Syelsky v. Edwards CA2/7

Filed 1/27/14 Syelsky v. Edwards CA2/7 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

LISA SYELSKY and VLADIMIR B247866 SYELSKY, (Los Angeles County Plaintiffs and Appellants, Super. Ct. No. SC115235)

v.

JEFFREY EDWARDS,

Defendant and Respondent.

APPEAL, from a judgment of the Superior Court of Los Angeles County, Bobbi Tillmon, Judge. Reversed with directions. Law Offices of Ronald N. Richard and Nicholas A. Bravo for Plaintiffs and Appellants. Ezra Brutzkus Gubner, David Seror, Michael W. Davis for Defendant and Respondent. ________________________

Appellants Vladimir and Lisa Syelsky sued Jeffrey Edwards, alleging breach of a promissory note, breach of fiduciary duty, and fraud. After Edwards failed to answer the complaint, the Syelskys obtained entry of default and, subsequently, a default judgment. Edwards moved to set aside both the default and the default judgment. Over the Syelskys’s objections, the trial court did so. We reverse, and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND The Syelskys filed a complaint on December 14, 2011 alleging that they had hired Edwards in 2006 as a loan broker to obtain a line of credit on their residence. In the course of that relationship, they agreed to loan money to him, for which he executed a note, and later a deed of trust. Edwards failed to pay the sums owing, and the property subject to the deed of trust was foreclosed on by the senior beneficiary. The complaint alleged three causes of action for breach of the note, breach of Edwards’s fiduciary duty as a broker, and fraud. The Syelskys’s attorney personally served the complaint on Edwards on December 16, 2011. Edwards failed to answer the complaint and on January 23, 2012, only 38 days after service, the Syleskys served and filed a request for entry of default; the court entered the default that same day. On May 1, 2012, the Syelskys sought judgment by default; the court entered the judgment on May 11, 2012. On November 9, 2012, Edwards moved to set aside the default judgment pursuant to Code of Civil Procedure section 473(b).1 Edwards included a proposed answer, generally denying the allegations of the complaint, with his pleadings. Edwards asserted that his failure to file an answer was based, in part, on a conversation with the Sylelskys’s attorney at the time of service. Edwards stated in his declaration that the attorney had represented that it would be to Edwards’s benefit to allow the matter to proceed to judgment, because the complaint was a technicality to allow the Syelskys to collect