Store stopped paying rent due to COVID. After it received a notice to pay or quit, it retained Counsel, who wrote to Landlord requesting that any communications regarding the lease be directed to Counsel. Landlord filed a UD complaint, and without sending a copy to Counsel, sub-served it by dropping a copy on a random retail employee, and mailing a copy to the local store. It neither served Store’s registered agent nor provided a copy to its corporate offices. The process never got to the right people, so Store didn't answer in time. Landlord requested default, and a default judgment was entered. Eventually, Store found out about the judgment and moved for relief from default under Code of Civil Procedure § 473(b), which the trial court denied.
Store appealed, but a stay pending appeal was not granted. Landlord regained possession. Landlord says the appeal is moot, but that’s not right. Upon a reversal, § 908 permits an appellate court to restore the parties to the pre-judgment status quo. That can include the return of possession to a tenant in the event of the reversal of a judgment in favor of a landlord in a UD case. Or the court can award monetary restitution.
So far as the merits, the Court finds that, when a plaintiff’s attorney knows a defendant is represented by counsel, he or she has both an ethical and statutory obligation to warn that plaintiff intends to seek a default judgment. The ethical duty arises from a duty to behave with professional courtesy—a duty to the Court and the legal profession that overrides any duty to zealously advocate for one’s client. The statutory duty arises from § 583.130, which declares the state’s policy in favor of cases being decided on the merits. There’s a case on all fours—LaSalle v. Vogel, 36 Cal.App.5th 127, 137 (2019). Landlord tries to distinguish it on BS factual grounds, but the Court is having none of it. It notes that to the extent the case is distinguishable, it is because Landlord’s behavior here is worse.
So although the ethical breach doesn’t, per se, merit § 473(b) relief, the facts do here. Landlord clearly was engaged in sharp tactics designed to ensure that legal decision makers—both outside counsel and corporate decision makers—did not get timely notice of service. Moreover, Store moved quickly after it learned the facts.
On rehearing, Landlord tries to argue that the policy shouldn’t apply in UD cases. But it can’t raise a new argument in a rehearing petition, so it was forfeited. And in any event there’s nothing about UD procedure that is inconsistent with the policy. Indeed, the rule is needed more is UD cases, where the tight response times provide unfortunate incentives for Landlords to engage in exactly the kind of service shenanigans that happened here.
Reversed, remanded, and assigned to a new judge on remand.
FWIW, I have dealt with this personally. I once had to get relief from a defaulted judgment in a pro bono UD case, where the Landlord’s counsel knew I was representing the tenant, but nevertheless took a default without telling me. It was based on a proof of service that the court ultimately found was perjured. The landlord bar seems to make this worse by waiting to file a proof of service of summons until they file default papers. So even diligent docket docket monitoring can’t protect you from some shady claim of service. The Legislature really should require that the plaintiff can’t get a default in a UD case until a period of time (say, seven calendar days) after a proof of service is filed. Since the answer in UD isn’t due for a week after service, that would have no impact on diligent landlord lawyers who file proof right away. And it would encourage prompt filing of proofs of service.
