Judge: Virginia Keeny, Case: 22VECV00410, Date: 2023-05-22 Tentative Ruling

Case Number: 22VECV00410    Hearing Date: May 22, 2023    Dept: W

Farmers insurance exchange  v. ruben hernandez

MOTION to quash service of process and set aside default AND DEFAULT JUDGMENT

Date of Hearing:          May 22, 2023                          Trial Date:       None set.

Department:               W                                             Case No.:         22VECV00410

Moving Party:             Defendant Ruben Hernandez

Responding Party:       Plaintiff Farmers Insurance Exchange

BACKGROUND

This is a subrogation action.  On July 20, 2022, Plaintiff Farmers Insurance Exchange (“Plaintiff”) filed a Complaint against Defendant Ruben Hernandez (“Defendant”).

On May 13, 2022, the Court’s clerk entered default against Defendant.

On July 20, 2022, the Court entered default judgment against Defendant for $26,392.63.

On July 27, 2022, Plaintiff provided notice of the default judgment to Defendant.

[Tentative] Ruling

Defendant’s Motion to set aside the Default and Default Judgment is GRANTED.

Defendant improperly filed a motion to quash with his motion to set aside the default/default judgment and for other relief.  The motion to quash is moot at this point, but other issues are raised in the motion.  The defendant must file an answer or other responsive pleading within 20 days. 

LEGAL STANDARD

Code of Civil Procedure 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.  (Code Civ. Proc., § 473.5.)  Code of Civil Procedure section 473.5 provides that the Court may set aside the default or default judgment upon a finding that the motion is timely and that Defendant’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect.

ANALYSIS

Defendant moves to set aside the default and default judgment entered against him pursuant to Code of Civil Procedure section 473.5, on the grounds that the default and default judgment were obtained through extrinsic fraud.  In addition, Defendant moves to quash service of summons pursuant to Code of Civil procedure section 418.10 on the grounds that he was not properly served with the Summons and Complaint, and on the grounds that this dispute was subject to mandatory intercompany arbitration. 

The Court notes Defendant’s motion based on Code of Civil Procedure section 473.5 is untimely, as Defendant had until January 23, 2023 to move to set aside the default judgment.  While the Motion is untimely, Defendant may be entitled to relief based on equitable grounds.  The Court has the inherent authority to vacate a default and default judgment on equitable grounds such as extrinsic fraud or extrinsic mistake.  (See Pulte Homes Corporation v. Williams Mechanical, Inc. (2016) 2 Cal.App.5th 267, 275.)  

Relief from default or default judgment can be sought at any time on the ground of extrinsic mistake.  (Olivera v. Grace (1942) 19 Cal.2d 570, 576; Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300.)  This is a form of equitable relief, rather than statutory relief, and is based on a finding by the court that the judgment is void.  (See Trackman v. Kenney (2010) 187 Cal.App.4th 175, 180-81 [contrasting Code Civ. Proc.,  § 473(d) and extrinsic fraud and mistake]; Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 47 [“After the six-month period for statutory relief has passed, the court may still grant relief on equitable grounds, including extrinsic fraud or mistake.”])  

There are three essential requirements to obtain relief on this ground: (1) a meritorious defense; (2) diligence in seeking relief once the default or default judgment is discovered; and (3) a satisfactory excuse for not presenting a defense to the original action.  (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982.)  The statutory time limits on relief under Code Civ. Proc., §§ 473(b) and 473.5 do not apply, but once the purported extrinsic fraud or mistake is discovered, a party is expected to proceed diligently to seek relief.  This requirement is inextricably intertwined with prejudice to the plaintiff. (Id., at 983-984.)   

“Extrinsic fraud occurs when a party is deprived of his opportunity to present his claim or defense to the court, where he was kept in ignorance or in some other manner fraudulently prevented from fully participating in the proceeding.”  (Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 315.) 

Defendant contends there was extrinsic fraud because he was not properly served with the Summons or Complaint, Plaintiff failed to notify Defendant of the lawsuit, and Defendant was not aware of the lawsuit until January 16, 2023.

“Under the due process clause of the federal Constitution a personal judgment rendered without service of process on, or legal notice to, a defendant is not merely voidable, but void, in the absence of a voluntary appearance or waiver.”  (City of Los Angeles v. Morgan (1951) 105 Cal.App.2d 726, 730; see Lovato v. Santa Fe International Corp. (1984) 151 Cal.App.3d 549, 553.) 

In cases where there is no actual or constructive notice providing the defendant with an opportunity to be heard because an affidavit of service is false, the court may grant relief on equitable grounds for extrinsic fraud.  (See Manson, Iver & York, supra, 176 Cal.App.4th at 47; City of Los Angeles, supra, 105 Cal.App.2d at 731.)  

Plaintiff contends Defendant failed to provide evidence that he was not properly served with the Summons and Compliant.

Plaintiff points the Court to the proof of service of the Summons and Compliant, which provides Defendant was served by substituted service by leaving the Summons and Complaint with Adaley Hernandez (“Hernandez”), who was Defendant’s co-occupant at 20756 Hart Street, Winnetka, CA 91306-3314 (Defendant’s “Residence”).  (See Proof of Service filed on 3/29/22.)  The proof of service further provides the documents were mailed to Defendant’s residence.  (See id.)  Plaintiff also points the Court to Hernandez’s declaration in support of the Motion, where she states that she is a co-occupant at Defendant’s residence, and was stopped on March 26, 2022, outside of Defendant’s residence, handed a package for Defendant, and left that package on the kitchen table at Defendant’s residence.  (Hernandez Decl., ¶ 1.)

While Plaintiff is correct that Hernandez’s declaration states she was provided a package, Plaintiff fails to include the fact that Hernandez states she was not informed of the contents of the package, which is required by Code of Civil Procedure section 415.20.  (Hernadez Decl., ¶ 1.)  The March 29, 2022 proof of service provides Hernandez was “informed . . . of the general nature of the papers[;]” however, Hernandez’s declaration, which is signed under penalty of perjury, states she was not informed of the contents of the package, which means the representation made by Plaintiff’s process server was false.  (See Proof of Service filed on 3/29/22; Hernadez Decl., ¶ 1.)  In addition, Defendant provides a declaration stating, under penalty of perjury, that he did not receive the Summons and Compliant that was left with Hernandez, and that the first time he found out about this lawsuit was on January 16, 2023.  (Def. Decl., ¶ 6-9.)

The Court finds Defendant has presented sufficient evidence to establish that the default and default judgment entered against him were obtained by extrinsic fraud, as Defendant was not properly served with the Summons and Complaint, and Plaintiff’s process server made false representations as to informing Hernandez of the contents of the package left with her.  The Court also finds Defendant was diligent in seeking relief, as he filed the instant Motion approximately three months after finding out about the lawsuit.  Further, the Court finds Defendant’s excuse for failure to present a defense is satisfactory, as he was not aware of the lawsuit at the time default/default judgment was entered against him.

The Court denies Plaintiff’s request for sanctions pursuant to Code of Civil Procedure section 473(c)(1), as the Motion was granted pursuant to Code of Civil procedure section 473.5, and not Code of Civil Procedure section 473.

Thus, Defendant’s Motion to set aside the Default and Default Judgment is GRANTED.

The Court notes that Defendant improperly filed a motion to quash with his motion to set aside the default/default judgment.

“As a general rule, the entry of a default terminates a defendant's rights to take any further affirmative steps in the litigation until ... the default is set aside. Any motion by a defaulted defendant, other than a motion to set aside the default, is unauthorized and void, and It has no legal effect.”  (Humphrey v. Bewley (2021) 69 Cal.App.5th 571, 580 (citations and quotations omitted.)

As set forth above, a default was entered against Defendant on May 13, 2022, and default Judgment was entered against Defendant on July 27, 2022, and the only motion Defendant could have brought was a motion to set aside the default/default judgment.  (Humphrey, supra, 69 Cal.App.5th at 580.) 

In light of the Court granting the Motion to Set Aside the Default/Default Judgment, the motion to quash is moot. 

CONCLUSION

Defendant’s Motion to set aside the Default and Default Judgment is GRANTED.

Answer or other responsive pleading to be filed within 20 days.