Claire Mccormack (Certified Law Student No. 14205)

Claire McCormack (Certified Law Student No. 14205) David Sapp (Certified Law Student No. 13781) Craig Largent (Certified Law Student No. 12860) Margaret Stevenson (State Bar No. 112982) Severa Keith (State Bar No. 218167) Peter Reid (State Bar No. 045808) STANFORD COMMUNITY LAW CLINIC 2117 University Avenue East Palo Alto, CA 94303 (650) 475-0560 Attorneys for PlaintiffSUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA UNLIMITED CIVIL JURISDICTIONMARTHA LOPEZ, ) Case No.: 1-03-000895 Plaintiff, ) ) vs. ) OPPOSITION TO MOTION TO SET ASIDE HARRIS HOTDOG, ) DEFAULT & DEFAULT JUDGMENT WIDA FEDAIY, an individual, ) JOHN FEDAIY, an individual, and ) Date: April 1, 2004 ) DOES 1-10, inclusive ) Time: 9:00 a.m. Defendants ) Dept: 2 ) Honorable William Elfving ) ) ) ) )______Opposition to Motion to Set Aside Default & Default Judgment TABLE OF CONTENTSPage TABLE OF EXHIBITS iiTABLE OF POINTS AND AUTHORITIES iiiI. INTRODUCTION 1II. STATEMENT OF FACTS 1A. Relevant Facts and Procedural History 1B. Defendants Were Personally Familiar With the Law and Legal 4 Process III. ARGUMENT 5A. Defendants’ Conduct Is an Inexcusable Mistake of Law Because It 7 Demonstrates Willful Ignorance of the Law1. Defendants Are Not Unsophisticated Because of Previous 7 Experience with Legal Process and in Their Businesses2. Defendants Received Numerous Warnings From 8 Multiple Sources That They Faced a Default By Failing to Act 3. Defendants Were Unreasonable in Willfully Failing to Act 9B. Defendants Offer No Justification for Failing to Ascertain the 10 Correct LawC. Defendants Were Not Laboring Under a Mistake of Fact When They 11 Failed to Answer the Complaint D. The Interests of Substantial Justice Will Be Served by Denying Relief 12 in this CaseE. Martha Lopez’ Claim Has Merit 13F. In the Alternative, if Defendants’ Motion is Granted, Defendants 14 Should Bear the Costs 14 IV. CONCLUSION______i Opposition to Motion to Set Aside Default & Default Judgment SUMMARY TIMELINE 15______ii Opposition to Motion to Set Aside Default & Default Judgment TABLE OF EXHIBITSExhibit 1 Letter from SCLC to John Fedaiy of 6/26/03, confirming content of 6/24/03 telephone conversation Exhibit 2 Demand letter from SCLC to John Fedaiy of 7/29/03 Exhibit 3 Letter from Richard Vaught to SCLC of 9/9/03, confirming content of 9/5/03 telephone conversation Exhibit 4 Letter from SCLC to Richard Vaught of 9/25/03 Exhibit 5 Fax from Richard Vaught to SCLC of 9/25/03 Exhibit 6 Letter from SCLC to Defendants of 9/25/03 Exhibit 7 Declaration of Alexandra Wenzke Exhibit 8 Letter from SCLC to Louis Willett of 1/16/04, confirming content of 1/12/04 telephone conversation Exhibit 9 Docket Sheet for Case No. 1-98-CV-776793, Superior Court of Santa Clara County Exhibit 10 Santa Clara County, California, Fictitious Business Name Record Exhibit 11 California Fictitious Business Names Record Exhibit 12 Declaration of Sarah Pappas Exhibit 13 Award of Arbitrator of 8/29/00 Exhibit 14 Notice of Settlement of 11/29/00 Exhibit 15 Health Department Inspection Report Exhibit 16 Declaration of Gregory Siehl, Attorney, in Support of Motion to Compel Discovery Responses and Request for Award of Sanctions Exhibit 17 Declaration of Martha Lopez Exhibit 18 Declaration of Martha Garces Exhibit 19 Declaration of Margaret Stevenson re Record of time spent by SCLC seeking an answer from Defendants and opposing the motion to set aside default______iii Opposition to Motion to Set Aside Default & Default Judgment TABLE OF CASES AND AUTHORITIESStatutesCal. Code of Civ. Proc. Section 473 Page 5RegulationsSection 201.7(g), Cal. Rules of Court Page 12CasesWaite v Southern Pacific Co., (1923) 192 Cal. 467 Page 6 Weinberger v. Manning (1942) 50 Cal. App. 2d 494 Page 6 Brochtrup v. INTEP (1987) 190 Cal. App. 3d 323 Page 6 A & S Air Conditioning v. John J. Moore Co., (1960) 184 Cal. App. Page 6 2d 617 Homestead Savings v. Superior Court, (1986) 179 Cal. App. 3d 494 Page 7 Beall v. Munson (1962) 204 Cal. App. 2d 396 Page 9 Viles v. State (1967) 66 Cal. 2d 24, 29 Page 10 Security Truck Line v. Monterey (1953) 117 Cal. App. 2d 441 Page 11 Gillingham v. Lawrence (1909) 11 Cal. App. 231 Page 12Other Authorities8 Witkin Procedure 4th ed. Page 9______iv Opposition to Motion to Set Aside Default & Default Judgment I. INTRODUCTIONPlaintiff Martha Lopez opposes Defendants’ motion to vacate the default judgment against them. In sum, Defendants argue that they did not understand the legal requirement to file an answer. However, Defendants repeatedly disregarded clear notices from this court, from Plaintiff’s counsel and presumably from their own prior attorney who represented them for a brief time in this case. Further, Defendants have significant experience that would alert them to the seriousness of court processes and legal requirements: Defendant Wida Fedaiy is a businesswoman who has operated several businesses over the last ten years, initiated a personal injury action in which she won a substantial sum of money, and completed several real estate transactions. As outlined below, Defendants demonstrated a willful disregard for the legal process and the procedures of the court. Although general policy favors trial on the merits, this is the rare case in which allowing the default to remain serves the interests of justice and fairness. Allowing the default to remain would prevent Defendants from taking advantage of a system of law and process that they chose to disregard when it suits them and preserve the interests of a person who worked for years without enjoying the benefits of the law. Because vacating the default judgment would disserve the interests of justice, the Court should deny Defendants’ motion. II. STATEMENT OF FACTSA. Relevant Facts and Procedural History 1The Stanford Community Law Clinic (hereinafter “SCLC”) contacted Defendants on June 24, 2003, seeking wage records relating to Ms. Lopez’ employment. (Exhibit 1, Letter from SCLC to John Fedaiy of 6/26/03.) Defendants initially asserted that Ms. 1 A timeline summarizing the key events outlined in this section is attached at the end of this Brief.______1 Opposition to Motion to Set Aside Default & Default Judgment Lopez did not work at Harris Hotdog and that they retained no records of her hours. (Id.) On July 14, 2003, Ms Lopez filed a lawsuit seeking over $ 90,000 in unpaid overtime wages, unpaid split-shift premiums, penalties for missed meal breaks and rest periods, penalties for missing wage statements, waiting time penalties and liquidated damages. The summons and complaint were served on Defendants on July 17, 2003. The summons clearly states at the top of the page in bold, “You have 30 CALENDAR DAYS after this summons is served on you to file a typewritten response at this court.” On July 29, 2003 SCLC sent a demand letter to Defendants noting that, althoughMs. Lopez had filed a lawsuit against them, she would be willing to withdraw the lawsuit and settle the matter outside of court if they were interested in discussing the matter. (Exhibit 2.) Defendants did not respond to this letter. On September 5, 2003, attorney Richard Vaught notified SCLC that Defendants had retained him in this matter and requested that Ms. Lopez delay seeking a default judgment so Defendants could file an answer. (Exhibit 3, Letter from Richard Vaught to SCLC of 9/9/03.) SCLC agreed to postpone entering a default at that time and scheduled a meeting for September 17, 2003, in order to discuss the possibility of settlement. (Id.) On the morning of September 17, 2003, Mr. Vaught’s secretary contacted SCLC and stated that he would not attend the settlement meeting because Defendants had dismissed him as counsel. (Exhibit 4, Letter from SCLC to Richard Vaught of 9/25/03.) On September 25, 2003, Mr. Vaught sent a fax confirming he had been dismissed and requesting that SCLC inform Defendants of the risk of default. (Exhibit 5.)2 2 The fax stated, in relevant part, “Please be advised that the undersigned no longer represents Harris Hotdogs. . . Additionally, I hope you will advise the defendants about your intentions to take their default so they may take the proper steps to avoid this proceeding.”______2 Opposition to Motion to Set Aside Default & Default Judgment That same day – September 25 – SCLC personally delivered a letter to Defendants at Harris Hotdog and mailed a copy to Defendants’ home address. (Exhibit 6.) The letter outlined Defendants’ duties and the risks they faced if those obligations were not fulfilled. In pertinent part, the letter stated:[W]e strongly recommend that you find an attorney to assist you in this serious matter. . . If you are indeed representing yourself in this matter, there are several important things you should know. First, we plan to seek a default judgment in this case. That means that since you have not filed an Answer in court within the time allowed, we can ask the court to enter a judgment in favor of the plaintiff without hearing from you. . .Again, we strongly recommend that you retain counsel to assist you in this matter. You should know that in no case will we grant you an extension to file your Answer – already over a month late – after close of business on Tuesday, October 7, 2003. . .If we obtain a judgment against you, we intend to enforce that judgment against Harris Hotdog and your personal assets. In sum, we urge your prompt attention to this important matter. (Id., emphasis in the original.)Fourteen days after SCLC’s letter was personally delivered, not having received Defendants’ Answer, SCLC requested entry of a default. SCLC served a copy of the Request for Entry of Default on Defendants on October 8, 2003. The Court entered the Default on October 10, 2003 and served a copy of the Entry of Default on Defendants.SCLC filed a Case Management Statement on November 4, 2003. Defendants received a copy of this statement, specifically mentioning that a default had been entered (see Case Management Statement of 11/4/03 at 2, ¶ 6) and that a Court Judgment would be sought (see Case Management Statement of 11/4/03 at 2, ¶ 4).On November 14, 2003, SCLC filed a Request for Court Judgment. SCLC served a copy of this request on Defendants, along with a copy of the original complaint, Ms. ______3 Opposition to Motion to Set Aside Default & Default Judgment Lopez’s Declaration, the applicable law governing the causes of action in the complaint, and an Application for Plaintiff’s Attorney’s Fees. Defendants appeared at the Case Management Conference on November 18, 2003, where Commissioner Strickland admonished Defendants to retain counsel (Fedaiy Decl. ¶ 6; Exhibit 7, Wenzke Aff. ¶ 3.) In the hallway following the conference, SCLC reiterated the Commissioner’s advice and the advice in SCLC’s September 25 letter to obtain counsel. (Id., Wenzke Aff. ¶ 9.) Defendants did not contact SCLC after the CMC, and on November 26, 2003, the court entered judgment for $97,713 for Ms. Lopez. On January 12, 2004, Attorney Louis Willett informed SCLC that Defendants had retained him as counsel and requested a stipulation to set aside the default judgment (Exhibit 8, Letter from SCLC to Louis Willett of 1/16/04.) At a meeting on January 22, 2004, representatives from SCLC informed Mr. Willett that they would not stipulate to vacate the default judgment given Defendants’ repeated failure to act in this case and their misrepresentations to SCLC. On January 29, 2004, Defendants filed this motion to set aside the default judgment. B. Defendants Are Personally Familiar With the Law and Legal Process Defendant Wida Fedaiy initiated a personal injury action in which she won a substantial sum of money, operated several businesses over the last ten years, and completed several real estate transactions. In 1998, Defendant Wida Fedaiy retained counsel and filed a personal injury complaint in Santa Clara County. (Exhibit 9, Docket Sheet for Case No. 1-98-CV-776793, Superior Court of Santa Clara County.) The course of litigation included four case management conferences, and during discovery the defendant filed a motion to compel discovery after Ms. Fedaiy failed to answer discovery______4 Opposition to Motion to Set Aside Default & Default Judgment requests. (Id.) At the fourth and final case management conference, the Commissioner ordered the parties to arbitration, where the arbitrator awarded Ms. Fedaiy over $30,000 in damages. (Id.) After the arbitrator’s award, the defendant requested a trial de novo; however, the parties settled before trial in January 2000. (Id.) Defendant Wida Fedaiy owned Harris Hotdog from 1993 to October 2002. (Exhibit 10, Santa Clara County, California, Fictitious Business Name Record.) Defendants employed Plaintiff Lopez from March 1997 to March 8, 2003. (See Complaint at 2.) Defendant John Fedaiy has worked at Harris Hotdog since 1997. (Fedaiy Decl. ¶ 1.) Defendant Wida Fedaiy sold the business to her brother, Harris Fedaiy, in October 2002. (See Fedaiy Decl. ¶ 2.) 3 Defendant Wida Fedaiy also owned or managed Fashion City, a men’s clothing store in San Leandro, since at least 2002. 4 (See Exhibit 11, California Fictitious BusinessNames Record.) Defendant Wida Fedaiy employs at least three people at Fashion City. (Exhibit 12, Pappas Aff. ¶ 4.) III. ARGUMENTUnder Cal. Code of Civ. Proc. Section 473, “[t]he court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal order, or other proceeding taken against him or her through his or her mistake, 3 In the hallway following the November 18, 2003 Case Management Conference, Defendants informed SCLC that they sold Harris Hotdog and did not know the new owner or who the new owner currently employs. (Exhibit 14, Wenzke Aff. ¶ 7.) Later, SCLC learned that Ms. Fedaiy sold Harris Hotdog to her brother, Harris Fedaiy, in October 2002. (Exhibit 18.) 4 At the November 18, 2003 CMC, Defendant Wida Fedaiy stated that she had been unemployed for the past six months. (Exhibit 14, Wenzke Aff. ¶ 6.) Later, SCLC learned that Ms. Fedaiy has owned or managed a men’s clothing store in San Leandro since at least 2002. (Exhibit 19.) Additionally, Defendants demonstrated an understanding of legal process by claiming that the summons had not been “properly served.” (Exhibit 14, Wenzke Aff. ¶ 6.)______5 Opposition to Motion to Set Aside Default & Default Judgment inadvertence, surprise, or excusable neglect.” Although the law favors a trial on the merits, the impartial discretion a trial court exercises in passing on a motion to set aside a default, is “guided and controlled in its exercise by fixed legal principles. . . to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.” Waite v. Southern Pacific Co., (1923) 192 Cal. 467, 471 (granting relief from default where defendant’s counsel made a reasonable mistake in believing jurisdiction was properly in federal court and failed to oppose lawsuit in state court). “While courts are generous in relieving litigants of their defaults resulting from inadvertence or excusable neglect yet they are not required to act as guardians for persons who are grossly careless as to their own affairs.” Weinberger v. Manning (1942) 50 Cal. App. 2d 494, 497 (holding that trial court abused its discretion in setting aside default where defendant had received numerous warnings, yet chosen not to act). In determining whether to grant relief under C.C.P. Section 473, courts undertake a two-pronged inquiry, first addressing the parties’ reasonableness in failing to act and then the justification for the parties’ failure to determine the correct law. Brochtrup v. INTEP (1987) 190 Cal. App. 3d 323, 329 (holding that attorney’s belief that request for admissions could be verified by person other than party to whom directed was a reasonable mistake of law); A & S Air Conditioning v. John J. Moore Co., (1960) 184 Cal. App. 2d 617, 619 (holding that mistake about amount of attorney’s fees was unreasonable because it was simple to determine the correct rules). Defendants’ misunderstanding of the law was unreasonable, and they offer no evidence of any effort to determine the correct law.______6 Opposition to Motion to Set Aside Default & Default Judgment A. Defendants’ Conduct Is an Inexcusable Mistake of Law Because It Demonstrates Willful Ignorance of the LawWillful ignorance is a category of conduct for which the courts do not grant relief.A & S Air Conditioning v. John J. Moore Co. (1960) 184 C.A.2d 617, 620. Defendants’ previous legal and business experience, the repeated warnings by Plaintiff’s counsel, the warning from Commissioner Strickland, the Defendants’ decision to terminate attorney Vaught’s services, and the explicit language of the summons, belie an inexcusable mistake of law rising to the level of willful ignorance. 1. Defendants Are Not Unsophisticated Because of Previous Experience with Legal Process and in Their BusinessesThe law should not be a trap for the unwary, Homestead Savings v. Superior Court, (1986) 179 Cal. App. 3d 494, 498, but Defendants here are not the unwary. As the prevailing party in a lawsuit Wida Fedaiy initiated in Santa Clara County Superior Court in 1998 and a business owner since 1993, Defendant Wida Fedaiy is familiar with the rights and responsibilities associated with the legal system. Defendant John Fedaiy managed Harris Hotdogs for several years. Litigation experience. Defendant Wida Fedaiy’s affirmative personal injury lawsuit demonstrates her own experience with the legal system. She filed a lawsuit, navigated the case management process, and ultimately settled a case after declining a $30,000 arbitration award. (Exhibit 13, Award of Arbitrator; Exhibit 14, Notice of Settlement) This experience provided Defendants a more extensive familiarity with the legal system than many business owners and sufficient information to make an informed choice about retaining counsel and answering a complaint in this case.______7 Opposition to Motion to Set Aside Default & Default Judgment Business experience. Contrary to their assertion, Defendants are not naïve, unsophisticated small business owners. (See Defendant’s Memorandum of Points and Authorities, hereinafter “Defendant’s Brief” at 3, stating “[Defendants] are hardly sophisticated business people.”) First, Defendant Wida Fedaiy has nine years of business experience as the owner of Harris Hotdog from 1993 to 2002. Additionally, Wida Fedaiy has owned or managed Fashion City, an upscale men’s retail clothing store, since at least 2002. Mr. Fedaiy worked at Harris Hotdog for at least six years (Fedaiy Decl. ¶ 2) and has demonstrated his familiarity with health code requirements governing the restaurant industry5 (Fedaiy Decl. ¶ 3). Defendants also point to their immigrant status as grounds for their failure to respond to legal process. (See Defendants’ Brief at 3.) Although their foreign heritage may be considered, it is not sufficient to justify their mistake. Weinberger v. Manning, (1942) 50 Cal. App. 2d 494, 497 quoting Fink & Schlindler Co. v. Gavros (1925) 72 Cal. App. 688, 693 (denying relief after finding that defendant’s foreign origin was insufficient to excuse defendant’s mistaken belief that codefendant’s counsel would represent him).2. Defendants Received Numerous Warnings From Multiple Sources That TheyFaced a Default By Failing to Act Even if Defendants’ experience in pursuing an affirmative lawsuit did not provide them with a basic understanding of legal procedures, the repeated warnings from the court, from Plaintiff’s counsel, and from their first retained counsel, Mr. Vaught, should have provided them with ample warning. 5 Despite John Fedaiy’s apparent familiarity with health code requirements, Harris Hotdog received numerous citations over the years from the Santa Clara County Health Department. (Exhibit 15, Health Department Inspection Report.)______8 Opposition to Motion to Set Aside Default & Default Judgment Defendants benefited from at least three direct warnings from the court about the serious consequences they risked in not responding to the complaint. First, the summons, which Defendants received on July 17, 2003, clearly outlines in all caps their obligation to respond within 30 days. Additionally, Defendants were served with notice of the Request for Default on or about October 10, 2003. Finally, Commissioner Strickland admonished Defendants to seek counsel at the Case Management Conference on November 18, 2003. Although Defendants’ conversations with their counsel are privileged, the September 5, 2003, phone conversation with Mr. Vaught, in which he requested that Ms. Lopez delay seeking the default so that Defendants could file an answer, supports the inference that Defendants’ attorney advised them to answer the complaint. Further support appears in his fax notice to SCLC of September 25 requesting that SCLC notify Defendants of its intent to take a default. (See Exhibit 5.) Notably, there is no declaration from Mr. Vaught accompanying Defendants’ Motion to suggest that he failed to counsel the Fedaiys regarding the default.Finally, Defendants ignored repeated warnings from SCLC. In addition to the original demand letter (Exhibit 2), Defendants ignored SCLC’s letter of September 25 (Exhibit 6), 2003, which explicitly delineated the consequences if they did not answer the complaint by October 7, 2003, 60 days after the original deadline. It is hard to imagine how Plaintiff’s counsel could have been more clear.3. Defendants Were Unreasonable in Willfully Failing to ActWhere the default occurred as a result of a deliberate refusal to act and the parties seek relief after changing their mind, relief should not be granted. 8 Witkin Procedure 4th______9 Opposition to Motion to Set Aside Default & Default Judgment ed, page 670. As noted above, Defendants received numerous warnings from multiple sources, had benefit of legal counsel, and had significant experience with the legal system. Their decision to ignore the complaint was willful and unreasonable.“It is the duty of every defendant who desires to resist a plaintiff's action to take timely and adequate steps to avoid an undesirable judgment. He must exercise the same degree of diligence as a man of ordinary prudence usually bestows upon his important business affairs.” Beall v. Munson (1962) 204 Cal. App. 2d 396, 400 (holding that where a defendant receives a summons and fails to act based on his mistaken assumptions, he is not prevented or deprived of the opportunity to present his case to the court, and therefore, should not be granted relief). Defendants were neither diligent nor prudent here. After successfully litigating a personal injury claim, there is no way that DefendantWida Fedaiy can argue that she exercised prudence by failing to respond after being served with a complaint alleging damages of over $90,000.In Weinberger v. Manning, defendant was warned by the court clerk, opposing counsel, a friend, and an attorney that she faced a default, but took no action until garnishment proceedings were instituted, thinking the whole process “a joke.” (1942) 50 Cal. App. 2d 494, 495. The court held that the trial court had abused its discretion to grant relief under Section 473 because defendant’s actions demonstrated a willful disregard and contempt of judicial process that was distinct from mistake or neglect. Id. at 498. In contrast, in Viles v. State, the court found an excusable mistake of law where plaintiff received erroneous advice from a professional insurance adjuster experienced in claims work and therefore missed the filing deadline. (1967) 66 Cal. 2d 24, 29. ______10 Opposition to Motion to Set Aside Default & Default Judgment Here, as in Weinberger, Defendants refused to take the law suit seriously. (See Fedaiy Decl. ¶ 4, stating “[the lawsuit] was so preposterous in our view that we could not believe this was happening,” Defendants’ Brief at 5-6.) Defendants simply chose not to act, forcing Ms. Lopez to seek the default or indefinitely delay the process of justice. B. Defendants Offer No Justification for Failing to Ascertain the Correct LawDefendants claim that they believed the complaint could be opposed in person at the Case Management Conference in November 2003. (Defendants’ Brief at 6; Fedaiy Decl. ¶ 5.) This belief was unreasonable. Moreover, they failed to take any steps to ascertain whether their belief was mistaken. This failure to determine what the law indeed required is remarkable, particularly in light of Defendants’ own experience and their notice of requirements from the Court, their own prior counsel, and SCLC.“Ignorance of the law, at least where coupled with negligence in failing to look it up, will not justify a trial court in granting relief, and such facts will certainly sustain a finding denying relief.” Security Truck Line v. Monterey (1953) 117 Cal. App. 2d 441, 445 (upholding trial court’s refusal to set aside default because defendant failed to look up the correct law after being warned by plaintiff’s counsel of the need to appear at hearing). After determining whether a mistake is reasonable, courts determine whether parties took meaningful steps to ascertain the correct law. Brochtrup v. INTEP (1987) 190 Cal. App. 3d 323, 329. Not only did Defendants demonstrate an unreasonable mistake about the law, but they also took no steps to ascertain what the law actually required them to do. Based on all the factors, the court should conclude that Defendants’ mistake as to the requirements of law was unreasonable. Because Defendants took no steps to ______11 Opposition to Motion to Set Aside Default & Default Judgment ascertain what the actual law was and even dismissed their legal counsel, the court should deny relief. C. Defendants Were Not Laboring Under a Mistake of Fact When They Failed to Answer the Complaint Although Defendants attempt to cast their mistake as one of fact (See Defendant’sBrief at 6, stating “There has been a mistake of fact on the part of the defendants in this case … Defendants were mistaken as to their ability to represent themselves”), it should not be considered as such. In Beall v. Munson, the defendant’s mistaken assumption that the plaintiff could not obtain a judgment against him without providing additional notice after the summons was not a mistake of fact. (1962) 204 Cal. App. 2d 396, 400. The court refused to set aside the default judgment in Beall. Defendant John Fedaiy made substantially the same mistaken assumption as the defendants in Beall in thinking “that a judgment could not possibly be taken against us on the complaint of a part time hot dog helper.” (Fedaiy Decl. ¶ 9.) As detailed above, given the Defendants’ own experience with litigation and business, and given repeated notice from the court and Mr. Vaught, as well as the detail provided in SCLC’s letter of September 25, Defendants were not laboring under a mistake of the fact that they needed to act. D. The Interests of Substantial Justice Will Be Served by Denying Relief in this CaseGiven Defendants manifest disregard of court procedures, their requested relief should be denied. Although the policy of the law favors bringing trials on the merits whenever possible, this policy must be balanced with the need for finality, judicial ______12 Opposition to Motion to Set Aside Default & Default Judgment economy, and timely remedies when injured parties turn to the courts for justice. Indeed, the California Rules of Court state that plaintiffs must act within 10 days when seeking a default for defendants’ failure to respond. Section 201.7(g), Cal. Rules of Court. The policy of prompt judicial determination of complaints, as well as plaintiffs’ need for prompt justice, supports the importance of timely action and finality.The interest in the finality of judgments has been weighed by courts in considering motions to set aside defaults. In Gillingham v. Lawrence, the court noted that “there must be rules and regulations by which rights are determined and under which judgments become final.” (1909) 11 Cal. App. 231, 233 (holding that a default should not be set aside where defendant disregards legally sufficient notice). Rather than challenge the case on the merits, Defendants willfully ignored numerous warnings and the rules of legal process. Discretion under 473 must be exercised with the interests of substantial justice in mind. Waite v Southern Pacific Co., (1923) 192 Cal. 467, 471. Justice in this case will be served by finality and allowing the default judgment to stand. Those who would abuse the legal system by seeking to dissemble and avoid the law should pay the price that willful and unreasonable ignorance of the law compels. Defendants have exhibited a pattern of disregarding the rules if the rules disserve their interests. Just as they failed to pay Martha Lopez the wages owed to her, failed to keep wage records, and disregarded health codes by having Ms. Lopez prepare food at home, they disregard the legal process when it suits them. They have ignored this lawsuit, just as they ignored the plaintiff’s discovery requests in Ms. Fedaiy’s previous lawsuit. (Exhibit 16, Siehl Decl. in Support of Motion to Compel Discovery Responses ¶4.) If the Court grants this motion, further delay and avoidance should be expected. ______13 Opposition to Motion to Set Aside Default & Default Judgment E. Martha Lopez’ Claim Has MeritAlthough the merits of the underlying case are not at issue in the motion now before the Court, Defendants have addressed the merits in their brief, so we are compelled to briefly respond. Defendants attempt to justify their failure to act by claiming the lawsuit lacks merit. Despite Defendants’ suggestion to the contrary (Defendants’ Brief at 2; Fedaiy Decl. ¶¶ 8-9), Ms. Lopez’ claim is not meritless. Defendants acknowledge they did not provide wage statements during the course of Ms. Lopez’ employment. (Exhibit 1.) Several witnesses were prepared to testify that Ms. Lopez worked five hours a day at the food cart and worked at least six additional hours preparing food at home and buying groceries. (See Exhibit 17, Lopez Decl. ¶ 5; Exhibit 18, Garces Aff. ¶ 3, 6.) Defendants only paid her $300 per week in cash ($4.55 per hour). (See Exhibit 17 ¶ 5.) Contrary to John Fedaiy’s assertion that Ms. Lopez did not work at home (See Fedaiy Decl. ¶ 3), her roommate verifies that Mr. Fedaiy and his son frequently came by their apartment to pick up the food that Ms. Lopez made and returned the empty containers at the end of the day. (Exhibit 18 ¶ 4.) F. In the Alternative, if Defendants’ Motion is Granted, Defendants Should Bear the CostsIf the Court decides to set aside the default judgment, SCLC respectfully requests that the Court require Defendants to compensate SCLC for the time spent seeking an answer from Defendants and opposing the motion to set aside the default. Attached as Exhibit 19 is a record of the time spent seeking to get Defendants to participate in the ______14 Opposition to Motion to Set Aside Default & Default Judgment legal process established for principled determination of rights and remedies. (Exhibit 19Declaration of Margaret Stevenson IV. CONCLUSIONFor the foregoing reasons, Plaintiff Martha Lopez respectfully requests that the Court deny Defendants’ Motion to Set Aside Default Judgment. Permitting the Defendants to pursue a lawsuit promises only further delay, obstruction and failure to act.March 17, 2004 Respectfully submitted,STANFORD COMMUNITY LAW CLINICBy: ______Claire McCormack______David Sapp______Craig Largent______Margaret Stevenson______Severa Keith______15 Opposition to Motion to Set Aside Default & Default Judgment SUMMARY TIMELINEJune 24, 2003: SCLC contacted John Fedaiy via telephone to request wage records for Ms. Lopez June 26, 2003: SCLC sent letter to John Fedaiy confirming that he had no wage records for Ms. Lopez July 14, 2003: SCLC filed Complaint in Superior Court in Santa Clara County July 17, 2003: Defendants were personally served with summons and complaint July 25, 2003: Proof of Service filed with the court July 29, 2003: SCLC sent demand letter to John and Wida Fedaiy and personally served a copy of the letter at Harris Hotdogs September 5, 2003: Attorney Richard Vaught, counsel for Defendants, contacted SCLC requesting that we delay filing Request for Default until after Defendants answer. Scheduled a meeting with Attorney Vaught for September 17, 2003 September 9, 2003: Received letter from Attorney Vaught confirming that SCLC would delay requesting default September 17, 2003: Attorney Vaught’s secretary notified SCLC that Defendants had dismissed him September 25, 2003: SCLC sent letter to Fedaiys explaining that we would seek Default if they did not contact us by September 30, 2003; carbon copied Attorney Vaught on this letter and asked for confirmation that he no longer represented Defendants; received confirmation October 8, 2003: SCLC Request for Entry of Default filed with court; copy mailed to Wida and John Fedaiy October 10, 2003: Filed Entry of Default November 4, 2003: SCLC Case Management Statement filed with court; copy mailed to Wida and John Fedaiy November 14, 2003: Filed Request for Default Judgment for $98,000 November 18, 2003: Case management conference with Commissioner Strickland; Defendants advised by Commissioner and SCLC to seek legal representation November 26, 2003: Default Judgment entered for $98,000 January 12, 2004: Attorney Louis Willett informed SCLC that he has been retained by Defendants; Attorney Willett asked SCLC if we will stipulate to set aside Default January 22, 2004: SCLC met with Attorney Willett and informed him of our intent to oppose Motion to Set Aside Default and Default Judgment______16 Opposition to Motion to Set Aside Default & Default Judgment January 30, 2004: SCLC served with Motion to Set Aside Default and Default Judgment______17 Opposition to Motion to Set Aside Default & Default Judgment

Claire Mccormack (Certified Law Student No. 14205)

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