Judge Deirdre Hill, Case 18TRCV00169 2022-08-19 Tentative Ruling

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On December 11, 2018, Plaintiffs Pinesight LLC, Veritas Liberabit Vos, LLC. filed a complaint against Defendants Zion, Inc., Cameron Wilson, Sarah Aikin, and Does 1 through 50 for (1) declaratory relief (2) declaratory relief, (3) breach of contract, (4) breach of fiduciary duty, and (5) tortious conversion of a corporate ownership interest.

On October 4, 2021, Plaintiffs filed a Fourth Amended Complaint for (1) breach of fiduciary duties, (2) tortious conversion of a corporate ownership interest, (3) violations of the California Corporation Code, and (4) breach of contract.

On July 28, 2022, Specially Appearing Defendant Karina Fedasz filed a motion to quash service of summons.

On August 8, 2022, Plaintiffs Pinesight LLC and Veritas Liberat Vos LLC filed an opposition to Defendant’s motion to quash service of summons.

On August 12, 2022, Specially Appearing Defendant filed a reply to Plaintiffs’ opposition.

This action arises of out of a contract dispute. On December 18, 2015, Plaintiff, Veritas Liberabit VOS, LLC (VLV) purchased a convertible note (Note) for $350,000 from ZON. On June 27, 2016, Plaintiff, Pinesight, LLC (“Pinesight”), purchased a Note for $150,000 from ZON. The Notes provide for optional conversion upon a “non-qualified financing” event (defined as a sale of equity securities that do not constitute a “financing” event). If such an event occurs, the Notes can be converted at the same price per share as the equity securities but only at “the written election of at least majority in interest of the Holders. On October 31, 2016, nonparty Jeff Wilson loaned $300,000 to ZON in return for a secured promissory note and warrant (Warrant) for 20% of ZON’s preferred stock. On January 31, 2017, the Notes matured. On May 18, 2017, ZON converted all noteholders by issuing 882,487 common shares for approximately $1,550,000 of principal and accrued interest. ZON also issued 1,193,949 preferred shares to Jeff Wilson. As such, on December 11, 2018, Plaintiffs filed this action against ZON, Wilson, and Sarah Aiken. Plaintiffs alleged claims against ZON on the ground their Notes should have been converted at the same price per share as the Warrant. Plaintiffs alleged claims against Aiken and Wilson for breach of fiduciary duty and conversion for allegedly acting improperly in converting the Notes.

Specially Appearing Defendant Karina Fedasz requests that the court quash service of summons for lack of personal jurisdiction. This Motion is made up on the grounds that the summons purportedly served on Defendant does not name her as a Defendant, nor is she named as a Defendant in the operative Fourth Amended Complaint.

In the alternative, Defendant request that if the Court were to deem the December 11, 2018 Summons valid, despite any mention of Ms. Fedasz on its face and otherwise failing to provide her with constitutional due process or notice of the purported claims against her, the service on June 25, 2022 of a summons dated December 2018 would be barred by the mandatory dismissal provisions of California Code of Civil Procedure §§ 583.210 and 583.250 for failure to serve a summons and complaint on a defendant within three years.

Specially Appearing Defendant Karina Fedasz contends that there is a lack of personal jurisdiction as the summons purportedly served on Defendant does not name her as a Defendant, nor is she named as a Defendant in the operative Fourth Amended Complaint.

“A defendant . . . may serve and file a notice of motion for one or more of the following purposes: (1) To quash service of summons on the ground of lack of jurisdiction of the court over him or her. . ..” (Code Civ. Proc., § 418.10(a).) “[C]ompliance with the statutory procedures for service of process is essential to establish personal jurisdiction. [Citation.]” (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1444.) “[T]he filing of a proof of service creates a rebuttable presumption that the service was proper” but only if it “complies with the statutory requirements regarding such proofs.” (Id. at 1441-1442.) When a defendant moves to quash service of the summons and complaint, the plaintiff has “the burden of proving the facts that did give the court jurisdiction, that is the facts requisite to an effective service.” (Coulston v. Cooper (1966) 245 Cal.App.2d 866, 868.) “A court lacks jurisdiction over a party if there has not been proper service of process.” (Ruttenberg v. Ruttenberg (1997) 53 Cal.App.4th 801, 808.)

Defendant Karina Fedasz argues that Defendant was not named in the Complaint filed on December 11, 2018. Defendant argues that the First Amended Complaint filed on August 20, 2019, and no summons was ever issued. On April 26, 2021, a Third Amended Complaint was filed that named Ms. Fedasz as a Defendant. On October 4, 2021, a Fourth Amended Complaint was filed. The Fourth Amended Complaint omits Defendant Karina Fedasz from the caption. Defendant argues that at no point was an amended summons requested or issued on any of these Amended Complaints.

Defendant argues that Plaintiffs first submitted an Amended Summons to the Court on May 5, 2022, which was rejected. Plaintiffs then filed a Notice of Errata on May 23, 2022, purporting to add Ms. Fedasz back into the Fourth Amended Complaint. Plaintiffs then submit another Amended Summons to the Court on May 27, 2022, that was rejected on June 9, 2022. Even though Plaintiffs admitted that an amended summons was required to establish jurisdiction over Ms. Fedasz, they were unable to obtain the Amended Summons.

Defendant argues that without a valid amended summons to Ms. Fedasz, Plaintiffs seemingly shrug and attempt to serve her with the 2018 Summons. On June 27, 2022, Plaintiffs filed a proof of service of summons that simply states that a “summons” was served, which was intended to lead this Court to believe that Ms. Fedasz had been validly served with a summons in this action. However, the only summons that was included with the Fourth Amended Complaint was the 2018 Summons that does not name Ms. Fedasz. (RJN, Exhibit 1). No other summons has ever been issued in this matter and no amended summons has ever been served on Ms. Fedasz.

In opposition, Plaintiffs argue that Defendant failed to give sufficient notice for her motion for two reasons, each warranting dismissal: (1) 45 days’ notice was required given that it is a motion to dismiss for delay in prosecution; and (2) even if 45 days’ notice was not required, standard notice was not satisfied because Fedasz failed to account for the method of service by mail. Plaintiff argues that the hearing on the motion is August 19, 2022, and the papers were served on July 25, 2022. The earliest the hearing could have been noticed, when adding the five calendar days for service, is August 22, 2022. Fedasz, therefore, failed to give sufficient notice pursuant to section 1005 of the California Code of Civil Procedure, depriving Plaintiffs of multiple days of statutory notice to respond to this motion. Plaintiffs argue that they effectuated service on June 25, 2022.

A review of the eCourt reveals that the summons on the original Complaint filed on December 11, 2018, names the following Defendants Zon Inc., Cameron Wilson, and Sarah Aikin. On August 20, 2019, a First Amended Complaint was filed. On April 26, 2021, a Third Amended Complaint was filed. On October 4, 2021, a Fourth Amended Complaint was filed. On October 18, 2021, Plaintiffs filed a Case Management Statement checking box 3(a) that states “All parties named in the complaint and cross-complaint have been served, have appeared, or have been dismissed.” Here, the original Complaint and Summons filed on December 11, 2018, fails to name Karina Fedasz as a Defendant and fails to show that service was properly effectuated upon her. In fact, there is no service of summons filed with the Court that shows that Karina Fedasz was properly served the Original Complaint or the First, Second, Third, or Fourth Amended Complaint. When a defendant moves to quash service of the summons and complaint, the plaintiff has “the burden of proving the facts that did give the court jurisdiction, that is the facts requisite to an effective service.” (Coulston v. Cooper (1966) 245 Cal.App.2d 866, 868.) Plaintiffs have not filed any supporting evidence to show that service upon Defendant, Karina Fedasz was properly effectuated, instead, Plaintiffs argue that they followed the Court’s instructions in effectuating the June 25, 2022, service. Furthermore, Plaintiff has had ample opportunity to properly effectuate service upon Defendant Karina Fedsaz as they have filed multiple Complaints and have yet to show proof of service of the summons and complaint. Accordingly, Defendant, Karina Fedasz’s motion to quash service of summons is granted.

Plaintiffs argues that Even if Rule 3.1342 of the California Rules of Court does not apply, and it does, Fedasz still failed to give sufficient notice based on the ordinary notice rules set forth in Section 1005 of the California Code of Civil Procedure. That provision provides that a motion “shall be served and filed at least 16 court days before the hearing.” Cal. Code Civ. Proc., § 1005. That notice period is extended by five calendar days when papers are served by mail. Id. The Motion was served on July 25, 2022, and the hearing for this matter is scheduled for August 19, 2022. Plaintiffs argue that the earliest the hearing could have been noticed, when adding the five calendar days for service, is August 22, 2022. The Court finds that there is good cause to allow the motion as Plaintiffs were able to file an opposition to Defendant’s motion and were not prejudiced as a result of the notice.