Claire McCormack (Certified Law Student No. 14205)

David Sapp (Certified Law Student No. 13781)

Craig Largent (Certified Law Student No. 12860)

Margaret Stevenson (State Bar No. 112982)

Severa Keith (State Bar No. 218167)

Peter Reid (State Bar No. 045808)

STANFORD COMMUNITY LAW CLINIC

2117 University Avenue

East Palo Alto, CA 94303

(650) 475-0560

Attorneys for Plaintiff

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SANTA CLARA

UNLIMITED CIVIL JURISDICTION

MARTHA LOPEZ,
Plaintiff,
vs.
HARRIS HOTDOG,
WIDA FEDAIY, an individual,
JOHN FEDAIY, an individual, and DOES 1-10, inclusive
Defendants / )
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) / Case No.: 1-03-000895
OPPOSITION TO MOTION TO SET ASIDE DEFAULT & DEFAULT JUDGMENT
Date: April 1, 2004
Time: 9:00 a.m.
Dept: 2
Honorable William Elfving

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Opposition to Motion to Set Aside Default & Default Judgment

TABLE OF CONTENTS

Page
TABLE OF EXHIBITS
TABLE OF POINTS AND AUTHORITIES
  1. INTRODUCTION
  1. STATEMENT OF FACTS
  1. Relevant Facts and Procedural History
  1. Defendants Were Personally Familiar With the Law and Legal Process
  1. ARGUMENT
  1. Defendants’ Conduct Is an Inexcusable Mistake of Law Because It Demonstrates Willful Ignorance of the Law
  1. Defendants Are Not Unsophisticated Because of Previous Experience with Legal Process and in Their Businesses
  1. Defendants Received Numerous Warnings From Multiple Sources That They Faced a Default By Failing to Act
  1. Defendants Were Unreasonable in Willfully Failing to Act
  1. Defendants Offer No Justification for Failing to Ascertain the Correct Law
  1. Defendants Were Not Laboring Under a Mistake of Fact When They Failed to Answer the Complaint
  1. The Interests of Substantial Justice Will Be Served by Denying Relief in this Case
  1. Martha Lopez’ Claim Has Merit
  1. In the Alternative, if Defendants’ Motion is Granted, Defendants Should Bear the Costs
  1. CONCLUSION
SUMMARY TIMELINE / ii
iii
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4
5
7
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10
11
12
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TABLE OF EXHIBITS

Exhibit 1 / Letter from SCLC to John Fedaiy of 6/26/03, confirming content of 6/24/03 telephone conversation
Exhibit 2 / Demand letter from SCLC to John Fedaiy of 7/29/03
Exhibit 3 / Letter from Richard Vaught to SCLC of 9/9/03, confirming content of 9/5/03 telephone conversation
Exhibit 4 / Letter from SCLC to Richard Vaught of 9/25/03
Exhibit 5 / Fax from Richard Vaught to SCLC of 9/25/03
Exhibit 6 / Letter from SCLC to Defendants of 9/25/03
Exhibit 7 / Declaration of Alexandra Wenzke
Exhibit 8 / Letter from SCLC to Louis Willett of 1/16/04, confirming content of 1/12/04 telephone conversation
Exhibit 9 / Docket Sheet for Case No. 1-98-CV-776793, SuperiorCourtofSanta ClaraCounty
Exhibit 10 / Santa Clara County, California, Fictitious Business Name Record
Exhibit 11 / California Fictitious Business Names Record
Exhibit 12 / Declaration of Sarah Pappas
Exhibit 13 / Award of Arbitrator of 8/29/00
Exhibit 14 / Notice of Settlement of 11/29/00
Exhibit 15 / Health Department Inspection Report
Exhibit 16 / Declaration of Gregory Siehl, Attorney, in Support of Motion to Compel Discovery Responses and Request for Award of Sanctions
Exhibit 17 / Declaration of Martha Lopez
Exhibit 18 / Declaration of Martha Garces
Exhibit 19 / Declaration of Margaret Stevenson re Record of time spent by SCLC seeking an answer from Defendants and opposing the motion to set aside default

TABLE OF CASES AND AUTHORITIES

Statutes

Cal. Code of Civ. Proc. Section 473 / Page 5

Regulations

Section 201.7(g), Cal. Rules of Court / Page 12

Cases

Waite v Southern Pacific Co., (1923) 192 Cal. 467 / Page 6
Weinberger v. Manning (1942) 50 Cal. App. 2d 494 / Page 6
Brochtrup v. INTEP (1987) 190 Cal. App. 3d 323 / Page 6
A & S Air Conditioning v. John J. Moore Co., (1960) 184 Cal. App. 2d 617 / Page 6
Homestead Savings v. Superior Court, (1986) 179 Cal. App. 3d 494 / Page 7
Beall v. Munson (1962) 204 Cal. App. 2d 396 / Page 9
Viles v. State(1967) 66 Cal. 2d 24, 29 / Page 10
Security Truck Line v. Monterey (1953) 117 Cal. App. 2d 441 / Page 11
Gillingham v. Lawrence(1909) 11 Cal. App. 231 / Page 12

Other Authorities

8 Witkin Procedure 4th ed. / Page 9

1

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Opposition to Motion to Set Aside Default & Default Judgment

  1. INTRODUCTION

Plaintiff Martha Lopez opposes Defendants’ motion to vacate the default judgment against them. In sum, Defendants argue that they did not understand the legal requirement to file an answer. However, Defendants repeatedly disregarded clear notices from this court, from Plaintiff’s counsel and presumably from their own prior attorney who represented them for a brief time in this case. Further, Defendants have significant experience that would alert them to the seriousness of court processes and legal requirements: Defendant Wida Fedaiy is a businesswoman who has operated several businesses over the last ten years, initiated a personal injury action in which she won a substantial sum of money, and completed several real estate transactions.

As outlined below, Defendants demonstrated a willful disregard for the legal process and the procedures of the court. Although general policy favors trial on the merits, this is the rare case in which allowing the default to remain serves the interests of justice and fairness. Allowing the default to remain would prevent Defendants from taking advantage of a system of law and process that they chose to disregard when it suits them and preserve the interests of a person who worked for years without enjoying the benefits of the law. Because vacating the default judgment would disserve the interests of justice, the Court should deny Defendants’ motion.

  1. STATEMENT OF FACTS
  2. Relevant Facts and Procedural History[1]

The Stanford Community Law Clinic (hereinafter “SCLC”) contacted Defendants on June 24, 2003, seeking wage records relating to Ms. Lopez’ employment. (Exhibit 1, Letter from SCLC to John Fedaiy of 6/26/03.) Defendants initially asserted that Ms. Lopez did not work at Harris Hotdog and that they retained no records of her hours. (Id.) On July 14, 2003, Ms Lopez filed a lawsuit seeking over $ 90,000 in unpaid overtime wages, unpaid split-shift premiums, penalties for missed meal breaks and rest periods, penalties for missing wage statements, waiting time penalties and liquidated damages.

The summons and complaint were served on Defendants on July 17, 2003. The summons clearly states at the top of the page in bold, “You have 30 CALENDAR DAYS after this summons is served on you to file a typewritten response at this court.” On July 29, 2003 SCLC sent a demand letter to Defendants noting that, although Ms. Lopez had filed a lawsuit against them, she would be willing to withdraw the lawsuit and settle the matter outside of court if they were interested in discussing the matter. (Exhibit 2.) Defendants did not respond to this letter.

On September 5, 2003, attorney Richard Vaught notified SCLC that Defendants had retained him in this matter and requested that Ms. Lopez delay seeking a default judgment so Defendants could file an answer. (Exhibit 3, Letter from Richard Vaught to SCLC of 9/9/03.) SCLC agreed to postpone entering a default at that time and scheduled a meeting for September 17, 2003, in order to discuss the possibility of settlement. (Id.)

On the morning of September 17, 2003, Mr. Vaught’s secretary contacted SCLC and stated that he would not attend the settlement meeting because Defendants had dismissed him as counsel. (Exhibit 4, Letter from SCLC to Richard Vaught of 9/25/03.) On September 25, 2003, Mr. Vaught sent a fax confirming he had been dismissed and requesting that SCLC inform Defendants of the risk of default. (Exhibit 5.)[2]

That same day – September 25 – SCLC personally delivered a letter to Defendants at Harris Hotdog and mailed a copy to Defendants’ home address. (Exhibit 6.) The letter outlined Defendants’ duties and the risks they faced if those obligations were not fulfilled. In pertinent part, the letter stated:

[W]e strongly recommend that you find an attorney to assist you in this serious matter. . . If you are indeed representing yourself in this matter, there are several important things you should know. First, we plan to seek a default judgment in this case. That means that since you have not filed an Answer in court within the time allowed, we can ask the court to enter a judgment in favor of the plaintiff without hearing from you. . .

Again, we strongly recommend that you retain counsel to assist you in this matter. You should know that in no case will we grant you an extension to file your Answer – already over a month late – after close of business on Tuesday, October 7, 2003. . .

If we obtain a judgment against you, we intend to enforce that judgment against Harris Hotdog and your personal assets. In sum, we urge your prompt attention to this important matter. (Id., emphasis in the original.)

Fourteen days after SCLC’s letter was personally delivered, not having received Defendants’ Answer, SCLC requested entry of a default. SCLC served a copy of the Request for Entry of Default on Defendants on October 8, 2003. The Court entered the Default on October 10, 2003 and served a copy of the Entry of Default on Defendants.

SCLC filed a Case Management Statement on November 4, 2003. Defendants received a copy of this statement, specifically mentioning that a default had been entered (see Case Management Statement of 11/4/03 at 2, ¶ 6) and that a Court Judgment would be sought (see Case Management Statement of 11/4/03 at 2, ¶ 4).

On November 14, 2003, SCLC filed a Request for Court Judgment. SCLC served a copy of this request on Defendants, along with a copy of the original complaint, Ms. Lopez’s Declaration, the applicable law governing the causes of action in the complaint, and an Application for Plaintiff’s Attorney’s Fees.

Defendants appeared at the Case Management Conference on November 18, 2003, where Commissioner Strickland admonished Defendants to retain counsel (Fedaiy Decl. ¶ 6; Exhibit 7, Wenzke Aff. ¶ 3.) In the hallway following the conference, SCLC reiterated the Commissioner’s advice and the advice in SCLC’s September 25 letter to obtain counsel. (Id., Wenzke Aff. ¶ 9.) Defendants did not contact SCLC after the CMC, and on November 26, 2003, the court entered judgment for $97,713 for Ms. Lopez.

On January 12, 2004, Attorney Louis Willett informed SCLC that Defendants had retained him as counsel and requested a stipulation to set aside the default judgment (Exhibit 8, Letter from SCLC to Louis Willett of 1/16/04.) At a meeting on January 22, 2004, representatives from SCLC informed Mr. Willett that they would not stipulate to vacate the default judgment given Defendants’ repeated failure to act in this case and their misrepresentations to SCLC. On January 29, 2004, Defendants filed this motion to set aside the default judgment.

  1. Defendants Are Personally Familiar With the Law and Legal Process

Defendant Wida Fedaiy initiated a personal injury action in which she won a substantial sum of money, operated several businesses over the last ten years, and completed several real estate transactions. In 1998, Defendant Wida Fedaiy retained counsel and filed a personal injury complaint in Santa ClaraCounty. (Exhibit 9, Docket Sheet for Case No. 1-98-CV-776793, SuperiorCourtofSanta ClaraCounty.) The course of litigation included four case management conferences, and during discovery the defendant filed a motion to compel discovery after Ms. Fedaiy failed to answer discovery requests. (Id.) At the fourth and final case management conference, the Commissioner ordered the parties to arbitration, where the arbitrator awarded Ms. Fedaiy over $30,000 in damages. (Id.) After the arbitrator’s award, the defendant requested a trial de novo; however, the parties settled before trial in January 2000. (Id.)

Defendant Wida Fedaiy owned Harris Hotdog from 1993 to October 2002. (Exhibit 10, Santa Clara County, California, Fictitious Business Name Record.) Defendants employed Plaintiff Lopez from March 1997 to March 8, 2003. (See Complaint at 2.) Defendant John Fedaiy has worked at Harris Hotdog since 1997. (Fedaiy Decl. ¶ 1.) Defendant Wida Fedaiy sold the business to her brother, Harris Fedaiy, in October 2002. (See Fedaiy Decl. ¶ 2.)[3]

Defendant Wida Fedaiy also owned or managed FashionCity, a men’s clothing store in San Leandro, since at least 2002.[4] (See Exhibit 11, California Fictitious Business Names Record.) Defendant Wida Fedaiy employs at least three people at FashionCity. (Exhibit 12, Pappas Aff. ¶ 4.)

  1. ARGUMENT

Under Cal. Code of Civ. Proc. Section 473, “[t]he court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” Although the law favors a trial on the merits, the impartial discretion a trial court exercises in passing on a motion to set aside a default, is “guided and controlled in its exercise by fixed legal principles. . .to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.” Waite v. Southern Pacific Co., (1923) 192 Cal. 467, 471 (granting relief from default where defendant’s counselmade a reasonable mistake in believing jurisdiction was properly in federal court and failed to oppose lawsuit in state court). “While courts are generous in relieving litigants of their defaults resulting from inadvertence or excusable neglect yet they are not required to act as guardians for persons who are grossly careless as to their own affairs.” Weinberger v. Manning (1942) 50 Cal. App. 2d 494, 497 (holding that trial court abused its discretion in setting aside default where defendant had received numerous warnings, yet chosen not to act).

In determining whether to grant relief under C.C.P. Section 473, courts undertake a two-pronged inquiry, first addressing the parties’ reasonableness in failing to act and then the justification for the parties’ failure to determine the correct law. Brochtrup v. INTEP (1987) 190 Cal. App. 3d 323, 329 (holding that attorney’s belief that request for admissions could be verified by person other than party to whom directed was a reasonable mistake of law);A & S Air Conditioning v. John J. Moore Co., (1960) 184 Cal. App. 2d 617, 619 (holding that mistake about amount of attorney’s fees was unreasonable because it was simple to determine the correct rules). Defendants’ misunderstanding of the law was unreasonable, and they offer no evidence of any effort to determine the correct law.

  1. Defendants’ Conduct Is an Inexcusable Mistake of Law Because It Demonstrates Willful Ignorance of the Law

Willful ignorance is a category of conduct for which the courts do not grant relief. A & S Air Conditioning v. John J. Moore Co. (1960) 184 C.A.2d 617, 620. Defendants’ previous legal and business experience, the repeated warnings by Plaintiff’s counsel, the warning from Commissioner Strickland, the Defendants’ decision to terminate attorney Vaught’s services, and the explicit language of the summons, belie an inexcusable mistake of law rising to the level of willful ignorance.

  1. Defendants Are Not Unsophisticated Because of Previous Experience with Legal Process and in Their Businesses

The law should not be a trap for the unwary, Homestead Savings v. Superior Court, (1986) 179 Cal. App. 3d 494, 498,but Defendants here are not the unwary. As the prevailing party in a lawsuit Wida Fedaiy initiated in Santa Clara County Superior Court in 1998 and a business owner since 1993, Defendant Wida Fedaiy is familiar with the rights and responsibilities associated with the legal system. Defendant John Fedaiy managed Harris Hotdogs for several years.

Litigation experience. Defendant Wida Fedaiy’s affirmative personal injury lawsuit demonstrates her own experience with the legal system. She filed a lawsuit, navigated the case management process, and ultimately settled a case after declining a $30,000 arbitration award. (Exhibit 13, Award of Arbitrator; Exhibit 14, Notice of Settlement) This experience provided Defendants a more extensive familiarity with the legal system than many business owners and sufficient information to make an informed choice about retaining counsel and answering a complaint in this case.

Business experience. Contrary to their assertion, Defendants are not naïve, unsophisticated small business owners. (See Defendant’s Memorandum of Points and Authorities, hereinafter “Defendant’s Brief” at 3, stating “[Defendants] are hardly sophisticated business people.”) First, Defendant Wida Fedaiy has nine years of business experience as the owner of Harris Hotdog from 1993 to 2002. Additionally, Wida Fedaiy has owned or managed FashionCity, an upscale men’s retail clothing store, since at least 2002. Mr. Fedaiy worked at Harris Hotdog for at least six years (Fedaiy Decl. ¶ 2) and has demonstrated his familiarity with health code requirements governing the restaurant industry[5] (Fedaiy Decl. ¶ 3).

Defendants also point to their immigrant status as grounds for their failure to respond to legal process. (See Defendants’ Brief at 3.) Although their foreign heritage may be considered, it is not sufficient to justify their mistake. Weinberger v. Manning, (1942) 50 Cal. App. 2d 494, 497 quoting Fink & Schlindler Co. v. Gavros (1925) 72 Cal. App. 688, 693 (denying relief after finding that defendant’s foreign origin was insufficient to excuse defendant’s mistaken belief that codefendant’s counsel would represent him).

  1. Defendants Received Numerous Warnings From Multiple Sources That They Faced a Default By Failing to Act

Even if Defendants’ experience in pursuing an affirmative lawsuit did not provide them with a basic understanding of legal procedures, the repeated warnings from the court, from Plaintiff’s counsel, and from their first retained counsel, Mr. Vaught, should have provided them with ample warning.

Defendants benefited from at least three direct warnings from the court about the serious consequences they risked in not responding to the complaint. First, the summons, which Defendants received on July 17, 2003, clearly outlines in all caps their obligation to respond within 30 days. Additionally, Defendants were served with notice of the Request for Default on or about October 10, 2003. Finally, Commissioner Strickland admonished Defendants to seek counsel at the Case Management Conference on November 18, 2003.

Although Defendants’ conversations with their counsel are privileged, the September 5, 2003, phone conversation with Mr. Vaught, in which he requested that Ms. Lopez delay seeking the default so that Defendants could file an answer, supports the inference that Defendants’ attorney advised them to answer the complaint. Further support appears in his fax notice to SCLC of September 25 requesting that SCLC notify Defendants of its intent to take a default. (See Exhibit 5.) Notably, there is no declaration from Mr. Vaught accompanying Defendants’ Motion to suggest that he failed to counsel the Fedaiys regarding the default.

Finally, Defendants ignored repeated warnings from SCLC. In addition to the original demand letter (Exhibit 2), Defendants ignored SCLC’s letter of September 25 (Exhibit 6), 2003, which explicitly delineated the consequences if they did not answer the complaint by October 7, 2003, 60 days after the original deadline. It is hard to imagine how Plaintiff’s counsel could have been more clear.

  1. Defendants Were Unreasonable in Willfully Failing to Act

Where the default occurred as a result of a deliberate refusal to act and the parties seek relief after changing their mind, relief should not be granted. 8 Witkin Procedure 4th ed, page 670. As noted above, Defendants received numerous warnings from multiple sources, had benefit of legal counsel, and had significant experience with the legal system. Their decision to ignore the complaint was willful and unreasonable.