Judge: Teresa A. Beaudet, Case: 22STCV30819, Date: 2023-05-05 Tentative Ruling

Case Number: 22STCV30819    Hearing Date: May 5, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Andrea Campos (“Plaintiff”) filed this action against Defendants Sabina Arezou Manians (“Manians”), Seyed Abbas Hosseini (“Hosseini”), and Rasht LLC (collectively, “Defendants”). The Complaint asserts causes of action for (1) common law fraudulent conveyance, (2) actual fraudulent transfer in violation of Civil Code section 3439, et seq., and (3) constructive fraudulent transfer in violation of Civil Code section 3439, et seq. In the Complaint, Plaintiff alleges that Manians and Hosseini are managers and/or members of Rasht LLC. (Compl., ¶ 5.)

On December 5, 2022, default was entered against Defendants.

Defendants previously moved to set aside the entry of default against them. On March 30, 2023, the Court issued an Order granting Defendants’ motion as to Hosseini and Manians, and denying the motion as to Rasht LLC.

Defendants now move “to set aside the Entry of Default against them.” Plaintiff opposes.

Discussion

As an initial matter, as set forth above, the Court issued an Order on March 30, 2023 granting Defendants’ previous motion to set aside default as to Hosseini and Manians. Thus, Defendants’ instant motion is moot to the extent it pertains to Hosseini and Manians. This Order thus concerns Defendants’ motion to set aside the entry of default against Rasht LLC.

The Court also notes that the caption page of the instant motion indicates that Defendants seek to set aside “default and default judgment,” but default judgment has not been entered by the Court against any of the Defendants.   

Code of Civil Procedure section 473, subdivision (b) provides in pertinent 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.”

 “[B]ecause the law strongly favors trial and disposition on the merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233 [negative treatment on other grounds].) Where the party in default moves promptly to seek relief, and no prejudice to the opposing party will result from setting aside the default, “very slight evidence will be required to justify a court in setting aside the default.” (Ibid.)

            Plaintiff filed a proof of service on September 29, 2022 indicating that Rasht LLC was served with the Complaint in this matter by personal service on September 22, 2022.

            In her declaration in support of the instant motion, Manians states that “[o]n or about March 2020,” she “formed Rasht LLC and was the sole managing member.” (Manians Decl.,      ¶ 4.) “On or about February 2021,” Hosseini “became an additional manager/member of Rasht LLC.” (Ibid.) Manians indicates that “[o]n October 19, 2022, the Defendant Rasht LLC filed an answer in pro per by mail to the Superior Court of California, County of Los Angeles (Stanley Mosk Courthouse) and served Plaintiff’s attorney via email on October 20, 2022.” (Manians Decl., ¶ 9.) On October 25, 2022, a Notice of Rejection - Pleadings was filed, indicating that “[w]e are unable to process your…answer/response…submitted on 10/21/2022 for the following reason(s):…the required fee of $1305 was not submitted.” Manians states that “[u]nbeknownst to Defendants, and each of them, the Court rejected the filing because Defendants,s [sic] and each of them did not mail a check to pay for the first filing fees with the answer and did not know that Rasht, LLC could not make an appearance in pro per.” (Manians Decl., ¶ 10.) On December 5, 2022, default was entered against Defendants, and on December 19, 2022, Rasht LLC filed another answer.

            Defendants assert that “Rasht LLC’s failure to respond was caused by its mistake, inadvertence, surprise or excusable neglect as its managing member, Defendant Manians did not know that she had to mail the first appearance fees with the answer and that [sic] company must be represented by an active member of the State Bar of California.” (Mot. at p. 4:23-27.)  Defendants also assert that Plaintiff will not be prejudiced if relief is granted. Defendants assert that “Plaintiff knew that Defendants had attempted to file their Answered [sic] in a timely manner as Plaintiff was served by email on October 20, 2022.” (Mot. at p. 7:18-19.)

            In the opposition, Plaintiff asserts that Rasht LLC is not entitled to discretionary relief under Code of Civil Procedure section 473, subdivision (b) because “it failed to show that its failure to properly appear is attributable to mistake, inadvertence, surprise, or excusable neglect and Defendants failed to act in good faith.” (Opp’n at p. 6:22-24.)

Plaintiff asserts that the Court “should disregard Defendant’s argument that it failed to timely file an answer through mistake, inadvertence, surprise, or excusable neglect because the answer filed on December 19, 2022 was not accepted for filing and because they did not know that that they were required to have an attorney represent the corporation.” (Opp’n at p. 7:10-13.)[1] As Plaintiff notes, Rasht LLC’s second answer filed on December 19, 2022 indicates that Manians is “representing Rasht LLC.” Plaintiff’s counsel states in the opposition that previously, “[o]n October 20, 2022, immediately upon receiving Defendants’ Answers, [he] informed Defendants that California case law does not allow corporations and LLC’s to represent themselves.” (Friedman Decl., ¶ 13.)

However, this argument solely pertains to the second answer Rasht LLC attempted to file. As set forth above, Manians indicates as to the first answer that “Rasht LLC filed an answer in pro per by mail to the Superior Court of California, County of Los Angeles (Stanley Mosk Courthouse) and served Plaintiff’s attorney via email on October 20, 2022,” and that “[u]nbeknownst to Defendants, and each of them, the Court rejected the filing because Defendants…did not mail a check to pay for the first filing fees with the answer and did not know that Rasht, LLC could not make an appearance in pro per.” (Manians Decl., ¶¶ 9-10.) The Court finds that the foregoing demonstrates excusable neglect on the part of Rasht LLC as to its failure to timely answer the Complaint. 

Moreover, the instant motion was filed by the Jalilvand Law Corporation on behalf of Rasht LLC, and Kamelia Jalilvand indicates in a supporting declaration that she is counsel for Rasht LLC. (Jalilvand Decl., ¶ 1.) A Substitution of Attorney was also filed on May 1, 2023 indicating that Ms. Jalilvand is Rasht LLC’s new legal representative. Thus, Rasht LLC is now represented by counsel.

Plaintiff also asserts that Rasht LLC is not entitled to discretionary relief because “ignorance of law is not a mistake that would support relief from judgment.” (Opp’n at p. 8:9-10.) Plaintiff cites to Hopkins & Carley v. Gens (2011) 200 Cal.App.4th 1401, 1405, which involved a motion to set aside a judgment under Code of Civil Procedure section 473, subdivision (b). The Hopkins Court noted that “[a]n honest mistake of law can provide a valid ground for relief, at least where a problem is complex and debatable, but relief may be properly denied where record shows only ignorance of the law coupled with negligence in ascertaining it. In considering whether a mistake of law furnishes grounds for relief, the determining factors are the reasonableness of the misconception and the justifiability of lack of determination of the correct law.” (Id. at pp. 1412-1413 [internal quotations and citations omitted].)[2]

            Plaintiff asserts that here, “Rasht LLC was defaulted because it acted with indifference to the law in light of Plaintiff’s numerous warnings regarding the requirement that a corporation must be represented by an attorney.” (Opp’n at p. 9:5-7.) But Plaintiff disregards the point in the motion that Rasht LLC attempted to file its first answer by mail on October 19, 2022, and “[u]nbeknownst to Defendants…the Court rejected the filing because Defendants…did not mail a check to pay for the first filing fees with the answer…” (Manians Decl., ¶¶ 9-10.) The Court finds that this demonstrates excusable neglect on the part of Rasht LLC as to its failure to timely answer the Complaint.[3]

Plaintiff also contends that “[s]hould Defendant’s default be set aside, Plaintiff will be prejudiced by Defendant’s disregard of the legal process and continuous delay in properly litigating this case until drastic measures are taken.” (Opp’n at p. 10:18-19.) The instant action was recently filed on September 21, 2022. The Court does not find that Plaintiff has demonstrated that a long delay exists here that would warrant denying the instant motion. Plaintiff also asserts that “Defendants admitted that they did not conduct the necessary legal research until they were served with a Request for Entry of Default. Plaintiff will be prejudiced because she complied with the judicial rules whereas, Defendants consciously disregard the rules.” (Opp’n at p. 11:1-3.) The Court notes that it is unclear what legal research Plaintiff is referring to, as such research is not mentioned in the motion. 

            Based on the foregoing, the Court grants Rasht LLC’s motion to set aside the default entered against it.

Lastly, “[w]henever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this [Section 473], the court may do any of the following: (A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party. (B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund. (C) Grant other relief as is appropriate.” (Code Civ. Proc., § 473, subd. (c)(1).)

Plaintiff asserts that “[i]f the Court grants Defendant’s Motion to Vacate and Set Aside Entry of Default, Plaintiff requests that the Court impose a penalty of $1,000 upon Defendants due to the failure to Answer the Complaint. Furthermore, Plaintiff requests that the Court issue an order requiring Defendants to compensate Plaintiff for the costs and attorney’s fees associated with Plaintiff’s Request for Entry of Default as well as the costs and attorney’s fees associated with Plaintiff’s Opposition to the Motion at hand.” (Opp’n at p. 11:11-16.) Plaintiff seeks $6,007.26 in fees and costs in connection with Plaintiff’s opposition to the instant motion. (Freidman Decl., ¶ 30.) The Court does not find that the circumstances of this case are appropriate for imposing either a penalty or other relief such as attorney fees, and therefore, the Court does not do so.

Conclusion

Based on the foregoing, Defendants’ motion is granted as to Rasht LLC. The default entered against Rasht LLC is ordered set aside. Defendants’ motion is denied as moot to the extent it pertains to Hosseini and Manians.

The Court orders Rasht LLC to file and serve its proposed answer attached to Rasht LLC’s “Notice of Errata Re Defendant’s Notice of Motion and Motion to Set Aside Default and Default Judgment” within 10 days of the date of this Order.¿  

Defendants are ordered to give notice of this Order.

DATED:  May 5, 2023          

            ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court