Filed 8/26/19 Luberski, Inc. v. Edalat CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

LUBERSKI, INC.,

Cross-Complainant and Respondent,

v.

PAUL EDALAT,

Cross-Defendant and Appellant.

G055536

(Super. Ct. No. 30-2012-00594049)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Derek W. Hunt, Judge. Reversed and remanded.

Law Offices of M. Candice Bryner and Candice Crosby for Appellant.

Coleman & Horowitt and Judith M. Sasaki for Respondent.

* * *

 

Paul Edalat appeals from the trial court’s denial of his various motions for relief from a default judgment entered against him for nonpayment of two promissory notes totaling $500,000. Edalat’s default on the notes led to cascading financial consequences that culminated in a default judgment against him for over $3.3 million.

Edalat contends the trial court erroneously denied his motion to vacate entry of his default under Code of Civil Procedure section 473, mistakenly concluding the motion was an untimely motion for reconsideration under section 1008. He further contends the court erred in denying his motions to vacate the default judgment and for a new trial because “the judgment was excessive, against the law, and not supported by the evidence.”

We conclude Edalat has demonstrated prejudicial error in the rulings challenged here. Consequently, we reverse and remand for further proceedings in the trial court.

I

BACKGROUND

A. The Underlying Loan Agreements

Paul Edalat was the president of Scilabs Nutraceuticals, Inc. (Scilabs), a licensed nutraceutical manufacturer in Irvine. In early 2012, Edalat obtained two short-term loans totaling $500,000 for Scilabs from Luberski, Inc. (Luberski), a licensed finance lender. On January 5, 2012, Scilabs and Edalat (collectively, the borrower) executed a $300,000 loan agreement and security agreement in favor of Luberski (loan No.1). On January 18, 2012, Scilabs and Edalat executed a similar set of documents for a second secured loan from Luberski in the amount of $200,000 (loan No.2).

Each set of loan documents required Edalat to repay the entire principal of each loan within 120 days, with interest accruing at a monthly rate of 4 percent. Each loan agreement further provided that if the loan were not repaid in full at the end of the 120 days, the borrower would pay a monthly 10 percent default rate of interest on the balance owed from the due-date forward. The security agreement executed with loan No.1 gave Luberski a lien on a 1991 Lamborghini Diablo and a 2004 Lamborghini Mucielago. The security agreement executed along with loan No.2 gave Luberski a lien on all the assets of Scilabs, including its inventory and equipment.

Scilabs and Edalat failed to make any payments on either loan.

B. The Litigation, Seizure of Assets, and Bankruptcy

In August 2012, Edalat and Scilabs filed a complaint against Luberski, and in October 2012, Luberski filed a cross-complaint against Edalat and Scilabs to enforce the two loan agreements. The amended cross-complaint is the pleading that underlies this appeal. In November 2012, Luberski obtained an order for writ of possession and seized Scilab’s equipment, furniture, inventory, and other property pledged as security for the debt.

On April 4, 2013, Luberski served written discovery requests on Edalat (form and special interrogatories, requests for admissions, requests to produce documents). Luberski granted Edalat several extensions to respond. Eventually, after failing to obtain the promised responses, Luberski obtained a court order requiring Edalat to respond without objection to written discovery and pay discovery sanctions (the October 1, 2013 discovery order).

On December 17, 2013, Edalat personally served the mandated discovery responses on Luberski’s counsel, but apparently never paid the sanctions ordered.

Edalat filed for Chapter 7 bankruptcy protection on July 22, 2014. Thereafter, Edalat represented himself in the underlying case.

C. Motion for Terminating Sanctions and for Entry of Default

In January 2016, the bankruptcy court issued an order waiving Edalat’s discharge based on a stipulation between Edalat and the bankruptcy trustee. In April 2016, Luberski filed in this action a motion for terminating sanctions based on Edalat’s “abject failure to respond to any and all discovery . . . combined with [his] failure to comply with the Court’s [October 1, 2013] discovery order[.]”

The motion painted a picture of a litigant who had refused to provide any discovery responses and disobeyed court orders to do so. The motion stated: “Since the case was initiated by Edalat on August 27, 2012, Edalat has not done anything to fulfill his discovery obligations in this case.” “Edalat has failed to provide any discovery[.]” And: “Edalat has completely failed to comply with the Court’s order” to provide discovery responses and to pay sanctions. The motion argued terminating sanctions were only fair: “Since Edalat has failed and refused to respond to any discovery propounded regarding [his] claims and defenses in this action[], it is therefore appropriate for him to lose his claims.” The motion requested an order striking Edalat’s complaint and answer to the cross-complaint, and the entry of a default judgment against Edalat on the cross-complaint.

Edalat, still representing himself, did not oppose the motion for terminating sanctions. In September 2016, Judge John Gastelum granted Luberski’s motion for terminating sanctions, issued an order striking Edlat’s complaint and answer to the cross-complaint, and entered his default. On October 3, 2016, Judge Gastelum entered a default judgment against Edalat for $2,774,373.27, reflecting the principal debt of $500,000, prejudgment interest in the amount of $2,263,883.27, and additional fees, costs, and sanctions.

D. First Motion to Vacate the Default, Default Judgment, and Terminating Sanctions;

June 20, 2017 Order Declining to Rule

In November 2016, Edalat, now represented by counsel, filed a motion to vacate the entry of default, the default judgment, and the terminating sanctions order based on section 473, subdivision (b), and the court’s inherent equitable powers. The motion for relief argued “terminating sanctions were premised” on the fallacy that Edalat failed to comply with the October 1, 2013 discovery order. The motion asserted, “Edalat served verified responses (without objection) to all the discovery at issue nearly three years ago in December 2013.” Edalat also asserted his failure to appear for deposition before the bankruptcy did not warrant terminating sanctions.

Edalat contended he was blindsided by the motion for terminating sanctions, stating he “had no reason to suspect that Luberski would file a Motion for Terminating Sanctions.” Edalat pointed out that after waiver of his discharge in the bankruptcy case, “Luberski never contacted [] Edalat to reschedule his deposition. Nor did Luberski ever complain or contend that [] Edalat’s responses to written discovery in December 2013 were inadequate.”

Edalat further argued he received no notice of the motion for terminating sanctions and submitted evidence of his purported difficulties with mail delivery at the time. Edalat asserted he first learned of the sanctions motion after October 5, 2016, when the court clerk e-mailed him a notice of the default judgment entered against him.

On January 6, 2017, Judge Gastelum sua sponte vacated the default judgment, but not the entry of default.

Luberski opposed Edalat’s motion to vacate, arguing the requested relief was not warranted for a multitude of reasons, including: “Edalat still has failed to comply with the Court’s Orders regarding the payment of sanctions”; Edalat fails to state grounds for relief under section 473, subdivision (b), because his purported failure to receive the mailed notice of the motion for terminating sanctions is “entirely his fault . . .”; and Edalat has no plausible defense to Luberski’s claims for breach of the loan agreement and promissory note. Luberski also argued the motion to vacate was actually a motion “to reconsider discovery Orders issued against him in 2013” and therefore untimely.

In reply, Edalat argued Luberski “obtained ‘death knell’ sanctions against a pro per litigant based on untrue statements made under penalty of perjury.” Edalat asserted Luberski’s counsel declared under penalty of perjury that “Plaintiff has not produced any discovery in response to the Court’s Order[,]” when “[i]t is irrefutable that [] Edalat responded to all written discovery to which this Court ordered him to respond.” The reply challenged Luberski’s argument terminating sanctions were warranted based on Edalat’s “failure to comply with two orders to pay monetary sanctions,” pointing out, “California law is well settled that it is never appropriate for a court to issue a terminating sanction based on the failure to pay a monetary discovery sanction. (Newland v. Superior Court (1995) 40 Cal.App.4th 608, 615.)”

The reply disputed Luberski’s argument the motion to vacate was an untimely motion for reconsideration. Edalat also argued he had demonstrated grounds for relief under section 473, subdivision (b), because his failure to respond to the motion for terminating sanctions was the result of surprise, mistake, or excusable neglect.

On or about February 28, 2017, Luberski filed an “application for court judgment on declaration in lieu of personal testimony.” The application sought a default judgment of $3,346,697, consisting of $500,000 principal, $2,836,207 accumulated interest, $8,015 fees and costs, and $2,475 discovery sanctions.

In April 2017, the case was reassigned to Judge Derek Hunt. The trial court set for hearing on June 20, 2017 Edalat’s motion to vacate entry of his default, the default judgment, and the order striking his complaint and answer to Luberski’s cross-complaint, and Luberski’s default “prove-up” for judgment on the cross-complaint.

In advance of the June 20, 2017 hearing, Edalat filed two additional documents: a supplemental brief regarding bankruptcy issues in support of the motion to vacate, and an objection to the proposed default judgment. In the objection, Edalat protested the amount of the judgment because it “does not recognize any credit for the considerable value of assets that [Luberski] has seized pursuant to a writ of attachment[.]” In an accompanying declaration, Edalat stated that in November 2012 Luberski seized pursuant to a writ of attachment “all of the equipment, furniture and inventory at Scilabs’ office[.]”

Edalat attached to his declaration two “Equipment Lists” detailing the seized property and opined the property “was worth approximately $729,780.” According to the declaration, “Luberski also seized other equipment, parts and accessories . . .[and] all Scilabs’ manufacturing inventory,” collectively worth approximately $750,000. Additionally, Edalat stated Luberski seized in September 2016 the 1991 Lamborghini Diablo, “worth approximately $180,000[.]” The declaration concluded: “In [the] proposed Default Judgment, Luberski does not provide any credit for the value of the items seized. Luberski has admitted that items have been sold, but has not to date provided any kind of accounting or records that reflect this.”

Though the record contains no reporter’s transcript of the June 20, 2017 hearing, Judge Hunt’s subsequent minute order shows he declined to rule on the merits of Edalat’s motion to vacate under section 473, subdivision (b). The June 20, 2017 minute order stated: “In the court’s evaluation, the instant motion seeks reconsideration of orders and a judgment entered by Judge Gastelum in September and October 2016 and to that extent are untimely under CCP § 1008 and thus ordered off calendar.”

At the June 20, 2017 hearing, the trial court refrained from proceeding with the default “prove-up” and, instead, “[o]n its own motion . . . [set] an OSC re dismissal of the instant action” for July 17, 2017[.]” The minute order stated the court required “a written showing by all parties opposing such a dismissal. The currently pending request for entry of default judgment by Luberski Inc. against Paul Edalat will remain under submission pending resolution of the said OSC.” Based on a subsequent minute order, it appears the court set the hearing on dismissal because it was concerned about the status of the bankruptcy and its effect on this action.

Luberski’s counsel submitted a memorandum opposing dismissal, attaching certain bankruptcy court filings. Edalat’s counsel informed the court Edalat would not oppose dismissal of the action. In July 2017, the trial court vacated the dismissal hearing and again took the application for default judgment under submission.

On July 27, 2017, Luberski refiled its earlier application for default judgment on declaration in lieu of personal testimony, seeking a judgment of $3,346,697.

E. Edlat’s “Additional” Opposition to the Proposed Default Judgment; August 11, 2017

Order and Judgment

According to Edalat’s counsel’s declaration, she contacted Judge Hunt’s courtroom staff on or about August 9 or 10, 2017, and advised the court she was working on “another objection” to the application for default judgment which she anticipated filing on the morning of August 11, 2017. Edalat’s counsel filed the promised objection, entitled “Response and Second Objection to the Proposed Judgment,” on August 11, 2017, at 5:43 P.M.

In the document, Edalat’s counsel objected to the proposed judgment on several “additional” grounds: the wrong interest rate was used to calculate interest on part of debt; the proposed judgment is based almost entirely on a default interest rate of 120 percent that is void as a penalty under Civil Code section 1671, substantively unconscionable, and thus unenforceable under Civil Code section 1670.5; Luberski’s cross-complaint is ambiguous on the amount claimed and thus does not support a default judgment in any amount; and Luberski failed to comply with Commerical Code requirements on disposition of seized collateral.

Judge Hunt issued a minute order on the “Default Prove-Up” at 10:49 a.m. on August 11, seven hours before Edalat’s counsel filed her “Response and Second Objection[.]”

The August 11, 2017 minute order failed to address Edalat’s counsel’s later-filed substantive objections to the proposed judgment, nor did the minute order address Edalat’s initial objection the judgment provided no credit for substantial collateral seized in satisfaction of the debt. Instead, the minute order recounted the procedural history of the case, including certain events in Edalat’s Chapter 7 bankruptcy proceeding. The minute order specifically mentioned a May 16, 2016 “written sale agreement” between the bankruptcy trustee and Edalat concerning the sale of Edalat’s assets, including “six automobiles and the right to Edalat’s Third Amended Complaint,” to Mehdi Khorasani and MK Investments, both named by Luberski as “Doe” cross-defendants in this action. The minute order states: “Whether this supposed transaction was approved by the Bankruptcy Court is unclear from this court’s file, as is the question of whether it was ever fully or partially consummated.”

The minute order implied the May 16, 2016 sale agreement was disclosed in bankruptcy documents that the trial court “discovered” Luberski had filed July 3, 2017, in the dismissal hearing that had been set for July 17.

The minute order stated that in light of these “discovered” documents and Luberski’s earlier submission of “its default package to support Judge Gastelum’s 2016 default judgment,” the court “now rules as follows: (a) Cross-defendants Mehdi Khorasani and MK Investments are hereby dismissed without prejudice from the instant action. [¶] (b) The regularity of the May 16, 2016 sale of assets seeming to be authenticated, and no opposition otherwise having been filed, the court –– insofar as it has not already been done by Judge Gastelum –– hereby grants judgment of $3,346,697 (inclusive of interest, costs and attorney fees) to cross-complainant Luberski, Inc. as against cross-defendant Paul Edalat.” (Italics added.) The court promptly entered judgment for Luberski, awarding the exact amounts requested in the application.

F. Motions for New Trial and to Vacate the Judgment; October 3, 2017 Order Denying

Both Motions

On August 28, 2017, Edalat filed a motion to vacate the default judgment (§ 473, subd. (b)) and a motion for new trial or to set aside the judgment (§§ 657, 663). A joint memorandum in support of both motions argued the court set aside the default judgment because it is “excessive, not supported by the evidence[,] and is an illegal judgment otherwise against the law.” The motion to vacate further argued the default judgment was entered as a result of “Edalat’s surprise, mistake and/or excusable neglect in failing to oppose” the motion for terminating sanctions.

The motions repeated the arguments Edalat’s counsel made in her “Response and Second Objection to the Proposed Judgment.” Edalaat asserted the court should vacate the judgment because an incorrect rate of interest was used; the judgment was based almost entirely on a default interest rate of 120 percent annually that is void as a penalty under Civil Code section 1671; the 120 percent interest rate was substantively unconscionable and thus unenforceable under Civil Code section 1670.5; Luberski violated Commercial Code requirements in disposing of the seized collateral; and Luberski’s cross-complaint is ambiguous on the amount claimed and thus does not support a default judgment in any amount.

Luberski filed an opposition to Edalat’s motions to vacate the default judgment and for a new trial. The opposition asserted Edalat “did not oppose” Luberski’s application for entry of the $3,346,697 default judgment against Edalat , which ignored the two objections Edalat filed in opposition to the proposed judgment. Luberski also argued Edalat’s “conclusory assertions regarding the assets attached in 2014 and sold by Luberski are inadmissible” because Edalat failed to present any evidence supporting his claim as to value. By comparison, Luberski asserted, it had “presented evidence of the . . . monies recovered by the sale of the equipment by providing the ledger reflecting the credit for monies received in conjunction with equipment sales.” The opposition also disputed Edalat’s assertion the cross-complaint was ambiguous on the damages sought for breach of the loan agreements and promissory notes.

Luberski argued the 120 percent annual default interest rate on the $500,000 loan “is legal” because Luberski, as a licensed finance lender, is exempt from California usury law, citing an unpublished decision by another panel of this court in an unrelated case. (Luberski, Inc. v. Integrated Freight Corporation (March 27, 2015, No. G049877 [nonpub. opn.].) The opposition did not address Edalat’s statutory arguments the 120 percent annual interest rate was void as a penalty (Civ. Code, § 1671) and unenforceable as substantively unconscionable (Civ. Code, § 1670.5).

The opposition conceded the default judgment was incorrect in one respect: Relying on an erroneous representation in Luberski’s application for judgment, the trial court used the wrong interest rate to award interest on $200,000 (loan No.2) during the first 120 days of the loan. The judgment calculated interest on the $200,000 at 5 percent monthly for that 120-day period rather than at the correct rate of 4 percent monthly. Luberski’s counsel filed a supplemental declaration attaching a “corrected ledger” showing the correct tabulation of interest owed for the first 120 days of the loan was $7,956.17 less than the amount included in the judgment. Consequently, Luberski conceded, the court should reduce the amount of the judgment correspondingly.

Edalat filed a reply and declaration in support of his motions to vacate and for new trial. Edalat disputed Luberski’s unwarranted assertion Edalat had not opposed the default judgment application, pointing out Edalat filed an objection to the application on June 6, 2017, and Edalat’s counsel telephoned the trial court on August 9 or 10, 2017, to advise the court she would be filing “another objection” on August 11, and in fact filed a “Response and Second Objection to the Proposed Judgment” on August 11, 2017.

The reply objected to Luberski’s citation to an unpublished appellate case dealing with usury (a nonissue here), and argued Luberski’s status as a licensed finance lender “is irrelevant” because Civil Code sections 1671 and 1670.5 forbid even licensed lenders “from charging default interest rates which bear no reasonable relationship to the lender’s actual damages or which are substantively unconscionable.”

Finally, the reply argued section 9626 of the Commercial Code places on Luberski, the secured creditor, “the burden of proving that it sold the seized collateral in a commercially reasonable manner and that the value of the seized collateral was less than the amount of Edalat’s obligation.” Failing to do so, Luberski “is not entitled to any default judgment because the value of the seized collateral is presumed equal to the value of Edalat’s secured obligations.”

On October 3, 2017, the trial court issued a minute order summarily denying Edalat’s motions to vacate the default judgment and for new trial. The court provided no explanation for the ruling, stating only, “As more fully discussed at the hearing, both motions denied.” There is no transcript of the hearing.

II

DISCUSSION

This case veered onto the wrong path when Luberski premised his motion for terminating sanctions on false representations that Edalat never provided any discovery responses and flatly disobeyed the trial court order to provide those responses. The case continued its wayward journey when Edalat failed to oppose the motion for terminating sanctions, for reasons that may or may not have been worthy of relief under section 473, subdivision (b), and the court later decided not to consider the merits of Edalat’s motion for relief from the terminating sanctions and entry of his default.

In any event, the court erred when it entered a default judgment against Edalat for $3,346,697, comprising mostly prejudgment interest on an original debt of $500,000, based in part on the court’s erroneous belief “no opposition [to the judgment] ha[s] been filed . . . .” On appeal, the errors are clear, as is the need to remand the matter for further proceedings in the trial court.

A. The Trial Court Erred in Denying the Motion to Vacate Entry of Default

The June 20, 2017 minute order reveals the trial court denied Edalat’s motion to vacate entry of his default based on a misperception of the nature of the motion. Although Edalat filed the motion for relief from default under section 473, subdivision (b), the court recast the motion as one for reconsideration of Judge Gastelum’s orders from September and October 2016. The court concluded the motion was “untimely” under section 1008 and ordered it off calendar.

A motion under section 473, subdivision (b), is the proper procedure to vacate a default or default judgment entered pursuant to a previously issued terminating sanction. (Rodriguez v. Brill (2015) 234 Cal.App.4th 715, 719 [“a judgment of dismissal that implements a terminating sanction for discovery abuse is a ‘dismissal entered’ for purposes of section 473(b)”].) An initial motion for section 473 relief, like Edalat’s motion at issue here, does not implicate section 1008, which “expressly applies to all renewed applications for orders the court has previously refused.” (Even Zohra Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 840 (Zohra), italics added.) More to the point, the California Supreme Court clarified in Zohra, supra, that “section 1008 does not restrict initial applications for relief from default under section 473(b) in any way.” (Id. at p. 841; see Gee v. Greyhound Lines, Inc. (2016) 6 Cal.App.5th 477, 487 [noncompliance with § 1008 did not deprive court of jurisdiction to grant relief from judgment of dismissal under § 473].) Consequently, the trial court erred in denying Edalat’s section 473 motion to vacate his default on the ground it was an untimely motion for reconsideration.

Because it expressly found Edalat’s motion to vacate default was an untimely motion for reconsideration, the trial court failed to exercise its discretion under section 473, subdivision (b). Remand is necessary to allow the court to decide the motion for relief on its merits. (See Gardner v. Superior Court (1986) 182 Cal.App.3d 335, 340-341 [reversal for failure to “exercise informed discretion” in setting aside default]; Kemp Bros. Construction, Inc. v. Titan Elec. Corp. (2007) 146 Cal.App.4th 1474, 1478 [reversal where minute order and reporter’s transcript demonstrated trial court “never engaged in the process of weighing the evidence”].)

Luberski unpersuasively argues there is “no point to granting the appeal as a practical matter” because “Edalat concedes that he borrowed the money and did not pay it back.” In other words, Luberski contends a remand would be a futile gesture because Edalat has no defense to the action and will necessarily end up with the same judgment entered against him again.

Of course, the argument overlooks the statutory and equitable challenges Edalat raises to Luberski’s right to enforce the loan agreements’ “default” interest rate of 120 percent per annum. Additionally, the argument disregards Edalat’s contention Luberski’s failure to comply with Commercial Code provisions governing the seizure and sale of collateral impacts Luberski’s right to a deficiency judgment. Any of these defenses could result in a different judgment upon remand. Regardless, Edalat is entitled to have his motion for relief from default decided on the merits.

Luberski also argues Edalat is not entitled to relief under section 473, subdivision (b), because he failed to offer a “satisfactory excuse” for failing to defend against the motion for terminating sanctions and for allowing his default to be entered. But the question of whether Edalat made a sufficient showing for discretionary relief under section 473 is a matter for the trial court. Remand is necessary precisely because the trial court failed to exercise its discretion.

B. The Trial Court Erred in Denying the Motions to Vacate the Judgment and for New

Trial

1. Applicable Law

“‘A default judgment is reviewable on appeal the same as any other civil judgment. The fact that defendant defaulted in the trial court does not bar its right to appeal the judgment entered. [Citation.]’ [Citation.] . . . [¶] . . . ‘Although in default, defendant can attack the default judgment in the trial court by motion for new trial on the ground of “excessive or inadequate” damages or “because the verdict or decision is against the law[.]” [Citations.]’ [Citation.]” (Misic v. Segars (1995) 37 Cal.App.4th 1149, 1153-1154.)

“On appeal from an order denying a motion for a new trial, we review the entire record, including the evidence, and make an independent determination as to whether the claimed error was prejudicial. [Citation.]” (Hill v. San Jose Family Housing Partners, LLC (2011) 198 Cal.App.4th 764, 779.)

2. The Default Judgment Cannot Stand

In moving to vacate the default judgment and for a new trial, Edalat pointed out multiple errors in the judgment, each of which he argued supported the requested relief. Edalat repeats the litany of errors in his opening brief:

● the judgment is based in part on an incorrect rate of interest (5 percent rather than 4 percent on loan No.2 for the first 120 days);

● the judgment is illegal because it is based primarily on a default rate of interest of 120 percent annually, which is void as a penalty under Civil Code section 1671, and also substantively unconscionable and, therefore, unenforceable under Civil Code section 1670.5;

● the judgment is “excessive, erroneous and illegal” because it provides no credit for the approximately $1.5 million worth of inventory, furniture and equipment Luberski seized as collateral for the debt or the $180,000 Lamborghini Diablo similarly seized, and also because Luberski’s failure to provide Scilabs or Edalat with any notice of the sale of seized collateral or any accounting of sale proceeds or the disposition of the remaining collateral precludes a default judgment under Commercial Code sections 9626 and 9613; and

● the default judgment improperly exceeds the amount explicitly stated in the complaint, given that some causes of action requested interest “according to proof” and the application for a default judgment did not specify upon which causes of action judgment was sought.

Luberski asserts only three points in response. First, Luberski contends Edalat’s “conclusory assertions” regarding the value of the assets seized in 2014 are “inadmissible” because unsupported by evidence. The argument, however, fails to acknowledge case law holding “[t]he opinion of an owner of personal property is in itself competent evidence of the value of that property, and sufficient to support a judgment based on that value. [Citations.]” (Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 921.) Luberski makes no other response to Edalat’s arguments based on Luberski’s purported failure to comply with statutory requirements governing the seizure and sale of collateral in satisfaction of a debt.

Next, Luberski argues the interest rate applied to Edalat’s debt is “legal” because Luberski is a licensed finance lender exempted from usury laws by section 22009 of the Financial Code. In support, Luberski cites the unpublished opinion of another panel of this court in Luberski, Inc. v. Integrated Freight Corporation (March 27, 2015, G049877), supra, which indeed held Luberski was exempt from usury laws. The case, however, is both nonciteable (Cal. Rules of Court, rule 8.1115) and otherwise irrelevant because usury is not an issue in this case. Luberski does not refute Edalat’s statutory and equitable arguments the 120 percent annual default interest rate in the loan agreements is void as a penalty and unenforceable because unconscionable.

Finally, Luberski contends the cross-complaint was sufficiently clear and specific regarding the damages sought to satisfy procedural requirements for a default judgment.

Rather than consider the merits of each of Edalat’s arguments for finding the judgment “excessive, not supported by the evidence and . . . illegal,” we see one obvious basis for setting aside the default judgment. That is the fact the trial court erroneously believed Edalat filed “no opposition” to the default judgment at the time the court granted Luberski’s application for the judgment “on declaration,” as revealed in the August 11, 2017 minute order. The court’s admitted ignorance of Edalat’s two separately-filed, substantive objections to the proposed judgment, and consequent failure to consider those objections before ruling, effectively deprived Edalat of his right to a fair hearing on the judgment.

Our independent review of the whole record persuades us this error was prejudicial and requires reversal of the judgment.

III

DISPOSITION

The judgment is reversed and the matter is remanded for further proceedings in the trial court. Appellant is entitled to its costs on appeal.

ARONSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

GOETHALS, J.