Judge: Daniel S. Murphy, Case: 20STCV24193, Date: 2022-10-24 Tentative Ruling

Case Number: 20STCV24193    Hearing Date: October 24, 2022    Dept: 32

BACKGROUND

            On June 26, 2020, Plaintiff Kirk Hawkins filed this action against various Defendants for (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) fraud, (4) retaliation, (5) interference with prospective economic relations, and (6) declaratory judgment.

Plaintiff is the founder and CEO of Defendant Icon Aircraft, Inc. (Icon). Defendant Shanghai Pudong Science and Technology Investment Co., Ltd. (PDSTI), a Chinese company, acquired 51% of Icon. Defendant Xudong Zhu (Zhu) is PDSTI’s chairman, who also sits on the board of Icon. Plaintiff alleges that Defendants engaged in bad faith negotiations regarding his employment and compensation. Plaintiff alleges that Defendants placed him on sabbatical and refused to reinstate him, effectively sidelining him. According to the complaint, Icon is currently dominated by PDSTI and Zhu.

After filing this action, Plaintiff was terminated. On September 16, 2021, Plaintiff filed the operative First Amended Complaint (FAC) to add facts regarding his termination. Plaintiff alleges that he was terminated in retaliation for raising safety concerns and for participating in a lawsuit to redress Defendants’ misappropriation of Icon’s intellectual property and breaches of fiduciary duty.  

On September 16, 2022, Defendants PDSTI and Zhu filed the instant motion to quash service of summons because they were served with the original complaint instead of the operative FAC.

LEGAL STANDARD

“[T]he court in which an action is pending has jurisdiction over a party from the time summons is served on him as provided by Chapter 4 (commencing with Section 413.10).” (Code Civ. Proc, § 410.50(a).) “[A] court acquires jurisdiction over a party by proper service of process or by that party's general appearance.” (In re Jennifer O. (2010) 184 Cal.App.4th 539, 547.) Actual notice of a lawsuit is not a substitute for proper service of process. (Abers v. Rohrs (2013) 217 Cal.App.4th 1199, 1206.)

Service outside the United States is “subject to the provisions of the Convention on the ‘Service Abroad of Judicial and Extrajudicial Documents’ in Civil or Commercial Matters (Hague Service Convention).” (Code Civ. Proc., § 413.10, subd. (c).) “Failure to comply with the Hague Service Convention procedures voids the service even though it was made in compliance with California law.” (Kott v. Superior Court (1996) 45 Cal.App.4th 1126, 1136.)

A defendant may serve and file a notice of motion to quash service of summons on the ground that the court lacks jurisdiction. (Code Civ. Proc., § 418.10, subd. (a).) “The court may dismiss without prejudice the complaint in whole, or as to that defendant, when dismissal is made pursuant to Section 418.10.” (Id., § 581, subd. (h).)

DISCUSSION

            Defendants argue that Plaintiff’s attempt to serve them in China through the Hague Convention was defective because Plaintiff omitted the operative FAC from the package. (Mtn. 5:18-20.)

            When summons is served on a person outside the United States, it shall be served (1) as provided in Chapter 4 of the Code of Civil Procedure, (2) as directed by the court in which the action is pending, or (3) as prescribed by the law of the place where the person is served, if the court finds that the method is reasonably calculated to give actual notice. (Code Civ. Proc., § 413.10(c).) All methods are subject to the Hague Convention. (Ibid.)

“The Hague Service Convention states each signatory nation shall designate a central authority through which service of process may be effected. (Hague Service Convention, art. 2.) That authority receives documents and serves them in accordance with either the internal law of the receiving state or a compatible method requested by the sender. The authority then provides the sender with a certificate of service. (Hague Service Convention, arts. 5, 6.) A state may allow other methods of service within its boundaries. (Hague Service Convention, arts. 8-11, 19).” (Kott, supra, 45 Cal.App.4th at p. 1134.)

Here, ABC Legal Services from Seattle, Washington served the translated summons and complaint to the Ministry of Justice of China in Beijing, requesting delivery to Defendants at their address, in accordance with Article 5 of the Convention. (Petroff Decl., Ex. A, p. 5.) Defendants do not contend that this method of service is improper under the Convention or incompatible with the laws of China. Instead, Defendants’ sole dispute concerns which complaint should have been served. However, the Convention contains no provision requiring service of an operative complaint, nor do Defendants cite any authority for the proposition that service of an operative complaint is required to confer jurisdiction.

Additionally, “[w]here a reasonable attempt has been made to comply with a statute in good faith, and there was no attempt to mislead or conceal, the doctrine of substantial compliance holds that the statute may be deemed satisfied.” (Davis v. Allstate Ins. Co. (1989) 217 Cal.App.3d 1229, 1232.) “[T]imely service of summons and complaint is not invalid because of defects in form which do not frustrate the statutory purpose.” (Id. at p. 1233.) In Davis, the plaintiff served the defendant with a superseded second amended complaint and did not serve the operative third amended complaint until the three-year limitation imposed by Code of Civil Procedure section 583.210(a) had passed. The Court of Appeal nonetheless held that service of the second amended complaint was sufficient and that service was made within the three-year limit. The court reasoned that because the allegations in both complaints “were essentially similar,” service of the second amended complaint “provided Allstate with timely notice of the action and of substantially all of the plaintiff's factual contentions against it, thus satisfying the purposes of the statute.” (Id. at p. 1234.)

Similarly, the FAC in this case “did not change the substance of plaintiff's cause[s] of action against defendant[s].” (Davis, supra, 217 Cal.App.3d at p. 1232.) The FAC adds allegations pertaining to Plaintiff’s termination, which occurred after he had arranged for service of the original complaint. (Blue Decl. ¶¶ 8-10.) There was no attempt to conceal, and Defendants have not been “prejudiced or misled as to the claims [they face].” (Davis, supra, 217 Cal.App.3d at p. 1234.) Plaintiff had already alleged in the original complaint that he was retaliated against in the form of being placed indefinitely on sabbatical. (Compl. ¶ 83.) Amending the complaint to reflect the fact that Plaintiff was subsequently fully terminated does not change the substance of the claims.

Considering that it is proper service of the summons that confers jurisdiction (see Code Civ. Proc, § 410.50(a)), failure to serve the operative complaint is not dispositive where the summons is nonetheless accompanied by adequate notice of the claims asserted (see Davis, supra, 217 Cal.App.3d at p. 1234). The omission of the FAC is a “defect[] in form which do[es] not frustrate the statutory purpose” of the Code provisions governing jurisdiction. (Id. at p. 1233.)

CONCLUSION

            The Court finds that service was properly effectuated upon Defendants PDSTI and Zhu. Accordingly, Defendants’ motion to quash service of summons is DENIED.