Filed 4/30/20 Fidelity National Title Ins. Co. v. Hansen CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

FIDELITY NATIONAL TITLE INSURANCE COMPANY,

Plaintiff and Respondent,

v.

KENNETH HANSEN,

Defendant and Appellant.

G057356

(Super. Ct. No. 30-2013-00656315)

O P I N I O N

Appeal from an order of the Superior Court of Orange County, Steven W. Siefert, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Reversed and remanded. Request for judicial notice. Granted.

Law Office of Mark B. Simpkins and Mark Beale Simpkins for Defendant and Appellant.

Fidelity National Law Group and Karen A. Ragland for Plaintiff and Respondent.

* * *

Kenneth Hansen appeals from an order denying his motion to vacate entry of a judgment on a sister state judgment. Hansen argues two grounds for vacating entry of the sister state judgment. First, he contends the sister state judgment was void for lack of service of process. Second, Hansen asserts the judgment creditor failed to comply with the statutory mandate to serve notice of entry of the judgment “promptly.” (See Code Civ. Proc., § 1710.30, subd. (a), italics added; all further undesignated statutory references are to Code Civil Procedure.)

We conclude Hansen is correct in asserting the sister state judgment was void for defective service of process. Consequently, we reverse and remand the matter with directions to vacate entry of the sister state judgment.

I

BACKGROUND

The Nevada Action

For some period before July 2009, defendant Hansen was one of the members of a limited liability company known as Hedley Henderson II, LLC (Hedley Henderson), which was developing a commercial real estate project in Nevada. Plaintiff Fidelity National Title Insurance Co. (Fidelity) insured the project.

In July 2009, Hansen moved from California to Hawaii for work and thereafter resided in Hawaii continuously until October 2013.

In July 2010, Fidelity filed a lawsuit in Nevada against Hedley Henderson and Hansen to recover the amount Fidelity paid in defense and settlement costs for release of a mechanic’s lien on the insured project.

Fidelity hired a California process server to locate Hansen and to serve him with notice of Fidelity’s lawsuit. In April 2011, Fidelity applied to the Nevada Superior Court for an order to serve Hansen by publication pursuant to the governing statute, former Rule 4, subdivision (e)(1)(i) of the Nevada Code of Civil Procedure (Nevada Rule 4, subd. (e)(1)(i)). In the application for the order, Fidelity cited an attached affidavit from its counsel as establishing all the facts necessary for the court to order service by publication under Nevada Rule 4, subdivision (e)(1)(i).

The application for order was brief. It stated the following facts: Fidelity filed the complaint on July 23, 2010, naming Hansen, among others, as a defendant; Fidelity “sent the Summons and Complaint to a process server in Orange County, California, where [Hansen] works and resides”; the process server “attempted to serve [Hansen] at his work on multiple occasions, but each time the process server was informed that [Hansen] was not in the office on that day”; and “[d]espite multiple attempts, [Hansen] was not successfully served.”

The application further asserted Hansen is “well aware of the litigation,” despite Fidelity’s failure to personally serve him. Fidelity based this assertion on the fact Hansen had an attorney represent him in early settlement discussions with Fidelity and, Fidelity argued, Hansen’s later refusal to authorize this attorney to accept service of process on his behalf proved “Hansen is evading service in this matter.” In conclusion, the application asserted, “Because [Hansen] cannot be located within the State of Nevada, and because [Hansen] has avoided Fidelity’s attempts to personally serve him in California, [Hansen] must be served by publication.”

In support of these factual assertions, the application for order cited generally to the attached affidavit of Fidelity’s counsel. In the affidavit, Fidelity’s counsel stated Hansen “resides and works in Orange County, California.” Counsel further stated the process server Fidelity hired to personally serve Hansen “visited [Hansen’s] work location on multiple occasions, [and] each time the process serve[r] was informed that [Hansen] was not there on that day. . . . [¶] Additionally, the process server visited [Hansen’s] last known residence and was informed that Hansen did not live there.”

The affidavit provided no foundation for counsel’s conclusory assertion Hansen “resides and works” in Orange County nor for counsel’s identification of the two places where service was attempted as Hansen’s “work location” and “last known residence,” respectively. As evidentiary support for the assertions regarding attempted service in California, counsel’s affidavit referenced generally the process server’s “Affidavit of Due Diligence,” attached as an exhibit.

According to the process server’s affidavit, between mid-August to mid-September 2011, the process server made five unsuccessful attempts to serve the summons and complaint on Hansen at “Business: 3300 Irvine Ave., # 315, Newport Beach, CA.” The process server’s affidavit stated the reason for “nonservice” was “subject is working in Hawaii, and is out of town.” An additional attached affidavit by the process server stated he made a single attempt at “Residence: 2555 Main Street #1029, Irvine, CA.” The reason for “nonservice” in that attempt was “Bad address. Subject is unknown. This is the Chang Residence.”

Curiously, the attorney affidavit concluded by identifying Hansen’s “last known address” as “3300 Irvine Ave., #135, Newport Beach, California, 92660.” The suite number “135” which counsel listed as Hansen’s “last known address” was different from the suite number of the business address where the process server repeatedly attempted to serve Hansen: “#315.”

The Nevada court granted Fidelity’s application, ordering “that Defendant [Hansen] shall be served by publication of the Summons at least once a week for four (4) weeks in Nevada Legal News, a newspaper of general circulation published in Clark County, Nevada.” The court further ordered Fidelity to mail a copy of the Summons and Complaint to Hansen “at his last known address at 3300 Irvine Ave, #135, Newport Beach, CA.”

After Fidelity accomplished service by publication and Hansen failed to answer, Fidelity had Hansen’s default entered. In April 2012, Fidelity obtained a default judgment of $424,985 against Hansen.

The Entry of Judgment on Sister State Judgment

In June 2013, Fidelity filed in Orange County Superior Court an application for entry of judgment on sister state judgment per the Sister State and Foreign Money-Judgments Act (SSFMJA) (§§ 1710.10 et seq.). On August 8, 2013, Fidelity obtained from the clerk’s office a duly issued notice of entry of judgment on sister state judgment notifying Hansen he was the judgment debtor on a judgment of $424,985 in favor of Fidelity, based upon the Nevada judgment.

In October 2013, Hansen moved back to California from Hawaii, settling in Long Beach, where he has resided continuously since then.

In December 2013, Fidelity filed with the Orange County Superior Court a process server’s “Affidavit of Reasonable Diligence” concerning his attempts to serve Hansen with the notice of entry of judgment on sister state judgment. The affidavit stated that between October 4 and 10, 2013, the process server made three attempts to personally serve Hansen at a business address: “3300 Irvine Ave. Suite 135 Newport Beach CA 92660.” This was the same business address where a different process server unsuccessfully attempted to serve Hansen with the summons and complaint three years earlier.

According to this 2013 affidavit of attempted service, the process server learned the address was no good on the second of his three attempts. The “results” from the second attempt were recorded as follows: “Per front desk, subject is no longer associated with the company, has been gone for a year and a half, current location or address are unknown.” Despite knowing the business address was not a valid address for Hansen, the process server made his third service attempt at the same address a few days later.

In January 2015, Fidelity made an attempt to locate Hansen by obtaining a “TLO Report” that listed 14 possible addresses for Hansen, 2 in Long Beach, 11 in Orange County (including the “bad” Newport Beach business address of 3300 Irvine Blvd. #135), and 1 in Palm Desert. Fidelity does not state it did anything with the information from the January 2015 TLO report.

On September 16, 2018, a process server served Hansen through substituted service by giving a copy of the notice of entry of the judgment to Hansen’s wife at their Long Beach residence, and then mailing Hansen a copy there. The residence was the second address listed on the January 2015 TLO report.

The Motion to Vacate Entry of Sister State Judgment

Thereafter Hansen filed a timely motion under to section 1710.40 to vacate entry of the sister state judgment and for stay of enforcement. The motion stated two grounds for vacating the judgment: (1) the Nevada judgement is void for lack of personal jurisdiction because Nevada’s statutory requirements for service of process by publication were unmet, and (2) Fidelity failed to comply with the mandate of section 1710.30 that notice of entry of the judgment “shall be served promptly[.]” (§ 1710.30, subd. (a).)

The trial court denied the motion to vacate solely on the ground Hansen failed to prove he had a meritorious defense to the Nevada action; the court did not decide whether the Nevada judgment was void for lack of personal jurisdiction or whether Fidelity violated the statutory mandate to serve notice of entry of the judgment “promptly.” In its minute order, the court adopted the reasoning of two cases holding such proof is a prerequisite to vacating a void judgment: “‘“[T]he plaintiff must plead and prove facts from which it appears, at least prima facie, that if the judgment were set aside and the proceedings were reopened, a different result would probably follow. . . .”’ (See, New York Higher Education Assistance Corp. [v. Siegel (1979) 91 Cal.App.3d 684,] 689, [quoting Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 554].)”

 

II

DISCUSSION

A. The Stated Reason for Denying the Motion to Vacate Was Erroneous

As a preliminary matter, we agree with Hansen’s contention the trial court clearly erred in denying the motion to vacate entry of the judgment on the ground Hansen failed to prove he has a meritorious defense to the Nevada action. In Peralta v. Heights Medical Center, Inc. (1988) 485 U.S. 80 (Peralta), the Supreme Court held a judgment debtor who was not served with process is entitled to have a default judgment set aside as void regardless of whether he had a meritorious defense to the action. (Id. at pp. 84-85.) The Supreme Court explained the due process principles at stake as follows: “‘An elementary and fundamental requirement of due process in any proceeding . . . is notice reasonably calculated, under the circumstances, to apprise interested parties of the pendency of the action and afford them the opportunity to present their objections.’ [Citation.] Failure to give notice violates ‘the most rudimentary demands of due process of law.’ [Citations.]” (Ibid.)

The Supreme Court’s decision in Peralta, supra, 485 U.S. at pp. 84-85, superseded the two opinions the trial court relied on in concluding a defendant must “plead and prove” a meritorious defense as a prerequisite to vacating a void judgment. Consequently, the trial court erred in denying the motion to vacate based on Hansen’s failure to present a defense on the merits. The next question in this appeal, however, is whether the court could have denied the motion on either of the other two grounds Hansen asserted for vacating the judgment. If so, we must affirm the order on appeal. (Young v. Fish & Game Com. (2018) 24 Cal.App.5th 1178, 1192-1193 [an appealed judgment or order correct on any theory will be affirmed].)

As we explain below, Hansen is correct in arguing the Nevada court lacked fundamental jurisdiction to enter the default judgment against him due to defective service of process under Nevada law. Consequently, the judgment was void and must be vacated. For that reason, we need not consider Hansen’s second contention the judgment must be vacated because of Fidelity’s noncompliance with the mandatory notice provisions of section 1710.30.

B. The Nevada Judgment Must be Vacated as Void for Defective Service of Process

1. Applicable Legal Principles

“The party moving under section 1710.40 to set aside the sister state judgment has ‘the burden to show by a preponderance of the evidence why it was entitled to relief. [Citation.]’ [Citation.] [¶] . . . [I]f the movant proves service of process in the sister state action was not made or was defective, this burden has been met. Under these circumstances, the sister state judgment is void for lack of fundamental jurisdiction and therefore unenforceable in California. ([People v.] American Contractors Indemnity, [Co. (2004)] 33 Cal.4th [653,] 660 [‘““Lack of jurisdiction in its most fundamental . . . sense means . . . absence of authority over . . . the parties”’].)” (Conseco, supra, 221 Cal.App.4th at p. 841.)

“Where the question on appeal is whether the entry of default and the default judgment were void for lack of proper service of process, we review the trial court’s determination de novo.” (Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1200; accord, Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 495-496.)

Courts in California and Nevada agree strict compliance with the applicable publication statute is required of a plaintiff seeking to serve summons by publication. As the court explained in Calvert v. Al Binali (2018) 29 Cal.App.5th 954 (Calvert): “‘When jurisdiction is obtained by a prescribed form of constructive notice, the statutory conditions upon which service depends must be strictly construed; there must be strict compliance with the mode prescribed in the statute. Conformance with the statute is deemed jurisdictional and absence thereof deprives the court in the particular action of power to render a judgment.’ [Citation.]” (Id. at p. 962.) The court in Calvert cited numerous cases reflecting the “breadth of case law establishing that [the publication statute] is strictly construed. [Citations.]” (Id. at p. 963; see, e.g., County of Riverside v. Superior Court (1997) 54 Cal.App.4th 443, 450 [“‘the requirements for service of summons by publication must be strictly complied with’”].)

In Foster v. Lewis (1962) 78 Nev. 330, the Nevada Supreme Court expressed the same view regarding the necessity of strict compliance with that state’s publication statute in obtaining an order for service by publication. The Nevada high court noted that “[w]ith no valid personal service of summons,” a judgment “can be sustained only if there has been proper substituted service,” which in turn depends on strict compliance with the publication statute. (Foster v. Lewis, supra, 78 Nev. at p. 333.) “The statutory provisions for acquiring jurisdiction over a defendant by other than personal service must be strictly pursued. [Citation.]” (Ibid.)

2. Requirements for Service by Publication Under Nevada Law

Nevada Rule 4(e)(1)(i) sets forth “what an affidavit for publication must contain” in order to confer jurisdiction on the court to order service by publication. (Foster v. Lewis, supra, 78 Nev. at pp. 334-335.) Essentially, the statute provides that the court has jurisdiction to grant an order for service by publication if one of four facts “shall appear, by affidavit, to the satisfaction of the court[.]” (Nev. Rule 4(e)(1)(i).) The four facts are that “the party on whom service is to be made” (defendant) either: 1. resides out of the state, 2. has departed from the state, 3. cannot, after due diligence, be found within the state, or 4. conceals himself to avoid the service of summons. (Ibid.)

The statute further provides that if the affidavit states the defendant “resides out of the state,” but the defendant’s present address is unknown, there are specific facts which, if stated in the affidavit, will trigger a conclusive presumption the defendant “still resides and remains out of the state,” and, moreover, the affidavit “shall be deemed to be a sufficient showing of due diligence to find the defendant,” thereby giving the court jurisdiction to order service by publication. (Nev. Rule 4(e)(1)(i).) Here is the statutory language describing the specific facts required for these crucial findings to be conclusively presumed:

“[I]t shall be a sufficient showing of [the] fact [the party resides out of the state] if the affiant shall state generally in such affidavit that at a previous time such person resided out of this state in a certain place (naming the place and stating the latest date known to affiant when such party so resided there); that such place is the last place in which such party resided to the knowledge of affiant; that such party no longer resides at such place; that affiant does not know the present place of residence of such party or where such party can be found; and that affiant does not know and has never been informed and has no reason to believe that such party now resides in this state[.]” (Nev. Rule 4(e)(1)(i), italics added.)

3. Analysis

Hansen argues the Nevada judgment was void for lack of jurisdiction because Fidelity failed to comply with Nevada’s statute governing service by publication. We agree.

The defects are obvious from the face of the documents Fidelity submitted to the Nevada court. Nevada Rule 4(e)(1)(i) confers jurisdiction on the court to order service by publication if the plaintiff submits by affidavit proof “to the satisfaction of the court” that at least one of four facts (i.e., ultimate facts) is true: that defendant resides out of the state; or has departed from the state; or cannot, after due diligence, be found within the state; or is concealing himself to avoid service. (Nev. Rule 4(e)(1)(i).) Importantly, the affidavit must provide “facts, as distinguished from legal conclusions from which the court can determine whether due diligence to find the defendant in the State of Nevada has been exercised.” (Foster v. Lewis, supra, 78 Nev. at p. 336, italics added.) From the face of the record, it is clear Fidelity provided no facts to support any of the ultimate facts necessary for the publication order.

Fidelity’s application for the order variously asserted three ultimate facts: that Hansen resides out of the state (Hansen “resides and works in Orange County, California”); that Hansen “cannot be located” within Nevada (implying due diligence in searching for him); and that Hansen is concealing himself to avoid service (Hansen “has avoided Fidelity’s attempts to personally serve him”). These three assertions of ultimate facts were legal conclusions; the application stated no supporting facts. Nor do any supporting facts appear in the affidavits Fidelity provided to the court.

The affidavit from Fidelity’s counsel stated Hansen “resides and works in Orange County, California,” but provided no information to support that conclusion. The affidavit did not mention any investigative efforts it made to locate Hansen or verify Hansen’s connection to the two Orange County addresses where the process server attempted to serve Hansen. Most importantly, the affidavit did not state several specific facts Rule 4(e)(1)(i) identifies as prerequisite to triggering the statute’s conclusive presumption the defendant “still resides and remains out of the state,” and the applicant showed “due diligence to find the defendant[.]” Specifically, the affidavit does not state “that at a previous time [Hansen] resided out of this state in a certain place (naming the place and stating the latest date known to affiant when such party so resided there); [and] that such place is the last place in which such party resided to the knowledge of affiant[.]” (Italics added.) In fact, counsel’s affidavit neither claimed nor demonstrated any personal knowledge of where Hansen ever lived. That failure is in itself fatal to the application for publication, given strict compliance with the publication statute is required for the court to have jurisdiction to order service by publication. (Foster v. Lewis, supra, 78 Nev. at p. 333 [“The statutory provisions for acquiring jurisdiction over a defendant by other than personal service must be strictly pursued”].)

Fidelity similarly provided no facts to support its assertion of the other two ultimate facts––that it exercised due diligence in trying to locate Hansen and that Hansen was evading service. As for due diligence, Fidelity provided no evidence of any investigative efforts to determine Hansen’s residence or work place. Moreover, the only evidence of attempts at service were the process server’s single attempt to serve Hansen at “the Chang residence” (a “bad address”), and the process server’s five attempts to serve Hansen at “Business: 3300 Irvine Ave., # 315, Newport Beach, CA.” The process server’s affidavit revealed he learned at some point during those attempts that Hansen “is working in Hawaii, and is out of town.” Moreover, the legitimacy of those service attempts is further undermined by the conflicting assertion in Fidelity’s counsel’s affidavit that Hansen’s “last known address” was “3300 Irvine Ave., #135, Newport Beach, California, 92660.” The business suite number “135” which counsel listed was different from the suite number of the business address where the process server repeatedly attempted to serve Hansen: “#315.”

Under Nevada law, a real effort to locate and serve a defendant is essential for showing the due diligence needed for the court to order service by publication under Nevada Rule 4(e)(1)(i). Two cases illustrate the diligence showing required.

In McNair v. Rivera (1994) 110 Nev. 463 (McNair), the Nevada Supreme Court held service by publication was defective because the order authorizing publication was not adequately supported by evidence of plaintiff’s due diligence in attempting to personally serve defendant as required by Nevada Rule 4(e)(1)(i). Although plaintiff initially made repeated attempts to serve defendant with process, the record showed plaintiff made only one attempt to serve defendant during a six-month extension of time for service. The Nevada high court stated, “The single effort referenced in the affidavit of due diligence clearly falls short of that required by [Nevada Rule] 4(e)(1)(i).” (McNair, supra, 110 Nev. at p. 468.)

The McNair court found plaintiff’s “anemic efforts to effectuate service on [defendant] . . . analogous to the situation in Price[v. Dunn (1990) 106 Nev. 100 (Price)], where the plaintiff attempted to determine the location of the defendant by searching the telephone book, the power company records, and making one phone call to the defendant’s stepmother. There were no attempts [in Price] to make ‘additional, simple efforts’ such as calling other known relatives or consulting the phone book covering the area of the defendant’s residence, once informed thereof by the call to the stepmother. [(]Price, at 103.[)] We must conclude from the evidence of record [here] that there was no adequate showing of due diligence to support an order for service by publication.” (McNair, supra, 110 Nev. at pp. 468-469.)

In Price, supra, 106 Nev. 100, overruled on other grounds by NC-DSH, Inc. (2009) 125 Nev. 647, 651, fn. 3, the Nevada Supreme Court held plaintiff’s efforts to locate defendant and serve him with process (consulting the telephone directory and the power company’s customer list, and contacting defendant’s stepmother) did not satisfy a due diligence test and, thus, the trial court’s order authorizing service by publication was not valid. (Price, supra, 106 Nev. at p. 103.)  The high court faulted plaintiff for not contacting defendant’s mother or his niece even though stepmother told her she could reach defendant through those relatives. The court stated, “Where other reasonable methods exist for locating the whereabouts of a defendant, plaintiff should exercise those methods. . . . [A]lthough [plaintiff’s] affidavit technically complies with [Nevada Rule] 4(e)(1)(i), her actual efforts, as a matter of law, fall short of the due diligence requirement to the extent of depriving [defendant] of his fundamental right to due process.” (Price, supra, 106 Nev. at p. 103.)

In light of McNair, supra, 110 Nev. at pp. 468-469, and Price, supra, 106 Nev. at p. 103, Fidelity’s efforts to locate and serve Hansen “as a matter of law, fall short of the due diligence requirement” for service by publication under Nevada Rule 4(e)(1)(i).

Finally, as for Fidelity’s assertion Hansen is concealing himself to avoid service, Fidelity offered no supporting facts other than Hansen refused to authorize an attorney to accept service of process on his behalf. Hansen had no duty to authorize another to accept service on his behalf. His refusal to do so does not constitute evidence Hansen attempted to evade service.

From the face of the record, we conclude the affidavits contained none of the facts required to confer jurisdiction on the court to order service by publication under Nevada Rule 4(e)(1)(i). In the respondent’s brief, Fidelity makes no real effort to address the factual deficiencies of the application for order and affidavits it filed in the Nevada court. Instead, Fidelity makes two arguments for finding the Nevada default judgment valid despite the purported lack of service of process.

First, Fidelity argues Hansen submitted to the jurisdiction of the state of Nevada under its long arm statute by doing significant business there. As Hansen aptly responds, however, establishing a defendant’s “minimum contacts” with the forum state is only half the battle in proving personal jurisdiction over a nonresident of that state; the plaintiff also must accomplish service of process in strict compliance with applicable service statutes. (See Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1229.)

Fidelity’s second argument for disregarding the lack of service of process is that Hansen “had notice” of the lawsuit. In its brief, Fidelity cited the fact Hedley Henderson’s attorney represented Hansen in early settlement negotiations in the dispute and, as manager of Hedley Henderson, Hansen authorized the attorney to answer the complaint on behalf of the company. Essentially, Fidelity argues Hansen’s actual knowledge of the complaint was a sufficient basis upon which the Nevada court could order service on him by publication. The argument lacks merit. “Knowledge by a defendant of an action will not satisfy the requirement of adequate service of a summons and complaint. (Waller v. Weston (1899) 125 Cal. 201 [203]; Renoir v. Redstar Corp. (2004) 123 Cal.App.4th 1145, 1152-1153.)” (County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1226.)

Finally, Fidelity falls back on the argument the trial court properly denied Hansen’s motion to vacate the Nevada judgment because Hansen failed to demonstrate he had a meritorious defense to that action. That argument fails, however, in light of Peralta, supra, 485 U.S. at pages 84-85, which held a judgment debtor, not served with process, is entitled to have the default judgment set aside as void regardless of whether he had a meritorious defense.

In summary, because the invalidity of the Nevada judgment appears on the face of the record, we reach the same conclusion the Nevada Supreme Court reached in Foster v. Lewis, supra, 78 Nevada 330: “[T]he trial court never acquired jurisdiction to make the order for publication of summons or to enter judgment,” and “since the order was void,” the judgment based thereon is likewise void.” (Id. at pp. 336-337.) Consequently, we find the trial court erred in denying Hansen’s motion to vacate entry of the Nevada judgment.

 

III

DISPOSITION

The order denying the motion to vacate the entry of judgment is reversed. The matter is remanded to the superior court with instructions to enter an order granting Hansen’s motion to vacate the judgment entered on the Nevada judgment. Appellant is entitled to his costs on appeal.

ARONSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

FYBEL, J.