Case Number: BC707260 Hearing Date: March 02, 2020 Dept: 31

MOTION TO VACATE DEFAULT IS GRANTED.

Background

On May 23, 2018, Plaintiff Eden Development & Consulting, Inc. filed the instant action against Defendants Melissa Sanford, Jason Burks, and Does 1 through 50. The Complaint asserts causes of action for:

Breach of Contract;

Breach of Implied Covenant of Good Faith and Fair Dealing;

Quantum Meruit and Quantum Valebant; and

Foreclosure of Mechanic’s Lien.

On July 23, 2018, Defendants filed an Answer and Cross-Complaint. The Cross-Complaint asserts causes of action for:

Negligence;

Breach of Construction Contract;

Breach of the Implied Covenant of Good Faith and Fair Dealing;

Breach of Implied Warranty;

Breach of Express Warranty;

Unfair Business Practices;

Fraud; and

Declaratory Relief.

On June 25, 2019, the Court granted Plaintiff’s motion for terminating sanctions. Defendants’ Answer and Cross-Complaint filed on July 27, 2018 were ordered stricken and Defendants’ default was deemed entered as of June 27, 2019. Default judgment in the amount of $78,098.13 was entered on November 22, 2019.

Defendants seek an order setting aside: (1) the default and resulting default judgment that entered against Defendants on June 27, 2019 and November 22, 2019, respectively; and (2) the dismissal of their Cross-Complaint.

Legal Standard

The court has broad discretion to set aside the entry of default, default judgment, or a dismissal, but that discretion can be exercised only if the defendant establishes a proper ground for relief, by the proper procedure and within the set time limits.

Code of Civil Procedure section 473(b) provides that when an application for relief is made no more than six months after entry of dismissal and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, the court shall set aside a dismissal entered against the attorney’s client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect. (Code Civ. Proc., § 473(b).) “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.”

Judicial Notice

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).)

Plaintiff requests that the Court take judicial notice of a number of documents filed with the Los Angeles Department of Building and Safety, the Los Angeles Superior Court, and the United States District Court for the Central District of California. The request is GRANTED.

Discussion

Defendants move for both mandatory and discretionary relief from the default, resulting default judgment, and the dismissal of their Cross-Complaint entered after the Court granted terminating sanctions.

CCP § 473(b) – Mandatory Relief

“[T]he text of section 473, subdivision (b) does not require an explication of reasons as a prerequisite to mandatory relief. “Statutory analysis begins with the plain language of [a] statute, and if that language is unambiguous, the inquiry ends there” as well. [Citation.] As noted above, section 473, subdivision (b) makes relief mandatory only if the request for relief “is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.” [Citation.] As this text indicates, what must be attested to is the mistake, inadvertence, surprise, or neglect—not the reasons for it. [Citation.]

Even if we were to go beyond the text of section 473, subdivision (b) and consider its purpose [citation], that purpose is served without requiring attorneys to spell out the reasons for their omission. The purpose of section 473, subdivision (b) generally is “to promote the determination of actions on their merits.” [Citations.] More specifically, section 473, subdivision (b)’s mandatory relief provision has three purposes: (1) “to relieve the innocent client of the consequences of the attorney’s fault” [citations]; (2) “to place the burden on counsel” [citation]; and (3) “to discourage additional litigation in the form of malpractice actions by the defaulted client against the errant attorney” [citation].

These purposes are advanced as long as mandatory relief is confined to situations in which the attorney, rather than the client, is the cause of the default, default judgment, or dismissal. [Citations.] In other words, the purpose of the mandatory relief provision under section 473, subdivision (b) is achieved by focusing on who is to blame, not why. Indeed, in many cases, the reasons for the attorney’s mistake, inadvertence, surprise, or neglect will be irrelevant; that is because, as noted above, the mandatory relief provision entitles a party to relief even when his or her attorney’s error is inexcusable. [Citations.] We are reluctant to construe section 473, subdivision (b), to require in every case the production of information that will in many cases be of no use in deciding whether to grant relief. [Citation.]” (Martin Potts & Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 438–440.)

Defendants move to set aside the dismissal and default judgment entered against them arguing that, as laid out in the declaration of Glenn Todd Rosen, their former counsel abandoned Defendants through positive misconduct. Defendants assert that based upon attorney Rosen’s declaration of fault, it is clear that the default, default judgment, and the order dismissing Defendants’ cross-complaint were clearly based upon attorney Rosen’s inaction, abandonment of his clients, and fault. Defendants argue that they were not aware of: any of the discovery that was propounded upon them; the motions to compel discovery; the motion for terminating sanctions; or the entry of default judgment until December 19, 2019. Defendants assert that attorney Rosen completely abandoned them by not notifying them of any of the relevant proceedings or judgment, and by failing to properly represent them. Defendants contend that attorney Rosen has committed the same types of acts with other clients and that there are currently two separate State Bar Court proceedings pending against him: State Bar court Proceeding Case Numbers SBC-19-O-30293 and SBC-19-O-30523. Defendants additionally argue that their motion is timely as the six-month period in which to seek relief runs from the date of entry of judgment, which here was November 22, 2019.

In opposition, Plaintiff argues that Defendants are not entitled to mandatory relief under Section 473(b). Plaintiff asserts that Defendants counsel’ deliberately avoided discovery and filed an affidavit of fault months after the entry of terminating sanctions stating that he was incapacitated during that period of time due to depression. (Rosen Decl. ¶ 18.) Plaintiff contends that throughout 2019, while Plaintiff received zero response to its efforts to obtain vital discovery and prosecute its case, Defendants’ counsel was actively litigating cases in no less than four other lawsuits––filing summary judgment oppositions, ex parte applications, joint reports, and stipulations in federal court. (RJN ¶ 4–8, Exh. H–L; Crump Decl. ¶ 15.) Plaintiff argues that Rosen appears not to have been incapacitated, but rather seems to have made a tactical decision to avoid acting in this case with knowledge that he had Section 473(b) as a back stop.

Plaintiff asserts that additionally, Defendants were not totally without fault in the circumstances that led to their default – Defendants were well aware that Rosen would handle their case in this manner as just a year earlier, Rosen had engaged in the same conduct on their behalf in another lawsuit involving their property. (RJN ¶ 3, Exh. G; Crump Decl. ¶ 14.) Plaintiff contends that there, as here, Rosen failed to respond to discovery and comply with motions to compel, which eventually resulted in terminating sanctions and the dismissal of Defendants’ case on July 3, 2017, less than a year before this case was filed. (RJN ¶ 3, Exh. G; Crump Decl. ¶ 14.) Plaintiff argues that given this history, Defendants’ claimed ignorance of Rosen’s tactics is disingenuous at best. Plaintiff asserts that tellingly, while Rosen obstructed Plaintiff’s access to discovery, Defendants were able to conceal much of the rough construction work at issue. (Crump Decl. ¶ 11; RJN ¶ 2, Exh. E; Zeton Decl. ¶ 6.)

Plaintiff contends that given this evidence, it is clear that Rosen did not act with “mistake, inadvertence, surprise or neglect,” but rather acted willfully and intentionally. Plaintiff argues that although he states he was incapacitated during the early months of 2019, this is simply not credible because he was actively engaged in multiple lawsuits during the same time period. Plaintiff asserts that it is also clear that Defendants were complicit and aware that Rosen engaged in such obstructionist tactics. Plaintiff contends that accordingly, mandatory relief should be denied.

In reply, Defendants argue that contrary to Plaintiff’s assertion Defendants were not negligent. Defendants assert that in the prior case, on May 16, 2019, only forty-two days prior to the entry of the default in this case, Rosen had overtly lied to them, representing that the prior case was still pending and “coming along slowly.” Defendants contend that neither of them had any prior litigation experience and neither had any reason to question Rosen’s statements. Defendants argue that they were entitled to rely on their attorney’s statements and were not negligent.

As to Plaintiff’s argument that Rosen’s reasons for his mistake, inadvertence, surprise, or neglect are unworthy of credence, Defendants assert that case law makes clear that when an attorney declaration of fault is submitted, the reason why the attorney committed the fact that resulted in the dismissal is irrelevant. Defendants contend that moreover, the things that Rosen failed to do are undisputed, unimpeached, and independently corroborated by Defendants’ declarations.

The Court finds that Defendants’ motion is timely and accompanied by an attorney’s sworn affidavit attesting to his mistake, inadvertence, surprise, or neglect, entitling them to relief. As noted above, relief under the mandatory provision of Section 473(b) focuses on who is to blame, not why. Here, it is undisputed that Rosen failed to: respond to discovery, oppose the motions leading to default, and inform Defendants of the pending discovery, motions, and default. Moreover, Plaintiff has failed to provide any evidence whatsoever to support its contention that Defendants “were complicit and aware that Rosen engaged in such obstructionist tactics.”

Based on the foregoing, Defendants’ motion to set aside default, default judgment, and dismissal is GRANTED.

Costs

Pursuant to Section 473(b), “[t]he 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.” Section 473(c) further provides:

(1) Whenever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this section, the court may do any of the following:

(A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party.

(B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund.

(C) Grant other relief as is appropriate.

(CCP § 473(c)(1).)

Pursuant to Section 473(b), Plaintiff seeks a total of $5,970.60 in fees incurred in conjunction with obtaining the terminating sanctions and resulting judgment in this matter. (Crump Decl. ¶ 16; Exh. M.) Plaintiff additionally requests that the Court order Defendants (1) to pay a monetary sanction of $1,000.00, (2) restrain from transferring their interests in the property at 3820 Buena Park Drive, Studio City, CA during the pendency of the litigation, and (3) requiring Defendants to post a surety bond in the amount of Plaintiff’s judgment, which is $78,098.13.

In opposition, Defendants argue that there is no basis for the Court to require a bond or other security as a condition to setting aside the default. Defendants assert that (1) they have good and meritorious claims against Plaintiff and owe Plaintiff nothing, and (2) Plaintiff is already protected by the $78,024.91 mechanics’ lien it recorded against the property on February 22, 2019. (Sanford Decl., Exh. 5.)

The Court finds that Plaintiff is entitled to costs in the amount of $5,970.60. The Court thus orders Defendants’ former attorney, Glenn Todd Rosen, to pay costs in the amount of $5,970.60 in fees associated with obtaining the defaults. The Court declines Plaintiff’s other requests to impose sanctions, require that Defendants not transfer their interests in the subject property, and require Defendants to post a surety bond.

Conclusion

Defendants’ motion to set aside default, default judgment, and dismissal is GRANTED. Defendants’ former attorney, Glenn Todd Rosen, is ordered to pay costs in the amount of $5,970.60 within thirty (30) days.

The Court intends to set a trial date at the time of the hearing on this motion. The parties must be prepared to advise the court as to how much time is needed for discovery and an what an appropriate trial date should be.

Moving party to give notice.