Court Opinion

ID: 9881123
Source: CourtListenerOpinion
Date Created: 2023-09-29 18:04:04.377378+00
Date Added: 2024-06-11T13:59:09.845519
License: Public Domain

Filed 9/29/23 Wasserbauer v. Theradome CA1/5
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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

                                      FIRST APPELLATE DISTRICT

                                                  DIVISION FIVE

 SARA WASSERBAUER,
           Plaintiff and Respondent,
                                                                        A164748
 v.
 THERADOME, INC. et al.,                                                (Alameda County
                                                                        Super. Ct. No. RG-19-035893)
           Defendants and Appellants.

         Theradome, Inc. (Theradome) and Tamim Hamid (defendants) appeal
from the November 2021 default judgment entered in favor of plaintiff Sara
Wasserbauer (plaintiff) and the March 2022 order denying defendants’
motion to set aside the default judgment under Code of Civil Procedure
section 473, subdivision (b) (section 473(b)).1 Because defendants satisfied
the requirements for application of section 473(b)’s mandatory provision, we
reverse.
                                                  BACKGROUND2
         Plaintiff is a medical doctor with a specialization in hair transplants
and restoration. Defendant Theradome produces and sells a product called

         1 All undesignated statutory references are to the Code of Civil

Procedure.
         2 Because this is an appeal from a default judgment, portions of this

background are based on the allegations in the operative complaint.

                                                               1
the Theradome LH, which is a helmet that delivers a hair growth treatment
known as laser phototherapy. Defendant Tamim Hamid is Theradome’s sole
officer and shareholder.
      In September 2013, plaintiff and Theradome entered into a
memorandum of understanding (MOU). Under the MOU, plaintiff agreed to
make promotional appearances and allowed Theradome to include plaintiff in
videos and photographs used to promote the Theradome LH, in exchange for
a percentage of Theradome’s net profit. By October 2015, plaintiff had not
received the quarterly statements and payments required by the MOU, and
she requested an accounting. Instead, defendant Hamid sent plaintiff an
e-mail purporting to terminate the MOU.
      In December 2018, plaintiff discovered that Theradome was continuing
to use her name and likeness to promote the Theradome LH, despite
termination of the MOU. The present action was filed in September 2019,
and, in December, plaintiff filed her first amended and operative complaint
(FAC). The FAC alleges defendants failed to provide plaintiff the royalty
payments required under the MOU, and failed to provide an accounting. The
FAC alleges eight causes of action, including a claim for violation of plaintiff’s
right of publicity, which includes a request for attorney’s fees. Defendants
filed an answer in March 2020.
      In January 2020, plaintiff served on defendants a first set of requests
for production of documents (Requests). Certain of the Requests sought
documents relevant to plaintiff’s damages, including financial records
necessary to account for royalties. In February, defendants responded with
only objections to the Requests relating to royalties, aside from producing two
2016 royalty checks payable to plaintiff. In May 2020, defendants produced

                                        2
two single-page documents purporting to be royalty statements for the 2016
checks.
      In July 2020, plaintiff filed a motion to compel further responses to the
to the Requests relating to royalties. After initially opposing the motion,
defendants’ former attorney, Stephen Crump, filed a “Notice of Non-
Opposition to Plaintiff’s Motion to Compel.” Following an October hearing,
the trial court directed defendants to provide a further response and ordered
payment of sanctions to plaintiff in the amount of $6,010.
      Defendants failed to produce additional documents responsive to the
Requests relating to royalties. In November 2020, plaintiff filed a motion for
terminating sanctions. A hearing on the motion was scheduled for January
13, 2021. Defendants did not file an opposition. Instead, on January 7, Mr.
Crump signed on behalf of defendants a stipulation agreeing, among other
things, to produce the responsive documents by January 26 and to pay an
additional $19,135 in sanctions by January 22. The sanctions motion hearing
was continued to February 17.
      On January 26, 2021, defendants produced an additional two-page
spreadsheet, purporting to be a summary of Theradome’s financials through
June 2019. On February 9, plaintiff deposed defendant Hamid as
Theradome’s person most knowledgeable. Plaintiff’s counsel asked Mr.
Hamid about the discovery sanctions and Mr. Hamid claimed he was
unaware of them. Mr. Hamid admitted he had produced only income
statements even though plaintiff requested source documents; he expressed
willingness to produce additional documents. Subsequently, Theradome paid

                                       3
the $19,135 monetary sanction and produced an additional document,
another spreadsheet.3
      On or around February 15, 2021, the trial court issued a tentative
ruling granting plaintiff’s motion for terminating sanctions. On the morning
of February 17, the day of the hearing, Mr. Crump attempted to contest the
tentative ruling by e-mailing the court and opposing counsel, stating, “Since
the Theradome PMK deposition (but prior to this court’s tentative),
Theradome paid the total sum of the stipulated monetary sanctions. My
client did indeed produce documents created in house to summarize the
massive amount of data that is implicated in [p]laintiff’s broad requests for
essentially all of its financials, and my client indicated at its first deposition
that it would do whatever necessary to verify that the financial summaries
already produced were indeed correct, in fact agreeing to produce whatever
was necessary to be deposed for a second session. [¶] On the basis of these
new facts, I would contest the court’s tentative to strike [d]efendants’
answer . . . .”
      The trial court denied the request for a contested hearing as untimely.
That same day, the court entered an order granting the motion for
terminating sanctions, striking defendants’ answer to the FAC, and entering
defendants’ default. The court stated that, in light of the inefficacy of the
“substantial monetary sanctions” it had previously imposed, it had “no
reasonable choice other than to issue an order striking the [a]nswer . . . .”
      On November 2, 2021, following a default prove-up hearing, the trial
court entered a default judgment against defendants, awarding plaintiff

      3 Defendants later averred the payment was made on February 12,

2021. The check is dated February 17, the same date as the sanctions motion
hearing, but a bank e-mail supports a February 12 order placement date.

                                         4
$287,743.60 in general damages, $200,000 in special damages, $150,000 in
attorney’s fees (under the publicity rights cause of action), and $4,959.13 in
court costs.
      In December 2021, defendants, represented by new counsel, filed a
motion to vacate the default judgment and reinstate their answer pursuant to
section 473(b). The motion was supported by declarations from defendant
Hamid and Mr. Crump. Mr. Hamid averred he was unaware of the orders
compelling production of documents and he was willing to produce the
documents at issue. Mr. Crump averred he failed to inform Mr. Hamid of the
orders to produce documents and the sanctions orders, failed to obtain the
requested documents from Mr. Hamid, failed to inform Mr. Hamid of the
motion for terminating sanctions, and failed to file an opposition to the
motion for terminating sanctions.
      Plaintiff opposed the motion to vacate the default judgment. She
argued that the declarations in support of the motion lacked credibility and
that defendants’ “discovery abuses” were responsible for entry of the default
judgment.
      The trial court denied the section 473(b) motion based on its conclusion
that the declarations submitted by defendants did not “establish that the
default was entered and the default judgment was issued as a result of
counsel’s failure to advise his client of the subject discovery and the discovery
motions filed by [p]laintiff’s attorneys.” The trial court’s order continued,
“[T]he Court finds Dr. Hamid’s claim that his attorney kept him in the dark
about his discovery obligations and the potential consequences of continuing
to resist compliance to be incredible. The subject requests for production are
straightforward and were drafted in a clear and concise manner. Dr. Hamid
testified during his deposition that he was personally involved in the

                                        5
preparation of documents for production to [p]laintiff’s attorney. . . . The
Court also concludes that [d]efendants are not entitled to the relief sought
because the neglect of attorney Crump did not cause the Court to enter the
default and default judgment. Defendants clearly had both time and
opportunity to avoid the imposition of terminating sanctions by simply
complying with the requests for production of documents prior to February
17, 2021.”
      The present appeal followed.
                                  DISCUSSION
      “Section 473[(b)] states that a 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.’
Relief under this provision is discretionary. [Citation.] Section 473[(b)]
states further that if an application for relief is filed within six months after
the entry of judgment, is in proper form, and is accompanied by an attorney’s
affidavit of fault, the court ‘shall . . . vacate any (1) resulting default entered
by the clerk against his or her client, and which will result in entry of a
default judgment, or (2) resulting default judgment or dismissal entered
against his or her client, unless the court finds that the default or dismissal
was not in fact caused by the attorney’s mistake, inadvertence, surprise, or
neglect.’ Relief under this provision is mandatory if the conditions are
fulfilled. [Citation.] The attorney’s mistake, inadvertence, surprise, or
neglect need not be reasonable to justify mandatory relief. [Citation.] The
purpose of the mandatory relief provision is to relieve the client of the burden
caused by the attorney’s error, impose a burden on the attorney instead, and
avoid additional malpractice litigation.” (Matera v. McLeod (2006) 145
Cal.App.4th 44, 63, fn. omitted (Matera).)

                                         6
      “ ‘ “[T]he provisions of section 473 . . . are to be liberally construed and
sound policy favors the determination of actions on their merits.” [Citation.]’
[Citation.] ‘[B]ecause the law strongly favors trial and disposition on the
merits, any doubts in applying section 473 must be resolved in favor of the
party seeking relief from default.’ ” (Maynard v. Brandon (2005) 36 Cal.4th
364, 371–372.) “Whether section 473[(b)’s] requirements have been satisfied
in any given case is a question we review for substantial evidence where the
evidence is disputed and de novo where it is undisputed.” (Martin Potts &
Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 437 (Martin
Potts).)
      The main thrust of defendants’ argument on appeal is that, because the
default resulted from Mr. Crump’s failure to oppose the motion for
terminating sanctions, the trial court erred in finding Mr. Crump did not
cause the default.4 The contention has merit. Even if defendants flaunted
their discovery obligations, it did not necessarily follow that terminating
sanctions were appropriate.
      At the outset, we note that it is appropriate to seek relief under the
mandatory provision of section 473(b) from a default judgment resulting from
terminating sanctions. The decision in Matera, supra, 145 Cal.App.4th 44, is
directly on point. There, as in the present case, the court considered
“whether [the] defendants are entitled to mandatory relief from the defaults
entered by the court after striking defendants’ answer as a sanction for
failure to comply with a discovery order, and from the resulting default
judgment.” (Id. at pp. 65–66.) The court concluded the statute did apply to a

      4 That was also the main thrust of the section 473(b) motion below.  In
describing Mr. Crump’s failures, the motion first states, “Former Counsel’s
Declaration of Fault shows that he failed to oppose Plaintiff’s October 1,
2020, terminating sanction motion.”

                                         7
default judgment resulting from a discovery sanction. (Id. at p. 67; see also
Rodriguez v. Brill (2015) 234 Cal.App.4th 715, 725 [terminating sanctions
based on plaintiff’s discovery violations within scope of section 473(b)].)
Plaintiff cites no case holding relief under the mandatory provision of section
473(b) is categorically unavailable as to a default judgment resulting from a
discovery sanction.5
      Turning to the terminating sanctions motion, although a trial court has
discretion in fashioning discovery sanctions, “the courts have long recognized
that the terminating sanction is a drastic penalty and should be used
sparingly. [Citation.] A trial court must be cautious when imposing a
terminating sanction because the sanction eliminates a party’s fundamental
right to a trial, thus implicating due process rights. [Citations.] The trial
court should select a sanction that is ‘ “ ‘tailor[ed] . . . to the harm caused by
the withheld discovery.’ ” ’ [Citation.] ‘ “[S]anctions ‘should be appropriate to
the dereliction, and should not exceed that which is required to protect the
interests of the party entitled to but denied discovery.’ ” ’ ” (Lopez v.
Watchtower Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th
566, 604 (Lopez); accord, Doppes v. Bentley Motors, Inc. (2009) 174
Cal.App.4th 967, 992.)

      5 Plaintiff cites English v. IKON Business Solutions, Inc. (2001) 94

Cal.App.4th 130, but that case merely held that the mandatory provision
of section 473(b) did not apply to a judgment following a motion for summary
judgment. (English, at p. 143.) Such a judgment is not a default judgment.
(Matera, supra, 145 Cal.App.4th at p. 65 [“The cases involving an
uncontested judgment or a summary judgment, rather than a default,
default judgment, or dismissal, . . . are not on point.”].)

                                         8
      In the present case, it is undisputed that the Requests at issue related
exclusively to damages on plaintiff’s claims.6 Under section 2023.030,
subdivision (b), a “court may impose an issue sanction ordering that
designated facts shall be taken as established in the action in accordance
with the claim of the party adversely affected by the misuse of the discovery
process. The court may also impose an issue sanction by an order prohibiting
any party engaging in the misuse of the discovery process from supporting or
opposing designated claims or defenses.” (See also NewLife Sciences, LLC v.
Weinstock (2011) 197 Cal.App.4th 676, 686–687.) As defendants argue, the
trial court “could have prevented [defendants] from contesting the amount of
compensatory damages set forth in the complaint yet still allowed [the
parties] to present evidence at trial on the liability issue.” Had Mr. Crump
opposed the motion for terminating sanctions and raised the possibility of
issue sanctions, it would have been the “reasonable” alternative the trial
court lamented it lacked. It would have been an abuse of discretion for the
trial court to deny defendants their right to contest liability by striking the
answer instead of imposing issue sanctions. (See Lopez, supra, 246
Cal.App.4th at pp. 605–606 [abuse of discretion for trial court to order
terminating sanctions where issue sanctions could have remedied discovery
violations]; McArthur v. Bockman (1989) 208 Cal.App.3d 1076, 1081 [same].)
      Plaintiff disregards the primary thrust of defendants’ argument and
makes no attempt to dispute the appropriateness or adequacy of issue

      6 The trial court’s October 2020 order compelling production states,

“The requests sought documents regarding [plaintiff’s] compensatory
damages, including royalties purportedly due to [p]laintiff from Theradome
based on sales figures for Theradome products. Plaintiff states that the
requested documents are needed prior to conducting a deposition of
Theradome’s person-most-knowledgeable on the issue of damages.”

                                        9
sanctions. Instead, plaintiff argues that defendants’ “own discovery abuses
directly caused the entry of their default.” She argues the evidence
submitted in opposition to the motion to set aside the default judgment
showed, “(1) that [defendants] ignored Crump’s advice to comply with
[plaintiff]’s Requests; (2) that Hamid personally made the decisions as to
which, if any, documents [defendants] would produce; (3) that Hamid made
the fully-informed decision not to comply with [plaintiff]’s discovery and the
trial court’s orders, despite the probable consequences; and (4) that Hamid
decided to instead produce only inadmissible spreadsheets purporting to
summarize information from source documents that were never produced.”
For purposes of appeal, we presume the record contains sufficient evidence
from which the trial court could make all such inferences. But that evidence
fails to address defendants’ fundamental argument that Mr. Crump’s failure
to oppose the motion for terminating sanctions led to the trial court’s order
striking the answer.7
      We recognize that “[t]he [trial] court’s determination of whether the
default was caused by the attorney’s mistake, inadvertence, surprise, or
neglect is in part a credibility determination. [Citation.] ‘Credibility is an
issue for the fact finder [. . .] we do not reweigh evidence or reassess the
credibility of witnesses.’ ” (Cowan v. Krayzman (2011) 196 Cal.App.4th 907,
915.) The trial court’s order explained in detail why it found “incredible” “Dr.
Hamid’s claim that his attorney kept him in the dark about his discovery

      7 Plaintiff’s argument that Mr. Crump’s declaration was insufficient

because it provided no explanation for his failure to oppose the motion and
because his mistakes were “unreasonable” also fails. Section 473(b) requires
no explanation for the attorney’s failures, and “the mandatory relief provision
entitles a party to relief even when his or her attorney’s error is inexcusable.”
(Martin Potts, supra, 244 Cal.App.4th at pp. 439, 443.)

                                        10
obligations and the potential consequences of continuing to resist
compliance.” Based on that finding, the court denied the section 473(b)
motion “because the declarations of attorney Crump and Dr. Hamid fail to
establish that . . . the default judgment was issued as a result of counsel’s
failure to advise his client of the subject discovery and the discovery
motions . . . .”
       However, the trial court’s order does not find that defendants
intentionally failed to oppose the motion for terminating sanctions, and the
order does not address whether issue sanctions would have been an
appropriate remedy for the discovery violations. Indeed, the order does not at
all address defendants’ argument that Mr. Crump’s failure to oppose the
motion led to entry of the default judgment. Accordingly, the trial court’s
findings do not contradict defendants’ showing of causation.8 (See Cisneros v.
Vueve (1995) 37 Cal.App.4th 906, 912 [concluding the “ ‘unless’ ” clause of
section 473(b) “is not a credibility testing device, it is a causation testing
device. The statute mandates relief ‘unless the court finds that the
default . . . was not in fact caused by the attorney’s mistake, inadvertence’
etc.”].)
       Citing Jerry’s Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th
1058 (Jerry’s Shell), plaintiff argues, “A party cannot justly be permitted to
seek relief under [s]ection 473(b) for failing to oppose discovery motions.”9
Jerry’s Shell did not so hold. There, a group of plaintiffs and their attorney

       8 Because the trial court’s credibility findings are not determinative, we

need not and do not consider defendants’ argument that the court improperly
relied on “extra-record evidence.”
       9 The other case cited by plaintiff, Luri v. Greenwald (2003) 107

Cal.App.4th 1119, is inapposite because it addressed a motion for
discretionary relief based on excusable neglect.

                                        11
repeatedly ignored orders compelling discovery; when a motion for
terminating sanctions was filed, the plaintiffs filed no written opposition
(although their counsel was present at the hearing). (Jerry’s Shell, at
pp. 1063–1064.) After the trial court ordered terminating sanctions,
plaintiffs’ counsel stated, “ ‘I’ll have to bring some other sort of motion to get
that set aside.’ ” (Id. at p. 1074, fn. 13.) The declaration submitted by
counsel in support of a subsequent section 473(b) motion was directly refuted
by the defendants, who presented evidence that plaintiffs’ counsel was
attending hearings on dates she claimed she was hospitalized and that
counsel claimed different hospitalization dates in a declaration in another
case. (Jerry’s Shell, at pp. 1064–1066.) The Court of Appeal affirmed denial
of relief, stating, “While calling [counsel’s] practice a ‘strategy’ is perhaps too
generous a term, there is no question that it resulted in the attorneys having
considerable supplemental time to respond to discovery not available to
practitioners who follow the rules, while generally risking nothing more
severe than an order compelling responses that should have been provided
months earlier or an issue sanction on a topic that might never have been
proven at trial. When the ultimate sanction of dismissal inevitably reared its
head, . . . counsel’s obvious plan was to claim attorney fault and revive the
claims through a section 473(b) motion for relief.” (Jerry’s Shell, at pp. 1073–
1074.)
      Jerry’s Shell stands for the proposition that, “if an attorney deliberately
causes his client to incur a default while intending to later invoke his own
‘neglect’ to set it aside, there is in fact no ‘neglect’ to invoke—nor any mistake,
inadvertence, or surprise.” (Standard Microsystems Corp. v. Winbond
Electronics Corp. (2009) 179 Cal.App.4th 868, 906 (Standard Microsystems),
disapproved on another ground in Even Zohar Construction & Remodeling,

                                        12
Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 843–844 (Even
Zohar); see also Martin Potts, supra, 244 Cal.App.4th at p. 439 [similar
characterization of Jerry’s Shell].) That is not what happened in the present
case. Here, the trial court did not find the failure to oppose the motion for
terminating sanctions was tactical, and plaintiff cites to no evidence
supporting any such inference. Indeed, such an inference is contradicted by
the evidence that Mr. Crump made an untimely attempt to contest the
motion, as well as by the evidence that defendant Theradome paid the
$19,135 monetary sanction—Mr. Crump’s reference to the payment in his
untimely request for a contested hearing suggests the payment was made to
demonstrate compliance with the court’s orders in hope of avoiding
terminating sanctions. Finally, it is important to note that in Jerry’s Shell
issue sanctions would not have been effective: the plaintiff was the subject of
the sanctions motion and it risked only issue sanctions “on a topic that might
never have been proven at trial.” (Jerry’s Shell, supra, 134 Cal.App.4th at
p. 1073.) In the present case, issue sanctions were an effective alternative
“ ‘ “ ‘tailor[ed] . . . to the harm caused by the withheld discovery.’ ” ’ ” (Lopez,
supra, 246 Cal.App.4th at p. 604.)
      “Perhaps it will someday occur that a defendant has so little to lose
from a default judgment that he is willing to gamble on securing the mere
purchase of delay that would come from suffering its entry and then seeking
its vacation based upon a trumped-up claim of attorney fault. It is difficult to
formulate a credible set of circumstances in which such a strategy would
actually make sense, but we cannot rule it out in the abstract. It is sufficient
to the present occasion to say that there is no evidence in this record on
which to attribute such an intention to defendants or their attorney.”
(Standard Microsystems, supra, 179 Cal.App.4th at p. 907; see also

                                         13
Metropolitan Service Corp. v. Casa de Palms, Ltd. (1995) 31 Cal.App.4th
1481, 1488.)
      Because there is no evidence in the record to support a finding that
entry of the default judgment was not caused by Mr. Crump’s neglect, the
trial court erred in denying the section 473(b) motion, even if defendants bore
some responsibility for the underlying discovery violations.10
                                 DISPOSITION
      The 2021 default judgment and the trial court’s award of terminating
sanctions are vacated. The matter is remanded to the trial court for further
proceedings. On plaintiff’s request, the court may conduct a hearing to
consider imposition of issue sanctions and monetary sanctions, including the
determination of compensation due to plaintiff under section 473(b) and
potential discretionary penalties under section 473, subdivision (c). The clerk
of this court is ordered to forward a copy of this opinion to Mr. Crump and to
the California State Bar, for investigation of Mr. Crump’s conduct and
possible discipline. In the interests of justice, each party shall bear its own
costs on appeal.

      10 Because we vacate the default judgment, we need not consider

defendants’ contention the trial court abused its discretion in its award of
attorney’s fees.
       We disagree with plaintiff’s contention that granting defendants’
section 473(b) motion will reward misconduct. Mr. Crump will be liable for
“ ‘reasonable compensatory legal fees and costs’ ” as required by section
473(b), and the trial court may impose additional penalties under section 473,
subdivision (c). (See also Even Zohar, supra, 61 Cal.4th at p. 839.) Further,
because Mr. Crump’s conduct may have amounted to incompetent
representation, we will order that a copy of this opinion be forwarded to the
California State Bar for investigation and possible discipline. (Bus. & Prof.
Code, § 6086.7.) We see little risk attorneys will voluntarily expose
themselves to such consequences to delay discovery.

                                       14
                                 _________________________
                                 SIMONS, J.

We Concur.

_________________________
JACKSON, P. J.

_________________________
CHOU, J.

(A164748)

                            15