Judge: Michael Small, Case: 24STCV03168, Date: 2025-01-03 Tentative Ruling

Case Number: 24STCV03168    Hearing Date: January 3, 2025    Dept: 57

On February 6, 2024, Dianne Galindo (“Plaintiff”) sued multiple Defendants alleging violations of various provisions of the wage and hour laws in the California Labor Code.  Four corporate Defendants were named in Plaintiff’s complaint:  Lacausa, LLC (“Lacausa”); Amber James Apparel LLC (“AJA”); The Jules Hartley Corporation (“JHC”); and Gredale PPE, Inc. (“Gredale”).  The complaint also named two individual Defendants: Greg Lorber (“Lorber”) and Lee Hirsch (“Hirsch”).  None of the Defendants timely responded to the Plaintiff’s complaint.  At Plaintiff’s request, the Clerk of the Court entered defaults on the follow dates: April 26, 2024 as to Lacausa and AJA; July 24, 2024 as to Hirsch and Lorber; and September 9, 2024 as to JHC and Gredale.

Pending before the Court is the joint motion filed by all of the Defendants pursuant to Code of Civil Procedure Section 473(b) to vacate the Clerk’s entry of defaults against them.  The Court is denying the Defendants’ motion.

Section 473(b) contains both discretionary and mandatory provisions regarding relief from defaults. (Noceti v. Whorton (2014) 224 Cal.App.4th 1062, 1065-1066.)  Defendants’ motion here is based on the discretionary relief provision, which states 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.  Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.

Defendants contend in the motion that their failure to file timely responses to the Plaintiff’s complaint was based on excusable neglect -- they make no claim of mistake, inadvertence, or surprise.  In turn, Defendants say that this excusable neglect was based on their inability in a timely fashion to raise capital to retain counsel to defend them in this action.

As a threshold matter, the Court finds that Defendants’ motion is untimely as to Lacausa and AJA.  The defaults against those two entities were entered on April 26, 2024.  The motion for relief from default was filed on November 22, 2024.  That is more than six months after the entry of the defaults against Lacausa and AJA and hence beyond the deadline set forth in Section 473(b).

Putting aside the untimeliness of the motion as to Lacausa and AJA, the Defendants have failed to establish excusable neglect justifying relief from the defaults.  As Plaintiff correctly points out her in opposition to the Defendants’ motion, a claim of an inability to hire counsel due to financial constraints does not necessarily constitute excusable neglect for purposes of Section 473(b).  Indeed, courts have broad discretion to deny Section 473(b) motions that are rooted on such claims.  (Carrasco v. Craft (1985) 164 Cal.App.3d 796, 806; Davis v. Thayer (1980) 113 Cal.App.3d 892, 905-906).  The Court is exercising that discretion here and rejecting Defendants’ financial constraint claim.

In any event, the declaration of Hirsch in support of the Defendants’ motion speaks only of the financial distress suffered by two of the Defendants, Lacausa and AJA.  Hirsch’s declaration says nothing as to the other Defendants’ (including Hirsch himself) ability/inability to afford to hire counsel to represent them.  Hirsch’s declaration says that the other Defendants (aside from Lacausa and AJA) should not have been sued in this action.  That may be true.  But that is not a basis for relief from default.

The Court also notes that Plaintiff’s counsel accommodated a request Hirsch made on behalf of all the Defendants in mid-March 2024 for more time to respond to the complaint. Hirsch and Plaintiffs’ counsel agreed that the time to respond would be extended to April 12, 2024.  That deadline came and went, and Defendants did not respond to the complaint as agreed.  Nor did Hirsch or any of the other Defendants respond to Plaintiff’s counsel outreach to Hirsch on April 22, 2024 stating that Plaintiffs would proceed to seek defaults within a few days in light of the Defendants’ failure to respond by the April 12, 2024 deadline.  It was not until mid-October 2024, after the defaults had been entered, that Hirsch contacted Plaintiffs’ counsel to request that the Plaintiff stipulate to lifting the defaults, which Plaintiff declined to do.  That half-year of silence on the Defendants’ part undermines their claim of excusable neglect.

The Court is not reaching Plaintiff’s alternative argument that the Defendants’ motion should be denied on the ground that the proposed answer the Defendants submitted along with the motion is not sufficiently verified to match up with the Plaintiff’s verified complaint.