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Even Zohar Construction & Remodeling, Inc v. Bellaire Townhouses

April 10, 2013

EVEN ZOHAR CONSTRUCTION & REMODELING, INC., PLAINTIFF AND APPELLANT,
v.
BELLAIRE TOWNHOUSES, LLC ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from an order of the Superior Court of Los Angeles County, Ralph W. Dau, Judge. (Los Angeles County Super. Ct. No. BC458347)

The opinion of the court was delivered by: Willhite, J.

CERTIFIED FOR PUBLICATION

Reversed.

INTRODUCTION

Plaintiff Even Zohar Construction & Remodeling, Inc. sued Bellaire Townhouses, LLC and Samuel N. Fersht, individually and as trustee of the Fersht Family Living Trust (collectively defendants), in a dispute regarding development and construction of a condominium project.

After the trial court denied defendants' motion to compel arbitration, defendants failed to file a responsive pleading to plaintiff's complaint. Pursuant to plaintiff's requests, the trial court ultimately entered a $1.7 million default judgment against defendants.

Citing section 473, subdivision (b),*fn1 defendants moved for mandatory relief, relying upon an affidavit of fault executed by their attorney. The trial court denied the motion, finding the attorney affidavit "not credible" and "too general."

Several weeks later, defendants filed a motion to renew their request for relief, supported by a more detailed attorney affidavit of fault. Plaintiff opposed the motion on multiple grounds, including defendants' failure to satisfactorily explain why they had not presented the evidence contained in the more detailed affidavit in their first motion for relief. On several separate occasions, the trial court stated that it did not find the attorney's second affidavit credible and that defendants had failed to meet the foundational requirements for a motion to renew found in section 1008, subdivision (b). Nonetheless, the trial court felt bound by Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868 (Standard Microsystems), a decision that held that section 1008, subdivision (b) does not apply to a renewed section 473, subdivision (b) motion for mandatory relief based upon an affidavit of attorney fault. As a result, the trial court granted defendants' motion and set aside the defaults and default judgment.

We reverse. First, we find that the trial court correctly concluded that defendants did not satisfactorily explain their failure to present earlier the evidence proffered in their attorney's second affidavit of fault. Second, we decline to follow Standard Microsystems. Its conclusion that section 1008's requirements do not apply to a renewed motion for mandatory relief from default based upon an affidavit of attorney fault ignores section 1008's clear and unambiguous language that it applies to all renewal motions and undermines the Legislature's goal to limit repetitive motions based upon facts that, with the exercise of due diligence, could have been but were not presented at the first hearing. We therefore conclude that the trial court lacked jurisdiction to consider the renewed motion. On that basis, we reverse and direct the trial court to reinstate the defaults and default judgment.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Lawsuit and Entry of the Default Judgment

In March 2011, plaintiff filed and served its lawsuit.

In May 2011, defendants filed a petition to compel arbitration.

On August 29, 2011, the trial court denied the petition to compel arbitration. On August 31, 2011, plaintiff properly served defendants by mail with notice of entry of that order. As a result, defendants had until September 20, 2011 to respond to plaintiff's complaint. (§§ 1281.7, 1013, subd. (a).) Defendants did not file any responsive pleading.

On September 23, 2011, plaintiff notified defendants' attorney Daniel Andrew Gibalevich (Gibalevich) by email and FAX that it would request entry of default the following week unless a responsive pleading was filed immediately. No pleading was forthcoming.

On September 29, 2011 and October 4, 2011, at plaintiff's requests, the clerk of the superior court entered defendants' defaults.

On November 22, 2011, plaintiff moved for entry of a default judgment.

On December 8, 2011, the trial court, after conducting a prove-up hearing, entered a $1,701,116.70 default judgment (plus interest) against defendants.

2. Defendants' First Motion for Relief

On December 16, 2011, defendants moved for relief. Their pleading is entitled "Notice of Motion for Mandatory Relief Under C.C.P. § 473 to Vacate Defaults and Default Judgments." Notwithstanding the reference in the motion's caption to mandatory relief, the body of the motion argued that Gibalevich had committed both excusable neglect and inexcusable neglect. Gibalevich's declaration, offered in support of the motion, also improperly conflated the two concepts. He averred:

"3. Beginning the end of August and through the first part of November of 2011, I had to spend substantial amounts of time away from the office. I had to attend to certain personal issues that required my undivided attention. I believed that I had sufficient staff to assure competent handling of client files. My associates were instructed to notify me immediately of issues that would require my personal attention. It appears that my staff failed to maintain this file in accordance with this firm's policies and procedures.

"4. Due to my frequent absences, I failed to file and serve the responsive pleading. Since the responsive pleading was never filed or served, defaults were taken against the Defendants. Had I filed the responsive pleading on time, prior to defaults being taken, the defaults and possible default judgments would have been avoided. It is clear that my mistake and excusable neglect resulted in the entry of defaults and default judgments against the Defendants." (Italics added.)

Plaintiff opposed the defense request for relief. Essentially, plaintiff urged that Gibalevich was not credible to the extent that his declaration suggested that he was unaware of the deadline to file a responsive pleading. Plaintiff submitted multiple documents (court orders, emails, FAXes) to establish: (1) Gibalevich had been aware that his clients' response to the complaint was due by September 20; and (2) when defendants failed to file a pleading by September 20, plaintiff informed Gibalevich that it intended to request entry of a default unless the deficiency was cured immediately.

Further, plaintiff noted that Gibalevich's claim of inattentiveness was not credible given that his mother is married to defendant Fersht. Plaintiff opined that the defaults "were part of a concerted plan in which [defendants] engaged with Mr. Gibalevich to delay ...


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