Preview
1 Ryan van Steenis (SBN 254542)
1601 S Shepherd Dr., #276
2 Houston, Texas 77019
314-749-2284
3 rjvansteenis@gmail.com
4
Attorney for Defendants Dave Bragg, and
5 Silicon Valley Real Ventures, LLC
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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FOR THE COUNTY OF SAN MATEO
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9
Robert Arntsen; Mary Lee; Arntsen Family ) Case No.: 22-CIV-01148
10 Partnership, LP; and Brian Christopher Dunn )
Custodianship, ) OPPOSITION OF DEFENDANTS DAVID
11 ) M. BRAGG AND SILICON VALLEY REAL
Plaintiffs, ) VENTURES, LLC, TO PLAINTIFFS’
) MOTION FOR ENTRY OF DEFAULT
12 JUDGMENT
vs. )
13 )
David M. Bragg; Kurtis Stuart Kludt; Silicon ) [Declaration of Ryan van Steenis, and Index of
Exhibits and Exhibits 1-7 to Declaration of Ryan
14 Valley Real Ventures LLC; SVRV 385 Moore, ) van Steenis,]
LLC; SVRV 387 Moore, LLC; Gregory J. Davis; )
15 Kevin Wolfe; Jason Justesen; Paramont ) Judge: Hon. Robert D. Foiles
Woodside, LLC; and Paramont Capital, LLC; ) Date: March 26, 2023
16 ) Time: 9:00 a.m.
) Dept: 21
17 ) Courtroom: 2J
Defendants. ) Action Filed: March 15, 2022
18 ) Trial Date: Unassigned
)
19 )
)
20
21 I. INTRODUCTION AND SUMMARY
22 Defendants Bragg and SVRV oppose Plaintiffs’ motion for entry of default judgment, made
23 by plaintiffs without any meet and confer with defendants and on pleadings the parties stipulated did
24 not have to be answered to on September 22, 2022. As plaintiffs agreed and represented in their
25 stipulation, they intended to file a second amended complaint foregoing the need for any party to
26 respond to the first amended complaint. As a result, this stipulation waives plaintiffs’ right to seek
27 default on the First Amended Complaint (FAC) and defendants Bragg and SVRV were not required
28 to answer those pleadings. This stipulation was not revoked or amended in any way. Instead of filing
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 their second amended complaint, once the bankruptcy court lifted the automatic stay (and denied
2 plaintiffs’ request for entry of default judgment in that forum), plaintiffs (again without conference)
3 quickly sought entry of default against defendants on the FAC, filed a new action in this Court
4 (currently before Judge Fineman) on March 10, 2023, with new allegations and parties, and then
5 sought default judgment on the August 22, 2022, FAC.
6 Plaintiffs have also waived the default upon which entry of default judgment is sought. Since
7 the lifting of the automatic stay on Friday, February 24, 2023, plaintiffs and defendants have been
8 working on satisfying plaintiffs’ discovery concerns, attended a continued informal discovery
9 conference on April 20, 2023, an in-person meet and confer at plaintiffs’ counsel’s office in San Jose
10 on April 26, 2023, providing plaintiffs with access to SVRV’s entire business google drive until June
11 26, 2023, as part defendants’ response to plaintiffs’ request for production of documents. In short,
12 defendants have continued to participate and litigate the case.
13 Setting the stipulation aside, plaintiffs’ request for entry of default judgment is also defective
14 on its face and should also be denied on the grounds that its allegations in the FAC are not well-plead
15 (they are currently subject to motions to strike, demurrers, and other pleading challenges), includes a
16 memorandum seven pages longer than is permissible by CRC 3.1113(d), includes affidavits from two
17 non-parties in support of its estimate of damages, requests damages in excess of those set forth in the
18 FAC, and for the additional grounds set forth below. To grant plaintiffs’ motion would award
19 procedural gamesmanship, a failure to confer, enter judgment on a technicality, and usurp the
20 agreement relied upon by the parties. A hearing on defendants’ motion to vacate plaintiffs’ entry of
21 default is scheduled for June 2, 2023, in before this court at 9:00 a.m.
22 II. FACTUAL BACKGROUND
23 On August 22, 2022, plaintiffs filed their first amended complaint against all defendants.
24 (Declaration of Ryan van Steenis (“RVS Decl.”) ¶ 2).
25 On September 8, 2022, in connection with opposing plaintiffs’ motions to compel filed in
26 non-compliance with Local Rule 3.700, defendants paid their first appearance fee in the amount of
27 $435.00 each (receipt# 2022-033013-HOJ). The Court later denied those motions (without prejudice)
28 because of plaintiffs’ failure to meet and confer. Id. at ¶ 3.
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 On September 19, 2022, plaintiffs proposed a stipulation that would nullify defendants’
2 requirement to answer plaintiffs’ FAC. Defendants entered into this agreement on September 22,
3 2022, Id at ¶ 4; Exh. 1, and Exh. 2.
4 The stipulation states, in part:
5 WHEREAS Plaintiffs intend to file a motion for leave to file a Second Amended
6 Complaint, addition two additional plaintiffs and several additional defendants;
7 WHEREAS Plaintiffs have asked Defendants not to oppose the motion in exchange
for a waiver of their obligation to answer or otherwise respond to Plaintiffs’ First Amended
8 Complaint;
***
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NOW THEREFORE, Plaintiffs and Defendants stipulate and agree that Defendants’
10 deadline to answer or otherwise respond to Plaintiffs’ First Amended Complaint shall be
October 21, 2022.
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12 Exh. 2.
13 On September 26, 2022, plaintiffs deposed John Geyer – at one time an investor in the Moore
14 Road project who defendants refunded at his request. Defendants attended through counsel and asked
15 the following questions of Mr. Geyer:
16 Q: “. . . did Mr. Bragg make any misrepresentations about your stake in the Moore Road
project?”
17 A: “No, he did not.”
18 Q: “Did he do anything to prevent you from getting your investment back in the Moore Road
project?”
19 A: “No.”
20 RVS Decl. ¶ 5; Exh. 3 at 98:12-15, 16-17, and 21.
21 On Friday, October 21, 2022, defendant Bragg filed for Chapter 7 bankruptcy. RVS Decl. at
22 ¶ 6. Bragg gave notice to the parties on Monday, October 24, 2022. Ibid. This filing created a
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23 bankruptcy estate and implemented an automatic stay as against Bragg in the instant proceeding.
24 Plaintiffs did not seek default against Paramont defendants at any time from October 31, 2022, until
25 March 3, 2023, again on the FAC. Ibid.
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Given plaintiffs’ conclusory alter-ego allegations the stay also applied to SVRV, but to eliminate any ambiguity the
parties explicitly stipulated to the same on January 3, 2023. RVS Decl. ¶ 6.
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 On December 22, 2022, plaintiffs filed an adversarial petition against Bragg in the bankruptcy
2 proceedings. Id at ¶ 7. On January 13, 2023, counsel sought an extension of time until the end of
3 January 2023 to respond, in part to find new bankruptcy counsel to represent Bragg in both the petition
4 and adversarial proceeding, which plaintiffs agreed to. Under the agreement, Bragg had until January
5 30, 2023, to answer the adversarial complaint. Ibid; Exh 4.
6 Nevertheless, prior to the expiration of that agreement to extend time, on January 24, 2023,
7 plaintiffs sought and received entry of default in the bankruptcy court, again without conference with
8 any of defendants’ counsel.2 Unaware of the parties’ agreement, the bankruptcy court entered the
9 default against Bragg on January 26, 2023. Bragg answered plaintiffs’ adversarial complaint on
10 January 31, 2023, but plaintiffs still sought entry of default judgment in the bankruptcy court, filing
11 a motion for said relief on February 21, 2023. RVS Decl., ¶ 8.
12 On Friday, February 24, 2023, Judge Jaime denied plaintiffs’ request for entry of default in
13 the adversarial proceeding, and sua sponte lifted the automatic stay to allow this Court to continue its
14 work: “Substantial proceedings have occurred in the State Court Case.” Id. at ¶ 9; Exh. 5 at p. 34 (lns
15 23-24).
16 On Tuesday, February 28, 2023, plaintiffs moved for entry of default on their FAC in the
17 instant action. Plaintiffs engaged in no discussions with defendants’ counsel before doing so. RVS
18 Decl. at ¶ 10.
19 On March 21, 2023, plaintiffs filed the instant motion for entry of default judgment. At the
20 same time, plaintiffs dismissed four causes of action against certain of the Paramont defendants
21 without argument and after receipt of those parties’ pleadings challenges to the FAC. Id. at ¶ 11; Exh.
22 6.
23 On March 23, 2023, defendants filed a motion to vacate/set aside plaintiffs’ entry of default,
24 which is currently set for hearing on June 2, 2023, at 9:00 a.m. in this court, the first available date
25 defendants could obtain for a hearing. Plaintiffs would not agree to advancing the hearing date on the
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Again, plaintiffs filed and sought this entry of default and instead of abiding by the parties’ agreement, sought default
28 as a perceived tactical advantage because the extension of time agreed to had to be filed with the bankruptcy court to be
effective.
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 entry of default even though, if granted, it would be dispositive as to the motion for entry of default
2 judgment. Id. at ¶ 12.
3 In the coordinated action (23-CIV-01099), defendants were forced to file a motion for an
4 extension to time on April 24, 2023, the deadline by which it had to respond to those plaintiffs’ March
5 10, 2023, complaint. That motion was on file ahead of plaintiffs’ request for entry of default made to
6 Judge Fineman on April 25, 2023. On April 27, 2023, Judge Fineman declined to enter plaintiffs’
7 request for entry of default given defendants’ pending motion, noting:
8 Department 4 has received the emails sent by Plaintiff’s counsel. Since there has been
9 an appearance by a defendant, please include all parties who have appeared and known parties
on emails to Department 4 so that there is not an improper ex parte communication. The Court
10 will not enter default while there is a motion pending to extend the time to David M. Bragg
and Silicon Valley Real Ventures, LLC.
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12 RVS Decl. ¶ 13, Exh. 7.
13 III. ARGUMENT & AUTHORITIES
14 A. Plaintiffs’ Motion for Entry of Default Judgment is Rife with Errors Requiring
its Denial
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16 1. Legal Standard on Motions for Entry of Default Judgment
17 “Our courts have repeatedly stated that is the policy of our law to allow each contested cause
18 to be tried on the merits.” Pearson v. Continental Airlines (1970) 11 Cal.App.3d 613, 619; see also,
19 Code Civ. Proc. § 473. California law “favors the determination of an action by a trial upon the
20 merits rather than by default.” Perkins v. Dawson (1963) 222 Cal.App.2d 610, 615 (upholding a
21 trial court’s dismissal of entry of default judgment 1 year, 5 months and 16 days after the entry of
22 judgment). “While there is no requirement that advance notice be given of an application for the
23 entry of an adversary’s default (citation omitted), under the decisional earlier noted the applicant
24 acts at his own risk” in failing to do so. Pearson, supra, at 619. “[T]he policy of the law is to have
25 every litigated case tried upon its merits, and it looks with disfavor upon any party, who regardless
26 of the merits of the case, attempts to take advantage of mistake, surprise, inadvertence, or neglect of
27 his adversary.” Grappo v. McMills (2017) 11 Cal.App.5th 996, 1010.
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 “The ‘well-pleaded allegations of a complaint’ refer to all material facts property pleaded,
2 but not contentions, deductions, or conclusions of fact or law.” Kim v. Westmoore Partners, Inc.
3 (2011) 201 Cal.App.4th 267, 281 (internal quotation marks omitted). As the default admits only
4 well-pleaded facts, “even a defaulting party may challenge sufficiency of a complaint… .” Buck v.
5 Morris (1952) 114 Cal.App.2d 461, 466. In addition, under Code Civ. Proc. §580(a) “[t]he relief
6 granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint …” see
7 also, Sass v. Cohen (2019) 244 Cal.Rpt.3d 441 (“However, the relief awarded in such a default
8 judgment cannot exceed the type and amount of relief sough in the plaintiff’s operative pleadings”)
9 (voiding default judgment where it exceeded the relief sought in the complaint).
10 “A stipulation is a contract … and is sometimes said to be governed by the usual rules of
11 construction of other contracts.” Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th
12 624, 632. “A stipulation is an agreement between counsel respecting business before the court ... .”
13 Rivera v. Shivers, 54 Cal.App.5th 82, 92; see also, e.g., Mikaluschutz v. Superior Court of Los
14 Angeles (1911) 16 Cal.App.226, 227 (“Assuming that no duty devolved upon the acting clerk to
15 enter the general denial, nevertheless, the parties treated the case as at issue, and stipulated for a
16 time of trial upon its merits. The necessity of an answer was waived by the stipulation for trial on
17 the matters set forth in the complaint”).
18 Finally, when making such a motion, an opening memorandum of points and authorities
19 may not exceed 15 pages in length. Cal. Rules of Court, rule 3.1113(d). “A memorandum that
20 exceeds the page limits of these rules must be filed and considered in the same manner as a late-
21 filed paper.” Id. at (g).
22 2. Plaintiffs’ Claims Are Conclusory and Unsupported, Not “Well-Plead”
23 As the Paramont defendants’ recent pleading challenges show, Plaintiffs’ claims are not
24 well-pleaded. For example, plaintiffs seek punitive damages for their 17200 claims, which is not
25 permitted by California law. See, e.g., Bank of the West v. Superior Court (1992) 2 Cal.4th 1254,
26 1266. Nor are punitive damages permitted for claims arising out of contract, even if the breach is
27 willful and fraudulent (Code of Civil Procedure, section 3294(a)). Indeed, upon receipt of
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 Paramont’s challenge to the FAC, plaintiffs’ voluntarily dismissed four causes of action against
2 certain Paramont defendants on March 21, 2023. RVS Decl. ¶ 11; Exh. 6.
3 Here, plaintiffs’ fraud, 17200, alter ego, breach of fiduciary duty, breach of contract, and
4 unjust enrichment claims are all conclusory and not well-pleaded. First, with respect to plaintiffs’
5 fraud allegations they do not contain the particularity required under California law. Lazar v.
6 Superior Court (1996) 12 Cal.4th 631, 645. At a minimum these allegations required plaintiffs to
7 plead facts demonstrating “how, when, where, to whom, and by what means the representations
8 were tendered.” Ibid. However, in support of their motion, plaintiffs do not cite to a single “fact” via
9 an affidavit or anywhere else as to “how, when, where, to who, and by what means the
10 representations were tendered.” Rather they only cite to self-serving allegations made in the FAC.
11 See, e.g., Plaintiffs’ Motion for Entry of Default at 16:16-16, 21-22, and 22-26. And the only actual
12 evidence regarding purported misrepresentations comes from the Geyer deposition where he
13 affirmatively testified that Bragg did not make any misrepresentations to him about his stake as an
14 investor in the Moore Road project. RVS Decl., ¶ 5; Exh. 3 at 98:12-15, 16-17, and 21.
15 Plaintiffs’ alter ego allegations are similarly unsupported. With respect to Bragg and SVRV,
16 plaintiffs make two alter ego allegations in the FAC, at paragraphs 24 and 233. This is not sufficient
17 and does not even allege Bragg exercised the requisite control over SVRV that its company
18 existence should otherwise be disregarded. Plaintiff repeats this process of citing its own allegations
19 as evidence. Despite filing lengthy affidavits, including from two non-parties to the instant suit,
20 plaintiffs do not cite to them once as evidence of any “well-plead” allegation.
21 Finally, since the majority of plaintiffs’ argument for the “reasons” their claims are “well-
22 plead” are on the excess pages of its memorandum (pgs. 16-19) in violation of Cal. Rules of Court,
23 rule 3.1113(d), the court is within its discretion to disregard those pages in its consideration of
24 plaintiffs’ application.
25 3. Plaintiffs Are Seeking Default Despite the Parties’ Stipulation
26 The parties’ September 22, 2022, stipulation is a contract between the parties. Winograd,
27 supra, at 632. Plaintiffs never stated they intended to revoke it, amend its terms, or otherwise not
28 intend to comply with it any longer (RVS Decl ¶ 10), which was to allow plaintiffs to file a second
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 amended complaint. Plaintiffs’ stipulation as to the FAC waives their right to seek entry of default
2 on pleadings they agreed defendants not need an answer to.
3 4. Plaintiffs’ Application Seeks More Damages than requested in the FAC
4 Plaintiffs’ motion for entry of default judgment seeks $1,106,158.55 in damages, $500,000
5 of which is claimed as punitive damages (how plaintiffs settled on this number is not entirely clear).
6 Plaintiffs’ FAC seeks $748,909 in damages (see FAC, Prayer for Relief, ¶ B). This represents a
7 47%7.0 increase over what is requested in the FAC. This is grounds to deny the motion and violates
8 Code Civ. Proc. §580(a).
9 5. Plaintiffs’ Application Includes Declarations From Two Non-Parties In
Support of Plaintiffs’ Motion
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11 Plaintiffs included the declarations of John Ho and Jacky Huang in their March 21, 2023,
12 filing in support of the request for entry of default judgment. Neither Ho nor Huang are parties to
13 the instant action, and the entirety of their declarations is objected to as irrelevant and incompetent
14 evidence in support of the motion.
15 6. Plaintiffs Have Sought Default At Every Juncture, Contrary to Agreements,
Stipulations, the Policy of this Court, and Defendants’ Participation
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17 At every juncture in this case, the coordinated case, and the bankruptcy proceeding plaintiffs
18 have sought entry of default in an effort to seek default judgment against Bragg and SVRV. In the
19 bankruptcy proceeding, plaintiffs sought default despite the parties’ agreement for an extension of
20 time to respond. Instead, learning that the written extension had to be filed with the bankruptcy
21 court, plaintiffs kept to themselves and sought default anyways. The bankruptcy court denied
22 plaintiffs request for entry of default and this court should too for many of the same reasons.
23 After the February 24, 2023, sua sponte lifting of the automatic stay, there was no
24 communication from plaintiffs they changed their mind as to an amendment and now intended to
25 rely on the FAC as the operative pleadings. RVS Decl. at ¶ 10. Plaintiffs sought to take advantage
26 of this unexpected development, never mentioned they intended to use the FAC as their operative
27 pleadings, starting the process that has led to more law and motion work. This is contrary to “the
28 policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 any party, who regardless of the merits of the case, attempts to take advantage of mistake, surprise,
2 inadvertence, or neglect of his adversary.” Grappo v. McMills (2017) 11 Cal.App.5th 996, 1010
3 Finally, plaintiffs – again – sought entry of default in the coordinate action pending before
4 Judge Fineman in Department 4. Plaintiffs sought the entry of default despite the fact defendants
5 had filed a motion for an extension of time to respond while the parties met and conferred over
6 arbitrating the claims in the coordinated action. Correctly, Judge Fineman denied plaintiffs’ request
7 and a hearing on defendants’ motion to extend time is currently scheduled for May 30, 2023.
8 B. Plaintiffs Failed to Confer That They No Longer Intended to File a Second
Amended Complaint as Contemplated by their Stipulation
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10 “While there is no requirement that advance notice be given of an application for the entry
11 of an adversary’s default (citation omitted), under the decisional earlier noted the applicant acts at
12 his own risk” in failing to do so. Pearson, supra, at 619. “[T]he policy of the law is to have every
13 litigated case tried upon its merits, and it looks with disfavor upon any party, who regardless of the
14 merits of the case, attempts to take advantage of mistake, surprise, inadvertence, or neglect of his
15 adversary.” Grappo, supra, at 1010.
16 Here, plaintiffs’ failure to give any notice of its plan to seek default judgment on the FAC
17 after a sua sponte lifting the automatic stay, and despite their stipulation to the contrary, has created
18 sufficient risk for the court to deny plaintiffs’ application. Unsuccessful in obtaining default in the
19 bankruptcy forum, plaintiffs reversed course on the stipulation and their intention to file a second
20 amended complaint, and sought to take advantage of the ability to again litigate against Bragg and
21 SVRV.
22 A simple meet and confer with counsel as to the plaintiffs’ plans in light of the bankruptcy’s
23 stay lifting would have likely prevented two scheduled hearings and at least six briefs filed in
24 support and opposition to the motion for entry of default judgment and the motion to vacate the
25 entry of default.
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
1 IV. CONCLUSION
2 For the reasons set forth in these papers, and any arguments considered at the hearing,
3 Defendants request this Court DENY plaintiffs’ March 21, 2023, motion for entry of default
4 judgment against defendants Bragg and SVRV.
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DATED: May 14, 2023
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Ryan van Steenis
7 Attorney for Defendant Bragg and
Silicon Valley Real Ventures, LLC
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Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
PROOF OF SERVICE
1
I am over the age of 18 and not a party to this action. I hereby certify that on May 15, 2023,
2
I served the following document(s) on the parties in the above-entitled action:
3
OPPOSITION OF DEFENDANTS DAVID M. BRAGG AND SILICON VALLEY REAL
4 VENTURES, LLC, TO PLAINTIFFS’ MOTION FOR ENTRY OF DEFAULT JUDGMENT
5 Via Email: I emailed the document(s) referenced above to the following persons at the following
6 email addresses:
Robert Dunn
7 rdunn@eimerstahl.com
Collin Vierra
8
cvierra@eimerstahl.com
9 Counsel for Plaintiffs
10 Jessica Chong
jchong@spencerfane.com
11 Brian Zimmerman
12 bzimmerman@spencerfane.com
Nicolas Reisch
13 nreisch@spencerfane.com
Ernesto Aldover
14 ernesto@arealestatelawfirm.com
Counsel for Defendants Gregory J. Davis, Kevin Wolfe, Jason Justesen, Paramont
15 Woodside, LLC, Paramont Capital, LLC, SVRV 385 Moore, LLC, and SVRV 387 Moore,
16 LLC
I declare under penalty of perjury under the laws of the State of California that the foregoing is a
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true and correct statement.
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Dated: May 15, 2023
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20 Ryan van Steenis
Attorney for Defendant Bragg and
Silicon Valley Real Ventures, LLC
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Proof of Service to Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment
Preview
1 Ryan van Steenis (SBN 254542) 1601 S Shepherd Dr., #276 2 Houston, Texas 77019 314-749-2284 3 rjvansteenis@gmail.com 4 Attorney for Defendants Dave Bragg, and 5 Silicon Valley Real Ventures, LLC 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA 7 FOR THE COUNTY OF SAN MATEO 8 9 Robert Arntsen; Mary Lee; Arntsen Family ) Case No.: 22-CIV-01148 10 Partnership, LP; and Brian Christopher Dunn ) Custodianship, ) OPPOSITION OF DEFENDANTS DAVID 11 ) M. BRAGG AND SILICON VALLEY REAL Plaintiffs, ) VENTURES, LLC, TO PLAINTIFFS’ ) MOTION FOR ENTRY OF DEFAULT 12 JUDGMENT vs. ) 13 ) David M. Bragg; Kurtis Stuart Kludt; Silicon ) [Declaration of Ryan van Steenis, and Index of Exhibits and Exhibits 1-7 to Declaration of Ryan 14 Valley Real Ventures LLC; SVRV 385 Moore, ) van Steenis,] LLC; SVRV 387 Moore, LLC; Gregory J. Davis; ) 15 Kevin Wolfe; Jason Justesen; Paramont ) Judge: Hon. Robert D. Foiles Woodside, LLC; and Paramont Capital, LLC; ) Date: March 26, 2023 16 ) Time: 9:00 a.m. ) Dept: 21 17 ) Courtroom: 2J Defendants. ) Action Filed: March 15, 2022 18 ) Trial Date: Unassigned ) 19 ) ) 20 21 I. INTRODUCTION AND SUMMARY 22 Defendants Bragg and SVRV oppose Plaintiffs’ motion for entry of default judgment, made 23 by plaintiffs without any meet and confer with defendants and on pleadings the parties stipulated did 24 not have to be answered to on September 22, 2022. As plaintiffs agreed and represented in their 25 stipulation, they intended to file a second amended complaint foregoing the need for any party to 26 respond to the first amended complaint. As a result, this stipulation waives plaintiffs’ right to seek 27 default on the First Amended Complaint (FAC) and defendants Bragg and SVRV were not required 28 to answer those pleadings. This stipulation was not revoked or amended in any way. Instead of filing -1- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 their second amended complaint, once the bankruptcy court lifted the automatic stay (and denied 2 plaintiffs’ request for entry of default judgment in that forum), plaintiffs (again without conference) 3 quickly sought entry of default against defendants on the FAC, filed a new action in this Court 4 (currently before Judge Fineman) on March 10, 2023, with new allegations and parties, and then 5 sought default judgment on the August 22, 2022, FAC. 6 Plaintiffs have also waived the default upon which entry of default judgment is sought. Since 7 the lifting of the automatic stay on Friday, February 24, 2023, plaintiffs and defendants have been 8 working on satisfying plaintiffs’ discovery concerns, attended a continued informal discovery 9 conference on April 20, 2023, an in-person meet and confer at plaintiffs’ counsel’s office in San Jose 10 on April 26, 2023, providing plaintiffs with access to SVRV’s entire business google drive until June 11 26, 2023, as part defendants’ response to plaintiffs’ request for production of documents. In short, 12 defendants have continued to participate and litigate the case. 13 Setting the stipulation aside, plaintiffs’ request for entry of default judgment is also defective 14 on its face and should also be denied on the grounds that its allegations in the FAC are not well-plead 15 (they are currently subject to motions to strike, demurrers, and other pleading challenges), includes a 16 memorandum seven pages longer than is permissible by CRC 3.1113(d), includes affidavits from two 17 non-parties in support of its estimate of damages, requests damages in excess of those set forth in the 18 FAC, and for the additional grounds set forth below. To grant plaintiffs’ motion would award 19 procedural gamesmanship, a failure to confer, enter judgment on a technicality, and usurp the 20 agreement relied upon by the parties. A hearing on defendants’ motion to vacate plaintiffs’ entry of 21 default is scheduled for June 2, 2023, in before this court at 9:00 a.m. 22 II. FACTUAL BACKGROUND 23 On August 22, 2022, plaintiffs filed their first amended complaint against all defendants. 24 (Declaration of Ryan van Steenis (“RVS Decl.”) ¶ 2). 25 On September 8, 2022, in connection with opposing plaintiffs’ motions to compel filed in 26 non-compliance with Local Rule 3.700, defendants paid their first appearance fee in the amount of 27 $435.00 each (receipt# 2022-033013-HOJ). The Court later denied those motions (without prejudice) 28 because of plaintiffs’ failure to meet and confer. Id. at ¶ 3. -2- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 On September 19, 2022, plaintiffs proposed a stipulation that would nullify defendants’ 2 requirement to answer plaintiffs’ FAC. Defendants entered into this agreement on September 22, 3 2022, Id at ¶ 4; Exh. 1, and Exh. 2. 4 The stipulation states, in part: 5 WHEREAS Plaintiffs intend to file a motion for leave to file a Second Amended 6 Complaint, addition two additional plaintiffs and several additional defendants; 7 WHEREAS Plaintiffs have asked Defendants not to oppose the motion in exchange for a waiver of their obligation to answer or otherwise respond to Plaintiffs’ First Amended 8 Complaint; *** 9 NOW THEREFORE, Plaintiffs and Defendants stipulate and agree that Defendants’ 10 deadline to answer or otherwise respond to Plaintiffs’ First Amended Complaint shall be October 21, 2022. 11 12 Exh. 2. 13 On September 26, 2022, plaintiffs deposed John Geyer – at one time an investor in the Moore 14 Road project who defendants refunded at his request. Defendants attended through counsel and asked 15 the following questions of Mr. Geyer: 16 Q: “. . . did Mr. Bragg make any misrepresentations about your stake in the Moore Road project?” 17 A: “No, he did not.” 18 Q: “Did he do anything to prevent you from getting your investment back in the Moore Road project?” 19 A: “No.” 20 RVS Decl. ¶ 5; Exh. 3 at 98:12-15, 16-17, and 21. 21 On Friday, October 21, 2022, defendant Bragg filed for Chapter 7 bankruptcy. RVS Decl. at 22 ¶ 6. Bragg gave notice to the parties on Monday, October 24, 2022. Ibid. This filing created a 1 23 bankruptcy estate and implemented an automatic stay as against Bragg in the instant proceeding. 24 Plaintiffs did not seek default against Paramont defendants at any time from October 31, 2022, until 25 March 3, 2023, again on the FAC. Ibid. 26 27 28 1 Given plaintiffs’ conclusory alter-ego allegations the stay also applied to SVRV, but to eliminate any ambiguity the parties explicitly stipulated to the same on January 3, 2023. RVS Decl. ¶ 6. -3- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 On December 22, 2022, plaintiffs filed an adversarial petition against Bragg in the bankruptcy 2 proceedings. Id at ¶ 7. On January 13, 2023, counsel sought an extension of time until the end of 3 January 2023 to respond, in part to find new bankruptcy counsel to represent Bragg in both the petition 4 and adversarial proceeding, which plaintiffs agreed to. Under the agreement, Bragg had until January 5 30, 2023, to answer the adversarial complaint. Ibid; Exh 4. 6 Nevertheless, prior to the expiration of that agreement to extend time, on January 24, 2023, 7 plaintiffs sought and received entry of default in the bankruptcy court, again without conference with 8 any of defendants’ counsel.2 Unaware of the parties’ agreement, the bankruptcy court entered the 9 default against Bragg on January 26, 2023. Bragg answered plaintiffs’ adversarial complaint on 10 January 31, 2023, but plaintiffs still sought entry of default judgment in the bankruptcy court, filing 11 a motion for said relief on February 21, 2023. RVS Decl., ¶ 8. 12 On Friday, February 24, 2023, Judge Jaime denied plaintiffs’ request for entry of default in 13 the adversarial proceeding, and sua sponte lifted the automatic stay to allow this Court to continue its 14 work: “Substantial proceedings have occurred in the State Court Case.” Id. at ¶ 9; Exh. 5 at p. 34 (lns 15 23-24). 16 On Tuesday, February 28, 2023, plaintiffs moved for entry of default on their FAC in the 17 instant action. Plaintiffs engaged in no discussions with defendants’ counsel before doing so. RVS 18 Decl. at ¶ 10. 19 On March 21, 2023, plaintiffs filed the instant motion for entry of default judgment. At the 20 same time, plaintiffs dismissed four causes of action against certain of the Paramont defendants 21 without argument and after receipt of those parties’ pleadings challenges to the FAC. Id. at ¶ 11; Exh. 22 6. 23 On March 23, 2023, defendants filed a motion to vacate/set aside plaintiffs’ entry of default, 24 which is currently set for hearing on June 2, 2023, at 9:00 a.m. in this court, the first available date 25 defendants could obtain for a hearing. Plaintiffs would not agree to advancing the hearing date on the 26 27 2 Again, plaintiffs filed and sought this entry of default and instead of abiding by the parties’ agreement, sought default 28 as a perceived tactical advantage because the extension of time agreed to had to be filed with the bankruptcy court to be effective. -4- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 entry of default even though, if granted, it would be dispositive as to the motion for entry of default 2 judgment. Id. at ¶ 12. 3 In the coordinated action (23-CIV-01099), defendants were forced to file a motion for an 4 extension to time on April 24, 2023, the deadline by which it had to respond to those plaintiffs’ March 5 10, 2023, complaint. That motion was on file ahead of plaintiffs’ request for entry of default made to 6 Judge Fineman on April 25, 2023. On April 27, 2023, Judge Fineman declined to enter plaintiffs’ 7 request for entry of default given defendants’ pending motion, noting: 8 Department 4 has received the emails sent by Plaintiff’s counsel. Since there has been 9 an appearance by a defendant, please include all parties who have appeared and known parties on emails to Department 4 so that there is not an improper ex parte communication. The Court 10 will not enter default while there is a motion pending to extend the time to David M. Bragg and Silicon Valley Real Ventures, LLC. 11 12 RVS Decl. ¶ 13, Exh. 7. 13 III. ARGUMENT & AUTHORITIES 14 A. Plaintiffs’ Motion for Entry of Default Judgment is Rife with Errors Requiring its Denial 15 16 1. Legal Standard on Motions for Entry of Default Judgment 17 “Our courts have repeatedly stated that is the policy of our law to allow each contested cause 18 to be tried on the merits.” Pearson v. Continental Airlines (1970) 11 Cal.App.3d 613, 619; see also, 19 Code Civ. Proc. § 473. California law “favors the determination of an action by a trial upon the 20 merits rather than by default.” Perkins v. Dawson (1963) 222 Cal.App.2d 610, 615 (upholding a 21 trial court’s dismissal of entry of default judgment 1 year, 5 months and 16 days after the entry of 22 judgment). “While there is no requirement that advance notice be given of an application for the 23 entry of an adversary’s default (citation omitted), under the decisional earlier noted the applicant 24 acts at his own risk” in failing to do so. Pearson, supra, at 619. “[T]he policy of the law is to have 25 every litigated case tried upon its merits, and it looks with disfavor upon any party, who regardless 26 of the merits of the case, attempts to take advantage of mistake, surprise, inadvertence, or neglect of 27 his adversary.” Grappo v. McMills (2017) 11 Cal.App.5th 996, 1010. 28 -5- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 “The ‘well-pleaded allegations of a complaint’ refer to all material facts property pleaded, 2 but not contentions, deductions, or conclusions of fact or law.” Kim v. Westmoore Partners, Inc. 3 (2011) 201 Cal.App.4th 267, 281 (internal quotation marks omitted). As the default admits only 4 well-pleaded facts, “even a defaulting party may challenge sufficiency of a complaint… .” Buck v. 5 Morris (1952) 114 Cal.App.2d 461, 466. In addition, under Code Civ. Proc. §580(a) “[t]he relief 6 granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint …” see 7 also, Sass v. Cohen (2019) 244 Cal.Rpt.3d 441 (“However, the relief awarded in such a default 8 judgment cannot exceed the type and amount of relief sough in the plaintiff’s operative pleadings”) 9 (voiding default judgment where it exceeded the relief sought in the complaint). 10 “A stipulation is a contract … and is sometimes said to be governed by the usual rules of 11 construction of other contracts.” Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 12 624, 632. “A stipulation is an agreement between counsel respecting business before the court ... .” 13 Rivera v. Shivers, 54 Cal.App.5th 82, 92; see also, e.g., Mikaluschutz v. Superior Court of Los 14 Angeles (1911) 16 Cal.App.226, 227 (“Assuming that no duty devolved upon the acting clerk to 15 enter the general denial, nevertheless, the parties treated the case as at issue, and stipulated for a 16 time of trial upon its merits. The necessity of an answer was waived by the stipulation for trial on 17 the matters set forth in the complaint”). 18 Finally, when making such a motion, an opening memorandum of points and authorities 19 may not exceed 15 pages in length. Cal. Rules of Court, rule 3.1113(d). “A memorandum that 20 exceeds the page limits of these rules must be filed and considered in the same manner as a late- 21 filed paper.” Id. at (g). 22 2. Plaintiffs’ Claims Are Conclusory and Unsupported, Not “Well-Plead” 23 As the Paramont defendants’ recent pleading challenges show, Plaintiffs’ claims are not 24 well-pleaded. For example, plaintiffs seek punitive damages for their 17200 claims, which is not 25 permitted by California law. See, e.g., Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 26 1266. Nor are punitive damages permitted for claims arising out of contract, even if the breach is 27 willful and fraudulent (Code of Civil Procedure, section 3294(a)). Indeed, upon receipt of 28 -6- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 Paramont’s challenge to the FAC, plaintiffs’ voluntarily dismissed four causes of action against 2 certain Paramont defendants on March 21, 2023. RVS Decl. ¶ 11; Exh. 6. 3 Here, plaintiffs’ fraud, 17200, alter ego, breach of fiduciary duty, breach of contract, and 4 unjust enrichment claims are all conclusory and not well-pleaded. First, with respect to plaintiffs’ 5 fraud allegations they do not contain the particularity required under California law. Lazar v. 6 Superior Court (1996) 12 Cal.4th 631, 645. At a minimum these allegations required plaintiffs to 7 plead facts demonstrating “how, when, where, to whom, and by what means the representations 8 were tendered.” Ibid. However, in support of their motion, plaintiffs do not cite to a single “fact” via 9 an affidavit or anywhere else as to “how, when, where, to who, and by what means the 10 representations were tendered.” Rather they only cite to self-serving allegations made in the FAC. 11 See, e.g., Plaintiffs’ Motion for Entry of Default at 16:16-16, 21-22, and 22-26. And the only actual 12 evidence regarding purported misrepresentations comes from the Geyer deposition where he 13 affirmatively testified that Bragg did not make any misrepresentations to him about his stake as an 14 investor in the Moore Road project. RVS Decl., ¶ 5; Exh. 3 at 98:12-15, 16-17, and 21. 15 Plaintiffs’ alter ego allegations are similarly unsupported. With respect to Bragg and SVRV, 16 plaintiffs make two alter ego allegations in the FAC, at paragraphs 24 and 233. This is not sufficient 17 and does not even allege Bragg exercised the requisite control over SVRV that its company 18 existence should otherwise be disregarded. Plaintiff repeats this process of citing its own allegations 19 as evidence. Despite filing lengthy affidavits, including from two non-parties to the instant suit, 20 plaintiffs do not cite to them once as evidence of any “well-plead” allegation. 21 Finally, since the majority of plaintiffs’ argument for the “reasons” their claims are “well- 22 plead” are on the excess pages of its memorandum (pgs. 16-19) in violation of Cal. Rules of Court, 23 rule 3.1113(d), the court is within its discretion to disregard those pages in its consideration of 24 plaintiffs’ application. 25 3. Plaintiffs Are Seeking Default Despite the Parties’ Stipulation 26 The parties’ September 22, 2022, stipulation is a contract between the parties. Winograd, 27 supra, at 632. Plaintiffs never stated they intended to revoke it, amend its terms, or otherwise not 28 intend to comply with it any longer (RVS Decl ¶ 10), which was to allow plaintiffs to file a second -7- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 amended complaint. Plaintiffs’ stipulation as to the FAC waives their right to seek entry of default 2 on pleadings they agreed defendants not need an answer to. 3 4. Plaintiffs’ Application Seeks More Damages than requested in the FAC 4 Plaintiffs’ motion for entry of default judgment seeks $1,106,158.55 in damages, $500,000 5 of which is claimed as punitive damages (how plaintiffs settled on this number is not entirely clear). 6 Plaintiffs’ FAC seeks $748,909 in damages (see FAC, Prayer for Relief, ¶ B). This represents a 7 47%7.0 increase over what is requested in the FAC. This is grounds to deny the motion and violates 8 Code Civ. Proc. §580(a). 9 5. Plaintiffs’ Application Includes Declarations From Two Non-Parties In Support of Plaintiffs’ Motion 10 11 Plaintiffs included the declarations of John Ho and Jacky Huang in their March 21, 2023, 12 filing in support of the request for entry of default judgment. Neither Ho nor Huang are parties to 13 the instant action, and the entirety of their declarations is objected to as irrelevant and incompetent 14 evidence in support of the motion. 15 6. Plaintiffs Have Sought Default At Every Juncture, Contrary to Agreements, Stipulations, the Policy of this Court, and Defendants’ Participation 16 17 At every juncture in this case, the coordinated case, and the bankruptcy proceeding plaintiffs 18 have sought entry of default in an effort to seek default judgment against Bragg and SVRV. In the 19 bankruptcy proceeding, plaintiffs sought default despite the parties’ agreement for an extension of 20 time to respond. Instead, learning that the written extension had to be filed with the bankruptcy 21 court, plaintiffs kept to themselves and sought default anyways. The bankruptcy court denied 22 plaintiffs request for entry of default and this court should too for many of the same reasons. 23 After the February 24, 2023, sua sponte lifting of the automatic stay, there was no 24 communication from plaintiffs they changed their mind as to an amendment and now intended to 25 rely on the FAC as the operative pleadings. RVS Decl. at ¶ 10. Plaintiffs sought to take advantage 26 of this unexpected development, never mentioned they intended to use the FAC as their operative 27 pleadings, starting the process that has led to more law and motion work. This is contrary to “the 28 policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon -8- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 any party, who regardless of the merits of the case, attempts to take advantage of mistake, surprise, 2 inadvertence, or neglect of his adversary.” Grappo v. McMills (2017) 11 Cal.App.5th 996, 1010 3 Finally, plaintiffs – again – sought entry of default in the coordinate action pending before 4 Judge Fineman in Department 4. Plaintiffs sought the entry of default despite the fact defendants 5 had filed a motion for an extension of time to respond while the parties met and conferred over 6 arbitrating the claims in the coordinated action. Correctly, Judge Fineman denied plaintiffs’ request 7 and a hearing on defendants’ motion to extend time is currently scheduled for May 30, 2023. 8 B. Plaintiffs Failed to Confer That They No Longer Intended to File a Second Amended Complaint as Contemplated by their Stipulation 9 10 “While there is no requirement that advance notice be given of an application for the entry 11 of an adversary’s default (citation omitted), under the decisional earlier noted the applicant acts at 12 his own risk” in failing to do so. Pearson, supra, at 619. “[T]he policy of the law is to have every 13 litigated case tried upon its merits, and it looks with disfavor upon any party, who regardless of the 14 merits of the case, attempts to take advantage of mistake, surprise, inadvertence, or neglect of his 15 adversary.” Grappo, supra, at 1010. 16 Here, plaintiffs’ failure to give any notice of its plan to seek default judgment on the FAC 17 after a sua sponte lifting the automatic stay, and despite their stipulation to the contrary, has created 18 sufficient risk for the court to deny plaintiffs’ application. Unsuccessful in obtaining default in the 19 bankruptcy forum, plaintiffs reversed course on the stipulation and their intention to file a second 20 amended complaint, and sought to take advantage of the ability to again litigate against Bragg and 21 SVRV. 22 A simple meet and confer with counsel as to the plaintiffs’ plans in light of the bankruptcy’s 23 stay lifting would have likely prevented two scheduled hearings and at least six briefs filed in 24 support and opposition to the motion for entry of default judgment and the motion to vacate the 25 entry of default. 26 27 28 -9- Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment 1 IV. CONCLUSION 2 For the reasons set forth in these papers, and any arguments considered at the hearing, 3 Defendants request this Court DENY plaintiffs’ March 21, 2023, motion for entry of default 4 judgment against defendants Bragg and SVRV. 5 DATED: May 14, 2023 6 Ryan van Steenis 7 Attorney for Defendant Bragg and Silicon Valley Real Ventures, LLC 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 - Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment PROOF OF SERVICE 1 I am over the age of 18 and not a party to this action. I hereby certify that on May 15, 2023, 2 I served the following document(s) on the parties in the above-entitled action: 3 OPPOSITION OF DEFENDANTS DAVID M. BRAGG AND SILICON VALLEY REAL 4 VENTURES, LLC, TO PLAINTIFFS’ MOTION FOR ENTRY OF DEFAULT JUDGMENT 5 Via Email: I emailed the document(s) referenced above to the following persons at the following 6 email addresses: Robert Dunn 7 rdunn@eimerstahl.com Collin Vierra 8 cvierra@eimerstahl.com 9 Counsel for Plaintiffs 10 Jessica Chong jchong@spencerfane.com 11 Brian Zimmerman 12 bzimmerman@spencerfane.com Nicolas Reisch 13 nreisch@spencerfane.com Ernesto Aldover 14 ernesto@arealestatelawfirm.com Counsel for Defendants Gregory J. Davis, Kevin Wolfe, Jason Justesen, Paramont 15 Woodside, LLC, Paramont Capital, LLC, SVRV 385 Moore, LLC, and SVRV 387 Moore, 16 LLC I declare under penalty of perjury under the laws of the State of California that the foregoing is a 17 true and correct statement. 18 Dated: May 15, 2023 19 20 Ryan van Steenis Attorney for Defendant Bragg and Silicon Valley Real Ventures, LLC 21 22 23 24 25 26 27 28 -1- Proof of Service to Bragg and SVRV’s Opposition to Plaintiffs’ Motion for Entry of Default Judgment