Creditors Adjustment Bureau, Inc. v. SK Trading USA, LLC and Kai Sha

(Pasadena Courthouse: Dept. P) August 25, 2026 DEPARTMENT P LAW AND MOTION RULINGS

DEFENDANTS' MOTION TO SET ASIDE DEFAULT AND DEFAULT JUDGMENT

I. INTRODUCTION

Plaintiff Creditors Adjustment Bureau, Inc. ("Plaintiff") filed this action against Defendants SK Trading USA, LLC ("SK Trading") and Kai Sha aka Jason Sha ("Sha") (collectively, "Defendants"), seeking to recover amounts allegedly owed for goods shipped from China. Defaults were entered against SK Trading and Sha, and default judgment was entered on March 17, 2026. On July 24, 2026, Defendants filed the instant motion to set aside the defaults and default judgment pursuant to Code of Civil Procedure section 473(b). On August 12, 2026, Plaintiff filed an opposition and on August 18, 2026, Defendants filed a reply.

II. LEGAL STANDARD

Code of Civil Procedure section 473, subdivision (b) provides for either discretionary or mandatory relief from certain prior actions or proceedings in the trial court. (Luri v. Greenwald¿ (2003) 107 Cal.App.4th 1119, 1124.) "'Under the discretionary relief provision, on a showing of "mistake, inadvertence, surprise, or excusable neglect," the court has discretion to allow relief from a "judgment, dismissal, order, or other proceeding taken against" a party or his or her attorney. Under the mandatory relief provision, on the other hand, upon a showing by attorney declaration of "mistake, inadvertence, surprise, or neglect," the court shall vacate any "resulting default judgment or dismissal entered."' [Citation.]

Applications seeking relief under the mandatory provision of section 473 must be 'accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.' The mandatory provision further adds that 'whenever relief is granted based on an attorney's affidavit of fault [the court shall] direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.'" (Ibid.; Code Civ. Proc., Sec. 473, subd. (b).) 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." (Code Civ.

Proc. Sec. 473, subd. (b).)

III. DISCUSSION

Defendants move for an order setting aside the defaults and default judgment pursuant to Code of Civil Procedure section 473(b), arguing that their failure to respond resulted from their attorney's mistake, inadvertence, surprise, or neglect. Defendants contend their attorney believed they had not been properly served and, although counsel should have filed a motion to quash the summons, he failed to do so because of his own mistake and neglect. (Motion, pp. 3-4.)

Specifically, defense counsel states that his clients informed him that the lawsuit papers had been thrown over a fence into the parking lot of a building Defendants no longer occupied. Counsel believed this did not constitute proper service and instructed Defendants to notify him if anything further was received by mail or otherwise served. According to counsel, that did not occur, and counsel himself never received a copy of the complaint. Counsel acknowledges that, out of prudence, he should have filed a motion to quash but failed to do so because of his inadvertence, surprise, or neglect. (Motion, p. 4; Newell Decl., P.P. 4, 7.)

In opposition, Plaintiff argues that mandatory relief under section 473(b) is unavailable because Defendants' own evidence shows that counsel was not the sole cause of the defaults and that Defendants were not "totally innocent." Plaintiff relies on Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1248, arguing that mandatory relief is proper only where the client is entirely free from fault and the attorney alone caused the default. Plaintiff contends that defense counsel's decision not to act was based on information supplied by Defendants themselves and that Defendants thereafter failed to advise counsel of any additional documents, despite counsel's instruction that they do so.

The Court finds Defendants are entitled to mandatory relief under Code of Civil Procedure section 473(b). As a threshold matter, Defendants have satisfied the procedural requirements for mandatory relief. The default judgment was entered on March 17, 2026, and Defendants filed the instant motion on July 24, 2026, within six months of entry of judgment. Defendants also submitted the sworn declaration of their attorney, Ruben Newell, accepting responsibility for the failure to respond, and attached a proposed answer to the motion. (Newell Decl., P.P. 4, 7; Exh. C.)

On the merits, counsel states that Defendants informed him that the lawsuit papers had been left at a location Defendants no longer occupied. Based on that information, counsel believed Defendants had not been properly served and did not respond to the Complaint. Counsel acknowledges, however, that he should have filed a motion to quash the summons rather than simply taking no action. Counsel expressly attributes his failure to do so to his own mistake, inadvertence, surprise, or neglect and states that the failure was his fault, rather than that of his clients. (Newell Decl., P.P. 4, 7.)

Plaintiff argues mandatory relief is unavailable because Defendants were not "totally innocent" and counsel was not the sole cause of the defaults. Plaintiff relies primarily on Lang v. Hochman (2000) 77 Cal.App.4th 1225. The Court is not persuaded. Plaintiff's reliance on Lang is misplaced. In Lang, the default resulted from terminating sanctions after the defendants repeatedly failed to comply with discovery obligations and court orders. The trial court specifically found that the discovery violations were attributable not only to counsel, but also to the defendants themselves.

The circumstances here are different. Defendants had not appeared in the action and no discovery had taken place. Rather, defense counsel states that he believed Defendants had not been properly served and therefore did not respond to the Complaint. Counsel acknowledges that he should have filed a motion to quash but failed to do so because of his own mistake, inadvertence, surprise, or neglect. (Newell Decl., P.P. 4, 7.) Unlike Lang, there is no similar history of Defendants repeatedly disregarding court orders or otherwise participating in conduct that resulted in the default.

Moreover, Defendants submitted the declaration of Linda Yang with their reply. Yang states that SK Trading moved out of the Duarte warehouse in June 2025 and that the premises were thereafter occupied by another company. According to Yang, Defendants learned of an attempted service at that location, provided that information to their attorney, and did not receive any subsequent documents in this action. (Yang Decl., P.P. 2-4.) Thus, the evidence does not establish that Defendants knowingly failed to provide counsel with subsequently received documents or otherwise engaged in conduct comparable to the client misconduct at issue in Lang.

Further, as to the argument that that defense counsel has submitted similar declarations in other actions involving Sha and related entities, despite different service events and procedural histories. While the similarity of the motions may bear on the credibility of counsel's explanation, it does not establish that Defendants caused the defaults in this action. The Court's determination under section 473(b) turns on the circumstances resulting in the defaults at issue here.

Based on the foregoing, the Court finds that the default and default judgment resulted from defense counsel's failure to take appropriate action after learning of the attempted service. Counsel's declaration sufficiently establishes that the failure to respond or move to quash resulted from his mistake, inadvertence, surprise, or neglect. Defendants are therefore entitled to mandatory relief under Code of Civil Procedure section 473(b).

Attorney's fees

"The court may properly order payment of costs or attorney fees to the adverse party as compensation for loss or expense occasioned by the granting of the section 473 motion."¿ (Jade K. v. Viguri (1989) 210 Cal.App.3d 1459, 1474 (Jade K.).)¿ Plaintiff requests $4,130.00 in attorney's fees and $281.89 in costs, for a total of $4,411.89, pursuant to Code of Civil Procedure section 473(b). (Aposhian Decl., P. 17.) Ds do not oppose this. Because the Court grants relief based on defense counsel's affidavit of fault, section 473(b) requires the Court to award reasonable compensatory legal fees and costs. The Court finds the requested amount reasonable. Thus, the Court awards Plaintiff $4,411.89 in attorney's fees and costs, payable by defense counsel.

IV. CONCLUSION AND ORDER

The Court GRANTS Defendants' motion to set aside default and default judgments. The Court further GRANTS Plaintiff's request for $4,411.89 in attorney's fees and costs, payable by defense counsel, to be paid within 30 days' notice of this order. Defendants shall file their answer within 20 days' notice of this order.

Defendants are to give notice. Dated: August 25, 2026 JARED D. MOSES JUDGE OF THE SUPERIOR COURT | Home -->)" -->