Judge: Monica Bachner, Case: 21STCV22955, Date: 2022-08-17 Tentative Ruling

Case Number: 21STCV22955    Hearing Date: August 17, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Cross-Defendant Crownwell Construction Inc.’s motion to set aside default is granted.  Cross-Defendant is to file and serve its proposed answer within 10 days.

Cross-Defendant Crownwell Construction, Inc. (“Crownwell”) moves for an order setting aside the May 24, 2022 default entered against it on the cross-complaint filed by Cross-Complainants and Defendants Fred Maidenberg (“Maidenberg”) and Larchmont Investment Properties, LLC (“Larchmont”) (collectively, “Cross-Complainants”) pursuant to C.C.P. §473(b). 

Evidentiary Objections

Cross-Complainants 8/4/22 evidentiary objection to the Declaration of Gregg A. Martin is sustained as to No. 1.

Background

On June 18, 2021, Plaintiffs Roni Efron (“Efron”) and 439 South Clark, LLC (“South Clark”) (collectively, “Plaintiffs”) filed their initial complaint against Larchmont, Maidenberg, as an individual and as trustee of the Maidenberg Family Trust (“MFT”), Fred Maidenberg, CPA (“MCPA”), Equity Sharing Investment Company (“Equity Sharing”), 1735 Taft LLC (“Taft LLC”), 1120 North Van Ness LLC (“Van Ness LLC”), 1243 Beachwood LLC (“Beachwood LLC”), 312 South La Peer Drive LLC (“La Peer LLC”), and Wilton Chimney Smoke I LLC (“Wilton LLC”) (collectively, “Defendants”).  Crownwell was not named as a party to the action.  On February 4, 2022, the Court overruled the demurrer to the complaint brought by Maidenberg and MCPA (collectively, “Maidenberg Defendants”) as to all causes of action except the 7^th cause of action, which Plaintiffs dismissed without prejudice.  The Court also overruled the demurrer filed by the Acquisition Entity Defendants.

          On February 25, 2022, the same date Defendants filed an answer to the complaint, Cross-Complainants filed a cross-complaint for money had and received and breach of contract against Crownwell and Efron (collectively, “Cross-Defendants”). On April 56, 2022, Cross-Complainants filed a proof of service of summons indicating that Crownwell had been served with summons on the Cross-Complaint on April 1, 2022, by personal service on Maurice Wainer, the agent for service of process.  On May 24, 2022, Cross-Complainants filed a request for entry of default as to Crownwell and default was entered on that same date. On June 8, 2022, Efron filed an answer to the cross-complaint. On June 14, 2022, Crownwell filed the instant motion to set aside default.

C.C.P. §473(b)

“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 made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken…”  (C.C.P. §473(b).)

As a preliminary matter, Crownwell’s motion is timely.  Crownwell filed the instant motion less than a month after entry of default against it, and accordingly, within the statute’s six-month deadline.  In addition, Crownwell submitted evidence suggesting it moved for relief within a reasonable time of discovering the default entered against it.  (Decl. of Martin ¶¶7-8.)

Crownwell met its burden of establishing its default was taken through mistake, inadvertence, surprise, and/or excusable neglect.  Specifically, Crownwell’s evidence suggests its default was taken as the result of the excusable neglect of the individuals responsible for maintaining Crownwell’s corporate status in their failure to timely address the fact Crownwell was a suspended corporation, preventing it from being able to file an answer to the cross-complaint without first curing its suspended status.  Crownwell submitted evidence that on May 19, 2022, Crownwell submitted an application for a certificate of revivor to the California Secretary of State and on May 23, 2022, Crownwell received a certificate of revivor, and its corporate status was changed to active and in good standing.  (Decl. of Martin ¶6, Exh. 4.)  As such, as of this date, Crownwell would have been able to file an answer to the cross-complaint; however, this is the date cross-complainants filed their entry of default against Crownwell.  The Court notes Crownwell does not dispute having been served with summons on the cross-complaint on April 1, 2022, at which time the evidence suggests Crownwell was a suspended corporation, unable to respond to the complaint.  Crownwell submitted evidence that on May 6, 2022, its counsel contacted Cross-Complainants’ counsel to, among other things, request additional time for Crownwell to respond to the cross-complaint, in which the letter acknowledged Crownwell’s response was already due, on May 2, 2022. (Decl. of Martin ¶4, Exh. 2.)  The letter made no reference to the reason for Crownwell’s failure to respond and/or a basis for the request (i.e., an indication that Crownwell would make efforts to cure its suspended status so as to answer the complaint).  Crownwell submitted evidence that in response to this correspondence, on May 6, 2022, Cross-Complainants’ counsel refused to agree to an extension to permit Crownwell to respond to the cross-complaint based on it “already [being] in default” since it was suspended and had not appeared and could not appear in the action.  (Decl. of Martin ¶5, Exh. 3 [The Court notes that contrary to this assertion, default had not yet been entered against Crownwell as of this date, though it could have been].)  The Court notes Cross-Complainants’ counsel did agree to an extension of time for Efron to respond to the cross-complaint, notwithstanding the fact Efron’s response was about to be due on May 9, 2022, at the time of the May 6, 2022 correspondence.  Given Crownwell’s corporate status was corrected within two months of having been served with the cross-complaint, the Court finds the evidence is sufficient to establish excusable neglect on the part of Crownwell in failing to timely respond to the cross-complaint to warrant setting aside the entry of default.

Based on the foregoing, Crownwell’s motion to set aside the default is granted.  Crownwell shall file its proposed answer within 10 days.

Dated:  February _____, 2022

Hon. Monica Bachner

Judge of the Superior Court