Case Number: EC060958 Hearing Date: April 11, 2014 Dept: NCD

TENTATIVE RULING
#4 (part 1 of 3)
EC 060958
RAC DEVELOPMENT, INC. v. ZHUANG

Cross-Defendants Richard Kwo-Tai Sun and San Pasqual Development, LLC’s Motion to Deem Cross-Complainant Xin Gao a Vexatious Litigant
Joinder by the City of San Marino in Cross-Defendants’ Richard Kwo-Tai Sun and San Pasqual Development, LLC’s Motion to Deem Cross-Complainant Xin Gao a Vexatious Litigant and Motion for Undertaking
Joinder by Johnny Wang aka Johnny Yen-Zen Wang in Cross-Defendants Richard Kwo-Tai Sun and San Pasqual Development, LLC’s Motion to Deem Cross-Complainant Xin Gao a Vexatious Litigant and Motion for Undertaking

TENTATIVE:
[No Opposition]
1.) Unopposed Motion by Cross Defendants Richard Kwo-Tai Sun and San Pasqual Development, LLC to Deem Cross-Complainant Xin Gao a Vexatious Litigant is GRANTED.
Cross-Defendants have provided evidence establishing that cross-complainant fits within the statutory definition of a vexatious litigant, and has established that there is not a reasonable probability that cross-complainant will prevail in this action against moving cross-defendants. Accordingly, cross-complainant is ordered to provide a bond in the amount of ______________.

2.) Unopposed Joinder by the City of San Marino in Motion to Deem Cross-Complainant Xin Gao a Vexatious Litigant and Motion for Undertaking is GRANTED.
Cross-Defendant has provided evidence establishing that cross-complainant fits within the statutory definition of a vexatious litigant, and has established that there is not a reasonable probability that cross-complainant will prevail in this action against moving cross-defendant. Accordingly, cross-complainant is ordered to provide a bond in the amount of ______________.

3.) Unopposed Joinder by Johnny Wang aka Johnny Yen-Zen Wang in Motion to Deem Cross-Complainant Xin Gao a Vexatious Litigant and Motion for Undertaking is GRANTED.
Cross-Defendant has provided evidence establishing that cross-complainant fits within the statutory definition of a vexatious litigant, and has established that there is not a reasonable probability that cross-complainant will prevail in this action against moving cross-defendant. Accordingly, cross-complainant is ordered to provide a bond in the amount of ______________.

4.) Tentatively, the action as to Cross Defendants Richard Kwo-Tai Sun, San Pasqual Development, LLC, cross-defendant City of San Marico and Johnny Wang is stayed until ten days after the posting of the bonds. See CCP § 391.6.

SUMMARY OF FACTS:
The FAC alleges that Plaintiff RAC Development, as Trustee of Investment Trust Project 53, was the successful bidder at a trustee’s sale on April 16. 2013 and is now record owner of property on South Los Robles, in San Marino. The FAC alleges that subsequent to the trustee’s sale, on April 23, 2013, defendants, the former owners of the property, recorded a fraudulent Grant Deed. The Trustee’s Deed Upon Sale conveying title to plaintiff was recorded on April 29, 2013. The FAC alleges that defendants continued to record fraudulent or void Grant Deeds, including a Grant Deed conveying title back to themselves on May 14, 2013, which recordings have caused a cloud on title and delay in the ability of plaintiff to market and sell the property.

Defendant Xin Gao has filed a cross-complaint against plaintiff, various individuals and the City of San Marino alleging that after Gao purchased the subject property various parties recorded false deeds of trust.

ANALYSIS:
Substantive
CCP sec. 391.1 permits a defendant to move the court for an order requiring plaintiff to post a bond:
“ In any litigation pending in any court of this state, at any time until final
judgment is entered, a defendant may move the court, upon notice and hearing,
for an order requiring the plaintiff to furnish security…. The motion for an order requiring the plaintiff to furnish security shall be based upon the ground, and supported by a showing, that the plaintiff is a vexatious litigant and that there is not a reasonable probability that he or she will prevail in the litigation against the moving defendant.”

Vexatious Litigant
Under CCP sec. 391, “Vexatious litigant” is defined, in pertinent part, as follows
(b) “Vexatious litigant” means a person who does any of the following:

(1) In the immediately preceding seven year period has commenced, prosecuted,
or maintained in propria persona at least five litigations other than in a small
claims court that have been (i) finally determined adversely to the person or
(ii) unjustifiably permitted to remain pending at least two years without having
been brought to trial or hearing.”

In cases arising under the vexatious litigant’s statute, the burden of establishing the statutory conditions for requiring plaintiff to furnish security is on the party moving for security. Muller v Tanner (1969) 2 Cal.App.3d 445. The trial court’s determination is reviewed as follows: “On appeal, we presume the order finding plaintiff a vexatious litigant is correct and imply such findings as are necessary to support it.” Tokerud v. Capital Bank of Sacramento (1995) 38 Cal.App.4th 775, 780.

In this case, the San Pasqual Development cross-defendants submit evidence showing that Gao has prosecuted eight unlimited civil actions, one unlimited civil cross-complaint, one limited civil matter, and one federal district court matter in pro per over the last seven years, all of which were finally determined against Gao. This is sufficient to establish that Gao qualifies as a vexatious litigant within the definition of the statute.

No reasonable probability of prevailing
This leaves the issue of whether with respect to plaintiff “there is not a reasonable probability that he or she will prevail in the litigation against the moving defendant.”

In cases arising under the vexatious litigant’s statute, the burden of establishing the statutory conditions for requiring plaintiff to furnish security is on the party moving for security. Muller v Tanner (1969) 2 Cal.App.3d 445. The trial court’s determination is reviewed as follows: “On appeal, we presume the order finding plaintiff a vexatious litigant is correct and imply such findings as are necessary to support it.” Tokerud v. Capital Bank of Sacramento (1995) 38 Cal.App.4th 775, 780.

The San Pasqual cross-defendants also submit evidence showing that Gao does not have a reasonable probability of prevailing on his claims against them in connection with the subject property. First, cross-complainant stated in his original cross-complaint that in 2010 he separated from his wife and quitclaimed the subject property to her. [Para. 26]. This allegation is missing from the FACC, but there appears to be a standing issue with respect to Gao’s claims, as the Quitclaim Deed is attached to the pleading. [See FACC, Ex. N]. In addition, the San Pasqual cross-defendants submit a declaration from cross-defendant Sun stating that the subject property was sold to Wang in 2004, and cross-defendants have had no dealings, ownership of the property or contact with Gao. [See Sun Decl., paras. 3-5]. This appears to be supported by the documents recorded against the property, which name San Pasqual only in a transfer to Wang in 2004. [See FACC, Ex. I].

Cross-defendant Johnny Wang and his attorney, Peter M. Kam, submit their declarations as well as certain correspondence in support of Mr. Wang’s assertion that Mr. Gao has no reasonable likelihood of prevailing on his cross-claims. The Court agrees. Basically, the essential offer of proof is that Johnny Wang sold the disputed property to Gao “more than 7 years ago (June of 2006).” Wang’s Notice of Motion, 2:23-24.

The City of San Marino presents evidence that Gao’s claims against it are barred because he did not comply with pre-suit claims requirements against the City, a public entity.
Government Code section 811.2, defines public entity:
“”Public entity” includes the state, the Regents of the University of California, the Trustees of the California State University and the California State University, a county, city, district, public authority, public agency, and any other political subdivision or public corporation in the State.”

Under Civ. Code section 905, 945.5, no suit for money damages may be brought against a public entity until a written claim has been presented and been acted on or deemed to be rejected.

The City is obviously a “city” within the meaning of the definition of public entity, and the City controller submits a declaration indicating that the city records show no record of any claim made by Gao at any time. [See Ruiz Decl., para. 3].

This appears sufficient to shift the burden to cross-complainant to establish a probability of prevailing, but there is no opposition, so no evidence submitted with the motion.

In Muller v Tanner (1969) 2 Cal.App.3d 445, and the statutes, which, as Muller points out, expressly state that at the hearing on a vexatious litigant motion, the court shall consider “evidence:”
“At the hearing upon the motion the court shall consider any evidence,
written or oral, by witnesses or affidavit, as may be material to the ground of
the motion. …no determination made by the court in determining or ruling upon the
motion shall be or be deemed to be a determination of any issue in the
litigation or of the merits thereof.”

Without any evidence controverting cross-defendants’ showing the court should find that cross-complainant has no reasonable probability of prevailing in his claims against them.

CCP sec. 391.3 provides that if, after hearing the evidence on the motion, “the court determines that the plaintiff is a vexatious litigant and that there is no reasonable probability that the plaintiff will prevail in the litigation against the moving defendant, the court shall order the plaintiff to furnish, for the benefit of the moving defendant, security in such amount and within such time as the court shall fix.”

CCP sec. 391(c) defines “security” as follows:
“‘Security’ means an undertaking to assure payment, to the party for whose benefit the undertaking is required to be furnished, of the party’s reasonable expenses, including attorney’s fees and not limited to taxable costs, incurred in or in connection with a litigation instituted, caused to be instituted, or maintained or caused to be maintained by a vexatious litigant.”

Cross-complainant is ordered to provide security to cover defendants’ attorneys’ fees and costs in this action.

The City requests $5,000, basically 10% of the amount claimed, while no specific sum is sought by the San Pasqual cross-defendants.

Johnny Wang seeks a $50,000.00.

MOTION TO SET ASIDE DEFAULT

TENTATIVE RULING
#4 (part 2 of 3)
EC 060958
RAC DEVELOPMENT, INC. v. ZHUANG

Cross-Defendants Tin-Jon Syiau and RAC Development, Inc.’s Motion to Vacate Default

TENTATIVE:
[No Opposition]
Unopposed Motion to Set Aside Default is GRANTED pursuant to CCP section 473(d). Default entered on January 9, 2014 as to cross-defendant Tin-Jon Syiau, and default entered January 16, 2014 as to cross-defendant RAC Development, Inc. are set aside as void, as based on improper service.

Ten days to respond to the cross-complaint.

FACTUAL BACKGROUND:
The FAC alleges that Plaintiff RAC Development, as Trustee of Investment Trust Project 53, was the successful bidder at a trustee’s sale on April 16. 2013 and is now record owner of property on South Los Robles, in San Marino. The FAC alleges that subsequent to the trustee’s sale, on April 23, 2013, defendants, the former owners of the property, recorded a fraudulent Grant Deed. The Trustee’s Deed Upon Sale conveying title to plaintiff was recorded on April 29, 2013. The FAC alleges that defendants continued to record fraudulent or void Grant Deeds, including a Grant Deed conveying title back to themselves on May 14, 2013, which recordings have caused a cloud on title and delay in the ability of plaintiff to market and sell the property.

Defendant Xin Gao has filed a cross-complaint against plaintiff, various individuals and the City of San Marino alleging that after Gao purchased the subject property various parties recorded false deeds of trust.

On January 9, 2014, cross-complainant filed a Request for Entry of Default with respect to several cross-defendants, including moving cross-defendant Tin Jon Syiau, which was entered the same date, evidently based on a proof of service by publication which does not mention this party. No proof of service mentioning this cross-defendant was located in the Court file.

On January 16, 2014, cross-complainant filed a Request for Entry of Default with respect to defendant RAC, Development, Inc, based on a proof of service showing personal service on “John,” a manager on December 2, 2013. Default was entered as requested that date.

ANALYSIS:
Defendants appear to be entitled to relief under CCP section 473(d), under which the court may, “on motion of either party after notice to the other party, set aside any void judgment or order.” CCP § 473(d). A default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void. Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1444, citing, e.g. , Nagel v. P & M Distributors, Inc. (1969) 273 Cal.App.2d 176. Where there was never valid service of summons, the court must set aside the default even where there is no showing of a meritorious defense. Peralta v. Heights Medical Center, Inc. (1988) 485 U.S. 80, 86-87.

Here, default was entered against the individual evidently without any proof of service. Default was entered against the entity RAC based on a proof of service stating defendant was personally served on an agent “John.” RAC has submitted a declaration indicating that no service on either defendant was ever made, and that no “John” works at the office at the address of service. [Supplemental RAC Decl., para. 3].

Here, cross-complainant has failed to provide any evidence in response to this showing, and, as pointed out by RAC, service on RAC was not even made by a registered process server, so cross-complainant is not entitled to any presumption concerning the facts stated concerning service in the return. The motion is therefore granted and the defaults are set aside.