Judge Michael E. Whitaker, Case Number: 23SMCV06064, Date: 2024-06-17 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV06064, Date: 2024-06-17 Tentative Ruling

MOVING PARTIES Defendants Aleksandar Sasha Poparic; Immobilium, Inc.; Cali Miners, Inc.; and Helvetia Holdings Group, LLC

On December 29, 2023, Plaintiffs Nektarios Zafeiris and Emily Aspiotis (“Plaintiffs”) filed suit against Defendants Aleksandar Sasha Poparic (“Poparic”); Immobilium, Inc. (“Immobilium”); Cali Miners, Inc. (“Cali”); and Helvetia Holdings Group, LLC (“Helvetia”) (together, “Defendants.”)

The proofs of service indicate Poparic was personally served with the summons and complaint on January 8, 2024; Immobilium was personally served on January 17 and Helvetia was personally served on January 19, via Poparic, their agent for service of process; and Cali was served by substitute service on January 8, by leaving the papers with the manager of CMRA Mail & More and mailing a copy thereafter.

Default was requested and entered against all Defendants on March 4, 2024. On April 19, 2024, Defendants moved ex parte to set aside their defaults, which Plaintiffs opposed on procedural grounds. Defendants also seek $2,700 in attorneys’ fees incurred in bringing the instant motion following Plaintiff’s refusal to stipulate to set aside the defaults. At the April 22 ex parte hearing, the Court found no affirmative showing of irreparable harm or immediate danger to justify ex parte relief, and continued the hearing to June 17, with opposition and reply briefing due in accordance with Code of Civil Procedure section 1005.

Plaintiffs have since filed a substantive opposition to Defendant’s motion and Defendants have replied.[1]

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.”

Defendants contend that when Poparic, who is the CEO of Immobilium and Cali and is a managing member of Helvetica (Poparic Decl. ¶ 1), received the January 30, 2024 Notice of Case Management Conference giving a CMC date of May 1, 2024, he mistakenly believed that May 1, 2024 was Defendants’ deadline to file a response to the Complaint. (Poparic Decl. ¶ 3.)

Plaintiffs counter that Poparic’s purported mistake was not reasonable, because he was personally handed the summons and complaint at least three times in January, so that does not explain why he waited until March, when he was served with a copy of the Notice of Case Management Conference to form an opinion about the responsive pleading date, especially where, as here, Poparic has been involved in at least ten other civil litigation matters in Los Angeles since 2007. Plaintiffs also argue that as CEO, he had an obligation to disclose the lawsuit to Cali’s board of directors, which includes its corporate counsel. Moreover, Plaintiffs contend they informed Poparic by letter on September 17, 2023 about the prospect of this litigation, followed up by emails and telephone calls until October 25, 2023, when Poparic stopped responding, and a second letter on December 5, 2023, alerting Poparic of his duty to refrain from destroying evidence.

The Court does not know why Plaintiffs indicate Poparic was served with the Notice of Case Management Conference statement in March, as the proof of service indicates it was served by mail on January 26, 2024. Thus, Poparic personally received 3 copies of a summons and complaint on different days throughout January (and possibly a fourth copy via mail on behalf of Cali), the last of which was served on January 19. Approximately a week later, Poparic then received the notice of case management conference, which indicates twice on the caption page, as well as in the body of the notice, that a hearing has been scheduled for May 1, 2024.

It is therefore understandable how Poparic, who is not himself an attorney, may have become confused about his responsive pleading obligations, in light of the repeated service of process and other documents upon him, and the clear May 1, 2024 date that stood out among the paperwork. This is true even though Poparic may have known that this litigation was forthcoming and that Poparic has been previously involved in other litigations. Finally, Plaintiffs offer only speculation that Poparic timely disclosed the litigation to in-house counsel for Cali.

Therefore, Defendants have demonstrated that the entry of default against them was a result of Poparic’s reasonable mistake.

Defendants seek recovery of their reasonable legal fees and costs incurred in bringing this motion pursuant to Code of Civil Procedure section 473, subdivision (b) which provides in relevant part:

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. The court shall, whenever relief is granted based on an attorney's affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.

Here, the authority cited by Defendants in support of their request is inapplicable. That provision would have afforded Plaintiffs as the opposing parties to seek reasonable legal fees and costs if the defaults were set aside because of counsel for Defendants’ “affidavit of fault.” But that scenario is not present; in particular, Brian P. Ballo, counsel for Defendants, does not advance an “attorney affidavit of fault.” In fact, Ballo does not attest to any fault on his part which led to the defaults being entered. (See Declaration of Brian P. Ballo, ¶¶ 1-4.) And because Defendants advance no other authority, the Court denies the Defendants’ request for attorneys’ fees.

For the reasons stated, the Court grants in part and denies in part Defendants’ motion to set aside the defaults. The Court orders the defaults entered against Defendants to be set aside, and denies Defendants’ request for attorneys’ fees.

Further, the Court orders Defendants to file and serve Answer(s) to the Complaint on or before July 1, 2024, and continues the Case Management Conference to August 21, 2024 at 8:30 A.M. in Department 207. All parties shall comply with California Rules of Court, rules 3.722, et seq., regarding Initial and Further Case Management Conferences. In particular, all parties shall adhere to the duty to meet and confer (Rule 3.724) and to the requirement to prepare and file Case Management Statements (Rule 3.725).

[1] The Court does not consider Defendants’ reply evidence, as it deprives the opposing party of a fair opportunity to respond. (San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 316 [“due process requires a party be fully advised of the issues to be addressed and be given adequate notice of what facts it must rebut in order to prevail”]; see also Wall Street Network Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171.)