Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 200 

 

 

BACKGROUND 

This case arises from a dispute over rental income from vacation properties.  Defendant Joel Liebke owns and operates a property management firm, assisting property owners in renting out luxury vacation homes throughout California.  Plaintiff Peter Deschner owns a home in Palm Springs, California (the “Palms Springs Property”).   

Defendant, through his firm, began leasing the Palm Springs Property to third parties, but failed to obtain the required permits from the City of Palm Springs.  As a result, the City fined Plaintiff and imposed a lifetime rental ban on Plaintiff.  Plaintiff sued one of Defendant’s entities – Luxury Rental Group, Inc. (“LRG”) – for breach of contract and tortious conduct.  The parties then entered into a written settlement agreement for $60,000 to be paid out over nine months.  LRG made the first payment and then declared Chapter 7 Bankruptcy. 

Plaintiff also owns property in Venice, California (the “Venice Property”).  Plaintiff and Defendant entered into an exclusive written property management agreement granting Defendant the right to lease the Venice Property to prospective renters.  As consideration for his services, Defendant was to receive 25% of gross booking revenue.  From December 26, 2018 through January 6, 2019, Defendant rented the Venice Property to third parties.  After commissions, Plaintiff was to receive $12,081.05 in net rental income.  Plaintiff has yet to receive his share of the rental income.   

The operative first amended complaint (“FAC”) alleges claims for (1) violation of Penal Code section 496(c), (2) conversion, (3) fraudulent inducement and (4) breach of contract.   

This hearing is on Defendant’s motion to set aside default.  Defendant claims he was never served with the FAC, and therefore, the Court did not have jurisdiction to enter a default judgment against him.    

LEGAL STANDARD¿ 

“Compliance with the statutory procedures for service of process is essential to establish personal jurisdiction.¿ Thus, a default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void.¿ Under section 473, subdivision (d), the court may set aside a default judgment which is valid on its face, but void, as a matter of law, due to improper service.”¿ (Ellard v. Conway (2001) 94 Cal.App.4th 540, 544.)¿  

“When a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void, and thus vulnerable to direct or collateral attack at any time.”¿ (Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249 (trial court properly granted motion for relief from default and default judgment based on CCP §473(d) where defendants argued there was no valid service of process and they lacked minimum contacts with California).)¿¿¿ 

A defendant may therefore move to set aside a default and default judgment based on improper service and lack of personal jurisdiction under Code Civ. Proc. §473(d).¿ (Id. at 1250.)¿ A defendant need not bring a motion to quash prior to or in conjunction with a motion for relief from default and default judgment pursuant to Code Civ. Proc. §473(d).¿ (Id.)¿ 

It is always the plaintiff’s burden to establish the existence of jurisdiction.¿ (Id. at 1250-1251; Dill v. Berquist Const. Co., Inc. (1994) 24 Cal.App.4th 1426, 1439-1440.)¿ Thus, even though defendant is the moving party on a motion to set aside a void judgment under CCP §473(d), the burden is on plaintiff to establish proper service.¿ (Dill, 24 Cal.App.4th at 1439-1440.)¿ A valid proof of service gives rise to a rebuttable presumption of valid service.¿ (Id. at 1441-1442.)¿ But the presumption may be overcome by contrary evidence.¿ (City of Los Angeles v. Morgan (1951) 105 Cal.App.2d 726, 731.)¿ 

DISCUSSION 

¿Code Civ. Proc. § 473(b)¿provides that a motion to set aside default must be “accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted.”  Plaintiff’s motion fails to include a copy of the proposed answer, and accordingly, it is procedurally defective.  Moreover, the Court cannot exercise its discretion to overlook this defect, as Code Civ. Proc. § 473(b) expressly states that without the copy of the answer, the application “shall not be granted.”   

Further, the lone support for Defendant’s motion to set aside is his counsel’s affidavit which purports to attest to facts not within her personal knowledge, including where Defendant lived and worked at the time the summons and FAC were served (Shouhad Decl. ¶¶9, 10); when Defendant purportedly first learned of the FAC (Shouhad Decl. ¶¶9, 10); Defendant was allegedly not evading service (Shouhad Decl. ¶25); Defendant’s failure to respond was the alleged result of his inadvertence, surprise, mistake or excusable neglect or lack of notice (Shouhad Decl. ¶¶26, 27); and the proof of service of the FAC alleges service by mail to an address that was purportedly not Defendant’s home or work address (Shouhad Decl. ¶29).  The declaration lacks foundation, and to the extent it is based on statements made by Defendant to his counsel, it contains inadmissible hearsay.  (Kendall v. Barker (1988) 197 Cal.App.3d 619, 624 (reversing grant of motion to set aside default where the defendant’s entire substantive showing in support of his motion was a conclusory declaration by his counsel, made without personal knowledge and containing inadmissible hearsay). 

Finally, the declaration from counsel also fails to explain why Defendant did not retain counsel sooner.  Defense counsel actually represented Defendant for over a year until she was relieved as counsel on August 12, 2022.  Defendant then chose to represent himself pro per, during which time he evaded attempts to take his deposition. Only after default was entered, did defense counsel re-appear again.  This chronology smacks of Defendant lying in wait and testing whether Plaintiff would give up or move forward, only to reappear when it became clear Plaintiff was taking steps to obtain a judgment.  (See Hopkins & Carley v. Gens (2011) 200 Cal.App.4th 1401, 1411 (rejecting affidavit filed in support of a 473(b) motion that “fail[ed] conspicuously to set out any details that would most obviously bear on the excusability of the claimed ignorance:  When was counsel retained?  Why was Gens not ‘able’ to engage counsel sooner? What exactly was ‘discovered’?  How?  When?  By whom?  And most critically again—why not sooner?”).)  

To grant relief to litigants, like defendant here, who delay the case in getting to trial “invites other litigants to ignore the laws and rules and renders the process unfair to most other litigants and counsel who endeavor to comply with them.”  (McClain v. Kissler (2019) 39 Cal.App.5th 399, 424.)  “When inexcusable neglect is condoned even tacitly by the courts, they themselves unwittingly become instruments undermining the orderly process of the law.”  (Id.)   

CONCLUSION 

Based on the foregoing, the Court denies Defendant’s motion to set aside default.   

 

DATED: April 3, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court