Judge: Theresa M. Traber, Case: 21STCV06333, Date: 2024-02-08 Tentative Ruling

Case Number: 21STCV06333    Hearing Date: February 8, 2024    Dept: 47

Tentative Ruling

 

Judge Theresa M. Traber, Department 47

 

HEARING DATE:     February 8, 2024                   TRIAL DATE: March 5, 2024

 

CASE:                         Laksh, Inc. et al. v. Templar Transportation Corporation, et al.

 

CASE NO.:                 21STCV06333

           

 

MOTION TO SET ASIDE/VACATE DEFAULT & DEFAULT JUDGMENT

 

MOVING PARTY:               Defendant BTLN, Inc.

 

RESPONDING PARTY(S): Plaintiffs Laksh, Inc. and JROD Brothers, Inc.

 

CASE HISTORY:

 

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

           

            This is an action for breach of contract.

 

Defendant BLTN, Inc. moves to set aside the default and default judgment entered against it.  

           

TENTATIVE RULING:

 

Defendant’s Motion to Set Aside the Default and Default Judgment is DENIED.

 

DISCUSSION:

 

Defendant BLTN, Inc. moves to set aside the default and default judgment entered against it pursuant to Code of Civil Procedure 473(b) and the Court’s inherent equitable authority.

 

//

 

Statutory Relief Under Code of Civil Procedure

 

Defendant moves to set aside the default and default judgment entered against it pursuant to the discretionary relief provision of Code of Civil Procedure section 473(b).

 

Code of Civil Procedure section 473(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…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…was taken.

 

(Code Civ. Proc. § 473(b).) The six-month time limit is jurisdictional, and runs from entry of default, not default judgment. (Pulte Homes Corp. v. Williams Mechanical, Inc. (2016) 2 Cal.App.5th 267, 273.) Thus, if default was entered more than six months before the motion to set aside is made, the Court cannot ordinarily set aside the default judgment, even if the default judgment was within the six-month period, because doing so would be an “idle act.” (Id quoting Howard Greer Custom Originals v. Capritti 1950) 35 Cal.2d 886, 888.) “If the judgment were vacated, it would be the duty of the court immediately to render another judgment of like effect, and the defendants, still being in default, could not be heard in opposition thereto.” (Pulte Homes Corp., supra, 2 Cal.App.5th at 273 [internal citations and quotations omitted].) Here, default was entered against Defendant BLTN, Inc. on November 28, 2022. This motion was filed and served on January 16, 2024, more than a year after default was entered against BLTN. Defendant is therefore not entitled to challenge the default and default judgment under Code of Civil Procedure section 473(b).

 

Equitable Relief

 

            Defendant moves in the alternative for equitable relief to set aside the default and default judgment.

 

            A court may utilize its equitable authority to relieve a party from default on the grounds of (1) a void judgment; (2) extrinsic fraud; (3) constructive service; and (4) extrinsic mistake. (Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147.) “Extrinsic mistake is found when a party becomes incompetent but no guardian ad litem is appointed; when one party relies on another to defend; when there is reliance on an attorney who becomes incapacitated to act; when a mistake led a court to do what it never intended; when a mistaken belief of one party prevented proper notice of the action; or when the complaining party was disabled at the time the judgment was entered. Relief has also been extended to cases involving negligence of a party's attorney in not properly filing an answer.” (Kulchar v. Kulchar (1969) 1 Cal.3d 467, 471-72 [internal citations omitted].) To set aside a judgment based on extrinsic mistake, the moving party must (1) demonstrate that it has a meritorious case; (2) articulate a satisfactory excuse for not presenting a defense to the original action; and (3) demonstrate diligence in seeking to set aside the default once it had been discovered. (Stiles, supra, 147 Cal.App.3d at 1147-48.)

 

            1. Meritorious Case

 

            Defendant contends that it has a meritorious defense to this action which it should be permitted to present.

 

            The party seeking to set aside the default must not merely allege a meritorious defense but make an affirmative showing of the facts supporting that defense. (See, e.g. Hart v. Gudger (1957) 143 Cal.App.2d 217, 220.) A verified proposed answer denying the material allegations of the complaint is sufficient to demonstrate a meritorious case for the purpose of setting aside a default or default judgment. (Stiles, supra, 147 Cal.App.3d at 148.)

 

            Defendant’s evidence of a meritorious case is presented in the form of an unverified proposed answer attached to the motion which offers a general denial of the allegations in the operative Complaint and asserts various affirmative defenses which, if proven, would offer a complete defense to the action. (Defendant’s Exh. A.) Had the proposed answer been verified, it would by itself suffice to demonstrate meritoriousness. Absent such verification, however, the proposed answer lacks that value, and Defendant provides no other evidence which supports its position that there is a meritorious defense. Were this the only defect, the Court would be inclined to permit Defendant to obtain a proposed verified answer. However, as addressed below, the Court is not persuaded that Defendant had a valid excuse for not defending the original action, nor has it acted with diligence in moving to set aside the default, and, for that reason, permitting technical corrections would be futile.

 

            2. Excuse for Not Defending Original Action

 

            Defendant asserts that it has a valid excuse for not originally defending this action.

 

            “Although the policy of the law is to favor a hearing on the merits of a case, courts are not required to set aside default judgments for defendants who flagrantly ignore the responsibility to present a defense. The burden of a party who has had a default entered against him is not limited to merely articulating the existence of a meritorious case. The defendant must also demonstrate a satisfactory excuse for not responding to the original action in a timely manner.” (Stiles, supra, 147 Cal.App.3d at 1148.)

 

            Here, Defendant’s excuse for failing to defend the original action is that its owner believed that the other defendants in this action would defend and indemnify BTLN as a bona fide purchaser of the rights to provide package service to the regions that are the subject of this dispute. (See Declaration of Aram Seropian ISO Mot. ¶ 4.) Mr. Seropian provides no explanation for why he formed that belief, nor has Defendant produced any evidence indicating that it had requested such a defense or that the other defendants promised to do so. Unsupported statements of belief without justification are not sufficient to demonstrate a valid excuse for not defending the original action. (See Stiles, supra, 147 Cal.App.3d at 1148 [Defendant’s unsupported belief that employer was obligated to defend him not a valid excuse for failure to defend].) Defendant has thus failed to demonstrate that it had a valid excuse for not defending this action.

 

            3. Diligence in Seeking to Set Aside Default

 

            Defendant also contends that it acted diligently in seeking to set aside the default when its error was discovered.

 

            Original negligence in allowing the default to be taken will be excused if the aggrieved party makes a “strong showing” of diligence in seeking to set aside the default soon after discovering the default or entry of judgment. (See Stiles, supra, at 1149 citing Hallett v. Slaughter (1943) 22 Cal.2d 552, 557.) In determining whether due diligence has been exercised, the Court must examine both the time factor and the possible prejudice which might result from setting aside the default; the greater the prejudice, the prompter relief must be sought. (McCreadie v. Arques (1967) 248 Cal.App.2d 39, 47.)

 

            Defendant’s motion was presented on January 16, 2024, six weeks before trial, and is set for hearing on February 8, 2024, less than a month before the March 5, 2024 trial date. The remaining parties have already engaged in substantial discovery and extensive motion practice, including challenges via both demurrer and a motion for summary judgment. If the default were set aside, Plaintiffs would be forced to either seek a continuance of the trial date, which would impact all parties, or forgo any opportunity for discovery or substantive motion practice as to claims specific to this Defendant. (See, e.g., Code Civ. Proc. §§ 437c(a); 2024.020(a).) Thus, Defendant bears a heightened burden to demonstrate that it acted diligently in not bringing the motion until this late date.

 

            Defendant has failed to carry that burden. Defendant’s motion offers no discussion of when the default was discovered and no basis to presume that it acted diligently in seeking relief when it did. More damningly, Plaintiffs present evidence that Defendant’s counsel was aware of the default by no later than August 30, 2023, when he telephoned Plaintiffs’ counsel to discuss vacating the judgment to participate in a mandatory settlement conference. (Declaration of Kathrin A. Wanner ISO Opp. ¶ 16.) In reply, Defendant’s counsel merely states that the motion was withheld “to await the outcome of mediation” between Plaintiffs and the other defendants. (Declaration of Melkon R. Melkonian ISO Reply ¶ 2.) This showing is not sufficient to carry Defendant’s burden on this motion. Where default was enter in November 2022 and default judgment in April 2023, the Court cannot find that Defendant acted with the requisite diligence by delaying its motion for relief an additional five months and bringing that motion on the eve of trial. Defendant has clearly not shown that it acted with diligence in bringing this motion for relief.

 

            Defendant has failed to offer competent evidence of a meritorious defense to this action, has failed to show a valid excuse for not defending the original case, and has not shown that it acted with diligence in seeking to set aside the default and default judgment. The Court therefore finds that Defendant has not shown good cause to grant equitable relief from the default and default judgment.

 

CONCLUSION:

 

Accordingly, Defendant’s Motion to Set Aside the Default and Default Judgment is DENIED.

 

Court to give notice.

 

IT IS SO ORDERED.

 

Dated: February 8, 2024                                 ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

 


            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.