Judge: Mel Red Recana, Case: 23STCV07248, Date: 2024-02-21 Tentative Ruling
Case Number: 23STCV07248 Hearing Date: February 21, 2024 Dept: 45
Hearing Date: February
21, 2024
Moving Party: Defendants
Network Logistics Inc., Network Logistics Transportation, LLC, Gabriel Fleming,
and Dennis Stone
Responding Party: Plaintiff Five & Six Logistics, Inc.
Motion to Set Aside Default
The court considered
the moving, opposition, and reply papers.
The court GRANTS
Defendants’ motion to set aside default. The court hereby sets aside and vacates
the defaults entered against Network Logistics Inc., Network
Logistics Transportation, LLC, Gabriel Fleming, and Dennis Stone pursuant to CCP §
473(b). The court orders Defendants to file their proposed
pleading to be filed within 10 days of the date of this ruling.
Background
Plaintiff
Five & Six Logistics, Inc. filed this action on April 3, 2023. Plaintiff
filed a First Amended Complaint (FAC) on May 5, 2023 against defendants Network
Logistics Inc., Network Logistics Transportation, LLC, Gabriel Fleming, and
Dennis Stone, alleging causes of action for (1) Breach of Written Contact; (2) Breach
of Implied Contract; (3) Common Count – Open Book Account; (4) Common Count – Account
Stated; and (5) Common Count – Goods and Services Rendered. The FAC alleges
Defendants failed to pay for Plaintiff’s trucking services, performed to and
from the Port of Long Beach for Defendants’ various clients. (See FAC, ¶¶ 13-26.)
Defendants
Network Logistics Inc., Network Logistics Transportation, LLC, Gabriel Fleming,
and Dennis Stone filed this motion to set aside default on November 2, 2023. Plaintiff
filed an opposition on February 1, 2024. Defendants replied on February 13,
2024.
Legal Standard
CCP § 473(b)
states, in relevant part: “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. . . Notwithstanding any other
requirements of this section, the court shall, whenever an application for relief
is made no more than six months after entry of judgment, is in proper form, and
is accompanied by an attorney's sworn affidavit attesting to his or her mistake,
inadvertence, surprise, or neglect, vacate any (1) resulting default entered by
the clerk against his or her client, and which will result in entry of a default
judgment, or (2) resulting default judgment or dismissal entered against his or
her client, unless the court finds that the default or dismissal was not in
fact caused by the attorney's mistake, inadvertence, surprise, or neglect.”
“Section 473 is often applied
liberally where the party in default moves promptly to seek relief, and the
party opposing the motion will not suffer prejudice if relief is granted.” (Elston v. City of Turlock (1985) 38
Cal.3d 227, 233, superseded by statute on other grounds as stated in Wilcox v. Birtwhistle (1999) 21 Cal.4th 973.)
“In such situations ‘very slight evidence will be required to justify a court
in setting aside the default.’ ” (Id.
at 233, quoting Berri v. Rogero
(1914) 168 Cal. 736, 740.) “Moreover, because the law strongly favors
trial and disposition on the merits, any doubts in applying section 473 must
be resolved in favor of the party seeking relief from default [citations.]” (Id. at 233.) “In order to qualify for
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.” (Id. at 234.)
Discussion
Defendants
Network Logistics Inc., Network Logistics Transportation, LLC, Gabriel Fleming,
and Dennis Stone move to set aside the defaults entered against them on July
14, 2023 (against Network Logistics Inc., Network Logistics Transportation,
LLC, and Gabriel Fleming) and August 1, 2023 (against Dennis Stone). Defendants
move pursuant to CCP § 473(b) on the ground the defaults were entered due to mistake,
inadvertence, surprise, or excusable neglect. Defendants contend they were
focused on trying to negotiate a resolution with Plaintiff out-of-court, thought
they could appear on behalf of the businesses, and tried to reach a stipulation
to set aside the defaults or advance the motion.
Plaintiff
Five & Six Logistics, Inc. contends Defendants could not have reasonably
believed settlement was likely or that no legal defense was necessary because
no communications existed between the parties until after defaults had already
been entered. Plaintiff argues it granted an extension for Defendants to answer
the complaint, but they still neglected to retain counsel and file answers. Plaintiff
asserts Defendants’ real reason for not hiring an attorney and filing answers
was the inability to pay legal fees. Plaintiff maintains Defendants failed to
file this motion within a reasonable time and that any extrinsic mistake did
not prevent them from answering the complaint.
The
court finds Defendants provide sufficient evidence to show the default entered
was due to their excusable neglect or inadvertence. Defendants provide statements
that they thought a reasonable possibility existed to resolve Plaintiff’s
claims without needing to hire a lawyer and participate in expensive
litigation. (Fleming Decl., ¶ 5; Stone Decl., ¶ 7.) Defendants believed a
settlement was likely and that Plaintiff did not need to keep pursuing court
action. (Id.) Given Defendants were actively trying to resolve the
dispute out-of-court so they would not need to incur legal expenses, it was reasonable
for Defendants to inadvertently or neglect to miss their deadline to file a
responsive pleading.
In
opposition, Plaintiff submit statements that no communications ever took place
regarding the settlement of this case. (See Paer Decl., ¶ 2; Lee Decl., ¶ 2.)
Plaintiff provide statements that they told Defendants what would happen if
they did not file answers in this case. (Paer Decl., ¶ 5.)
While
Plaintiff presents evidence at odds with Defendants’ statements, only “very slight
evidence” is required to justify setting aside a default. (See Elston, supra, 38 Cal.3d at 233.) And “because the law strongly
favors trial and disposition on the merits, any doubts in applying section
473 must be resolved in favor of the party seeking relief from default
[citations.]” (Id. at 233.) The court
finds the liberal policy of resolving actions on the merits supports a finding
in Defendants’ favor since they present at the very least slight evidence of
excusable neglect or inadvertence.
As to Plaintiff’s argument that Defendants
failed to file the motion within a reasonable time, the court finds it is without
merit. “A delay is unreasonable as a matter of
law only when it exceeds three months and there is no evidence to explain the
delay. [Citations.]” (Minick v. City of Petaluma (2016) 3 Cal.App.5th 15,
34.)
Here, defaults were entered against
defendants Network Logistics Inc., Network Logistics
Transportation, LLC, and Gabriel Fleming on July 14, 2023. A default was
entered against defendant Dennis Stone on August 1, 2023. Defendants served
this motion on November 1, 2023 and filed it on November 2, 2023, which were
well within the six-month deadline.
Defendants
present statements that they did not begin to realize what it meant to be in
default until they appeared in court for this case on August 2, 2023. (Fleming Decl.,
¶ 9; Stone Decl., ¶ 4.) Up until that time, Defendants mistakenly believed they
could appear in court and plead their case in person. (Id.) In the first
week of July 2023, Defendants contacted the court and a staff member informed
them that it would not be necessary to retain counsel to appear on behalf of
the Network Logistics companies. (Fleming Decl., ¶ 6; Stone Decl., ¶ 5.)
Defendants would have hired counsel had they known they could not speak for the
Network Logistics companies at court hearings. (Fleming Decl., ¶ 7; Stone
Decl., ¶ 6.)
Defendants
retained counsel on or before September 1, 2023. (See Gore Decl., ¶¶ 2-3.) Defendants’
counsel advised the court at the September 1, 2023 hearing that Defendants
planned to file a motion to set aside the defaults. (Id. at ¶¶ 3-4.) Defendants’
counsel promptly contacted Plaintiff’s counsel to discuss a stipulation to set
aside the defaults and the prospects of settlement. (Id. at ¶ 4.)
Defendants’ counsel then reserved the earliest possible hearing date for this
motion. (Id.) Defendants’ counsel engaged in communications with Plaintiff’s
counsel from September 16, 2023 to early October to attempt to stipulate to set
aside the defaults or to advance the hearing date for this motion. (See id.
at ¶¶ 6-7.) Plaintiff’s refused to stipulate to anything. (Id.)
Thus,
Defendants did not delay over three months without any explanation. Defendants
show they did not sit idly by in the litigation, as they appeared at the August
2, 2023 hearing believing they could represent their companies without counsel.
Defendants retained counsel shortly thereafter. Defendants’ counsel reasonably
attempted to reach a stipulation with Plaintiff’s counsel to avoid unnecessary motion
practice or to expeditiously resolve the matter. Defendants moved to set aside
default less than four months after entry. The evidence do not show Defendants
delayed over three months without explanation.
The court
therefore GRANTS Defendants’ motion to set aside default. The court hereby
sets aside and vacates the defaults entered against Network
Logistics Inc., Network Logistics Transportation, LLC, Gabriel Fleming, and
Dennis Stone
pursuant to CCP § 473(b). The court orders Defendants to file
their proposed pleading to be filed within 10 days of the date of this ruling.
It
is so ordered.
Dated:
February 21, 2024
_______________________
ROLF M. TREU
Judge of the
Superior Court