Judge: Robert S. Draper, Case: 21STCV37217, Date: 2022-10-18 Tentative Ruling

Case Number: 21STCV37217    Hearing Date: October 18, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Defendant Shad Rabbani’s Motion to Set Aside Default is DENIED.

Default Judgment is entered as proposed by Plaintiff.

FACTUAL BACKGROUND

This is an action for failure to repay a fraudulently obtained loan. The Complaint alleges as follows.

Plaintiff William Edwards (“Plaintiff”) and Defendant Shad Rabbani (“Defendant”) met through their careers in the music industry. (Compl. ¶ 11.) Defendant owned a building that housed commercial music studios. (Compl. ¶ 12.)

In 2014, Plaintiff received a considerable settlement following a motorcycle accident. (Compl. ¶ 13.) Defendant heard about this settlement and, using his friendship with Plaintiff, convinced Plaintiff to loan Defendant money to invest in real estate deals. (Compl. ¶ 14.) Between 2016 and 2018, Plaintiff loaned Defendant $575,000.00. (Compl. ¶¶ 15-18.) Each of these loans was memorialized in written documents that provide for a repayment schedule. (Compl. ¶ 19.) To date, Defendant has not repaid any of the principal or interest. (Ibid.)

PROCEDURAL HISTORY 

On October 8, 2021, Plaintiff filed the Complaint asserting six causes of action:

1.    Fraud (Intentional Misrepresentation; Fraudulent Inducement; False Promise);

2.    Breach of Written Contract;

3.    Negligent Misrepresentation;

4.    Conversion;

5.    Unlawful Business Practices; and,

6.    Intentional Infliction of Emotional Distress

On May 26, 2022, the Clerk entered Default as to Defendant pursuant to Plaintiff’s request.

On June 30, 2022, Defendant filed the instant Motion to Set Aside Default.

On August 26, 2022, Plaintiff filed a Motion for Entry of Default Judgment and a Proposed Judgment prepared on form JUD-100.

On October 4, 2022, Plaintiff filed an Opposition to the Motion to Set Aside Default.

On October 10, 2022, Defendant filed a Reply.

DISCUSSION 

I.              MOTION TO SET ASIDE DEFAULT

Defendants moves to set aside default pursuant to Code of Civil Procedure section 473(b).

A.  Section 473(b)

CCP section 473(b) provides, in relevant part: 

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 court has broad discretion to vacate the entry of default, default judgment or a dismissal, but that discretion can be exercised only if the defendant establishes a proper ground for relief, by the proper procedure and within the set time limits. Pursuant to CCP section 473(b), a motion to set aside/vacate cannot be brought more than 6 months after the entry of default and must be made within a “reasonable time.” 

Here, Default was entered on May 26, 2022, and Defendant filed the instant motion on June 30, 2022; accordingly, the motion is timely.

Defendant argues that default should be set aside due to his mistake, inadvertence, surprise, and excusable neglect.

The party seeking relief under section 473 on the basis of mistake, inadvertence, or neglect must demonstrate that such mistake, inadvertence, or neglect was excusable. (See Younessi v. Woolf (2016) 244 Cal.App.4th 1137, 1146.) A moving party’s mistake, inadvertence, or neglect is excusable if a reasonably prudent person under similar circumstances might have made the same error. (See id.; Austin v. Los Angeles Unified School District (2016) 244 Cal.App.4th 918, 929.) 

The party seeking relief under section 473 on basis of mistake, inadvertence, or excusable neglect has the burden of showing a satisfactory excuse for the occurrence of that mistake, inadvertence, or neglect. (See Austin v. Los Angeles Unified School District (2016) 244 Cal.App.4th 918, 929; Eigner v. Worthington (1997) 57 Cal.App.4th 188, 196.) Neglect is excusable if a reasonably prudent person under similar circumstances might have made the same error. (See Austin, supra, 244 Cal.App.4th at 929.) 

Defendant contends that he failed to file an answer because he was negotiating settlement with Plaintiff outside of Court and was under the belief that the parties had reached a settlement agreement. (Rabbani Decl. ¶ 13.) Defendant attaches an email from Plaintiff’s Counsel, in which Plaintiff’s Counsel sent Defendant a proposed settlement agreement. (Rabbani Decl. Ex. A.) The email states that the proposed settlement was along the lines that had been discussed, and requests signatures on the proposed settlement. (Ibid.)

In Opposition, Plaintiff contends that Defendant is misleading the Court. Plaintiff notes that in response to Plaintiff’s proposed settlement for $875,000, Defendant responded with a proposal for $239,200. (Procel Decl., ¶ 10.) Accordingly, Plaintiff contends, Defendant cannot argue that a settlement had been reached when the parties were more than $600,000 apart in negotiation. (Ibid.) Additionally, Plaintiff notes that if Defendant indeed feels that the proposed settlement represents the final settlement, he may sign it and Plaintiff will dismiss the case.

Additionally, Plaintiff argues that Defendant could not have been mistaken or surprised by the lawsuit or the entry of default, as Plaintiff’s Counsel “repeatedly told Defendant that he should retain counsel and respond to the Complaint.” (Procel Dec., ¶ 5.) Plaintiff’s Counsel alleges Defendant told him that Defendant “did not have the money for a lawyer; that [he] did not have time to deal with the lawsuit; and that a default would do no good because a judgment would not be collectible.” (Ibid.)

Upon review of the evidence, the Court finds that Defendant has not met his burden of showing that a prudent person under similar circumstances would have made the same error. The evidence shows that the two parties were nowhere near settlement as Defendant contends. Moreover, that Plaintiff’s Counsel repeatedly informed Defendant of his need to respond to the Complaint, and advised Defendant that he should retain counsel, indicates there was no mistake here.

Finally, though the Court strongly prefers to resolve all cases on their merits, Defendant has not provided any evidence or argument demonstrating that his breach of the attached contracts was defensible. In his Motion, Plaintiff argues that the case is not “cut and dry,” and that he is “certain that different results would be reached if the default is vacated.” (Motion at p. 8.) He does not provide any evidence or defense that would support this argument. Additionally, the Answer attached to Defendant’s motion is a general denial and makes no effort to address the allegations on their merits.

Accordingly, the Court finds that Defendant has not met his burden in showing mistake, inadvertence, and neglect, and the Court sees no equitable reason that Plaintiff should be forced to wait longer for resolution, where Plaintiff already waited more than seven months to file for default.

Defendant’s Motion to Set Aside Default is DENIED.

Default is to be entered pursuant to Plaintiff’s Proposed Judgment.

DATED:  October 18, 2022                 _________________________             

Hon. Robert S. Draper 

Judge of the Superior Court