Judge: Teresa A. Beaudet, Case: 23STCV13121, Date: 2023-12-12 Tentative Ruling

Case Number: 23STCV13121    Hearing Date: December 18, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Insurance Company of the West (“Plaintiff”) filed this action on June 8, 2023 against Defendant Sudden Valley Holdings (“Defendant”). The Complaint alleges one cause of action for breach of agreement.

            On August 1, 2023, default was entered against Defendant. 

Defendant now moves for an order to vacate and set aside the default entered against Defendant and provide Defendant with leave to file its answer to Plaintiff’s Complaint. Plaintiff opposes.

Discussion

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.)

On July 27, 2023, Plaintiff filed a proof of service indicating that Defendant was served with the Complaint on June 20, 2023 by substituted service. Item 4 of the proof of service states that the address where the party was served is “325 N Larchmont Blvd Suite 118, Los Angeles CA 90004.”

            In support of the instant motion, Defendant submits the Declaration of Patrick Henry, Defendant’s CEO. (Henry Decl., ¶ 1.) Mr. Henry states that “[w]hile…325 N. Larchmont Blvd., Suite 118, Los Angeles, CA 90004 is the address listed on the California Secretary of State website for service of process for Defendant, 325 N. Larchmont Blvd., Los Angeles, CA 90004 is a UPS Store wherein Defendant rents a private mail box. While Defendant regularly checks its mail there, Defendant denies ever receiving Plaintiffs Summons or Complaint either from any UPS Store employee or in the mail.” (Henry Decl., ¶ 2.) Mr. Henry further states that “[t]he first time that Defendant became aware of this case was when Defendant received a copy of Plaintiff’s August 16, 2023 request for court judgment,” and that “[i]mmediately upon receipt of Plaintiff’s August 16, 2023 request for court judgment, Defendant engaged counsel.” (Henry Decl., ¶¶ 2-3.)

            Defendant asserts that accordingly, the default entered against Defendant “should be vacated and set aside because such default result from Defendant’s inadvertence, surprise, or excusable neglect.” (Mot. at p. 3:4-5.) Defendant also provides a copy of its proposed answer to the Complaint. (Loakes Decl., ¶ 3, Ex. C.)

            In the opposition, Plaintiff argues that “[t]o obtain relief, the party in default must show: (1) a meritorious defense; (2) a satisfactory excuse for not presenting a defense to the original action; and (3) diligence in seeking to set aside the default once it was discovered.” (Opp’n at p. 3:14-16.) In support of this assertion, Plaintiff cites to Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1301, where the Court of Appeal noted that “[a]n essential requirement to obtain relief from a judgment on grounds of extrinsic fraud is that defendant demonstrate a satisfactory excuse for not defending the action.” But here, Defendant does not seek to obtain relief from a judgment on the grounds of extrinsic fraud. As discussed, Defendant moves to set aside the default pursuant to Code of Civil Procedure section 473, subdivision (b).[1]

            Plaintiff argues that Defendant has “not established a meritorious defense.” (Opp’n at p. 3:18.) But Plaintiff does not appear to cite any legal authority demonstrating that Defendant must do so on a motion to set aside a default pursuant to Code of Civil Procedure section 473, subdivision (b).

            Plaintiff also asserts that Defendant has not adequately established excusable neglect. Plaintiff argues that “Mr. Henry essentially claims this is the correct address for serving Defendant, he regularly receives mail there, received the request for default judgment in the mail, and other documents, but conveniently did not receive the Summons and Complaint…He offers no explanation as to how he also forgets receiving the request for entry of default which would have also put him on notice of the pending litigation.” (Opp’n at p. 4:8-13.)

But as set forth above, pursuant to Code of Civil Procedure section 473, subdivision (b), “[t]he 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.” (Emphasis added.) Plaintiff does not appear to assert that Defendant has not shown mistake, inadvertence, or surprise here.

Defendant notes that “California Code of Civil Procedure section 473 provides for relief from judgment or order taken by mistake, inadvertence, surprise or excusable neglect. ‘Surprise’ referred to in the provision of this section is ‘some condition or situation in which a party to cause is unexpectedly placed to his injury, without any default or negligence of his own, which ordinary prudence could not have guarded against.’” (Credit Managers Ass'n v. Nat'l Indep. Bus. Alliance (1984) 162 Cal.App.3d 1166, 1172-1173.) Defendant asserts that it “was surprised to learn that default had been entered in a case it did not even know existed…” (Reply at p. 3:5.)

As set forth above, Mr. Henry states that “[w]hile the 325 N. Larchmont Blvd., Suite 118, Los Angeles, CA 90004 is the address listed on the California Secretary of State website for service of process for Defendant, 325 N. Larchmont Blvd., Los Angeles, CA 90004 is a UPS Store wherein Defendant rents a private mail box. While Defendant regularly checks its mail there, Defendant denies ever receiving Plaintiffs Summons or Complaint either from any UPS Store employee or in the mail.” (Henry Decl., ¶ 2.) The Court finds that Defendant has demonstrated surprise and/or inadvertence for purposes of Code of Civil Procedure section 473, subdivision (b).

In the opposition, Plaintiff also asserts that “[a]lternatively, if the Court grants Defendants’ Motion, the Court has discretion to award appropriate monetary sanctions.” (Opp’n at p. 4:19-20.) Plaintiff states that it “requests the Court award sanctions against Defendants and their counsel of up to $2,000.00, payable to [Plaintiff].” (Opp’n at p. 4:26-27.) Pursuant to Code of Civil Procedure section 473, subdivision (c)(1), “(1) Whenever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this section, 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.” (Emphasis added.) The Court does not find that the circumstances here warrant penalties against Defendant or its counsel under Code of Civil Procedure section 473, subdivision (c)(1).

Plaintiff also asserts that “[a]n award of [Plaintiff’s] attorneys’ fees is…warranted.” (Opp’n at p. 5:1.) Plaintiff seeks “$618.50 in costs incurred in processing the default, preparing the default judgment package and opposing the motion to vacate default.” (Opp’n at p. 5:9-11.)

Code of Civil Procedure section 473, subdivision (b) provides that “[t]he court shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.” Here, Defendant’s motion is not based on an attorney’s affidavit of fault.

Plaintiff also cites to Jade K. v. Viguri (1989) 210 Cal.App.3d 1459, 1474, where the Court of Appeal noted that “Section 473 permits the court to grant relief ‘upon such terms as may be just.’ The court may properly order payment of costs or attorney fees to the adverse party as compensation for loss or expense occasioned by the granting of the section 473 motion.” Plaintiff’s counsel states that Plaintiff “incurred $618.50 in costs incurred in processing the default and preparing its default judgment package.” (Gascou Decl., ¶ 8.) The Court finds that this amount is reasonable.

Conclusion

Based on the foregoing, Defendant’s motion to vacate and set aside default is granted.

The default entered against Defendant on August 1, 2023 is ordered set aside.

Defendant is ordered to pay Plaintiff the amount of $618.50 within 20 days of the date of this Order. Defendant is ordered to file its answer to the Complaint within 10 days of the date of this Order. 

In light of the foregoing, the Order to Show Cause Re: Review of Default Judgment scheduled for December 18, 2023 is vacated.

Defendant is ordered to give notice of this Order.

DATED:  December 18, 2023           

                        ________________________________

Hon. Rolf M. Treu

Judge, Los Angeles Superior Court