Montecito Care & More, Inc. v. Dorota Llositzki
Case No: 19CV03247
Hearing Date: Mon Oct 07, 2019 9:30

Nature of Proceedings: Motion to Set Aside

# 19CV03247 Montecito Care & More Inc. v. Dorota Lositzki

Hearing Date: 10/7/19

HEARING: Continued hearing on motion to vacate default

ATTORNEYS:

Matthew M. Clarke / Jason P. Koch of Kelley Clarke PLLC for plaintiff

Beatriz P. Flores for defendant

TENTATIVE RULING: The Court will vacate the default, and will allow defendant 30 days from the date of this hearing within which to file a response to the complaint.

Background: Defendant’s motion to set aside default was previously set for hearing on September 16, 2019. The Complaint had been filed on June 21, 2019, and default entered on July 26, 2019. In the interim, a Notice of Errata was filed by plaintiff on July 8, 2019, in which plaintiff sought to delete two words from the Complaint. Specifically, plaintiff sought to change an allegation that defendant had been employed by plaintiff as a “live-in caregiver,” to an allegation that defendant had been employed by plaintiff as a “caregiver.”

The Court was immediately concerned with that alteration, particularly given that there was no Proof of Service showing that the Errata had ever been served upon defendant, since the allegations of the complaint all revolved around defendant’s past and present right to occupy the caregiver’s residence on the property at issue in the complaint. The property is owned by defendant and her husband. The two of them, with others, created the plaintiff entity for purposes of operating a small assisted living facility for seniors at the property, which defendant and her husband then leased to the plaintiff entity. The complaint alleges the lease was entered into in 2016. Plaintiff was CEO of plaintiff and President of its Board of Directors from 8/2012 to 4/30/19, and was also employed by plaintiff as a caregiver, from 8/2012 to 6/1/19. On the latter date, she was removed from the board by a special shareholders’ meeting called for that purpose, and the board then relieved her of her role as CEO. She was terminated as a care-giver on June 1, 2019. Plaintiff then filed this action against her shortly thereafter. Each of the causes of action alleged against defendant relate to her occupancy of the caregiver’s residence on the property, both from the time the property was leased to plaintiff, and from the time her involvement with plaintiff was terminated.

Given that all of the claims revolved around defendant’s occupancy of the caregiver’s residence, the change from alleging she had been hired by plaintiff as a “live-in caregiver,” to an allegation that she had simply been hired by plaintiff as a “caregiver,” the omission of the words “live-in” appeared to the court to alter the substance and the very nature of the complaint. Any substantive alteration in the complaint legally had to be personally served upon the defendant, and the time within which defendant could respond would run from the personal service of the “amendment,” but in fact the Notice of Errata had not been served upon defendant in any manner at all. As a result, the Court expressed its opinion that the default was void, since it was prematurely entered measured from the service of the original complaint, whereas the making of a substantive amendment further extended that time. If that was true, defendant should have been permitted to file her answer when she attempted to do so on August 1.

The Court contemplated simply voiding the default at that time, and noted that the attempt to make the alteration in an Errata, rather than in an Amended Complaint or an Amendment to the Complaint, and the failure to serve the Errata on defendant, created a perception of deliberate deception. However, the Court ultimately opted to allow plaintiff the opportunity to explain to the Court what had happened, and attempt to convince the court why the default which had been entered was not rendered void by the filing of the Notice of Errata.

On September 30, 2019, plaintiff filed the response requested by the Court. In the response, the plaintiff assures the Court that there was no attempt at deception involved. Plaintiff’s counsel contends that the alteration was actually made prior to the time the Complaint was filed, but that the wrong version of the complaint was inadvertently filed. Attorney Koch drafted the complaint, and made the change in response to comments from his supervising attorney. He e-mailed the amended version to his supervising attorney, with instructions to file that version, but the supervising attorney inadvertently filed the earlier uncorrected version of the complaint, while the supervising attorney was on vacation in Venezuela.

Plaintiff further argues that the alteration should not be viewed as being substantive, and because it was not substantive, should not be found to have extended the time for defendant to respond to the complaint, concluding that the default was not void. Plaintiff argues that the Complaint should be considered as a whole, referring to the fact that it mentions defendant’s employment as a “caregiver” three other times, and the one non-conforming reference to plaintiff as a “live-in caregiver” should be considered an outlier. The Errata was personally served upon defendant, even though such service was not necessary because the change was insubstantial, and this was done only to avoid confusion and an unwarranted demurrer based upon that error.

Plaintiff also argues that defendant did not file a reply brief, and did not raise the Errata as a basis for opening the default, submitting that this was because defendant did not see the Errata as a change of substance.

Further, plaintiff has now filed a proof of personal service of the Errata upon defendant, showing such service on July 16, 2019, ten days prior to the date upon which default was sought and entered. Plaintiff explains that the Errata was not served upon attorney Flores, because she had not responded to its counsel’s inquiry whether she represented defendant. The proof of service was not filed earlier due to counsel’s oversight.

ANALYSIS: The Court appreciates plaintiff’s comprehensive response to the inquiries it posed in advance of the prior hearing date. The Court further accepts counsel’s representation that no deception whatsoever was involved. In fact, the Court’s primary concern in requesting further response was in the integrity of the process. Counsel’s representations have alleviated the Court’s concerns and have shown that no deception was involved.

Even so, however, in evaluating the propriety of the default that was entered, the Court must evaluate the alterations effected by the Notice of Errata from an objective perspective. While the error might truly have been an inadvertent one, the fact of the matter is that the deletion which was made appears to go to the very heart of the dispute as it was alleged, i.e., defendant’s right to have assumed residency in the caretaker’s residence at the property, rather than having turned it over when the property was leased to plaintiff. Further, the Court cannot find that other references in the complaint to defendant’s employment as a “caregiver,” rather than a “live-in caregiver,” have the effect of rendering the latter reference to be an “outlier,” such that it should simply be ignored. Regardless of the omission of the modifying “live-in” terms by plaintiff, it seems clear to the Court that the issue of whether defendant was in fact employed as a live-in caretaker could be a central issue in this case and, if it is, the issue would be a question of fact which must be resolved by the jury.

While plaintiff was free to amend her original allegations, in the context of its remaining allegations, the Court finds that the amendment which was made was sufficiently significant and substantial that the time within which defendant had to respond to the complaint should necessarily have run from the date of service of that amendment. As a result, defendant should have been permitted 30 days from the date of such service (July 16, 2019) within which to respond to the complaint, i.e., her time to respond should have expired on August 15, 2019—a full two weeks after she attempted to file her answer.

When the Court continued the prior hearing and requested the response from plaintiff, it had not evaluated the merits of the motion filed by defendant, and was primarily concerned with the integrity of the proceedings. In now looking toward those merits, and given the preference for resolving disputes on their merits, however, the Court would likely have found the evidence sufficient to support setting aside the default under the terms of Code of Civil Procedure section 473(b).

The Court will order that the default which was entered on July 26, 2019 be vacated, and will allow defendant 30 days from the date of this hearing (November 6, 2019) within which to file her responsive pleading.