Judge Ronald F. Frank, Case Number: 23TRCV03890, Date: 2024-06-27 Tentative Ruling

Judge: Ronald F. Frank, Case: 23TRCV03890, Date: 2024-06-27 Tentative Ruling

Case Number: 23TRCV03890 Hearing Date: June 27, 2024 Dept: 8

Tentative Ruling¿

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HEARING DATE: June 27, 2024¿¿

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CASE NUMBER: 23TRCV03890

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CASE NAME: Omni Manhattan Towers Limited Partnership v. Matern Law Group, PC, et al.

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MOVING PARTY: Defendants, Matern Law Group, PC and Matthew J. Matern

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RESPONDING PARTY: Plaintiff, Omni Manhattan Towers Limited Partnership

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DEFAULT ENTRY DATE: Matern Law Group, PC – February 8, 2024

Matthew J. Matern – April 26, 2024

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MOTION:¿ (1) Motion to Set Aside Default

Tentative Rulings: (1) ARGUE. See the issues identified in the Court’s analysis.

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I. BACKGROUND¿¿

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A. Factual¿¿

On November 21, 2023, Plaintiff, Omni Manhattan Towers Limited Partnership (“Plaintiff”) filed a complaint against Defendants, Matern Law Group, PC, Matthew J. Matern, and DOES 1 through 10. The complaint alleges causes of action for: (1) Breach of Contract; (2) Breach of Guaranty; (3) Breach of the Implied Covenant of Good Faith and Fair Dealing; (4) Declaratory Relief RE Lease; and (5) Declaratory Relief RE Guaranty.

On February 8, 2024, Default was entered against Defendant, Matern Law Group, PC. On April 25, 2024, Default was entered against Defendant, Matthew J. Matern.

Now, Defendants, Matern Law Group, PC and Matthew J. Matern (collectively “Matern Defendants”) file a Motion to Set Aside Entry of Default and Request for Order to Show Cause why Sanctions should not be imposed against Plaintiff’s counsel of record in the amount of $3,734.50.

B. Procedural

On May 28, 2024, Matern Defendants filed this Motion to Set Aside Default and Request for Order to Show Cause why Sanctions should not be imposed on Plaintiff. On June 10, 2024, Plaintiff filed an opposition and Request for Fees and Sanctions pursuant to Code of Civil procedure sections 473 and 128.7 in the amount of $4,828. On June 20, 2024, Defendants filed a reply brief.

II. ANALYSIS¿

A. Legal Standard

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

Preliminarily, this Court notes that Matern Defendants have indicated that counsel for Plaintiff, Maria Kao (“Kao”) has, and continues to, engage in violations of California Professional Rules of Responsibility, Rule 2-100(A), which prohibits attorneys from directly or indirectly communicating about the subject of the representation with a party known to be represented by a lawyer. Specifically, Mater Defendants assert that Kao has repeatedly directly served Defendant, Matern Law Group, PC with case-related documents and pleadings and has intentionally failed to serve Defendants’ counsel. Matern Defendants also contend that Kao’s office also submitted an erroneous proof of service to this Court indicating that Defendant, Matern Law Group, PC was “in pro per” (Declaration of Scott J. Kalter (“Kalter Decl.”), ¶6.)

On January 17, 2024, counsel for Matern Defendants sent a letter of representation to Kao informing her that the Matern Defendants are represented (Kalter Decl., ¶ 3.) However, Matern Defendants assert that even after receiving this letter, Kao has caused two Requests for Entry of Default and Case Management Conference Statement to be served directly to Defendant, Matern Law Group, PC and has failed to serve these three documents on counsel for Defendants. Moreover, Defendant, Matthew J. Matern has asserted that he did not ever receive actual notice of the Summons and Complaint being served on him (Kalter Decl., ¶ 9.) Matern Defendants note that the proof of service for Defendant, Matthew J. Matern indicates that service by substituted service, despite Defense counsel making multiple offers to accept service on behalf of Matthew J. Matern, and Plaintiff’s counsel not complying. (Kalter Decl., ¶ 7.)

Further, on February 6, 2024, counsel for Defendants notes that he informed counsel for Plaintiff of the Matern Defendants’ intentions to file a demurrer and that for the sake of judicial economy, Defendants wanted to file one responsive pleading on behalf of both Defendants – however, Plaintiff had not yet served Defendant, Matthew J. Matern. (Kalter Decl., ¶ 5.) Defendant’s counsel notes that he offered to accept service on behalf on behalf of Matthew J. Matern both via email and via telephone. (Kalter Decl., ¶ 7.) Defense counsel notes that Plaintiff’s counsel indicated that she would check with her client, but that Plaintiff’s counsel never responded. (Kalter Decl., ¶ 7.)

Matern Defendants contend that Plaintiff’s counsel has met and conferred with Defendant’s counsel previously concerning Defendants’ demurrer, so they argue that there is absolutely no excuse, mistake, surprise, inadvertence, or excusable neglect to justify her failure to meet and confer before requesting to enter default against Defendants. (Kalter Decl., ¶ 7.)

Defense counsel notes that he requested Plaintiff stipulate to set aside the default, but that Plaintiff’s counsel refused. (Kalter Decl., ¶ 11.) As such, Matern Defendants have filed this Motion to Set Aside Default and have also requested sanctions in the amount of $3,734.50 as against counsel for Plaintiff for alleged improper conduct.

Mistake, Inadvertence, Surprise, or Excusable Neglect

Here, Matern Defendants’ counsel indicates that this Court should set aside the default judgment due to the “surprise” of Plaintiff’s counsel failing to meet or confer with Defense counsel prior to the filing of the Request for Entry of Default, because Plaintiff’s counsel failed to serve Defense counsel or inform him that she planned to serve Defendant, Matthew J. Matern personally. (Kalter Decl., ¶ 8.) Defense counsel notes that the only reason the Matern Defendants have not yet filed a responsive pleading is due to confusion caused by Plaintiff’s counsel’s lack of communication. Based on this, Defendants contend that their motion to set aside is based on his counsel’s surprise. This Court also notes that Matern Defendants’ counsel has complied with the requirements of Code of Civil Procedure § 473(b), as this motion has been made within six months, and his declaration attests to his claimed excusable neglect and surprise.

In opposition, Plaintiff notes that prior to Plaintiff’s counsel ever being notified of Stone & Salter LLP’s involvement and on December 12, 2023, an attorney at Matern Law Group, PC named Dahlia Khalili called Plaintiff asking for an extension to respond to the pleading. (Declaration of Maria Kao (“Kao Decl.”), ¶ 2.) During that same call Plaintiff notes that Khalili confirmed that service on both Defendants was completed on December 6, 2024. Given that the responsive pleading was not yet due and because Plaintiff wanted to see about resolving the matter, Plaintiff’s counsel notes that she declined to discuss the extension until a call with Defendant, Matern could be had. (Kao Decl., ¶ 3.) On January 4, 2024, Plaintiff’s counsel notes that Khalili again asked for an extension to file a responsive pleading, and Plaintiff again asked to speak with Matthew Matern.

Plaintiff’s counsel notes that even though service was confirmed to be completed on December 6, 2023 against both Defendants, on January 23, 2024, the clerk rejected the proof of service on Defendant, Matthew J. Matern because the attorney service for Plaintiff had completed the form incorrectly and would not correct the proof of service. (Kao Decl., ¶ 5.) On January 31, 2024, Plaintiff notes that the clerk accepted, and the Clerk entered, the default of Defendant, Matern Law Group, PC. (Kao Decl., ¶ 7.) Given the issues with the attorney service and the clerk’s rejection, Plaintiff notes that she caused process servers to complete again the personal service against individual, Matthew Matern. (Kao Decl., ¶ 8.) Plaintiff notes that Defendant, Matthew J. Matern was served via substituted service on March 11, 2024. Subsequently, on April 23, 2024, the clerk entered default.

Plaintiff argues that this motion should be denied because Defense counsel has failed to comply with section 473 as his declaration fails to attest to his own mistake, inadvertence, surprise, or neglect. Plaintiff’s counsel also notes that she agreed to set aside the defaults on the condition that Defendants file an Answer, however, they refused (Kao Decl., ¶12-13.)

This Court identifies numerous problems of miscommunication in this case. First, Plaintiff had a reasonable ground for believing that Matern Defendants were representing themselves in pro per since an attorney in their law office was emailing counsel for Plaintiff and seeking a pleading extension. Second, that reasonable ground appears to have ended when Plaintiff’s counsel received Defense counsel’s Letter of Representation on January 16, 2024. The Court is curious why Plaintiff’s counsel continued to contact Matern Defendants directly and to refrain from notifying Stone & Sallus thereafter.

Third, the Court notes that Matern Defendants’ counsel indicated that the only reason that a responsive pleading was not filed was because Matthew J. Matern did not receive actual notice. A motion to quash allegedly invalid service might have been an option at that point, up until the time the clerk accepted the service of summons filed on March 21, 2024. Fourth, the assertion that counsel for Defendants wanted to serve a responsive pleading jointly, does not appear to create a valid excuse for the failure to timely file a responsive pleading on behalf of Matern Law Group, PC for an indefinite period of time.

The Court will take oral argument from both sides on these points, in an effort to re-introduce both sides to the concept of civility among litigation counsel even when appearing on opposing sides in a lawsuit. At this time, the Court is DENYING both parties’ requests for sanctions and/or fees and costs as neither party has a compelling reason for requesting said sanctions when neither side conducted themselves in a fashion the Court would expect of competent litigation counsel to avoid the need for a contested motion and a hearing on a motion that routinely would be unopposed or stipulated to upon payment of the costs of applying for the defaults. The majority of the requested sanctions amounts appear to be, in the Court’s view, self-inflicted wounds.

Finally, while there may be a service issue or disagreement as to proper service on Defendant Matthew J. Matern, there is not an issue raised as to the actual service on Matern Law Group, PC. As such, the parties are to argue as to whether this Court should GRANT this motion as to both Defendants or just Matthew J. Matern.

The Court is inclined to grant the motions as to both defendants, and since the motions failed to attach the proposed responsive pleading, to condition the granting of the motion on the defendants filing a joint answer rather than any other form of responsive pleading within 15 days, but to deny any monetary sanctions.