Judge: Layne H. Melzer, Case: 2020-01158834, Date: 2023-01-05 Tentative Ruling

Defendants Merlan Investments, Inc.

Motion to Set Aside/Vacate Default and Judgment

The court is inclined to grant Defendants Merlan Investments, Inc. and David Merlan Gonzales’ Motion to vacate default and the default Judgment.

Factual Background

On 9/3/20, Plaintiff Andres Perez sued Defendants Merlan Investments, Inc. and David Merlan Gonzales for a singular claim of breach of written contract. (ROA 2)

Plaintiff filed two proofs of service showing that Defendants were personally served on 1/28/21 by leaving the documents at a UPS Store. (ROA 14, 15, 16.)

The Clerk rejected Plaintiff’s first Entry of Default dated 3/18/21 for defective service. (ROA 22)

Plaintiff then effectuated service by substitute service by leaving the documents on 1/4/22 at the UPS Store and then mailing them. (ROA 25, 27.)

Default was entered on 3/2/22.

A Clerk’s Judgment was entered on 4/6/22.

Defendants filed the instant Motion to vacate the default and default Judgment on 10/5/22.

Legal Standard

“[W]henever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise or neglect, [the court shall] vacate any (1) resulting default entered by the clerk … or (2) resulting default judgment or dismissal entered against his or her client.” [CCP § 473(b) (emphasis added)]

The purpose is “to alleviate the hardship on parties who lose their day in court due solely to an inexcusable failure to act on the part of their attorneys.” [Zamora v. Clayborn Contracting Group, Inc. (2002) 28 C4th 249, 257 (emphasis in original; internal quotes omitted)]

The only limitation is that the court may deny relief if it finds the default or dismissal “was not in fact caused by the attorney's mistake, inadvertence, surprise, or neglect” (e.g., where attorney is attempting to “cover up” for client). [CCP § 473(b) (emphasis added).]

Merits

The Motion is timely filed. The application for mandatory relief based on an attorney affidavit of fault must be made “no more than six months after entry of judgment.” [CCP § 473(b).] The wording of the statute makes clear that the 6-month period runs from entry of the default judgment, not the original default. [Sugasawara v. Newland (1994) 27 CA4th 294, 297.]

Here, this Motion is for mandatory relief based on an attorney affidavit of fault.  If the motion based on an attorney affidavit of fault is granted, CCP § 473 requires the court to vacate the underlying default upon vacating the default judgment. [Sugasawara v. Newland, supra, 27 CA4th at 295]

Thus, since the Motion was filed within 6 months of entry of Judgment, it is timely.

Moving to the merits, as long as the default resulted from attorney neglect, the attorney's “affidavit of fault” compels relief from both the default and any resulting default judgment. [See Cisneros v. Vueve (1995) 37 CA4th 906, 909, fn. 2]

Defendants present evidence to the court to show that on 3/28/22, Aldo A. Flores, Esq., Counsel for Defendants, submitted an Answer on behalf of both Defendants. Defense counsel believed the Answer was filed and that the case was therefore at issue. (Flores Decl. ¶¶ 2-3, Exh. A) In fact, the Answer was rejected the next day on 3/29/22. (ROA 34.)

However, on September 30, 2022, during a case review, defense counsel noticed that no activity had taken place in the case since the date he submitted Defendants’ answer for filing. (Flores Decl. ¶ 4, Exh. A) Counsel then logged onto the court’s online web portal to review the court’s case summary. While reviewing the court’s case summary, defense counsel discovered that on March 2, 2022, Plaintiff filed requests for entry of default, and that on April 6, 2022, the court entered default judgment. (Id.) Defense counsel than contacted his attorney service provider and learned that Defendants’ March 28, 2022 answer had been rejected by the court. The attorney service provider had provided notice to defense counsel electronically, and through inadvertence, counsel had missed the notification. Thereafter, defense counsel prepared the instant Motion. (Flores Decl. ¶5).

In Opposition, Plaintiff argues that it is not clear whether Defense Counsel was representing Defendants at the time of default on 3/2/22 as opposed to a short time later when Counsel tried to file an Answer on 3/28/22. (See ROA 34)

Where the default (i.e., the failure to respond) was not the attorney's fault, an attorney “affidavit of fault” relating to the subsequent default judgment does not compel relief. There is no policy favoring “neglectful clients who allow their default to be entered simply because that neglect is compounded by attorney neglect in permitting the judgment to be perfected.” [Cisneros v. Vueve (1995) 37 CA4th 906, 911, Attorney was hired to represent Defendant whose default had already been entered. Attorney forgot about the matter and did nothing for over 6 months. By the time Attorney moved to set aside the default, a default judgment had been entered. Attorney's affidavit of fault did not compel relief from the judgment (or the default).]

On Reply, Defense Counsel responds to this argument showing in a supplemental declaration that he was retained by Defendants 2/16/21, well before default was entered. (Flores Suppl. Decl.; ¶2; Exhibit A.) Defendants alerted their Counsel that they had received copies of court documents in the mail around the time of substitute service, but, again, confirmed they had not been personally served with process. (Flores Suppl. Decl. ¶3.) Defense Counsel apparently made no further inquiries as to whether substitute service had been effectuated. In an abundance of caution, however, despite Defendants not having been personally served, Mr. Flores submitted an Answer on behalf of Defendants as set forth above and believed that it had been filed.

The purpose of declarations and other evidence submitted with the reply is to fill in the gaps in the evidence created by the other party's opposition papers. (Jay v Mahaffey (2013) 218 CA4th 1522, 1537–1538.) Reply evidence must be supplemental to the evidence already submitted. Id. at 1538.) The court finds the new evidence responsive to Plaintiff’s argument in opposition that the Moving affidavit of fault lacked clarity. Plaintiff has not requested leave to further address this new evidence.

Plaintiff then argues that even if the court construed this motion as one for mandatory relief, Defendants still must show excusable neglect. That is not true.

“[T]he mandatory provisions … do not require a showing that the attorney's neglect was excusable nor a showing of diligence short of the six-month time limit.” [Metropolitan Serv. Corp. v. Casa de Palms, Ltd. (1995) 31 CA4th 1481, 1488; see Milton v. Perceptual Develop. Corp. (1997) 53 CA4th 861, 868; Younessi v. Woolf (2016) 244 CA4th 1137, 1147.]

Plaintiff inaccurately reasons that the court should not permit mandatory relief because this neglect amounted to malpractice.

Plaintiff argues:

However, neglect is not excusable — and thus, discretionary and mandatory relief is not available — where an attorney’s conduct falls below the professional standard of care. Wagner v. Wagner (2008) 162 Cal.App.4th 249, 259; Garcia, 58 Cal.App.4th at 681 [Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 681.]

(Opp., p. 5:20-23.)

But in Wagner, the movant chose to seek discretionary relief only. Why?

“The range of attorney conduct for which relief can be granted in the mandatory provision is broader than that in the discretionary provision, and includes inexcusable neglect. But the range of adverse litigation results from which relief can be granted is narrower. Mandatory relief only extends to vacating a default which will result in the entry of a default judgment, a default judgment, or an entered dismissal. [Citation] Apparently cognizant of this limitation, Claire's counsel moved solely for discretionary relief under section 473, subdivision (b), based on his failure to submit a timely objection to Kent's proposed order.”

[Wagner v. Wagner (2008) 162 Cal.App.4th 249, 258–259.]

Thus, the citation to Wagner is misplaced because unlike the movant in Wagner, Defendants here can and did move for mandatory relief. Thus, it does not matter whether the conduct was inexcusable – and the court agrees it was not.

Plaintiff next argues that “Counsel would have the Court believe that a reasonably prudent person in similar circumstances would similarly fail to ascertain the status of the Answer for over six months.” (Opp., p. 6:15-17.) But again, we are dealing only with mandatory relief and Plaintiff cites no case to show that any diligence is required.

Plaintiff then argues that the Answer is boilerplate. “Defendant’s moving papers only contain a general denial and boilerplate affirmative defenses. No facts have been pleaded that show Defendants have a meritorious defense to any of the allegations contained in the original Complaint.” (Opp., p. 7:21-23.)  A precondition for obtaining relief is that the application “shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted.” [See CCP § 473(b).] Here, Defendants provide the court with the Answer that was rejected on 3/28/22. Plaintiff cites no law requiring the court to adjudicate the merits of the case and find a meritorious defense as part of this Motion for mandatory relief.

Thus, the court is inclined to grant the Motion.

Finally, in granting relief based on an “attorney affidavit of fault,” the court must “direct the attorney to pay reasonable compensatory legal fees and costs” to the opposing counsel or parties. [CCP § 473(b)]. After reviewing all papers and evidence in this regard, the court orders Defense Counsel Mr. Flores to pay Plaintiff’s Counsel Jacobson & Gorrie $900 within 30 days of this Order.

Defendants are ordered to service notice of this Order.