Judge: Malcolm Mackey, Case: 21STCV46295, Date: 2022-09-08 Tentative Ruling

Case Number: 21STCV46295    Hearing Date: September 8, 2022    Dept: 55

GODBE v. COLONY BANCORP OF MALIBU, INC.                            21STCV46295

Hearing Date:  9/8/22,  Dept. 55

#11:   MOTION TO SET ASIDE DEFAULT AND DEFAULT JUDGMENT.

Notice:  Okay

Opposition

MP:  Defendant

RP:  Plaintiff

Summary

On 12/20/21, Plaintiff DOUGLAS E. GODBE filed a Complaint regarding alleged breach of a commercial lease.

Default was entered 1/31/22.

Default Judgment was filed 7/8/22.

MP Positions

Moving party requests an order setting aside default entry and judgment, on grounds including the following:

·         The motion is made pursuant to C.C.P. Section 473(b), upon the grounds of attorney error.

·         Counsel misunderstood, and thought there had been an informal resolution of the dispute, such that no responsive pleading was needed.

·         A proposed Answer is attached to the motion as Exhibit A.

RP Positions

Opposing party advocates denying, or granting with conditions of paying attorney fees and costs, and a $1,000 penalty, for reasons including the following:

·         Defendant does not have the capacity to bring the motion, since its corporate status has been revoked in its home state of Nevada. E.g., Weil & Brown, California Practice Guide Civil Procedure Before Trial (The Rutter Group 2022) ¶ 2:92.

Tentative Ruling

The motion hearing is continued to November 8, 2022, at 8:30 a.m., in Department 55.

Moving party shall have an opportunity to revive the suspended corporation.

 There may be an abuse of discretion where judges do not allow a suspended corporation time to revive a corporation’s good standing, either pursuant to parties’ requests, or on the court’s own motion.  Cadle Co. v. World Wide Hospitality Furniture, Inc. (2006) 144 Cal. App. 4th 504, 512.  

“ ‘[A] plea of lack of capacity of a corporation to maintain an action by reason of a suspension of corporate powers for nonpayment of its taxes ‘is a plea in abatement … which is not favored in law, is to be strictly construed and must be supported by facts warranting the abatement’ at the time of the plea.’ ”  V & P Trading Co., Inc. v. United Charter, LLC (2012) 212 Cal.App.4th 126, 133.  Revenue and Taxation Code "Section 23301 provides, in relevant part, 'the corporate powers, rights and privileges of a domestic taxpayer may be suspended' if it does not pay its taxes. The suspension of the corporate powers, rights, and privileges means a suspended corporation cannot sue or defend a lawsuit while its taxes remain unpaid."  Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2006) 136 Cal.App.4th 212, 217-18.

Judges must vacate dismissals, default entries, and default judgments “whenever (1) an application is made no more than six months after entry of judgment, (2) the application is accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, and (3) the attorney's mistake, inadvertence, surprise or neglect in fact caused the dismissal or entry of default.”  Benedict v. Danner Press  (2001) 87 Cal.App.4th 923, 927 (citing CCP §473(b)).  Accord  Wagner v. Wagner (2008) 162 Cal.App.4th 249, 258.

Whenever relief is based upon an attorney’s affidavit of fault, the court must order the attorney to pay reasonable legal fees and costs of the opposing side, and may order penalties of up to $1,000. Solv-All v. Sup. Ct. (2005) 131 Cal.App.4th 1003, 1009 n.7 (citing CCP §473(b) and (c)).