Judge Ralph C. Hofer, Case Number: 22GDCV00093, Date: 2024-01-12 Tentative Ruling

Plaintiff Escrow for You, Inc. (Escrow) has filed this action based on a complaint in intervention. Plaintiff alleges that plaintiff is a licensed escrow agent and is now in possession of $33,750.00 in disputed money, which funds represent the earnest money deposit of defendant Lusine Hakhverdyan (Buyer) submitted to Escrow during the purchase of real property in Van Nuys from defendants Karapet Kiramichyan and Tsonvinar Kiramittchian (Sellers).

Plaintiff alleges that in June of 2018, the defendants executed a California Residential Purchase Agreement and Joint Escrow Instructions (Purchase Agreement) and escrow was opened in July of 2018, with Buyer submitting the earnest money deposit with Escrow.

In September of 2018, Buyer signed and submitted a Cancellation of Contract, Release of Deposit and Joint Escrow Instructions form for the property, when Buyer determined it would not be possible to obtain funds for purchase of the Property. On March 10, 2020, Buyer delivered to Escrow a Demand for Notice and Release of Deposit. On March 18, 2020, Sellers submitted to Escrow Sellers Rejection of Buyer’s Demand for Release of Deposit.

Plaintiff alleges that Buyer and Sellers have each claimed a right to the deposit, that plaintiff claims no interest in the deposit except for reasonable attorney’s fees and costs provided by CCP section 386.6, and requests that defendants be ordered to interplead and litigate their claims to the money described in the complaint, and that plaintiff be discharged from any liability to each of the defendants with respect to the interpleaded monies.

On July 14, 2023, plaintiff brought a motion for leave to file a first amended complaint to name as a defendant Tamara Kiramichyan, wife of defendant Karapet Kiramichyan, and an alleged party to the contract that was the basis for the instant action, and to delete as a party Karapet Kiramichyan, who had passed away on November 10, 2019, in effect, substituting Tamara for Karapet as defendant. In addition, plaintiff sought to correct two typographical errors in the pleading.

On September 25, 2023, plaintiff filed a request for entry of default/clerk’s judgment as to defendant Lusine Hakverdyan, which was entered as requested on September 15, 2023, in the sum of $876.

“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.”

The trial court’s granting or denial of relief under this provision is reviewed for abuse of discretion. State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610. It is noted that appellate courts are traditionally “favorably disposed toward such action on the part of the trial courts as will permit, rather than prevent, the adjudication of legal controversies on their merits.” Mercantile Collection Bureau v. Pinheiro (1948) 84 Cal.App.2d 606, 608, citing Benjamin v. Dalmo Mfg. Co. (1947) 31 Cal.2d 523.

Defendant has also submitted a declaration indicating that she is being defaulted because she cannot afford an attorney and is trying her best to research, find forms, and meet the needs of this case. Defendant also indicates that defendant answered at the CMC on April 5, 2022, and responded on August 23, 2023 to oppose the efforts to have Tamar Kiramichyan replace Karapet Kiramichyan in this action, and did not answer the FAC on August 25, 2023 because she thought it was duplicative paperwork to add Tamar, which she had already opposed. [Hakhveryan Decl.].

First, the proof of service filed with the motion does not show appropriate service on all the parties who have appeared in the matter, but only on plaintiff, and, as to plaintiff does not show service of the moving papers on plaintiff at the address of record in this matter. The file shows that plaintiff’s attorney’s address is on North Verdugo Road in Glendale. The proof of service shows service on plaintiff at an address on Ocean View Boulevard in Glendale. [See POS, filed 11/5/23, para. 5b]. It accordingly appears that the parties do not have proper notice of this motion in order to respond to it, which could explain why there has been no opposition filed.

Under the Code sections permitting a party to seek to set aside a default, such must be sought pursuant to “application,” or noticed “motion.” See, e.g., CCP sections 473 (b), 473 (d), 473.5 (a).

CCP § 1005 (a) provides that written notice “shall be given,” for specified motions, including “(10) Motion to Set aside Default or Default Judgment and for Leave to Defend Actions pursuant to Section 473.5.”

Under CCP section 1010, notices must be in writing, and “may be served upon the party or attorney in the manner prescribed by this chapter...” Under CCP section 1013, service by mail may be made by depositing the papers in the mail “addressed to the person on whom it is to be served, at the office address as last given by that person on any document filed in the cause and served on the party making service by mail; otherwise at that party’s place of residence.” The address on the proof of service is not the address appearing on documents filed by plaintiff, so that it appears plaintiff was also not provided proper service of the moving papers. This gives rise to due process concerns on the part of all of the other parties. The court will accordingly not consider the motion unless proper service is shown.

In addition, as noted above, CCP § 473(b) requires that application for relief based on mistake “shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted.” The moving papers are not accompanied by a copy of an answer or other pleading proposed to be filed, and the motion may also be denied or continued for submission of an appropriate proposed pleading. The file shows that defendant filed an answer to the original complaint on April 5, 2022, and should be capable of submitting a proposed answer to the FAC.

It would appear that if the procedural errors can be addressed at the hearing, and a proof of service and satisfactory proposed answer submitted, defendant could likely establish that the default was taken based on plaintiff’s mistaken understanding that she had appropriately extended her previous answer to the litigation by opposing the proposed amendment. Particularly if there continues to be no opposition to the motion in the face of proper service, there is no indication that there in fact was not a mistake here. The favorable disposition toward permitting adjudication of legal controversies on their merits would then prevail here, and the motion would be granted.

Motion to Set Aside Default Judgment is DENIED WITHOUT PREJUDICE. Motion is not considered by the Court as there is no proof of service showing the papers were properly served on the other parties to this action. In addition, the motion is insufficient as it is not accompanied by a copy of a proposed pleading, as required under CCP §473 (b).

UNOPPOSED Motion to Set Aside Default Judgment is GRANTED. The default/clerk’s judgment entered September 15, 2023 is vacated pursuant to CCP § 473(b), based on moving party’s mistake.

Defendant is ordered to efile a separate signed copy of the Answer submitted by defendant by close of business this date, and the answer will also be deemed served upon filing.

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