Judge: Michael P. Linfield, Case: 21STCV26182, Date: 2023-03-22 Tentative Ruling

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Case Number: 21STCV26182    Hearing Date: March 22, 2023    Dept: 34

SUBJECT:         Motion to Set Aside and Vacate Entry of Default, Motion for Dismissal, and/or Request to Schedule Hearing Date

Moving Party:  Defendant Avida Naturals, LLC

Resp. Party:    Plaintiff Robert Manquero

The Motion is GRANTED in part. The default on Defendant Avida Naturals, LLC is SET ASIDE. The Motion is DENIED regarding all other requests for relief.

Defendant Avida Naturals, LLC shall have 10 days from the issuance of this Order to file its Response.

BACKGROUND:

On July 15, 2021, Plaintiff Robert Manquero filed his Complaint against Defendants Avida CBD and Avida Naturals, LLC regarding causes of action arising from Plaintiff’s use of Defendants’ cannabis products.

On January 6, 2022, by request of Plaintiff, the Clerk’s Office entered default on Defendant Avida Naturals, LLC (“Defendant”). 

On October 7, 2022, Defendant filed its Motion to Set Aside and Vacate Entry of Default, Motion for Dismissal, and/or Request to Reschedule Hearing Date.

On February 22, 2023, Plaintiff filed his Opposition. Plaintiff concurrently filed his Request for Judicial Notice.

On March 2, 2023, Defendant filed its Reply.

On March 3, 2023, Plaintiff filed his Objection to Defendant’s Reply.

ANALYSIS:

I.           Evidentiary Objections

Plaintiff objects to Defendant’s Reply, arguing: (1) that the Reply improperly attempts to raise new arguments and new evidence not set forth in the moving papers; (2) the Declaration of Jason Gonzalez attached to the Reply contains hearsay statements and sets forth documents that lack authentication, are without foundation, and impermissibly attempt to turn this into an evidentiary hearing; and (3) the item which Defendant requests be judicially noticed is not judicially noticeable pursuant to Evidence Code sections 452 and 453. (Objection, pp. 1:23–28, 2:1–8.)

The Court OVERRULES Plaintiff’s Objections.

II.        Request for Judicial Notice

Plaintiff requests that the Court take judicial notice of the following items:

(1)       Defendant Avida Naturals, LLC’s Statement of Information filed with the California Secretary of State and dated September 26, 2018;

(2)       Defendant Avida Naturals, LLC’s Statement of Information filed with the California Secretary of State and dated October 13, 2020;

(3)       Proof of Substituted Service filed in this matter; and

(4)       Proof of Service by Personal Service filed in this matter.

Judicial notice is DENIED to all items. Judicial notice is denied to the first two items because: (1) Plaintiff did not attach the documents to the Request for Judicial Notice; and (2) these items are irrelevant to the Court’s analysis. (Evid. Code, § 453, subd. (b).) Judicial notice is denied as superfluous to the last two items. Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).)

III.     Legal Standard

“When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.” (Code Civ. Proc., § 473.5, subd. (a).)

It has been long held that “the reference in Code of Civil Procedure section 473.5 to ‘actual notice’ means genuine knowledge of the party litigant and does not contemplate notice imputed to a principal from an attorney’s actual notice.” (Rosenthal v. Garner (1983) 142 Cal.App.3d 891, 895.)

“A notice of motion to set aside a default or default judgment and for leave to defend the action shall designate as the time for making the motion a date prescribed by subdivision (b) of Section 1005, and it shall be accompanied by an affidavit showing under oath that the party’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect. The party shall serve and file with the notice a copy of the answer, motion, or other pleading proposed to be filed in the action.” (Code Civ. Proc., § 473.5, subd. (b).)

“Upon a finding by the court that the motion was made within the period permitted by subdivision (a) and that his or her lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect, it may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action.” (Code Civ. Proc., § 473.5, subd. (c).)

IV.       Discussion

Defendant moves the Court to: (1) vacate entry of default on Defendant due to lack of actual notice; (2) confirm that no entry of default has been made against Non-Party Avida LLC; (3) order dismissal of all Defendants from this action; and (4) reschedule the hearing that is currently scheduled for January 12, 2023. (Motion, p. 2:5–27.)

Three of these issues can be quickly disposed of. First, the Clerk’s Office only entered default on Defendant Avida Naturals, LLC — not Defendant Avida CBD (which, according to Defendant, does not exist) or Non-Party Avida LLC. This is not something that Defendant needs an order to confirm. Second, the Court denies the Motion regarding dismissal of Defendants from this action. Defendant did not cite any law regarding that issue, and Defendant merely argues that it should be dismissed because it did not sell the product at issue. Aside from being procedurally inappropriate to argue for dismissal when Defendant is currently in default, Defendant has not shown at this time that dismissal is appropriate. Finally, it is a moot issue to reschedule a hearing that was heard more than two months ago.

The remaining issue is whether the Court should vacate the entry of default.

Defendant argues that it did not have actual notice of this matter until August 16, 2022 and provides a declaration in support of this point. (Motion, ¶¶ 16–18, 20; Motion, Decl. Gonzalez, ¶¶ 3–10.) Further, Defendant was not aware of the entry of default until September 2022. (Motion, Decl. Gonzalez, ¶ 6; Motion, Decl. Miller, ¶ 3.)

Plaintiff opposes the Motion, arguing: (1) that the moving papers fail to demonstrate good cause to set aside the default judgment entered against Defendant; and (2) that Defendant had actual notice of the lawsuit. (Opposition, p. 8:2–3, 8:27–28.) As evidence of the service that had been made prior to the entry of default, Plaintiff points to the substitute service made on August 24, 2021 with the operator of a private mailbox (and a copy being mailed to Defendant via first class mail) and to the service made on Defendant’s authorized agent for service of process, Zoomlegal.com. (Id., p. 5:7–27.) Plaintiff ultimately argues that Defendant has been willfully ignorant and inexcusably neglectful, that such conduct does not justify setting aside the default, and that the service on the agents constituted actual service. (Id. at 8:17–18, 11:10–15.)

Defendant reiterates its arguments in its Reply.

As an aside, the Court notes that Plaintiff is incorrect when it argues that default judgment has been entered. At this time, the Court has not issued a judgment in this matter. The only thing that has occurred is that default has been entered on Defendant Avida Naturals, LLC.

Onto the substance of the matter, the Court agrees with Defendant’s arguments.

For the purposes of Code of Civil Procedure section 473.5, the phrase “actual notice to a party” literally means actual notice to a party — and it does include notice imputed to a party. (Accord Rosenthal, supra, at 895.)

Defendant has provided evidence through its declarant, Jason Gonzalez, that it did not have actual notice of the litigation until August 16, 2022. Similarly, the evidence shows that Defendant did not have notice of the entry of default until September 2022, and Defendant moved the Court to set aside and vacate the default on October 7, 2022. It is immaterial to this analysis that Defendant was properly served prior to the entry of default on January 6, 2022.

The Motion is brought within a reasonable time because it has been less than two years since entry of default, and it has been less than 180 days after Defendant became aware of the default. (Code Civ. Proc., § 473.5, subd. (a).) The Motion also follows the statute’s affidavit requirement, as Jason Gonzalez declares that “this lack of actual notice in time to defend the action was not caused by our avoidance of service or inexcusable neglect.” (Code Civ. Proc., § 473.5, subd. (b).)

The evidence before the Court at this time supports a finding that Defendant did not have actual notice in time to defend the action and that this lack of notice was not caused by avoidance of service or inexcusable neglect.

        Further, “[i]t has always been the policy of the courts in California to resolve a dispute on the merits of the case rather than allowing a dismissal on technicality.”  (Harding v. Collazo (1986) 177 Cal.App.3d 1044, 1061 [Acting P.J. Lui, dis.].)  For that reasons, the courts “deem it preferable to apply our decisions in such a manner as to preserve, rather than foreclose, a litigant's day in court on the merits of his or her action.” (Sierra Club v. San Joaquin Local Agency Formation Com. (1999) 21 Cal.4th 489, 509.)

The Court GRANTS in part the Motion. The Court SETS ASIDE the default on Defendant Avida Naturals, LLC. The Court DENIES the Motion regarding all other requests for relief.

Defendant Avida Naturals, LLC shall have 10 days from the issuance of this Order to file its Answer and/or to make other filings in accordance with the Code.

V.          Conclusion

The Motion is GRANTED in part. The default on Defendant Avida Naturals, LLC is SET ASIDE. The Motion is DENIED regarding all other requests for relief.

Defendant Avida Naturals, LLC shall have 10 days from the issuance of this Order to file its Response.