Judge Michael E. Whitaker, Case Number: 24SMCV03825, Date: 2024-12-05 Tentative Ruling

Judge: Michael E. Whitaker, Case: 24SMCV03825, Date: 2024-12-05 Tentative Ruling

On August 8, 2024, Plaintiffs Sarah Kurtz (“Kurtz”) and Farid Yagoubi (“Yagoubi”) (together, “Plaintiffs”) filed suit against Defendants Elm Luxury Investment, LLC (“Elm”) and Araks Amirian (“Amirian”) (together, “Defendants”) alleging one cause of action for breach of contract.

Plaintiffs filed proofs of service indicating on August 12, Defendants were personally served via “Employee Diana” at “CT Corporation Inc.” who accepted service on behalf of both Defendants. Thereafter, the Court entered default against both Defendants on September 26, 2024.

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 the summons and complaint were sent from CT Corporation to VCORP Services, and Elm did not learn about the complaint until September 25, when VCORP finally provided a copy to Elm. (Rashidi Decl. ¶¶ 3-8.)

Further, Amirian did not learn about the complaint until Elm subsequently informed her of it. Although the proofs of service indicates Amirian was served at CT Corporation, Inc., Amirian has no affiliation with CT Corporation. (Amirian Decl. ¶¶ 2-5.)

The motion further indicates Defendants’ counsel contacted Plaintiffs, who are unrepresented by counsel, and requested that they stipulate to set aside the default, but Plaintiffs refused.

Therefore, in light of the fact that neither Defendant received actual notice of the summons and complaint until September 25, and the strong public policy to try cases on their merits,[1] the Court finds it appropriate to set aside the defaults entered on September 26.

For the foregoing reasons, the Court grants Defendants’ motion and orders the defaults entered against Defendants on September 26, 2024 set aside.

Defendants shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

[1] “Proceeding to judgment in the absence of a party is an extraordinary and disfavored practice in Anglo–American jurisprudence: The policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon a party, who, regardless of the merits of the case, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary.” (Au-Yang v. Barton (1999) 21 Cal.4th 958, 963 [cleaned up].)

Defendants demur to the complaint on the grounds that it fails to state facts sufficient to constitute a cause of action, and fails to allege whether the alleged contract is written, oral, or implied by conduct, pursuant to Code of Civil Procedure section 430.10, subdivisions (e) and (g), respectively.

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Here, Plaintiffs allege:

BC-1. On or about Feberuary [sic] 12th, 2024 the plaintiff established a trust (the Trust Agreement), designating the defendants as trustee. A true and correct copy of the Trust Agreement is attached hereto as Exhibit A. The Trust Agreement explicitly delineates the trustee’s duties to manage the trust assets for the plaintiffs benefits [sic], which includes ensuring the plaintiff’s housing, care, and overall well-being.

BC-2. The defendants breached their fiduciary duties by filing an Unlawful Detainer on February 28th, 2024. The defendants wrongfully initiated an eviction process against the plaintiff, thereby violating both the Trust Agreement and California laws.

BC-3. Plaintiff has performed all obligations to defendant except those obligations plaintiff was prevented or excused from performing.

BC-4. The defendants [sic] actions constitute a breach of fiduciary duty under California Probate Code §§ 16000-16015 and common law principles. The defendants [sic] eviction of the plaintiffs constitutes an unlawful detainer and a violation of California Civil Code § 1942.5. Plaintiffs were dragged into an unlawful eviction and Plaintiff’s inalienable rights were destroyed and damaged.

BC-6. Due to the defendants [sic] breach of fiduciary duties and wrongful eviction, the plaintiffs have suffered substantial damages, including Physical Harm: Deterioration of health conditions, including worsening diabetes and vision loss, due to stress and inadequate living conditions. Emotional Distress: Significant emotional and psychological harm to the plaintiffs and their children due to the unsafe living conditions and unlawful eviction.

Although Plaintiffs have not attached the purported contract as Exhibit A, the fact that the Complaint alleges that there exists a copy of the contract suggests the contract is written. Therefore, the Court overrules the demurrer pursuant to Code of Civil Procedure section 430.10, subdivision (g).

Further, “[t]o state a cause of action for breach of contract, it is absolutely essential to plead the terms of the contract either in haec verba or according to legal effect.” (Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239, 252.)

Here, the Complaint alleges that as trustee, Defendants owed “duties to manage the trust assets for the plaintiffs benefits [sic], which includes ensuring the plaintiff’s housing, care, and overall well-being” which Defendants allegedly breached by filing an unlawful detainer action to evict Plaintiffs from their home. Thus, for purposes of a demurrer, Plaintiffs have adequately alleged the required ultimate facts[1] – the existence of a contract and essential terms thereof, breach, causation, and damages – to state a cause of action for breach of contract.

For the reasons stated, the Court overrules Defendants’ Demurrer to the Complaint, and orders Defendants to file and serve an Answer to the Complaint on or before January 3, 2025.

Further, on the Court’s own motion, the Court continues the Case Management Conference from December 11, 2024 to March 3, 2025 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).

Defendants shall also provide notice of the Court’s orders and the notice with a proof of service forthwith.

[1] Ultimate facts are those “constituting the cause of action” or those upon which liability depends, e.g., duty of care, breach of the duty and causation (damages). (See Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “[T]he term ultimate fact generally refers to a core fact, such as an essential element of a claim. Ultimate facts are distinguished from evidentiary facts and from legal conclusions.” (Central Valley General Hosp. v. Smith (2008) 162 Cal.App.4th 501, 513 [cleaned up]; see also Rodriguez v. Parivar, Inc. (2022) 83 Cal.App.5th 739, 750–751 [“The elements of a cause of action constitute the essential or ultimate facts in a civil case”].)

DEPARTMENT	207
HEARING DATE	December 5, 2024
CASE NUMBER	24SMCV03825
MOTION	Demurrer to Complaint
MOVING PARTIES	Defendants Elm Luxury Investments, LLC and Araks Amirian
OPPOSING PARTY	none