Judge: Stephen P. Pfahler, Case: 22STCV38443, Date: 2024-08-05 Tentative Ruling

Case Number: 22STCV38443    Hearing Date: August 5, 2024    Dept: 68

Dept. 68

Date: 8-5-24

Case #22STCV38443 (lead case related to 23STCV24029)

Trial Date: 1-27-25

LEAVE FOR SERVICE OF PROCESS ON SECRETARY OF STATE

MOVING PARTY: Defendant/Cross-Complainant, RLoom, LLC fka OneWorld Apparel, LLC

RESPONDING PARTY: Unopposed/Plaintiff, Limelight International, Ltd., et al.

RELIEF REQUESTED

Motion for Leave to Complete Service of Process via Email

SUMMARY OF ACTION

Plaintiff Limelight International Ltd., (Limelight) a Hong Kong based company authorized to conduct business in California alleges an unpaid balance of $586,962.09 owed by Defendant OneWorld Apparel, LLC aka One World Apparel, LLC.

On December 9, 2022, Plaintiff filed its complaint for Breach of Contract and Common Counts (three causes of action). On January 27, 2023, RLoom, LLC fka OneWorld Apparel, LLC, filed a cross-complaint against Limelight International, Ltd., Catherine Yan aka Ning Yan, and Sylvia Ha Huynh, for 1. Fraud (Inducement) 2. Fraud (Concealment) 3. Conspiracy to Defraud 4. Breach Of Fiduciary Duty 5. Aiding and Abetting Breach of Fiduciary Duty 6. Civil Theft (Penal Code § 496) 7. Unfair Business Practices (Business & Professions Code § 17200) and 8. Rescission. On April 18, 2023, the court sustained the demurrer to the cross-complaint with leave to amend.

On May 26, 2023, Cross-Complainants filed a first amended cross-complaint for 1. Fraud 2. Conspiracy to Defraud 3. Breach Of Fiduciary Duty 4. Aiding and Abetting Breach of Fiduciary Duty 5. Recission/Unjust Enrichment 6. Rescission, and 7. Breach of Contract. On June 22, 2023, Cross-Complainants dismissed the sixth cause of action for Recission. On July 10, 2023, the court overruled the demurrer to the second and fourth causes of action, and sustained the demurrer to the seventh cause of action in the first amended cross-complaint.

On July 31, 2023, Cross-Complainants filed a second amended cross-complaint for 1. Fraud 2. Conspiracy to Defraud 3. Breach Of Fiduciary Duty 4. Aiding and Abetting Breach of Fiduciary Duty 5. Recission/Unjust Enrichment and 6. Breach of Contract. On September 6, 2023, the court sustained the demurrer to the sixth cause of action with leave to amend.

On September 26, 2023, Cross-Complainants filed a third amended cross-complaint for 1. Fraud 2. Conspiracy to Defraud 3. Breach Of Fiduciary Duty 4. Aiding and Abetting Breach of Fiduciary Duty 5. Recission/Unjust Enrichment and 6. Breach of Contract. Cross-Defendants answered the third amended cross-complaint on October 25, 2023.

A Notice of Related Cases was filed on December 14, 2023, with Limelight International, Ltd. v. D. Masin Consulting, LLC, et al. (223STCV24029).

RULING: Denied without Prejudice.

Defendant, Cross-Complainant, RLoom, LLC fka OneWorld Apparel, LLC (RLoom) moves for leave to serve Cross-Defendant Catherine Yan with the operative cross-complaint individually via email service. RLoom brings this motion after a previous unsuccessful attempts to serve Yan in Hong Kong, and expectation of both a potentially futile and otherwise effort to effect service in Shanghai due to Hague Convention protocols adhered to in China. The court electronic filing system shows no opposition or reply on file at the time of the tentative ruling publication cutoff.

While service on the corporate entity remains allowable under California Corporations Code section 1702, RLoom moves for relief to serve a foreign national via email under a plenary request pursuant to Code of Civil Procedure section 413.30: “Where no provision is made in this chapter or other law for the service of summons, the court in which the action is pending may direct that summons be served in a manner which is reasonably calculated to give actual notice to the party to be served and that proof of such service be made as prescribed by the court.” (Code Civ. Proc., § 413.30.) The court interprets the plain language of the statute, “[w]here no provision is made in this chapter or other law for the service of summons” precedes and conditions relief under this provision.

Section 413.10, subdivision (c) provides: “Outside the United States, as provided in this chapter or as directed by the court in which the action is pending, or, if the court before or after service finds that the service is reasonably calculated to give actual notice, as prescribed by the law of the place where the person is served or as directed by the foreign authority in response to a letter rogatory. These rules are subject to the provisions of the Convention on the ‘Service Abroad of Judicial and Extrajudicial Documents’ in Civil or Commercial Matters (Hague Service Convention).” (Code Civ. Proc., § 413.10, subd. (c).) The court declines to rely on unpublished federal authority interpreting the Federal Code of Civil Procedure for determination of proper service. The plain language of section 413.30 specifically and categorially only provides leave to the court, “where no provision is made in this chapter or other law for the service of the summons.”

The court finds no statutory omission or exception to the requirement of service on a foreign national under Code of Civil Procedure section 413.30, especially given the specific rule for service requirements. RLoom in fact admits the binding requirements of the Hague Service Convention, but because of the “arduous” process in Mainland China, requests alternative means for a shorter wait period.

The court cannot disregard the plain language of the statute, established case law, and the Hague Convention treaty in order to allow service by another means even with “actual notice.” (Volkswagenwerk Aktiengesellschaft v. Schlunk (1988) 486 U.S. 694, 699; Rockefeller Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd. (2020) 9 Cal.5th 125, 134-138; Kott v. Sup. Ct. (1996) 45 Cal.App.4th 1126, 1136; Floveyor Internat., Ltd. v. Superior Court (1997) 59 Cal.App.4th 789, 794 [Failure to comply with the Convention renders the service void, even if the defendant has actual notice of the lawsuit.] The court finds no basis of authority to disregard Hague Convention procedure on grounds of expedience and frustration.

The court therefore denies the motion without prejudice.

In denying the motion without prejudice however, the court allows RLoom to potentially seek leave to apply for service by publication. “The only method of service under California law which does not require the transmission of documents abroad, and consequently does not implicate the Hague Service Convention, is service of summons by publication where the party's address remains unknown during the publication period despite the exercise of reasonable diligence.” (Kott v. Sup. Ct., supra, 45 Cal.App.4th at p. 1136.) This court is not responsible for review of service by publication applications, however, and in no way attests to the validity of this potential avenue for service.

Three motions to compel further responses to document demands scheduled for October 30, 31, and December 5, 2024.

Rloom to give notice to all parties.