Case Name: Cayton, et al. v. Artloan Financial Services, Inc., et al.

Case No.: 1-12-CV-224336

Defendant Steven McVay moves to set aside an entry of default obtained by Plaintiffs on March 11, 2014. Plaintiffs oppose the motion.

Plaintiffs filed this action on May 11, 2012. At that time, McVay had a bankruptcy proceeding pending. On November 22, 2013, the bankruptcy court denied McVay’s motion to discharge. On January 16, 2014, the court instructed McVay to file an answer in this case. Plaintiff claims that the court did not provide a deadline for this, but the transcript states “[McVay] might want to think about getting an answer on file if [McVay] were served because once 30 days comes and goes, without an extension, [Plaintiffs] have a right to pursue a default against [McVay].” On February 12, 2014, McVay received an e-mail from Daniel Muller on behalf of other defendants, asking McVay to review a proposed stipulation to stay the proceedings. McVay signed the proposed stipulation and e-mailed it to Mr. Muller on February 15, 2014, but did not date his signature when he e-mailed the signed stipulation. The stipulation was filed with the court on March 3, 2014, but the filed stipulation version does not include McVay’s signature. On March 11, 2014, default against McVay was entered.

Plaintiffs argue that because the motion should be denied because Plaintiffs have only taken McVay’s default and the notice states that the motion is to set aside a default judgment. However, McVay states elsewhere in his papers that he “brings this motion seeking an order from the court setting aside the entry of default.” Therefore, the court will rule regarding the motion to set aside the entry of default.

McVay makes two arguments as to why entry of default should be set aside: (1) there was improper proof of service, and (2) there was a mistake and/or excusable neglect on his part.

I. Improper Proof of Service

McVay argues that the entry of default should be set aside because Plaintiff Monica Cayton filed an improper proof of service of the documents and she committed perjury by: (1) claiming on March 12, 2014, that she placed the Default in the mail on March 13, 2014, the day after the document was filed with the court, and (2) claiming that she was not a party in this case, when she is, and therefore she could not be the one serving the default; (3) declaring that she deposited the document in the mail on March 13, 2014, when a postmark shows that the notice was mailed on March 25, 2014; and (4) swearing that she sent the document to 260 Stonehurst Way, while the envelope attached had McVay’s actual address at 960 Stonehurst Way. McVay also argues that if he had not signed the stipulation, he would have filed an Answer with the court, and he has attached a proposed Answer to his motion.

Regarding McVay’s argument that there was an improper proof of service, the document served on McVay on March, 2014, was the notice of termination of stay, not notice for request of judgment. Therefore, McVay’s first argument applies to a different proceeding. None of the other points is pertinent to this motion.

II. Mistake and/or Excusable Neglect

The court may relieve a party from a judgment taken against him through his mistake, inadvertence, surprise, or excusable neglect. Cal. Code Civ. Proc. § 473(b). Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken. Id. Even in a case where the showing under section 473 is not strong, or where there is any doubt as to the setting aside of a default, such doubt should be resolved in favor of the application. Van Dyke v. MacMillan (1958) 162 Cal.App.2d 594, 598.

McVay received an e-mail from Mr. Muller about a stipulation to stay the proceedings within the 30-day time frame that the court set out on January 16, 2014, and responded to Mr. Muller with his signature on the proceedings within that 30-day time frame. McVay therefore reasonably believed that he did not need to file an answer. The court finds that this is mistake and excusable neglect on his part. McVay provided a proposed answer as required by the statute. Thus, the court finds that McVay meets the requirements under CCP § 473(b) to set aside the entry of default against him.

Plaintiffs argue that the motion was not timely brought because, even if he received the notice of default on April 3, 2014, McVay filed his motion on May 27, 2014, nearly two months later. However, CCP § 473(b) requires that the motion be filed within six months, and the court finds that McVay’s filing within two months after notice of the entry of default is reasonable.

Therefore, the motion for setting aside default is GRANTED. McVay has ten days leave to file his proposed answer.