Judge William A. Crowfoot, Case 22AHCV00437 2023-05-15 Tentative Ruling

Judge: William A. Crowfoot, Case: 22AHCV00437, Date: 2023-05-15 Tentative Ruling

On July 5, 2022, plaintiff BFS Group, LLC (“Plaintiff”) filed this action against defendant Vision Construction Group, Inc. (“Defendant”) arising from a breach of contract for the delivery of lumber. Default was entered on December 7, 2022, and the Court granted Plaintiff a judgment in the amount of $705,323.42 on March 28, 2023.

On April 11, 2023, Defendant filed this motion to set aside the default judgment. Defendant argues that the entry of default and default judgment were taken by surprise and that the complaint does not support the judgment awarded. Defendant also attaches a copy of a proposed answer.

A judge has the discretion to grant a motion for relief from default if the default was entered by reason of mistake, inadvertence, surprise, or excusable neglect. (Code Civ. Proc., § 473, subd. (b.) “Surprise” for purposes of a motion for relief under CCP § 473(b) means a condition or situation in which a party is unexpectedly placed to the party's injury, without any default or negligence by the party, against which ordinary prudence could not have guarded. (County of Los Angeles v. Financial Cas. & Sur. Inc. (2015) 236 Cal.App.4th 37, 44 [failure to appear after being misinformed by court clerk that case had been taken off calendar demonstrates surprise].)

Defendant argues that the default was entered in surprise and that the complaint does not support the default judgment. Juan Rivas, Defendant’s president, declares that he was unaware of any lawsuit filed by Plaintiff against Defendant or any efforts at service until March 24, 2023. (Motion, Jonathan Rivas Decl., ¶ 2A. ) He states that on March 24, 2023, his father received a copy of Plaintiff’s application for default judgment and immediately gave it to Mr. Rivas. (Id., ¶¶ 3-4.) According to Mr. Rivas, “this was [his] first notice of any legal proceedings against [Defendant] by [Plaintiff].” (Id. at ¶ 4.)

Mr. Rivas concedes that he, his wife, and two children reside at 31 W. Camino Real in Arcadia, California (“Arcadia Residence”), which is listed on the declaration of due diligence submitted with the proof of service showing service on the Secretary of State. He adds, for no apparent reason, that he and his family live in the accessory dwelling unit (“ADU”) located while that his father, mother, brother, and sister reside in the main residence, and submits photos to support his claim that the ADU is not visible from the front of the house. (Id., ¶¶ 3, 6.)

Mr. Rivas points out, without much purpose, that the declaration of due diligence do not state that his vehicle, a black Ram truck, was visible, and claims that he was not home at the time of service. (Id., ¶ 8.) He also states that although Plaintiff’s counsel declared that service by mail was attempted, he never received any papers. (Id., ¶ 10.) He further states that he never received anything from the Secretary of State regarding the lawsuit. (Id.¶ 12.)

Mr. Rivas’s family members declare in substantially identical declarations that until they learned of the default judgment, they “had no idea anyone was trying to serve [Defendant] or had come to our door with papers”, that they were “not aware that any process server ever came to the main residence or the ADU with papers”, and “[a]t no time did [they] receive any papers regarding any lawsuit or from the Secretary of State relating to this case in our mailbox.”

Defendant also argues that the Complaint is deficient because it fails to give notice of the damages being claimed. The Court disagrees. The Complaint requests “all available damages, including but not limited to actual damages, lost profits or the price of lumber less resale, incidental damages, and all other damages available under the California Commercial Code § 2701 et seq., as applicable, as well as costs, pre- and post-judgment contractual and statutory interest, attorney’s fees, and such other relief as the Court deems just and proper.” (Comp., p. 3.) The Complaint then incorporates several exhibits which state that Defendant agreed to a contract purchase price of $801,324.37, which gives Defendant notice of the maximum amount recoverable against it.

In opposition, Plaintiff argues that Defendant has known about this action from its inception because its counsel sent a demand for performance on August 26, 2021 at the Arcadia Residence. (Opp., p. 2.) Then, after this action was initiated on July 5, 2022, Plaintiff’s process server unsuccessfully attempted to serve Defendant at the Arcadia Residence 7 times. (Id., p. 3.) Plaintiff also states that that a copy of the default package was mailed to Rivas’s residence and that Defendant had 4 days’ notice of the prove-up hearing yet still failed to attend. (Id., 3.) Plaintiff argues that Defendant has not shown that it was “surprised” by the entry of judgment and that ordinary prudence dictated that Defendant would appear at the prove-up hearing to contest Plaintiff’s request for a default judgment. In the alternative, Plaintiff argues that if the Court is inclined to grant the motion, that the Court should impose a sanction or require Plaintiff to post a bond.

On reply, Defendant argues that the copy of the default package received by Mr. Rivas’s father did not include a hearing date, therefore it could not appear to contest the default judgment. (Reply, pp. 3-4.) Defendant also argues for the first time that Plaintiff did not submit a certificate from the Secretary of State, therefore it is unknown whether the Secretary of State has a record of being served with the complaint or that it gave notice to Defendant or forwarded the Complaint to Defendant. (Reply, p. 3.)

The Court does not take the absence of this certificate lightly, especially in light of the multiple declarations submitted in support of Defendant’s motion for relief. Accordingly, the Court GRANTS Defendant’s motion for relief.

Next, the Court considers whether Defendant should be required to: (1) pay Plaintiff’s fees or costs in the amount of $16,617, (2) a sanction of $1,000 as permitted by CCP 473(c), or (3) post a bond. Plaintiff’s counsel, Aaron M. Cohn, declares that his hourly rate is $360 per hour and his colleague, Marjan Hajimirzaee’s rate is $345 per hour. (Cohn Decl., ¶ 16.) Cohn declares that Plaintiff incurred $7,302 in fees in connection with the default and application for default judgment and $9,315 in connection with opposing Defendant’s motion for relief. (Ibid.) In total, Plaintiff requests $16,617 as compensation. (Opp., p. 7.) This declaration is insufficient because Cohn only declares that his colleague, Ms. Hajimirzaee, spent 25 hours preparing this motion without specifying how he has personal knowledge of this fact. He also declares that Plaintiff incurred $7,302 in fees in connection with the default judgment, but does not specify whether he or Ms. Hajimirzaee performed the work. The Court finds Plaintiff’s request for Defendant to post a bond is similarly unsubstantiated. However, the Court is mindful that Plaintiff expended costs and fees to attempt to serve Defendant at the address for its registered agent’s service of process many times. Therefore, the granting of this motion is conditioned on Defendant’s payment of $1,000 within 10 days of the date of this hearing.

Defendant’s motion to set aside the default judgment and entry of default is GRANTED on the condition that Defendant pay $1,000 to Plaintiff within 10 days of the date of this hearing.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.