Judge Thomas D. Long, Case 19STCV27319 2023-04-18 Tentative Ruling

On February 14, 2023, Defendant filed this motion to set aside the default and default judgment. Defendant included a copy of his proposed answer to the complaint. (Simons Decl., Ex. A.)

The Court may relieve a party or counsel from a judgment resulting from mistake, inadvertence, surprise, or excusable neglect. (Code Civ. Proc., § 473, subd. (b).) The application for relief must be made within a reasonable time, not to exceed six months, after the judgment. (Ibid.) Additionally, the Court may set aside a default or default judgment upon a motion and affidavit attesting that the lack of actual notice in time to defend the action was not caused by the party’s avoidance of service or inexcusable neglect. (Code Civ. Proc., § 473.5.)

“[I]f a defendant is not validly served with a summons and complaint, the court lacks personal jurisdiction and a default judgment in such action is subject to being set aside as void.” (Lee v. An (2008) 168 Cal.App.4th 558, 564 (Lee).)

Plaintiff argues that the six-month period to set aside the default under section 473 has run. (Opposition at pp. 6-7.) However, a motion based on extrinsic fraud or mistake has no such time limitation. Additionally, “[s]ubdivision (d) of section 473 allows a court to set aside a void judgment without any mention of a time limit.” (Lee, supra, 168 Cal.App.4th at p. 563.)

Defendant argues he was not served with the summons and complaint, and he first learned about this action on February 6, 2023, when the Department of Real Estate notified him that someone was trying to collect the judgment. (See G. Nazaryan Decl. ¶¶ 3, 7.)

The proof of service filed on January 23, 2020 states Defendant was served by substituted service on September 19, 2019 at 1:37 p.m. through his father, John Nazaryan, at 8726 Corbin Avenue, Northridge, California 91324. Substituted service requires leaving a copy of the summons and complaint either at the individual’s dwelling house or usual place of abode, usual place of business, or usual mailing address other than a post office box. (Code Civ. Proc., § 415.20, subd. (b).) Plaintiff must also mail a copy of the summons and 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. (Ibid.)

The service address of 8726 Corbin Avenue is a barber shop and has never been Defendant’s business address. (G. Nazaryan Decl. ¶¶ 4-5.) No one at that address ever notified Defendant about the action, provided him with a copy of the summons and complaint, or notified him about misdirected mail addressed to him at that address. (G. Nazaryan Decl. ¶¶ 5-6.) John Nazaryan declares that he was not at 8726 Corbin Avenue on September 19, 2019, he is not regularly present at that address, he does not work or reside at that address, that is not the address of the Nazaryan family business, and he was not served with the summons and complaint for Defendant. (J. Nazaryan Decl. ¶¶ 3-4.)

Plaintiff acknowledges that 8726 Corbin Avenue is a barber shop, not Defendant’s residence. (See Opposition at p. 3.) According to Plaintiff, “Plaintiff met with defendant at many different locations but only met with the defendant one time at Rudy’s Barber Shop at 8726 Corbin Ave Northridge CA 91324[.] That is the address he gave for the service of the summons and complaint since he knew defendant was never in one place for very long and he would be hard to serve.” (Ibid.) Plaintiff obtained a business card from the barber shop, and “Plaintiff is informed and believes that the name ‘John’ on the business card, only refers to John Nazaryan who is defendant’s father. . . . Plaintiff was under the impression based on comments from the defendant that the barber shop was a family owned business.” (Ibid.)

Plaintiff declares that Defendant once Plaintiff that Defendant and his wife owned the barber shop. (Tanious Decl. ¶ 3.) Plaintiff also provides a declaration from the process server who states that the man who was served identified himself as Defendant’s father. (Sands Decl. ¶ 6.) However, these statements are hearsay and cannot be used to prove the truth of Defendant’s ownership of the business, especially in light of Defendant’s conflicting evidence. Code of Civil Procedure section 415.20 does not authorize substituted service on a defendant at an address that is not his own residence or usual place of business.

Accordingly, the Court concludes that Defendant was not properly served via substituted service.

“‘Where, as in the present case, a motion to vacate a default judgment is made more than six months after the default was entered, the motion is not directed to the court’s statutory power to grant relief for mistake or excusable neglect under Code of Civil Procedure section 473, but rather is directed to the court’s inherent equity power to grant relief from a default or default judgment procured by extrinsic fraud or mistake.’ [Citations.]” (Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 314.) Extrinsic fraud occurs when a defendant is deprived of his opportunity to present his claim or defense to the court, or when he was kept ignorant or fraudulently prevented from fully participating in the proceeding. (Id. at p. 315.) This does not include circumstances when the party “‘has been given notice of the action and has had an opportunity to present his case and to protect himself from any mistake or fraud of his adversary, but has unreasonably neglected to do so.’” (Ibid.)

To set aside a judgment or order based on extrinsic mistake, the defaulted party must (1) show that it has a meritorious case, (2) articulate a satisfactory excuse for not presenting a defense to the original action, and (3) demonstrate that it was diligent in seeking to set aside the default once it had been discovered. (Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 738.)

Defendant’s proposed answer asserts several affirmative defenses, including estoppel, laches, and statute of frauds, which may provide a defense to the breach of contract allegations. (Simons Decl., Ex. A.) Defendant also states that some funds have been returned, and the contract’s repayment terms are unclear. (Motion at p. 7.)

Plaintiff does not provide a coherent contrary argument on this point, instead arguing about Defendant’s notice of this action and the motion’s timeliness. (Opposition at pp. 8-9.)

Therefore, Defendant has shown, although only slightly, that he may have a meritorious defense.

As discussed above, Defendant has shown that he did not present a defense because he was not properly served with the summons and complaint and did not learn about this action until February 6, 2023. (See Motion at pp. 6, 8.)

Defendant first learned about this action on February 6, 2023, when he received certified mail from the Department of Real Estate about collection of the judgment. (G. Nazaryan Decl. ¶ 7.) He called his attorney, and they had a meeting the next day. (G. Nazaryan Decl. ¶¶ 7-8; Simons Decl. ¶¶ 2-3.) Defendant has been a client of the firm since 2018 and is in regular contact with the office, so counsel believes that Defendant would have retained him had he been aware of this matter. (Simons Decl. ¶ 2.) Defendant promptly filed this motion on February 14, 2023, only a week after his meeting with counsel.

Plaintiff argues that Defendant had notice of the case and the judgment when the default and default judgment were served on him, along with other notices served in this action. (Opposition at p. 6.) Therefore, according to Plaintiff, Defendant’s delay in filing this motion shows unjustifiable and inexcusable neglect. (Ibid.)

The Request For Entry of Default filed on January 23, 2020 shows that it was mailed to “Genrik Nazaryan C/O John Nazaryan, 8726 Corbin Ave. Northridge, CA 91324.” Defendant has provided evidence that he does not reside, do business, or accept mail at that address. (G. Nazaryan Decl. ¶¶ 4-6.)

On July 20, 2022, Plaintiff served a Notice of Appearance on Defendant at “Genrik Nazaryan a/k/a Henry Nazarian a/k/a Henrik Nazarian 1014 Allen Ave., Apt. 3 Glendale, CA 91201-1653.” (Opposition, Ex. 5.) Plaintiff contends that according to title company records, Defendant became a co-owner of that property on August 26, 2015, and he is still the owner as of February 21, 2023. (Opposition at p. 4 & Exs. 6-7.) That Notice of Appearance may have been sufficient to put Defendant on notice of an action brought by Plaintiff against him, but it contained no substantive information about the claims or judgment. Additionally, in reply, Defendant contends that “Plaintiff is fully aware that Defendant does business in real estate transactions and had vested interest in more than one single property.” (Reply at p. 2.)

Considering all of the evidence, the Court finds that Defendant diligently sought relief.

Although not set forth in the Notice of Motion, Defendant also contends that he is entitled to relief under Code of Civil Procedure section 473.5. (Motion at p. 3.) A motion under section 473.5 must be brought either within two years after entry of a default judgment or within 180 days after service of a written notice that the default or default judgment has been entered, whichever is earlier. (Code Civ. Proc., § 473.5, subd. (a).)

Plaintiff did not file proofs of service for notices of entry of default or default judgment. Plaintiff’s proof of service for his April 14, 2021 application for entry of default judgment—which should include a notice of entry of default—shows that it was mailed to 8726 Corbin Avenue, where Defendant does not reside or regularly do business. Although not a traditional written notice of entry of default judgment, Plaintiff also provides a copy of his recorded abstract of judgment, recorded on August 24, 2022—which was only 174 days before Defendant filed his motion. (Opposition, Ex. 8.) Accordingly, a motion under this section appears timely.

Plaintiff does not provide any argument or evidence regarding Defendant’s avoidance of service or inexcusable neglect prior to the entry of default. Therefore, Plaintiff has not shown that Defendant’s lack of actual notice in time to defend the action was caused by Defendant’s inexcusable neglect. (See Code Civ. Proc., § 473.5.)

The Court alternatively finds that Defendant’s motion is timely and he is entitled to relief under section 473.5.

Finally, Plaintiff argues that vacating the judgment would be “highly prejudicial to Plaintiff who has waited since before 2016 and earlier for debt repayment who then had to file a court action for compensation.” (Opposition at pp. 8-9.) Regardless of the merit of Defendant’s defenses or the prejudice to Plaintiff, the Court may vacate the judgment if it is a void judgment due to lack of personal jurisdiction. (See Lee, supra, 168 Cal.App.4th at p. 564.) Because Defendant was not properly served, the judgment entered on August 2, 2021 is void.

The motion to set aside the default and default judgment is GRANTED. The default entered on January 23, 2020 and default judgment entered on August 2, 2021 are VACATED.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court