Judge Michael E. Whitaker, Case Number: 23SMCV04878, Date: 2024-07-02 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV04878, Date: 2024-07-02 Tentative Ruling

MOVING PARTIES Defendants Hidden Sole Foundation; Hidden Sole; Bazar Trade, LLC; Darren Holms; Cameron Brooks; Obinna Okwara; and Chibuike Okwara

Plaintiff Wudasie Gorfu (“Plaintiff”) originally filed suit on October 17, 2023, alleging three causes of action for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; and (3) fraud against Defendant Hidden Sole Foundation and Does 1-20.

On February 20, 2024, Plaintiff filed a First Amended Complaint (“FAC”) on February 20, 2024, against Defendants Hidden Sole Foundation; Hidden Sole; Bazar Trade, LLC; Darren Holmes; Cameron Brooks; Obinna Okwara; and Chibuike Okwara (collectively, “Defendants”).

Default was entered against Defendant Hidden Sole Foundation on May 9, 2024, and the remaining Defendants on May 1, 2024.

Defendants now move to set aside the defaults entered against them. The motion is unopposed.

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.)

Per Code of Civil Procedure section 473, subdivision (b), a court may “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.”

(Code Civ. Proc., § 473, subd. (b).) “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.)

Defendants contend that Hidden Sole Foundation was served with the original complaint via substitute service on December 26, 2023, but believed their insurance company would litigate the matter on its behalf, and simply forwarded it to the insurance company. (Okwara Decl. ¶¶ 3-4, 11.) Once Defendants realized their insurance company was not representing them in this lawsuit, they “immediately” retained counsel on May 10, 2024. (Id. at ¶ 5.)

Upon retaining counsel, Defendants were informed that a FAC had been filed, adding additional Defendants who were supposedly served via substitute service on March 4, 2024, and defaults had been requested against them. (Id. at ¶ 6.) Defendants filed an Answer on May 13, 2024, but subsequently discovered that defaults had already been entered against them. (Id. at ¶¶ 9-10.)[1]

Defendants later came to learn that their employee, Daniel, was served with the summons and FAC on March 4, 2024, but did not inform anyone about the service, and instead put them in a drawer and then three days later traveled to Mexico for a family emergency and has not been heard from since. (Id. at ¶¶ 12.)

Therefore, Defendants have demonstrated that the defaults were entered as a result of their mistake, inadvertence, surprise, and/or excusable neglect.

For the foregoing reasons, the Court grants Defendant’s unopposed Motion to Set Aside Default and orders the defaults entered against Defendants on May 1 and May 9, 2024 set aside.

Further, on the Court’s own motion, the Court strikes Defendants’ Answer filed on May 13, 2024,[2] and orders Defendants to file and serve responses to the FAC on or before July 23, 2024.

[1] “The entry of a default terminates a defendant's rights to take any further affirmative steps in the litigation until either its default is set aside or a default judgment is entered.” (Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385. Further, the entry of default “[c]uts off the defendant's right to file pleadings and motions (other than a motion to set aside default under § 473), and it also cuts off the defendant's right to notices and the service of pleadings or papers.” (Bailey v. Citibank, N.A. (2021) 66 Cal.App.5th 335, 347, emphasis added.)

[2] “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436, subds. (a)-(b).)