VILLAFUERTE, et al v YGRENE ENERGY FUND, INC., et al

VILLAFUERTE, et al v YGRENE ENERGY FUND, INC., et al

DEFENDANT’S MOTION TO SET ASIDE AND VACATE ORDER STRIKING DEFENDANT’S ANSWER, DEFAULT, AND DEFAULT JUDGMENT

This is a breach of contract action brought by Marco Villafuerte and Ximena Villafuerte (“Plaintiffs”) against multiple defendants including Ygrene Energy Fund, Inc. (“Ygrene.”) Now before the Court is Ygrene’s Motion for Relief from Default Judgment and Motion to Set Aside the order striking Ygrene’s Answer.

A Court has discretion to set aside a default and grant leave to defend the action on grounds of “mistake, inadvertence, surprise or excusable neglect.” (Code Civ. Proc., § 473(b).) The motion for discretionary relief must be filed within six months after the clerk’s entry of default, which occurred here on October 7, 2025. Ygrene’s initial ex parte application was filed on March 30, 2026, within six months of the October 7, 2025, default judgment. (Declaration of Noel J. Meza (“Meza Decl.”) ¶ 11.)

However, a proper motion was not filed until July 27, 2026, giving the Court the potential to find it was untimely. However, in keeping with the law’s strong preference to resolve matters on their merits, the fact the ex parte extended time for a motion, and the failure to thereafter meet the six month timeline was the failure to follow the local rule procedures, a finding of untimeliness would lad to a new 473 motion for relief on attorney mistake for the failure to follow the rules. Therefore, the Court finds the motion is timely and will rule based on its substantive merits.

Plaintiffs filed this action on or about March 8, 2024. On May 6, 2024, while represented by attorney Daniel R. Paluch and his firm (“Prior Firm”), Ygrene filed its Answer. (Meza Decl. ¶ 4.) Mr. Paluch passed away unexpectedly on July 8, 2025. (Id. ¶ 5.) Prior Firm remained counsel of record, and Ygrene believed that it would continue to be represented appropriately by Prior Firm. (Declaration of Supriya Sachar (“Sachar Decl.”) ¶ 3.) Ygrene instructed Prior Firm to contact Plaintiffs and seek a continuance of the Mandatory Settlement Conference that had been scheduled for September 8, 2025 but Prior Firm did not appear to do so and no one appeared at the conference on Ygrene’s behalf. (Id. ¶ 4; Meza Decl. ¶ ¶ 6, 7.)

Ygrene was not informed of these failures. (Sachar Decl. ¶ 5.) The Court then set an Order to Show Cause hearing for October 3, 2025, regarding whether Ygrene’s Answer should be stricken. No one appeared for Ygrene at that hearing either and the Court struck Ygrene’s Answer. Default judgment was thereafter entered against Ygrene on October 7, 2025. (Id. ¶ 8.) Current counsel has expressed that Ygrene did not know that the Answer was stricken, that default had been entered, of that the writ had been executed until later. (Id. ¶ ¶ 9, 10.)

On December 1, 2025, a writ of execution was filed by Plaintiffs. However, this writ was directed to the Sheriff of Calaveras County – whereas Ygrene’s business address is in Sonoma County. Ygrene then retained new counsel and on December 17, 2025, the law firm of Pierson Ferdinand, LLP (attorney Meza’s firm) filed its notice of appearance.

Thereafter, on March 20, 2026, another writ of execution was issued, this time in Sonoma County. Shortly thereafter, on April 1, 2026, Ygrene’s new counsel filed its ex parte application for relief from default. At the hearing the only relief granted was a stay of the writ of execution; thereafter defendant failed to file a proper motion for 473 relief until July 27, 2026.

Plaintiffs oppose the motion, arguing that there are no grounds to grant the Defendants’ motion because Ygrene and its new counsel inexcusably delayed seeking relief and the granting Ygrene’s motion will cause Plaintiffs significant prejudice and harm. The Court recognizes the apparent delay in seeking relief, but “because the law strongly favors trial and disposition on the merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.) This reflects the purpose behind section 473 and the judicial preference to “dispose of cases upon their substantial merits, and to give to the party claiming in good faith to have a substantial defense to the action an opportunity to present it.” (Mitchell v. California & Oregon Coast S.S. Co. (1909) 156 Cal. 576, 579.)

Here, Ygrene reasonably assumed Prior Firm was continuing to handle the matter after the death of Mr. Paluch. Ygrene’s representative avers that Ygrene was unaware that Prior Firm had missed both a settlement conference, an OSC hearing, and that default had been entered against it. (Sachar Decl. ¶ ¶ 3-5.) Ygrene’s failure to do something prior to retaining new counsel was therefore the result of a reasonable mistake or excusable neglect. (Alderman v. Jacobs (1954) 128 Cal.App.2d 273, 276 [“Excusable neglect is that neglect which might have been the act of a reasonably prudent person under the same circumstances”].)

Ygrene’s new counsel, Mr. Meza, avers that when it began representing Ygrene, the firm was inundated with different legal issues and matters and had to “triage” various matters involving Ygrene. (Meza Decl. ¶ 7.) Mr. Meza avers that during the transition process, communication with the Prior Firm was less than stellar and involved incomplete and inaccurate information, including that this case had been dismissed. (Id. ¶ 19.) Mr. Meza avers that, rather than immediately checking the Court’s docket to determine the status of this case, his firm waited on information from Prior Firm and had no reason to believe that Ygrene – which had been represented from the case’s inception – had a default entered against it. (Id. ¶ 20.)

It was only after continued delay, that in March 2026 Mr. Meza’s firm checked the Court’s docket, and then became aware of the default and pending writ of execution. (Id. ¶ 21.)

The Court construes Mr. Meza’s declaration to be an attorney’s affidavit setting forth the “attorney’s mistake, inadvertence, surprise or neglect,” making relief from default mandatory in this case. (Code Civ. Proc. §473(b).) Accordingly, given the totality of the circumstances, the judicial preference for decisions on their merits, and Mr. Meza’s affidavit, the motion for relief from default is GRANTED. The original Answer filed on May 6, 2024 is reinstated. Because the Court has relied on an affidavit of counsel regarding mistake, Ygrene and its counsel shall pay $1,000.00 in compensatory legal fees and costs to Plaintiffs within 20 (twenty) days of this ruling. (Code Civ.

Proc. § 473(b)) to mitigate the prejudice asserted by plaintiffs. The Court sets a Mandatory Settlement Conference on February 1, 2027, at 8:30 a.m. in Department 2. MSC Statements must be filed and served by 3:00 p.m. on January 20, 2027.

The clerk shall provide notice of this ruling to the parties forthwith. The Court intends to sign the submitted (proposed) Order.