Judge Ralph C. Hofer, Case Number: 21GDCV01383, Date: 2024-10-18 Tentative Ruling

DUE TO THE COURT’S SCHEDULING ISSUES, THE CALENDAR WILL START AT 8:30 A.M. AND WILL RECESS AT 9:30 A.M. WHATEVER MATTERS HAVE NOT BEEN CALLED WILL TRAIL TO THE 1:30 P.M.

Plaintiff M&K Attorneys, APC alleges that in the summer of 2019, plaintiff’s principal and shareholder was introduced to defendant Ronald Davis and defendant Kealyn Teekah through a mutual friend, and that over the next several months the parties developed a close friendship and relationship based on trust. Plaintiff alleges that throughout the months defendants Davis and Teekah discussed the numerous business endeavors they were allegedly involved in, attempting to depict themselves as successful businesspeople.

Defendants Davis and Teekah represented, among other things, that they invested heavy amounts of liquid money in securities, specifically bonds, and claimed monthly coupon payments in excess of $20,000 a month, and claimed that defendants Edgar Abrams and defendant ERA Management, Inc., an entity solely owned and managed by defendant Abrams, were responsible for these investments. Defendants Davis and Teekah also represented that they had various real estate holdings in Florida, Louisiana, and Alabama, were in the business of reselling fine jewelry, watches and sports memorabilia, had developed various businesses overseas with Chinese billionaires, and were in discussions and developing a television series with Fox featuring defendants Davis and Teekah hosting a talk show. Defendants Davis and Teekah also represented that they were developing a podcast for defendant Davis, and that defendant Davis would be participating in and being paid to play in various basketball tournaments.

The operative complaint, the First Amended Complaint, alleges that in November of 2019, defendant Davis was in need of monies and claimed that defendants’ liquid funds were currently tied up in bonds and the penalty of selling the investments was steep, but that a bond coupon payment would be forthcoming in a few weeks. Defendant Davis also represented that he was currently in escrow on one of his properties and was expecting a profit once escrow closed, and that Fox was drafting a contract for his television show which would pay him handsomely, in addition to Davis playing in basketball tournaments and starting a podcast. Plaintiff alleges that plaintiff relayed the statements to defendant Teekah who confirmed each of them, and also stated that she managed Davis’ bank accounts, made all deposits and was a signatory on his account, and stated in writing that she promised to pay back any loans, if made, as she was in charge of Davis’ money.

Plaintiff alleges that based on these representations and assurances, plaintiff loaned defendants $89,000.00. Plaintiff alleges that plaintiff has made numerous requests for repayment of the funds, defendants Davis and Teekah have promised to repay the funds shortly, but in November of 2021 defendants Davis and Teekah stated the money would not be repaid and advised plaintiff to “do whatever you need to do,” and as a result this suit was initiated.

The file shows that on August 31, 2023, plaintiff filed an Application for Publication seeking an order directing service of the summons on defendant Teekah by publication. On September 1, 2023, the court ordered the summons on the First Amended Complaint and First Amended Complaint shall be made upon defendant Teekah by publication in the San Fernando Valley Sun newspaper.

Defendant argues that the application for publication was legally insufficient since it was based on an insufficient investigation as to defendant’s then current address, and that defendant was not aware of the outstanding lawsuit so could not answer.

“The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken….”

The trial court’s granting or denial of relief under this provision is reviewed for abuse of discretion. State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610. It is noted that appellate courts are traditionally “favorably disposed toward such action on the part of the trial courts as will permit, rather than prevent, the adjudication of legal controversies on their merits.” Mercantile Collection Bureau v. Pinheiro (1948) 84 Cal.App.2d 606, 608, citing Benjamin v. Dalmo Mfg. Co. (1947) 31 Cal.2d 523.

Defendant argues that the default was entered on January 16, 2024, so this motion is timely made within six months, as it was filed on July 15, 2024, and is accompanied by a proposed answer. [Ex. 7]. Defendant argues that defendant was not aware that a lawsuit had been filed against her and did nothing to avoid service, but was living and working in New York at the time of service.

Specifically, defendant submits a declaration stating that in 2021 defendant’s relationship with defendant Davis terminated, and she stopped being privy to his business activities, and that Arno Keshishian, a partner in plaintiff lawfirm, continued updating defendant regarding his interactions with defendant Davis and expressing frustration over nonpayment of funds that Keshishian had loaned to Davis. [Teekah Decl., para. 3]. Defendant indicates that after her breakup with Davis, she took a job in New York City, lived there from November 2021 through August 2023, and submits lease agreements and bank statements supporting this relocation. [Teekah Decl., paras. 3, 4, Exs. 3-6].

Defendant indicates that she did not receive a copy of this lawsuit, and never avoided service in this matter and each time she moved residences she filed forwarding requests with the U.S. Postal Service. [Teekah Decl., paras. 7, 9, 11]. The declaration indicates that it was only after defendant returned to Los Angeles that she learned that the summons had been published and a default entered, and sought the assistance of counsel. [Teekah Decl., paras. 7, 8]. Defendant states:

“During my stay in New York City, I was in email contact with plaintiff's counsel. I was never specifically told that a lawsuit had been filed naming me as a defendant. Plaintiff's counsel never did ask me where I was residing but kept referring to a 'publication' which I did not understand. I thought plaintiff’s counsel was attempting to intimidate me into paying Davis’s debt by intending to broadcast something about me.”

Here, the argument is essentially that plaintiff failed to conduct a reasonable investigation with respect to a service address for defendant before resorting to service by publication, and that defendant was easily located for service, but was not made aware of the lawsuit by publication or by other means in time to defend herself against the allegations.

The court is mindful that the service here was made by publication, and that it is recognized that where service is by publication, there is a prima facie case established, as the law presumes from the fact of constructive service only that failure to answer is due to lack of notice of the service. Palmer v. Lantz (1932) 215 Cal. 320, 324.

A defendant is entitled to relief if defendant has not received actual notice; imputed or constructive notice is not “actual” notice. Rosenthal v. Garner (1983, 2nd Dist.) 142 Cal.App.3d 891, 895. “Actual” notice is defined under Civil Code section 18 as that “which consists in express information of a fact.”

This requirement means that to defeat a motion for relief if supported by the proper showing in a service by publication case, plaintiff must come forward with facts showing actual notice, neglect, or avoidance of service.

Whether relief should be granted on this ground “is a matter within the discretion of the trial court and its order will not be disturbed except for an abuse of discretion.” Brockman v. Wagenback (1957, 2nd Dist.) 152 Cal.Ap.2d 603, 611 (applying predecessor statute). It is also recognized that the trial court in exercising its “broad discretion” in application of the statute, should resolve any doubt as to setting aside of a default in favor of the application:

“‘It is also well established that it is the policy of the law to bring about a trial on the merits whenever possible, so that any doubts which may exist should be resolve in favor of the application, to the end of securing to a litigant his day in court and a trial upon the merits.’”

A review of the application for publication shows that it was supported by a declaration of counsel explaining that defendant had represented that her attorney and family member would accept service, but that attorney advised he would not accept service, and that the service address relied upon was that provided by Keshishian, a personal friend of defendant, who was “personally aware” of defendant’s address in Encino. [Zargaryan Decl., filed 8/31/2023]. The application was also supported by the declaration of a process server who attempted service at the Encino address in October and November of 2022 without success, after defendant had moved to New York. [Panoyan Decl., filed 8/31/2023]. Counsel’s declaration references a request to an investigator which provided no additional addresses, but there is no copy of the report of that investigation. It would appear that there may have been too great a reliance on the personal knowledge of Keshishian. Plaintiff submits a whitepages search using the Encino address, which disclosed the address in New York. [Ex. 1].

Plaintiff in opposition argues that defendant was provided multiple instances of notice of the existence of the lawsuit, and provides emails to counsel Mr. Darden, which were evidently not sent to defendant (Exs. A, B), and emails which were sent to Darden and to an email address which may have been defendant’s, providing proof of the service by publication. [Exs. C, D].

In fact, the initial communication with attorney Darden of February 7, 2023 supports defendant’s account that there could have been confusion with respect to service by publication referring to an instance of publicity, as that email states:

The court finds that the default was entered due to surprise, excusable neglect and resulted in a lack of actual notice to moving defendant, and will exercise its discretion to set aside the default. Again, this is in keeping with the preference for permitting the adjudication of legal controversies on their merits.

Defendant Kealyn Teekah is ordered to efile separate signed copies of the the Answer to Complaint by Defendant Kealyn Teekah and Cross-Complaint submitted as Exhibit 7 by close of business this date, and the Answer will be deemed served upon filing.

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