Judge Ralph C. Hofer, Case EC066192 2022-12-16 Tentative Ruling

Plaintiffs Sandford Jones and Maribel Haro allege that in January of 2011, they entered into a lease for the rental of a unit of residential premises located in Burbank, and that shortly afterward plaintiff Haro had to seek treatment for bed bug bites at the subject premises. Plaintiffs allege that defendant Harry Ayvazian dba as Ayvazian Realty Management was notified of the bed bug and roach infestation at the subject premises but failed to take any corrective action.

The SAC alleges that on weekends in October of 2012, contractors hired by defendant Ayvazian to remodel the exterior of the subject premises would begin construction work early in the morning, between the hours of 6:30 and 7:30 am, in violation of the City of Burbank Municipal Code. The contractors would in engage in loud and vulgar conversations outside the window of the subject property, thereby disturbing the quiet enjoyment by plaintiffs of the subject premises.

Plaintiffs further allege that in November of 2013, defendant Ayvazian entered into the subject premises under the false pretense of carrying out an inspection and scheduling repairs to pre-existing damage identified during the initial walkthrough prior to the execution of the rental agreement, and during the inspection began to berate and verbally abuse plaintiffs, and when plaintiff Jones demanded that defendant Ayvazian leave the premises, Ayvazian assaulted Jones in the presence of plaintiff Haro, causing both plaintiffs to fear for their safety. Jones documented the assault with the Burbank Police Department.

The SAC alleges that in February of 2014, plaintiffs placed their rent money in the Ayvazian drop box, as usual, but notwithstanding the deposit of rent, the Ayvazian defendants caused to be issued a 3-day notice to pay rent or quit on plaintiffs, and then filed an unlawful detainer case against plaintiffs. Plaintiffs allege that in April of 2014, the Ayvazian defendants fraudulently obtained a default judgment for possession of the subject premises. Plaintiffs’ application and motion to set aside the judgment were denied by the court. On April 30, 2015, the Ayvazian defendants, without notice to plaintiffs, obtained a money judgment against plaintiffs in the sum of $2,010.92.

Plaintiffs allege that in September of 2015, defendants Eric Steve Morrow, an individual doing business as Judicial Assertion Systems and Morrow and Associates, a collection agency, filed with the court an acknowledgement of assignment of judgment, and have, with full knowledge that the judgment was fraudulently obtained, and after being repeatedly told by plaintiffs to cease and desist from collecting on the judgment, proceeded to obtain a writ of execution for collection of the judgment against plaintiffs.

On July 14, 2022, at an OSC Re: 5-Year Rule, CMC and Trial Setting Conference, the court granted leave to allow plaintiff to file an amended complaint, continued the matters, and ordered, “Amended complaint must be filed within 30 days. Plaintiff must re-serve complaint on the same parties that were served before.”

On October 12, 2022, the court heard a CMC, Trial Setting Conference, a Status Conference re: Amended Complaint, and an OSC Re: Five-Year Rule. The court noted an Amended Complaint had been filed, with all defendants served except Eric Steve Morrow. The court also noted a declaration had been filed for an automatic extension to file a responsive pleading on behalf of the Ayvazian defendants, but no counsel had substituted in as attorney of record. “If there is a Demurer filed as to the 5-Year Rule the Court will rule on it. If defense counsel does not substitute-in as counsel of record, then the Court will rule on the Order to Show Cause Re: 5-Year Rule.”

“(a) Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. If an amended complaint, cross-complaint, or answer is filed, the responding party shall meet and confer again with the party who filed the amended pleading before filing a demurrer to the amended pleading.

(1) As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies. The party who filed the complaint, cross-complaint, or answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency.”

The court also notes that plaintiffs have failed to file timely opposition to the demurrer, suggesting that plaintiffs have no good faith substantive response to the points raised in the meet and confer correspondence or in this demurrer. The court would ordinarily require plaintiffs to meet and confer and prepare the required declaration concerning that meet and confer, but in light of plaintiffs’ counsel’s failure to respond in any manner to the arguments raised in the meet and confer or in the demurrer, the court will consider the failure to participate in meet and confer as a factor in considering the merits of the motion and the determination of whether leave to amend will be granted.

It appears that counsel who filed the demurrer has been designated counsel of record for moving defendants in this file in this matter, due to the demurrer apparently having constituted the first appearance of moving defendants in this matter, who had been previously subject to a default.

“A defendant appears in an action when the defendant answers, files a notice of motion to strike, files a notice of motion to transfer pursuant to Section 396b, moves for reclassification pursuant to Section 403.040, gives the plaintiff written notice of appearance, or when an attorney gives notice of appearance for the defendant. After appearance, a defendant or the defendant’s attorney is entitled to notice of all subsequent proceedings of which notice is required to be given. Where a defendant has not appeared, service of notice or papers need not be made upon the defendant.”

“When an attorney is changed, as provided in the last section, written notice of the change and the substitution of a new attorney, or the appearance of the party in person, must be given to the adverse party. Until then he must recognize the former attorney.”

Moreover, even if this were a situation where the attorney was being changed, it is held that, if authorized by the client, a new attorney may file pleadings and otherwise act on the client’s behalf even before a formal substitution of attorneys is obtained: “Where the actual authority of the new attorney appears, courts regularly excuse the absence of a formal substitution...particularly where the adverse party has not been misled or otherwise prejudiced.” Baker v. Boxx (1991) 226 Cal.App.1303, 1309. There does not appear to have been any prejudice here.

The Ayvazian defendants argue that the Second Amended Complaint fails to state facts sufficient to constitute a cause of action in this matter because the SAC is subject to the general rule that unless an action is brought to trial within five years after it has been filed, the action must be dismissed upon motion of the defendant.

The five-year period begins to run upon the filing of the complaint in the action. Bosworth v. Superior Court (1956, 2nd Dist.) 143 Cal.App.2d 775, 779. In reviewing the trial court’s dismissal of an action for failure to bring the matter to trial within five years under this statute, the appellate court applies an abuse of discretion standard. Coe v. City of Los Angeles (1994, 2nd Dist.) 24 Cal.App.4th 88, 92.

The moving papers indicate that there was a period during which the statute of limitations was tolled pursuant to Judicial Council Emergency Rule 9. However, this is not a statute of limitations issue, but an issue of the five-year rule. The applicable rule is accordingly Judicial Council Emergency Rule 10(a), which provides:

“Notwithstanding any other law, including Code of Civil Procedure section 583.310, for all civil actions filed on or before April 6, 2020, the time in which to bring the action to trial is extended by six months for a total time of five years and six months.”

This period of total time would require that the action be brought to trial by June 30, 2022. The five-year period has accordingly expired, and the Second Amended Complaint was already subject to dismissal on this ground by the time it was filed on August 12, 2022, and thereafter served on the moving defendants.

Defendants argue that the filing of an amended pleading does not prevent operation of the five-year rule, as long as the amended pleading relates back to the filing of the original pleading, that is, arises from the same set of facts previously alleged. Defendants rely on Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, which involved a discussion of relation back theory as it applies to the statute of limitations, in which it was observed that an “amended complaint will be deemed filed as of the date of the original complaint provided recover is sought in both pleadings on the same general set of facts.” Amaral, at 1199-1120. The demurrer also cites Barrington v. A.H. Robins Co. (1985) 39 Cal. 3d 146, in which the California Supreme Court recognized that a relation back analysis applied to a first amended complaint in connection with a motion to dismiss under former Code of Civil Procedure section 581a (for failure to serve and return the summons and complaint within three years), although the Court found that under the facts of that case the pleading did not relate back to the filing of the original complaint. That motion to dismiss is similar to the motion to dismiss under the five-year rule, and a relation back analysis does apply to the amended pleadings.

Defendants have requested that the court take judicial notice of the original complaint, the first amended complaint, and the second amended complaint in this matter. [RFJN, Exs. A, B, D]. A comparison of the allegations show that the same general set of facts are alleged in connection with each of those pleadings, specifically, that moving defendants failed to correct habitability issues such as bed bugs, engaged loud contractors, filed frivolous unlawful detainer actions, assaulted Jones at the premises during a purported inspection, and filed an improper unlawful detainer matter based on a dispute concerning the February 14, 2014 rent, which plaintiffs had paid. [Ex. A, Complaint, paras. 16- 23, Ex. B, First Amended Complaint, paras. 6-13; Ex. D, Second Amended Complaint, paras. 6-13]. There are paragraphs added to the FAC and SAC concerning the moving defendants obtaining a default judgment and damages in connection with the UD action based on the February 14, 2014 rent, but these events have arisen out of the same previously alleged rent dispute and UD action which was a subject of the original complaint. Those allegations also relate back to the filing of the original complaint, and plaintiffs have failed to argue otherwise.

A comparison of the original complaint, FAC and SAC, also shows that while plaintiff sought a specific amount of alleged damages in the original complaint, the First Amended Complaint fails to allege a specific amount. [See Ex. A, prayer, Ex. B, prayer]. The SAC again adds specific amounts to the damages sought. [Ex. D, prayer]. These damages, whether specific amounts or not, appear to be sought based on the underlying facts from which the original complaint arose.

In fact, it appears from the amendments that since default was taken against defendants on the FAC, which did not include a specific amount of damages, the reason a default judgment was not long ago entered against the moving defendants is because there was no specific sum of damages sought in the FAC. See CCP § 580(a) (“The relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint…”). This provides further support for the argument that plaintiffs cannot show that they failed to pursue this matter to trial because it was at any time impossible, impractical, or futile to bring the matter to trial, but because plaintiffs inexplicably delayed in amending the defective FAC, so that judgment by default could ultimately be entered. The FAC was filed on March 1, 2018, and default taken on February 18, 2020, and no request to file an amended pleading was evidently made until July 14, 2022, two years and four months later. Plaintiffs have not and apparently cannot show that any of the circumstances excusing or extending the deadline arose here.

There is no opposition, so plaintiffs have not requested leave to amend. Defendants argue that the demurrer should be sustained without leave to amend, as it is probable from the nature of the defect here that plaintiffs cannot state a cause of action that would not be barred by the five-year rule.

Where a complaint is successfully challenged on demurrer, it is plaintiff’s burden to demonstrate how the complaint might be amended to cure it of the defect. Association of Community Orgs. for Reform Now v. Dept. of Industrial Relations (1995) 41 Cal.App.4th 298, 302. “Where from the nature of the defects in a complaint it is probable that plaintiff cannot state a cause of action, a general demurrer may be sustained without leave to amend.” La Vista Cemetery Association v. American Savings & Loan Association (1970, 2nd Dist.) 12 Cal.App.3d 365, 369.

Particularly given the nature of the argument and the judicially noticeable matter, and the failure of plaintiffs to respond to meet and confer correspondence or to file timely written opposition opposing the points made in the demurrer, or requesting leave to amend, or meeting plaintiff’s burden to show how the defects could be corrected, the court is inclined to sustain the demurrer without leave to amend.

Defendant Harry Ayvazian’s UNOPPOSED Demurrer to Second Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND, as plaintiffs are barred from further pursuing the matters alleged in the SAC by the five-year rule, and the failure to bring the matter to trial within the permitted statutory period.

The Court has nevertheless considered the untimely opposition, only because moving party has filed a timely reply responding to the opposition, and the dispositive nature of the demurrer. The Court is providing this additional analysis and revised recommended ruling based on the opposition and reply papers.

Plaintiffs in opposition argue that the five-year statute was tolled when bringing the action to trial was impossible, impracticable, or futile, in reliance on CCP section 583.340(c), set forth above. Plaintiffs argue that defendant admits that plaintiffs obtained a default against the demurring defendant on February 14, 2020, and it was accordingly impossible and impracticable to proceed to trial against the demurring defendant. Plaintiffs argue that plaintiffs were forced to file their SAC on August 12, 2022 because the FAC did not include specific amounts of damages, and that defendant then took advantage of the filing of the SAC to appear for the first time in the action and file the demurrer. Plaintiffs argue that accordingly the period of time between the entry of default on February 14, 2022, and the filing of the SAC on August 12, 2022 should be excluded from the calculation of the five-year period. As noted above, this is a period of two years and just short of six months.

Plaintiffs cite, without discussion, Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 438, in which the California Supreme Court found that a trial court had not abused its discretion in dismissing a case under CCP section 583.410 following a delay in setting the action for trial following judicial arbitration.

Defendant in reply argues that the Howard case supports the argument that the five-year statute has expired, as in this case, in contrast to Howard, plaintiffs never obtained or attempted to obtain a default judgment against Ayvazyan after the clerk’s entry of default on February 14, 2020. Under Howard, the court should exclude the time during which a default judgment was in place, which is not the situation here, as a default judgment was never entered.

Howard also provides a more limited exclusion of time with respect to any period of time between the default and entry of default judgment, noting that “[i]n the context of a default judgment, courts have held that a reasonable period of time between the defendant’s default and the entry of default judgment should also be excluded from the calculation of the five-year period.” Howard, at 438-439, citing Hughes v. Kimble (1992) 5 Cal.App. 4th 59, 67. Again, here there was never a default judgment entered, so this is not a case arising “in the context of a default judgment.” Moreover, to the extent plaintiffs intend to argue that a reasonable time from the entry of default should be excluded, plaintiffs have failed to submit any argument or evidence showing what period of time would be “reasonable.” The argument seems to be that plaintiffs could not bring the matter to trial during the entire period of over two years between the entry of default and the filing of the SAC, because plaintiffs could not obtain a default judgment because of the admitted defect in the FAC. Plaintiffs do not explain why they could not have sought leave to file an amended complaint more promptly, and this situation appears to be a circumstance entirely within plaintiffs’ control.

Defendant in the reply argues that the entry of default alone does not render further prosecution of the case impossible, but that there is a requirement of diligence imposed to determine a reasonable period of time to be excluded. The period of time between finalization of an arbitration award and entry of judgment found reasonable in Howard, for example, was one week. Howard, at 439.

In Hughes, the Second District found that the trial court had appropriately applied the five-year rule to dismiss an action in a situation very similar to that presented here, the Second District holding that “section 538.340 does not require the court to exclude time during which [appellant] was in default from the five years allowed to bring the case to trial.” Hughes, at 62.

“Here, Hughes obtained a clerk's entry of default, then failed for over three years to obtain a judgment, until the court on its own motion at last acted to dismiss the case. Neither in Maguire, nor in similar cases preceding or following it, has default time been excluded from computation of the five-year time limit in such circumstances. Although we can imagine circumstances in which three years of default time might appropriately be excluded, it would be absurd, in our view, to require such exclusion in all cases, regardless of the reasonableness of the plaintiff's delay in having a judgment entered. Such a mandatory rule of exclusion would give to negligent or dilatory plaintiffs who have obtained clerk's defaults an unlimited time in which to apply for entry of a judgment. The results would include the clogging of court calendars with stale cases, and the exposure of defendants, albeit defaulting defendants, to liability in an unknown amount, on claims of unproven merit, potentially for all eternity.

As has often been held, and as we have recently had occasion to reemphasize, a plaintiff has a duty to exercise reasonable diligence to insure that a case is brought to trial or other conclusion within statutory time constraints. (Wilshire Bundy Corp. v. Auerbach, supra, 228 Cal.App.3d at p. 1286; Boutwell v. Kaiser Foundation Health Plan, supra, 206 Cal.App.3d at p. 1374; Hill v. Bingham (1986) 181 Cal.App.3d 1, 10-11 [225 Cal.Rptr. 905].) There can be no doubt that such duty includes a duty to exercise reasonable diligence in obtaining a judgment after a clerk's entry of default. Accordingly, the time between entry of a default and entry of a default judgment should be excluded from the five-year time to bring a case to trial if and only if the court finds that the plaintiff used due diligence to obtain entry of the judgment, and that in spite of such due diligence, it was impossible, impracticable, or futile to obtain a judgment.”

Under the circumstances here, plaintiffs have presented no facts under which the court can find that plaintiffs used due diligence to obtain the entry of default judgment, and that in spite of such diligence, it was impossible, impracticable, or futile to obtain a judgment. The file itself suggests that plaintiffs made no effort to obtain default judgment or to correct the defect in the FAC despite the court’s setting of multiple hearings on an Order to Show Cause re Entry of Default Judgment once default had been entered through August 16, 2021, and, beginning in April of 2022, hearings on an Order to Show Cause re 5-year rule, in response to which plaintiffs continued to fail to act until August of 2022. The court cannot find that plaintiffs used due diligence during that time period sufficient to support a determination that in spite of such due diligence, it was impossible, impracticable, or futile to obtain a judgment.

Plaintiffs also argue briefly that defendant should be estopped from seeking a dismissal based on the delay, given defendant’s conduct in failing to respond to the FAC in the first place. Plaintiffs argue that the estoppel doctrine should be invoked here to prevent defendant from profiting by his inaction in failing to respond to the FAC. Plaintiffs cite, without discussion, Borglund v. Bombardier, Ltd. (1981) 121 Cal.App.3d 276, 280.

As pointed out in the reply, the amendments to the SAC to specify the dollar amount of damages with leave of court constituted a substantive change, opening up the default and giving defendant the right to respond to the SAC. Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1734; Engebretson & Co., Inc. v. Harrison (1981) 125 Cal.App.3d 436, 442-443.

Defendant also points out that the court of appeal in Borglund did not determine that the failure to respond to a previous pleading constitutes conduct giving rise to an estoppel defense, but set forth the usual scenario under which estoppel can be invoked, and held broadly that the equitable doctrine of estoppel applies to motions brought pursuant to the five-year rule, remanding the matter to the trial court to determine if such estoppel arose in the case before it, based on a factual determination. The court of appeal held:

“We hold, consistent with Tresway, that the equitable doctrine of estoppel applies fully to motions brought under section 583, subdivision (b). Our holding gives full flower to the “duty of the trial court to examine all the acts and conduct of the parties, and render a discretionary decision with a view to furthering the ends of justice.” ( Tresway Aero, Inc. v. Superior Court, supra., 5 Cal.3d 431, 440.) If a trial court encounters statements or conduct by a defendant which lulls the plaintiff into a false sense of security resulting in inaction, and there is reasonable reliance, estoppel must be available to prevent defendant from profiting from his deception. By following the rule of Tresway, we move away from the rigid application of a few limited exceptions to section 583, subdivision (b), and rather adopt a rule that permits substantial justice to triumph over form.

In view of the conflict in the affidavits of counsel for appellant and respondents, we do not decide whether respondent's counsel made statements or engaged in conduct likely to induce appellant to permit the running of the five-year statute. Nor do we decide whether, assuming such statements or conduct, appellant's reliance was reasonable. These are issues of fact for the trial court.”

No such circumstances or affirmative acts or deceptive conduct by defendant are shown by plaintiffs here, and plaintiff does not argue any reasonable reliance. Plaintiffs appear to rely on the singular circumstance that defendant did not respond to the FAC, which is a circumstance which Hughes suggests is not alone a circumstance reasonably justifying a lack of action on the part of plaintiffs. The court will not find that defendant is estopped to enforce the five-year rule here.

Plaintiffs in opposition has failed to show that any reasonable period of delay after the entry of default was sufficient to extend the five-year period to avoid the conclusion that the deadline has passed. Plaintiffs in opposition have also failed to request leave to amend and have failed to meet their burden of showing how the deficiency could be cured by further amendment. The demurrer accordingly is sustained without leave to amend.

Defendant Harry Ayvazian’s Demurrer to Second Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND, as plaintiffs are barred from further pursuing the matters alleged in the SAC by the five-year rule, and the failure to bring the matter to trial within the permitted statutory period.

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