Judge Michael E. Whitaker, Case 20STCV30342 2022-10-14 Tentative Ruling

Judge: Michael E. Whitaker, Case: 20STCV30342, Date: 2022-10-14 Tentative Ruling

PLEASE NOTE: Parties are encouraged to meet and confer concerning this tentative ruling to determine if a resolution may be reached. If the parties are unable to reach a resolution and a party intends to submit on this tentative ruling, the party must send an email to the Court at sscdept32@lacourt.org indicating that party’s intention to submit. The email shall include the case number, date and time of the hearing, counsel’s contact information (if applicable), and the identity of the party submitting on this tentative ruling. If the Court does not receive an email indicating the parties are submitting on this tentative ruling and there are no appearances at the hearing, the Court may place the motion off calendar or adopt the tentative ruling as the order of the Court. If all parties do not submit on this tentative ruling, they should arrange to appear in-person or remotely (which is highly encouraged). Further, after the Court has posted/issued a tentative ruling, the Court has the inherent authority to prohibit the withdrawal of the subject motion and adopt the tentative ruling as the order of the Court.

Defendant Minghua Wang dba Minghua Laundry (“Defendant”) moves to set aside the Clerk of the Court’s entry of default on July 20, 2021, and the default judgment entered against Defendant on April 18, 2022. Plaintiff Fang Li (“Plaintiff”) opposes the motion and Defendant replies to the opposition.

At the hearing on September 9, 2022, the Court continued the hearing to permit the parties to submit supplemental points and authorities on the following issues: (1) whether the July 20, 2021 entry of default regarding Defendant is void or voidable because a statement of damages was not filed or served before the entry of default, and (2) whether the affidavit of attorney fault grants the relief sought by Defendant under Code of Civil Procedure section 473.

“[D]ue process requires notice to defendants, whether they default by inaction or by wilful obstruction, of the potential consequences of a refusal to pursue their defense. Such notice enables a defendant to exercise his right to choose—at any point before trial, even after discovery has begun—between (1) giving up his right to defend in exchange for the certainty that he cannot be held liable for more than a known amount, and (2) exercising his right to defend at the cost of exposing himself to greater liability. To this end, . . . , ‘The rules governing default judgment provide the safeguards which ensure that defendant's choice is a fair and informed one.’” (Greenup v. Rodman (1986) 42 Cal.3d 822, 829.)

To that end, Code of Civil Procedure section 425.11 provides in pertinent part: “When a complaint is filed in an action to recover damages for personal injury or wrongful death, the defendant may at any time request a statement setting forth the nature and amount of damages being sought. The request shall be served upon the plaintiff, who shall serve a responsive statement as to the damages within 15 days. In the event that a response is not served, the defendant, on notice to the plaintiff, may petition the court in which the action is pending to order the plaintiff to serve a responsive statement. If no request is made for the statement referred to in subdivision (b), the plaintiff shall serve the statement on the defendant before a default may be taken.” (Code Civ. Proc., § 425.11, subds. (b)-(c), emphasis added.)

And “a plaintiff's . . . failure to give formal notice of the amount of money damages it seeks constitutes a critical defect in the proceedings. The clerk or judge has no authority to enter a default unless and until formal notice is given. And failure to give formal notice may deprive a defendant of due process. For these reasons, a default entered without formal notice of the amount or other relief or amount sought is invalid.” (Schwab v. Southern California Gas Co. (2004) 114 Cal.App.4th 1308, 1324-1325, citations omitted (hereafter Schwab).) But “by its terms section 425.11 requires that a plaintiff personally serve on defendant a statement setting forth the nature and amount of damages being sought; it does not require the statement to be filed with the court.” (Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1147, disapproved of on other grounds by Lewis v. Ukran (2019) 36 Cal.App.5th 886.)

Here, as set forth in the procedural history of this action, Plaintiff served the Statement of Damages on Defendant on October 21, 2020 and filed proofs of service regarding the service of the Statement of Damages on March 4 and November 12 of 2021. Thus, from the record, Plaintiff afforded Defendant due process by serving the Statement of Damages before the default was entered against Defendant on July 20, 2021. Plaintiff failure to file the Statement of Damages before the entry of default is of no consequence.

Thus, based upon the requisite service of the Statement of Damages before the entry of default and default judgment against Defendant, the Court finds that the neither the default nor the default judgment void or voidable as a matter of law.

Code of Civil procedure section 473 “includes a discretionary provision, which applies permissively, and a mandatory provision, which applies as of right.” (Minick v. City of Petaluma (2016) 3 Cal.App.5th 15, 25 (hereafter Minick).) “Section 473 is a remedial statute to be “applied liberally” in favor of relief if the opposing party will not suffer prejudice. 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. Unless inexcusable neglect is clear, the policy favoring trial on the merits prevails.” (Minick, supra, 3 Cal.App.5th at p. 24 [cleaned up].)

The party or the legal representative must seek such relief “within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Code Civ. Proc., § 473, subd. (b); see Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980 [“because more than six months had elapsed from the entry of default, and hence relief under section 473 was unavailable”]; People v. The North River Ins. Co. (2011) 200 Ca.App.4^th 712, 721 [motion for relief under section 473 must be brought “within a reasonable time, in no case exceeding six months”]). “The six-month limit is mandatory; a court has no authority to grant relief under section 473, subdivision (b), unless an application is made within the six-month period.” (Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 333, 340, citations omitted.)

Defendant filed this motion on June 7, 2022, which is ten months and eighteen days after the Clerk of the Court’s entry of default. Accordingly, the Court finds Defendant’s motion to set aside the Clerk of the Court’s entry of default is untimely regarding discretionary relief under Section 473.

And because Defendant’s motion is untimely with respect to the Clerk of the Court’s entry of default, the Court is thus unable to set aside the default judgment entered against Defendant despite Defendant’s motion being timely in that regard. (See Pulte Homes Corp. v. Williams Mechanical, Inc. (2016) 2 Cal.App.5th 267, 273 [finding that where a motion to set aside default and default judgment is untimely as to the default but still timely as to the default judgment, a court cannot set aside a default judgment under Code of Civil Procedure section 473 “because that would be ‘an idle act’”].)[1]

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

(Code Civ. Proc., § 473, subd. (b), emphasis added.) Here, the Court entered the default judgment against Defendant on April 18, 2022 and Defendant filed his motion on June 7, 2022. Thus, with respect to the relief sought by Defendant under the mandatory provisions of Section 473, the Court finds that Defendant’s motion is timely. (See, e.g., Sugasawara v. Newland (1994) 27 Cal.App.4th 294 [six-month limitation period for relief from default based on attorney's neglect commences at time default judgment is rendered, rather than earlier when default is entered].)[2]

“In considering whether the trial court properly denied relief under section 473(b), the first question is the sufficiency of defendants' showing of attorney fault, if believed, to trigger the mandatory relief provisions of that statute.” (Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868, 896, disapproved on other grounds by Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830 (hereafter Standard).) “Under section 473(b), a party is entitled to relief from a default and resulting judgment whenever, on timely application for relief, his attorney ‘attest[s] to his or her mistake, inadvertence, surprise, or neglect’ in connection with the default or the judgment.” (Ibid.)

In Standard, counsel for the defendants attested that he believed the service of the summons on defendants was defective and informed defendants that they were not required to answer the summons under the laws of the United States. Defense counsel also did not advise the defendants to take any affirmative action, for example move to quash the service of the summons. Defense counsel also indicated that he expected to “receive notice of any application for entry of default before default was entered so that we could respond.” “He also acknowledged that he was responsible for advising defendants in connection with, and preparing, the first motion for relief from the default; that in doing so he “believed that the Court would set aside any default because of an invalid service of process”; and that he omitted “any argument showing that there was a ‘mistake, inadvertence, surprise, or excusable neglect’ in WEC and Winbond Israel's motions.” Although he did not separately point it out, he also indisputably omitted from defendants' first motion any invocation of the mandatory relief provisions of section 473(b), and the required showing to support such an invocation.” (Standard, supra, 179 Cal.App.4th at p. 897.)

After considering the record before the trial court, the appellate court held that “Counsel's mistakes, in contrast, entitled them to relief . . . . [defense counsel's] affidavit and the record as a whole overwhelmingly established that the default and ensuing judgment were the products of attorney fault.” (Standard, supra, 179 Cal.App.4th at p. 900.)

Further, “[t]he court's determination of whether the default was caused by the attorney's mistake, inadvertence, surprise, or neglect is in part a credibility determination. Credibility is an issue for the fact finder, we do not reweigh evidence or reassess the credibility of witnesses. When the evidence gives rise to conflicting reasonable inferences, one of which supports the findings of the trial court, the trial court's finding is conclusive on appeal.” (Cowan v. Krayzman (2011) 196 Cal.App.4th 907, 915 [cleaned up].)

Here, Defendant advances the Declaration of Robert Hsu (“Hsu”) to support his request for relief under Section 473. Hsu’s states verbatim as follows:

“I was retained by Minghua Wang defendant in this action for the limited purpose of trying to resolve this case through settlement. As such, I have personal knowledge of the matters stated herein. If called to testify, I could and would competently testify as follows:

1. My representation consisted of a phone call to plaintiff’s counsel William C. Kersten, Esq. and return call from Mr. Kersten, Esq. I sent an email to Mr. Kersten, on or about February 2, 2021. No response to my email was ever received by my office from Mr. Kersten.

2. Plaintiff’s counsel never sent my office any correspondence or communications that that a statement of damages had been served on October 21, 2020.

3. I never received any communications, correspondence, or notice from plaintiff’s counsel that defaulted had been entered on July 8, 2021, for zero dollars.

4. I never received any communications, correspondence, or notice that default had been attempted to be entered on December 27, 2021, in the amount of $1,029,868.00, including $500,000 in punitive damages.

5. I never received any communications, correspondence, or notice that default judgement had been entered in the amount of $502,958.00 on April 18, 2022.

6. Mr. Wang could not afford to retain me to fully defend this case. I did not receive any notices that plaintiff was continuing to pursue this case after my email. As such, I assumed that plaintiff’s counsel had abandoned this case.”

For the Court’s assessment of whether Defendant is entitled to mandatory relief based upon his attorney’s mistake, inadvertence, surprise, or neglect, the Court determines that paragraph 6 of Hsu’s declaration is central. On one hand, Hsu claims that he assumed Plaintiff abandoned the action because he did not receive any notices after his email to counsel for Plaintiff. But on the other hand, Hsu claims Defendant could not afford to retain Hsu to fully defend the action. Hsu’s statements are in conflict and begs the question: was the entry of default and entry of default judgment because Hsu mistakenly assumed Plaintiff abandoned his case or because Defendant could not pay for Hsu’s services? The former may justify relief but the latter certainly would not.

Further, Hsu fails to detail the purported phone call between himself and counsel for Plaintiff. Was there anything stated during that conversation which would have led Hsu to suppose that Plaintiff intended to abandon the action?

More important, Hsu fails to attach a copy of the purported email he sent to counsel for Plaintiff. Yet, Plaintiff attaches what may be the email Hsu references in paragraph 1 of his declaration. In that email, Hsu states in pertinent part: “My office has been retained for the limited purpose on behalf of Ming Hua Laundry to discuss settlement options. I understand your client claims injuries and has filed for a Request for Entry of Default. In the interest of resolution to avoid unnecessary costs of litigation, please provide your demand on your client's injuries as well as a description of the injuries and any documentations to support the claims.” (See Plaintiff’s Supplemental Opposition, Declaration of William C. Kersten, ¶¶ 3-4, Exhibit 4, emphasis added.) As set forth in that email, Hsu knows that Plaintiff has requested entry of default against Ming Hua Laundry (which is Defendant doing business as) which would signify to Hsu, or to any reasonable attorney similarly situated, that Plaintiff did not intend to abandon the action. In fact, the Court finds that the opposite is inferred from that email: Plaintiff intended to prosecute the action by default if warranted.

In short, the Court finds that Hsu’s statements as set forth in the declaration to lack clarity as to the reasons why he did not take action on behalf of Defendant to forestall the entry of default and entry of default judgment, and in turn, the Court finds Hsu’s declaration to lack credibility as to whether he was mistaken or surprised or whether his actions or inaction amounted to inadvertence or neglect. Therefore, the Court determines that Defendant is not entitled to mandatory relief under Section 473 based on an attorney affidavit of fault.

Accordingly, the Court denies Defendant’s motion to set aside default and default judgment for the reasons stated above. The Clerk of the Court shall provide notice of the Court’s ruling.

[1] The Court of Appeal’s rationale in Pulte Homes was that “[i]f the judgment were vacated, it would be the duty of the court immediately to render another judgment of like effect, and the defendants, still being in default, could not be heard in opposition thereto[.]” (Pulte Homes Corp., supra, 2 Cal.App.5th 267 at p. 273; but see Schwab, supra, 114 Cal.App.4th at p. 1320 [“A prematurely entered default is invalid, and any judgment entered after an invalid default is also invalid”], disapproved on other grounds by Sass v. Cohen (2020) 10 Cal.5th 861.)

[2] Under Code of Civil Procedure section 473, relief from a default judgment based upon an attorney’s affidavit of fault requires a trial court to also vacate the underlying entry of default. (See Sugasawara v. Newland, supra, 27 Cal.App.4th at pp. 295-296.)

DEPARTMENT	32
HEARING DATE	September 9, 2022 – Continued to October 14, 2022
CASE NUMBER	20STCV30342
MOTION	Motion to Set Aside Default Judgment
MOVING PARTY	Defendant Minghua Wang dba Minghua Laundry
OPPOSING PARTY	Plaintiff Fang Li