Case Number: BC528628    Hearing Date: July 10, 2014    Dept: 46

Posted 7-8-2014

Case Number: BC528628
ALAN A GABBAY ET AL VS SELECT REAL ESTATE MANAGEMENT INC ET
Filing Date: 11/22/2013
Case Type: Contractual Fraud (General Jurisdiction)
Status: Default Judgment Pursuant to Decl. 05/15/2014
Future Hearings

07/10/2014 at 08:32 am in department 46 at 111 North Hill Street, Los Angeles, CA 90012
Motion Set Aside Default/Judgment

TENTATIVE RULING: Defendants [Ds] Select Real Estate Management, Inc. [“Select”] and Ronald Escobar’s [“Escobar”]s [together ‘Ds”] motions to set aside the default are conditionally GRANTED pursuant to CCP §473(b) conditioned upon payment by Defendants to Plaintiffs attorney’s fees and costs in the sum of $3,785. After the fees are paid to Plaintiffs and the Defendant’s file a responsive pleading, the matter will be returned to the civil active list. The court sets a status conference in this matter for 08/06/2014 at 8:30 a.m. in Dept. 46.

1. “Relief under CCP § 473(b) may be based either on: • An ‘attorney affidavit of fault,’ in which event, relief is mandatory; or • Declarations or other evidence showing ‘mistake, inadvertence, surprise or excusable neglect,’ in which event relief is discretionary.” Id. at ¶ 5:290 (emphasis theirs). Zellerino v. Brown (1991) 235 CA3d 1097, 1105…].” Weil & Brown, et al., CAL. PRAC GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2013) ¶ 5:282 (emphasis theirs).

2. Relief under the discretionary portion of CCP § 473(b) is DENIED. Mr. Escobar has failed to show mistake or excusable neglect for which relief is warranted as his assumptions were completely unreasonable. As Mr. Escobar attested in his declaration at paragraph 2:

“2. After I was served with the complaint in this action in December 2013, I contacted Plaintiffs Alan Gabbay and Parysima Gabbay’s (collectively ‘Plaintiffs’) attorney, Salar Atrizadeh, to request an extension to respond to the complaint. I had a pre-existing relationship with Mr. Atrizadeh from working with him in the underlying transaction in this case and believed that we had a cordial relationship. I informed Mr. Atrizadeh that Defendants wanted an extension to respond to the complaint until January 30, 2014, while I tendered the lawsuit to Defendants’ insurer to see they would cover the Defendants’ defense in this case. While Mr. Atrizadeh did not respond to my inquiry, I assumed that he agreed to the extension since I had a pre-existing relationship and Mr. Atrizadeh never said no to my request for the extension. I only learned that Mr. Atrizadeh did not agree to the request for an extension until January 2014 when he told my attorney Mr. Simkin that he received the request but intentionally remained silent as to a response until after the default was entered.” (D Escobar Declaration, ¶ 2; emphasis added).

3. However, relief is granted under the mandatory provisions of CCP 473(b) due to Michael Simkin’s (hereinafter, “Simkin’s”) declaration of fault.

3.a. “’(W)henever 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, (the court shall) vacate any (1) resulting default entered by the clerk … or (2) resulting default judgment or dismissal entered against his or her client …’ [CCP § 473 (b) (emphasis and parentheses added)]. The purpose is ‘to alleviate the hardship on parties who lose their day in court due solely to an inexcusable failure to act on the part of their attorneys.’ [Zamora v. Clayborn Contracting Group, Inc. (2002) 28 C4th 249, 257, (emphasis in original; internal quotes omitted)]. The only limitation is that the court may deny relief if it finds the default or dismissal ‘was not in fact caused by the attorney’s mistake, inadvertence, surprise or neglect’ (e.g., where attorney is attempting to ‘cover up’ for client). [CCP § 473(b) (emphasis added).]. The trial court may also deny the motion if it finds that the attorney’s declaration of fault is not credible. [Cowan v. Krayzman (2011) 196 CA4th 907, 915] Id. at ¶ 5:292. “If the attorney is willing to take the blame—and pay the costs (below)—the court must set aside the default judgment (unless a ‘cover-up,’ etc. is found). The client’s interests are protected and the culpable attorney avoids a potential malpractice action or disciplinary proceeding. [See Beeman v. Burling (1990) 216 CA3d 1586, 1604; Lorenz v. Commercial Accept. Ins. Co. (1995) 40 CA4th 981, 989 (citing text)].” Id. at ¶ 5:294.

3.b. Simkin has attested, in relevant part, as follows:

“7. On February 3, 2014, Mr. Atrizadeh wrote to me stating that he had not received my January 24, 2014 letter concerning the stipulation to set aside Defendants’ defaults. However, he stated that he would execute the stipulation to set aside defaults if Defendants paid $500 to the Plaintiffs. Attached hereto as Exhibit ‘G’ is a true andcorrect copy of Mr. Atrizadeh’s letter to me. February was personally a very difficult time for me because my father suddenly was hospitalized and he passed away March 11, 2014.
8. On March 26, 2014, I sent a letter to Mr. Atrizadeh with a check for $500 and a stipulation to set aside the defaults for him to sign and file with the Court. On April 3, 2014, after not having heard from Plaintiffs, I sent another letter to Mr. Atrizadeh to follow up on whether he filed the Stipulation and Order. Attached hereto as Exhibits ‘H’ and ‘I’ are true and correct copies of my letters dated March 26, 2014 and April3, 2014, respectively.
9. On April 7, 2014, I received a letter from Mr. Atrizadeh stating that his clients had submitted an Application for Court Judgment to the court and that they now refused to sign the stipulation to set aside the defaults. Attached hereto as Exhibit ‘J’ is a true and correct copy of Mr. Atrizadeh’s letter…Based upon my numerous letters with Mr. Atrizadeh and after sending him the check for the $500 which he had requested, I mistakenly believed that Mr. Atrizadeh would…set aside the defaults especially after the money had been sent and he had not previously rescinded the offer to set aside the defaults.
10. On April 10, 2014 and again on May 8, 2014, I sent Mr. Atrizadeh a letter reminding him that we had an agreement to vacate the defaults in exchange for $500 which he breached by thereafter refusing to sign the stipulation. I also offered to pay an additional $250, for a total of $750, to set aside the defaults. Attached hereto as Exhibits ‘K’ and ‘L’ are true and correct copies of my letters.
11.On May 9,2014, Mr. Atrizadeh wrote to me claiming to have returned the $500 check to my office, which I never received. He also stated that his clients were only willing to stipulate to set aside the defaults upon the condition that Defendants now pay $3,785 and waive the 5 year mandatory dismissal statute for the period of time the defaults have been in effect (since January 6, 2014). Attached hereto as Exhibit ‘M’ is a true and correct copy of Mr. Atrizadeh’s letter to me.
12.The error as to the Defendants’ defaults was my mistake for believing that the defaults would be set aside in exchange for $500 to Plaintiffs. If the error is a delay in sending the money, I am sorry but due to my father’s hospitalization and death, I was not in the office and able to work as normal. Further, Mr. Atrizadeh never rescinded his offer or conditioned it on a date for performance…” (Simkin Declaration, ¶¶ 7-12).

Although Simkin does not explain why he delayed in filing this instant motion, particularly since he was on notice, via opposing counsel’s 4/7/14 correspondence, that Ps would no longer set aside Ds’ defaults for $500, he sufficiently explains why his 3/26/14 correspondence and the $500 check were delayed. Grounds for mandatory relief under CCP 473(b) have been adequately stated although the delay was lengthy.

4. The lengthy delay has caused Ps to incur substantial attorney’s fees and costs in connection with the default. The court ordered Ps to provide additional information and resubmit the default package which resulted in duplication of effort. The first submission of was done prior to their counsel’s receipt of the $500 check; as such, the court finds it reasonable that Ps pay $3,785 as a condition of having the default set aside. It is stated in CCP 473(b) that “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…”

IT IS SO ORDERED:

______________________________
Frederick C. Shaller, Judge