Judge: Mark A. Young, Case: 23SMCV04532, Date: 2024-09-10 Tentative Ruling

Case Number: 23SMCV04532    Hearing Date: September 10, 2024    Dept: M

CASE NAME:           Ross Production Services v. Triller Acquisition LLC, et al.

CASE NO.:                23SMCV04532

MOTION:                  Motion to Vacate Default, Default Judgment

HEARING DATE:   9/10/2024

Legal Standard

Relief under Code of Civil Procedure (CCP) 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].) 

CCP section 473.5(a) permits the court to set aside a default or default judgment “[w]hen service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him.”¿ “The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of:¿ (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered .”¿ (Id.) The phrase “actual notice” means “genuine knowledge of the party litigant” and does not include constructive or imputed notice to the client.¿ (Tunis v. Barrow (1986) 184 Cal. App. 3d 1069, 1077.) A defendant also must show that his “lack of actual notice in time to defend the action was not caused by his inexcusable neglect or avoidance of service.”¿ (Id. at 1077-1078.) Further, the court is “not required to accept [a] self-serving evidence contradicting the process server's declaration.” (Rodriguez v. Nam Min Cho (2015) 236 Cal.App.4th 742, 751.)

Analysis

Defendant Triller Hold Co. LLC (sued as Triller Acquisition LLC) (hereinafter, “THC”) moves for an order setting aside the default and default judgment entered against Defendant Triller Acquisition LLC, a Limited Liability Company DBA Triller Fight Club ((hereinafter, “TA”).

On September 25, 2023, Plaintiff commenced this action against TA. TA’s default (the “Default”) was requested and entered on November 14, 2023 (the day after the responsive pleading deadline) and a default judgment (the “Default Judgment”) was entered against TA on December 18, 2023.

Defendant demonstrates that the service of Complaint and Summons did not put it on actual notice in time to defend the action prior to default. Defendant explains that the named defendant, TA, merged into THC on August 17, 2022. (Lee Decl., Ex. A.) Paracorp Incorporated (“Paracorp”) was TA’s Registered Agent for Service of Process. (Lee Decl., ¶ 7.) Paracorp was also the Registered Agent for Service of Process for Triller and many other “Triller”-affiliated entities. (Lee Decl., ¶ 7.) The founder and former manager of TA had designated himself as the designated service recipient (“DSR”) with Paracorp, such that service earmarked for TA went to him. (Lee Decl., ¶ 8.) Following the Merger, THC filed the Certificate of Merger with Paracorp. (Lee Decl., ¶ 10.) Therefore, Triller was under the impression that it would from that point on be the DSR for anything served on the now-defunct TA. (Lee Decl., ¶ 10.)

According to the proof of service on file, Plaintiff served the summons on TA via Paracorp on October 11, 2023. Unbeknownst to Triller, Paracorp had not in fact updated its DSR for TA. (Lee Decl., ¶ 10.) The former DSR ended up receiving notice of the suit, and because he no longer had any incentive to defend the action, he did not promptly notify anyone at Triller of the suit. (Lee Decl., ¶ 8.) Triller did not learn of this lawsuit until January 26, 2024. Triller obtained a copy of the default judgment on January 31, 2024. (¶ 9.) Upon inquiry, Trilled learned that the DSR for TA had not actually been updated. (Lee Decl., ¶ 10.) Paracorp provided the Complaint as well as documents related to the Default and Default Judgment. (Lee Decl., ¶ 11.) Triller promptly noticed their appearance on January 31, 2024. (Woodland Decl., ¶ 3, Ex. A.)

Defendant shows their good faith and reasonable efforts to resolve the default without resorting to a motion. (See Lee Decl., ¶12; Woodland Decl., ¶ 4, Ex. B.) These efforts explain any delay between Defendant’s discovery of this action at the end of January and its filing of this motion on May 14, 2024. Thus, Defendant demonstrates that the motion was timely made, and that its lack of actual notice in time to defend the action was not caused by its avoidance of service or inexcusable neglect required for relief under section 473.5. Defendant also shows a “mistake, inadvertence, surprise, or excusable neglect,” such that discretionary relief under section 473(b) is appropriate. Plaintiff filed a perfunctory opposition, suggesting that service was enough to put Defendant on notice, but not materially disputing Defendant’s explanation.

Accordingly, Defendant’s motion to vacate default and default judgment is GRANTED. Defendant’s proposed answer is filed as of this date.