Judge Peter A. Hernandez, Case 21PSCV00889 2022-10-31 Tentative Ruling

Judge: Peter A. Hernandez, Case: 21PSCV00889, Date: 2022-10-31 Tentative Ruling

Case Number: 21PSCV00889 Hearing Date: October 31, 2022 Dept: O

Defendants California Investment Regional Center LLC’s and Zhong Fang’s Motion to Vacate and Set Aside Defaults is GRANTED. Wang is ordered to pay attorney’s fees to Plaintiff in the reduced amount of $4,125.00 pursuant to Code of Civil Procedure § 473, subdivision (b).

Background

Plaintiff Guangliang Zeng (“Plaintiff”) alleges as follows: Plaintiff is a Chinese citizen; Defendant California Investment Regional Center LLC (“CIRC”) is a regional center for EB-5 investment immigration. On June 5, 2014, Plaintiff signed a “U.S. EB-5 Investment Immigration Agreement” and “EB-5 Investment Management Agreement” (collectively, “Investment Agreements”) with CIRC and paid $500,000.00. On June 30, 2017 and November 13, 2019, Plaintiff and CIRC signed a “Refund Agreement” and “Deferred Refund Agreement” (collectively, “Refund Agreement”). CIRC failed to refund the amount as agreed.

On October 29, 2021, Plaintiff filed a complaint, asserting a cause of action against CIRC, Zhong Fang (“Fang”) and Does 1-50 for:

1. Breach of Contract

On February 1, 2022, Fang’s default was entered. On February 2, 2022, CIRC’s default was entered.

Legal Standard

Relief under Code of Civil Procedure section 473 is either discretionary or mandatory. A motion for mandatory relief must be “made no more than six months after entry of judgment” and be “accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.” (Code Civ. Proc., § 473, subd. (b).)

The attorney affidavit of fault must contain a “straightforward admission of fault.” (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610.) The attorney affidavit of fault, however, need not include an explanation of the reasons for the attorney’s mistake, inadvertence surprise or neglect. (Martin Potts & Assocs., Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 438-441.) “Relief is mandatory when a complying affidavit is filed, even if the attorney’s neglect was inexcusable.” (Rodrigues v. Superior Court (2005) 127 Cal.App.4th 1027, 1033.) Relief must be granted unless the court finds that the default or dismissal was not in fact the attorney’s fault. (Id.)

Where a party cannot obtain an attorney affidavit of fault, the party may seek discretionary relief under section 473(b) due to “mistake, inadvertence, surprise, or excusable neglect.” (Code Civ., Proc., § 473, subd. (b).) A motion for discretionary relief must be made “within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Id.) “The burden of proof. . . is on the moving party who must establish his position by a preponderance of the evidence.” (Luz v. Lopes (1960) 55 Cal.2d 54, 62.) “Because the law favors disposing of cases on their merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” (Rapplyea v. Campbell (1994) 8 Cal.4^th 975, 980 [quotation marks and citation omitted].)

A motion for relief under section 473, subdivision (b) “shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted. . .” (Code Civ. Proc., § 473, subd. (b).)

Discussion

Fang and CIRC move the court for an order setting aside their defaults entered on February 1, 2022 and February 2, 2022, respectively, on the basis of mistake, inadvertence, surprise, or excusable neglect.

The court notes that Fang and CIRC have moved for discretionary relief only. A motion under section 473 for discretionary relief accompanied by a declaration of an attorney suggesting attorney fault does not require the court to grant relief under the mandatory provision of section 473. (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1124 [“The trial court is not required to consider the availability of relief under the discretionary or mandatory grounds in the absence of any request for relief under those grounds . . . Just as the trial court may under appropriate circumstances overlook certain procedural deficiencies in pleadings . . . it is not precluded from considering a motion under section 473 to be one under the mandatory provision. If such relief is to be considered, the parties should have fair notice of the possibility of such relief. But, when faced with a motion for relief under section 473, the trial court does not have to consider the availability of relief under the mandatory provision unless such relief is requested in an appropriate manner”].)

As any aside, any request for discretionary relief is now time-barred, inasmuch as this instant motion was filed in excess of six months after entry of default. This is not the case, however, for mandatory relief based on an attorney affidavit of fault, which must be made “no more than six months after entry of judgment.” (Code Civ. Proc., § 473, subd. (b) [emphasis added].) The 6-month period runs from entry of the default judgment, not the original default. (Sugasawara v. Newland (1994) 27 Cal.App.4th 294, 297.) “If no default judgment has been entered, there appears to be no time limit on a motion for relief based on an attorney affidavit of fault.” (Weil & Brown, CAL. PRAC.GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2022) ¶ 5:305.2.)

Additionally, any request for mandatory relief “do[es] not require . . . a showing of diligence short of the six-month time limit.” (Metropolitan Service Corp. v. Casa de Palms, Ltd. (1995) 31 Cal.App.4th 1481, 1488.)

The court will treat Fang’s and CIRC’s motion as seeking mandatory relief. The motion is granted.

Sanctions/Fees and Costs

Code of Civil Procedure § 473, subdivision (b), provides that “[t]he court shall, whenever relief is granted based on an attorney's affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.” (Emphasis added). In addition to the award of fees and costs, the court may impose sanctions against the culpable attorney as follows: “(A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party. (B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund. (C) Grant other relief as is appropriate.” (Code Civ. Proc., § 473, subd. (c)(1)).

Plaintiff seeks fees and costs in the amount of $8,362.50 [calculated as follows: 3.75 hours preparing/filing request for entry of default, plus 7.5 hours for default prove-up packet, plus 6 hours preparing opposition, plus 2.5 hours reviewing reply and preparing for/attending hearing, plus 10.5 hours opposing, preparing for and attending hearings for previously filed motions at $250.00/hour (Note: the foregoing adds up to 30.25 hours, not 29.25 hours, as represented), plus $50.00 in miscellaneous costs, plus $1,000.00 in sanctions).

The court notes that, while three motions to set aside were previously filed, Plaintiff only filed an opposition to the first motion. The court will award fees and costs to Plaintiff and against Wang in the reduced amount of $4,125.00 [i.e., 0.5 hours for preparing/filing request for entry of default, plus 5 hours for default prove-up packet, plus 5 hours preparing opposition, plus 1 hour reviewing reply and preparing for/attending hearing, plus 5 hours for prior opposition and attendance time at $250.00/hour].