Nguyen v. Le

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# Case Name Tentative 105 30-2024- Defendant’s (The Entrust Group, Inc. erroneously sued as 01420730 The Entrust Group, Inc. FBO Robert Blanch Account Nguyen v. Le #17260) Motion to Set Aside Default (Motion), filed on 12-3-25 under ROA No. 241, is GRANTED.

The Motion states, “Even if the default were not void under section 473(d), the evidentiary record establishes that it resulted from Entrust’s good-faith mistake and excusable neglect within the meaning of section 473(b).” (Motion; 7:12-15.)

Plaintiffs’ (Quan Nguyen and Phuong Nguyen) Opposition to Motion to Set Aside Default (Opposition), filed on 1-16- 26 under ROA No. 305, responds, “Next, Defendant seeks relief under CCP § 473(b) based on the odd red-herring argument that its business model and procedures are “premised” on its purported inability to participate in legal disputes and the disingenuous argument that it is entitled to set aside the default because Mr. Kowalski ‘explained’ his position to Plaintiffs’ counsel. Neither of these arguments support the proposition that Defendant could reasonably have considered the matter resolved and was therefore justified in ignoring papers delivered by a process server that explicitly informed Defendant of its obligation to participate and meet deadlines.” (Opposition; 8:24-9:2 (Italics in Opposition.).)

Code of Civil Procedure section 473, subdivision (b), states, “The 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. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken. However, in the case of a judgment, dismissal, order, or other proceeding determining the ownership or right to possession of real or personal property, without extending the six-month period, when a notice in writing is personally served within

the State of California both upon the party against whom the judgment, dismissal, order, or other proceeding has been taken, and upon his or her attorney of record, if any, notifying that party and his or her attorney of record, if any, that the order, judgment, dismissal, or other proceeding was taken against him or her and that any rights the party has to apply for relief under the provisions of Section 473 of the Code of Civil Procedure shall expire 90 days after service of the notice, then the application shall be made within 90 days after service of the notice upon the defaulting party or his or her attorney of record, if any, whichever service shall be later.

No affidavit or declaration of merits shall be required of the moving party. Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.

The court shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties. However, this section shall not lengthen the time within which an action shall be brought to trial pursuant to Section 583.310.”

Ron Burns Constructions Co., Inc. v. Moore (2010) 184 Cal.App.4th 1406, 1413 (disapproved on other grounds in Even Zohar Constr. & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 844) states, “ ‘[T]he policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon a party, who, regardless of the merits of the case, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary. [Citations.]’ [Citation.]

Hence, ‘ “ ‘[t]he provisions of section 473 of the Code of Civil Procedure are to be liberally construed. . . .’ [Citation.]” [Citation.] . . . “[A]ny doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” [Citation.]’ (Maynard v. Brandon (2005) 36 Cal.4th 364, 371–372, 30 Cal.Rptr.3d 558, 114 P.3d 795.) ‘Section 473 is often applied liberally where the party in default moves promptly to seek relief, and the party opposing the motion will not suffer prejudice if relief is granted. [Citations.]

In such situations “very slight evidence will be required to justify a court in setting aside the default.” [Citations.]’ [Citation.]” [¶] “ ‘A motion

seeking such relief lies within the sound discretion of the trial court, and the trial court's decision will not be overturned absent an abuse of discretion. [Citations.] However, the trial court's discretion is not unlimited and must 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.’ ” [Citations.]’ (Elston v. City of Turlock, supra, 38 Cal.3d at p. 233, 211 Cal.Rptr. 416, 695 P.2d 713.) ‘[A] trial court order denying relief is scrutinized more carefully than an order permitting trial on the merits. [Citations.]’ [Citation.]”

Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1206, states, in relevant part, “Mistake is not a ground for relief under section 473, subdivision (b), when ‘the court finds that the “mistake” is simply the result of professional incompetence, general ignorance of the law, or unjustifiable negligence in discovering the law. . . .’ [Citation.] Further, ‘[t]he term “surprise,” as used in section 473, refers to “ ‘some condition or situation in which a party . . . is unexpectedly placed to his injury, without any default or negligence of his own, which ordinary prudence could not have guarded against.’ ” [Citation.]’ [Citation.]

Finally, as for inadvertence or neglect, ‘[t]o warrant relief under section 473 a litigant's neglect must have been such as might have been the act of a reasonably prudent person under the same circumstances. The inadvertence contemplated by the statute does not mean mere inadvertence in the abstract. If it is wholly inexcusable it does not justify relief. [Citations.] It is the duty of every party desiring to resist an action or to participate in a judicial proceeding to take timely and adequate steps to retain counsel or to act in his own person to avoid an undesirable judgment.

Unless in arranging for his defense he shows that he has exercised such reasonable diligence as a man of ordinary prudence usually bestows upon important business his motion for relief under section 473 will be denied. [Citation.] Courts neither act as guardians for incompetent parties nor for those who are grossly careless of their own affairs. . . . The only occasion for the application of section 473 is where a party is unexpectedly placed in a situation to his injury without fault or negligence of his own and against which ordinary prudence could not have guarded.’ [Citation.]”

Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 134-135 (Lasalle), states, “We acknowledge the standard of review for an order denying a set aside motion is abuse of discretion. [Citation.] But there is an important distinction in the way that discretion is measured in section 473 cases. The law favors judgments based on the merits, not procedural missteps. Our Supreme Court

has repeatedly reminded us that in this area doubts must be resolved in favor of relief, with an order denying relief scrutinized more carefully than an order granting it. As Justice Mosk put it in Rappleyea, ‘Because the law favors disposing of cases on their merits, “any doubts in applying section 473 must be resolved in favor of the party seeking relief from default [citations]. Therefore, a trial court order denying relief is scrutinized more carefully than an order permitting trial on the merits.” (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233 [211 Cal.Rptr. 416, 695 P.2d 713]; see also Miller v. City of Hermosa Beach (1993) 13 Cal.App.4th 1118, 1136 [17 Cal.Rptr.2d 408].)’ [Citation.]” (Footnote 5 omitted.)

Here, Defendant has submitted sufficient evidence to demonstrate mistake or neglect as to Defendant’s status as a party in this action.

The declaration in support of the Motion states in part: (1) “I am the Chief Financial Officer of The Entrust Group, Inc. (“Entrust”). Entrust provides administrative and record-keeping services for self-directed individual retirement accounts (“IRAs”). Entrust does not advise clients, originate loans, underwrite loans, broker real estate transactions, or make any investment decisions. Entrust’s role is purely custodial and administrative. [¶] I reviewed the deed of trust recorded on February 17, 2021, as document number 2021000112396 in the official records of the Orange County Recorder, which lists Plaintiffs Quan Nguyen and Phuong-Trang Nguyen (‘Plaintiffs’) as borrowers and ‘The Entrust Group, Inc.

FBO Robert Blanch account # 17260 as to an undivided 124,0000/215,000 interest and Robert Blanch and Martha Blanch trustees of the 2017 amendment and restatement of the Blanch Family Trust as to an undivided 91,000/215,000 interest, both as tenants in common’ as the lender (‘Deed of Trust’). Entrust does not hold any beneficial interest in that property. Entrust is a passive, self-directed IRA custodian for Robert Blanch’s individual retirement account.” (Kowalski Decl., ¶¶ 2 and 3.); (2) Consistent with this practice, when Entrust received correspondence relating to the First Amended Complaint naming “The Entrust Group, Inc.

FBO Robert Blanch Account #17260” as a defendant, I understood that the documents pertained to the client account and were addressed to the client’s vesting designation. I believed they were to be forwarded to the account holder, not responded to by Entrust as a litigation party. [¶] Before the First Amended Complaint was allegedly served, I had conversations with Plaintiffs’ counsel, Daniel Inscore, concerning the original complaint, which had named The Entrust Group, Inc. as a defendant. In those conversations, I explained that Entrust serves solely as a

recordkeeper and non-fiduciary custodian and that Entrust has no involvement in or control over client investment decisions, including any real estate transactions involving IRA funds. I also explained that Entrust does not make or fund loans, does not provide advice, and does not originate or underwrite any transactions. [¶] Based on my conversations with Mr. Inscore, I understood that Plaintiffs recognized Entrust’s non-fiduciary and purely custodial role, and I believed that Plaintiffs would dismiss Entrust from the lawsuit.

That remained my understanding at the time the First Amended Complaint was allegedly served.” (Kowalski Decl., ¶¶ 6, 7, and 8.); (3) “At no time did I understand that Plaintiffs intended to pursue Entrust as a defendant. To the contrary, based on my conversations with Plaintiffs’ counsel and Entrust’s custodial role, I believed Entrust would be dismissed from this lawsuit. [¶] On May 19, 2025, I signed a Notice and Acknowledgment of Receipt (‘NAR’) acknowledging receipt of the FAC. My signature reflected my understanding that documents addressed using the ‘FBO’ vesting were to be routed to the IRA account holder, as well as my understanding from prior discussions that Entrust was not being pursued as a defendant.

My signing of the NAR did not change my belief that Entrust was not a party intended to respond or litigate this matter.” (Kowalski Decl., ¶¶ 11 and 12.); and (4) “Entrust did not intentionally ignore litigation. Any failure to respond to the amended pleading was the result of Entrust’s genuine misunderstanding and mistaken belief that Plaintiffs intended to dismiss Entrust because of its custodial and administrative role, obligations, and the meaning of the ‘FBO’ designation in this context. That misunderstanding was in good faith and consistent with Entrust’s custodial business model.” (Kowalski Decl., ¶ 15.)

The declaration in support of the Opposition states, “On April 18, 2025, I discussed the case with Mr. Kowalski, Defendant’s CFO and authorized agent, as Defendant was not represented by counsel at that time. Mr. Kowalski did indicate Defendant viewed itself as merely a custodian and recordkeeper for the IRA account of its co-defendant, Robert Blanch. However, I explained that the entity named on a deed at issue in the litigation, it would have to be a party to the case. (Referring to ROA #35, FAC, Ex. 1.)

Mr. Kowalski instructed me that the appropriate way to style the entity being sued, and the appropriate entity to file an answer, was the Plan itself: ‘The Entrust Group, Inc. FBO Robert Blanch Account #17260,’ (the exact name used in on the deed at issue) and that he would accept service on behalf of that entity. I stated that I might be willing to make the amendment if Mr. Kowalski would accept service on behalf of that entity. During the

call, I also advised Mr. Kowalski to consult with counsel. Mr. Kowalski indicated that he had access to counsel if he needed. I also said that I would provide the contact information for Robert Blanch’s counsel should Mr. Kowalski wish to speak with him.” (Inscore Decl., ¶ 5.)

The declaration in support of the Opposition attaches Exhibit 3 (Inscore Decl., ¶ 6) which consists of email correspondence between Gary Kowalski and Plaintiffs’ attorney. In a 5-1-25 email from Mr. Kowalski to Plaintiffs’ attorney, Mr. Kowalski wrote, “. . . We received your proof of service of summons of CIVIL (DOCUMENTS SERVED) and noticed that neither Entrust nor the blanches were listed on it. We also received your Proof of Service—CIVIL (PERSONS SERVED) and identified that the Blanche’s names have been removed from it but not those of Entrust.

Does that mean that the Blanche’s have been removed from the suit? What about Entrust? . . .” (Inscore Decl., ¶ 6 and Exhibit 2.) On 5-3-25, Plaintiffs’ attorney responded, “. . . I’m not sure which documents you’re referring to. The Blanches have not been removed. Entrust has been changed to the retirement plan. . . .” (Inscore Decl., ¶ 6 and Exhibit 2.) On 5-5-25, Mr. Kowalski replied, “I see what was done now. You had The Entrust Group, Inc. removed as a defendant by correcting the vesting to The Entrust Group, Inc.

FBO Robert Blanch account number 17260. [¶] Thank you very much! Good Luck in your case! . . . .” (Inscore Decl., ¶ 6 and Exhibit 2; Italics in the 5-5-25 email.)

Mr. Kowalski’s declaration in support of the Motion coupled with the email correspondence between Mr. Kowalski and Plaintiffs’ attorney supports Defendant’s mistake or excusable neglect. Mr. Kowalski’s declaration indicates that Mr. Kowalski did not believe Plaintiffs intended to pursue Entrust Group, Inc. as a party in this case. The email correspondence supports this mistake because it indicates Mr. Kowalski’s understanding that Entrust Group, Inc. had been removed from the case. (Inscore Decl., ¶ 6 and Exhibit 2; 5-5-25 email.)

The evidence supports that there was confusion as to how to name Entrust Group, Inc. as a party to this action given the designation of the lender in the Deed of Trust (First Amended Complaint filed on 1-22-25 under ROA No. 35; ¶ 34 and Exhibit 1) and the email correspondence. Based on the emails, the evidence supports that Mr. Kowalski erroneously believed that Plaintiffs did not intend to pursue Entrust Group, Inc. as a defendant in this action.

The court finds that the above evidence is sufficient to establish mistake and excusable neglect especially in light of the above authority indicating that courts should

resolve doubts in applying Code of Civil Procedure section 473 in favor of the party seeking relief from default.

In this case, the court entered default against Defendant on 6-26-25 under ROA No. 227. Defendant timely filed this Motion on 12-3-25 which is within the six-month period required by Code of Civil Procedure section 473, subdivision (b). The Motion also includes the answer that Defendant intends to file in response to Plaintiffs’ First Amended Complaint (Kuzminova Decl., ¶ 14 and Exhibit B) as required by Code of Civil Procedure section 473, subdivision (b).

Therefore, the court GRANTS Defendant’s Motion to Set Aside Default, filed on 12-3-25 under ROA No. 241, pursuant to Code of Civil Procedures section 473, subdivision (b). The court orders Defendant to file the answer attached to the declaration from Elena Kuzminova (Kuzminova Decl., ¶ 14 and Exhibit B) no later than February 6, 2025.

Based on the court’s ruling, the court does not address the issues raised in the Motion as to the application of Code of Civil Procedure section 473, subdivision (d), or whether the court can exercise its inherent equitable authority to grant relief from the entry of default.

Defendant is to give notice.

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