Judge: Lee W. Tsao, Case: 19NWCV00834, Date: 2023-09-12 Tentative Ruling

Case Number: 19NWCV00834    Hearing Date: September 12, 2023    Dept: C

AMERICAN CONSTRUCTION MANAGEMENT & ENGINEERING v. PROMATE PRODUCE U.S.A., et al.

CASE NO.:  19NWCV00834

HEARING:  9/12/23

#1

TENTATIVE RULING

Cross-Defendant American Construction Management & Engineering’s motion to set aside default judgment is GRANTED.  No sanctions.  Cross-Defendant is ordered to file its Answer by the close of court business on September 12, 2023.

Moving Party to give NOTICE.

Cross-Defendant American Construction Management & Engineering (“ACME”) moves to set aside default judgment pursuant to CCP § 473(b).

This is Breach of Contract action filed by Plaintiff American Construction Management & Engineering for $1,405,416.11.  The Complaint asserts causes of action for:

1.    Breach of Contract

2.    Account Stated

3.    Reasonable Value

4.    Foreclosure on Mechanic’s Lien

J.R. Miller & Associates (“J.R. Miller”) filed a Cross-Complaint against ACME on May 4, 2020. 

On August 1, 2023, the parties informed the court that they were close to settling the matter.  As such, the hearing on the instant motion was continued to September 12, 2023.  The court is not in receipt of any notice from the parties advising the court of the status of the settlement.  If there is no settlement, the following analysis applies.

Merits

“The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. 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.   (CCP § 473(b).)

The entire action was submitted to arbitration, but J.R. Miller’s Cross-Complaint was not handled in arbitration.  ACME submits the declaration of David Jones, Principal of ACME.  Jones attests, “[F]or reasons unknown to us, this particular cross-complaint was not handled in the arbitration action. Once we were made aware of this fact, and after believing that nearly all actions had been resolved except for this action which remained in the State Court, we sought counsel's advice and direction… our counsel simply never filed a responsive pleading to this cross-complaint. When further action was set to move the remainder of the case forward, ACME specifically paid counsel, who had handled the rest of the matter, to handle this remaining issue. Counsel indicated to us that he would make the necessary appearances and file the necessary documents related to this matter. We actually paid counsel for his service of dealing with these remaining issues. We later learned that counsel only appeared at the status conference and didn't file anything to protect us and our position in this matter. In response, Cross-complainant JR Miller, filed a Request for Entry of Default.”  (Jones Decl., ¶ 4.)  The court finds that ACME has demonstrated mistake and excusable neglect.  The court further finds, based on its equitable powers, that ACME has demonstrated extrinsic mistake.

Contrary to Cross-Complainants’ arguments, the court finds that Movant complied with CRC § 3.1110(a) by stating the “nature of the order being sought and the grounds for issuance of the order.”  The Notice states that Cross-Defendant “will move the court for an order setting aside the Request for Entry of Default Judgment and related prove-up documents.”  The Notice refers to the Memorandum of Points and Authorities, which gives fair notice to Cross-Complainant that the motion is based on CCP § 473(b).

The court further finds that ACME promptly sought relief upon becoming aware of JR Miller’s efforts to pursue default judgment (Ren Decl., ¶¶ 3-5), and JR Miller failed to demonstrate any prejudice.  Judicial policy favors trial on the merits.

Accordingly, the motion is GRANTED. 

Sanctions:  “Whenever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this section, the court may do any of the following:  (A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party.  (B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund.  (C) Grant other relief as is appropriate.”  (CCP § 473(c)(1).)

The court declines to impose sanctions against ACME because substantial justification exists.