JASON MITCHELL, ET AL., VS. DANIEL M. UZAN

Tentative Rulings

Case Number: LC106818    Hearing Date: July 15, 2020    Dept: U

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT

I. BACKGROUND

On February 1, 2018, Jason Mitchell and JHM Ventures (Plaintiffs) filed a complaint against Daniel M. Uzan (Uzman) and Does 1 through 20, alleging claims for: (1) breach of contract – shareholder agreement; (2) breach of contract – guaranty agreement; (3) fraud; (4) conversion; and (5) breach of fiduciary duty. Triumph Sound and Vision (Triumph) was substituted in as Doe Defendant 1 on October 17, 2019.

Default was entered against Triumph on December 16, 2019. Triumph filed this motion to set aside/vacate default on March 6, 2020.

II. LEGAL STANDARD

In relevant part, Code of Civil Procedure section 473(b) 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 court has broad discretion to vacate the entry of default, default judgment, or a dismissal, but that discretion can be exercised only if the defendant establishes a proper ground for relief, by the proper procedure and within the set time limits. Pursuant to Code of Civil Procedure section 473(b), a motion to set aside/vacate cannot be brought more than 6 months after the entry of default and must be made within a “reasonable time.”

III. DISCUSSION

a. Timeliness

Default was entered against Triumph on December 6, 2019. Triumph filed this motion to set aside/vacate default against it on March 6, 2020. Defendant’s motion is timely as it is within the six-month window.

b. Reason for Delay

Triumph argues it was not properly served the summons and complaint in this matter. Plaintiffs’ process server claimed to have effectuated personal service on Triumph on November 11, 2019. Service of process was made on Bailey Watson, the person in charge at 5737 Kanan Road, Agoura Hills, California 9130, a postal annex mailbox location. Watson is not an employee, let alone the registered agent for service of process, of Triumph. Uzman is the registered service of process agent for Triumph, in addition to being its President/CEO.

Triumph also contends that if personal service was validly effected, its default should be set aside/vacated because it was the product of mistake, inadvertence, surprise, or excusable neglect. Uzman has also been served in an individual capacity in this matter. Therefore, when he learned Triumph had been named as a defendant, Uzman did not realize Triumph was being sued as its own corporate entity instead of as an extension of himself. Triumph argues this assumption was reasonable because it was not a party to the transactions between Uzman and Plaintiffs, was not mentioned in the complaint, and Uzman was not personally served as its registered agent. Uzman thought Triumph was being sued in his capacity as a sole proprietorship, therefore, when he received the notice of default, he thought Triumph would be subject to the automatic stay imposed as a result of his personal bankruptcy action.

Triumph requested that Plaintiffs set aside/vacate its default voluntarily, but they refused. Triumph argues Plaintiffs will not be prejudiced by setting aside its default because the case has progressed very little in the interim.

Plaintiffs oppose Triumph’s default being vacated on the grounds that process was properly served on Triumph at the postal annex because this was the only address available for Triumph. Plaintiffs contend Code of Civil Procedure section 415.20(c) allows for service to be made on a private mailbox when it is a party’s only known address because Business and Professions Code section 17538.5 requires the user of a private mailbox to agree that the operator of the postal annex act as an agent for service of process.

Further, Plaintiffs challenge Uzman’s assumption that Triumph was not being sued as an individual entity and, therefore, subject to his bankruptcy stay. Plaintiffs argue Uzman’s “assumption” is unpersuasive because Uzman has been dilatory in litigating this matter and is now using this as a convenient excuse.

Here, Triumph has timely made this motion and filed its accompanying answer to Plaintiffs’ complaint. Despite their contentions otherwise, Plaintiffs did not properly serve Triumph at the postal annex. While the address at the post office box is listed as Triumph’s address on its statement of information filed with the State of California Secretary of State, this document also lists Uzman as the company’s agent for service of process and lists his home address. Therefore, Plaintiffs should have served Uzman as Triumph’s service agent at Uzman’s home address.

Uzman’s mistaken belief that Triumph was being sued as his sole proprietorship and was subject to his personal bankruptcy stay was reasonable given the circumstances. While it is understandable that Plaintiffs would question the validity of this assumption, the Court finds justice would be furthered by relieving Triumph of its default.

Therefore, based on the timeliness of this motion and Plaintiffs’ failure to properly serve Triumph, the motion to vacate/set aside Triumph’s default is well-taken and should be granted.

IV. CONCLUSION

For the foregoing reasons, Triumph’s motion to vacate/set aside default is GRANTED. Triumph is ordered to file its Answer within 10 days of entry of this order.

Triumph is also ordered to give notice of the Court’s ruling.

DATED: July 15, 2020

_____________________

Hon. Theresa M. Traber

Judge of the Superior Court

Case Number: LC106818    Hearing Date: July 14, 2020    Dept: U

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT

I. BACKGROUND

On February 1, 2018, Jason Mitchell and JHM Ventures (Plaintiffs) filed a complaint against Daniel M. Uzan (Uzman) and Does 1 through 20, alleging claims for: (1) breach of contract – shareholder agreement; (2) breach of contract – guaranty agreement; (3) fraud; (4) conversion; and (5) breach of fiduciary duty. Triumph Sound and Vision (Triumph) was substituted in as Doe Defendant 1 on October 17, 2019.

Default was entered against Triumph on December 16, 2019. Triumph filed this motion to set aside/vacate default on March 6, 2020.

II. LEGAL STANDARD

In relevant part, Code of Civil Procedure section 473(b) 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 court has broad discretion to vacate the entry of default, default judgment, or a dismissal, but that discretion can be exercised only if the defendant establishes a proper ground for relief, by the proper procedure and within the set time limits. Pursuant to Code of Civil Procedure section 473(b), a motion to set aside/vacate cannot be brought more than 6 months after the entry of default and must be made within a “reasonable time.”

III. DISCUSSION

a. Timeliness

Default was entered against Triumph on December 6, 2019. Triumph filed this motion to set aside/vacate default against it on March 6, 2020. Defendant’s motion is timely as it is within the six-month window.

b. Reason for Delay

Triumph argues it was not properly served the summons and complaint in this matter. Plaintiffs’ process server claimed to have effectuated personal service on Triumph on November 11, 2019. Service of process was made on Bailey Watson, the person in charge at 5737 Kanan Road, Agoura Hills, California 9130, a postal annex mailbox location. Watson is not an employee, let alone the registered agent for service of process, of Triumph. Uzman is the registered service of process agent for Triumph, in addition to being its President/CEO.

Triumph also contends that if personal service was validly effected, its default should be set aside/vacated because it was the product of mistake, inadvertence, surprise, or excusable neglect. Uzman has also been served in an individual capacity in this matter. Therefore, when he learned Triumph had been named as a defendant, Uzman did not realize Triumph was being sued as its own corporate entity instead of as an extension of himself. Triumph argues this assumption was reasonable because it was not a party to the transactions between Uzman and Plaintiffs, was not mentioned in the complaint, and Uzman was not personally served as its registered agent. Uzman thought Triumph was being sued in his capacity as a sole proprietorship, therefore, when he received the notice of default, he thought Triumph would be subject to the automatic stay imposed as a result of his personal bankruptcy action.

Triumph requested that Plaintiffs set aside/vacate its default voluntarily, but they refused. Triumph argues Plaintiffs will not be prejudiced by setting aside its default because the case has progressed very little in the interim.

Plaintiffs oppose Triumph’s default being vacated on the grounds that process was properly served on Triumph at the postal annex because this was the only address available for Triumph. Plaintiffs contend Code of Civil Procedure section 415.20(c) allows for service to be made on a private mailbox when it is a party’s only known address because Business and Professions Code section 17538.5 requires the user of a private mailbox to agree that the operator of the postal annex act as an agent for service of process.

Further, Plaintiffs challenge Uzman’s assumption that Triumph was not being sued as an individual entity and, therefore, subject to his bankruptcy stay. Plaintiffs argue Uzman’s “assumption” is unpersuasive because Uzman has been dilatory in litigating this matter and is now using this as a convenient excuse.

Here, Triumph has timely made this motion and filed its accompanying answer to Plaintiffs’ complaint. Despite their contentions otherwise, Plaintiffs did not properly serve Triumph at the postal annex. While the address at the post office box is listed as Triumph’s address on its statement of information filed with the State of California Secretary of State, this document also lists Uzman as the company’s agent for service of process and lists his home address. Therefore, Plaintiffs should have served Uzman as Triumph’s service agent at Uzman’s home address.

Uzman’s mistaken belief that Triumph was being sued as his sole proprietorship and was subject to his personal bankruptcy stay was reasonable given the circumstances. While it is understandable that Plaintiffs would question the validity of this assumption, the Court finds justice would be furthered by relieving Triumph of its default.

Therefore, based on the timeliness of this motion and Plaintiffs’ failure to properly serve Triumph, the motion to vacate/set aside Triumph’s default is well-taken and should be granted.

IV. CONCLUSION

For the foregoing reasons, Triumph’s motion to vacate/set aside default is GRANTED. Triumph is ordered to file its Answer within 10 days of entry of this order.

Triumph is also ordered to give notice of the Court’s ruling.

DATED: July 15, 2020

_____________________

Hon. Theresa M. Traber

Judge of the Superior Court