Judge: Ronald F. Frank, Case: 22TRCV00588, Date: 2023-11-29 Tentative Ruling
Case Number: 22TRCV00588 Hearing Date: November 29, 2023 Dept: 8
Tentative Ruling¿
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HEARING DATE: November 29, 2023¿¿
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CASE NUMBER: 22TRCV00588
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CASE NAME: Eric
Neilsen, et al. v. Shikha Sethi, et al.
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MOVING PARTY: Defendants,
Reality Holdings PSJC LLC, and PS Realty Holdings
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RESPONDING PARTY: Plaintiffs,
Eric Nielsen, et al.
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TRIAL DATE: None set.
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MOTION:¿ (1) Motion to Set Aside Default
and Leave to Defend Action
Tentative Rulings: (1) GRANTED, but the Court will continue the
hearing if Plaintiff seeks to respond to the Reply Declaration of Ms. Sethi. Costs of service attempts and reasonable attorney’s
fees incurred in opposing the ex parte and opposing the motion to be awarded to
Plaintiffs as detailed in this ruling.
Status conference set for 1/16/24 remains on calendar.
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I. BACKGROUND¿¿
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A. Factual¿¿
On
July 15, 2022, Plaintiffs, Eric Neilsen, Shane Tafolla, Christopher Padilla,
Makyah Crawford, Kennis Shepherd, Mark Steward, Annie Orque, Joshua Moultrie,
Carolina Sanchez Alvez, Angela Estrada, Angela C. Freeman, and James Coppermith
(collectively “Plaintiffs”) filed a Complaint against Defendants, Shikha Sethi,
Shikha Vidjearadji, South Bay Estates, Reality Holdings PSJC LLC, PS Realty
Holdings, and DOES 1 through 40. The Complaint alleges causes of action for:
(1) Breach of the Warranty of Habitability; (2) Nuisance – Negligence; (3) Nuisance – Intentional; (4) Negligence; (5)
Breach of the Implied Covenant of Quiet Use and Enjoyment; (6) Breach of
Contract; (7) Unfair Competition/Unfair Business Practices Under Business and
Professions Code sections 17200, Et Seq.’ (8) Negligent Infliction of Emotional
Distress; and (9) Intentional Infliction of Emotional Distress.
Defendants,
Reality Holding PSJC LLC and PS Realty Holdings (collectively “PSJC”) concedes
that Plaintiffs’ service agent attempted – on numerous occasions – to serve the
PSJC Defendants, but that PSJC’s service agent was travelling outside of the
country at the time and was not served. Plaintiffs thereafter obtained a court
order to deliver service to the secretary of state, which they did. However,
PSJC asserts that they did not receive notice from the secretary of state. On
May 4, 2023, the Court entered default against the PSCJ Defendants.
The
PSJC Defendants note that in September 2023, when checking a court website
related to another action, their service agent discovered the current action.
PSJC Defendants note that their service agent immediately tendered the lawsuit
to their insurance company, who quickly retained counsel. Once Defense counsel
was assigned, PSJC Defendants note that he contacted Plaintiffs’ counsel
requesting a stipulation to set aside the default. However, the PSJC Defendants
note Plaintiffs’ counsel refused to set aside the defaults.
As
such, PSJC Defendants seek an order from this Court setting aside the defaults
and for leave to defend against the action.
B.
Procedural
On October 26, 2023, PSJC
Defendants filed the current Motion to Set Aside Default and for Leave to
Defend the Action. On November 14, 2023, Plaintiffs filed an opposition. On
November 20, 2023, PSJC Defendants filed a reply brief with a Reply declaration.
II. REQUEST FOR JUDICIAL
NOTICE
In
support of Plaintiffs’ opposition, they have filed a Request for Judicial
Notice of the following documents:
1.
Declaration of Kavita Tekchandani, Esq. RE: Plaintiffs’ Due
Diligence efforts to date to serve Defendants, submitted for order to show
cause re: Proof of Service filed on January 9, 2023.
2.
(Second) Declaration of Kavita Tekchandani, Esq. RE:
Plaintiffs’ Due Diligence efforts to date to serve Defendants, submitted for
order to show cause re: proof of service filed on February 7, 2023.
3.
(Third) Declaration of Kavita Tekchandani, Esq. RE:
Plaintiffs’ Due Diligence efforts to date to serve defendants filed on July 12,
2023.
4.
(Fourth) Declaration of Kavita Tekchandani, Esq. RE:
Plaintiffs’ due diligence efforts to date to serve Defendants filed on August
15, 2023
5.
Application for order allowing service of process on
Defendants, Reality Holdings PSJC LLC and PS Realty Holdings Inc. by delivery
to secretary of state; memorandum of points and authorities in support thereof;
declaration of Brigid Joyce in support thereof filed on January 10, 2023.
The Court GRANTS Plaintiffs’ request and takes judicial
notice of the above.
III. ANALYSIS¿
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A.
Legal Standard
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Pursuant to Code of Civil Procedure §473(b), both
discretionary and mandatory relief is available to parties from a judgment,
dismissal, order, or other proceeding. Discretionary relief is available
under the statute as “the court may, upon any terms as may be just, relieve a
party or his or her legal representative from judgment, dismissal, order, or
other proceeding taken against him or her through his or her mistake,
inadvertence, surprise, or excusable neglect. (Code of Civ. Proc. §¿473(b).)
Alternatively, mandatory relief is available when “accompanied by an attorney’s
sworn affidavit attesting to his or her mistake, inadvertence, surprise, or
neglect.” (Ibid.) Under this statute, an application
for discretionary or mandatory relief must be made no more than six months
after entry of the judgment, dismissal, order, or other proceeding from which
relief is sought. (Code Civ. Proc., § 473(b); English v. IKON Business
Solutions (2001) 94 Cal.App.4th 130, 143.)
“‘[W]hen relief under section 473¿is¿available, there is a
strong¿public¿policy¿in¿favor¿of granting relief and allowing the requesting
party his or her day in court…[Citation.]” (Rappleyea v. Campbell¿(1994)
8 Cal. 4th 975, 981-82.)
B. Discussion
Here,
PSJC Defendants assert that the default should be set aside in so far that it
was entered as a result of Defendants’ mistake, inadvertence, and excusable
neglect which contributed to its failure to timely file a responsive pleading,
and also because pursuant to Code of Civil Procedure § 473.5, they did not
receive actual notice of the lawsuit in time to defend the action before
defaults were entered.
This
Court does not find Defendants’ second argument to be convincing as it is in
contradiction to the law. Corporations Code § 1702, formerly section 3302,
states: “(a) If an agent for the purpose of service of process has resigned and
has not been replaced or if the agent designated cannot with reasonable
diligence be found at the address designated for personally delivering the
process, or if no agent has been designated, and it shown by affidavit to the
satisfaction of the court that process against a domestic corporation cannot be
served with reasonable diligence upon the designated agent by hand or in a
manner provide in Section 415.10, subdivision (a) of Section 415.20 or subdivision
(a) of Section 415.30 of the Code of Civil Procedure or upon the corporation in
the manner provided in subdivision (a), (b), or (c) of Section 416.10 or
subdivision (a) of Section 416.20 of the Code of Civil Procedure, the court may
make an order that the service be made upon the corporation by delivering by
hand to the Secretary of State, or to any person employed in the Secretary of
State’s office…” (Corp. Code,§ 1702(a).)
Here,
after Plaintiffs’ numerous attempts at service, this Court granted Plaintiffs’
signed an order allowing service of PSJC Defendant’s via service upon Secretary
of State. Plaintiffs also provided Proof of Publication, filed on November 16,
2023. The First District in Koski v. U-Haul Co. (1963) 212 Cal.App.2d 640, has
noted that generally, “personal service” means actual delivery of process to
defendant in person but service upon agent who in pursuance to former § 3301
(now § 1702) has been expressly or by implication of law designated by
corporation to receive service may amount to “personal service” if that was
intention of Legislature in enacting section under which service was made. This
Court also notes that it does not grant service via publication unless all
other service attempts have been exhausted. As such, the Court does not
entertain PSJC Defendants’ argument that personal delivery was not effectuated.
Mistake,
Inadvertence, Surprise, or Excusable Neglect
PSJC
Defendants also argue that their failure to file responsive pleadings prior to
default being entered was due to inadvertence (international travel on the
dates of Plaintiffs’ attempted service on PSJC’s service agent) and surprise
(discovering the lawsuit while searching a Court website for another lawsuit
against PSJC).
In
Vidjearadji’s Declaration, she contends that she was out of the country on and
off between November 2022 and August 2023. However, in their opposition, Plaintiffs
argue that within the dates provided in Vidjearadji’s declaration, there are
also large periods of time in the dates included in her Declaration when she
was in the country. Further, Plaintiffs note that service attempts were made on
the address on file with the Secretary of State, and Plaintiffs’ process server
was told Ms. Vidjearadji no longer lives at that address. Plaintiffs argue that
entities are required to update their agent for service of process and failure
to do so does not qualify as inadvertence or a surprise. Further, Plaintiffs
note they made over twenty (2) attempts at Ms. Vidjearadji’s home and place of
business via hand delivery, certified mail, regular mail and by posting on Ms.
Vidjearadji’s door. Plaintiffs assert that the Sheriff who attempted service
over a several day period stated in his Declaration that Ms. Vidjearadji was evading
contact as he spoke to her on the phone while she was in her home. (Joyce
Decl., ¶ 8, Exhibit 3.) Moreover, Plaintiffs note that further attempts to
serve by certified mail were “refused” as noted by the postal carrier. (Joyce
Decl., ¶ 9, Exhibit 4.) Lastly, Plaintiffs note that most recently, the summons
and complaint were most recently posted on Ms. Vidjearadji’s front door on
September 9, 2023 (Joyce Decl., ¶ 10, Exhibit 5.) Plaintiffs also argue that
relief from default is not mandatory where there is no attorney affidavit of
fault, noting that PSJC Defendants’ attorney has not filed an affidavit of
fault.
In
the PSJC Defendants’ reply brief, they included a supplemental declaration of Ms.
Sethi Vidjearadji noting that she has reviewed the dates in Plaintiffs’
opposition and asserting that from a review of photos she had taken when out of
state she was not home at the dates and times Plaintiffs attempted to serve
her. (Vidjearadji Supp. Decl. ¶ 6.) She also contends that in May of 2023, she
did speak with a sheriff, when she was in fact at home, but that the lawsuit papers
left by the sheriff was a different lawsuit, not the present one. (Vidjearadji
Supp. Decl. ¶ 8.) She further asserts that prior to leaving the country in
December 2022, she informed her mailman to reject all certified mail until she
returned home and was out of the country in January 2023. (Vidjearadji Supp.
Decl. ¶ 9.) She contends she did not ignore the lawsuit, and had no genuine
knowledge of the lawsuit until September 2023. (Vidjearadji Supp. Decl. ¶¶
10-11.) Lastly, she asserts that her lack of knowledge was inadvertent, and
that discovering the lawsuit was a surprise. (Vidjearadji Supp. Decl. ¶¶
11-12.)
The Supplemental declaration of Ms.
Sethi Vidjearadji contains several new facts that were not included in the
original application, and generally courts do not consider new facts raised in
support of a reply without affording the opposing party an opportunity to
address the new matters. Even the Reply declaration
is vague, lacking in the type of detail one would expect after the Court itself
pointed out shortcomings in the original declaration. The totality of the evidence before the Court
is that defendants’ registered agent has been deliberately evasive, has
required Plaintiff to expend considerable expense in multiple and repeated
efforts to serve her, and has failed to explain how she did not become aware of
this lawsuit when she admits she was at home and admits that the sheriff called
her on her son’s mobile phone. Because of
the liberal policy of trying cases on the merits, however, the Court GRANTS the
Motion, deems the Answer of defendants to be filed and served as of November 3,
2023, but awards costs of service and reasonable attorney’s fees for Plaintiffs’
opposition to this motion including the ex parte. Before December 21, 2023, Plaintiffs are to
prepare and serve on defense counsel a detailed summary of the process server
costs incurred for the Secretary of State service, service by publication, and
other service attempts since the SOS service and a declaration of counsel
detailing the attorney’s fees reasonably incurred in opposing the ex parte and
in opposing this motion. If defendants
do not pay those costs and fees within 20 days of service of the summary and
declaration, Plaintiffs may apply to the Court for payment of those fees and
costs at the January 16, 2024 hearing reserved for a status conference in this
matter.