Case No:? 2012-1-CV-219830
Case Name:? International Power Technology, Inc vs. Forbes & Manhattan, et al.
- Factual and Procedural Background
On March 1, 2012, International Power Technology Inc. filed a complaint for breach of contract, specific performance and interference with contract against Forbes & Manhattan, US Turbine and Does 1-20.
Forbes & Manhattan filed an answer to the complaint on June 11, 2013.
On or about April 28, 2015, the Court granted the motion to withdraw for counsel representing Forbes & Manhattan.? The Court instructed counsel to prepare the order and advise Forbes & Manhattan to be prepared to identify new counsel at the case management conference on May 19, 2015.? An order was prepared thereon and filed and served on May 7, 2015.
Forbes & Manhattan did not appear, through counsel or otherwise, at the case management conference on May 19, 2015.? The Court issued an Order to Show Cause as to why it should not strike Forbes & Manhattan?s answer for failure to appear at the case management conference.? Notice of same went out on May 21, 2015 and the OSC hearing was scheduled to take place on July 2, 2015.
At the hearing on July 2, 2015, Forbes & Manhattan did not appear and the Court ordered that Forbes & Manhattan?s answer be stricken for a second non-appearance.? The Court file does not reflect that counsel for plaintiff prepared a formal order striking Forbes & Manhattan?s answer or served notice of same on Forbes & Manhattan.?? The Court file further does not show that counsel for plaintiff sought to have the Court enter default against Forbes & Manhattan following the Court?s striking of its answer per minute order.
On November 9, 2015, plaintiff requested a Court Judgment against Forbes & Manhattan; US Turbine LLC; 0890241 BC Ltd; Earthrenew and Forbes Agricultural Group in the amount of $955,548.? Defaults had been entered against all of the defendants except for Forbes & Manhattan.? The Request for Court Judgment was mailed to defendants on November 6, 2015.
On February 16, 2016, defendants 0890241 BC Ltd; Forbes & Manhattan and
Earthrenew, Inc. filed a motion to vacate and set aside entry of default.
By order dated March 23, 2016, the Court granted defendants 0890241 and Earthrenew?s motion to vacate and set aside entry of default conditioned upon paying plaintiff?s attorney?s fees in pursuing the default and entry of default judgment.? As no proper default was ever entered against Forbes & Manhattan, the Court could not grant its request to set aside default.? Rather, the Court encouraged Forbes & Manhattan to seek to set aside the order striking its answer.
On May 4th, 2016, Forbes & Manhattan filed the subject motion to vacate the striking of its answer.? Plaintiff filed an opposition on May 26, 2016 and Forbes & Manhattan filed a reply on June 2, 2016.
- Legal Analysis
Forbes & Manhattan seeks relief under CCP 473 (b) and the Court?s inherent equitable power to vacate the striking of its answer for failure to appear at a court hearing.? Forbes & Manhattan argues that it participated in the lawsuit for 3 years before its answer was stricken; it has a meritorious defense to the lawsuit; it had no notice of the case management conference and order to show cause for missing the case management conference; and after it?s counsel withdrew, there was confusion, mistake, inadvertence and unfamiliarity with the legal process all of which resulted in the striking of its answer.
In opposition, plaintiff argues that the 6 month deadline under CCP 473 (b) has elapsed so the Court has no jurisdiction to entertain Forbes & Manhattan?s request.? Plaintiff also contends that Forbes & Manhattan has not demonstrated ?mistake, inadvertence, surprise or excusable neglect.??? Forbes & Manhattan continued to receive notice via Pat Gleeson who purportedly acted on behalf of Forbes & Manhattan after its counsel withdrew.? Pat Gleeson, via a declaration, denies he was authorized or ever acted as counsel for Forbes & Manhattan.? Mr. Gleeson stated, under penalty of perjury, that he works with certain companies in Forbes & Manhattan?s portfolio, but he does not advise or represent Forbes & Manhattan.
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Code of Civil Procedure Section 473(b) is to be liberally construed in favor of permitting trial on their merits and ?any doubt in applying section 473 must be resolved in favor of the party seeking relief from default.?? Elston v City of Turlock (1985) 38 Cal. 3d. 227,233.
As far as the timeliness issue, the Court finds that plaintiff is estopped from asserting this claim because to do so would be inherently unfair.??? First, plaintiff never provided Forbes & Manhattan notice that the Court struck its answer.? Indeed, plaintiff never prepared a formal order on same.? Second, plaintiff represented to Forbes & Manhattan that its default had been entered, which was never true.???? Plaintiff skipped seeking entry of Forbes & Manhattan?s default and immediately included Forbes & Manhattan in plaintiff?s request for entry of? default court judgment along with other defendants.??? When Forbes & Manhattan tried to investigate the status of the case, the court file was unavailable for review and the court docket did not provide sufficient information to alert Forbes & Manhattan?s counsel whether the answer was stricken and whether it was in default.? (Exhibit 2)??? Apparently relying on plaintiff?s counsel, Forbes & Manhattan timely m oved to set aside the defaults entered, mistakenly believing Forbes & Manhattan was among the defendants whose defaults had been entered.??? It was not until the Court pointed out in its March, 2016 tentative ruling that default had never been properly entered against Forbes & Manhattan, that the litigants likely appreciated that fact.? The Court?s March 23, 2016 order stated that Forbes & Manhattan must file a motion to set aside the order striking its answer if it wished to appear in the lawsuit.? A few weeks later, Forbes & Manhattan filed the instant motion.? The Court does not believe Forbes & Manhattan delayed filing this motion.? The Court considers it timely.
The Court appreciates the parties sharply disagree over whether Forbes & Manhattan received notice of the case management conference and order to show cause hearing notice. ?And, each side has submitted evidence, including declarations and other documents, attempting to establish Mr. Gleeson?s role (if any) on behalf of Forbes & Manhattan.? With the competing evidence, the Court cannot conclude that Forbes & Manhattan received actual notice of the case management conference and order to show cause hearing.? And, even if Forbes & Manhattan did, with the loss of its in-house counsel, unfamiliarity with the legal procedures in California and other confusion mentioned in the moving and reply papers, the Court finds that Forbes & Manhattan has demonstrated the requisite mistake, inadvertence and excusable neglect.
The minute order striking Forbes & Manhattan?s answer is set aside and vacated.? Forbes & Manhattan may appear in this action.