Judge: Donald F. Gaffney, Case: Dhaliwal v. Popular Tech, Date: 2023-06-14 Tentative Ruling

TENTATIVE RULING:

Motion for Summary Judgment.

Defendant Popular Tech moves for summary judgment or, in the alternative, summary adjudication on the First Amended Complaint (FAC) filed by Plaintiffs Sarvipal Dhaliwal and Intellect It, LLC.  For the following reasons, the motion is DENIED.

A defendant moving for summary judgment satisfies his or her initial burden by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to the cause of action.  (Code Civ. Proc. (“CCP”), § 437c(p)(2).)  A cause of action “cannot be established” if the undisputed facts presented by the defendant prove the contrary of the plaintiff’s allegations as a matter of law.  (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1597.)  Once the moving party meets that burden, the burden shifts to the party opposing MSJ to show, by reference to specific facts, the existence of a triable issue as to that affirmative defense or cause of action.  (Id.; Villacres v. ABM Industries, Inc. (2010) 189 Cal.App 4th 562, 575.)  To meet this burden, the opposing party must present substantial and admissible evidence creating a triable issue.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) 

According to the FAC, Defendant Popular Tech filed a lawsuit against Plaintiffs Sarvipal Dhaliwal and Intellect IT, LLC on July 1, 2016 (the “Underlying Action”).  (FAC, ¶ 4.)  Plaintiffs allege that they were not sufficiently served in connection with that lawsuit.  Specifically, Defendant attempted service at 1024 Iron Point Road, Suite 100 Folsom, California, 95630.  (Id., ¶ 6.)  Plaintiff Intellect IT’s office, however, is suite number 1031, not suite 100.  (Id., ¶ 7.)  Defendant then attempted substitute service at that address.   (Id., ¶ 8-9.)  Defendant did not attempt to serve Plaintiffs at Plaintiff Dhaliwal’s residence on file with the Secretary of State as the agent for service of process for Intellect IT.  (Id., ¶ 10.)  Plaintiffs allege that Popular knew the correct address for Dhaliwal’s residence and knew that Suite 1031 was not the correct business address for Plaintiffs.  (Id., ¶ 12.)  The FAC asserts causes of action for 1) independent action in equity to vacate judgment for lack of personal jurisdiction, and 2) independent action in equity to vacate judgment for extrinsic fraud or mistake.

First cause of action - independent action in equity to vacate judgment for lack of personal jurisdiction

Plaintiffs allege they were not served with the Summons and Complaint in the Underlying Action and the attempted substitute service was defective because it was directed to an incorrect address.  (FAC, ¶¶ 22-26.)  Defendant contends it served Plaintiffs by substitute service.  (UMF 9.)

Code Civ. Proc., § 415.20 governs substitute service:

(b) If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, as specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be served 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 other than a United States Postal Service post office box, 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 by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. Service of a summons in this manner is deemed complete on the 10th day after the mailing. 

Plaintiffs provide evidence that they occupied three suites at the Iron Point Road building –suites 1031, 1060, and 1066.  (Plaintiffs’ Response to Separate Statement No. 4.)  Defendant contends it made three attempts to serve Plaintiffs with the Complaint in the Underlying Action at their usual place of business.  (UMF 6.) 

However, as evidence of this, Defendant points only to the request for judicial notice.  “Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)  “Although the existence of a document may be judicially noticeable, the truth of statements contained in the document and its proper interpretation are not subject to judicial notice if those matters are reasonably disputable.’ ” (Unruh–Hazton v. Regents of University of California (2008) 162 Cal.App.4th 343, 364–365.)  While the Court can take judicial notice that the proofs of service were filed and were accompanied by a declaration of due diligence, the Court cannot take judicial notice of the truth of the statements contained in the proofs of service.

Even if Defendant’s counsel had properly authenticated the proofs of service via declaration, however, there would still be a triable issue of material fact as to whether Plaintiffs were properly served.  Plaintiffs provide evidence that the address at which Defendant effectuated substitute service on Plaintiffs – Suite 100 – was not a valid address for Plaintiffs.  (Response to UMF 4-7.)  Defendant has not established that it served either Plaintiff at their address at Suites 1031, 1060, or 1066.  At the very least, there is a triable issue of material fact as to whether Suite 100 was a valid address for Plaintiffs.  Thus, there is a triable issue of material fact as to whether Plaintiffs were ever properly served at their “dwelling house, usual place of abode, usual place of business, or usual mailing address.”  (Code Civ. Proc., § 415.20.)  If Plaintiffs were never served properly, then the Court may have lacked personal jurisdiction over Plaintiffs.  If the Court never had personal jurisdiction over Plaintiffs, then the judgment would be void.  (Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249 (Lack of personal jurisdiction renders a default judgment void, so that it may be vacated at any time); Yu v. Signet Bank/Virginia (1999) 69 Cal.App.4th 1377, 1386 (“[A] defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding.”).)  Thus, the motion is denied as to the first issue for summary adjudication.

Second cause of action - independent action in equity to vacate judgment for extrinsic fraud or mistake.

The second cause of action seeks to set aside the judgment on the same basis that Plaintiffs were not properly served with the Underlying Action.  (FAC, ¶¶ 29-33.)

Apart from any statutory authority, a court has inherent, equitable power to set aside a judgment on the ground of “extrinsic fraud or mistake.” (Olivera v. Grace (1942) 19 Cal. 2d 570, 576; Rappleyea v. Campbell (1994) 8 Cal. 4th 975, 981.)

A motion to vacate a default or dismissal that is made more than six months after entry of default can be made on the ground that a court has the inherent equitable power to grant such relief where there has been extrinsic fraud or mistake. (Orange Empire Nat. Bank v. Kirk, 259 CalApp3d 347, 352-53 (1968).)  “Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding … The essence of extrinsic fraud is one party's preventing the other from having his day in court.”  (Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300.) In short, “[e]xtrinsic fraud is a broad concept that ‘tend(s) to encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing.’” (Weil & Brown, Cal. Prac. Guide: Civil Procedure before Trial, § 5:441.) Relief based on extrinsic fraud is not limited to fraud by the opposing party.

There are three essential requirements to obtain equitable relief. The party in default must show: 1) a meritorious defense; 2) a satisfactory excuse for not presenting a defense to the original action; and 3) diligence in seeking to set aside the default once it was discovered. (Rappleyea v. Campbell (1994) 8 Cal. 4th 975, 982.)

Here, Defendant has not met its initial burden of showing that Plaintiffs cannot establish the elements required to obtain equitable relief.  Specifically, Defendant contends Plaintiffs cannot show a meritorious defense (UMF 48), but Defendant does not provide sufficient supporting evidence.  The only evidence supporting this fact is the following allegation from Plaintiffs’ Complaint in this lawsuit: “Although Plaintiffs deny liability as alleged in the underlying action, Dhaliwal takes no issue with the filing of the underlying action itself. It is the lack of due process in obtaining default judgment in the underlying action that is at issue in this collateral attack on that judgment.”  (FAC, ¶ 5.)  This allegation does not satisfy Defendant’s initial burden of showing that Plaintiffs cannot show a meritorious defense to the Underlying Action.  In fact, the allegation shows that Plaintiffs deny liability in the Underlying Action. 

The motion is denied as to the second issue for summary adjudication. 

Third issue – Defendant’s affirmative defense of laches

The third issue on which Defendant seeks summary adjudication in its notice of motion is its affirmative defense of laches. 

The affirmative defense of laches may be applied to bar relief to a plaintiff who has delayed unduly in seeking relief. (Concerned Citizens of Palm Desert, Inc. v. Board of Supervisors (1974) 38 Cal.App.3d 257, 265.)  A defendant seeking to apply the affirmative defense must demonstrate prejudice, making it unjust to grant relief to plaintiff. (San Bernardino Valley Audubon Society v. City of Moreno Valley (1996) 44 Cal.App.4th 593, 607.)  On undisputed facts, the applicability of laches may be decided as a matter of law. (Ibid.)  “Generally speaking, the existence of laches is a question of fact to be determined by the trial court in light of all of the applicable circumstances, and in the absence of manifest injustice or a lack of substantial support in the evidence its determination will be sustained.” (Miller v. Eisenhower Medical Center (1980) 27 Cal.3d 614, 624.)

“The defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay.” (Conti v. Board of Civil Service Commissioners (1969) 1 Cal.3d 351, 359.)

Defendant provides evidence that Plaintiffs were provided notice of the judgment by mail at Suite 1031 on November 30, 2016.  (UMF 27, 54.)  Service by mail of the judgment, however, does not necessarily establish actual knowledge of the judgment on the part of Plaintiffs.  Defendant also provides evidence that on July 16, 2019, Plaintiffs’ counsel at the time sent a letter to Defendant’s then-counsel threatening legal action if a lien was not removed.  (UMF 36, 40.)  But whether this was an unreasonable delay is a question of fact.  (See Miller, supra, 27 Cal.3d at 624.)  Further, Defendant does not contend in its memorandum of points and authorities or point to any evidence in its separate statement of any prejudice resulting from the delay, which is another factor to be considered for laches.

In its “Further Reply” that was filed after the deadline to file the reply papers, Defendant provides evidence it contends shows that Defendant has been prejudiced by the delay in bringing this action.  However, new evidence is generally not permitted with reply papers.  (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537; San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 312, as modified (Oct. 9, 2002) (“Assignee contends the trial court erred when it considered the supplemental declaration which landlord submitted with its reply papers. We agree.”).) The Court declines to consider this new evidence.  Even if the Court were to consider it, however, the question of whether the delay was unreasonable is a question of fact, as discussed previously.

The motion is denied.

Defendant’s request for judicial notice of documents filed in the Underlying Action (Exhibits 1-9) is granted.  (Evid. Code § 452(d) (judicial notice may be taken of court records).)  Defendant’s request for judicial notice of documents filed in Sacramento County Superior Court in Case Number 13FL04083, entitled Panzy Chattha vs. Sarvpal Dhaliwal (Exhibits 10-11)is granted for the same reasons.  Defendant’s request for judicial notice of documents recorded in Sacramento County (Exhibits 12-15) is granted, but not as to the truth of the matters stated therein.  (Evid. Code § 452 (c) and (h); Richtek USA, Inc. v. UPI Semiconductor Corp. (2015) 242 Cal.App.4th 651, 658.)  Defendant’s request for judicial notice of the Limited Liability Company Articles of Organization of Intellect IT, LLC, filed with the California Secretary of State on 4/6/2005 (Exhibit 16) is denied.  Materials prepared by private parties and merely on file with state agencies generally not properly subject to judicial notice. (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 607-608, citing Hughes v. Blue Cross of Northern California (1989) 215 Cal.App.3d 832, 856.)  Further, even if the Court were to take judicial notice of the existence of the Statement on file with the Secretary of State, the Court would not take judicial notice of the truth of the contents of that document.  (Searles Valley Minerals Operations, Inc. v. State Bd. of Equalization (2008) 160 Cal.App.4th 514, 519.)

The Court declines ruling on Plaintiffs’ evidentiary objection because it is not material to the disposition of the motion.  (Code Civ. Proc. § 437c(q).) 

Plaintiffs to give notice.