Judge: Mark A. Young, Case: 23SMCV04773, Date: 2024-06-28 Tentative Ruling

Case Number: 23SMCV04773    Hearing Date: June 28, 2024    Dept: M

CASE NAME:           Nassara LLC v. Stoll, et al.

CASE NO.:                23SMCV04773

MOTION:                  Motion to Vacate Default

HEARING DATE:   6/28/2024

Legal Standard

Relief under 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

Defendant RJ Nautical (“RJ”) moves to set aside the default entered against it. Defendant provides a copy of its proposed answer. (Casey Decl., Ex. H.)  Plaintiff has not stipulated to the requested relief, but has filed a notice of non-opposition. 

The court entered default against RJ on November 27, 2023. The proof of service shows service on October 12, 2023, via substitute service on the agent for service of process.

RJ explains the circumstances which caused it to not timely respond to this suit. On October 13, 2023, RJ’s front office received an envelope made out to a former employee of RJ Nautical, Kira Peralta. (Casey Decl., ¶ 4, Ex. A.) However, Ms. Peralta has not been employed with RJ Nautical for several years, and the envelope was inadvertently incorrectly filed. (Id.) In early November 2023, RJ became aware that Defendant Engel Volkers Yachting was named in this lawsuit. (Id., ¶ 5.) Since, RJ’s only involvement with the subject yacht was its management services that terminated in November 2022, no one at RJ had reason to believe that it was named in this lawsuit. (Id.) On November 10, 2023, upon further inquiry, RJ learned that it had been named in the suit. (Id., ¶ 6.) After locating the misfiled complaint, RJ contacted its insurance carrier to advise that RJ Nautical had been served with the lawsuit. (Id.) On November 28, 2023, the day after default, RJ’s insurance carrier agreed to defend RJ in the lawsuit under a full reservation of rights and secure defense counsel. (Id.) On December 19, 2023, RJ’s counsel contacted Plaintiff’s counsel seeking to stipulate to set aside the default. (Id., ¶¶ 7-8.) Counsel negotiated the stipulation and settlement discussions throughout December 2023 and early January 2024. (Id., ¶¶9-13.) The parties could not reach an agreement on the stipulation, and this motion followed. (Id. ¶ 13.)  

With this, RJ shows excusable neglect. Plaintiff’s service was addressed to an individual who had not been employed by defendant for several years, causing RJ to mistakenly assume that the envelope was either mislabeled or was meant for the former employee. Consequently, RJ misfiled the papers. Once RJ discovered its mistake, it diligently secured counsel. Counsel sought to informally resolve the issue, which explains any delay in making this motion.

Accordingly, the motion is GRANTED.  The answer is deemed filed as of this date.