Judge Stephen P. Pfahler, Case Number: 21STCV47419, Date: 2024-03-18 Tentative Ruling

Judge: Stephen P. Pfahler, Case: 21STCV47419, Date: 2024-03-18 Tentative Ruling

Case Number: 21STCV47419 Hearing Date: March 18, 2024 Dept: 68

Dept. 68

Date: 3-18-24

Case #21STCV47419

VACATE DEFAULT

MOVING PARTY: Defendant, Zhi Yun Huang

RESPONDING PARTY: Plaintiff, Daniel Moon

RELIEF REQUESTED

Motion to Vacate Default

SUMMARY OF ACTION

Plaintiff Daniel Moon participated in a $2.5 million joint investment venture for the purchase of a “vertically integrated” cannabis business owned and operated by defendants Buraq Investment Group, LLC and Zhi Yun Huang in the City of Montebello. Defendant Masaji Konishi acted as agent on behalf of Huang and Buraq Investment Group. The investment also involved the purchase of commercial premises located at 7131 Telegraph Road, Montebello, for $1.8 million, though the appraised value was only $1.3 million. Following the execution of documents and tender of funds, Plaintiff alleges the discovery of the fraud in the underlying transaction through misrepresentations of material terms.

On December 29, 2021, Plaintiff filed a complaint for Breach of Contract, Fraud, Negligent Misrepresentation, and Violation of Business and Professions Code section 17200. On March 8, 2022, the clerk entered a default against Zhi Yun Huang.

Orders for service by publication were issues for Masaji Konishi, and Buraq Investment Group, LLC, on February 6, 2023. An order for service by publication on 7131Telegraph LLC was issued on February 9, 2023. On July 21, 2023, the clerk entered defaults against Masaji Konishi, Buraq Investment Group, LLC, and 7131Telegraph LLC. On August 1, 2023, Plaintiff dismissed Kevin Kim without prejudice. On August 30, 2023, the court entered default judgments against Zhi Yun Huang, Masaji Konishi, Buraq Investment Group, LLC, and 7131Telegraph LLC.

RULING: Granted.

Defendant Zhi Yun Huang moves to vacate the March 8, 2021, entered default and August 30, 2023, default judgment on grounds of lack of actual notice of the complaint, due to service at a former address where Huang no longer resided. Plaintiff Daniel Moon in opposition asserts the motion under Code of Civil Procedure section 473, subdivision (b) and 473.5 is untimely, service was proper, and the motion lacks support under the improper service standard, and lacks evidence of mistake, inadvertence or support. Should the court award relief, Judgment Creditor requests $19,424.90 in attorney fees and costs. Huang in reply maintain sufficient evidence was provided establishing invalid service in that substituted service was executed at the incorrect address. Huang alternatively reiterates the basis for relief under the mistake, inadvertence, excusable neglect standard. Finally, Huang challenges any recovery of costs.

Huang moves for relief under Code of Civil Procedure section 473, subdivision (d) regarding a void judgment, and section 473, subdivision (b) under the mistake, inadvertence, excusable neglect standard. Considering the basis of the motion arises from improper service, the court begins with Code of Civil Procedure section 473.5.

(a) 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.

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(c) Upon a finding by the court that the motion was made within the period permitted by subdivision (a) and that his or her lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect, it may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action.

Contrary to the argument of Plaintiff/Judgment Creditor, the motion for relief under this standard is timely. The court docket shows no mailing of notice, and the motion was filed within two years of the default judgment (and default). The court therefore considers relief under this section.

A plaintiff has the initial burden to establish valid statutory service of a summons and complaint. (Dill v. Berquist Const. Co., Inc. (1994) 24 Cal.App.4th 1426, 1439-40; Floveyor Internat. v. Sup. Ct. (1997) 59 Cal.App.4th 789, 794.) The proof of service on Huang was executed by a licensed process server by leaving the summons and complaint with Jane Doe on January 18, 2022. The proof of service complies, including a declaration of diligence showing three prior attempts on January 10, 14, and 18, 2022, and mailing upon completion of service. The proof of service was filed on February 7, 2022. The identified address was 11310 Cedar Cir., El Monte.

“The return of a process server registered [under] Division 8 of the Business and Professions code upon process or notice establishes a presumption, affecting the burden of producing evidence, of the facts stated in the return.” (Evid. Code, § 647.) “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.” (Code Civ. Proc., 415.20, subd. (b).) Service in this context is allowed “upon a person upon a person whose ‘relationship with the person to be served makes it more likely than not that they will deliver process to the named party.’” (Bein v. Brechtel-Jochim Group, Inc. (1992) 6 Cal.App.4th 1387, 1393; see Ellard v. Conway (2001) 94 Cal.App.4th 540, 546 (footnote 3).) Substituted service on a person apparently in charge of the premises is allowed where the “‘relationship with the person to be served makes it more likely than not that they will deliver process to the named party.’” (Bein v. Brechtel-Jochim Group, Inc., supra, 6 Cal.App.4th at p. 1393; Ellard v. Conway, supra, 94 Cal.App.4th at p. 546 (footnote 3); Code Civ. Proc., 415.95, subd. (a).)

The validity of the proof of service itself remains unchallenged. Huang instead contends that the service address was not valid, as Huang moved out of 11310 Cedar Cir. in November 2020, and was not a resident on January 18, 2022. Huang moved to 468 S. Cedar in November 2020, with his sister and brother-in-law. [Declarations of Zhi Yun Huang, Mark Ka Fai Wong, Suzanne Huang.] Paul and Joanie Huang own and reside at 11310 Cedar Cir. [Declaration of Paul Huang.] Zhi Huang is their nephew, lived with them until moving out in November 2020. Paul Huang denies knowing Zhi’s whereabouts after he left, thereby preventing any forwarding of mail. [Ibid.] Huang only learned of the action and default in July 2023. [Declaration of Halil Hasic; Zhi Huang Decl.]

Plaintiff/Judgment Creditor challenges the motion based on reliance from an October 19, 2021, investigative report provided by a third party licensed private investigator. [Declaration of Jake Jung, Ex. A.] The report identifies 11310 Cedar Cir. as the current address, with a listing of 468 S. Cedar Dr. in Covina from January 1, 2020 to November 23, 2020. In other words, nearly the exact opposite representation from Huang and the supporting declarants. Further into the report however, Zhi Huang, along with Suzanne Huang and Mark Wong, are listed as current owners of 468 S. Cedar Dr., Covina, with a “business” address for Zhi Huang at 11310 Cedar, El Monte.

The disputed declarations and ambiguity in the private investigator report, along with public policy favoring the adjudication of claims on the merits, supports the basis for relief on grounds of service at the wrong address, thereby depriving Zhi Huang of notice of the action. The court therefore grants the motion on this basis.

The court also considers the alternative request under Code of Civil Procedure section 473 subdivision (b):

“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 six-month time limit for granting statutory relief is jurisdictional and the court may not consider a motion for relief made after that period has elapsed. (Citation.) The six-month period runs from entry of default, not entry of judgment.” (Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 42.) “[A] trial court is obligated to set aside a default, default judgment, or dismissal if the motion for mandatory relief (1) is filed within six months of the entry of judgment, (2) ‘is in proper form,’ (3) is accompanied by the attorney affidavit of fault, and (4) demonstrates that the default or dismissal was in fact caused by the attorney's mistake, inadvertence, surprise, or neglect.’” (Martin Potts & Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 443.) A discretionary standard applies to the motion given the lack of an attorney statement and dependence on the individual parties’ explanations. (Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1251-1252; see Rodriguez v. Brill (2015) 234 Cal.App.4th 715, 727.) Public policy favors adjudication of claims on the merits. Nevertheless, where conduct by the party acting in pro per represents a deliberate, strategic decision, public policy vests the court with discretion to find no basis for relief. (Benedict v. Danner Press (2001) 87 Cal.App.4th 923, 929-930; Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1251-1252.)

The motion is untimely, and lacks sufficient support for relief simply based on a represented change of address, without supposedly providing a forwarding address. Regardless, given the

Public policy still favors adjudication on the merits. Given the equities of the subject case relative to the widow and daughter of decedent, and other potential efforts for judgment collection by other judgment creditors, lien holders and/or secured interests, the court finds a compelling public policy interest to allow the action to proceed on the merits rather than via default. The motion is therefore granted under Code of Civil Procedure section 473, subdivision (b).

Finally, the court also finds the default judgment subject to relief. A trial court can set aside a judgment pursuant to 473, subdivision (d) on a void judgment. (Talley v. Valuation Counselors Group, Inc. (2010) 191 Cal.App.4th 132, 146.) “A court can lack fundamental authority over the subject matter, question presented, or party, making its judgment void, or it can merely act in excess of its jurisdiction or defined power, rendering the judgment voidable.” (In re Marriage of Goddard (2004) 33 Cal.4th 49, 56.) “A judgment is void if the court lacked jurisdiction over the subject matter or parties, for example, if the defendant was not validly served with summons.” (Johnson v. E-Z Ins. Brokerage, Inc. (2009) 175 Cal.App.4th 86, 98.) The questionable service renders the judgment subject to a determination of being void.

In summary, the court grants the motion and vacates both the default and default judgment on grounds of invalid service at the improper address. Zhi Huang presents a valid address, and now agrees to appear in the action. The court finds no basis for the imposition of sanctions given the unreliable service of the summons and complaint. The motion contains a proposed copy of the answer. The court orders Zhi Huang to separately file and serve the proposed answer on all appearing parties.

Motion to vacate default by Buraq Investment Group, LLC scheduled for July 2, 2024.

Zhi Huang to give notice to all parties.

Dept. 68

Date: 3-18-24

Case #21STCV47419

VACATE DEFAULT

MOVING PARTY: Defendant, Masaji Konishi

RESPONDING PARTY: Plaintiff, Daniel Moon

RELIEF REQUESTED

Motion to Vacate Default

SUMMARY OF ACTION

RULING: Granted.

Defendant Masaj Konishi moves to vacate the July 21, 2023, entered default and August 30, 2023, default judgment on grounds of lack of actual notice of the complaint, due to service by publication. More specifically, Konishi maintains a lack of diligence in serving by publication. Plaintiff Daniel Moon in opposition asserts the motion under Code of Civil Procedure section 473, subdivision (b) and 473.5 is untimely, service was proper, and the motion lacks support under the improper service standard, and lacks evidence of mistake, inadvertence or support. Should the court award relief, Judgment Creditor requests $19,424.90 in attorney fees and costs. Konishi in reply maintains insufficient diligence in locating Konishi before resorting to service by publication occurred. Konishi reiterates the request for relief under the mistake, inadvertence, excusable neglect standard, and/or lack of notice. Konishi also challenges any award of costs.

Konishi moves for relief under Code of Civil Procedure section 473, subdivision (d) regarding a void judgment, and section 473, subdivision (b) under the mistake, inadvertence, excusable neglect standard. Considering the basis of the motion arises from improper service, the court begins with Code of Civil Procedure section 473.5.

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The order for service by publication remains undisputed. Defendant/Judgment Debtor challenges the underlying diligence in requesting the order for publication.

(a) A summons may be served by publication if upon affidavit it appears to the satisfaction of the court in which the action is pending that the party to be served cannot with reasonable diligence be served in another manner specified in this article …

(e) As a condition of establishing that the party to be served cannot with reasonable diligence be served in another manner specified in this article, the court may not require that a search be conducted of public databases where access by a registered process server to residential addresses is prohibited by law or by published policy of the agency providing the database, including, but not limited to, voter registration rolls and records of the Department of Motor Vehicles.

Code Civ. Proc., § 415.50

“Publication of notice pursuant to this section shall be once a week for four successive weeks. Four publications in a newspaper regularly published once a week or oftener, with at least five days intervening between the respective publication dates not counting such publication dates, are sufficient. The period of notice commences with the first day of publication and terminates at the end of the twenty-eighth day, including therein the first day.” (Gov. Code, § 6064.)

“If a defendant's address is ascertainable, a method of service superior to publication must be employed, because constitutional principles of due process of law, as well as the authorizing statute, require that service by publication be utilized only as a last resort. (Citations.) … The term 'reasonable diligence ‘... denotes a thorough, systematic investigation and inquiry conducted in good faith by the party or his agent or attorney. (Citations.) A number of honest attempts to learn defendant's whereabouts or his address by inquiry of relatives, ... and by investigation of appropriate city and telephone directories, [voter registries, and assessor's office property indices situated near the defendant's last known location], generally are sufficient. These are the likely sources of information, and consequently must be searched before resorting to service by publication.” (Citations.) ‘Before allowing a plaintiff to resort to service by publication, the courts necessarily require him to show exhaustive attempts to locate the defendant, for it is generally recognized that service by publication rarely results in actual notice. (Citations.).’”

(Watts v. Crawford (1995) 10 Cal.4th 743, 749 [footnote 5].)

The court declines to retroactively declare the order granting leave for service by publication invalid, but will review the circumstances in context of the entry of the default judgment and adherence to due process rights. (Donel, Inc. v. Badalian (1978) 87 Cal.App.3d 327, 333; see Kott v. Superior Court (1996) 45 Cal.App.4th 1126, 1138.) The proof of service attempt shows a single visit on January 10, 2022, to the Downey address where it was determined by the process server that Konishi was no longer operating at this location. Konishi denies any association with 8060 Florence Ave., 209, Downey. The finding of the process server for purposes of the instant motion is therefore consistent.

In submitting the application for publication, Plaintiff/Judgment Creditor included a copy of a personal investigator report identifying Konishi ’s residence as 6227 Woodward Ave., Bell, CA. The State of California Department of Real Estate also confirms this address. Konishi admits to his residence at 6227 Woodward Ave., Bell, CA in December 2022.

The January 30, 2023, filed declaration in support of application for proof of publication lacks any proof of service efforts for the identified Woodward Ave. address. The opposition to the motion, however, incorporates a copy of a process server declaration showing service attempts at the Woodward address on March 28, March 31, April 3, April 6, April 9, and April 12, 2022. [Declaration Jake Jung, Ex. D.] It’s not clear why Konishi only identifies December 2022 as an admitted time of residence, and otherwise offers no explanation for the March to April time frame.

The court finds Defendant/Judgment Debtor declarant credible. Konishi denies notice by publication, as well as any receipt of notice via mail. The court accepts that Konishi was unaware of the action via publication in the Los Angeles Daily Journal newspaper. The August 30, 2023, entered default judgment as a basis of notice to Konishi also supports the representations in that no follow-up mail service is required. (Code Civ. Proc., § 585, subd. (c).) The brief period of attempted service where the process server showed no activity in the household supports no finding of an effort to evade service. (Rios v. Singh (2021) 65 Cal.App.5th 871, 883-884.) The conduct of Judgment Debtor demonstrates no apparent effort to evade service. Given public policy favoring adjudication on the merits as well, the motion is therefore granted under Code of Civil Procedure section 473.5.

The court also considers the alternative request under Code of Civil Procedure section 473 subdivision (b):

The motion is untimely. The section is inapplicable as well given the lack of notice argument.

Finally, the court also finds the default judgment subject to relief. A trial court can set aside a judgment pursuant to 473, subdivision (d) on a void judgment. (Talley v. Valuation Counselors Group, Inc. (2010) 191 Cal.App.4th 132, 146.) “A court can lack fundamental authority over the subject matter, question presented, or party, making its judgment void, or it can merely act in excess of its jurisdiction or defined power, rendering the judgment voidable.” (In re Marriage of Goddard (2004) 33 Cal.4th 49, 56.) “A judgment is void if the court lacked jurisdiction over the subject matter or parties, for example, if the defendant was not validly served with summons.” (Johnson v. E-Z Ins. Brokerage, Inc. (2009) 175 Cal.App.4th 86, 98.) The finding of insufficient service by publication renders the judgment void.

In summary, the court grants the motion and vacates both the default and default judgment on grounds of improper deprivation of due process rights due to service by publication. The court finds no basis for the imposition of sanctions given the unreliable service of the summons and complaint. The motion contains a proposed copy of the answer. The court orders Masaji Konishi to separately file and serve the proposed answer on all appearing parties.

Motion to vacate default by Buraq Investment Group, LLC scheduled for July 2, 2024.

Masaji Konishi to give notice to all parties.