CBD Franchising, Inc. v. Central Jersey Doors & Closets, LLC, et al.

Case No.: 22STCV13457 Hearing Date: August 26, 2026 | The Conway's motion to vacate judgment is GRANTED.

On 4/21/2022, Plaintiff CBD Franchising, Inc. (Plaintiff) filed a complaint against Defendants Central Jersey Doors & Closets, LLC, Mary Conway, William Conway, One Day Doors and Closets, Inc., and One Day Enterprises, alleging causes of action for: (1) breach of written contract; (2) breach of the implied duty of good faith and fair dealing; (3) tortious interference with contractual relations; and (4) unlawful business practices.

On 7/11/2025, the Conways moved to vacate default against Defendants William Conway, Mary Conway, and Central Jersey Doors & Closets, LLC (the Conway Defendants) and enter summary judgment in their favor.

Discussion

Defendants argue that default should be vacated as it would be inequitable to enter a default judgment against the Conways, stating: Here, the One Day Defendants have already established that neither they nor the Conway Defendants are liable. In fact, the Court has already granted summary judgment in favor of the One Day Defendants, finding that the 2013 Franchise Agreement's post-term covenant not to compete is unenforceable under California. See May 21, 2024, Order Granting One Day Defendants' Mot. for Summ. J.

Moreover, the Court has already denied CBDF's motion for reconsideration of that order (see July 7, 2024, Order Denying CBDF's Mot. for Recon.) and entered a judgment in favor of the One Day Defendants (see Nov. 11, 2024, Judgment).

Accordingly, it would be inequitable and unjust for the Court to enter a default judgment against the Conway Defendants, where that judgment would depend on finding contrary to the Court's prior orders and prior judgment. In other words, the Court has already held that the 2013 Franchise Agreement's post-term covenant not to compete is unenforceable under California law and should not ignore that holding by entering a default judgment against the Conway Defendants. (Motion, 2: 14-26.)

On 7/28/2025, the Court set an OSC re: entry of default judgment, and ordered supplemental briefing from CBDF explaining why it may recover from the Conways notwithstanding the Court's findings that the contract may not be enforced under California law.

In supplemental briefing, CBDF argues that "[t]he Conways' motion incorrectly assumes that the summary judgment granted in favor of the One Day Defendants negates all potential liability for the Conways. This argument fails because the Complaint alleges independent grounds for liability against the Conways that are not contingent on the One Day Defendants' liability." (Supp. Opp., 3: 8-9.)

CBDF argues that the Conways have also violated claims not asserted against any other defendant, such as Breach of Written Contract and Breach of the Implied Duty of Good Faith and Fair Dealing. However, as previously noted, these claims all derive from the Franchise Agreement's post-term covenant which this Court already found to be unenforceable under California law.

CBDF's briefing does not include any persuasive argument that the claims against the Conways do not implicate the post-term covenant, or that a default judgment against them would not necessarily require an enforcement of the post-term covenant.

Finally, while the Court notes that the Conways have not shown mistake, inadvertence, surprise under section 473(b), to allow default judgment to move forward would result in enforcement of a provision that this Court has deemed unenforceable under California law. This outcome would create greater inequity and inflict more substantial prejudice than that inflicted on CBDF for the Conways failure to litigate this action. The Conways' default did not impede CBDF's ability to defend itself, nor did it foreclose its ability to argue the post-term covenant was enforceable.

On 2/5/2026, the Court ruled that the motion should be continued writing: Still, after oral argument, the Court finds good cause to continue the motion to vacate until after CBDF's appeal is considered. This is because, as noted, the Conways have not shown mistake, inadvertence, surprise under section 473(b). As such, the equity analysis favoring setting aside default would be dramatically altered if the Court of Appeal were to determine that the post-term covenant was enforceable. Therefore, in order to give the Court the benefit of an accurate assessment of the facts supporting and detracting from the equity analysis, the Court finds the motion should be continued until after CBDF's pending appeal is complete.

This continuance will allow the Court to determine whether or not default should be vacated to avoid the inequitable result of enforcing an unenforceable provision against the Conways.

On 8/19/2026, the Court of Appeal affirmed this Court's ruling and found the post-term covenant to be unenforceable.

Accordingly, the Court finds that default judgment cannot be pursued against the Conways as it would require enforcement of an illegal post-term covenant. Based on the foregoing, the Conway's motion to vacate judgment is granted. It is so ordered. Dated: August, 2026 Hon. Jon R. Takasugi Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at [email protected] by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org. If a party submits on the tentative, the party's email must include the case number and must identify the party submitting on the tentative. If all parties to a motion submit, the court will adopt this tentative as the final order. If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. For more information, please contact the court clerk at (213) 633-0517.

Case Number: 24STCV32070 Hearing Date: August 26, 2026 Dept: 309 Superior Court of California County of Los Angeles DEPARTMENT 309 TENTATIVE RULING NATIONAL COMMERCIAL RECOVERY, INC. vs. HONEY BADGER M&R, INC., et al. |