Aaron Himmler v. Lidia Giles, Senzala, Inc.		CASE NO. 111CV204991
DATE: 16 January 2015	TIME: 9:00	LINE NUMBER: 1

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.882.2310 and the opposing party no later than 4:00 PM Thursday 15 January 2015.  Please specify the issue to be contested when calling the Court and counsel.

On 16 January 2015, the motion of defendant and cross-complainant Lidia Giles (“Giles”) and defendant Senzala, Inc. (collectively “Defendants”) to set aside order granting terminating sanctions was argued and submitted.

Plaintiff Aaron Himmler (“Plaintiff”) filed formal opposition to the motion.

Defendants are reminded that all papers must comply with Rule of Court 3.1110(f).[1]

1. Statement of Facts.

According to the allegations of Plaintiff’s complaint, Defendant Giles operated a restaurant business (“Senzala Brazilian Restaurant”) at 250 E. Java Drive, Sunnyvale, California. Around September 2010, Giles offered Plaintiff a business opportunity to open and operate a bar on the premises of the restaurant. The initial arrangement was for Plaintiff to own and operate the bar business. He was later presented with a draft agreement proposing a partnership between Plaintiff, Giles, and another person in relation to the bar and restaurant businesses. The draft agreement was never signed. Giles later promised to make Plaintiff a shareholder in Senzala, Inc. That never materialized either.

Plaintiff started bartending at the restaurant beginning the end of October 2010, which lasted until the end of March 2011. In the course of this time, Plaintiff spent a total of $62,700 in the form of direct advances to Giles, purchase of supplies and furniture, and other expenses related to the bar business. Part of the money was for the purpose of securing a hard liquor license, since the restaurant only had license to sell beer and wine. Giles never obtained the license.

Plaintiff also alleged that the restaurant’s daily revenue averaged between $500 and $1000 per day, with even higher revenues whenever the restaurant hosted special events. Giles took and kept all the revenues and never shared any part of it with Plaintiff. Nor did she account for Plaintiff, or allowed him access to the books and records of the restaurant. Giles made all the decisions regarding the restaurant business including the bar.

On 7 October 2010, Plaintiff filed a complaint alleging seven causes of action against both Defendants.  Plaintiff sought to recover the $62,700, compensation for work, labor, and services rendered, damages for breach of duty of loyalty, dissolution of the partnership, if any was formed, and other remedies.

Despite a grant of extension by Plaintiff, Defendants failed to file an answer to the complaint and were defaulted on15 September 2011. Plaintiff later stipulated to set aside the default and both Defendants filed a joint answer on 7 October 2011. At the same time, Giles alone filed a cross-complaint against Plaintiff alleging breach of oral contract and conversion causes of action. Plaintiff filed an answer to the cross-complaint on 26 October 2011.

On 15 May 2014, the Court imposed terminating sanctions against both Defendants for failure to comply with the Court’s discovery order of 28 February 2014. Defendants’ answer and Giles’ cross-complaint were stricken, and Defendants’ default was ordered to be entered. On 20 October 2014, Plaintiff obtained a default judgment against Defendants for the total amount of $94,416.14.

1. Background to the Terminating Sanctions Order.

On 9 January 2014, Plaintiff filed a motion to compel Defendants’ responses to the first sets of form and special interrogatories and request for production of documents, and for monetary sanction. The motion was scheduled to be heard on 28 February 2014.

On 27 February 2014, the Court duly posted a tentative ruling granting the motion to compel responses, and denying the request for monetary sanction. Defendants did not file formal opposition to the motion. Nor did they object to the tentative ruling. On 28 February 2014, no appearances having been made at the hearing, the Court adopted the tentative ruling by minute order. On the same day, the Hon. Judge Manoukian signed a formal order, which was filed and served on all parties by the Court Clerk on 3 March 2014. The Order required Defendants to serve their discovery responses within 20 days of the date of the Order.

On 21 April 2014, having received no responses from Defendants in compliance with the Court Order, Plaintiff filed a motion for terminating and monetary sanctions. In particular, Plaintiff requested the Court for an order striking the answer filed by both defendants, dismissing the cross-complaint filed by Giles, entering the defaults of both defendants, and imposing monetary sanction against both defendants. The motion was scheduled to be heard on 15 May 2014.[2] On 14 May 2014, the Court duly posted a tentative ruling granting the motion as requested. Defendants did not file a formal opposition to the motion. Nor did they object to the tentative ruling.

On 15 May 2014, no appearances having been made at the hearing, the Court adopted the tentative ruling by minute order. On 19 May 2014, the Hon. Judge Manoukian signed a formal order, which was filed and served on all parties by the Court Clerk on 21 May 2014. Subsequently, Plaintiff prepared and submitted a similar order by incorporating the Court’s tentative ruling, which was signed on 28 May 2014 and filed on 2 June 2014. There is no record on the Court file showing that Plaintiff served this order on Defendants.

On 11 June 2014, based upon the order filed on 21 May 2014, the Court Clerk entered the default of both defendants. (See “Request for Default” filed by Plaintiff on 11 June 2014, to which was attached an endorsed filed copy of the order filed on 21 May 2014.) After a default prove-up hearing was conducted on 20 October 2014, the Court entered a default judgment in favor of Plaintiff and against Defendants.

On 26 November 2014, Defendants filed the current motion to set aside the order granting terminating sanctions against them, on the grounds of mistake, inadvertence, excusable neglect and attorney error. In addition to the notice of motion, Defendants submitted a memorandum of points and authorities and the declarations of Lidia Giles and Robert J. Anderson, Esq. in support of the motion.

On 29 December 2014, Plaintiff filed a formal opposition supported by a memorandum of points and authorities and the declaration of Marlis McAllister, Esq.

Defendants did not file a reply to Plaintiff’s opposition.

 

 

III.     Analysis.

The main arguments presented by Defendants in support of their motion to set aside the order for terminating sanctions can be summarized as follows: 1) Defendants have complied with the Court’s initial discovery order by serving responses to form and special interrogatories on 14 May 2014, two days prior to the date set for the hearing of the motion for terminating sanctions. Counsel for Defendants intended to attend the hearing for terminating sanctions and notify the Court of Defendants’ compliance, but failed to do so because he was accidentally locked out of the courtroom. By the time Defendants’ counsel was able to re-enter the courtroom, the case was already called and the tentative ruling was adopted. 2) Defendants were unable to timely respond to the discovery requests, because Giles was away for a period of months due to death and illness in the family. She was not available to assist counsel in preparing the discovery responses until her return to California around the middle of March 2014.

On the other hand, Plaintiff argues that Defendants should not be granted relief from the terminating sanctions for the following reasons: 1) Defendants’ motion is not timely, because it was not filed within six months of entry of the order for terminating sanctions. 2) Defendants continued to the present day to fail to comply with the Court’s initial discovery order. They have never either served responses to the requests for production of documents or produced the documents requested. 3) Defendants have engaged in a long-term pattern and practice of flaunting the Discovery Act and refusing to comply with the Court’s discovery order. As a result, they cannot demonstrate the mistake, inadvertence, surprise or neglect necessary to obtain the relief they seek.

The Court will first address the issue of whether Defendants’ motion is timely.

1. Legal Standard.

“A court may relieve a party from ‘a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.’ ([Code Civ., Proc.,] § 473, subd. (b).)[3] Relief from a default entered by the clerk or a resulting default judgment or dismissal is mandatory if a timely application for relief is accompanied by an attorney’s affidavit of fault, unless the court finds that the default or dismissal was not caused by the attorney’s mistake, inadvertence, surprise, or neglect. (Ibid.) Absent an appropriate attorney’s affidavit of fault, relief is discretionary. (Ibid.)” (Arambula v. Union Carbide Corp. (2005) 128 Cal. App. 4th 333, 340.)

“An ‘[a]pplication” for discretionary relief must be made within a reasonable time, not exceeding six months, after the judgment, dismissal, order, or proceeding was taken. (§ 473, subd. (b).) [FN.] An “application” for mandatory relief must be made within six months after entry of judgment. (Ibid.) [….] The six-month limit is mandatory; a court has no authority to grant relief under section 473, subdivision (b), unless an application is made within the six-month period. [Citations.]” (Ibid.)

In other words, “[t]he six-month time limit for granting relief under [(§ 473, subd. (b)] is jurisdictional and relief cannot be granted under [(§ 473, subd. (b)] if the application for such relief is instituted more than six months after the entry of the judgment, order or proceeding from which relief is sought. [Citations.]” (Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 736, FN3.)

1. The Six-Month Limitation.

The issue of whether the application for relief under § 473, subd. (b) was made within the six-month period can be broken down in two parts. The first part relates to the date on which the period begins to run, and the second relates to the date on which the application for relief was made. If there is a time gap exceeding six months between the two dates, the application will be untimely and the Court cannot grant the requested relief.

In the case at hand, determination of the date on which the application for relief was made presents the least problem. “[A]n application for relief under section 473, subdivision (b), is a motion and […] an application for relief under the statute is deemed to be made upon filing in court of a notice of motion and service of the notice of motion on the adverse party. [Citations]” (Arambula v. Union Carbide Corp., supra, 128 Cal. App. 4th 333, 341; referencing Code Civ. Proc., §§ 1003, 1005.5.) Accordingly, Defendants’ notice of motion was filed with the Court and served on Plaintiff on 26 November 2014.

On the other hand, determination of the date on which the six-month period began to run is apparently complicated by two factors. First, the Court file contains three separate orders relating to the terminating sanctions under consideration that were signed and filed on different dates. The minute order was entered on the date of hearing for terminating sanctions (15 May 2014), by adopting the tentative ruling and physically attaching an unsigned copy of the same. The Court also prepared a formal order that was signed on 19 May 2014, and filed on 21 May 2014. Subsequently, Plaintiff submitted a similar order by incorporating the tentative ruling that was signed on 28 May 2014, and filed on 2 June 2014.

Secondly, the parties are in disagreement as to which one of the above three orders is the operative document for purposes of this motion. The notice of motion is silent on this issue (as well as on the authorities for issuance of the relief sought).[4] The supporting memorandum, however, references the order signed on 28 May 2014 (filed 2 June 2014). The memorandum provided no explanation as to why Defendants picked this order instead of the previously entered orders. The obvious reason appears to be the fact that only this order could allow a timely filing of the 26 November 2014 motion.

Plaintiff, on the other hand, references the order filed on 21 May 2014 as the order relevant to this motion. Again, the memorandum in opposition did not provide any explanation as to why Plaintiff picked this order over the others, except the obvious inference that this order would push Defendants’ motion over the six-month limitation.

“The statute states that an application for discretionary relief ‘shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken,’ and that that an application for mandatory relief must be made ‘no more than six months after entry of judgment.’ ” [Citations and emphasis omitted.] (Arambula v. Union Carbide Corp., supra, 128 Cal. App. 4th 333, 345; referencing Code Civ. Proc., § 473 subd. (b).)

“Orders are entered by either of two methods. The court can order the clerk to enter a minute order which when entered in the minutes is a written order of the court. The court may also make a formal order, and entry then consists of filing the signed order with the clerk.”[5] (Eldridge v. Super. Ct. (1989) 208 Cal.App.3d 1350, 1354; citing 7 Witkin, Cal. Procedure (3d ed. 1985) Judgment, § 56, p. 492.) Court Rule 8.104(c)(2) also provides, “[t]he entry date of an appealable order that is entered in the minutes is the date it is entered in the permanent minutes. But if the minute order directs that a written order be prepared, the entry date is the date the signed order is filed; [….]”

In the case at hand, the order for terminating sanctions was entered in the permanent minutes on 15 May 2014. Although two formal orders were subsequently filed on the same matter, the minute order did not include an express instruction that a formal order be prepared and filed. It follows that the entry of the minute order on 15 May 2014 constituted the operative date for commencement of the six-month period for purposes of making a section 473 subd. (b) motion. Therefore, Defendants’ 26 November 2014 motion for relief from the terminating sanctions order was untimely as it was filed on more than six months after the subject order was entered.[6]

Since the untimeliness finding is dispositive of the motion, the Court did not reach other issues raised in this case.

1. Conclusion and Order.

It is observed that the six-month time limit provided in section 473 [(b)] “is simply a limitation upon the power of the court to grant any relief, regardless of any question either as to the merits of the application, or as to whether or not the application was made within what might be held to be a reasonable time under the circumstances.” (Caldwell v. Methodist Hospital (1994) 24 Cal. App. 4th 1521, 1524; citing Carrasco v. Craft (1985) 164 Cal.App.3d 796, 805.)

Therefore, “[t]he six-month limit is mandatory; a court has no authority to grant relief under section 473, subdivision (b), unless an application is made within the six-month period. [Citations, FN omitted.]” (Arambula v. Union Carbide Corp., supra, 128 Cal. App. 4th 333, 340.)

Defendants failed to act within the six-month period. Therefore, the motion to set aside the terminating sanctions order is untimely, and the Court lacks jurisdiction to grant relief under section 473 subd. (b).

The motion is DENIED.

 

 

____________________________ DATED:

_________________________________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara

[1] “Each exhibit must be separated by a hard 81/2 x 11 sheet with hard paper or plastic tabs extending below the bottom of the page, bearing the exhibit designation. An index to exhibits must be provided. Pages from a single deposition and associated exhibits must be designated as a single exhibit.”

[2] The original hearing date was 16 May 2014. Due to judicial unavailability, the date was advanced to 15 May 2014. All parties were duly notified of the new date.

[3] All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.

[4] “A notice of motion must state in the opening paragraph the nature of the order being sought and the grounds for issuance of the order.”  (Court Rule 3.1110(a).)

[5] “An order is a document which is either entered in the court’s permanent minutes or signed by the judge and stamped ‘filed.’” (Michael v. Aetna Life & Cas. Ins. Co. (2001) 88 CA4th 925, 932; citing Shpiller v. Harry C.’s Redlands (1993) 13 Cal.App.4th 1177, 1179.)

[6] “The six-month period has been construed to mean a half year, or 182 days (as distinct from six calendar months). The first day is excluded, and the last day included, in the computation.” (Mathew Bender (2014) 7-70 California Points & Authorities § 70.10; referencing Davis v. Thayer (1980) 113 Cal. App. 3d 892, 903.) Thus, even if it was assumed arguendo that entry of a formal order was required to trigger the running of the six-month limitation, the order filed on 21 May 2014 would still have made Defendants’ motion untimely.