Judge Ronald F. Frank, Case Number: 24TRCV00835, Date: 2024-07-08 Tentative Ruling

Judge: Ronald F. Frank, Case: 24TRCV00835, Date: 2024-07-08 Tentative Ruling

Case Number: 24TRCV00835 Hearing Date: July 8, 2024 Dept: 8

Tentative Ruling¿

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HEARING DATE: July 8, 2024¿¿

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CASE NUMBER: 24TRCV00835

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CASE NAME: We Are Reality, Inc. v. Pieces, LP, et al.

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MOVING PARTY: Defendant, Pieces, LP

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RESPONDING PARTY: Plaintiff, We Are Reality, Inc. (Late-Filed Opposition)

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DEFAULT ENTRY: May 14, 2024

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MOTION:¿ (1) Motion to Set Aside Default

Tentative Rulings: (1) Argue, but the Court is inclined to GRANT.

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I. BACKGROUND¿¿

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A. Factual¿¿

On March 11, 2024, Plaintiff, We Are Reality, Inc. (“Plaintiff”) filed an unlawful detainer complaint against Defendant, Pieces, LP, and DOES 1 through 10. The complaint alleges Plaintiff is the landlord and owner of the subject property of 249 Rees St., Playa Del Rey, CA 90293. Plaintiff alleges that Defendant, Pieces, LP agreed to pay $20,000 a month in rent. Plaintiff alleges that Defendant failed to pay rent and was served a three-day notice to pay rent or quit. Now, Plaintiff seeks to recover past due rent owed by Defendant in the amount of $45,000.

On April 18, 2024, Plaintiff filed an Application and Order to Serve Summons by Posting for Unlawful Detainer, which was subsequently granted the same day. The Application to serve by posting makes no mention of the claimed vacation home use of the property rather than as residential premises.

On May 14, 2024, default entry was entered by the Court’s clerk as against Defendant, Pieces, LP (“Defendant”) as to possession only of the subject property. On May 17, 2024, Plaintiff filed an Application for Writ of Possession. On May 20, 2024, the Clerk issued the writ of possession.

Now, Defendant has filed a Motion to Set Aside Default Judgment and Leave to Amend Action.

B. Procedural

On June 11, 2024, Defendant filed this Motion to Set Aside Default Judgment and Leave to Amend Action. On July 3, 2024, Plaintiff filed an untimely opposition brief that the Court nonetheless considered. To date, no reply brief has been filed.

II. ANALYSIS¿

A. Legal Standard

The Motion is brought under Code of Civil Procedure section 473.5.

Courts may set aside a default or default judgment due to lack of actual notice. Code of Civil Procedure section 473.5 states:

“(a) When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.

(b) A notice of motion to set aside a default or default judgment and for leave to defend the action shall designate as the time for making the motion a date prescribed by subdivision (b) of Section 1005, and it shall be accompanied by an affidavit showing under oath that the party’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect. The party shall serve and file with the notice a copy of the answer, motion, or other pleading proposed to be filed in the action.

(c) Upon a finding by the court that the motion was made within the period permitted by subdivision (a) and that his or her lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect, it may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action.”

B. Discussion

Defendant is moving to set aside the default judgment entered by the clerk on May 14, 2024 on the grounds of Code of Civil Procedure section 473.5 as it argues Plaintiff’s service by posting did not result in actual notice. Defendant contends that throughout 2023 and 2024, Plaintiff was in regular communication with Defendant regarding their attempt to conclude a sale of the subject property, but that Plaintiff never mentioned its unlawful detainer action against Defendant. Further, Defendant notes that it is a limited partnership with a registered agent for service. (Declaration of Jay Grdina (“Grdina Decl.”), ¶ 18.) However, Defendant asserts that the Summons and Complaint were never served to Defendant’s registered agent for service. (Grdina Decl., ¶ 18.)

Pursuant to the Proof of Service filed on May 14, 2024, Defendant was served by posting at the subject property and U.S. mail. The Application to Serve Summons by Posting for Unlawful Detainer, filed on April 18, 2024, indicated that service had not been attempted during regular business hours at the place of employment of the defendant because the places of employment of the defendant was not known. The application further indicates that service had been attempted at the subject property which was asserted to be the residence of the defendant. Further, the application included a declaration of non-service indicating that on four different occasions from March 15, 2024 to March 20, 2024, service had been unsuccessfully attempted prior to the application for service by posting was filed.

Defendant argues that service by posting was improper because service was only made to the subject property, a property Plaintiff knew Defendant only used as a summer vacation home rather than as Defendants’ regular residence address. As such, Defendant contends that its lack of physical presence at the subject property was not because it was avoiding service, but because it occurred at a time Defendant was not naturally there. If it is true that Plaintiff knew the subject property was only used as a summer vacation home by Defendant, but nonetheless only attempted service there during winter or spring months, the Court might not have authorized service by posting at the property without further efforts to serve the defendant elsewhere. Defendant indicates it is a limited partnership organized in South Dakota with a registered agent for service.

In Plaintiff’s tardy opposition brief, it indicates that Defendant held itself out as a California limited partnership throughout its interactions with the Plaintiff and in the execution of the lease agreement. As such, Plaintiff contends that it acted in good faith when it conducted a thorough search in the California Secretary of State database and found no registration for Pieces, LP, indicating that Defendant failed to comply with California’s statutory requirements for registering as a foreign limited partnership conducting business within the state. Because of this, Plaintiff argues that Defendant’s motion is without merit as Defendant did not designate a lawful agent for service of process within the state, and consequently, service at the subject property was the only viable option available to the Plaintiff. But Plaintiff did not seek to serve Defendant via the Secretary of State as one might if a party had failed to designate a registered agent; rather, Plaintiff only sought resort through a substitute service by posting, a method permissible only in unlawful detainer actions where the Legislature has recognized that the landlord may only have the subject property address as a way of giving notice to a tenant.

This Court notes that Defendant’s motion and supporting documents comply with Code of Civil Procedure section 473.5 as the motion has been filed concurrently with the proposed answer. However, the Court is interested (as it is not discussed in the moving papers) as to how Defendant received notice of the entry of default judgment, but not of service. Depending on the parties’ presentation of oral argument during the hearing of the above, and given the strong public policy favoring resolution of cases on their merits, the Court’s tentative ruling is to GRANT the Motion to Set Aside Default Judgment pursuant to Code of Civil Procedure section 473.5.