Goossen v. Daily CA2/3 ( 2021 )

Filed 7/26/21 Goossen v. Daily CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
TIFFANY GOOSSEN et al., B307660
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No. 19CHCV00772)
v.
IAN DAILY et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Melvin D. Sandvig, Judge. Affirmed.
Greenacre Law and Josué Cristóbal Guerrero, for
Defendants and Appellants.
Eric Bensamochan for Plaintiffs and Respondents.
_________________________
Tiffany Goossen and Kennedy Sweis (plaintiffs) sued Deena
Ridha and Ian Daily (defendants) for claims arising out of an
alleged breach of an investment agreement. When defendants
failed to respond to the complaint, default was entered against
them. Defendants moved to set aside entry of default under the
mandatory provision of Code of Civil Procedure section 473,
subdivision (b).1 The trial court denied the motion, finding that
their attorney’s declaration did not meet the requirements of that
provision. Defendants then moved for reconsideration. That
motion too was denied. Defendants appeal, contending that the
default judgment entered against them must be reversed because
the trial court abused its discretion in denying their motions. We
disagree and affirm the judgment.
BACKGROUND
I. The lawsuit and defendants’ default
Plaintiffs and defendants entered into an agreement under
which plaintiffs invested in Chill Distro LLC, a cannabis
distribution company. Sweis invested $25,000 in the company,
and Goossen invested $50,000. Based on allegations, for
example, that defendants never intended to use plaintiffs’ money
to fund the company, shares of the company never existed, and
defendants never intended to honor the agreement, plaintiffs
sued defendants for fraud by misrepresentation, nondisclosure,
and concealment; breach of contract; accounting; and common
count, money had and received.2
Plaintiffs served the summons and complaint, and
defendants’ response was due by or on November 18, 2019. When
defendants failed to respond to the complaint, plaintiffs
1
All further undesignated statutory references are to the Code of
Civil Procedure.
2
Plaintiffs also sued Chill Distro LLC, but it is not a party to the
appeal.
2
requested entry of default on November 21, 2019, and the clerk
entered default that same day. Thirty minutes after the request
for entry of default was filed, defendants filed a declaration for an
automatic extension to file a responsive pleading under section
430.41, subdivision (a). Attorney Josué Guerrero declared that
the day before the request for entry of default was filed, he called
plaintiffs’ counsel to meet and confer about filing a demurrer, but
a receptionist said plaintiffs’ counsel was unavailable.
II. Defendants move to set aside entry of default.
Hearing nothing from plaintiffs’ counsel, defendants moved
to set aside the entry of default under the mandatory relief
provision of section 473, subdivision (b). Attorney Edna Fok
declared under penalty of perjury that defendants retained her
and Guerrero’s law firm on November 20, 2019—two days after
the responsive pleading was due. Immediately on being retained,
Guerrero tried to meet and confer with plaintiffs’ counsel and
filed the declaration for an automatic extension. After laying out
these facts, Fok stated, “But for the said mistake, inadvertence,
and/or surprise, Defendants would have filed a responsive
pleading within a timely manner. Therefore, I respectfully
request that the Court vacate the Dismissal entered against
Defendants pursuant to CCP § 473(b) and on grounds of mistake,
inadvertence, surprise, and/or excusable neglect.”
Plaintiffs opposed the motion, arguing that defendants did
not qualify for mandatory relief because Fok’s declaration
established that counsel could not have caused the default, as
defendants retained counsel after the responsive pleading was
due. Defendants thus delayed retaining counsel. And, to the
extent the motion sought discretionary relief, Fok’s declaration
failed to show that the default was due to the clients’ mistake,
3
surprise, or excusable neglect. Plaintiffs’ counsel also denied that
defense counsel called him to meet and confer.
The hearing on the motion to set aside entry of default was
held telephonically. According to Fok, she did not have the
tentative ruling before the hearing, so she did not have the
opportunity to respond to it.3 The trial court denied the motion.
In its written order, the trial court noted that defendants had
requested relief under only the mandatory provision of section
473, subdivision (b). However, Fok’s admission that defendants
retained her firm after the responsive pleading was due
precluded relief under that provision. The trial court said, “As
such, the failure to file a timely responsive pleading was not the
fault of counsel as they had not been retained at the time the
pleading was due.” The trial court further noted that defendants’
declaration for an automatic extension under section 430.41,
subdivision (a)(2), was untimely, so that section similarly
provided no basis for relief from default. Finally, the trial court
noted that defendants had not filed a reply in support of the
motion.
III. Defendants file an untimely reply.
After the hearing, defense counsel received the written
order and realized that the reply brief in support of the motion to
set aside entry of default had never been filed. Counsel
immediately filed the reply, which argued for relief under the
discretionary provision of section 473, subdivision (b). In a
supporting declaration under penalty of perjury, Daily said he
thought he had retained counsel when defendants initially
consulted with the attorney on October 31, 2019, which was
3
The hearing was unreported.
4
before the responsive pleading was due. He signed a retainer
agreement that day but did not realize he had to pay a retainer
before counsel would commence representation. Daily left town,
believing he had retained counsel. When Daily returned to town
the week of November 18, 2019, he saw emails about finalizing
his payment arrangement with counsel. On November 20, 2019,
he officially retained counsel. The failure to file a timely
response to the complaint was therefore due to Daily’s
“reasonable mistake” in thinking he had timely retained counsel.
IV. Defendants move for reconsideration.
Defendants moved for reconsideration of the order denying
their motion to set aside entry of default. The motion raised
three grounds for reconsideration. First, defendants’ untimely
reply was a new or different fact, as required by section 1008.
Second, Daily mistakenly believed he had retained counsel in
time to respond to the complaint, so relief was appropriate under
section 473, subdivision (b). Third, relief under section 473,
subdivision (d), was proper because the clerk improperly entered
default when an automatic extension was in effect. In support of
the motion, defense counsel explained why the reply brief had not
been timely filed: although she had timely prepared the reply
and instructed the firm’s litigation secretary to file it, the
secretary failed to file it.
Plaintiffs argued in opposition that the supposed new or
different fact warranting relief—the reply containing Daily’s
declaration—could have been presented in the moving papers to
the motion to set aside default. Therefore, the reply was not a
new or different fact. And, even if the reply had been timely
filed, it improperly raised a new ground for relief that should
have been raised in the moving papers. Finally, no clerical error
5
occurred warranting relief under section 473, subdivision (d),
because defendants’ request for an automatic extension was
untimely.
The trial court denied the motion for reconsideration. It
found that the information in the reply was not a new fact
because it was available when the motion was filed. Also, the
reply impermissibly raised a new theory of relief. The trial court
also pointed out that defendants had again changed their position
by asserting in their reply to the motion for reconsideration that
Daily’s mistaken belief he had retained counsel before the
responsive pleading was due was attributable to defense counsel’s
lack of clarity about the retainer. Finally, the trial court
repeated that no clerical error occurred.
On August 24, 2020, the trial court entered judgment by
default in the amount of $75,000. This timely appeal followed.
DISCUSSION
Defendants argue that the default judgment must be
reversed for four reasons: (1) entry of default violated section
430.41, subdivision (a)(2); (2) the trial court abused its discretion
by denying the motion to set aside default under the mandatory
and discretionary provisions of section 473, subdivision (b);
(3) the trial court abused its discretion by denying the motion for
reconsideration; and (4) the default judgment was improperly
entered because the complaint did not state facts sufficient to
constitute a cause of action. We now address, and reject, each in
turn.
6
I. Entry of default did not violate section 430.41, subdivision
(a)(2).
Three days after defendants’ responsive pleading to the
complaint was due, defendants filed a declaration for an
automatic extension under section 430.41, subdivision (a)(2).
That section requires a party to meet and confer before filing a
demurrer. If parties are unable to meet and confer at least five
days before the demurrer is due, then the demurring party shall
be granted an automatic 30-day extension to file a demurrer.
(§ 430.41, subd. (a)(2).) To obtain the automatic extension, the
demurring party must file and serve, on or before the date the
demurrer would be due, a declaration stating under penalty of
perjury that a good faith attempt to meet and confer was made or
why the parties could not timely meet and confer. (Ibid.)
Thus, to obtain an automatic extension, defendants had to
file their declaration on or before November 18, 2019, when their
responsive pleading was due. But they did not file the
declaration until three days later. It was therefore untimely, and
defendants were not entitled to an automatic extension. For this
reason, we also reject defendants’ related argument that the
default judgment must be set aside as void under section 473,
subdivision (d),4 because the clerk entered default while the
automatic extension was in effect. As we have said, an automatic
4
Section 473, subdivision (d), provides that a “court may, upon
motion of the injured party, or its own motion, correct clerical
mistakes in its judgment or orders as entered, so as to conform to
the judgment or order directed, and may, on motion of either
party after notice to the other party, set aside any void judgment
or order.”
7
extension was not in effect, so section 473, subdivision (d), does
not apply.
II. The trial court did not abuse its discretion by denying the
motion to set aside entry of default.
Defendants next contend that their motion to set aside
entry of default should have been granted under both the
mandatory and discretionary provisions of section 473,
subdivision (b). We disagree.
Section 473, subdivision (b), permits a party or its legal
representative to be relieved from the consequences of a
dismissal entered as a result of mistake, inadvertence, surprise,
or neglect. The section has mandatory and discretionary
provisions. To obtain relief under the mandatory provision, an
attorney must submit a sworn affidavit attesting to the attorney’s
mistake, inadvertence, surprise, or neglect, and showing that the
mistake, inadvertence, surprise, or neglect in fact caused the
dismissal or entry of default. (§ 473, subd. (b).) The purpose of
the mandatory relief provision is (1) to relieve the innocent client
of the consequences of the attorney’s action, (2) to place the
burden on counsel, and (3) to discourage legal malpractice
actions. (Martin Potts & Associates, Inc. v. Corsair, LLC (2016)
244 Cal.App.4th 432, 439.)
The discretionary provision of section 473, subdivision (b),
applies when no attorney affidavit of fault is filed. Under that
provision, a “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.” (§ 473, subd. (b).) The moving party has the burden to
show that the neglect leading to default was excusable, and the
8
acts bringing about the default must have been those of a
reasonably prudent person. (Zamora v. Clayborn Contracting
Group, Inc. (2002) 28 Cal.4th 249, 258.)
We review a trial court’s ruling on a request under section
473, subdivision (b), for relief from default for abuse of discretion.
(Austin v. Los Angeles Unified School Dist. (2016) 244
Cal.App.4th 918, 929.) But, if the applicability of the mandatory
provision does not turn on disputed facts and instead presents an
issue of law, then the trial court’s ruling is subject to de novo
review. (Gee v. Greyhound Lines, Inc. (2016) 6 Cal.App.5th 477,
484.)
As the trial court here found, defendants initially moved to
set aside entry of default under only the mandatory provision of
section 473, subdivision (b). However, as the trial court also
found, the attorney affidavit failed to show that defendants’
counsel made any mistake or otherwise engaged in any act
showing defendants’ entitlement to relief. Instead, defendants
consulted the attorney before the responsive pleading was due,
but did not retain the firm until after it was due. The attorney
said nothing about any mistake or neglect her firm made
regarding their retention. And, once retained, counsel tried to
remedy the situation by calling plaintiffs’ counsel to meet and
confer and filing the (untimely) request for an automatic
extension.
The attorney affidavit thus not only failed unequivocally to
admit error (see, e.g., Cowan v. Krayzman (2011) 196 Cal.App.4th
907, 916 [affidavit must admit error]), it admitted that the firm
was not representing defendants when the responsive pleading
was due. Where, as here, an attorney did not represent the client
when the default occurred, mandatory relief is unavailable
9
because the attorney did not cause the entry of default. (Cisneros
v. Vueve (1995) 37 Cal.App.4th 906, 909, 912.) Accordingly,
whether we review the issue de novo or for an abuse of discretion,
the trial court properly denied relief under the mandatory
provision of section 473, subdivision (b).
Nor were defendants entitled to relief under the
discretionary relief provision of section 473, subdivision (b), for
the simple reason they did not ask for it. The trial court clearly
did not abuse its discretion by failing to grant relief never
requested. To be sure, defendants asked for discretionary relief
in their reply brief. But they filed that reply after the hearing on
the motion and after the trial court had issued its order denying
the motion. Therefore, the earliest opportunity the trial court
had to consider the reply and its request for discretionary relief
was in connection with the motion for reconsideration, to which
we now turn.
II. The trial court did not abuse its discretion by denying the
motion for reconsideration.
In moving for reconsideration, defendants cited their
untimely reply in support of the initial motion as a new or
different fact justifying relief and Daily’s declaration as evidence
they made a reasonable mistake about when they retained
counsel. As we now explain, the trial court did not err in finding
that these supposedly new facts did not provide grounds for
relief.
A. Standard of review
As an initial matter, we note that it is unclear whether
defendants’ motion for reconsideration was brought solely under
section 1008 or whether defendants also intended to renew their
10
section 473, subdivision (b), motion. The notice of motion did not
clearly state it was based on one or both sections, and the
memorandum of points and authorities focused on section 1008,
never clearly referring to a renewed motion under section 473,
subdivision (b). Indeed, the words “renewed motion” do not
appear in the record or in the briefs on appeal, and the trial court
did not address any such motion. Thus, to the extent defendants
were attempting to renew their section 473, subdivision (b),
motion, their lack of clarity constitutes a forfeiture of the issue.
Neither the trial court nor we have an obligation to decipher a
party’s opaque intentions. (See, e.g., Cahill v. San Diego Gas &
Electric Co. (2011) 194 Cal.App.4th 939, 956 [we do not develop
arguments for appellant].) Moreover, even if defendants were
renewing their motion under section 473, subdivision (b), they
had to satisfy the requirements of section 1008 (Even Zohar
Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC
(2015) 61 Cal.4th 830, 833 (Even Zohar), which, as we explain,
they failed to do.
Section 1008 requires parties to move for reconsideration of
an order within 10 days after service of notice of entry of the
order, and the request must be based on new or different facts,
circumstances, or law. (Case v. Lazben Financial Co. (2002) 99
Cal.App.4th 172, 179.) A party seeking reconsideration also must
satisfactorily explain the failure to produce the evidence at an
earlier time. (Even Zohar, supra, 61 Cal.4th at p. 839; New York
Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212.) If
these prerequisites are not satisfied, a trial court acts in excess of
its jurisdiction in granting a motion for reconsideration. (Garcia
v. Hejmadi (1997) 58 Cal.App.4th 674, 690.)
11
We review a trial court’s ruling on a motion for
reconsideration under the abuse of discretion standard. (New
York Times Co. v. Superior Court, supra, 135 Cal.App.4th at
p. 212.)
B. The motion for reconsideration did not satisfy the
requirements of section 1008.
Defendants assert that their untimely reply in support of
their motion to set aside entry of default was a new or different
fact within the meaning of section 1008. In that reply, Daily
explained that he thought he had retained counsel before the
responsive pleading was due on November 18, 2019. He left town
and returned the week of November 18, only to discover he had
“missed emails regarding finalizing the alternate payment
arrangement agreement” with the law firm.5 Due to his
“reasonable mistake,” a timely response to the complaint was not
filed.
The untimely reply, however, was not a new or different
fact. (Compare Johnson v. Corrigan (2005) 127 Cal.App.4th 553,
556 [trial court’s failure to consider timely filed memorandum of
points and authorities was new circumstance justifying
reconsideration].) Rather, the reply and Daily’s accompanying
declaration asked for discretionary relief based on facts known to
defendants when they filed their moving papers to set aside entry
of default. Defendants offered no explanation for their failure to
diligently present those facts in the moving papers in support of
the earlier motion as section 1008 requires. And, although the
5
It is unclear what the reference to the “alternate payment
arrangement” means and why it is relevant to any mistake Daily
made about when he retained his attorney.
12
trial court made no express credibility findings, it reasonably
could have believed that defendants strategically chose to move
only under the mandatory provision, and then to seek
discretionary relief via the reply only after mandatory relief was
denied.
Even if the trial court agreed that the failure to timely file
the reply was due to defendants’ attorney’s excusable neglect or
mistake, the trial court said it would have otherwise exercised its
discretion to disregard the reply because it asserted a new ground
for relief. It is generally improper to raise new theories of relief
or evidence in a reply, and a trial court has broad discretion to
disregard legal arguments or other matters not presented in a
party’s moving papers. (See, e.g., Jay v. Mahaffey (2013) 218
Cal.App.4th 1522, 1537 [motion practice general rule is new
evidence not permitted with reply]; San Diego Watercrafts, Inc. v.
Wells Fargo Bank (2002) 102 Cal.App.4th 308, 310 [summary
judgment reversed because trial court erred in considering
evidence first submitted with reply]; Plenger v. Alza Corp. (1992)
11 Cal.App.4th 349, 362, fn. 8 [new evidentiary matter in reply
allowed only in exceptional cases].)
The moving papers in support of setting aside entry of
default raised only attorney fault under the mandatory relief
provision. But the reply argued that the mistake was Daily’s
under the discretionary relief provision. The reply therefore did
not, as defendants argue on appeal, merely rebut arguments
raised in plaintiffs’ opposition or simply “expand” on “the
narrative” in the moving papers. Rather, the moving papers and
the reply presented two different grounds for relief based on two
different sets of disputed facts. Indeed, defendants admit as
much when they say that if the reply had been timely filed, then
13
plaintiffs could have asked for a continuance to respond to the
new matter in the reply.
Finally, defendants’ assertion that they were entitled to
mandatory relief on reconsideration because their counsel failed
to timely file the reply conflates the issues. Counsel’s failure
timely to file the reply is irrelevant to setting aside entry of
default. Stated otherwise, counsel’s failure to timely file the
reply is not why default was entered.
III. The complaint states facts sufficient to constitute a cause of
action.
Defendants’ final argument why the default judgment
should be reversed is the complaint failed to state facts sufficient
to state a cause of action. While an appellant may object that the
complaint failed to state facts sufficient to constitute a cause of
action on appeal from a default judgment (Kim v. Westmoore
Partners, Inc. (2011) 201 Cal.App.4th 267, 282), that objection
fails here. Defendants argue only that the fraud- and contract-
based causes of action failed to allege sufficient facts. However,
defendants do not address the common count for money had and
received in the amount of $75,000, the amount awarded to
plaintiffs. Thus, even if defendants were correct that the fraud
and contract causes of action were not properly alleged, the
unchallenged common count cause of action supports the default
judgment.
14
DISPOSITION
The judgment is affirmed. Tiffany Goossen and Kennedy
Sweis may recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS
EDMON, P. J.
We concur:
LAVIN, J.
KALRA, J.*
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
15