Judge: Bruce G. Iwasaki, Case: 21STCV22975, Date: 2023-08-15 Tentative Ruling
Case Number: 21STCV22975 Hearing Date: April 10, 2024 Dept: 58
Judge Bruce G. Iwasaki
Hearing
Date: April 10, 2024
Case
Name: Vickers Holding
& Finance, Inc. v. ABCComfort LLC
Case
No.: 21STCV22975
Matter: Motion to Set Aside
Default Judgment
Moving
Party: Defendants Magic
Touch Repair, Inc. and Dmitry
Sklyar
Responding Party: Plaintiff
Vickers Holding & Finance, Inc.
Tentative
Ruling: The Motion to Set Aside
Default Judgment is denied.
This is fraud
case. The Complaint alleges in October 2016, Vickers Holding & Finance,
Inc. (Plaintiff) obtained a money judgment from the Netherlands court against non-party
Jossiv Kim (Jossiv) relating to a loan agreement. Jossiv then absconded to Los
Angeles County and fraudulently transferred some of his money to his wife, non-party
Angelina Kim (Angelina) (jointly, the Kims).
Plaintiff then sued
in Los Angeles County in September 2017 under the Uniform Foreign
Money-Judgment Recognition Act, requesting that the Netherlands Judgment be
given force and effect in California. The Court granted the request in November
2018 against Jossiv and Angelina in the amount $6,597,215 plus $2,297,416 in
interest, accruing at $717 per day. Plaintiffs
then obtained an Assignment Order against Jossiv and Angelina, for any monies
due from various third parties. Despite that order, Plaintiff alleges that
Jossiv and Angelina have fraudulently transferred the money to their son, Defendant
Alex Anton Kim (Anton), and to numerous third-party entities such as Magic
Touch Repair, Inc. (Magic Touch), through its owner, Dmitry Sklyar (Skylar).
The Complaint
alleges that Defendant Anton created a company, ABCComfort LLC (ABC), which
then received money back from third parties, including Defendant Magic Touch,
who would then transfer money to Anton, and then back to Jossiv and Angelina,
allegedly, to circumvent Plaintiff’s collection efforts.
Plaintiff now sues
Defendants ABC, Anton, Magic Touch, and Sklyar (CEO of Magic Touch) for three
counts of fraudulent transfer, civil theft, unjust enrichment, and civil
conspiracy.
On March 20, 2023, the Court entered default judgment
against Defendants Magic Touch and Sklyar.
On May 30, 2023,
Plaintiff moved for summary adjudication of the sixth cause of action for civil
conspiracy against Defendant Anton. Defendant Anton
opposed the motion. The Court denied the motion for summary adjudication.
On March 4, 2024, Defendants
Magic Touch and Sklyar moved to set aside the March 20, 2023 default judgment
against them. Plaintiff opposes the motion.
The motion to set
aside the default judgment is denied.
Discussion
Defendants Magic
Touch and Sklyar move to set aside the default and default judgment on multiple
grounds.
First, Defendants
argue that the Default Judgment exceeds the amount demanded in the Complaint in
violation of Code of Civil Procedure section 580.
A default judgment “cannot exceed that demanded in the complaint.” (Code
Civ. Proc., §§ 580, 585, subds. (a), (b).) “[A] default judgment greater than
the amount specifically demanded is void as beyond the [trial] court's
jurisdiction.” (Greenup v. Rodman (1986) 42 Cal.3d 822, 826, [italics
added].) For example, a prayer for relief “in excess of” a specified dollar
amount will result in a default award of no more than that amount. (Traci
& Marx Co. v. Legal Options, Inc. (2005) 126 Cal.App.4th
155, 160.)
Except in certain cases, “courts
must look to the prayer of the complaint or to ‘allegations in the body
of the complaint of the damages sought’ to determine whether a defendant has
been informed of the ‘maximum liability’ he or she will face for choosing to
default.” (People ex rel. Lockyer v. Brar (2005) 134 Cal.App.4th 659,
667.)
Defendants concede
that the Default Judgment awarded no monetary amount against Magic Touch.
(Mot., 8, fn. 3.) Thus, this set aside argument only applies to judgment based
on the monetary amount awarded against Defendant Sklyar.
Here, the
Complaint alleges the following:
In September
2017, Plaintiff asked the Los Angeles County Superior Court to recognize and
enforce the above-referenced Dutch Judgment in California under the Uniform
Foreign Money-Judgment Recognition Act; Plaintiff also filed fraudulent
transfer and civil conspiracy claims against the Kims, as well as a company
owned and managed by the Kims, US Duo Design, Inc. (Duo Design), in connection
with Jossiv's transfers of the moneys that he owed to Plaintiff. (Compl., ¶ 3.)
On November 6, 2018, in Case No. BC674584, the Hon. Deirdre Hill entered a
judgment jointly and severally against Jossiv and Angelina, as well as Duo
Design, in the amount of $6,597,215, plus $2,297,416 in interest, with an
additional $717 in interest accruing on a daily basis until the full amount of
the Judgment is paid to Plaintiff. (Compl., ¶ 4.) The Complaint alleges that
the Kims have not paid any portion of this Judgment; Plaintiffs alleged that instead
the Kims have engaging in fraudulent transfers to avoid payment including transferring
“many hundreds of thousands of dollars to several third party entities,
including Magic Touch Repair Inc. ("Magic Touch''), with the aid of the
principals of those entities, such as
Dmitry Sklyar (the owner and Chief Executive Officer of Magic Touch), and then having these entities transfer back
to Jossiv a substantial portion of those moneys
(keeping some back as compensation for their participation in the
fraudulent scheme), as purported
compensation for Jossiv's fictitious work as an appliance repair
technician for these entities.” (Compl., ¶ 5.)
The Complaint further
seeks an order “declaring Anton, ABC, Magic Touch, and Sklyar (collectively
"Defendants') co-conspirators and/or alter egos of the Judgment Debtors,
and requiring Defendants to return to Plaintiff all of the moneys fraudulently
transferred to them by or at the direction of the Judgment Debtors.” (Compl., ¶
11.) Finally, the Complaint specifically seeks an “order finding defendant
Sklyar jointly and severally liable for the unpaid amount of the CA Judgment as
a co-conspirator of Judgment Debtors and Anton.” (Compl., Prayer, ¶ 5.)
Based
on the foregoing allegations in the body of the Complaint and the relief sought
in the Prayer, the Complaint adequately puts Defendant Sklyar on notice that he
may be liable for the full amount of the unpaid judgment in the amount of “of
$6,597,215, plus $2,297,416 in interest, with an additional $717 in interest
accruing on a daily basis.” Therefore, Defendants’ argument that the default judgment
is void on this ground is not well taken.
Second, Defendants
argue they were not properly served with the summons and complaint, rendering
the Default Judgment void pursuant to Code of Civil
Procedure section 473, subdivision (d), which allows the trial court to “set aside any void judgment or order.”
In response to this argument Plaintiff first argues this motion to set
aside is untimely pursuant to Code of Civil Procedure
section 473, subdivision (b) – citing Pittman v. Beck Park Apartments
Ltd. (2018) 20 Cal.App.5th 1009 and OC Interior Services, LLC v.
Nationstar Mortgage, LLC (2017) 7 Cal.App.5th 1318.
However, Code of Civil Procedure section 473, subdivision (b) is not the
applicable timing statute on a default judgment that is not void on its face
and is void for improper service.
First, while the trial court has discretion to grant or deny a request
to set aside a void order, it has no power under section 473, subdivision (d)
to set aside an order that is not void. (Pittman v. Beck Park Apartments
Ltd. (2018) 20 Cal.App.5th 1009, 1020 (Pittman).) It is well
established, however, that default judgment entered against a defendant without
service of process in a manner prescribed by statute is void. (Ellard v.
Conway (2001) 94 Cal.App.4th 540, 544.)
A motion to set aside a judgment void on its face may be brought at any
time. (Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009,
1021.) “In determining whether an order is void for purposes of section 473,
subdivision (d), courts distinguish between orders that are void on the face of
the record and orders that appear valid on the face of the record but are shown
to be invalid through consideration of extrinsic evidence. ‘This distinction
may be important in a particular case because it impacts the procedural
mechanism available to attack the judgment [or order], when the judgment [or
order] may be attacked, and how the party challenging the judgment [or order]
proves that the judgment [or order] is void.’ [Citation.]” (Pittman, supra,
20 Cal.App.5th at pp. 1020-1021.)
There is no time limit in which to challenge an order under section 473,
subdivision (d). (Pittman, supra, 20 Cal.App.5th at p. 1021.) However,
section 473, subdivision (d) applies only to an order that is void on its
face—that is, an order where “the invalidity is apparent from an inspection of
the judgment roll or court record without consideration of extrinsic evidence.
[Citations.] ... If the invalidity can be shown only through consideration of
extrinsic evidence, such as declarations or testimony, the order is not void on
its face. Such an order must be challenged within the six-month time limit
prescribed by section 473, subdivision (b), or by an independent action in
equity. [Citations.]” (Ibid.)
In this case, Defendants’ argument regarding improper service is based
on extrinsic evidence that the addresses served were not the proper addresses
to effectuate service. (Sklyar Decl., ¶¶ 15-21.) Thus, the default
judgment is not void on its face.
Nonetheless, Code
of Civil Procedure section 473, subdivision (b) is not applicable here. Rather, a motion to set aside a default judgment valid on its face but void
because of improper service is governed by the limitation periods set forth in Section
473.5. (Rogers v. Silverman (1989) 216 Cal.App.3d 1114, 1124.)
Under section 473.5, subdivision (a) a party that has not received
actual notice of an action due to improper service may move to set aside a
default or default judgment within “the earlier of: (i) two years after entry
of a default judgment against him or her; or (ii) 180 days after service on him
or her of a written notice that the default or default judgment has been
entered.”
Further, in Rogers, the court stated “the time in which to file a
motion to vacate a default judgment valid on its face but void due to improper
service commences upon the entry of judgment.” (Id. at p. 1126.) The Rogers
court reasoned that “[i]n such a case no omission on the moving party’s part
resulted in the clerk's entry of the default” and “[a]ccordingly, it would be
manifestly unfair to commence the period for moving for relief from that time.”
(Ibid.)
Here, Defendants’
motion to set aside was filed almost a year after entry of the March 20, 2023
Default Judgment. Thus, the motion to set aside is timely and within the two
year period of entry of default judgment (where there is no evidence of written notice that the default or default judgment has been entered).
Having found that
the motion to set aside is not untimely, the Court now turns to the argument
that Defendants were not properly served with the summons and Complaint.
In the moving
papers, Sklyar submits evidence that he resides at 13243 Vanowen Street, Unit
4, in North Hollywood, California 91605. (Sklyar Decl., ¶¶ 4, 15.) He
represents that he has resided at this location since 2007. (Sklyar Decl., ¶
15.)
With respect to Magic
Touch, Defendants submit evidence that it is registered with the California
Secretary of State and has filed statements of
information with the Secretary of State as required to identify its principal
address and its agent for service of process. (Sklyar Decl., ¶¶ 18, 19.) According
to the Statements of Information, Defendant Sklyar has been Magic Touch’s
registered agent for service of process since at least March 29, 2019. (Sklyar
Decl., ¶ 19, Ex. 1 [SOI filed 3-29-19).) Sklyar’s address for service of
process as Magic Touch’s registered agent is 13243 Vanowen Street, Unit 4, in
North Hollywood, California 91605 – Sklyar personal residence. (Id.)
Notwithstanding these
facts, Defendants note that Plaintiff’s proof of
service of the summons and complaint for purported service on Sklyar indicates
that Sklyar was served via “substitute service” by service on “Brian Choi of
Mail Boxes L.C.” at 2222 Foothill Blvd. No. 110, La Canada Flintridge (2222 Address)
“for Dmitry Sklyar.” (Daneshrad Decl., ¶ 10, Ex. 10 [Sklyar Proof of Service
filed 7-12-2021].)
Similarly,
Plaintiff’s proof of service of the summons and complaint for purported service
on Magic Touch indicates that it was served via “substitute service” by service
on “Brian Choi of Mail Boxes L.C. for Dimitry
Sklyar, agent of service & CEO of Magic Touch Repair” at 2222 Foothill
Blvd. No. 110, La Canada Flintridge (2222 Address). (Daneshrad Decl., ¶ 11, Ex.
11 [Magic Touch Proof of Service filed 7-12-2021].)
Finally,
Defendants contend that they only learned of the existence of the default
judgment on February 29, 2024, when Defendant Sklyar discovered that his bank
account and the bank accounts of Magic Touch had
been frozen as a result of a default judgment in this case. (Sklyar Decl., ¶¶
13-14.)
First, the Court
will address whether service on Defendant Skylar in his personal capacity was
proper.
Service upon an individual defendant may be made by personal service,
meaning service that is accomplished “by personal delivery of a copy of the
summons and of the complaint to the person to be served.” (Code Civ. Proc., §
415.10.) Alternatively, an individual defendant may be served by “substitute
service,” by “leaving a copy of the summons and complaint at the person's
dwelling house, usual place of abode, usual place of business, or usual mailing
address other than a United States Postal Service post office box, in the
presence of a competent member of the household or a person apparently in
charge of his or her office, place of business, or usual mailing address ...,
at least 18 years of age, who shall be informed of the contents thereof, and by
thereafter mailing a copy of the summons and of the complaint ... to the person
to be served at the place where a copy of the summons and complaint were left.”
(Code Civ. Proc., § 415.20, subd. (b).)
The statute authorizing substituted service expressly provides such
service is only permitted after reasonably diligent efforts at personal service
have been made. (Code Civ. Proc., § 415.20(b); Evartt v. Superior Court
(1979) 89 Cal.App.3d 795, 802 [“exercising reasonable diligence to
effect personal service” is a “mandatory prerequisite for [substituted]
service”].)
“[T]he burden is upon the plaintiff to show reasonable diligence to
effect personal service and each case must be judged upon its own facts.” (Evartt
v. Superior Court, supra, 89 Cal. App. 3d at 801.) “[P]erfunctory efforts”
to personally serve the defendant do not satisfy the “reasonable diligence”
prerequisite. (Id. at 802.)
Defendant notes
that Plaintiff’s declaration of diligence shows that Plaintiff attempted to
personally serve Skylar three times within an 18-hour period. Defendant argues
that this fails to satisfy the reasonable diligence requirement as a matter of
law, citing Evartt v. Superior Court (1979) 89 Cal.App.3d 795.
Defendants argue that in Evartt, multiple attempts were made within
a 26 hour period but the court found these efforts to be inadequate as matter
of law. However, Defendants’ summary of the holding in Evartt omits
important key facts. That is, in Evartt, the court held that service did
not satisfy the reasonable diligence requirement because “[t]he fact that the
perfunctory efforts to serve [the defendant] during the last three days of the
three-year period were unsuccessful because [the defendant] was out of the
state and that the limitations period expired prior to being able to personally
serve him was entirely due to [the plaintiff]’s inaction.” (Evartt, supra, 89
Cal.App.3d at 802.) The facts show that the process server repeatedly returned
to an address within hours, after being informed that the defendant was “on
vacation.” (Id. at 798.)
Here, in contrast, multiple attempts were made at different times of the
day and on different days with no representation that the address was
inappropriate. “ ‘Ordinarily ... two or three attempts at personal service at a
proper place should fully satisfy the requirement of reasonable diligence and
allow substituted service to be made.’ ” (Bein v. Brechtel-Jochim Group,
Inc. (1992) 6 Cal.App.4th 1387, 1391–1392 [quoting Espindola v. Nunez
(1988) 199 Cal.App.3d 1389, 1392].)
Moreover, Plaintiff’s opposition evidence shows that the process server made
attempts to serve Defendants Skylar and Magic Touch at the 13243
Vanowen Street, Unit 4, in North Hollywood, California 91605 address, which
served as Sklyar’s purported personal residence and the address for the Magic
Touch’s agent for service of process. (Katz Decl., ¶ 4.) After an attempt as
service and a conversation with a neighbor, the registered process server determined
that “Sklyar no longer resided at that address.” (Katz Decl., ¶ 4.)
Plaintiff’s registered
process server also attempted to serve Defendant Sklyar at 2115 La Canada
Crest, Apt. 211, La Canada Flintridge, CA. (Katz Decl., ¶ 5.) He omitted
evidence of these attempts at service from his declaration of reasonable
diligence believing that “only the most recent three efforts to serve the
defendant with summons need to be reflected on a process server’s due diligence
declaration. (Katz Decl., ¶ 5.)
Based on the foregoing, the evidence shows the reasonable diligence
requirement has been met.
Next, the Court will address whether service on Defendant Skylar and Magic
Touch at the 2222
Address complied with Code of Civil Procedure section 415.20.
Section 416.10 permits service on a corporation by serving an individual
or entity designated as an agent for service of process (Code Civ. Proc., §
416.10, subd. (a)); serving one of the 11 officers or managers of the
corporation specified in section 416.10, subdivision (b); serving a person
authorized by the corporation to receive service (Code Civ. Proc.,§ 416.10,
subd. (c)); or service in a manner authorized by the Corporations Code (Code
Civ. Proc., § 416.10, subd. (d)).
Plaintiff does not claim to have effected service on the corporation
pursuant to section 416.10. Rather, section 415.20, subdivision (a) permits
substitute service on a person specified in section 416.10 by leaving the
summons and complaint “in his or her usual mailing address ... with the person
who is apparently in charge thereof.” (Code Civ. Proc., § 415.20, subd. (a).)
Similarly, Section
415.20, subdivision (b), governs the procedure for substitute service on
individuals. “[S]ubstitute” service must be made (after reasonable diligence)
“at the person’s dwelling house, usual place of abode, usual place of business,
or usual mailing address.” (Code Civ. Proc. § 415.20, subd. (b).)
Here, Plaintiff’s private investigator and process server determined,
after speaking with Brian Choi, that both Defendants Sklyar and Magic Touch
received mail at the 222 Foothill Address. (Katz Decl., Ex. 2, ¶¶ 2-6.) Katz
determined that this address was a usual mailing address for both Defendants
based on his conversation with Brian Choi, person in charge of the private mail
box for Magic Touch and Sklyar, reviewing the licensing details for Magic Touch
from the California Household Goods and Services Bureau, and reviewing the
address used for checks issued by Magic Touch to Jossiv, dated January 3, 2021.
(Katz Decl., Ex. 2, ¶¶ 2-6.)
The holding in Ellard v. Conway (2001) 94 Cal.App.4th 540 is
instructive. In that case, the plaintiffs attempted personal service at the
defendants’ home, but the process server was told by the gate guard that the
defendants had moved. (Id. at p. 543.) The plaintiffs contacted the
United States Postal Service and obtained a forwarding address for the
defendants at the “Postal Annex,” a private post office box rental facility. (Ibid.)
The process server then attempted to serve the defendants at the Postal Annex
and was informed by the manager that the defendants received mail there. The
process server left the summons and complaint with the manager and mailed a
copy of the documents to the defendants at the Postal Annex. (Ibid.)
On appeal from the denial of the defendants’ motion to set aside default
judgment, the defendants argued service was improper because the plaintiffs
only attempted to personally serve the defendants once and thus were not
“reasonably diligent” before resorting to substitute service. (Id. at p.
545.) The appellate court disagreed, noting that after learning that the
defendants had moved, the plaintiffs were not required to “return to that
address two more times and attempt service at a residence where the [defendants]
no longer lived.” (Ibid.) The court found that the plaintiffs had
exercised reasonable diligence in attempting personal service at the
defendants’ residence, then obtaining a forwarding address from the postal
service and attempting service at that address. (Ibid) Under these
circumstances, the court also concluded that the private mailbox address was a
“usual mailing address” for the plaintiffs within the meaning of section
415.20.
Additionally, there are credibility issues with Skylar’s declaration. He
represents that he only discovered the default judgment in February 2024.
However, he executed a declaration in support of Defendant Anton’s motion for
summary adjudication on July 26, 2023 – a declaration where his name was in the
caption for Defendants. In an attempt to explain this apparent inconsistency,
his declaration provides background to his limited education and English
language skills and then states that his dyslexia prevented him from understanding
the document. (Sklyar Decl., ¶ 12.) However, this explanation appears deliberately
vague. Defendants’ papers also make no mention of Plaintiff’s statement that it
personally served Magic Touch and Sklyar in October 2021. While this fact may not bear directly on the
statutory basis for setting aside the default judgment, it does raise further
credibility issues with Sklyar’s evidence. These credibility questions
color Skylar’s claims as to his actual notice and his characterization on the
various mailing addresses at issue on this motion.
Plaintiff’s service on Defendants at the 222 Address complies with the
law.
Third, Defendant
argues that no default judgment can be taken where several defendants are sued
on a joint liability, and one of them answers asserting defenses which would
exonerate the defaulting defendant from such liability.
Although
Defendant point to the generally applicable “one judgment” rule, Defendants do not
provide a basis for setting aside the default judgment based on this rule.
Rather, as the opposition notes, the main purpose of the rule is to avoid
piecemeal appeals. (See Cuevas v. Truline Corp. (2004) 118 Cal.App.4th 56, 60 [“The one judgment rule has been
articulated thusly: ‘[A]s a general rule there can be only one final judgment
in a single action.’ [Citation.] A final, ordinarily single, judgment is a
prerequisite to appealing from an action, its purpose to avoid piecemeal
appeals.”];
Griset v. Fair Political Practices Com'n (2001) 25 Cal.4th 688, 697 [The one final judgment rule is a “fundamental
principle of appellate practice that prohibits review of intermediate rulings
by appeal until final resolution of the case.”].)
Further, Code of Civil Procedure section 579 specifically provides “In an
action against several defendants, the Court may, in its discretion, render
judgment against one or more of them, leaving the action to proceed against the
others, whenever a several judgment is proper.”
Moreover, Defendants’
reliance on Mirabile v. Smith (1953) 119
Cal.App.2d 685 is distinguishable. In that case, a plaintiff sued two partners
on a contract; one partner answered but the other defaulted. The answering
defendant contended that no contract existed. The court held that the default
should be held in abeyance until the case was “finally determined upon” by the
answering defendant where the answering defendant's position is “equally
applicable against both of these defendants.” (Id. at p. 688.) The court
stated that were the law otherwise, “a grave injustice would result.” (Id.
at p. 689; see also Freeman v. Churchill (1947) 30 Cal.2d 453, 461
[where a defense presented by a non-defaulting defendant is not personal to him
but goes to the merits of the case, the defense pleaded by the non-defaulting
defendant inures to the benefit of the defaulting defendant as well].)
As the opposition notes, co-conspirator liability is joint and
several, especially where Sklyar is also being sued as a co-conspirator of
Jossiv Kim and Angelina Kim, not just as a co-conspirator of non-defaulting
Defendant Anton. Thus, the liability is joint and several. (See e.g., Prince v. Harting (1960) 177 Cal.App.2d 720, 728 [“[I]t
is equally well established that if plaintiff proves that he has been damaged,
and that defendant conspired with another to damage him, each conspirator is
liable jointly and severally with his coconspirator for the entire loss
suffered.”])
Additionally, “[p]ursuant to article VI, section 13, of the California
Constitution, ‘[n]o judgment shall be set aside, or new trial granted, in any
cause, ... or for any error as to any matter of procedure, unless, after an
examination of the entire cause, including the evidence, the court shall be of
the opinion that the error complained of has resulted in a miscarriage of
justice.’ ‘A miscarriage of justice ... occurs ... when it appears reasonably
probable that were it not for the error a result more favorable to the
appellant could have been obtained.’ [Citation.] ‘Prejudice is not presumed and
the burden is on the appellant to show its existence.’ [Citation.]” (Candelaria
v. Avitia (1990) 219 Cal.App.3d 1436, 1444; accord, Taylor v. Varga
(1995) 37 Cal.App.4th 750, 759, fn. 9.)
Here,
with respect to prejudice, Defendant argues that under the conspiracy claim, if
co-conspirator Anton prevails on those issues at trial because the finder of
fact determines that the transfers at issue were in fact legitimate, that would
be completely inconsistent with the Default Judgment.” (Mot., 15:5-7.) However,
this argument is not grounds for setting aside the default judgment because Defendants
have presented only theoretical prejudice that may result. It
also ignores the allegations related to Defendants’ separate liability.
Conclusion
The motion to set aside the default judgment
is denied.