Judge Gregory Keosian, Case 21STCP03651 2022-10-24 Tentative Ruling

Judge: Gregory Keosian, Case: 21STCP03651, Date: 2022-10-24 Tentative Ruling

Case Number: 21STCP03651 Hearing Date: October 24, 2022 Dept: 61

Respondents Amir Haim Moyal and NKS Laboratories LTD’s Motion to Vacate Default Judgment and Order Confirming Arbitration Award is GRANTED. The Court orders the default entered against Respondents on December 22, 2021, order granting the petition to confirm the arbitration award on March 9, 2022, and judgment entered against Respondents on March 11, 2022 are hereby vacated.

Legal Standard

“[C]ompliance with the statutory procedures for service of process is essential to establish personal jurisdiction. [Citation.] Thus, a default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void. [Citation.]” (Ellard v. Conway (2001) 94 Cal.App.4th 540, 544.) “Under [Code of Civil Procedure] 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.” (Ibid.)

“When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of:¿(i) two years after entry of a default judgment against him or her;¿or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.” (Code Civ. Proc., § 473.5, subd. (a).)

Discussion

Respondents argue they were never served for the following reasons.

First, Moyal resided in Israel at all relevant times. (Declaration of Amir Haim Moyal (“Moyal Decl.”), ¶ 2.) In fact, the arbitration agreement stated that Moyal’s “Address For Notices and Service” is 23 Haplada street, Ashdod, Israel. (See Petition, Attachment 4(b) – the Arbitration Agreement, p. 4, at the bottom of page.) However, Petitioner’s Proof of Service shows that he mailed the Petition and Summons to a New York address that Moyal neither resides nor does business. (Moyal Decl., ¶ 2.) In addition, the return receipt that Petitioner filed does not bear Moyal’s name or signature, or of any person authorized to accept service on his behalf. (Moyal Decl., ¶ 3.) He had no knowledge of this action until July 2022. (Moyal Decl., ¶ 4.)

Second, NKS was not a party to the arbitration agreement. In addition, its principal and only place of business (as Moyal, its director, testifies) has always been 23 Haplada street, Ashdood, Israel. (Moyal Decl., ¶¶ 1, 5, 6.) The return receipt that Petitioner alleges was from NKS, did not bear the name or signature of anyone NKS authorized to accept service on its behalf. (Moyal Decl., ¶ 7.)

For those reasons, Respondents argue, the default and order confirming the Petition are void and should be vacated pursuant to Code of Civil Procedure sections 473, subdivision (d), and 473.5.

In opposition, Petitioner argues that the motion should be denied for the following four reasons. First, Petitioner requested, and the Respondents did not object, NKS to be added to the arbitration award. Therefore, Respondents cannot now argue that NKS should not be a party to these proceedings because it was not a party to the arbitration agreement. Second, Petitioner properly served Respondents as required by Code of Civil Procedure section 415.40. The contract between the parties listed the Respondents’ address as being the New York address. In addition, after Petitioner served the Respondents at that address, a return receipt was completed and returned. Third, Respondents have failed to attach a proposed responsive pleading as required by Code of Civil Procedure section 473, subdivision (b). Fourth and finally, Code of Civil Procedure section 473, subdivision (d), does not apply to the instant motion because Respondents have failed to show that the judgment resulted from clerical mistake.

In reply, Respondents correctly point out that there is no merit to Petitioner’s arguments that (1) the Court should deny the motion because they failed to attach a proposed pleading, and (2) Code of Civil Procedure section 473, subdivision (d), is inapplicable because Respondents have failed to show there is a clerical error.

Respondents’ motion is based on Code of Civil Procedure section 473, subdivision (d), which provides that a “court may set aside a default judgment which is valid on its face, but void, as a matter of law, due to improper service.” That subdivision (unlike subdivision (c)) does not require an applicant to attach a proposed responsive pleading.

In addition, Respondents do not need to show clerical error to obtain relief under Code of Civil Procedure section 473, subdivision (d). Although a clerical error can be grounds for setting aside a judgment under that statute, it is only one option. If the Respondents can show that the judgment entered against them is void, the statute allows the Court to set it aside.

The Court finds that the Respondents have shown that the default and judgment that was entered against them is void and should be set aside. Code of Civil Procedure section 1290.4, subdivision (b), provides that if an arbitration agreement does not provide the manner in which service of the petition shall be made, service outside California may be made by mailing a copy of the petition and other papers via certified mail. However, such service requires a “return receipt of the United States Post Office bearing the signature of the person on whom service was made.” (Code Civ. Proc., § 1290.4, subd. (b)(2).) Here, Petitioner intended to serve the Respondents. However, Respondents have presented uncontradicted evidence that they were not associated with the New York address where Petitioner mailed the summons. In addition, neither they nor their agents signed the return receipts Petitioner submitted to the Court. Therefore, there is no evidence that the Respondents received actual notice of this action in time to respond.

Accordingly, the Court grants the Respondents’ motion.

Counsel for Respondents to provide Notice.