Judge: Malcolm Mackey, Case: 22STCV09386, Date: 2023-01-26 Tentative Ruling
Case Number: 22STCV09386 Hearing Date: January 26, 2023 Dept: 55
CREDITORS
ADJUSTMENT BUREAU, INC. vs RSPPS, INC. 22STCV09386
Hearing Date: 1/26/23,
Dept. 55
#7: MOTION TO SET ASIDE/VACATE DEFAULT
Notice: OK
Opposition
MP:
Defendant RSPPS, INC.
RP:
Plaintiff CREDITORS ADJUSTMENT BUREAU,
INC.
Summary
On 3/17/22, Plaintiff filed a Complaint.
On 3/25/22, Plaintiff filed a First Amended Complaint,
alleging Defendant failed to pay State Compensation Insurance Fund $186,144.97
in premiums that are owed on workers compensation policy number 9241524-18.
Plaintiff also alleges it was assigned the debt.
The causes of action are:
1. BREACH OF CONTRACT
2. OPEN BOOK ACCOUNT
3. ACCOUNT STATED
4. REASONABLE VALUE.
On 6/21/22, default judgment was entered against
Defendant for damages of $186,144.97, attorney fees of $1,200.00, interest of
$38,299.97, and costs of $650.13, for a total of $226,295.07.
On 10/25/22, Defendant filed this motion to set aside/vacate
default and default judgment entered.
MP
Positions
Defendant requests the Court set aside/vacate the default
judgment entered against it on 6/21/22 for $226,295.07 based on the following
grounds:
·
This Court is empowered, pursuant to Code
of Civil Procedure §473, to relieve a party or its legal representative
"upon such terms as may be just ... from a judgment, order, or other
proceeding taken against him or her through his or her mistake, inadvertence,
surprise or excusable neglect."
·
Case law indicates a strong policy towards
litigating cases on the merits.
·
Defendant acknowledges being served.
However, Defendant did not initially understand the import of being served.
Once it did, Defendant retained an attorney who immediately reached out to
Plaintiff’s counsel, seeking to resolve the delay and file a responsive answer.
Plaintiff, however, would not oblige to any of Defendant’s requests for
extensions or settlement offers. Defendant then filed this motion.
RP
Positions
In opposition, Plaintiff
argues the following:
·
Defendant did not ask for—and is therefore
not entitled to—mandatory relief under CCP § 473(b).
·
Defendant cannot show surprise, excusable neglect,
or excusable mistake.
·
Defendant failed to exercise diligence in seeking
relief.
·
If relief is granted, Plaintiff should be
awarded $3,600 in attorney fees incurred from obtaining default. Defendant
should also be required to post bond for the full amount of the judgment
($226,295.07).
Tentative
Ruling
Defendant’s
motion to set aside/vacate default and the default judgment entered is DENIED
without prejudice.
Legal Standard
“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.”
(Code Civ. Proc. § 473(b).)
“[T]he 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.” [Citation.] (Fasuyi v. Permatex, Inc. (2008) 167
Cal.App.4th 681, 696.)
Analysis
Here, it appears as
though Plaintiff is attempting to take advantage of Defendant’s neglect. Defendant
was served on April 28, 2022. On June 1, 2022—a mere three days after
Defendant’s answer was due—counsel for Defendant attempt to contact Plaintiff
to request an extension. (Fisher Decl., ¶¶ 4-5, Ex. A.) Plaintiff nonetheless requested
entry of default that same day. In addition, in the following months Defendant
made numerous attempts to set aside the default without court intervention. (Id.
¶¶ 10-13.) Plaintiff ignored most and finally responded by suggesting Defendant
make a settlement offer, which Defendant did, but Plaintiff then ignored the
offer. (Id. ¶¶ 14-16.) Counsel’s declaration demonstrates Defendant
acted diligently to cure its default, and Plaintiff offers no declaration to
refute defense counsel’s statements. Based on Defendant’s counsel’s
declaration, Plaintiff has taken advantage of Defendant’s neglect in filing an
answer several days late. The law looks with disfavor on such behavior and
would normally favor having this case litigated on the merits.
However, Defendant fails
to offer a declaration attesting to its surprise, mistake, or neglect. “In
order to qualify for [discretionary] relief under section 473, the moving party
must act diligently in seeking relief and must submit affidavits or testimony
demonstrating a reasonable cause for the default.” (Huh v. Wang (2007)
158 Cal.App.4th 1406, 1419.) As noted, Defendant offers a declaration from
counsel who attests to the diligent efforts taken to cure Defendant’s default.
(See Fisher Decl.) But counsel’s declaration explicitly states he was first contacted
regarding this matter after Defendant’s time to answer had
expired—meaning default could not have been due to the mistake, neglect, or
inadvertence of counsel. (Id. ¶ 3.) Thus, Defendant may only seek
discretionary relief under Section 473, and in order to qualify for
discretionary relief under section 473 Defendant must submit affidavits or
testimony demonstrating a reasonable cause for the default.
Defendant has not done so
here. Defendant offers no declaration from a person authorized to speak on its
behalf demonstrating reasonable cause for the default in the form of surprise,
mistake, or excusable neglect.
Accordingly, Defendant’s
motion to set aside/vacate default and default judgment entered is denied
without prejudice.
*IF BOTH SIDES SUBMIT ON
THE COURT’S TENTATIVE RULING, PLEASE CALL 213-633-0655*