Judge: Laura A. Seigle, Case: 19STCV17968, Date: 2022-09-22 Tentative Ruling

Case Number: 19STCV17968    Hearing Date: September 22, 2022    Dept: 15

[TENTATIVE] ORDER RE MOTION TO VACATE ENTRY OF DEFAULT; ORDER RE JUDGMENT

I.          BACKGROUND FACTS

            On May 23, 2019, Plaintiffs Chaorong Huang, Nanping Luo, Yuchun Wei, and Wenhui Lin filed a complaint against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, Oasis Growth Partners, LLC, John F. Fitzmaurice, and Galway LLC.  On May 28, 2019, Plaintiffs filed a First Amended Complaint adding The Bassist Corporation as a defendant.  On August 6, 2019, Plaintiffs obtained entry of default against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, Oasis Growth Partners, LLC, and The Bassist Corporation.  On October 22, 2019, Plaintiffs added ARC-1 Limited Partnership as Doe 1 and Winston Liu as Doe 2.

            On January 9, 2020, Plaintiffs filed a Second Amended Complaint naming as defendants Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, ARC-1 Limited Partnership, Oasis Growth Partners, LLC, Winston Liu, Winston Construction Service, Inc., W&W Technologies, Inc., and PWP Construction, Inc.  On September 16, 2020, Plaintiffs obtained entry of default against Daniel Chiu, Oasis Growth Partners, LLC, and ARC-I Limited Partnership.  On December 30, 2020, Plaintiffs obtained entry of default against W&W Technologies, Inc. and ARC-III Limited Partnership, and they dismissed PWP Construction Inc.  On February 5, 2021, Plaintiffs obtained entry of default against Rebecca Chiu.  On December 7, 2021, Plaintiffs dismissed ARC-III Limited Partnership.  On May 25, 2022, Plaintiff Yuchun Wei dismissed claims against Winston Liu and Winston Construction Service, Inc., and on June 9, 2022, Yuchun Wei dismissed claims against Central Escrow, Inc. and Sarah Shum.  On June 22, 2022, Plaintiffs dismissed the remaining Does.

            On May 19, 2020, Winston Liu and Winston Construction Service, Inc. filed a cross-complaint for indemnification against Daniel Chiu, ARC-I Limited Partnership, and ARC-II Limited Partnership.  On June 29, 2020, Winston Liu and Winston Construction Service, Inc. obtained entry of default against Daniel Chiu and ARC-III Limited Partnership.  On December 21, 2020, Winston Liu and Winston Construction Service, Inc. obtained entry of default against ARC-I Limited Partnership.  On June 22, 2022, Winston Liu and Winston Construction Service, Inc dismissed remaining Does.

            On January 6, 2021, Plaintiffs named Central Escrow, Inc. as Doe 3 and Sarah Shum as Doe 4.  On March 19, 2021, Central Escrow, Inc. and Sarah Shum filed a cross-complaint for indemnification against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC.  On April 29, 2022, Central Escrow, Inc. and Sarah Shum obtained entry of default against Rebecca Chiu, Daniel Chiu, Oasis Growth Partners, LLC, and ARC-III Limited Partnership.  On June 22, 2022, Central Escrow, Inc. and Sarah Shum dismissed remaining Does.

            On February 8, 2022, Plaintiffs named Iling Wu as Doe 5.  On April 20, 2022, Plaintiffs filed a proof of service of the summons and complaint on Iling Wu by substituted service on April 20, 2022 at 33862 Granada Dr., Dana Point CA 92629.  The process servicer states he left the documents with an Asian women who was approximately 40-50 years old and is a co-habitant.  On May 23, 2022, the court severed the claims against Wu pursuant to Local Rule 3.25(f)(4).

            On June 22, 2022, the trial began on Plaintiffs Chaorong Huang’s, Nanping Luo’s, and Wenhui Lin’s claims against Winston Liu, Winston Construction Service, Inc., Sarah Shum, and Central Escrow, Inc.  On July 5, 2022, the jury returned a verdict in favor of Plaintiffs Chaorong Huang, Nanping Luo, and Wenhui Lin.  Plaintiffs were to prepare a judgment within five days.  The court also set an Order to Show Cause regarding entry of judgment against Wu for August 4, 2022.

            On July 11, 2022, Plaintiffs filed a proposed judgment.  On July 19, 2022, Central Escrow, Inc. and Sarah Shum filed objections to the proposed judgment stating one judgment should be entered that included the default judgments.  On July 20, 2022, Winston Liu and Winston Construction Service, Inc. filed objections to the proposed judgment stating one judgment should be entered that included the default judgments.  On July 20, 2022.  Plaintiffs filed a notice of settlement with Central Escrow, Inc. and Sarah Shum stating they had reached a conditional settlement and asked that no judgment be entered against Central Escrow, Inc. and Sarah Shum as part of the settlement.

On July 13, 2022, Plaintiffs filed an amended proof of service showing service of the Second Amended Complaint and summons on Iling Wu on April 20, 2022 by substituted service on an Asian women who was approximately 40-50 years old and is a co-habitant.  On July 13, 2022, Plaintiffs obtained entry of default against Iling Wu.

On August 1, 2022, Plaintiffs filed a default judgment package as to Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, Oasis Growth Partners, LLC, and Iling Wu.  On August 4, 2022, the court held a hearing about the defects in the default judgment package and set a deadline of September 7, 2022 for a revised default judgment package.  The court continued the OSC date to September 13, 2022, which was later continued to September 22, 2022.

II.        MOTION TO VACATE ENTRY OF DEFAULT

            On August 26, 2022, Defendant I-Ling Wu filed a motion to set aside entry of default pursuant to Code of Civil Procedure section 473.5.  She also lodged a proposed answer to the Second Amended Complaint.

The court does not acquire jurisdiction over a party unless the statutory requirements for service of summons are met.  (Engebretson & Co. v. Harrison (1981) 125 Cal.App.3d 436, 443.)  The original service of process, which confers jurisdiction, must conform to statutory requirements or all that follows is void.  (Honda Motor Co. v. Superior Court (1992) 10 Cal. App. 4th 1043, 1048.)  When a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void and is vulnerable to direct attack at any time.  (Lee v. An (2008) 168 Cal. App. 4th 558, 563-564.)

Where a service of summons has not resulted in actual notice to a party in time to defend the action, the party may move the court to set aside a default.  (Code Civ. Proc., § 473.5, subd. (a).)  The motion must be made no later than two years after entry of default or 180 days after service of a written notice that default or default judgment has been entered.  (Ibid.)  The party must act with diligence upon learning of the judgment.  (Trackman v. Kenney (2010) 187 Cal.App.4th 175, 180; Code Civ. Proc., §473.5, subd. (a).)  The party seeking to set aside must also submit a declaration that lack of actual notice was not caused by his or her avoidance of service or inexcusable neglect and a copy of the proposed answer, motion, or other pleading proposed to be filed in the action.  (Code Civ. Proc., § 473.5, subd. (b).)

I-Ling Wu states she is 71 years old and was 70 years old on the date of service shown on the proof of service.  (Wu Decl., ¶ 2.)  She lived alone at 33862 Granada Drive, Dana Point, California 92629 in April 2022, and there was no one at her house on April 20, 2022 who could have received the summons and amended complaint.  (Id. at ¶¶ 5, 6.)  She states she was not served with the summons and complaint and did not know about the entry of default until July 2022.  (Id. at ¶¶ 19, 22.) 

Plaintiffs argue Wu was served on April 20, 2022, and the process server took a picture of an Asian women aged 40-50 leaving Wu’s house on April 20, 2022.  (Guo Decl., ¶ 2.)

Wu presented evidence she was 70 years old on April 20, 2022, not 40-50 years old.  Wu presented sufficient that she was not served and that no co-habitant of hers was served.  She did not act to avoid service, and she acted diligently once she learned of the default.

Accordingly, the motion is GRANTED and the entry of default is set aside pursuant to section 473.5.  Defendant I-Ling Wu is to file her answer to the Second Amended Complaint within ten days of the date of this order.  The court sets a case management conference for October 20, 2022 at 9:00 a.m. in Department 15 of the Spring Street Courthouse.

The moving party is to give notice.

III.       JUDGMENT

Pursuant to the August 4, 2022 order, Plaintiffs were to submit a revised default judgment package by September 7, 2022.  They did not do that.  Nor did they file a new judgment after settling with Central Escrow and Sarah Shum and asking the court not to enter the July 11, 2022 proposed judgment. 

On September 7, 2022, Central Escrow and Sarah Shum filed a default judgment package against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC. 

Winston Liu and Winston Construction Service, Inc. did not file a default judgment package against Daniel Chiu, ARC-I Limited Partnership and ARC-III Limited Partnership.

The court notes the following deficiencies:

1.         Plaintiffs stated they settled with Central Escrow and Sarah Shum and asked the court not to enter a judgment naming those defendants.  Plaintiffs are to file a revised proposed  judgment that does not include Central Escrow and Sarah Shum by October 5, 2022.  Plaintiffs’ revised proposed judgment against Winston Liu and Winston Construction Services, Inc. must offset the amount of the settlement with Central Escrow and Sarah Shum.  And Plaintiffs must dismiss Central Escrow and Sarah Shum pursuant to the settlement.

2.         Plaintiffs failed to file a new default judgment package against Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, and Oasis Growth Partners, LLC.  To avoid a dismissal of the claims against Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, and Oasis Growth Partners, LLC, Plaintiffs must file a revised default judgment package fixing the deficiencies previously noted by October 5, 2022.

3.         Plaintiffs obtained entry of default against W&W Technologies, Inc., but Plaintiffs’ prior default judgment package did not include W&W Technologies, Inc.  Plaintiffs are to include W&W Technologies, Inc. in the revised default judgment package or dismiss W&W Technologies, Inc. by October 5, 2022.

4.         Plaintiff Yuchun Wei previously dismissed claims against Central Escrow, Sarah Shum, Winston Liu and Winston Construction Services, Inc.  Plaintiff Yuchun Wei did not dismiss claims against Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, Oasis Growth Partners, LLC, and W&W Technologies, Inc.  Therefore, to avoid a dismissal of the claims against Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, Oasis Growth Partners, LLC, and W&W Technologies, Inc., Plaintiff Yuchun Wei must file a default judgment package against Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, Oasis Growth Partners, LLC, and W&W Technologies, Inc. by October 5, 2022.  If Plaintiff Yuchun Wei fails to file a default judgment package, the court will dismiss Plaintiff Yuchun Wei’s remaining claims.

5.         Central Escrow, Inc. and Sarah Shum filed a proposed default judgment on their indemnity claims against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC seeking $1,620,000.00 in compensatory damages.  This is incorrect because Plaintiffs did not obtain an award of $1,620,000.00 against Central Escrow, Inc., and Plaintiffs did not obtain an award of $1,620,000.00 against Sarah Shum.  Plaintiffs obtained a total award of $933,604 against Central Escrow.  Therefore, the maximum amount that Central Escrow can recover against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC jointly and severally is $933,604, if it actually paid that amount to Plaintiffs, plus the attorney fees and costs it incurred.  The proposed judgment should state that Central Escrow is entitled to recover from Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC jointly and severally the amount it actually paid to Plaintiffs up to $933,604.  Plaintiffs obtained a total award of $400,115 against Sarah Shum.  The maximum amount that Sarah Shum can recover against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC jointly and severally is $400,115, if she actually paid that amount to Plaintiffs, plus the attorney fees and costs she incurred.  The proposed judgment should state that Sarah Shum is entitled to recover from Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC jointly and severally the amount she actually paid to Plaintiffs up to $400,115. 

6.         Central Escrow, Inc. and Sarah Shum’s proposed default judgment on their indemnity claims against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC states they are entitled to $3,266.76 in prejudgment interest.  They do not state how they calculated that amount.  Therefore, that amount is denied.

7.         Central Escrow, Inc. and Sarah Shum’s proposed default judgment on their indemnity claims against Daniel Chiu, Rebecca Chiu, ARC-III Limited Partnership, and Oasis Growth Partners, LLC states they are entitled to $49,000.00 in attorney fees, and $7,713.97 in costs.  However, each is only entitled to recover the amount of fees and costs each actually paid or actually incurred.  Central Escrow, Inc. must identify the portion of the fees and costs it actually paid or actually incurred.  Sarah Shum must identify the portion of the fees and costs it actually paid or actually incurred.

8.         Winston Liu and Winston Construction Service, Inc. did not file a default judgment package against Daniel Chiu, ARC-I Limited Partnership and ARC-III Limited Partnership.  To avoid a dismissal of their claims, Winston Liu and Winston Construction Service, Inc. must file a default judgment package against Daniel Chiu, ARC-I Limited Partnership and ARC-III Limited Partnership by October 5, 2022.  If Winston Liu and Winston Construction Service, Inc. fail to file a default judgment package against Daniel Chiu, ARC-I Limited Partnership and ARC-III Limited Partnership, the court will dismiss their claims.

The court sets an Order to Show Cause re dismissal of Central Escrow, Inc. and Sarah Shum pursuant to the settlement for October 11, 2022 at 9 a.m. 

The court sets an Order to Show Cause re dismissal of Plaintiff Yuchun Wei’s claims against Daniel Chiu, Rebecca Chiu, ARC-I Limited Partnership, Oasis Growth Partners, LLC, and W&W Technologies, Inc. for October 11, 2022 at 9 a.m. 

The court sets an Order to Show Cause re dismissal of Winston Liu and Winston Construction Service, Inc.’s claims against Daniel Chiu, ARC-I Limited Partnership and ARC-III Limited Partnership for October 11, 2022 at 9 a.m.

Plaintiffs’ counsel is to give notice to all parties including Plaintiff Yuchun Wei.