Judge: Latrice A. G. Byrdsong, Case: 23STLC03972, Date: 2024-01-25 Tentative Ruling

Case Number: 23STLC03972    Hearing Date: January 25, 2024    Dept: 25

Hearing Date:                         Thursday, January 25, 2024

Case Name:                             CREDITORS ADJUSTMENT BUREAU, INC v. CROW DESIGN BUILD INC.

Case No.:                                23STLC03972

Motion:                                   Motion to Set Aside/Vacate Default and Default Judgment

Moving Party:                         Defendant Crow Design Build, Inc.  

Responding Party:                   Plaintiff Creditors Adjustment Bureau, Inc.

Notice:                                    OK

Tentative Ruling:                    Defendant Crow Design Build’s Motion to Set Aside/Vacate Default and Default Judgment is DENIED.

SERVICE: 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                      OK

[X] Correct Address (CCP §§ 1013, 1013a)                                      OK

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                       OK 

OPPOSITION:          Filed as of January 11, 2024               [   ] Late          [   ] None 

REPLY:                     Filed as of January 18, 2024               [   ] Late          [   ] None 

BACKGROUND

On June 22, 2023, Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”) filed several causes of action against Defendant Crow Design Build Inc. (“Defendant”) for the following: 1) Breach of Contract, 2) Open Book Account, Account Stated, and 4) Reasonable Value.

On September 08, 2023, Plaintiff moved for default to be entered against Defendant. The Clerk entered default the same day.

On October 06, 2023, the Court entered default judgment against Defendant in the amount of $21,596.65.

On December 06, 2023, Defendant filed the instant Motion to Set Aside/Vacate Entry of Default and Default Judgment Entered by Plaintiff. Plaintiff replies in opposition. Defendant writes in reply.  

MOVING PARTY POSITION

Defendant prays for an order from the Court setting aside/ vacating the September 08, 2023, entry of default and vacate the default judgment entered on October 06, 2023, under CCP § 473.5. Defendant argues that Plaintiff’s service of Summons and complaint is defective on its face and, hence, that the Court lacks jurisdiction over Defendant. Moreover, Defendant became aware of the action only after receiving a copy of the request for entry of default and thereby took immediate action to set aside and vacate both the default and default judgment.

OPPOSITION

            In opposition, Plaintiff argues that Defendant is precluded from relief under CCP § 473.5 as Plaintiff did properly serve Defendant’s registered agent at the precise address identified in all California Secretary of State and Contractors State License Board filings as the only address where Defendant could be served with summons and complaint. Defendant received the summons and complaint in time to defend this lawsuit but consciously chose to undertake no action to defend itself. Moreover, Defendant has submitted no testimony suggesting any alternative address where service could have been made on John Carney or Defendant, and the testimony of John Carney pleading ignorance is terribly disingenuous and legally irrelevant in any event. Even if Defendant’s alleged ignorance was true, relief under CCP §473.5 is precluded because Defendant has not and cannot meet its burden to show any of the mandatory prerequisites to obtaining relief under 473(b). Finally, Plaintiff argues that pro per parties are not entitled to special treatment.

REPLY

            In reply, Defendant maintains that service of the summons and complaint was defective and, therefore, the default judgment is void ab initio. Defendant’s inability to timely respond to the complaint was not intentional but rather the product of inadvertence and oversight. Further, Defendant disputes that he waited three months before taking affirmative steps to set aside the judgment; rather, Defendant acted as soon as it became aware of the judgment, and moreover, Defendant continues to dispute the underlying bill for extra insurance premiums.

ANALYSIS

I.          Evidentiary Ruling

Defendant’s Evidentiary motion for the Court to take judicial notice of “Amended Proof of Service filed herein on September 8, 2023” marked as Exhibit A is Sustained.

II.        Legal Standard

Under Code of Civil Procedure, section 473, subdivision (b), an application for relief must be made no more than six months after entry of the order from which relief is sought, and must be accompanied by an affidavit of fault attesting to the moving party’s mistake, inadvertence, surprise or neglect. (Code Civ. Proc., § 473, subd. (b); English v. IKON Business Solutions (2001) 94 Cal.App.4th 130, 143.) Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Code Civ. Proc., § 473, subd. (b).) 

“It is the policy of the law to favor, wherever possible, a hearing on the merits, and appellate courts are much more disposed to affirm an order where the result is to compel a trial upon the merits than they are when the judgment by default is allowed to stand and it appears that a substantial defense could be made. Stated another way, the policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon a party, who, regardless of the merits of the case, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary.” (Weitz v. Yankosky (1966) 63 Cal.2d 849, 854–855.) 

CCP section 473.5 permits the Court to set aside a default and default judgment when the service of a summons has not resulted in actual notice to a party in time to defend the action. ¿CCP section 473.5 requires the motion to be accompanied by an affidavit showing under oath that the party's lack of actual notice in time to defend the action was not caused by the party's avoidance of service or inexcusable neglect. ¿The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of the following: 

1) two years after entry of a default judgment against him or her; or  

2) 180 days after service on him or her of a written notice that the default or default judgment has been entered. ¿ 

(Code Civ. Proc., § 473.5.) In addition, a copy of the proposed answer must be filed. ¿ 

II.        Discussion

A.     Motion to Set Aside under CCP § 473.5.

Defendant prays for an order from the Court setting aside the September 08, 2023, entry of default and vacating default judgment entered on October 06, 2023, under CCP § 473.5. Defendant argues that Plaintiff’s service of Summons and complaint is defective on its face and hence, that the Court lacks jurisdiction over Defendant.

Defendant provides both the Declarations of John Carney, the Chief Executive Officer and agent for service of process, and the declaration of his mother Sylvia Carney. Sylvia states that she resides at 433 Todd Ln, Monrovia, CA. (Sylvia Carney Decl. ¶ 2.) She answered the door on the night of July 18, 2023, thinking she was receiving delivery from Federal Express or the postal service. (Id. ¶ 3.) A woman at her door asked for her son, to which Sylvia notified that he did not live at Sylvia’s address. (Id. ¶ 4.) The woman handed Sylvia an envelope, asking for her signature, Sylvia complied believing that the envelope was a typical delivery containing work documents or mail. Sylvia swears that the woman never explained that the envelope contained a lawsuit. (Id. ¶ 6.) Sylvia further declares that because the importance of the envelope was not disclosed, she did not alert her son of its delivery and placed it with all other work mail and deliveries. (Id. ¶ 7.)

John similarly declares that his mother did receive the Summons and Complaint around July 18, 2023, but that she did not understand the urgent need to immediately hand them to John. (John Carney Decl. ¶¶ 1, 4.) John states that he first saw the Summons and Complaint around September 10, 2023, almost two weeks after the time to respond had passed. (Id. ¶ 5.)

In opposition, Plaintiff’s counsel provides a true and correct copy of documents from the California Secretary of State’s office, which states that John Carney is the agent for Defendant, listing 433 Todd Ln, Monrovia, CA, 91016 as the address in which Defendant and John Carney can be served. (Kenneth J. Freed Decl. ¶ 2; Exh. 1.) Plaintiff further provides evidence that Defendant’s business address is at the same address. (Id. ¶ 3; Exh. 2.) Moreover, Plaintiff provides that records from the California Secretary of State and the CA Contractors State License Board indicate that Defendant’s business, mailing, and agents address 433 Todd Ln, Monrovia, CA 91016. (Id. ¶¶ 4-5; Exh. 3-4.) 

The Court that finds service was proper in this case. Code of Civil Procedure § 416.10(b) provides that,

A summons may be served on a corporation by delivering a copy of the summons and the complaint … To the president, chief executive officer, or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general manager, or a person authorized by the corporation to receive service of process.

(Code. Civ. Proc. § 416.10(b).) Here, based on the moving papers of both parties. Defendant’s authorized agent is John Carney. Both John’s confirmed service address and Defendant’s business address were located at 433 Todd Ln, Monrovia, CA, 91016. Moreover, both declarations supporting the motion admit that mail relating to Defendant usually goes to Sylvia’s address and that she received service of summons and complaint. (See. Sylvia Carney Decl. ¶ 8; See Also John Carney Decl. ¶ 3.)

Moreover, the Court notes that Plaintiff’s Proof of Service by Substituted Service indicates that the Process Server also swears that she explained the general nature of the paper to Sylvia. (9/08/2023 Amended Proof of Service by Substituted Service.) The Court will not engage in a dispute over whom to believe but will trust in the validity of the proof of service filed that Defendant was served correctly under CCP § 416.10(b) and thus did have actual notice of the action.

Thus, Defendant would not be entitled to relief under CCP § 473.5.

B.     Motion to Set Aside under CCP § 473(b)

Defendant alternatively moves to set aside/vacate default and default judgment under Section 473(b). In opposition, Plaintiff argues that Defendant has failed to meet his burden for the Court to Grant him relief under 473(b).

As a general matter, the Court notes that the motion is timely. First, the default judgment was already issued in this matter, so Defendant would need to set aside the default before setting aside the default judgment. Courts have held that setting aside default judgment without setting aside the default would be an “idle act” and thus not permitted even though technically timely. (Pulte Homes Corp. v. Williams Mechanical, Inc. (2016) 2 CA5th 267, 273.) Here, default was entered against Defendant on September 08, 2023. (09/08/23 Request for Entry of Default.) The Court entered default judgment on October 06, 2023. Defendant filed its motion to set aside default on December 06, 2023, within the six-month deadline prescribed under CCP section 473(b). 

Here, the Court finds that Defendant would not be entitled to mandatory relief as Defendant does not provide an attorney affidavit of fault. Thus, to set aside the default, Defendant must show it is entitled to discretionary relief by showing that the default was due to Defendant’s mistake, inadvertence, surprise, or neglect.

Here, based on the declarations provided by Defendant, it’s clear that Defendant seeks to lay the mistake with either Sylvia for not knowing the importance of the documents that were handed to her or the process server for not telling Slyvia what was contained in the envelope. The Court does not finds that neither argument supports finding Defendant’s neglect to be excusable.  Sylvia declares that she communicated to the process server that John was out of town. (Sylvia Carney Decl. ¶ 4.)  Yet the Court notes that nothing in John’s declaration or Defendant’s moving papers addresses the failure to check the business mail for two months. In John’s declaration he states that the corporation has projects on-going in various counties, and that his mother’s address is a convenient location for receiving mail and service of process. (John Carney Decl. ¶ 2.) Typically, his mother would place all mail and any other items on a desk in her home for him to sort through once a week. (Id. ¶ 3.)  The Court finds it unreasonable for the CEO of a company to leave mail delivered to the business address unattended for such a length of time.

Plaintiff correctly notes that the concept of excusable neglect should not be taken so liberally as to excuse any mistake made by a moving party when seeking relief. Noting the McClain court’s holding, the Court agrees with Plaintiff in that 473(b) motions should not be considered,

a get-out-of-jail-free card for parties who later come to regret past inaction or sitting on their rights… If it is wholly inexcusable it does not justify relief. [Citations.] It is the duty of every party desiring to resist an action or to participate in a judicial proceeding to take timely and adequate steps to retain counsel or to act in his own person to avoid an undesirable judgment. Unless in arranging for his defense he shows that he has exercised such reasonable diligence as a man of ordinary prudence usually bestows upon important business his motion for relief under section 473 will be denied. [Citation.] Courts neither act as guardians for incompetent parties nor for those who are grossly careless of their own affairs.... The only occasion for the application of section 473 is where a party is unexpectedly placed in a situation to his injury without fault or negligence of his own and against which ordinary prudence could not have guarded.

(McClain v. Kissler (2019) 39 Cal.App.5th 399, 414–415, citing Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1206.) Noting that John ordinarily checks weekly through mail addressed to his business, the Court finds it hard to reconcile how the neglect in this case can be considered excusable. The onus is not on his mother to inform him that there is a lawsuit against his company, that responsibility falls on the Defendant and John alone.

Thus, because the Court finds that default was not due to Defendant’s mistake, inadvertence, surprise, or excusable neglect, the Court DENIES discretionary relief in this case.

            Accordingly, Defendant’s motion is DENIED.

III.       Conclusion

            Defendant Crow Design Build’s Motion to Set Aside/Vacate Default and Default Judgment is DENIED.

Moving party is ordered to give notice.