Chandler v. Extended Stay America

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 LAURA ASHLEY CHANDLER, Case No.: 20-CV-0024 W (BLM) 12 Plaintiff, ORDER FOR FURTHER BRIEFING 13 v. ON PLAINTIFF’S APPLICATION FOR DEFAULT JUDGMENT 14 EXTENDED STAY AMERICA; [DOC. 7] ESH/ESA PROPERTIES, LLC; ESA [15] MANAGEMENT, INC.; ESA P 16 PORTFOLIO, LLC; and DOES 1 through 100, inclusive, [17] Defendants. [19] 20 Pending before the Court is Plaintiff’s Application for Default Judgment. [Doc. 7.] 21 The application is based on Defendant ESH/ESA Properties, LLC’s (“Defendant”) failure 22 to respond to the Complaint served to them on December 5, 2019. (Proof of Service 23 [Doc. 7-2.]) Codefendants Extended Stay America; ESA Management, Inc.; and ESA P 24 Portfolio, LLC (“Codefendants”) maintain, and have attempted to inform Plaintiff on four 25 separate occasions (January 17, 2020; February 3, 2020; February 13, 2020; and March 6, 26 2020) that Defendant is unable to answer Plaintiff’s Complaint because Defendant “does 27 not exist.” (Opp’n to Default J. [Doc. 8] 2:2–8.) It is not clear from the record if 28 Plaintiff has ever directly responded to Codefendants. 1 On February 2, 2020, the Clerk entered default for ESH/ESA Properties, LLC. 2 (Clerk’s Entry of Default [Doc. 6].) On March 4, 2020, Plaintiff applied for default 3 judgment. (App. for Default J. [Doc. 7].) On March 16, 2020, Codefendants opposed 4 Plaintiff’s Motion for Default Judgement on the basis that ESH/ESA Properties, LLC 5 “does not exist.” (Opp’n to Default J. [Doc. 8] 3:16–18.) On April 6, 2020, Plaintiff 6 replied to Codefendants’ Opposition with records from the County of San Diego and the 7 California Secretary of State showing that Defendant ESH/ESA Properties, LLC does 8 exist, is a SOS/FTB forfeited corporation, and is the current owner of the property that 9 Plaintiff alleges to have been injured on. (Reply [Doc. 9] 4:12–27; Cty. of San Diego 10 Pub. Rec. [Doc. 9-2, Ex. D]; Cty. of San Diego Treas.-Tax Collector Rec. [Doc. 9-3, Ex. 11 E]; Cal. Sec’y of State Bus. Search [Doc. 9-4, Ex. F].) Again, it is not clear if Plaintiff 12 ever attempted to meet and confer with Defendant between obtaining these records on 13 March 13, 2020, and filing the Reply on April 6, 2020. 14 As a suspended corporation, Defendant would be subject to action against it and 15 would be unable to defend such an action while suspended. See, e.g., Cal. Rev. & Tax. 16 Code § 23301 (West 2001); Reed v. Norman, 48 Cal.2d 338, 343 (1957). If Defendant is 17 now a dissolved corporation, it may still be sued and may defend an action while in the 18 process of wrapping up its affairs. See, e.g., Cal. Corp. Code § 2010 (West 2006); Cal. 19 Corp. Code § 17707.07 (West 2020); Peñasquitos, Inc. v. Superior Court, 53 Cal.3d 20 1180, 1194 (1991). In either event, Defendant may be subject to default judgement, entry 21 of which is within the trial court’s discretion. See Taylor Made Golf Co. v. Carsten 22 Sports, Ltd., 175 F.R.D. 658, 660 (S.D. Cal. 1997) (Brewster, J.) (citing Lau Ah Yew v. 23 Dulles, 236 F.2d 415, 416 (9th Cir. 1956)). However, default judgements are “ordinarily 24 disfavored” and cases should be decided on the merits “whenever reasonably possible.” 25 Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). Additionally, the purpose of 26 section 23301 is not punitive, but rather is meant to incentivize corporations to pay their 27 taxes. See United States v. 2.61 Acres of Land, More or Less, Situated in Mariposa Cty., 28 State of Cal., 791 F.2d 666, 668 (9th Cir. 1985). Thus, the “normal practice” when 1 suspension status comes to light during litigation is to “permit a short continuance to 2 ||enable the suspended corporation to effect reinstatement.” Timberline, Inc. v. 3 || Jaisinghani, 54 Cal.App.4th 1361, 1366-67 (1997). 4 Codefendants are hereby ORDERED to file a supplemental briefing in connection 5 || with their Opposition to Plaintiff's Application for Default Judgement, clarifying the 6 || legal status of Defendant ESH/ESA Properties, LLC and any action Defendant is taking 7 || to revive or dissolve its status in California. The document must be filed by Friday, 8 || June 5, 2020. It must not exceed five pages, exclusive of exhibits. Plaintiff may file a 9 responsive brief on this issue if they so desire on or before Wednesday, June 10, 2020. 10 || It must not exceed five pages, exclusive of exhibits. [11] 12 IT IS SO ORDERED. 13 Dated: May 27, 2020 \ 4 [pe Lon 15 Hn. 1 omas J. Whelan 16 United States District Judge