Judge: Virginia Keeny, Case: 22VECV00297, Date: 2022-12-06 Tentative Ruling

Case Number: 22VECV00297    Hearing Date: December 6, 2022    Dept: W

FEISTY GAL, INC., et al. v. MICHAEL KAISER, et al.

defendants’ MOTION TO SET ASIDE/vacate DEFAULT of defendants michael kaiser and people’s care holdings, inc.

Date of Hearing:        December 6, 2022                                         Trial Date:       None set.  

Department:              W                                                                    Case No.:        22VECV00297

Moving Party:            Defendants Michael Kaiser and People’s Care Holdings, Inc.

Responding Party:     Plaintiffs Feisty Gal, Inc. and Michelle Lander

BACKGROUND

Plaintiffs Feisty Gal, Inc. and Michelle Lander allege Defendants Michael Kaiser and People’s Care Holdings, Inc. sold Plaintiffs an unregistered franchise. Plaintiffs allege Defendants had several pre-sale omissions and post-sale omissions false and deceptive representations regarding the franchise status of A Right Place for Seniors International, LLC.

On March 2, 2022, Plaintiffs filed a complaint against Defendants asserting causes of action for (1) Violation of the California Franchise Investment Law - Sale of an Unregistered Franchise; (2) Violation of the California Franchise Investment Law - Failure to Disclose Materially Different Terms of Franchise Agreement; (3) Fraudulent Concealment; (4) Fraud; (5) Negligent Misrepresentation; (6) Breach of Contract; and (7) Unjust Enrichment.

[Tentative] Ruling

Defendants Michael Kaiser and People’s Care Holdings, Inc. Motion to Set Aside/Vacate Default is GRANTED.

EVIDENTIARY OBJECTIONS

Defendants make several evidentiary objections to the declaration of Michelle Lander made in support of Plaintiffs’ opposition to the motion to set aside. The court sustains objection no. 6.

discussion

Defendants Michael Kaiser and People’s Care Holdings, Inc. move the court for an Order setting aside/vacate the entry of default taken against them on June 17, 2022. Defendants argue neither Defendant was properly served resulting in a lack of actual notice of the lawsuit until late July 2022; one month after the defaults were already entered.

Defendants first argue the court must set aside the default due to improper service. The court may set aside any judgment or order that is void on its face at any time. (CCP § 473(d); Kremerman v. White (2021) 71 Cal.App.5th 358, 360-70.) “ ‘ “A judgment or order is said to be void on its face when the invalidity is apparent upon an inspection of the judgment-roll.” ’ [Citation.] This inquiry, however, ‘does not hinge on evidence: A void judgment’s invalidity appears on the face of the record.’ [Citation.]” (Kremerman v. White, supra, 71 Cal.App.5th at p. 370.) 

Defendants contend Plaintiffs failed to exercise reasonable diligence to locate Defendant Kaiser before effectuating personal service. Specifically, Defendant Kaiser had not lived at the property for almost a year when Plaintiffs attempted service. Moreover, the property where service occurred was visibly uninhabitable and under construction. Defendants further argue Plaintiffs effectuated service for People’s Care Holdings, LLC on someone had no authority, actual or implied, to accept service on behalf of Mr. Kaiser or PCH, Inc. and at an address that was no longer valid.

Defendants have not demonstrated that the judgment is void on its face by way of serving Defendants at the Chino Hills address. The Statement of Information at the time of service indicates Chino Hills as the address for service of process. (Greenfeld Decl., Exh. 1.) Moreover, the process server indicates that Deedee Gomez was the administrator allowed to accept service on Defendants’ behalf. Where service is carried out by a registered process server, Evidence Code § 647 applies to eliminate the necessity of calling the process server as a witness as trial.  (Palm Property Investments, LLC v. Yadegar (2011) 194 Cal.App.4th 1419, 1427.)  The proof of service in this circumstance establishes a presumption, affecting the burden of producing evidence of the facts stated in the return.  (Id. at 1428.) The fact that Defendant Kaiser states he does not know Deedee Gomez is of no consequence. Defendant Kaiser admits to giving up his title as CEO to People’s Care Holdings LLC and selling all Defendants shares in the company before service was attempted at the Chino Hills address. It may very well be that Deedee Gomez is a new employee permitted to accept service.

Defendant Kaiser also attests that he has not resided at La Sierra Drive since June 2021 and that the property has been unoccupied and under construction following a flood. (Kaiser Decl. ¶16.) However, Defendant Kaiser does not attest that this visible construction was ongoing at the time Plaintiffs attempted service in May 2022. Did the flood/construction occur in June 2021 when Defendant Kaiser moved out or in May 2022 when Plaintiffs attempted service? The declaration is unclear. Plaintiffs have attested they conducted a number of searches before locating Defendant Kaiser’s address. (Lander Decl. ¶6.)

Next, Defendants argue even if the court finds the substituted service was proper, the court should set aside the default as Defendants lacked actual knowledge of the lawsuit until July 2022. Code of Civil Procedure section 473.5 permits the court to vacate a default 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. (CCP §473.5(a).) The phrase actual notice means genuine knowledge and does not include constructive or imputed notice to the client. (Tunis v. Barrow (1986) 184 Cal.App.3d 1069, 1077.) “A defendant seeking vacation of a default judgment entered against him must further show that his lack of actual notice in time to defend the action was not caused by his inexcusable neglect or avoidance of service.” (Id. at 1077-1078, citing CCP § 473.5(c).) Section 473.5 provides that a defendant may obtain relief from default and default judgment if the defendant seeks relief within two years of the default judgment or 180 days after service of written notice that the default or default judgment has been entered, whichever is earlier. (CCP §473.5.)

Defendants argue in June 2021, Defendants sold their interest in People’s Care Holdings LLC and in January 2022, Defendant Kaiser stepped down as CEO. (Kaiser Decl. ¶¶7-8.) At this time, Defendant Kaiser closed down his office at the Chino Hills address and moved his company to Ontario. (Kaiser Decl. ¶8.) Moreover, although someone at People’s Care Holdings, LLC will occasionally forward mail, the occurrences are few and few between. (Kaiser Decl. ¶10.) As for personal service, Defendant Kaiser attests no one has ever attempted to serve him at his residence in Irvine. (Kaiser Decl. ¶19.) As a result, Defendants did not receive actual notice of the lawsuit against them until July 2022, when Defendant Kaiser received a package from People’s Care Holdings, LLC that contained the subject Summons and Complaint. (Kaiser Decl. ¶22.)

In opposition, Plaintiffs argue Defendants have failed to demonstrate that any purported lack of actual notice was not due to Defendants’ avoidance of service or excusable neglect. Rather, plaintiffs contend Defendants were avoiding service. Plaintiffs contend Defendant Kaiser’s own testimony and the incontrovertible facts demonstrate that there was inexcusable neglect. However, Plaintiffs offer no evidence to support their contention that Defendants were avoiding service. The declaration by the process server does not indicate avoidance of service. Rather, the process server only indicates that there was one vehicle located on the property at the time of attempted service. The process server does not indicate whether they heard noises inside the house or that they saw anyone on the property. Defendants explain that upon stepping down as CEO, Defendant moved their office to Ontario. As such, it is credible that Defendants were not aware of the service until the mail was forwarded to the new office. Although failing to update the Statement of Information may not have been an excusable neglect, Defendants have demonstrated a lack of actual notice.  Given the lack of actual notice and the fact that this motion was made in a timely manner, the court finds it appropriate to set aside the default in this case and allow it to proceed on the merits.