Johnson v. Vuong et al

Filing 27

ORDER granting 21 Motion to set aside the default signed by Judge Kimberly J. Mueller on 3/25/15: Defendants shall file their responsive pleading within fourteen days of this order. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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SCOTT JOHNSON,

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Plaintiff,

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No. 2:14-CV-0709 KJM-DAD

v.

ORDER

KARL VUONG, DIANA CERPAS, and
DOES 1-10.

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Defendants.

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This matter is before the court on the motion to set aside the clerk’s entry of

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default by defendants Karl Vuong and Diana Cerpas. ECF No. 21. Plaintiff Scott Johnson has

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filed a statement of non-opposition to the motion. ECF No. 23. This matter was decided without

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a hearing. For the reasons below, the court GRANTS defendants’ motion.

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I.

ALLEGED FACTS AND PROCEDURAL BACKGROUND

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In March 2014, plaintiff filed a complaint against defendants for violations of the

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Americans with Disabilities Act of 1990, 42 U.S.C. § 12101, et seq. (ADA); California’s Unruh

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Civil Rights Act, Cal. Civ. Code § 51-53, the California Disabled Persons Act, id. § 54-54.8; and

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negligence. Compl., ECF No. 1. Plaintiff seeks injunctive relief, damages, attorneys’ fees,

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litigation expenses and costs of suit. Id. at 7.

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Defendants Diana Cerpas and Karl Vuong are the owners of Viva Mazatlan Tacos

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& Mariscos Restaurant (“Restaurant”) in Sacramento, California. Decl. of Diana Cerpas ¶ 3, ECF

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No. 21-3; Decl. of Karl Vuong ECF No. 21-2 ¶ 3. Defendants’ restaurant allegedly does not

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comply with statutory requirements because it is not accessible to wheelchair users, does not have

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handicap parking spaces, the door hardware at the entrance requires tight grasping to operate and

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there is no lowered portion of the transaction counter for use by persons in wheelchairs. Compl.

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¶¶ 8–11.

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Defendant Cerpas became aware of this suit in April or May 2014 when the
Restaurant manager, Alvaro Lopez, called and informed her. Cerpas Decl. ¶ 4. Cerpas was in

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Mexico, where she was to be for two years. Id. ¶ 6. Lopez assured her the matter was taken care

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of, and Cerpas relied on Lopez to inform her if any further action was needed. Id. Cerpas was

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served on March 25, 2014, by substitute service on Jamie Rodriguez, a staff member at the

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Restaurant, and proof of service on Cerpas was filed with the court on April 1, 2014. ECF No. 4.

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After no response was filed, plaintiff requested an entry of default as to defendant Cerpas on

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May 16, 2014. ECF No. 5. The clerk entered default on May 20, 2014. ECF No. 6.

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Defendant Karl Vuong owns the property on which the Restaurant sits. He

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became aware of the suit in early July when he went to pick up a rent check at the Restaurant and

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was informed by one of the employees. Vuong Decl. ¶ 4. At the time, he believed the claims

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only pertained to the Restaurant and Cerpas. Id. He received “what appeared to be legal

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documents” at his home address in September 2014. Id. He contacted the manager of the

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Restaurant, who informed him the problems had been addressed; based on that conversation,

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Vuong believed the matter had been resolved. Id. ¶ 5. On July 21, 2014, plaintiff filed a request

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to serve Vuong by publication (ECF No. 8), which the court granted on August 5, 2014 (ECF

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No. 10). The court directed plaintiff to “serve defendant Karl Vuong by publication in The

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Sacramento Bee” once a week for four successive weeks and to “mail a copy of the summons, the

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complaint, and the order for publication to defendant Vuong at all addresses available for him.”

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ECF No. 10. Plaintiff “served the complaint on defendant Karl Vuong via publication through

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The Sacramento Bee on August 9, 16, 23 as well as August 30, 2014.” Request for Entry of
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Default, ECF No. 14. On October 1, 2014, plaintiff requested entry of default as to defendant

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Vuong only (ECF No. 14), which the clerk entered on October 2, 2014 (ECF No. 15).

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On November 5, 2014, plaintiff filed his application for default judgment against

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Cerpas and Vuong. ECF No. 16. On December 16, 2014, defendants filed the pending motion to

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set aside the entry of default under Federal Rule of Civil Procedure 55(c). ECF No. 21. Plaintiff

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filed his statement of non-opposition on December 31, 2014. ECF No. 23.

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II.

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STANDARD
Under Rule 55(c), “[t]he court may set aside an entry of default for good cause.”

Fed. R. Civ. P. 55(c). To determine whether good cause exists, the court considers three factors:

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(1) whether defendants engaged in culpable conduct that led to default, (2) whether defendants

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had a meritorious defense, or (3) whether reopening the default judgment would prejudice

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plaintiff. Franchise Holding II, LLC v. Huntington Rests. Grp., Inc., 375 F.3d 922, 925–26 (9th

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Cir. 2004). These factors apply to motions to set aside default under Rule 55(c) and motions to set

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aside default judgment under Rule 60(b); however, the test is “more liberally applied” in the Rule

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55(c) context. United States v. Signed Personal Check No. 730 of Yubran S. Mesle (“Mesle”),

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615 F.3d 1085, 1091 n.1 (9th Cir. 2010); see also Brady v. United States, 211 F.3d 499, 504 (9th

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Cir. 2000) (finding district court’s discretion is “especially broad” when setting aside entry of

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default, rather than default judgment). A district court may deny a movant’s request to set aside

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default if any one of the factors is present. Mesle, 615 F.3d at 1091; Franchise Holding II,

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375 F.3d at 926.

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The Ninth Circuit cautions against default judgments; courts are directed to be

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“solicitous towards movants” and deny a motion to set aside default only where “extreme

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circumstances” exist. Mesle, 615 F.3d at 1091–92; see also Westchester Fire Ins. Co. v. Mendez,

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585 F.3d 1183, 1189 (9th Cir. 2009) (“As a general rule, default judgments are disfavored; cases

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should be decided upon their merits whenever reasonably possible.”); Falk v. Allen, 739 F.2d 461,

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463 (9th Cir. 1984) (“[J]udgment by default is a drastic step appropriate only in extreme

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circumstances; a case should, whenever possible, be decided on the merits.”).

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III.

ANALYSIS
A.

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Culpability
A defendant’s conduct is culpable when he has received actual or constructive

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notice of the action and intentionally failed to answer. TCI Grp. Life Ins. Plan v. Knoebber,

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244 F.3d 691, 697 (9th Cir. 2001). “Neglectful failure to answer as to which the defendant offers

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a credible, good faith explanation negating any intention to take advantage of the opposing party,

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interfere with judicial decision-making, or otherwise manipulate the legal process is not

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‘intentional’ under [Ninth Circuit] default cases.” Id.; accord Mesle, 615 F.3d at 1092. Instead, a

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finding of intentional failure will exist only where “there is no explanation of the default

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inconsistent with a devious, deliberate, willful, or bad faith failure to respond.” Id. at 699.

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Here, defendants’ conduct was not culpable. In the case of Cerpas, she was out of

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the country, discussed the case with the Restaurant manager, instructed him to contact the

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property owner, and relied on him to take care of the matter. Mot. at 8. Id. With regard to

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Vuong, he “did not understand he was a party to the lawsuit” and believed the claims only related

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to the Restaurant owner, Cerpas. Id. When he received legal documents at his home address, he

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contacted the Restaurant manager who informed him they had responded to the suit by changing

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the hardware and lowering the service counter. Id. Vuong believed no further action was

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required. Id.

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Defendants each have provided a credible and good faith explanation for his or her

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lack of response to the complaint, and there is no evidence of bad faith. Vann v. Aurora Loan

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Servs. LLC, No. 10-CV-04736-LHK, 2011 WL 1002093, at *3 (N.D. Cal. Mar. 21, 2011)

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(behavior not culpable where “failure to answer resulted from mere negligence or inadvertence,

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rather than an attempt to manipulate the legal process or take advantage of Plaintiff”). This factor

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weighs in favor of defendants.

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B.

Meritorious Defense
A defendant seeking to vacate a default must provide specific facts that would

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constitute a defense, but the burden is not “extraordinarily heavy.” TCI Grp., 244 F.3d at 700.

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Whether defendants’ factual allegations are true is not at issue at this juncture. Mesle, 615 F.3d at
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1094. To prevail on the “meritorious defense” factor, “a [plaintiff] need only demonstrate law or

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facts showing that a sufficient defense is assertable.” J & J Sports Prod., Inc. v. Benitez, No.

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1:11-cv-01875, 2012 WL 6088300, at *4 (E.D. Cal. Dec. 6, 2012) (citing TCI Grp., 244 F.3d at

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700). A defense is meritorious if “there is some possibility that the outcome of the suit after a full

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trial will be contrary to the result achieved by the default.” Haw. Carpenters’ Trust Funds v.

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Stone, 794 F.2d 508, 513 (9th Cir. 1986).

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Defendants argue they have a meritorious defense because: (1) they do not provide

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parking spaces to Restaurant patrons; the parking spaces adjacent to the Restaurant are owned by

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a separate business establishment; (2) since learning of the suit, the Restaurant has fixed the door

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hardware and the counter height to comply with ADA guidelines. Mot. at 9-10. Because the

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ADA provides only for injunctive relief, defendants’ voluntary removal of alleged barriers prior

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to trial may have rendered plaintiff's ADA claim moot. See Martinez v. Longs Drug Stores Corp.,

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281 F. App’x. 712, 713–14 (9th Cir. 2000). Defendants also have a viable defense to the claim of

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non-compliant parking spaces if they do not own the spaces adjacent to the restaurant. Sharp v.

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Balboa Islands LLC, 900 F. Supp. 2d 1084, 1093 (S.D. Cal. 2012) (court “cannot order

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Defendants to alter property that they do not own”).

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Defendants have adequately presented law and facts supporting a meritorious
defense such that default would impede the interests of justice.

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C.

Prejudice

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Prejudice exists where plaintiffs’ “ability to pursue [their] case will be hindered.”

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See TCI Grp., 244 F.3d at 701 (quoting Falk, 739 F.2d at 463). A delay “must result in tangible

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harm such as a loss of evidence, increased difficulties of discovery, or greater opportunity for

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fraud or collusion” for the setting aside of default to be prejudicial to the plaintiff. Id. (citing

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Thomspon v. Am. Home Assur., 95 F.3d 429, 433–34 (6th Cir. 1996).

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Plaintiff has filed a statement of non-opposition, confirming that he will not be

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prejudiced if defendants’ motion is granted.

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IV.

CONCLUSION

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1. Defendants’ motion to set aside the default (ECF No. 21) is GRANTED; and

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2. Defendants shall file their responsive pleading within fourteen days of this

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order.

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IT IS SO ORDERED.

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DATED: March 25, 2015.

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UNITED STATES DISTRICT JUDGE

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