Judge: Christian R. Gullon, Case: 23PSCV03462, Date: 2024-12-09 Tentative Ruling

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Case Number: 23PSCV03462    Hearing Date: December 9, 2024    Dept: O

Tentative Ruling

Plaintiff’s Application for Entry of Default Judgment is DENIED WITH prejudice; The application is denied for invalid/improper service and the complaint amounts to open-ended liability; should Plaintiff seek default judgment, it is to file and a serve an amended complaint. The court, exercising its equitable powers, sets aside the 2/27/24 default.

Background

This case pertains to an HOA. Plaintiff DIAMOND BAR VILLAGE ASSOCIATION alleges the following against Defendant WAN XING 321, LLC: Defendant breached the terms of the CC&Rs, Bylaws, Rules, and other documents governing the HOA (collectively, the “Governing Documents”).

On November 7, 2023, Plaintiff filed suit for:

1.     COMPLAINT FOR DECLARATORY RELIEF

2.     BREACH OF COVENANT FORECLOSURE

3.     ACCOUNT STATED.

On February 27, 2024, a proof of service of summons (POS) was filed indicating that the Authorized Agent for Service of Process was served via substituted service by serving the spouse of the agent. That same day, default was entered against Defendant.

On October 8, 2024, Plaintiff filed the instant application for entry of default judgment.

Discussion

According to the proposed order, Plaintiff seeks both a monetary judgment and an order for foreclosure of the lien. The application for the following two defects.

1.     Service

An LLC must designate an agent for service of process on the information form filed biennially with the Secretary of State. A plaintiff may serve an LLC by serving the person designated as its agent for service of process. (Corp C § 17060(a)(2).) The designated agent may be served either by personal service, substitute service, or service by mail with acknowledgment of receipt. (CCP §§ 415.10, 415.20(a), 415.30(a))

Here, however, HECTOR GONZALEZ SANCHEZ is the Authorized Agent for Service of Process, but his spouse was served. Should service upon Sanchez have not been possible, there are methods to effectuate service (see e.g. Corp. Code section 1702), but serving the spouse is not one of them.

Therefore, absent service of the summons and complaint, any request for default, let alone default judgment, is not ripe.

2. Open-Ended Liability

CCP section 580 states that “[t]he relief granted to the plaintiff, if there is no answer, cannot exceed that which he or she shall have demanded in his or her complaint, in the statement required by Section 425.11, or in the statement provided for by Section 425.115.” “The Legislature enacted section 580 and related statutes to ensure that a defendant who declines to contest an action does not suffer open-ended liability.” (Electric Funds Solutions, LLC v. Murphy (2005) 134 Cal.App.4th 1161, 1173.)

Here, the complaint does not set forth any amount of damages, even in the account stated COA. Effectively, this amounts to open-ended liability. Accordingly, the complaint itself fundamentally fails as the primary purpose of section 580 which is to guarantee defaulting parties adequate notice of the maximum judgment that may be assessed against them. (Greenup v. Rodman (1986) 42 Cal.3d 822, 826.)

Therefore, should Plaintiff seek default judgment against Defendant, they are to file and serve a new/amended complaint.

Conclusion

Based on the foregoing, the 2/27/24 default is set aside/vacated and the application is otherwise denied WITH prejudice.