GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al.

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

Tentative Ruling

NOTICE:

PLEASE TAKE NOTICE that effective April 13, 2026, this department has moved to the Tani G. Cantil-Sakauye courthouse located at 500 G Street in Sacramento, CA 95814. All hearings noticed for Department 25 will be heard in Department 8D of the new courthouse. Parties who wish to contest the tentative ruling below must: (1) request a hearing by calling the Department 8D Oral Argument Request Line at (916) 874-7719 no later than 4:00 p.m. on the Court day before the scheduled CMC, and (2) advise opposing counsel of the request.

If a hearing is not requested by 4:00 p.m. on the Court day before the scheduled CMC, the tentative ruling shall become the final order of the Court. The Court encourages parties to appear remotely for the hearing on the tentative ruling through the Court’s Zoom Application. But, any party wishing to appear in person may do so, provided that party notifies the Court by 4:00 the Court day before the hearing. If a hearing is requested, the Court assumes that all parties will appear remotely via Zoom unless the Court orders inperson attendance.

The parties may join the Zoom session for hearing on the tentative ruling by audio and/or video through the following link: https://saccourt-ca-gov.zoomgov.com/j/16113421868 SIP Address: 16113421868@sip.zoomgov.com (833) 568-8864 ID: 16113421868 Parties requesting services of a court reporter will need to arrange for private court reporter services at their own expense, pursuant to Government code §68086 and California Rules of Court, Rule 2.956. Requirements for requesting a court reporter are listed in the Policy for Official Reporter Pro Tempore available on the Sacramento Superior Court website at https://www.saccourt.ca.gov/court-reporters/docs/crtrp-6a.pdf.

Parties may contact Court- Approved Official Reporters Pro Tempore by utilizing the list of Court Approved Official Reporters Pro Tempore available at https://www.saccourt.ca.gov/court-reporters/docs/crtrp- 13.Pdf A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list. Once the form is signed it must be filed with the clerk.

If a litigant has been granted a fee waiver

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will be forward the form to the Court Reporter’s Office and an official reporter will be provided

This matter was previously continued from August 17, 2026, for the purposes of oral argument. The original tentative ruling is republished below.

TENTATIVE RULING

Defendant’s Notice of Motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06(D). Defendant’s counsel is directed to contact opposing counsel forthwith to advise counsel of Local Rule 1.06 and the Court’s tentative ruling procedure. If Defendant’s counsel is unable to contact opposing counsel prior to the hearing, Defendant’s counsel shall be available at the hearing, in person or remotely (telephonically or by video conference via Zoom as stated in the introductory notice to today’s tentative rulings), in the event opposing counsel appears without following the procedures set forth in Local Rule 1.06(B).

Defendant Integrity Auto Sales, Inc.’s (“Defendant”) Motion to Set Aside Default is ruled upon as follows.

Factual Background

This action arises out of Plaintiffs Moraima Garcia and Mya Sandoval’s (“Plaintiffs”) purchase of a used vehicle from Defendant on or about March 7, 2025. (First Amended Complaint (“FAC”), ¶ 8.) Plaintiffs allege that the 2018 Mercedes-Benz C-Class they purchased from Defendant was defective and Defendant misrepresented the condition of the vehicle prior to purchase. (FAC ¶¶ 8, 10-25.) Plaintiffs’ FAC alleges causes of action for: (1) violation of the Consumer Legal Remedies Act - Injunctive Relief; (2) violation of the Consumer Legal Remedies Act - Restitution/Damages; (3) Violation of Business and Professions Code Section 17500; (4) Violation of Business and Professions Code Section 17200; (5) intentional misrepresentation; (6) violation of Penal Code section 496(a); (7) rescission; and (8) to enforce liability under dealer's bond.

The first six causes of action were alleged against Defendant, the seventh cause of action was alleged against Defendant and an unnamed “Holder,” and the eighth

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

cause of action was alleged against an unnamed “Surety.”

On September 30, 2025, following Defendant’s failure to file a responsive pleading, the Court entered default against Defendant.

On February 10, 2026, Defendant filed a motion to set aside default. Plaintiffs oppose.

On March 5, 2026, Plaintiffs filed a Second Amended Complaint (“SAC”). Plaintiffs’ SAC alleges causes of action for: (1) violation of the Consumer Legal Remedies Act - Injunctive Relief; (2) violation of the Consumer Legal Remedies Act - Restitution/Damages; (3) Violation of Business and Professions Code Section 17500; (4) Violation of Business and Professions Code Section 17200; (5) intentional misrepresentation; (6) violation of Penal Code section 496(a); (7) rescission; (8) to enforce liability under dealer's bond; and (9) not enforce liability under the holder rule. The SAC names Patelco Credit Union (“Patelco”) as the “Holder.” The first six causes of action are alleged against Defendant, the seventh cause of action is alleged against Defendant and Patelco, the eighth cause of action is alleged against an unnamed “Surety,” and the ninth cause of action is alleged against Patelco.

In Defendant’s reply brief in support of the motion to set aside default, Defendant argued that the SAC “opened up” the original entry of default. As a result of this new argument, this matter was previously continued from July 20, 2026 to permit the parties to file supplemental briefing. The Court’s July 20, 2026 Minute Order states:

This matter is continued to August 17, 2026 at 1:30 p.m. in this Department to allow Parties the opportunity to provided supplemental briefing on the limited issue of whether Defendant should be provided an opportunity to respond to the Second Amended Complaint, as set forth above. Plaintiff shall file and serve a supplemental opposition, not to exceed five pages, no later than July 27, 2026, and Defendant may file and serve a supplemental reply, not to exceed five pages, no later than August 3, 2026.

(7/20/26 Minute Order, p. 4.)

Plaintiffs’ objections to the declarations submitted in support of the reply are overruled.

Discussion

As set forth above, during the pendency of the motion and after Defendant filed its moving

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

papers, Plaintiffs filed a Second Amended Complaint (“SAC”), adding an additional party and additional causes of action. In reply, Defendant argued that the Second Amended Complaint provides a “substantive change” that provides Defendant an opportunity to respond. Plaintiffs did not have an opportunity to respond to this argument. Thus, the Court continued the matter to today’s date to permit the parties to submit supplemental briefing on the issue of whether the filing of the second amended complaint provides Defendant with an opportunity to file a responsive pleading.

In their supplemental briefing, Plaintiffs argue that an amended complaint only opens the default where there have been substantive changes to the allegations as directed to the defaulted defendant, citing Engebretson & Co., Inc. v. Harrison (1981) 125 Cal. App. 3d 436, 440. Plaintiffs argue that here, the changes to the SAC do not constitute substantive changes with respect to Defendant, as none of the revisions could be construed to be “against a defaulting defendant.”

In response to Plaintiffs’ supplemental briefing, Defendant argues that the SAC changes the allegations brought against Defendant to assert that Patelco is the holder of the RISC. Defendant argues that this directly affects Defendant, as “Integrity's contractual relationship with Patelco includes defense and/or indemnification obligations and as a result Integrity tendered Patelco's defense of the present case and is paying that defense. The SAC therefore created a present economic consequence to Integrity that did not exist when default was entered.

Integrity is now paying to defend a newly named defendant against a claim arising from the same transaction and alleged seller misconduct, while Integrity itself remains unable to defend those allegations.” (Supp. Reply, p. 2:12-19.) Defendant also relies on Paterra v. Hansen, arguing that while a defendant initially decides whether to dispute or not a complaint, but where an amendment creates a new circumstance that would materially affect that decision, the defendant must be permitted an opportunity to file a responsive pleading. (Paterra, supra, at p. 530.)

“After a defendant’s default has been entered, if a complaint is amended in matter of substance as distinguished from mere matter of form, the amendment opens the default, and unless the amended pleading be served on the defaulting defendant, no judgment can properly be entered on the default.” (Paterra, supra, 64 Cal.App.5th at p. 529 [internal quotations and citations omitted].) The Paterra Court explained:

“ ‘The reason for this rule is plain. A defendant is entitled to [an] opportunity to be heard upon the allegations of the complaint on which judgment is sought against him. His default on the original complaint is limited in its effect to that complaint, and if by

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

amendment a matter of substance is added, he should be given the opportunity to contest the same before any judgment is given against him on account thereof. The law, therefore, requires that the amended pleading shall be served on all the adverse parties, including defaulting defendants.’ ” (Ostling, supra, 27 Cal.App.4th at p. 1743; accord, Engebretson & Co. v. Harrison (1981) 125 Cal.App.3d 436, 442-443 [178 Cal. Rptr. 77] (Engebretson); see Sass, supra, 10 Cal.5th at pp. 880-881.)

“When a complaint is served, the defendant faces the decision to contest the action (perhaps seeking to negotiate a settlement at the same time) or to remain aloof and risk the entry of default. If the defendant fails to appear in the action after valid service of process, it is reasonable to assume the latter course has been chosen. Thereafter, if the complaint is amended in a way which would materially affect the defendant’s decision not to contest the action, this new circumstance should be brought home to the defendant with the same force as the notification of the original action.” (Engebretson, supra, 125 Cal.App.3d at p. 442, 178 Cal.Rptr. 77.)

(Ibid. [emphasis added].)

Plaintiffs filed the SAC to add a new defendant, Patelco, and a ninth cause of action against it. The ninth cause of action to enforce liability under the holder rule alleges that Patelco accepted assignment of the subject Retail Installment Sale Contract (“RISC”). The SAC further alleges:

By accepting assignment of the subject RISC, which prominently carried the above notice, defendant [Patelco] became contractually obligated to assume liability for all acts and omissions of defendant [Integrity] herein alleged. Pursuant to the above contract clause, Plaintiff(s) is/are entitled to bring all claims and defenses relating to the subject sale Plaintiff(s) may assert against defendant [Integrity], against defendant [Patelco]; accordingly, Plaintiff is entitled to rescission of the subject RISC assigned to [Patelco], and Plaintiff is entitled to a refund of all sums paid or owing pursuant to the RISC, including but not limited to the down payment, monthly payments, outstanding balance, and insurance paid, pursuant to the terms of the RISC, in a presently unascertained amount, the exact amount of-which to be shown according to proof or at trial.

(SAC, ¶ 106.)

Defendant presents evidence that it has a dealer agreement with Patelco that any claims arising from a sale from Defendant requires that Defendant provide defense and indemnity to any such

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

claim. (Arnaut Decl. to Supp. Reply, ¶ 5.)

Based on the allegations and information before it, the Court agrees with Defendant that by holding a contractual defense/indemnity obligation to Patelco, Defendant has a new economic consequence post-amendment that would materially affect Defendant’s decision to contest the action. As the ninth cause of action against Patelco arises from the same RISC and conduct, the new claim is transactionally intertwined with Defendant’s alleged conduct, and the contractual defense and indemnity provisions could create additional economic consequences for Defendant.

Given the addition of Patelco and a holder-based claim arising from the same RISC, paired with Defendant’s asserted contractual duty to defend and current payment of Patelco’s defense costs, the Court finds that the amendment materially affects Defendant and “relates to” it sufficiently to “open the default” and allow Defendant to file a responsive pleading to the SAC.

Disposition

Based on the foregoing, the Court vacates its July 20, 2026 Minute Order, and the instant motion to set aside default is GRANTED.

Defendant may file and serve its proposed answer no later than August 27, 2026. Although not required by statute or court rule, Defendant is directed to present the clerk a copy of this ruling at the time of filing the answer.

Based on the foregoing, the Parties may file and serve opposition and reply papers relating to the pending discovery motions set to be heard on September 21, 2026 at 1:30 p.m. in Department 8D. Opposition and reply papers shall be filed and served in accordance with Code of Civil Procedure section 1005 and applicable rules/statutes based on the new hearing date. While not required by the discovery statutes at issue, in light of the circumstances before it, the Court orders the Parties to meet and confer regarding the discovery at issue, no later than August 28, 2026, to see if resolution can be reached without court intervention.

If no resolution is reached, the Parties should be prepared to address, in their filings, the legal authority requiring a defendant to respond to discovery when default is entered before such responses are due. Likewise, to the extent Plaintiff continues to seek sanctions, Plaintiff should provide authority regarding why such sanctions would be appropriate where Defendant was in default at the time responses were due and could not oppose the motion when initially set.

The minute order is effective immediately. No formal order pursuant to California Rules of

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV016631: GARCIA, et al. vs INTEGRITY AUTO SALES INC, et al. 08/24/2026 Hearing on Motion to Set Aside/Vacate Default (CCP 473.5) in Department 8D

Court, rule 3.1312 or further notice is required.