Case Number: EC065396 Hearing Date: October 19, 2018 Dept: NCD

TENTATIVE RULING

Calendar: 7

Date: 10/19/18

Case No: EC 065396

Case Name: Chicago Title Insurance Company v. Talukder, et al.

MOTION FOR RELIEF

“Mistake, Inadvertence, Surprise, or Neglect”

(CCP §473)

Moving Party: Defendant Mahboob Talukder

Responding Party: Plaintiff Chicago Title Insurance Company

RULING:

Motion to Set Aside Default and Default Judgment is GRANTED pursuant to CCP §473(b), based on defendant’s mistake, surprise and/or excusable neglect. Default and default judgment entered as to moving defendant Mahboob Talukder only on March 9, 2018 and June 4, 2018 are set aside. Defaults and default judgment as against remaining defendants remain in effect.

Defendant is ordered to file with the court by close of business this date a separate, original signed Answer to the Complaint,

RELIEF REQUESTED:

Set aside default and default judgment (enteredMarch 9, 2018, June 4, 2018)

FACTUAL AND PROCEDURAL BACKGROUND:

Plaintiff Chicago Title Insurance Company alleges that in April of 2003, Penny Martin-Dougherty, the then owner of real property in North Hollywood, became in default on her two deeds of trust, and the senior lender recorded its Notice of Default on the property. As a result, defendant Mahboob Talukder aka David Talukder, and Frank Gonzalez and John Castenade appeared at the property unsolicited and represented to Dougherty that they could assist her to pay off her mortgage through a reverse mortgage loan transaction.

Plaintiff alleges these persons represented to Dougherty that they would pay off her mortgage on the property, but that she would remain title owner of the property, and that they would pay to her the amount of $500 for 15 years. Dougherty agreed to the reverse mortgage and signed documents which included a blank grant deed. Plaintiff alleges that the grant deed was completed and recorded, purportedly conveying the property to GIT, Inc. a limited liability company of defendant David Talukder and defendant Cristina Talukder, which they treated as their alter ego.

Defendants did not pay the mortgages, and as a result the senior deed of trust recorded a notice of default. Thereafter, defendants executed a deed of trust purporting to encumber the property in the principal amount of $240,000. The property was then conveyed to defendant Cristina Talukder, through a corporation grant deed, which was also recorded. In April of 2004, Cristina Talukder conveyed the property to defendant Absara, LLC, as Trustee for the Alcove Trust, a company plaintiff alleges defendants David and Cristina Talukder treated as their alter ego.

In May of 2005, Absara, as trustee for Alcove Trust, conveyed the property to Carmen E. Echeverria by executing a Grant Deed, which was recorded in May of 2005.

Echeverria then obtained a loan in the principal amount of $344,000.00 from plaintiff’s insured, Resmae Mortgage Corporation, which loan was secured by a deed of trust on the property, recorded on May 25, 2005. Plaintiff alleges that in connection with this loan transaction, it issued a policy of title insurance to the insured on the property, based on its reasonable reliance on the various fraudulent deeds of trust and grant deeds recorded by defendants.

In June of 2006, Dougherty filed a lawsuit naming the insured as a defendant in a case alleging that she was a victim of fraud, that the documents she signed were for a reverse mortgage, not to convey title, and seeking cancellation of the deed of trust of the insured. The insured made a claim under the policy to plaintiff. Dougherty then succeeded in the lawsuit when the court issued a judgment against defendants David Takukder, GIT Inc., Cristina Taludker and Absara as trustee for Alcove, and cancelled the insured’s deed of trust.

Plaintiff alleges that it paid the amount of $344,000 to its insured in satisfaction of the claim, and that defendants have refused to pay or indemnify plaintiff for its losses.

The complaint alleges causes of action for fraud, equitable indemnification, restitution based on unjust enrichment, and money paid.

On September 14, 2016, the default of defendant Git, Inc. was entered. On October 13, 2016, the default of defendant Absara, LLC was entered. On March 17, 2017, the default of defendant Absar, LLC as trustee for Alcove Trust was entered.

On July 21, 2017, the court heard six unopposed motions to compel responses to discovery from defendants Cristina Talukder and Mahboob Talukder (aka David). There was no appearance for defendants at the hearing, and the motions were granted and monetary sanctions awarded.

On February 2, 2018, the court heard two unopposed motions for terminating sanctions, based on the failure of Cristina Talukder and Mahboob Talukder to comply with the court’s orders of July 21, 2017 to serve responses to discovery or to pay sanctions. The motions were granted and the court ordered the General Denial filed August 8, 2016 to be stricken as to each of the defendants. The court also awarded further monetary sanctions.

On March 9, 2018, plaintiff filed Requests for Entry of Default of Mahboob Talukder and Cristina Talukder, which were entered as requested the same date.

On June 4, 2018, the court entered judgment by the court by default based on plaintiff’s written declaration in the sum of $493,879.58 against defendants Cristina Talukder, Mahboob Talukder, Absara, LLC, Absara, LLC as Trustee, and GIT, Inc.

ANALYSIS:

Defendant Mahboob Talukder moves to set aside the entry of default and default judgment against him in this action. Relief is sought under the discretionary provision of CCP § 473(b), which provides:

“The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.”

The trial court’s granting or denial of relief under this provision is reviewed for abuse of discretion. State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610. It is noted that appellate courts are traditionally “favorably disposed toward such action on the part of the trial courts as will permit, rather than prevent, the adjudication of legal controversies on their merits.” Mercantile Collection Bureau v. Pinheiro (1948) 84 Cal.App.2d 606, 608, citing Benjamin v. Dalmo Mfg. Co. (1947) 31 Cal.2d 523.

Defendant argues that the default should be set aside based on mistake, inadvertence, surprise or excusable neglect because defendant’s wife suffered from Amyotrophic Lateral Sclerosis, also known as ALS disease, and was in the ICU at Cedars Sinai hospital throughout 2017, with defendant Mahboob being her caregiver, and spending most of his time taking care of her, so he could not respond to discovery. [Talukder Decl., paras 2, 3]. Defendant also indicates that he never received any motions to compel or motion for terminating sanctions because in March of 2017, defendant and his wife moved from their previous address in Valencia to a new address in Santa Clarita. [Talukder Decl., paras. 5, 6]. He states, “I did not file and serve a notice of change of address because I did not know that I had to.” [Talukder Decl., para. 6]. He also indicates that he does not believe he is liable in this case, but was a victim of the fraud of Frank Gonzalez, and that he has served jail time related to the facts of this case and paid five years of restitution, so that he believes that plaintiff’s insured has been paid and defendant owes no money to plaintiff. [Para. 7].

A party seeking relief under section 473 on the ground of excusable neglect bears the burden of demonstrating that the neglect was excusable in order to secure relief. Cochran v. Linn (1984) 159 Cal.App.3d 245, 252.

The test of whether neglect was excusable is “whether a reasonably prudent person under the same or similar circumstances might have made the same error.” Bettencourt v. Los Rios Community College Dist. (1986) 42 Cal.3d 270, 276.

Defendant argues that he had moved from the residence where all the motions were served, and that certainly this is excusable neglect, and that he has brought the motion promptly after judgment was entered in June. Defendant also argues that the other parties will suffer no prejudice from having this matter heard on its merits.

The opposition argues that the motion to set aside fails to establish excusable neglect, as it is undisputed that the discovery requests and meet and confer letter were served at the proper address before defendant moved, and none of the other documents served on defendants at the address on Copper Hill in Valencia were returned by the U.S. Postal Service until May of 2018. Plaintiff also argues that a reasonable and prudent man with the knowledge of the pending case against him would have filed and served a change of address after he moved. The opposition argues that any neglect on the part of defendant here was inexcusable, not excusable neglect.

Defendant was required to serve and file a written notice of any change of address under CRC Rule 2.200:

“An attorney or self-represented party whose mailing address, telephone number, fax number, or e-mail address (if it was provided under rule 2.111(1)) changes while an action is pending must serve on all parties and file a written notice of the change.”

The opposition also argues that the motion should be denied because defendant does not have a meritorious defense in this matter, as he has already pleaded guilty to charges made against him in criminal court in connection with the subject property.

It appears that defendant here is taking the position that he was defrauded into taking any action in connection with the subject property, which appears a matter to be sorted out when the matter is heard on its merits. The opposition does not point to any prejudice from the court permitting this matter to be determined on its merits as to the moving defendant.

The cases supporting findings that neglect was inexcusable generally involve a deliberate refusal to act and facts or circumstances suggesting an after the fact change of mind. Although not cited in the papers, in Fidelity Federal Savings & Loan Association (1959 2nd Dist.) 175 Cal.App.2d 149, defendant, a sophisticated businessman, delayed in responding to the complaint, expecting that a defense would materialize through a bankruptcy proceeding, and when he discovered his mistake of law, three months after he was due to respond, sought relief on the ground of excusable neglect. The Second District fairly broadly observed:

“it is the duty of every party desiring to resist an action or to participate in a judicial proceeding to take timely and adequate steps to retain counsel or to act in his own person to avoid an undesirable judgment. Unless in arranging for his [*156] defense he shows that he has exercised such reasonable diligence as a man of ordinary prudence usually bestows upon important business his motion for relief under section 473 will be denied.” Other authorities clearly hold that where a default occurred as the result of a deliberate refusal to act and relief is sought after a change of mind, the remedy provided by section 473, Code of Civil Procedure, is clearly inappropriate ( Paulekas v. Paulekas, 117 Cal.App.2d 73 [254 P.2d 941]; Baratti v. Baratti, 109 Cal.App.2d 917 [242 P.2d 22]; Lukasek v. Lukasek, 108 Cal.App.2d 609 [239 P.2d 497]; Weinberger v. Manning, 50 Cal.App.2d 494 [123 P.2d 531]).

Fidelity Federal, at 155-156.

The Second District found in that case that the trial court had not abused its discretion in denying defendant’s motion for relief, as the trial court may well have seriously questioned the good faith of defendant and have doubted that his purported mistaken belief was the reason he failed to appear and contest the action. Fidelity Federal, at 153.

The Second District also found that the trial court had properly concluded that the nearly six month delay in bringing the motion after discovery of entry of default or the claimed defense was unexplained, or the explanation not sufficient, so that the trial court had not abused its discretion in concluding defendant did not apply for relief within the “reasonable time” required under section 473. Fidelity Federal, at 157.

The court finds that there does not appear to have been some change of heart here, or a manipulation of the system to gain some sort of strategic advantage, but an unfortunate set of circumstances facing defendant which may have reasonably initially distracted him from his discovery obligations, and then resulted in him not having actual notice of the mounting consequences from that conduct, by not keeping his address updated. The court finds that sufficiently excusable neglect has been established. The court therefore sets aside the default and default judgment and permits the filing of the new answer. This result is the best outcome given the preference for having matters determined on their merits, and based on defendant’s indication in the moving papers that he has no objection to promptly paying all sanctions awarded, so that there appears very little prejudice to plaintiff from the neglect.