Judge Walter P. Schwarm, Case 30-2020-01154509 2022-10-04 Tentative Ruling

Judge: Walter P. Schwarm, Case: 30-2020-01154509, Date: 2022-10-04 Tentative Ruling

Specially Appearing Defendants’ (TG Tech Holdings, LLC, Total Grow Holdings, LLC, Thompson Global Prtners, LLC, Mark A. Thompson, and Derek Oxford) Motion to Set Aside Default (Motion), filed on 7-5-22 under ROA No. 86, is GRANTED.

The court DENIES Specially Appearing Defendants’ Request for Judicial Notice, filed on 7-5-22 under ROA No. 84, as immaterial to the court’s decision. (Silverado Modjeska Recreation & Parks District v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18.)

Code of Civil Procedure section 473, subdivision (b), states, in 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 . . . Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney's mistake, inadvertence, surprise, or neglect. The 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. . . .”

Ron Burns Constructions Co., Inc. v. Moore (2010) 184 Cal.App.4th 1406, 1413 (disapproved on other grounds in Even Zohar Constr. & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 844) states, “ ‘[T]he policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon a party, who, regardless of the merits of the case, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary. [Citations.]’ [Citation.] Hence, ‘ “ ‘[t]he provisions of section 473 of the Code of Civil Procedure are to be liberally construed. . . .’ [Citation.]” [Citation.] . . . “[A]ny doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” [Citation.]’ (Maynard v. Brandon (2005) 36 Cal.4th 364, 371–372, 30 Cal.Rptr.3d 558, 114 P.3d 795.) ‘Section 473 is often applied liberally where the party in default moves promptly to seek relief, and the party opposing the motion will not suffer prejudice if relief is granted. [Citations.] In such situations “very slight evidence will be required to justify a court in setting aside the default.” [Citations.]’ [Citation.]” [¶] “ ‘A motion seeking such relief lies within the sound discretion of the trial court, and the trial court's decision will not be overturned absent an abuse of discretion. [Citations.] However, the trial court's discretion is not unlimited and must be “ ‘exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.’ ” [Citations.]’ (Elston v. City of Turlock, supra, 38 Cal.3d at p. 233, 211 Cal.Rptr. 416, 695 P.2d 713.) ‘[A] trial court order denying relief is scrutinized more carefully than an order permitting trial on the merits. [Citations.]’ [Citation.]”

Evan Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 838-839 (Zohar), explains, “Section 473(b) contains two distinct provisions for relief from default. The first provision, presented here only for context, is discretionary and broad in scope: ‘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.’ (§ 473(b).) The second provision is mandatory, at least for purposes of section 473, and narrowly covers only default judgments and defaults that will result in the entry of judgments. This provision, the one here at issue, declares as follows: ‘Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney's mistake, inadvertence, surprise, or neglect.’ (§ 473(b).)”

On 3-21-22 under ROA No. 46, Plaintiff (RefineX LLC) enter default against all of the Specially Appearing Defendants. By filing this Motion on 7-5-22, Specially Appearing Defendants timely filed the Motion within six months of the entry of default.

The declaration in support of the Motion states, “It was my understanding with RefineX California counsel, B.A. Patterson, Esq. (who filed the California Complaint) that there would be a standstill, and ten (10) days’ prior notice should he wish to take a default. This would allow Total Grow, TG Tech (with additional relevant parties) to sue RefineX in Colorado, as that was believed to be the proper venue for litigation involving the Operative Facts. Total Grow and TG Tech could easily have sued RefineX in Colorado in 2020 but did not do so believing there was a standstill.” (Hagens Decl., ¶ 6(a).) The declaration also states, “During this period (although no service of process was received), TG Tech discovered that the California Complaint had been filed in August, 2020, in Orange County, California, against these Non-Resident Defendants and a number of individuals. In early September of 2020, I was notified by Attorney B.A. Patterson, Esq., the Attorney for RefineX that an Amended Complaint had been filed, and various discussions then took place between myself and Attorney B.A. Patterson during September and October 2020, some of which were recorded by email (a true and correct copy of which is attached hereto as Exhibit B and made a part hereof).” (Hagens Decl., ¶ 6(g).) Exhibit B contains a 10-6-20 email from Donald Hagens to Plaintiff’s attorney, Bradley A. Patterson. (Hagens Decl., ¶ 6(g).) The email states in part, “In the interim . . . we would ask you to continue a standstill for both of our client sets. TG does nothing in CO to initiate legal actions in the current CO proceedings regarding RefineX, and RefineX does nothing in the CA proceedings regarding defaults / requirements for answers from the listed parties.” (Hagens Decl., ¶ 6(g).) The declaration also states, “In October 2021, hearing of the Northeast Colorado Complaint, I requested California attorney Wolfgang Hahn, Esq. to check the RefineX California Complaint Status. He responded that there was no service on Defendants. (Email October 8, 2021) (a true and correct copy of which is attached hereto as Exhibit E and made a part hereof).” (Hagens Decl., ¶ 7(l).) Further, the declaration shows that the parties were involved in litigation in Colorado. (For example, see Hagens Decl. at ¶¶ 7(n), 7(o), and Exhibits G and H.)

Plaintiff’s Opposition to Motion to Set Aside Default (Opposition), filed on 9-28-22 under ROA No. 118, states, “Defendants further claim, pursuant to that purported standstill agreement, that there was a provision to provide 10-days notice before any action was taken against Defendants in this action; yet the documentation provided by Defendants reveal no such agreement was ever entered into, nor was there any 10-day notice period. [¶] Defendants provide no evidence of acceptance of their proposed standstill agreement, which is nor surprising because there was no agreement. There was no extrinsic fraud. [¶] Even if there had been such a standstill and notice agreement, Defendants do not even attempt to explain why, after being served with process eleven-months later, they did not appear in this action for over nine-months afterward. Even after being served with the requests for entry of default and notices of default, they still did not appear.” (Opposition; 3:7-16.)

Although Specially Appearing Defendants do not present evidence of a written standstill agreement, the evidence sufficiently shows that Specially Appearing Defendants were aware of this case and monitoring this case. Specially Appearing Defendants’ evidence sufficiently shows excusable neglect based on the Specially Appearing Defendants’ belief that there was a standstill agreementas shown by their attempt to monitor the litigation in this case. It is reasonable to attribute their neglect to a mistake involving the parties’ understanding as to the totality of the litigation between the parties in Colorado and California.

Therefore, the court GRANTS Specially Appearing Defendants’ (TG Tech Holdings, LLC, Total Grow Holdings, LLC, Thompson Global Prtners, LLC, Mark A. Thompson, and Derek Oxford) Motion to Set Aside Default filed on 7-5-22 under ROA No. 86. The court vacates the defaults entered on 3-21-22 under ROA No. 46.

Specially Appearing Defendants are to give notice.