Judge: Mark A. Young, Case: 20SMCV00406, Date: 2024-12-03 Tentative Ruling
Case Number: 20SMCV00406 Hearing Date: December 3, 2024 Dept: M
CASE NAME: Rosamond Ranch
LP v. South La Cienega Holdings LLC, et al.
CASE NO.: 20SMCV00406
MOTION: Motion
to Set Aside Discovery Sanctions;
OSC
Re: Entry of Default Judgment
HEARING DATE: 12/3/2024
MOTION TO SET ASIDE DISCOVERY
SANCTIONS
Legal
Standard
Relief under Code of Civil Procedure section 473(b)
is either discretionary or mandatory. A motion for mandatory relief must be
made no more than six months after entry of judgment and be accompanied by an
attorney’s sworn affidavit attesting to the attorney’s “mistake, inadvertence,
surprise or neglect.” (CCP § 473(b).) The attorney affidavit of fault must
contain a “straight forward admission of fault.” (State Farm Fire &
Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610.) But it need
not contain an explanation of the reasons for the attorney’s mistake, inadvertence
surprise or neglect. (Martin Potts
& Assocs., Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 438-441.) Relief must be granted
“unless the court finds that the default or dismissal was not in fact caused by
the attorney's mistake, inadvertence, surprise, or neglect.” (Ibid.) If mandatory relief is
granted, the court must “direct
the attorney to pay reasonable compensatory legal fees and costs” to the
opposing counsel or parties. (CCP § 473(b).)
Where a party cannot obtain an attorney affidavit of
fault, the party may seek discretionary relief under section 473(b) due to
“mistake, inadvertence, surprise, or excusable neglect.” (CCP § 473(b).) A
motion for discretionary relief must be made “within a reasonable time but in
no instance exceeding six months after the judgment, dismissal, order, or
proceeding was taken.” (Id.) If discretionary relief is granted, the court may
in its discretion order the moving party to pay the costs, including attorney fees,
incurred in obtaining the default. (Rogalski v. Nabers Cadillac (1992)
11 Cal.App.4th 816, 823; Vanderkous v. Conley (2010) 188
Cal.App.4th 111, 118-119.) If the motion for discretionary relief is granted,
the court may order the offending attorney to pay monetary sanctions up to
$1,000 to opposing parties, or up to $1,000 to the State Bar Client Security
Fund, or “[g]rant other relief as is appropriate.” (CCP § 473(c)(1)(A), (B),
(C).)
A motion for relief under section 473(b) “shall be
accompanied by a copy of the answer or other pleading proposed to be filed
therein, otherwise the application shall not be granted. . .” (CCP § 473(b).)
However, this requirement is
not jurisdictional; substantial compliance may suffice. (Carmel, Ltd. v. Tavoussi (2009) 175 Cal.App.4th 393, 403
[finding substantial compliance where counsel offered proposed answer at
motion hearing rather than serving it with moving
papers].)
ANALYSIS
Plaintiff/Cross-Defendants Rosamond
Ranch LP, Calitex, LLC, Elias Shokrian, and Derek Boisse move to set aside the
discovery sanctions imposed by the Court on December 9, 2022, January 6, 2023,
December 1, 2023, August 8, 2024 and October 4, 2024 (presumably the default),
and to continue the trial date to allow for the completion of discovery.
Cross-Defendants make a
discretionary motion under section 473(b) on the grounds that: (1) multiple
prior counsel, particularly Neil C. Evans, (“Former Counsel”) breached their
duty and acted with neglect, unduly prejudicing Cross-Defendants through no
fault of their own and without their knowledge; and (2) there is bias with the
Court due to former counsel’s misconduct.
First, the motion is untimely. Cross-Defendants
filed the motion on September 23, 2024. Section 473(b) motions must be made
within a reasonable time, no later than six months after the subject order.
This time limit forecloses modification of each order except for the August 8,
2024, and October 4, 2024, orders. As to those orders, the motion is still
untimely under Code of Civil Procedure section 1008. In essence,
Cross-Defendants request that the Court reconsider these discovery orders
beyond the 10-day time limit for such motions. Cross-Defendants did not re-notice
the instant motion to include the October 4, 2024, order until October 21, 2024,
which is 17 days after the order. Since Cross-Defendants have not complied with
Code of Civil Procedure § 1008, the court denies the motion.
Second, relief is unavailable on
the merits, since Cross-Defendants fail to cite any “mistake, inadvertence, surprise,
or excusable neglect” recognized by section 473. As discussed throughout this
proceeding, the sanctions orders were the result of Cross-Defendants and
counsels’ willing and flagrant discovery abuse, not the result of a mistake or
neglect.
Accordingly, the motion is DENIED.
OSC
RE ENTRY OF DEFAULT JUDGMENT
As set
forth below, the Court does not have the authority to enter a default judgment
in the amounts requested.
ANALYSIS
1. Requested
Judgment
Cross-Complainants’ proposed
judgment (CIV-100 Form) seeks the following judgment:
Damages: $ 3,892,608.30
Interest: $ 949,581.79
Costs: $ 32,331.30
Att. Fees: $ 507,508.50
TOTAL: $ 5,382,029.89
2. Noticed
Damages
Code of
Civil Procedure section 580 limits the recoverable relief on default judgment
to the amount pled in the complaint. As a result, any default judgment
greater than that amount is void. (See
Airs Aromatics, LLC v. CBL Data Recovery Technologies, Inc.(2018) 23 Cal.App.5th 1013, 1018-1020.) Here, the
First Amended Cross-Complaint (“FACC”) alleges the following damages:
Promontory: $279,000.00 (fraud) + $1,300,000.00
(interference with subleases) = $1,579,000
WKM: $222,000.00 (fraud) + $1,023,000 (interference
with subleases) = $1,245,000
SLCH: $2,200,000 (breach for withholding consent for
subleases, interference with subleases)
By cause of action, the FACC alleges
the following:
1. Fraud by Promontory and WKM for $279,000.00 and
$222,000.00 (respectively) against all Cross-defendants;
2. Breach of master lease by SLCH against Rosamond (withheld
consent to SLCH’s subleasing to replacement tenants for Promontory and WKM) for
$2,200,000.00
3. Interference with sublease contracts (re: portions of the
3049 Property with Promontory, WKM, and MM respectively) by SLCH against
Cross-Defendants, for $2,200,000.00.
4. Interference with sublease contracts (SLCH-Promontory
Sublease and OKV-Promontory sublease) by Promontory against all
Cross-Defendants for $1,300,000.00 (representing the sums spent on rent, tenant
improvements, permits, and entitlements forfeited);
5. Interference with sublease (SLCH-WKM Sublease) by WKM
against all Cross-Defendants for $1,023,000.00;
6. Negligent Interference with Prospective Economic
Advantage:
SLCH requests $2,200,000
Promontory requests $1,300,000
WKM requests $1,023,000
(same damages as 3-5)
7. Intentional Interference with Prospective Economic
Advantage by SLCH, Promontory, and
WKM against Cross-Defendants for the same damages as nos.
3-6
The principal amount requested
is more than the principal amount requested in complaint. The above
figures are the outer limits of liability.
3.
Principal
The following are a summary of the affidavits or declarations
in support of the judgment:
Hice Declaration:
¶¶ 7-8: WKM and Promontory
collectively had spent $855,000 in tenant improvements. Rosamond insisted on
new lease terms that made it financially unfeasible for Cross- Complainants to
continue operations at the Properties and they were thus forced to surrender
possession. Promontory incurred $466,875 in costs for tenant improvements
and permits at the Premises in connection with the build-out that had to be abruptly
halted upon Cross-Complainants’ surrendering the Premises, (Exhibit “G” is an
excel sheet summarizing)
¶ 9: Promontory's expenditures
undertaking new tenant improvements to the Selmaraine facility at a total cost
incurred of $988,025.30 (build-out was $225,188.30 more expensive than
projected)
¶ 10: $489,296 are Promontory's
rental cost for facilities (at $15,000 per month for period between the planned
launch date of the original Premises and Promontory’s occupancy of the
replacement space at the Selmaraine location in October 2021)
¶ 11: SLCH's $109,286 security
deposit with Rosamond (They don't actually ask for the security deposit in the
FACC paras. 21, 24, 26, 29, 33-37, 40, 62.)
¶ 12: SLCH lost rental payments on
the subleases. $2,213,916. (This is capped at $2,200,000.00.)
Morrison Decl.
¶ 7: WKM and Promontory
collectively spent approximately $855,000 in tenant improvements.
¶ 8: WKM incurred $388,047.04 in
costs for tenant improvements and permits at the Premises in connection with
the build-out
The declarations establish the following damages:
Promontory's
Property expenditures $ 988,025.30
rental cost $ 489,296.00
Selmaraine exp $ 466,875.00
= $
1,944,196.30
WKM (improvements + permits) $388,047.04
SLCH's subleases $2,213,916
4. Costs
The Memorandum of Costs at ¶ 7 of CIV-100 requests the following:
Filing
Fee: $ 3,695.00
Jury Fees: $ 150.00
Process Server: $ 783.00
Court Rept Fees: $ 675.00
Elec. Filing: $ 554.82
Hosting: $ 26,473.48
Total: $ 32,331.30
Cross-Complainants claim $26,473.48
in hosting fees. However, section 1033.5(a)(15) states that “This paragraph
shall become inoperative on January 1, 2022.” Thus, this item should not be
granted unless the discretionary standard is met. (CCP 1033.5(c) [Standard: (1)
Incurred, (2) reasonably necessary to the conduct of the litigation rather than
merely convenient or beneficial to its preparation, and (3) reasonable in
amount].) Here, based upon the Court’s
familiarity with the case, the Court concludes that the discretionary standard
has been met.
CONCLUSION
Accordingly, default judgment cannot be granted as
requested.
Promontory may be awarded up to $1,579,000 against all Cross
Defendants.
WKM may be awarded $388,047.04 against all Cross Defendants.
SLCH may be awarded up to $2,200,000.00 against all Cross
Defendants.
Interest needs to be re-calculated with these new figures.
The Court also determines that Boisse is jointly and
severally liable with the other Cross-Defendants up to $1,569,406.30 of the
total judgment amount.