A. Stuart Rubin, et al., v. Preferred Bank

Case Number

21CV03982

Case Type

Hearing Date / Time

Wed, 01/21/2026 - 10:00

Nature of Proceedings

Plaintiffs and Cross-Defendants A. Stuart Rubin and Annette Rubin’s Motion to Set Aside Default Judgment

Tentative Ruling

For Plaintiffs and Cross-Defendants A. Stuart Rubin and Annette Rubin: Douglas M. Reid and Franklin L. Ferguson, Jr.

                            

For Plaintiff and Cross-Defendant 1604 Sunset Plaza LLC: Unrepresented

                                   

For Plaintiff and Cross-Defendant Elliot Lander: Self-Represented

For Defendant and Cross-Complainant Preferred Bank: Michael E. Bubman, Mirman Bubman & Nahmias, LLP

                       

RULING

For the reasons set forth below, Plaintiffs and Cross-Defendants A. Stuart Rubin and Annette Rubin’s motion to set aside default is denied.

Background

This action was commenced on October 6, 2021, by the filing of the complaint by Plaintiffs A. Stuart Rubin (Stuart) and Annette Rubin (Annette) against Defendant Preferred Bank (Preferred) asserting 11 causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) estoppel; (4) slander of title; (5) interference with contractual relationships; (6) interference with prospective economic advantage; (7) unfair business practices; (8) unjust enrichment; (9) declaratory relief; (10) breach of fiduciary duty; and (11) constructive fraud.

As alleged in Plaintiffs’ complaint:

Plaintiff Stuart Rubin (Rubin) is a real estate investor and developer. (Compl., ¶ 24.) For approximately 30 years, Rubin and his various entities have had long term banking relationships with several banks, including Defendant Preferred. (Compl., ¶¶ 24-26.) Rubin and his wife, Plaintiff Annette Rubin (A. Rubin), (collectively, the Rubins) formed a close and confidential relationship with Preferred and its President and Chief Executive Officer, Wellington Chen. (Compl., ¶ 27.) Business was not done by formal applications, but were discussed in a meeting or on the phone or by text and Preferred would send documents for the loan as discussed. (Ibid.) Preferred’s standard practice was to provide Rubin and his related entities with credit lines on an unsecured, interest-only basis, and to regularly renew those lines. (Compl., ¶ 28.)

On August 21, 2017, Preferred insisted that Rubin and his entities convert the unsecured credit lines to a jumbo loan of $12,750,000 (the Loan or Loan No. 209465) to be supported by collateral. (Compl., ¶ 29 & exhibits 1, 2.) The collateral for the Loan included (1) a second deed of trust on the residence at 715 N. Alpine Drive, Beverly Hills (the Beverly Hills Property), (2) a third deed of trust on the Rubins’ home at 4347 Marina Drive, Santa Barbara (the Santa Barbara Property), and (3) a second trust deed of trust on property located at 1604 Sunset Plaza Drive, Los Angeles (the Sunset Property) owned by Plaintiff 1604 Sunset Plaza, LLC (Sunset). (Compl., ¶¶ 17, 30 & exhibits 3-5.) Rubin is the manager of Sunset. (Compl., ¶ 17.)

In April 2019, Preferred increased the principal of the Loan by approximately $4,125,870 to $16,875,868.57, paying off four other loans. (Compl., ¶ 31 & exhibit 6.) The Loan was guaranteed by Sunset, the Stuart and Annette Rubin Family Trust dated 11/4/2003 (Family Trust), and the Stuart Rubin Children’s Trust dated 12/21/2001 (Children’s Trust). (Compl., ¶¶ 16, 18, 32 & exhibits 7-9.)

In December 2009, Rubin had lunch with Chen and discussed restructuring the Loan’s debt service. (Compl., ¶ 33.) Chen reiterated that Preferred’s relationship with the Rubins was important to Preferred. (Ibid.) They also agreed that Preferred only needed a principal paydown from the proceeds of the sale of the Beverly Hills Property, that following the sale of the Beverly Hills Property Preferred would then restructure the Loan, and that interest owed on the Loan could be paid by means of a separate loan. (Compl., ¶ 34.)

The Loan’s stated maturity date was March 5, 2020. (Compl., ¶ 35.) Preferred agreed to defer the maturity date to March 31, 2020, if the Rubins paid $37,000. (Ibid.) The Rubins made that payment, effectively deferring the maturity date on the Loan. (Ibid.)

By mid-March 2020, the COVID-19 pandemic occurred, and most banks were readily able to accommodate their affected borrowers. (Compl., ¶ 36.) Preferred reiterated and explicitly agreed in mid-April 2020 that the Rubins could sell the Beverly Hills Property, apply $8 million or more of the sales proceeds to pay down the outstanding principal owed on the Loan, and that Preferred would restructure the remaining outstanding loan amount. (Compl., ¶ 37.) (Note: The complaint identifies exhibit 10 as an email exchange. Instead, exhibit 10 attached to the complaint is a document entitled, “Business Loan Agreement.”) The April 2020 email exchange is identified by Plaintiffs as a “forbearance agreement.” (Ibid.)

The Rubins listed the Beverly Hills Property for sale and kept Preferred informed of offers and the ongoing process. (Compl., ¶ 38.) Preferred did not keep the Rubins informed of their plans to record a notice of default and, as such, the Rubins rejected certain offers made on the Beverly Hills Property. (Compl., ¶ 39.) Had the Rubins accepted the offers, Preferred would have received its $8 million in principal paydown, the Loan would have been restructured, and the foreclosure halted before it began. (Ibid.)

Preferred recorded notices of default (NOD) on each property on June 3, 2020, but did not tell the Rubins at that time. (Compl., ¶ 40.) The Rubins learned of the NODs two weeks later when they arrived by mail. (Ibid.)

As a result of Preferred’s actions, the Rubins filed suit against Preferred on October 2, 2020, as case No. 20CV03206 (the Prior Action). (Compl., ¶ 42.) The Rubins successfully obtained a temporary restraining order in the Prior Action preventing Preferred from proceeding with the trustee sales of the three properties. (Compl., ¶ 43.)

On January 6, 2021, the parties entered into a written Forbearance Agreement which served to act as a settlement agreement of the Prior Action. (Compl., ¶ 44 & exhibit 11.) Among its express terms, the Forbearance Agreement required Plaintiffs to file a request for dismissal of the Prior Action. (Compl., ¶ 45.) The Forbearance Agreement also required Plaintiffs to pay Preferred $8 million by June 6, 2021, in exchange for a Change of Terms Agreement with Preferred for the balance of the loan, modifying the repayment terms for the outstanding balance. (Ibid.) Plaintiffs complied with the terms of the Forbearance Agreement and timely made monthly payments owing under the Forbearance Agreement. (Compl., ¶ 46.)

Between March 2021 and May 2021, Plaintiffs received several offers to purchase the Beverly Hills Property. (Compl., ¶ 47.) Plaintiffs kept Preferred informed of the offers and of the opening of escrow within the timelines provided in the Forbearance Agreement. (Ibid.) Upon receiving notice from Plaintiffs of the opening of escrow, Preferred was obligated to extend the Forbearance Termination Date by at least 30 days until at least July 6, 2021. (Compl., ¶ 48.)

Preferred in bad faith violated the Forbearance Agreement by recording a NOD on June 15, 2021, during the period by which the Plaintiffs contractually were entitled to continued forbearance. (Compl., ¶ 49 & exhibit 12.) Preferred had predesigns to obstruct Plaintiffs from receiving the benefit of the bargain of the Forbearance Agreement and to take steps to ensure that it would not have to enter into the Change in Terms Agreement as agreed. (Compl., ¶ 50.)

Plaintiffs accepted an all-cash offer to purchase the Beverly Hills Property, and the buyer waived contingencies. (Compl., ¶ 52.) The escrow was open and was set to close on October 6, 2021. (Ibid.) Plaintiffs are actively taking steps to close the escrow, but the primary factor preventing the sale from closing is the NOD and notice of sale recorded by Preferred which Preferred refuses to rescind. (Ibid.)

Pursuant to the Forbearance Agreement, Preferred has made a demand to the escrow to be paid $8 million from the sales proceeds of the Beverly Hills Property. (Compl., ¶ 53.) By doing so, Preferred is ratifying and seeking to enforce the Forbearance Agreement and is waiving any defects it contends existed in the Plaintiffs’ performance. (Ibid.)

At about the same time, Plaintiffs were negotiating with a third party to lease the Santa Barbara Property. (Compl., ¶ 55.) The rent to be paid under the terms of the lease would have been more than sufficient to service the Loan. (Ibid.) However, Preferred, without notice to Plaintiffs, recorded an NOD on the Santa Barbara Property. (Compl., ¶ 56 & exhibit 13.) The tenant, upon learning of the NOD, refused to execute any lease agreement, resulting in a loss of significant rental payments and Plaintiffs’ ability to promptly repay Preferred. (Compl., ¶ 56.) Preferred also recorded a NOD on the Sunset Property. (Compl., ¶ 56 & exhibit 14.)

Preferred has recorded notices of trustee’s sale (NOS) on each of the properties: a NOS for the Beverly Hills Property, noticing a sale for October 12, 2021; a NOTS for the Sunset Property, noticing a sale for October 12, 2021; a NOS for the Santa Barbara Property, noticing a sale for October 13, 2021. (Compl., ¶¶ 58-59 & exhibits 15-17.)

Preferred filed a demurrer and motion to strike portions of the complaint and, on February 15, 2022, the Court sustained the demurrer as to the third cause of action for estoppel, the sixth cause of action for interference with prospective economic advantage, the eighth cause of action for unjust enrichment, the tenth cause of action for breach of fiduciary duty, and the eleventh cause of action for constructive fraud. Although they were given leave to amend, Plaintiffs did not do so. The remaining causes of action were the first, second, fourth, fifth, seventh, and ninth.

Preferred filed an answer to the complaint on April 5, 2022, asserting a general denial and 18 affirmative defenses. Concurrently with filing the answer, Preferred filed a cross-complaint against Plaintiffs, asserting causes of action for: (1) breach of contract; (2) breach of guarantees; (3) money lent; (4) trespass; and (5) loss of use of real property.

On August 14, 2023, Preferred moved for summary judgment of each of Plaintiffs’ remaining causes of action on the grounds that this action has no merit, there are no triable issues of material fact and Preferred is entitled to judgment as a matter of law. In the alternative, Preferred sought summary adjudication of each of the remaining causes of action.

The Rubin Plaintiffs filed six declarations from various individuals that they claimed to be in support of their opposition. However, no opposition, separate statement, objections to Preferred’s evidence, or any other document was filed by Plaintiffs, besides the declarations, until the day prior to, and the day of, the hearing on the motion.

Preferred also moved for an order dismissing with prejudice Plaintiffs’ complaint and striking the answer filed by cross-Defendants on the grounds that: (1) Plaintiffs and Cross-Defendants have deliberately and repeatedly violated their statutory discovery obligations despite being afforded numerous opportunities by both Preferred and this Court to comply; (2) Plaintiffs and Cross-Defendants have violated and refused to obey numerous orders of this Court designed specifically to remedy the impact of their ongoing failure to comply with their statutory discovery obligations; (3) Preferred has been prejudiced in its ability to defend itself against the complaint or prosecute its cross-complaint as a direct result of Plaintiffs and Cross-Defendants’ deliberate, repeated and wrongful failures to comply with their statutory discovery obligations and this Court’s orders; and (4) Plaintiffs and Cross-Defendants’ continuing misconduct, which this Court described in its June 7, 2023 order as ‘egregious,’ ‘deliberate’ and occurring with ‘rhythmic regularity,’ makes clear that any sanction less than terminating sanctions will be ineffective.

Following a continuance of the hearing on the motion for summary judgment from November 1, 2023, to November 15, 2023, so that the motions could be heard at the same time, the motions were granted on November 15, 2023. As part of the Court’s order, the Court: (1) Granted Preferred’s motion for summary judgment as to Plaintiff’s complaint; (2) Granted Preferred’s motion for terminating sanctions in its entirety; (3) Ordered that the Rubins’ answer to Preferred’s cross-complaint be stricken, and; (4) Took the Rubins’ default and ordered Preferred to proceed with its default prove-up by way of written declaration.

The Rubins moved for a new trial on the granting of summary judgment. The motion was denied.

On January 31, 2025, the Court entered default judgment in favor of Preferred and against the Rubins for $3,160,005.91 in damages and $5,709,019.54 in prejudgment interest, for a total judgment of $8,869,025.45. On September 12, 2025, Preferred filed an amended judgment that added attorney fees. Notice of Entry of Judgment was filed and served on April 14, 2025.

On October 14, 2025, the Rubins filed the present motion to set aside the default judgment pursuant to Code of Civil Procedure section 473, subdivision (b), arguing that their failure to oppose Preferred’s motion for judgment was the result of counsel’s mistake, inadvertence, surprise, or excusable neglect.

Preferred opposes the motion.

The Rubins filed their reply to the opposition on January 13, 2026.

Analysis

“The 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, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken. . . . Notwithstanding any other requirements of this section, the Court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the Court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (Code Civ. Proc., § 473, subd. (b), italics added.)

The trial Court has broad discretion to vacate the judgment and/or the clerk’s entry of default that preceded it.  However, “this discretion may be exercised only after the party seeking relief has shown that there is a proper ground for relief, and that the party has raised that ground in a procedurally proper manner, within any applicable time limits.” (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 495.)

In support of the Rubins’ motion, one of their attorneys submitted a declaration wherein he declares:

“On behalf of Cross-Defendants, I filed motions for new trial with respect to the Motion for Summary Judgment and Motion for Terminating Sanctions, in addition to appeals with respect to these motions. Throughout the litigation, each and every

pleading had been served electronically.” (Ferguson Decl., ¶ 2.)

“I am a solo-practice attorney, in an Ephesian Suite. Mail is placed by the floor receptionist into suite mail boxes, which [is] located behind the receptionist’s desk. Cross-Complainant’s CCP §585 Motion for Judgment, along with its supporting declarations, was served by mail. Every other document in the case had been served electronically. When it was received, I neglected to notice the contents of the package containing the CCP §585 Motion. As a result, I inadvertently placed the motion to an area of my office that contained other papers being stored.” (Ferguson Decl., ¶ 3.)

“I did not become aware of the CCP §585 Motion for Judgment until after

it had been decided.” (Ferguson Decl., ¶ 4.)

Attached to the Ferguson declaration, as Exhibit A, is a copy of a proposed opposition to Preferred’s motion for judgment.

The Rubins’ motion appears to largely rest on the false assertion that their answer to Preferred’s cross-complaint was not stricken. Contrary to the Rubins’ argument, the answer was specifically stricken on November 15, 2023, as just one result of Preferred’s motion for terminating sanctions. Default was also taken at the hearing. As part of their motion, Preferred moved for an order that included issuing terminating sanctions and dismissing the Rubins’ answer to the cross-complaint. The motion was granted in full, stating in part: “The Defendant’s Answer to the Preferred Bank’s Cross-Complaint has been stricken and Cross-Complainant’s shall proceed with respect to their default prove-up by way of written declaration by 1/15/24.” (11/15/2023 Minute Order.) Both of the Rubins’ attorneys appeared at the hearing and the Court’s order was subsequently emailed to them by the Court clerk. Further, the formal order filed by Preferred on November 29, 2023, sets forth what was sought by the motion for terminating sanctions, including that the Rubins’ answer to the cross-complaint be stricken (order after hearing p. 2, ll. 4-5). Again, the motion was granted in full and all relief sought was ordered. The Rubins’ attorneys were both clearly aware of the ruling granting terminating sanctions, striking the Rubins’ answer to the cross-complaint, and entering default. Neither the minute order nor the order after hearing are ambiguous.

Also, and contrary to the Rubins’ argument, summary judgment was entered in favor of Preferred and the Rubins’ complaint was dismissed on the same day.

The attorney “declaration of fault” is wholly irrelevant in that it only addresses the failure to oppose the motion for judgment. The Rubins, terminating sanctions having been imposed against them, and their answer to the cross-complaint being stricken, had no standing to oppose the motion.

Here, and as noted above, the Rubins only move to set aside the default judgment. They do not move to set aside the default that resulted in the judgment and the time for them to do so has expired. There is a distinct difference in moving to set aside a default judgment as opposed to a default.

“Both the notice of motion and the motion itself were to set aside the default judgment, not the default. Moreover, the formal order on the motion signed by the judge properly shows that the motion and the order were restricted to setting aside the judgment. The statement in the opinion that the default at no time was set aside is correct.” (Cumberpatch v. Nolan (Cal. Ct. App. 1954) 271 P.2d 519, 519.)

Even if the motion were properly brought, which it is not, it would be futile. The default would still stand and Preferred would simply be required to refile the motion for judgment, which the Rubins would lack standing to oppose.

“The entry of a default terminates a Defendant’s rights to take any further affirmative steps in the litigation until either its default is set aside or a default judgment is entered. [Citations.] “ ‘A Defendant against whom a default has been entered is out of Court and is not entitled to take any further steps in the cause affecting Plaintiff’s right of action; he cannot thereafter, until such default is set aside in a proper proceeding, file pleadings or move for a new trial or demand notice of subsequent proceedings.’ ” [Citation.] And, even where a default judgment is “ ‘vacated, it would be the duty of the Court immediately to render another of like effect, and the defaulting Defendants would not be heard for the purpose of interposing any denial or affirmative defense.’ ” (Title Insurance etc. Co. v. King etc. Co. (1912) 162 Cal. 44, 46 [120 P. 1066], italics added.)” (Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385-386.)

The motion to set aside the default judgment will be denied.