Case Number: BC519027 Hearing Date: April 14, 2014 Dept: 58

JUDGE ROLF TREU
DEPARTMENT 58
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Hearing Date: Monday, April 14, 2014
Calendar No: 5
Case Name: Kattan v. Bolour, et al.
Case No.: BC519027
Motion: Motion to Set Aside Defaults
Moving Party: Defendants Mehdi Bolour and Denley Investment and Management Company, Inc.
Responding Party: Plaintiff Mario Kattan
Notice: OK

Tentative Ruling: Motion to set aside defaults is granted. The answer and cross-complaint are deemed filed and served as of this date.

Attorney fees are awarded in favor of Plaintiff against Defendants and Matian & Moaddel, jointly and severally, in the total amount of $2,977 to be paid within 30 days. Payment to the State Bar Client Security Fund in the amount of $500 by Matien and Moaddel is ordered within 30 days.
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Background –
On 8/22/13, Plaintiff Mario Kattan filed this action against Defendants Mehdi Bolour and Denley Investment and Management Company, Inc. (collectively “Defendants”) arising out of an alleged oral partnership agreement concerning the ownership and operation of Juicy Burger restaurants, parking facilities, and a market. Kattan asserts causes of action for (1) breach of oral partnership agreement, (2) breach of fiduciary duty, (3) promissory fraud, (4) constructive fraud, (5) false arrest, and (6) dissolution and accounting.

On 12/4/13, Defendants filed and answer; and Mehdi Bolour filed a cross-complaint against Kattan and Cross-Defendant Juicy Burger LLC asserting causes of action for (1) breach of oral contract, (2) breach of fiduciary duty, (3) breach of implied covenant of good faith and fair dealing, (4) fraud, (5) conversion, (6) money had and received, (7) dissolution, and (8) accounting.

On 11/21/13, Kattan filed motions to compel Bolour to provide further responses to demands for production of documents, requests for admission, and form and special interrogatories. On 1/24/14, the Court continued the hearing on Kattan’s discovery motions to address the issue of Defendants’ representation by counsel. On 3/6/14, the Court struck Defendants’ answer and Bolour’s cross-complaint, entering default against Defendants. On 4/1/14, Defendants filed a motion to set aside the defaults.

Entry of Defaults –
Defendants’ oppositions to Kattan’s discovery motions were filed by attorney Daniel Moaddel, who asserted that supplemental responses were provided and explained that Defendants’ previous attorney, Donald O. Spaulding, provided inadequate representation. Moaddel Decls. filed 1/10/14 ¶ 7.

On 1/24/14, noting that no substitution of attorney forms were filed for Mr. Moaddel, the Court ordered Defendants to provide conformed copies of said substitutions or show cause why the Court should not refuse to consider Defendants’ filings since 12/4/13. In actuality, the substitution was filed on 1/23/14, unbeknownst to the Court as of 1/24, and not elucidated for the court by counsel present.

On 2/25/14, declarations were filed by Mr. Moaddel and Kim Shigenaka in response to the Court’s 1/24/14 order. These declarations explained Mr. Moaddel was retained at the end of November 2013; that despite efforts Mr. Spaulding’s signature on substitution of attorney forms were not obtained until 12/16/13; and that Mr. Moaddel’s assistant Kim Shigenaka mistakenly failed to file the substitutions of attorney forms. Moaddel Decl. filed 2/25/14 ¶¶ 2, 8-13, 17; Shigenaka Decl. filed 2/25/14 ¶¶ 4-8.

On 3/6/14, the Court noted that Defendants failed to: 1)provide the 12/16/13 substitution of attorney forms signed by Mr. Spaulding, 2) an explanation as to communications between Mr. Moaddel and Ms. Shigenaka after Ms. Shigenaka’s mistake, and 3) an explanation from a competent person to support the assertions concerning Mr. Spaulding. Therefore, the Court struck Defendants’ answer and Bolour’s cross-complaint, entering default against Defendants.

Motion to Set Aside Defaults –
Defendants move to set aside the defaults pursuant to the mandatory and discretionary provisions of CCP § 473(b).

Defendants submit evidence that Defendants executed the substitution of attorney forms on 12/3/13 (Moaddel Decl. ¶ 13, Ex. 1) and that Defendants and Mr. Moaddel unsuccessfully attempted to contact Mr. Spaulding for his signature (id. ¶¶ 13-18, Exs. 1-4). Mr. Moaddel submits that he filed the answer and cross-complaint after Plaintiff’s counsel advised that the answer was past due. Id. ¶¶ 19-21, Exs. 5-6. Mr. Moaddel explains that he was mistaken in doing so and that he should have obtained ex parte relief instead. Id. ¶¶ 22-27. Defendants submit that the substitution of attorney forms signed by Mr. Spaulding’s were received on 12/13/13. Id. ¶ 31, Ex. 7. Mr. Moaddel explains that neither he nor his other partner Shawn Matian followed up on Ms. Shigenaka’s mistake. Id. ¶¶ 38-40; see also Matian Decl. ¶¶ 5-7. Defendants submit evidence supporting Mr. Spaulding’s inadequate representation. Mehdi Bolour Decl. ¶ 3; Negin Bolour Decl. ¶¶ 3, 8-11; Andrade Decl. ¶¶ 3-4.

Kattan argues that Defendants’ evidence is not credible because it contradicts previous assertions by Defendants (see RJN Exs. A-B). The Court disagrees. Defendants’ evidence is consistent with the previous assertions by Defendants

This is sufficient to support mandatory relief pursuant to CCP § 473(b). See Milton v. Perceptual Develop. Corp. (1997) 53 Cal.App.4th 861, 867; Hu v. Fang (2002) 104 Cal.App.4th 61, 64-65 (attributing an attorney’s legal assistant’s error to the attorney). The motion to set aside defaults is granted. The proposed answer and cross-complaint are deemed filed and served as of this date.

Attorney Fees –
Kattan requests an award of reasonable compensatory legal fees if mandatory relief is granted (CCP § 473(b)) in the amount of $13,673. Gutman Decl. ¶¶ 3-5. Kattan’s request includes $1,052.50 for the 1/24/14 hearing (Juenger Decl. filed 2/28/14 [Gutman Decl. Ex. A] ¶¶ 4-13); $1,977 for the 3/6/14 hearing (Gutman Decl. ¶ 3); and $3,058.50 in connection with this motion (id. ¶ 4).

The Court notes that it stated that it would revisit the issue of sanctions as to Kattan’s discovery motions and for appearing at the prior hearings if mandatory relief was granted. M.O. dated 3/6/14.

As stated in the Court’s ruling on 3/6/14, Kattan failed to explain why the discovery motions were filed on 11/21/13 when the filing deadline was 12/12/13 and Defendants had indicated that they would provide supplemental responses and offered an extension to filing the discovery motions. Ruling dated 3/6/14. Therefore, the Court declines to award any sanctions based on the 1/24/14 hearing or the discovery motions (see Gutman Decl. ¶ 5).

Additionally, the Court notes that the majority of Kattan’s opposition to Defendants’ motion to set aside focused on the purported contradictions in Defendants’ evidence. This was without merit. Therefore, the Court only awards a nominal amount of $1,000 in connection with Defendants’ motion to set aside.

Therefore, the Court awards attorney fees in favor of Kattan against Defendants, and Matian & Moaddel, jointly and severally, in the total reduced amount of $2,977 to be paid within 30 days. The award of attorney fees is not a condition to the order setting aside the defaults. See CCP § 473(c)(2).

The Court further orders, pursuant to CCP 473(c)(1)(B) that Matian & Moaddel pay $500 to the State Bar Client Security Fund, and file in this case proof of said payment within 30 days.

Remaining issues: the Court presumes that with current representation, any outstanding discovery issues will be amicably resolved between the parties. Counsel are directed to immediately meet and confer on this and report progress to the Court at the hearing hereon.