Case Number: BC696119 Hearing Date: July 24, 2018 Dept: 51

Background

Based on the allegations, in 2014, defendant Wei Chen publicly announced that he would give one million Chinese yuan to the first Chinese woman to circumnavigate the globe. After plaintiff Zheng Wang became the first to complete the challenge, Chen and Wang held a press conference and award ceremony where Chen handed Wang a giant dummy check. No money was ever awarded, however, leading to this lawsuit.

On March 1, 2018, plaintiffs Wang and China General Aviation, LLC filed a complaint for:

fraud (intentional misrepresentation),

negligent misrepresentation,

breach of contract,

breach of covenant of good faith and fair dealing,

conversion,

violation of Penal Code section 496,

intentional interference with actual contract,

promissory estopped,

accounting, and

constructive trust.

On May 21, 2018, default was entered against defendant.

On July 3, 2018, following an ex parte hearing, defendant filed this opposed motion to set aside default under Code of Civil Procedure sections 473, subdivisions (b) and (d), and/or section 473.5. The Court considered the moving, opposition, and reply papers and rules as follows.

Failure to Tab Exhibits

The parties should note: “Each exhibit must be separated by a hard 8 1/2 x 11 sheet with hard paper or plastic tabs extending below the bottom of the page, bearing the exhibit designation.” CRC, rule 3.1110(f).

All parties are ORDERED to strictly comply with this rule or else risk their exhibits being rejected, struck, and/or disregarded, and/or a monetary sanction.

Evidentiary Objections

Defendant’s evidentiary objections to the Wesley declaration are each overruled.

The parties should note that the Court prefers to receive a separately lodged proposed order on all written evidentiary objections, although such is required only on summary judgment or adjudication, conforming to the format required under California Rules of Court, rule 3.1354, subdivision (c). The “form” provided cannot be used by the Court because it is part of the objections themselves.

Standard

“Under Code of Civil Procedure section 473, subdivision (b), a party may seek relief on the grounds of ‘mistake, inadvertence, surprise, or excusable neglect’ within ‘a reasonable time,’ but not more than six months after the entry of the default or default judgment. Code of Civil Procedure section 473.5 permits the court to set aside a default or default judgment if the defendant, ‘through no inexcusable fault of his own, received no actual notice’ of the action, provided that relief is requested within a reasonable time, but not more two years after the entry of the default judgment. [Citation.] In addition, under subdivision (d) of Code of Civil Procedure section 473, the court may set aside orders and judgments that are ‘“void,’” including orders and judgments void for want of fundamental jurisdiction or personal jurisdiction. [Citation.] In some instances, that relief is subject to the time period specified in Code of Civil Procedure section 473.5, for example, when the party seeking relief maintains that the judgment, although facially valid, is void due to lack of proper service of process. [Citation.]” Bae v. T.D. Service Company (2016) 245 Cal.App.4th 97 (brackets omitted.)

“A trial court has a wide discretion to grant relief under section 473 of the Code of Civil Procedure, and generally speaking, the action of the trial court in this respect will not be disturbed by an appellate court unless discretion has been palpably and manifestly abused. The policy of the law is that controversies should be heard and disposed of on their merits. [Citations.]” Barnes v. Witt (1962) 207 Cal.App.2d 441, 447.

Analysis

The Order Entering Default Was Void for Lack of Service Because Defendant Was Not Properly Substitute-Served Under CCP § 415.20

Code of Civil Procedure section 415.20, subdivision (b) provides that if personal delivery cannot be completed with reasonable diligence, “a summons may be served by leaving a copy of the summons and complaint at the person’s dwelling house [or] usual place of abode . . . .” (Further unspecified statutory references are to the Code of Civil Procedure.)

Substitute service was allegedly accomplished at a residence in Rowland Heights (the Rowland Heights Residence) on March 18, 2018. In his motion, defendant sufficiently establishes that residence in Rowland Heights where defendant was substitute-served (the Rowland Heights Residence) is neither his “dwelling house” nor “usual place of abode,” thus showing he was not properly substitute-served.

Defendant represents that the Rowland Heights Residence is his parents’ residence and that he has never resided there. Chen Decl. ¶ 4. Defendant also represents that although he owns an interest in the Rowland Heights Residence, he helped his parents purchase the home when they moved to California in 2013. Id. at ¶ 15. Defendant represents that he has been a resident of Tennessee for the past twenty-two years and intends to remain a permanent resident of Tennessee for the foreseeable future; in this regard, defendant proffers his driver’s license, wage statements, and bills and other documents listing a Tennessee address as defendant’s. Id. at ¶¶ 10-11, Exhs. A-B. He explains that his parents left for China for about two months on approximately April 2, 2018, and defendant learned of the lawsuit in June 2018 through the media. Id. at ¶¶ 7-8.

In opposition, plaintiffs submit some evidence that tends to support valid service at the Rowland Heights Residence. Plaintiffs submit (among other items) screenshots of defendant’s Facebook profile (indicating “Los Angeles, California” as his “Current City”) and LinkedIn profile (indicating that defendant “is the chairman of Sun Capital, and Los Angeles based private equity investment firm.”) OPP 5:9-26. Although these items suggest that defendant is often in California, they do not rise to the level of refuting defendant’s showing by establishing that the Rowland Heights Residence is his dwelling house or usual place of abode. The Court declines to conclude, for instance, that service of process was proper merely because defendant associates himself with Los Angeles as part of his social media presence, especially given his representation (corroborated by his driver’s license, wage statements, and other documentary evidence) that he is not a resident of California. Plaintiff’s argument that defendant resides in California because he holds title to the Rowland Heights Residence is adequately explained by defendant’s explanation, as mentioned above, that he helped his parents purchase the home in 2013. The service declaration itself shows four attempts at service, where each time either defendant’s mother or defendant’s father was at the residence. Further, given the relative ease with which an individual can work remotely, the mere fact that he serves on the board of directors of an organization based in California does not show that the Rowland Heights Residence is his usual place of abode. These facts, seen individually and as a whole along with plaintiffs’ other extrinsic evidence, ultimately fails to lead to the conclusion that defendant resides in California.

Aside from plaintiffs’ arguments based on extrinsic evidence, their arguments that (1) defendant failed to rebut the presumption that service of process was proper, (2) service was proper under Trackman v. Kenney (2010) 187 Cal.App.4th 175, and (3) he received actual notice of the lawsuit are unavailing. See OPP 8:2411:13. Plaintiffs’ first argument here fails simply because it is conclusory and lacks any citation to legal authority. Although plaintiffs may arguably have intended to cite Trackman in support of the first proposition, the case is distinguishable regardless. In Trackman, the Court of Appeal stated that “[l]eaving papers with an apparent co-resident at an address publicly registered by the defendant” constituted valid substitute service. Id. at 185. The facts there were that the process server had checked the county recorder’s office and found a certificate of DBA (doing business as) listing defendant’s residential address. Ibid. Here, in arguing that service was proper because defendant’s father is listed as the agent for service of process of defendant’s company (with the Rowland Heights Residence as the address listed as the father’s residence), plaintiff offers a Secretary of State filing for defendant’s company; that filing, however, actually indicates that defendant resides in Tennessee. OPP 7:22-8:3; Wesley Decl. Exh. P. Thus, following Trackman’s approach of following publicly registered addresses stated in business filings would actually cut against plaintiff here.

Plaintiffs’ third argument is that service was proper because defendant received actual notice of the lawsuit. OPP 10:24-11:7; see Wesley Decl. ¶ 5, Exhs. D-E. However, the case plaintiffs cite in support of this proposition, Ellard v. Conway (2001) 94 Cal.App.4th 540, does not help them here. In Ellard, the only substantive point made about actual service was that relief under section 473.5 remains available if “service of summons has not resulted in actual notice” and the defendant receives “actual knowledge of the action from another source.” Id. at 548 (citing Olvera v. Olvera (1991) 232 Cal.App.3d 32, 40.)) It does not establish or suggest that any actual notice, regardless of source, is sufficient for a Court to conclude that service was proper.

Given the policy that “controversies should be heard and disposed of on their merits,” Barnes, supra, 207 Cal.App.2d at 447, and the above, plaintiff failed to establish that defendant was substitute-served pursuant to section 415.20. Accordingly, the order entering defendant’s default was void for lack of service, and defendant is entitled to relief under section 473, subdivision (d).

While not dispositive, the Court additionally notes that defendant’s credibility is bolstered here where he acted promptly after entry of default (and after he claims he learned of the default in June 2018) to file this motion.

Because the above issue is dispositive, the Court need not reach the parties’ other arguments.

Conclusion

The motion is GRANTED. The order of entry of default against defendant is ORDERED set aside. Defendant is ORDERED to respond to the complaint within 10 days. Defendant to give notice.