Judge: Christian R. Gullon, Case: 23PSCV00548, Date: 2024-10-28 Tentative Ruling

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Case Number: 23PSCV00548    Hearing Date: October 28, 2024    Dept: O

Tentative Ruling

MOTION TO QUASH SERVICE OF THE SUMMONS AND COMPLAINT AND TO SET ASIDE DEFAULT JUDGMENT PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE § 473.5 is DENIED; service was in substantial compliance with the code because Zhou and/or Zeng received actual notice of the summons and litigation documents via mail, email, and a call.  

Background

This is a collections case.

On February 24, 2023, Plaintiff CREDITORS ADJUSTMENT BUREAU, INC—a collection agency assigned this account by State Compensation Insurance Fund ("SCIF") for premiums due in connections with two workers compensation insurance policies—filed led suit against Defendant Universal Elite Construction, LLC for $182,531.59.

On April 24, 2023, default was entered against Defendant.

On July 13, 2023, the court entered default judgment as to Plaintiff’s 5/30/23 request for entry of default judgment.

On July 31, 2024, Defendant filed a ‘Substitution of Attorney’ naming Counsel Rios as its attorney.

On August 30, 2024, Defendant filed the instant motion.

On October 15, 2024, Plaintiff filed its opposition.

To date, as of Friday, 10/25, no Reply has been received (due 5 court days before hearing, Monday, 10/21).

Legal Standard[1]

Defendant relies upon 473.5 to set aside the default judgment. (See e.g., Motion pp. 6-7; see also Opp. p. ii.)

In turn, Section 473.5 subdivision (a) provides the following:

When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding 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. (emphasis and underline added).

This statue affords discretionary relief. (Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1444.) As summarized by the court in Goya v. P.E.R.U Enterprises (1978) 87 Cal.App.3d 886:

[The statute] permits the court to set aside a default or default judgment against a defendant and allow him to defend the action on its merits if (1) he received through no inexcusable fault of his own, no actual notice of the action in time to appear and defend, and had not made a general appearance; (2) a default or default judgment has been entered against him by the court; (3) he acted with reasonable diligence in serving and filing the notice of motion to set aside the default or default judgment; and (4) he has a meritorious defense. (Comment (to section 473.5) Judicial Council.) (Id. at pp. 890-891, emphasis added.)

Discussion[2]

Before engaging in the merits and relevant authority, the court provides the following undisputed facts:

-      The proof of service indicates that on 3/8/23, a registered process server served Defendant via substituted service by leaving the documents with Hui Wang “Co-Occupant.”

-      Plaintiff acknowledges that it did not make any effort at personal service before the (alleged) substituted service. (Opp. p. 3:16-22)

-      Hui Wang is Kevin Zhou’s mother who is not an employee, officer, or agent authorized to accept service of process for the LLC. Hui Wang does not live at the residence nor speaks English. (Kevin Zhou according to the Statement of Information is the CEO of the LLC.)

-      The address where the party was served as 34 Willowbrook Lane in the city of Pomona.[3] This address is also the only address identified for Defendant as its "Principal Address" and "Mailing Address," and is also the only address identified as where Kevin C. Zhou could be served as the agent for service of process.

-      The process server mailed copies of the lawsuit related legal documents to defendant's address. This mailing was not returned by the Post Office.

-      On June 20, 2023, plaintiff filed its request for entry of default judgment, of which another copy was mailed to defendant's address; this mail was also not returned by the post office.

-      On July 17, 2023, a representative from plaintiff’s office called the registered telephone number of Yanfen Zeng, a manager/member of defendant.[4] Although Ms. Zeng claimed to not speak English, Ms. Zeng was able to find a translator and plaintiffs representative discuss with her at length regarding the judgment which was entered against defendant, the possible consequences, and that the CSLB license may be suspended if the judgment was not address. (See Johnson Decl., pp. 48-55 of 56 of PDF [includes notes from the conversation and an 7/17/23 email sent to Zeng].)[5]

-      On June 19, 2024, Plaintiff sent a letter to the CSLB advising CSLB of the judgment and requesting that Defendant’s license be suspended.

-      On June 20, 2024, the CSLB suspended Defendant’s license.

The Code of Civil Procedure provides a number of ways to serve process on a corporation doing business in the state such as (i) service by service on the corporation's designated agent for service of process. (Code Civ. Proc.,1 § 416.10, subd. (a)); (ii) personally delivering a summons and complaint to those corporate officers, managers and employees identified in section 416.10, subdivision (b); or (iii) by delivering process to someone in charge of the office of one of the individuals identified in section 416.10, subdivision (b) and then mailing the individual a copy of the summons and complaint. (§ 415.20.)  The individuals pertinent to the latter option include “the president, chief executive officer, or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general manager, or a person authorized by the corporation to receive service of process.” (§416.10, subd. (b).) “Because the face of [Plaintiff’s] proof of service fails to identify any individual specified in section 416.10, subdivision (b) who was served on behalf of the corporation, the proof of service and, hence, the judgment-roll, show that the judgment is void for lack of proper service.” (Ramos, supra, 223 Cal.App.4th at p. 1442.) But the inquiry does not end there. The court turns to the Ramos court’s explanation of service that is in substantial compliance with the code section(s).

It is axiomatic that strict compliance with the code's provisions for service of process is not required. (Pasadena Medi–Center Associates v. Superior Court (1973) 9 Cal.3d 773, 778, 108 Cal.Rptr. 828, 511 P.2d 1180; Dill v. Berquist Construction Co., supra, 24 Cal.App.4th at p. 1436, 29 Cal.Rptr.2d 746; Espindola v. Nunez (1988) 199 Cal.App.3d 1389, 1391, 245 Cal.Rptr. 596.) “Although some decisions under pre-1969 statutes required strict and exact compliance with the statutory requirements [citation], the provisions of the new law, according to its draftsmen, ‘are to be liberally construed. ... As stated in the Nov. 25, 1968, Report of the Judicial Council's Special Committee on Jurisdiction, pp. 14–15: “The provisions of this chapter should be liberally construed to effectuate service and uphold the jurisdiction of the court if actual notice has been received by the defendant, and in the last analysis the question of service should be resolved by considering each situation from a practical standpoint. ...” The liberal construction rule, it is anticipated, will eliminate unnecessary, time-consuming, and costly disputes over legal technicalities, without prejudicing the right of defendants to proper notice of court proceedings.’ [Citation.]” (Pasadena Medi–Center Associates v. Superior Court, supra, at p. 778, 108 Cal.Rptr. 828, 511 P.2d 1180, italics added.) “Thus, substantial compliance is sufficient.” (Dill v. Berquist Construction Co., supra, at p. 1437, 29 Cal.Rptr.2d 746.) In general, substantial compliance with the code occurs when, although not properly identified in a proof of service, the person to be served in fact actually received the summons  “[W]hen the defendant is a corporation, the ‘person to be served’ is one of the individuals specified in section 416.10. Therefore, [plaintiff] could be held to have substantially complied with the statute if, despite his failure to address the mail to one of the persons to be served on behalf of the defendants, the summons was actually received by one of the persons to be served.” (Dill v. Berquist Construction Co., supra, at p. 1437, 29 Cal.Rptr.2d 746.)

Here, Plaintiff used none of the methods prescribed in the Code of Civil Procedure for service of process on Defendant. Rather, plaintiff left a summons and complaint with a “co-occupant” and then mailed the corporation, rather serving any individual officer or manager with a copy of the summons and complaint. Notwithstanding, Defendant has not offered evidence from which it might be inferred a person specified in section 416.10 did not actually receive documents. To the contrary, none of the mail sent to the corporation’s principal and mailing address was returned. 

Therefore, the court determines that the record shows that Defendant received actual notice of the lawsuit via mail to show substantial compliance with the service requirements on a corporation.

Service aside, Defendant has not met the requirements of this statute. First, Defendant does not explain how it was reasonable to wait over one year from the last communication on 7/13/23 to seek relief. Second, Defendant has not advanced a meritorious defense to the breach of contract/account stated action.

All in all, “relief under section 473.5 is available only where the defendant's lack of actual notice ‘was not caused by his or her avoidance of service or inexcusable neglect.’ (§ 473.5, subd. (b).).” (Ramos, supra, 223 Cal.App.4th at p. 1444.) Here, Defendant ignored the written notice of the action such that any lack of actual notice was caused by Defendant’s own inexcusable neglect.

Conclusion

Based on the foregoing—in that Defendant did have actual notice of the summons and complaint and that its ignorance was the result of inexcusable neglect—the motion is DENIED.