Judge: Michael Small, Case: 22STCV10525, Date: 2024-08-15 Tentative Ruling

Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.

Case Number: 22STCV10525    Hearing Date: August 15, 2024    Dept: 57

The Court is denying the motion of Defendant MAD Construction & Turnarounds ("MAD") for an order under Code of Civil Procedure Section 473(b) to set aside the clerk's default entered against it following the Court's decision to strike MAD's answer to the Plaintiff's complaint in this action .   

MAD is a corporation.  Corporations cannot represent themselves in litigation.   A corporate defendant that is self-represented in litigation is subject to having the court strike its answer and a default entered against it.   MAD found itself self-represented in this case after the Court on February 26, 2024 granted the motion of its counsel to be relieved from representing MAD.   The Court set an order to show cause hearing for March 22, 2024 as to the striking of MAD's answer if it did not have new counsel representing it as of that date.   MAD failed to appear at the March 22, 2024 hearing.  As a result, the Court entered an order striking MAD's answer.  Subsequently, on May 1, 2024, the Clerk entered a default against MAD.   As of June 10, 2024, MAD no longer was self-represented: on that day,  MAD's current counsel filed a substitution of attorney stating that counsel was representing MAD.  With its new counsel on board, MAD filed the motion to set aside the default on June 24, 2024.

The provision of Section 473(b) on which MAD relies in its motion states, in pertinent part, as follows: "The court may, upon any terms as may be just, 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."  Granting relief under this provision is discretionary.  

MAD acknowledges that its previous counsel sought to be relieved from representing MAD because MAD had failed to pay counsel's bills, and that this led to MAD being in the impermissible position of a  corporate defendant without an attorney. MAD contends that the predicament in which it found itself was the result of inadvertence, surprise, or excusable neglect within the meaning of Section 473(b).  The Court disagrees.  MAD's failure to pay its counsel's bills was not the result of neglect.  It was intentional.  To be sure, MAD  says it did not pay its counsel's bills because it could not afford to do so at the time.  The Court sympathizes with MAD's plight.  The problem for MAD, however, is that a defendant's awareness of the fact that the defendant's financial condition will affect its  ability to conduct litigation is not excusable neglect for purposes of Section 473(b).  (Davis v. Thayer (1980) 113 Cal.App.3d 892, 905-906.)   

After its counsel was relieved, MAD was afforded an opportunity to find new counsel.  MAD could have appeared pro per at the order to show cause hearing on March 22, 2024 through its principal Guillermo Madrigal (who also is a Defendant in this case) and asked the Court to hold off striking MAD's answer so as to give MAD more time to find new counsel.  But neither MAD nor Madrigal bothered to appear at the March 22, 2024 hearing; as a result of their non-appearance, the Court entered an order striking MAD's answer.  The record before the Court indicates that the decision of MAD and Madrigal not to appear at the March 22, 2024 was intentional, not the product of excusable neglect.

At the hearing today, the Court will discuss with counsel for MAD, who also is representing Madrigal, whether the case can proceed to trial on Plaintiff's claims against Madrigal individually as scheduled on September 30, 2024.