Court Opinion

ID: 9382048
Source: CourtListenerOpinion
Date Created: 2023-03-24 18:02:56.434095+00
Date Added: 2024-06-11T17:17:36.759423
License: Public Domain

Filed 3/24/23 Rok Mobile v. Brannon CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO

ROK MOBILE, INC.,                                            B308642

         Plaintiff,                                          (Los Angeles County
                                                             Super. Ct. No.
         v.                                                  19SMCV01492)

SCHAD BRANNON,

         Defendant and Appellant;

RK SOLUTIONS, INC.,

         Respondent.

     APPEAL from an order of the Superior Court of Los
Angeles County, Mark A. Young, Judge. Affirmed.
     Brian J. Jacobs for Defendant and Appellant.
     Galperin & Hensley and Yury Galperin for Respondent
RK Solutions, Inc.
     Danning, Gill, Israel & Krasnoff and Uzzi O. Raanan for
Respondent John J. Menchaca as Trustee in Bankruptcy.
      Appellant Schad Brannon requested relief from a default
judgment. (Code Civ. Proc., §§ 473, 473.5.)1 The trial court
denied relief, finding that (1) Brannon had actual notice of the
summons and complaint served by his former employer, plaintiff
Rok Mobile, Inc. (Rok),2 and (2) his failure to answer the
complaint or react to notice of default was not excusable neglect.
The court did not abuse its discretion. We affirm.

      1Undesignated statutory references are to the Code of Civil
Procedure.
      2  On April 27, 2021, Rok filed a voluntary bankruptcy
petition. The bankruptcy court appointed John J. Menchaca as
bankruptcy trustee. We struck the brief Rok filed in March 2022
because Rok lacked standing to proceed; however, the trustee
later filed a brief on Rok’s behalf. The day before oral argument,
Menchaca advised us that the bankruptcy court approved a sale
of the bankruptcy estate to RK Solutions, Inc. A bankruptcy
court order in In re Rok Mobile, Inc., Debtor Case No.
2:32-bk-13413-SK, dated January 20, 2023, did not show that the
sale was fully consummated. At our request, the attorney for RK
Solutions, Inc., Yury Galperin of Galperin & Hensley, LLC, filed
a formal substitution of attorney and declaration averring that
the sale to RK Solutions, Inc., has been fully consummated and
cannot be challenged for failure of payment. Based on Galperin’s
declaration and the related motions, we approved the
substitution of RK Solutions, Inc., in place of the trustee, John J.
Menchaca, as respondent in this appeal. No brief was filed by RK
Solutions, Inc.

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            FACTS AND PROCEDURAL HISTORY
                   Service of Rok’s Complaint
       Rok’s complaint, filed August 23, 2019, alleges that
Brannon was hired in 2015.3 He signed a contract agreeing to
work full time and a Nondisclosure and Intellectual Property
Agreement (NDA). Rok fired Brannon when it discovered he was
working for other companies. He did not return Rok’s computer
and took confidential information. Rok asserted causes of action
for unjust enrichment and breaches of the employment contract,
NDA, implied covenant of good faith, and duty of loyalty.
       Rok made three attempts to serve Brannon at his residence
in Encino on August 27 to 29: No one answered the door, though
it sounded like someone was inside. A process server surveilled
the home on September 8 and 12; no one answered the door, but
Mrs. Brannon was seen coming and going and a loud male voice
was heard. On September 16, the process server approached
Mrs. Brannon in her driveway. When told she was being served
on her husband’s behalf, she said, “I have nothing to do with
this.” The server placed the documents at her feet and told her to
ensure her husband got them. The summons and complaint were
mailed to Brannon one day later.
               Default and Judgment Are Entered
       Brannon did not answer the complaint. Rok requested
entry of default on October 30. Notice of default was mailed to
Brannon that day. (§ 587.) On February 5, 2020, Rok applied for
a court judgment, seeking to recoup Brannon’s salary and
benefits. Rok’s officers declared that they never would have hired

      3 Alldates mentioned in this opinion are to the year 2019,
unless otherwise stated.

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or retained Brannon had they known he would devote his time
during business hours to four other companies.
       In a judgment entered February 18, 2020, the court found
Brannon was properly served with the summons and complaint,
failed to answer, and default was taken. It gave judgment to Rok
for $506,717.27, for breach of fiduciary duty, costs, and interest.
Rok served Brannon with notice of entry of judgment on
February 20, 2020.
            Brannon Moves To Vacate the Judgment
       On February 24, 2020, Brannon moved to set aside the
default and vacate the judgment. He asserted that the judgment
should be vacated for excusable neglect (§ 473) and failure to
receive actual notice of the action (§ 473.5).
       Brannon declared that he developed a new business in the
Republic of Ghana after being terminated at Rok. He was in
Ghana from August 3 to September 4. He did not dispute that
service was made on his wife on September 16, followed by
mailing of process by first-class mail on September 17. Brannon
declares, “Around two weeks after service was effected on me, I
left the country again on October 13, 2019, returning on
November 12, 2019, so that I was not in the country when the
Default was requested by Plaintiff and entered by this Court.”
Brannon was in Ghana from December 28 to January 14, 2020.
       Brannon denied wrongdoing. Rok knew that Brannon is
required, for licensing purposes, to act as agent for a registered
investment advisory company (RIA). Rok incorrectly listed the
RIA as an entity that Brannon worked for; other entities listed by
Rok were part of Brannon’s efforts to further Rok’s business.
Brannon was not employed or compensated by these entities.
The computer he took was his personal property. Attached to

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Brannon’s motion for relief is a demurrer to Rok’s unjust
enrichment claim; a motion to strike; and a request to transfer
venue.
       In opposition, Rok argued that Brannon was home when
the lawsuit was served. He had actual notice of it in time to
defend. Brannon did not show excusable neglect by failing to
respond to service of the summons and complaint.
       In reply, Brannon submitted a supplemental declaration
stating that he did not receive the summons and complaint from
his wife until September 23. He was living elsewhere and came
by the house once a week to collect mail.
                     The Trial Court’s Ruling
       The court denied Brannon’s motion. First, it found section
473.5 does not entitle him to relief. He admittedly received the
pleading on September 23, if his wife did not give it to him on
September 16. He had actual knowledge of the lawsuit in time to
defend it. Second, the court found that the motion under section
473 is timely, but Brannon’s neglect is inexcusable. Between
trips, he could have hired counsel to answer the lawsuit. After
default was taken, Brannon could have hired counsel to set aside
the default but did not do so.
                           DISCUSSION
       1. Appeal and Review
       Denial of a motion to set aside a default judgment is an
appealable postjudgment order. (§ 904.1, subd. (a)(2); Shapiro v.
Clark (2008) 164 Cal.App.4th 1128, 1137.) The trial court has
wide discretion to grant or deny relief. (Toho-Towa Co., Ltd. v.
Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096,
1111.) We presume the order is correct, and the appellant bears
the burden of showing abuse of discretion. (McClain v. Kissler

                                5
(2019) 39 Cal.App.5th 399, 413.) The test is whether the court
exceeded the bounds of reason. (Anastos v. Lee (2004) 118
Cal.App.4th 1314, 1318–1319.)
       2. Relief Under Section 473.5
       The court may set aside a default judgment “[w]hen service
of a summons has not resulted in actual notice to a party in time
to defend the action.” (§ 473.5, subd. (a); Sakaguchi v. Sakaguchi
(2009) 173 Cal.App.4th 852, 861.) A motion for relief must “be
accompanied by an affidavit showing under oath that the party’s
lack of actual notice in time to defend the action was not caused
by his or her avoidance of service or inexcusable neglect” and “a
copy of the answer, motion, or other pleading proposed to be filed
in the action.” (§ 473.5, subd. (b).)
       The court did not abuse its discretion by refusing to set
aside the judgment under section 473.5. Brannon admittedly
received the summons and complaint by September 23. (He does
not disclose if his wife told him on September 16 that the process
server placed the documents at her feet.) He left town on
October 13, without hiring counsel or requesting an extension of
time to hire counsel.
       Brannon had actual knowledge in time to defend the action.
If a defendant has actual notice, as Brannon did here, a busy
travel or work schedule is no excuse for failing to hire counsel or
seek an extension of time to answer. In Ellard v. Conway (2001)
94 Cal.App.4th 540, 548, relief was denied because the defendant
“had actual knowledge of the lawsuit two weeks before an answer
was due.” (See Sakaguchi v. Sakaguchi, supra, 173 Cal.App.4th
at pp. 861–862 [rejecting defendant’s excuse that “ ‘I was in State
Prison at the time and not at home’ ” when the action was served
because he did not claim lack of actual knowledge].) The trial
court did not abuse its discretion in denying relief under section
473.5 because the evidence shows Brannon was in Los Angeles

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when process was served and knew of the lawsuit, but simply
ignored it.
       3. Relief Under Section 473
       The trial court may “relieve a party . . . 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).) Section 473 “is remedial and to be
liberally construed.” (Luz v. Lopes (1960) 55 Cal.2d 54, 62.) An
order denying relief “ ‘is scrutinized more carefully than an order
permitting trial on the merits.’ ” (Rappleyea v. Campbell (1994) 8
Cal.4th 975, 980.)
       Brannon’s application for relief fell within the six-month
period allowed by section 473. The trial court found that though
the motion was timely, Brannon’s neglect was inexcusable.
       The court did not abuse its discretion by finding that
Brannon’s travels did not prevent him from answering the
summons. “The press of business is not a sufficient excuse for
failing to respond to service of a summons and complaint.”
(Bellm v. Bellia (1984) 150 Cal.App.3d 1036, 1038.) Being “ ‘busy
and occupied with other affairs is never held to constitute an
excuse for his neglect to answer a summons within time . . . . If
the rule were otherwise, few judgments by default would stand,
for most men could plead their business as an excuse for not
answering the summons of the court.’ ” (Davis v. Thayer (1980)
113 Cal.App.3d 892, 909 [relief denied to a defendant who had
suffered a heart attack and was caring for her elderly mother and
dying husband].) Mobile phones and laptop computers enable
international travelers to tend daily to business matters at home
by e-mail, unlike decades past when communication required
envelopes, postage stamps, and weeks of transit.
       After failing to answer, Brannon was served with notice of
default on October 30 but did not move to vacate it. Five months

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after service of summons, Rok obtained a default judgment
because it heard nothing from Brannon.
       Brannon claims he “was unaware that the Default had
been entered.” He forfeited this claim by failing to assert it in his
moving papers. He declared that he received, at home, the
summons and complaint, as well as Rok’s application for
judgment.4 He did not declare that he never received the notice
of entry of default mailed to his home.
       Brannon’s counsel wrote a settled statement purporting to
show that Brannon was not sent the default. We reject this use
of the settled statement. 5 Rok’s counsel declared under penalty
of perjury that he mailed Brannon the default the day the court
clerk entered it. Any claim Brannon never received it is
unsupported by the record. In any event, “nonreceipt of the
notice [of default] shall not invalidate or constitute ground for
setting aside any judgment.” (§ 587; Rodriguez v. Henard (2009)
174 Cal.App.4th 529, 537.)
       The summons and complaint were served at Brannon’s
home on September 16 and mailed to him on September 17. He

      4 In his motion to change venue, Brannon declares that he
resided at his home in Encino when the lawsuit began in August
and continued to reside there in February 2020.
      5 The opening brief recounts what was allegedly said at the
hearing on the motion, citing a settled statement. A settled
statement is used if a hearing is not reported by a court reporter.
(Cal. Rules of Court, rule 8.137(b)(1)(A).) In response to
Brannon’s settled statement, the trial court wrote, “counsel
quotes at length arguments and comments made at the hearing.
There was no court reporter, and the Court is unable to verify the
accuracy of counsel’s representations.” A settled statement
cannot be used to rewrite Brannon’s declaration.

                                  8
was in Los Angeles at that time. The time to answer lapsed on
October 28. (§ 415.20, subd. (b).) Brannon complains of Rok’s
“quiet speed” in requesting entry of default “two days after the
response was due, i.e., on October 30, 2019.”
       Brannon relies on cases in which the defendant had legal
representation. “The quiet speed of plaintiffs’ attorney in seeking
a default judgment without the knowledge of defendants’ counsel
is not to be commended.” (Smith v. Los Angeles Bookbinders
Union (1955) 133 Cal.App.2d 486, 500, disapproved on other
grounds in MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d
536, 551.) In Robinson v. Varela (1977) 67 Cal.App.3d 611, the
defendant’s attorney requested an extension of time to answer a
complaint. Without responding to the request, the plaintiff’s
attorney quickly secured a default judgment, which defense
counsel moved to vacate under section 473. (Id. at pp. 614–615.)
The order granting relief was affirmed: The court had broad
discretion to grant relief in the face of “professional discourtesy”
on the part of the plaintiff’s counsel. (Id. at p. 616; accord,
Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 135 [it is “well
acknowledged that an attorney has an ethical obligation to warn
opposing counsel that the attorney is about to take an adversary’s
default”].)
       The court is not required to grant relief for failure to warn
of an impending default because the duty to warn is ethical, not
legal. (Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 701–
702; Bellm v. Bellia, supra, 150 Cal.App.3d at p. 1038.) The trial
court observed that Brannon had ample time to hire counsel to
vacate the default yet left the country “without addressing the
matter in any way.” Thus, even if Rok moved swiftly to obtain a
default, Brannon’s subsequent delay was inexcusable.
       Brannon argues that the court should have granted relief
for “extrinsic mistake.” He forfeited the claim by failing to raise

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it below. This equitable remedy does not assist Brannon. Relief
for extrinsic mistake is denied “if a party has been given notice of
an action and has not been prevented from participating therein.
He has had an opportunity to present his case to the court and to
protect himself from mistake.” (Kulchar v. Kulchar (1969) 1
Cal.3d 467, 472; Cruz v. Fagor America, Inc. (2007) 146
Cal.App.4th 488, 503 [relief unavailable to a party who was
“given notice of an action yet fails to appear, without having been
prevented from participating in the action”]; Kramer v.
Traditional Escrow, Inc. (2020) 56 Cal.App.5th 13, 29 [no relief
on an extrinsic mistake theory when the defendants “knew of this
lawsuit yet chose not to participate in it”].)
       In another newly minted argument, Brannon asserts that
“the trial court overlooked . . . the fact that the complaint was
verified.” The claim was forfeited when it was not made below.
Brannon speculates that Rok verified the complaint “for the
purpose of harassing” him or to set “a trap.” Section 446 requires
a verified answer to a verified complaint to “protect[ ] the
interests of private parties by relieving them of the unreasonable
burden of undergoing a full-scale trial to prove verified
allegations which the defendant is unwilling to deny under
penalty of perjury.” (DeCamp v. First Kensington Corp. (1978) 83
Cal.App.3d 268, 278.) Rok was entitled to exercise its right under
section 446, to see which claims in the complaint Brannon was
willing to admit or deny under penalty of perjury.
       This court once observed: “It is the duty of every party
desiring to resist an action or to participate in a judicial
proceeding to take timely and adequate steps to retain counsel or
to act in his own person to avoid an undesirable judgment.
Unless in arranging for his defense he shows that he has
exercised such reasonable diligence as a man of ordinary
prudence usually bestows upon important business his motion for

                                10
relief under section 473 will be denied. [Citation.] Courts
neither act as guardian for incompetent parties nor for those who
are grossly careless of their own affairs.” (Elms v. Elms (1946) 72
Cal.App.2d 508, 513, quoted with approval in Luz v. Lopes, supra,
55 Cal.2d at p. 62.) Brannon did not satisfy his duty. He did not
take steps to retain counsel or call Rok’s counsel to secure extra
time to answer or hire counsel. He did not react to notice of
default. An ordinarily prudent person would not wait five
months after service of process to respond to a lawsuit when the
summons says, on its face, that the person served has 30 days to
answer. The court did not abuse its discretion by denying relief.
                           DISPOSITION
       The order is affirmed. Respondent RK Solutions, Inc., is
entitled to recover its costs on appeal.
       NOT TO BE PUBLISHED.

                                     LUI, P. J.
We concur:

      ASHMANN-GERST, J.

      HOFFSTADT, J.

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