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Kramer v. Traditional Escrow, Inc., 56 Cal.App.5th 13 (Oct. 20, 2020)

Plaintiff filed a wage and hour lawsuit against her former employer and its alleged alter ego, an individual. After filing an answer, Defendants’ counsel withdrew and Defendants chose not to participate further, making themselves unreachable and failing to update their contact information with the trial court or with Plaintiff’s counsel, which caused them to miss multiple phone calls from counsel and an email from the court. They also failed to receive postal mail, including an amended complaint, because they failed to provide mailing addresses. Default was entered against Defendants. The trial court found, however, that Plaintiff’s counsel subsequently misrepresented to the individual defendant’s divorce attorney, who had nothing to do with this matter, that Defendants were in default and could not file an answer to the amended complaint. Upon Defendants’ request, the trial court granted equitable relief and set aside and vacated the default on based on this misrepresentation and on the grounds that Defendants were unaware the complaint had been amended.

The Fourth Appellate District reversed, holding that equitable relief was not warranted where Defendants had actively absented themselves from litigation, and found that if Defendants were unaware that an amended complaint had been filed it was due to their own negligence and not because of any bad conduct by Plaintiff or her counsel. Further, Defendants provided no reasoning for why they did not act once they had notice of the misrepresentation, nor did they take action after having received actual notice about a month before default was entered that Plaintiff had filed an amended complaint. Defendants’ lack of diligence, and the absence of exceptional circumstances warranting relief, led to the reversal.