Free Motion to Set Aside Default - District Court of California - California

Case 3:07-cv-02525-MMC

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David Goldman (Bar No. 76551) Garret D. Murai (Bar No. 215667) WENDEL, ROSEN, BLACK & DEAN LLP 1111 Broadway, 24th Floor Oakland, CA 94607-4036 Telephone: (510) 834-6600 Fax: (510) 834-1928 Attorneys for Defendants XIAN S. HUANG and CINDY Q. CAO, Trustees of the XIAN HUANG AND CINDY CAO LIVING TRUST UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

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CRAIG YATES, an individual; and DISABILITY RIGHTS ENFORCEMENT, EDUCATION, SERVICES: HELPING YOU HELP OTHERS, a California public benefit corporation, Plaintiffs, vs. D & A CAFE INC.; XIAN S. HUANG and CINDY Q. CAO, Trustees of the XIAN HUANG and CINDY CAO LIVING TRUST, Defendants.

Case No. C 07 2525 MMC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO SET ASIDE DEFAULT

Date: Time: Department: Judge: Action Filed: Trial Date:

March 7, 2008 9:00 a.m. Courtroom 7, 19th Fl. Hon. Maxine M. Chesney May 11, 2007 None

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Defendants XIAN S. HUANG and CINDY Q. CAO, Trustees of the XIAN HUANG and CINDY CAO LIVING TRUST, respectfully submit the following Memorandum of Points and Authorities: I. INTRODUCTION On October 19, 2007, a default was entered against Defendants XIAN S. HUANG and CINDY Q. CAO, Trustees of the XIAN HUANG and CINDY CAO LIVING TRUST ("Defendants"). However, Defendants were never served with the summons or complaint. On October 15, 2007, Plaintiffs CRAIG YATES and DISABILITY RIGHTS ENFORCEMENT, EDUCATION, SERVICES: HELPING YOU HELP OTHERS ("Plaintiffs')
MEMORANDUM OF POINTS AND AUTHORITIES - Case No. C 07 2525 MMC

Case 3:07-cv-02525-MMC

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filed a Request to Enter Default. Attached as Exhibit A to the Declaration of Thomas E. Frankovich was a Proof of Service of Summons which provided that service on Defendants was made on a person named Arla Liu at 346 7th Street, Oakland, California. Defendants do not know Ms. Liu, she is not their agent, and she is not authorized to accept service of process on their behalf. Huang Decl., ¶2. Since Ms. Liu was served at 346 7th Street, Oakland, California, which is the location of the property formerly leased by Defendant D & A CAFÉ, INC., presumably she is or was an employee of D & A Café. Id. Moreover, the September 18, 2007 letter attached as Exhibit B to the Declaration of Thomas E. Frankovich (which Plaintiffs contend was sent to Defendants) was also never received by Defendants. Id. at ¶3. The letter, like the complaint, was sent to 346 7th Street, Oakland, California, the location of the property formerly leased by D & A Café. Defendants do not reside at or conduct business from that address. Id. Indeed, Plaintiffs have admitted in other pleadings filed with the Court that they sent another letter to the same address to Defendants that was returned marked "Return to Sender." See Plaintiffs' Response to Order to Show Cause filed October 18, 2007, ¶8. Defendants did not receive actual notice of this action until Plaintiffs sent Defendants' counsel a letter dated October 16, 2007. Huang Decl., ¶4; Murai Decl., ¶3. Once on notice of the pending action, Defendants, through their counsel, requested that Plaintiffs stipulate to set aside the default by telephone on November 9 and December 11, 2007 and by letters dated November 13 and December 6 and 11, 2007. Murai Decl., ¶¶4-5. Plaintiffs did no rebut any of the facts demonstrating lack of service and simply refused to stipulate to set aside the default. Id. As as result, Defendants have been left with no option but to file the instant motion. II. LEGAL ARGUMENT Federal Rules of Civil Procedure, Rule 55(c) provides that a court may set-aside an entry of default "for good cause." A court's discretion is "especially broad" when it is an entry of default that is being set aside as opposed to a default judgment. Brady v. United States (9th Cir. 2000) 211 F.3d 499, 504. Thus, relief may be granted where a defendant demonstrates that he or she received no actual notice of the action before the answer was due. Peralta v. Heights Med.
MEMORANDUM OF POINTS AND AUTHORITIES Case No. C 07 2525 MMC

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Ctr., Inc. (1988) 485 U.S. 80, 85-86. Relief may also be granted where a defendant, even if he or she had actual notice, demonstrates defects in the service of process. Mason v. Genisco Technology Corp. (9th Cir. 1992) 960 F.2d 849, 851. Here, Defendants had no actual notice of the instant action until their counsel's receipt of Plaintiff's letter dated October 16, 2007. This was after Plaintiffs had filed their Request to Enter Default. Defendants had no actual notice of the action before then. The complaint was served on a person named Arla Liu at 346 7th Street, Oakland, California, who Defendants do not know, who is not their agent, and who is not authorized to accept service of process on their behalf. And Plaintiffs' September 18, 2007 letter was sent to 346 7th Street, Oakland California, which is not where Defendants reside or where they conduct business. Plaintiffs could have properly served Defendants by simply conducting an online property search to locate the residence of Defendants. Murai Decl., ¶6. Plaintiffs chose not to. As a result, service on Defendants was defective. Based on the foregoing, good cause exists for the Court to set aside the entry of default. III. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court set aside the entry of default and permit Defendants to file a responsive pleading. Defendants anticipate they will be filing a motion to dismiss pursuant to Federal Rules of Civil Procedure, Rule 12, on the ground that D & A Café has closed and relocated and the business premises are not presently open to the public. Dated: January 16, 2008 WENDEL, ROSEN, BLACK & DEAN LLP

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By:

s/Garret Murai Garret D. Murai Attorneys for Defendants XIAN S. HUANG and CINDY Q. CAO, Trustees of the XIAN HUANG AND CINDY CAO LIVING TRUST

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MEMORANDUM OF POINTS AND AUTHORITIES Case No. C 07 2525 MMC

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