California Court Sets Aside $250k+ Default Against Florida Defendants

A court can enter default and issue default judgment if the defendant does not timely appear to defend themselves after being properly served with the summons and complaint. A default judgment can subject a defendant to substantial financial liability without having the opportunity to present contrary argument or evidence. As such, it is critical that parties timely respond to lawsuits.

Trépanier Tajima LLP recently secured a favorable ruling on behalf of a Florida-based appliance retailer and its individual owners who had been sued in San Bernardino County Superior Court—despite having no physical presence or operations in California. Prior to our involvement, plaintiffs obtained an entry of default which judgment could have exceeded $250,000 after purportedly serving the defendants by publication. Our clients—residents of Florida—had no actual notice of the lawsuit until after the default had already been entered, but had not proceeded to the default judgment stage yet.

Motion to Set Aside Entry of Default

Upon being retained, our firm moved quickly to file a motion for relief from default under California Code of Civil Procedure §§ 473(b) and 473.5. We argued and provided compelling evidence in the form of declaration testimony and exhibits, that:

• Our clients had not evaded service;

• And the interests of justice supported setting aside the judgment to allow the case to proceed on its merits.

We informed the Court that California law strongly favors decisions based on substance rather than procedural technicalities. As the California Supreme Court has made clear:

“Unless inexcusable neglect is clear, the policy favoring trial on the merits prevails.”
— Elston v. City of Turlock (1985) 38 Cal.3d 227, 233

Further, under Code Civ. Proc. § 473.5(a):

“When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii)180 days after service on him or her of a written notice that the default or default judgment has been entered.”

The Court’s Ruling in Favor of Our Florida Clients

The Court granted our motion, setting aside entry of default before default judgment was entered. In doing so, it:

• Found no evidence that our Florida-based clients attempted to evade service;

• Determined that litigation should proceed on the merits;

• Authorized our clients to file responsive pleadings, including a demurrer and a motion to quash service of process.

The Court’s ruling reinforces California’s well-established public policy that litigants should be allowed a fair opportunity to defend themselves. As noted in Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980:

“It is the policy of the law to favor, whenever possible, a hearing on the merits and to permit parties to litigate their claims or defenses.”

With the default vacated, our out-of-state clients now have a full and fair opportunity to contest the claims and challenge jurisdiction and service in the appropriate procedural manner.