Judge: Martha K. Gooding, Case: 20-01149600, Date: 2023-06-12 Tentative Ruling

Motion to Set Aside/Vacate Default and Judgment

The Motion by Defendant/Judgment Debtor Christine Le (“Le” or “Defendant”) for an order setting aside the default judgment entered against her is GRANTED.

Le moves for an order setting aside the default judgment entered against her on February 2, 2022, under Code of Civil Procedure (“CCP”) section 473.5 and under the Court’s inherent equitable powers.

CCP section 473.5(a) provides: “When 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 or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. 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.”

“Apart from any statutory authority, a court has inherent, equitable power to set aside a judgment on the ground of extrinsic fraud or mistake.” (Cal. Prac. Guide Civ. Pro. Before Trial at ¶ 5:435, citations omitted.) “Extrinsic mistake” is “a term broadly applied when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981 [citations omitted].) “Extrinsic fraud,” on the other hand, “usually arises when a party is denied a fair adversary hearing because he has been ‘deliberately kept in ignorance of the action or proceeding, or in some other way fraudulently prevented from presenting his claim or defense.’” (Kulchar v. Kulchar (1969) 1 Cal.3d 467, 471.) 

Le contends she was never served with the summons and complaint, and never made aware of the service by substitution from Defendant Pham, (her estranged husband), and that the first time she learned about this lawsuit and default judgment was on or about March 10, 2022, when she was served with the notice to appear for judgment debtor examination. (ROA 165 [Le Decl. at ¶¶ 5, 7-8.)  Le further explains she is a registered nurse practitioner and was “never employed by K&G,” and “never a corporate office [sic], director, shareholder, independent contractor and/or employee of K&G at any point in time.” (Le Decl. at ¶ 9.)

In addition to Le’s testimony, Pham, Le’s estranged husband, attests that he is the “100%” owner of K&G, that he was personally served with the summons and complaint on or about July 30, 2020, and that, although he noticed his estranged wife, Le, was named a defendant, he “never informed her that she was served with said lawsuit in any way, including ever informing her of the existence of said lawsuit.” (ROA 179 [Pham Decl. at ¶¶ 4-5].)

The Court finds Le’s evidence to be credible, and to be grounds for equitable relief and relief under section 473.5.

In its opposition, Plaintiff argues this motion is “not timely” and Le’s failure to answer was “not due to mistake, surprise, inadvertence or excusable neglect” under CCP section 473. (Opp’n at 4-6.)  But Le does not seek relief under CCP section 473(b); thus, that standard is not applicable. The Court notes that the record does not reflect service of a “written notice” of default judgment against Le. Thus, her motion, filed and served on February 14, 2023, is well within the two-year deadline. Further. as Plaintiff acknowledges, case law does not require the defendant to “provide an absolute guarantee of victory” to obtain equitable relief. (Opp’n at 6, citing Olivera v. Grace (1942) 19 Cal.2d 570, 578-579.) In her proposed answer, Le intends to assert a general denial and raise several affirmative defenses. The Court has no reason to conclude that none of her defenses is viable.

Finally, Plaintiff claims Le was “given numerous notices of the pending litigation” because Plaintiff’s counsel sent letters dated August 14, 2020, and September 16, 2020. (Brodkin Decl. at ¶¶ 9-10, Exhs. D, E.) This argument is not persuasive because the letters reflect they were both mailed to the same 8237 Monroe address, and, moreover, neither one was even addressed to Le. The Court has no reason to doubt that Le did not have actual notice of the lawsuit or judgment until she was served with the notice to appear for a judgment debtor examination. Thus, the Court concludes Le was denied a fair adversary hearing, and grants relief from entry of default.

The Default Judgment entered on February 2, 2022 (ROA # 69) and the Default entered on September 18, 2020 (ROA # 12), are set aside as against Defendant Christine Le, only.

Le is ordered to file and serve her Answer by June 26, 2023.

The Court sets a Case Management Conference (“CMC”) for August 21, 2023, at 9:00 a.m. in Department C31.

Le is ordered to give notice of the ruling and the CMC.