Judge Michael P. Linfield, Case 20STCV38469 2022-10-25 Tentative Ruling

Judge: Michael P. Linfield, Case: 20STCV38469, Date: 2022-10-25 Tentative Ruling

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Case Number: 20STCV38469 Hearing Date: October 25, 2022 Dept: 34

SUBJECT: Motion for Sanctions to Strike Defendant MassGenie Inc.’s Answer and for Entry of Default

Moving Party: Plaintiff Matevosian Enterprises, Incorporated

Resp. Party: Defendant Bruce Watanabe

The Court GRANTS Plaintiff Matevosian Enterprises, Incorporated’s Motion to Strike, for Entry of Default, and for Sanctions. The Court STRIKES Defendant MassGenie, Inc.’s Answer. The Court ENTERS DEFAULT on Defendant MassGenie, Inc. The Court orders Defendant MassGenie, Inc. to pay Plaintiff $2,134.15 in attorney fees.

BACKGROUND:

On October 7, 2020, Plaintiff Matevosian Enterprises, Incorporated, d.b.a. Nationwide Distributor, filed its Complaint against Defendants MassGenie, Incorporated, Bruce Wantanabe, Sam Kim, and Dan Devries. The causes of action relate to an alleged breach of contract among the parties.

On September 3, 2021, Defendants filed their Answer.

On June 14, 2022, the Court granted Defendants’ counsels’ Motions to be Relieved as Counsel.

On September 14, 2022, Plaintiff filed its Motion for Sanctions to Strike Defendant MassGenie, Inc.’s Answer and for Entry of Default (“Motion to Strike, for Entry of Default, and for Sanctions”). Plaintiff concurrently filed its Proposed Order. On September 26, 2022, Plaintiff filed its Notice of Errata to the Motion.

On October 5, 2022, Defendant filed its Opposition to the Motion.

Plaintiff has not filed a reply or other response to the Motion.

On October 18, 2022, on the Court’s own motion, the Court continued Trial from October 31, 2022 to December 8, 2022.

ANALYSIS:

I. Legal Standard

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)¿

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and 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.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)¿

It is settled law that corporations cannot represent themselves in propria persona in court. (Merco Constr. Engineers, Inc. v. Municipal Court (1978) 21 Cal.3d.724, 730.) In addition, the trial court may strike or dismiss a pleading filed by an unrepresented corporation, although it should liberally and routinely grant the dismissed party leave to amend where the defect is reasonably capable of cure. (CLD Constr. Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) “The rule's pragmatic purpose of protecting against the distractions and potentially harmful results that can arise from the unlicensed practice of law will still be served because the court retains authority to dismiss an action if an unrepresented corporation does not obtain counsel within reasonable time.” (Id., at 1148.) Finally, the trial court may allow a corporation’s attorney to withdraw from representation, even if that would leave the corporation without representation. (Ferruzzo v. Superior Court (1980) 104 Cal.App.3d 501, 504.) “For the uncooperative corporate client who has not been willing to bring in new counsel, granting of the withdrawal motion will put extreme pressure on it to obtain new counsel of record for should it fail to do so it risks forfeiture of its rights through nonrepresentation.” (Id.)

II. Discussion

Plaintiff argues: (1) that Defendant MassGenie, Inc. is a corporate entity that has failed to secure representation as required by California law, (Motion, p. 6:2–4); (2) that MassGenie, Inc.’s failure to obtain new counsel “has, and will continue to, unnecessarily delay and hinder the Court’s and the parties’ efforts to litigate and resolve this matter”, (Id. at p. 7:21–23); (3) that the Court is authorized to issue terminating sanctions because MassGenie, Inc.’s noncompliance is solely the result of its own actions, (Id. at p. 9:19–24); (4) that Defendants still have not paid the $16,955.24 ordered of them after the Court set aside Defendants’ default, (Aroustamian Decl., ¶ 2); and (5) that Plaintiff’s Counsel has spent $2,134.15 in attorneys costs and fees on this motion (4 hours at $500.00 per hour on work related to the motion, and $134.15 in costs) (Aroustamian Decl., ¶ 11.)

Plaintiff moves the Court to: (1) strike Defendant MassGenie, Inc.’s Answer; (2) impose monetary sanctions on Defendant MassGenie, Inc.; (3) enter default against Defendant MassGenie, Inc.; (4) enter judgment in favor of Plaintiff; and (5) order Defendant MassGenie, Inc. to pay Plaintiff’s reasonable attorney fees and costs incurred bringing this Motion. (Motion, p. 10: 13–21.)

Defendant Bruce Watanabe, the CEO of Defendant MassGenie, Inc., filed an Opposition to the Motion. Defendant Watanabe avers:

“I have been attempting to retain counsel for Massgenie [sic] since the withdrawal of prior counsel. To date, I have been unsuccessful. I have spoken with several attorneys and believe I can retain an attorney to represent Massgenie. If for some reason, I am unable to retain an attorney for Massgenie, any relief that Plaintiff may receive would be adjudicated at trial, currently set for October 31, 2022.”

The Court notes that Defendant MassGenie has not opposed this motion (nor could it, since the corporate defendant is not represented).

Since the filing of the Opposition, on the Court’s own motion, the Court continued Trial from October 31, 2022 to December 8, 2022.

The Court granted Defendant MassGenie, Inc.’s Counsel’s motion to be relieved on June 14, 2022. More than four months have since passed, and trial has been continued in part due to Defendant MassGenie, Inc.’s failure to obtain new counsel.

The Court finds that an unreasonable amount of time has passed. (CLD Constr. Inc., supra, at 1148.) The Court strikes Defendant MassGenie, Inc.’s Answer for failure to obtain counsel and enter default against Defendant MassGenie, Inc.

The Court finds Plaintiff’s Counsel’s hours, hourly rate, and costs to be reasonable. The Court will order Defendant MassGenie, Inc. to pay Plaintiff’s reasonable attorney fees and costs in the amount of $2,134.15.

The Court will order a hearing for Defendant MassGenie, Inc. to show cause why default judgment should not be entered against it.

III. Conclusion