Filed 4/27/20 Saidin v. Schanzer CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION FOUR

ZAKARIA SAIDIN,

Plaintiff and Appellant,

v.

IRA SCHANZER,

Defendant and Respondent.

A156680

(City & County of San Francisco

Super. Ct. No. SCN228739)

This case began as a falling out between roommates. When the dispute between them turned violent, Plaintiff Zakaria Saidin filed a complaint against his former roommate, alleging battery and other causes of action. Attempts to locate and serve Defendant Ira Schanzer failed, so Saidin sought and received permission from the court to serve the summons by publication and then secured a default judgment. More than three years after judgment entered, the trial court vacated the judgment on the grounds of extrinsic mistake. Saidin argues there was no extrinsic mistake because Schanzer’s lack of actual notice of the summons does not excuse his failure to answer here, where service by publication was lawful. Because we disagree that service by publication was proper, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On May 30, 2012, Saidin was driving with his girlfriend when he spotted his ex-roommate on the sidewalk. According to the statement Saidin’s girlfriend gave the police that day, Saidin confronted Schanzer by yelling at him from the truck. Schanzer tried to walk away, but Saidin drove after him. Eventually Saidin confronted Schanzer on foot, and the two men scuffled. Pushes escalated, until Schanzer stabbed Saidin in the chest. On July 12, 2013, Saidin filed a complaint against Schanzer for battery, intentional infliction of emotional distress, and breach of contract.

After his counsel’s various efforts to contact Schanzer failed, Saidin requested permission from the court to serve Schanzer by publication of summons. (Code Civ. Proc., § 415.50.) Saidin’s motion argued that Schanzer could not, with reasonable diligence, be found and served by another manner. The accompanying declaration of Saidin’s counsel asserted that Schanzer moved from his last known address without leaving a forwarding address and that his contact information could not be obtained through searching public directories and general search engines. In his own declaration, Saidin stated that he reviewed the police report from the stabbing incident with his counsel, and that he had no knowledge of Schanzer’s friends and family who would know of Schanzer’s whereabouts. The court granted Saidin’s request to serve summons by publication based on these declarations.

After Schanzer failed to answer, Saidin took his default and proceeded to procure a default judgment. The prove-up hearing concluded on March 24, 2015 with judgment entered in favor of Saidin for $2,969,026.80.

Three and a half years later, Schanzer discovered money missing from his bank account. He contacted his counsel immediately, who investigated and informed him of the default judgment. This was the first time, according to Schanzer, that he learned of Saidin’s case and the judgment Saidin had procured. A short time later, on December 13, 2018, Schanzer filed a motion to set aside entry of default and vacate the default judgment based on extrinsic fraud. Schanzer gathered declarations from his father, his sister, and a mutual friend of Saidin’s and his, to support his motion.

In the motion, Schanzer asserted that service of process by publication had been procured through fraud because Saidin’s application for service by publication omitted material facts and contained false representations. Schanzer emphasized that Saidin’s claim not to know Schanzer’s family or friends was demonstrably untrue, since statements Saidin made under oath for the prove-up hearing contradicted these assertions.

In papers for the prove-up hearing, Saidin declared: “[Schanzer] used to be my roommate. He told me that his parents own a successful business in New York called Design Sales Associates, Inc. My understanding is that [Schanzer] received and may still receive benefits from his family’s business, even though he does not work for the business.” How could Saidin know about Schanzer’s family business after claiming not to know Schanzer’s family and friends, the motion asked. And if Saidin believed Schanzer received regular benefits from the business, why did he not contact the business? Schanzer’s father declared that he could have been reached through contact information listed on the company’s website, but was not.

Schanzer’s declaration in support of the motion also noted Saidin could have, but failed to, contact him directly. Saidin never called or texted Schanzer on his cell phone, which was registered to the same number throughout their acquaintance. Saidin never contacted Schanzer on Facebook, where each has an open account. Saidin never used the police report from the stabbing incident to obtain any other contact information for Schanzer. Additionally, Schanzer reported that he and Saidin share a mutual friend, and the friend filed a declaration stating that although he maintained regular contact with both men, Saidin had not asked after Schanzer’s whereabouts. Finally, Schanzer alleged that Saidin knew where Schanzer’s sister lived since Saidin had picked him up from her home on several occasions. And Schanzer’s sister filed a declaration stating Saidin had not contacted her to find her brother.

In his response to Schanzer’s motion to vacate, Saidin did not deny knowing about Schanzer’s family business or where his sister lived. Saidin stated he did not contact the family business because he did not think doing so would lead him to Schanzer. Saidin also declared he had driven by Schanzer’s sister’s home, but when neighbors told him nobody was living there because of fire damage, he left without leaving a note. Contrary to the statements made by Schanzer and the mutual friend, Saidin also states that he asked the mutual friend about Schanzer’s location on multiple occasions but was “brushed . . . off” each time.

The trial court granted Schanzer’s request to set aside the default and vacate the default judgment. Although Schanzer’s notice of motion had relied on section 473, subdivision (d), a statutory ground for setting aside a default judgment, the trial court grounded its decision on the equitable doctrine of extrinsic mistake, focusing on the uncontroverted evidence that service by publication had deprived Schanzer of an opportunity to be heard. Before the hearing on Schanzer’s motion, the judge explained his reasoning in a tentative opinion, and at the hearing he provided the parties an opportunity to respond. As he explained in both the tentative and final written rulings, the judge concluded the elements for extrinsic mistake were met because Schanzer: (1) put forth facts which, if true, establish self-defense; (2) filed his motion to be relieved soon after he learned about the case; and (3) demonstrated that not every effort that could have been made, was made, to serve him personally or by substituted service.

DISCUSSION

I. Preliminary Issues
II.
We review an order granting or denying equitable relief from a judgment or order under the abuse of discretion standard. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981 (Rappleyea).) “The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason.” (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478.) We must decide whether the trial court’s factual findings are supported by substantial evidence and independently review its legal conclusions. (County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1230.)

At the outset, Saidin contends that the trial court erred in vacating the default judgment based on extrinsic mistake because this theory was not cited in Schanzer’s notice of motion or argued in any of his supporting papers. But Saidin never objected in the trial court to its decision to consider extrinsic mistake. “ ‘An appellate court will ordinarily not consider procedural defects or erroneous rulings, in connection with relief sought or defenses asserted, where an objection could have been but was not presented to the lower court by some appropriate method . . . . [The] explanation is simply that it is unfair to the trial judge and to the adverse party to take advantage of an error on appeal when it could easily have been corrected at the trial.’ ” (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 184–185, fn. 1, italics omitted.)

On the record before us, we are convinced that Saidin’s counsel had the opportunity to object in the trial court but failed to do so. The trial judge issued a tentative ruling expressly grounding his decision on extrinsic mistake, and he commented at the hearing that he was changing course from the way Schanzer had framed the legal issue. In response, Saidin’s counsel did not request additional time to brief unanticipated issues. Nor did he object at the hearing after the judge explained his reasons for applying extrinsic mistake. Instead, he twice responded with “Okay” and concluded, “I appreciate your thoughtful consideration of everything. [¶]I submit at this point.” Saidin has accordingly waived his objection to the trial court basing its ruling on a legal theory not expressly urged in the motion.

Moreover, Saidin’s reliance on section 1010 is misplaced. “Section 1010 . . . provides that notice of a motion ‘must state when, and the grounds upon which it will be made.’ ” This section has been construed “to mean ‘that the trial court may consider only such grounds as are specified in the motion.’ ” (Castagnoli v. Castagnoli (1954) 124 Cal.App.2d 39, 41.) But Section 1010 is inapplicable here because Schanzer’s papers provided adequate notice of the grounds for his motion. As the trial judge noted at the hearing although Schanzer did not expressly identify extrinsic mistake in his motion, his papers discussed the equitable concepts that underlie both extrinsic mistake and extrinsic fraud. The moving papers emphasized misleading aspects of Saidin’s declarations of due diligence, and Saidin’s papers opposing the motion set forth the three-part legal test for extrinsic mistake, again without attaching that name to it. “[A] trial court may overlook the failure of a notice of motion to state a ground for relief when the supporting materials discuss and support that ground for relief so that it is clear that relief is sought on that ground. In [this kind of] situation, the trial court may treat the supporting papers as curing the defective notice.” (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1126–1127.) We turn, accordingly, to the merits of the trial court’s decision.

III. Extrinsic Mistake
IV.
A trial court has inherent power to vacate a default judgment on equitable grounds, including for extrinsic mistake. (Rappleyea, supra, 8 Cal.4th at p. 981.) Extrinsic mistake is broadly construed and “tend to encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing.” (In re Marriage of Park (1980) 27 Cal.3d 337, 342.)

The test for equitable relief based on extrinsic mistake is stringent. (Rappleyea, supra, 8 Cal.4th at p. 982.) “[T]he defendant must demonstrate: (1) ‘a meritorious case’; (2) ‘a satisfactory excuse for not presenting a defense to the original action’; and (3) ‘diligence in seeking to set aside the default once the fraud [or mistake] had been discovered.’ ” (Mechling v. Asbestos Defendants (2018) 29 Cal.App.5th 1241, 1246.) This three-part test reflects a strong public policy in favor of the finality of judgments. (Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147–1148.) A judgment should only be set aside on equitable grounds when the circumstances are extraordinary. (Ibid.)

Saidin does not challenge Schanzer’s showing on the first and third elements of the test. As to the first element, Schanzer asserts he acted in self-defense on May 30, 2012. This defense is supported by the narrative of Saidin’s girlfriend to police, which suggests that Saidin instigated the fight. The trial court concluded Schanzer had put forth facts that, if true, established this affirmative defense. As to the third element, Schanzer has demonstrated diligence in seeking to set aside the default. He contacted his counsel the same day he discovered money missing from his bank account, gathered declarations from friends and family within weeks, and filed an ex parte motion to stay enforcement, set aside the default, and vacate the default judgment.

It is element two of the test for extrinsic mistake that Saidin argues is not met. He contends that no extrinsic mistake occurred because Schanzer’s failure to receive actual notice was not “ ‘excusable neglect,’ ” but the result of proper service by publication. And the trial court concluded otherwise only because it applied a too-stringent standard for allowing service by publication, Saidin argues. The trial court grounded its ruling on the factual finding “that service by publication occurred without Zakaria Saidin exhausting all possible sources to be able to serve Mr. Schanzer.” Saidin argues that the law does not require exhaustive efforts, only reasonable ones.

Saidin is correct that the standard is whether Saidin exercised “reasonable diligence” in searching for Schanzer. (Giorgio v. Synergy Management Group, LLC (2014) 231 Cal.App.4th 241, 248 (Giorgio).) Under section 415.50, subdivision (a), a court must examine the affidavit required by statute to see whether the plaintiff “took those steps which a reasonable person who truly desired to give notice would have taken under the circumstances.” (Donel, Inc. v. Badalian (1987) 87 Cal.App.3d 327, 333 (Donel).) But the term reasonable diligence denotes a “thorough, systematic investigation and inquiry conducted in good faith by the party or his agent or attorney.” (Kott v. Superior Court (1996) 45 Cal.App.4th 1126, 1137; see also Watts v. Crawford (1995) 10 Cal.4th 743, 749.) The fact that a plaintiff has taken one or a few reasonable steps does not mean that “all myriad . . . avenues” have been properly exhausted to warrant service by publication. (Donel, at p. 333.) Reasonable efforts, in short, are usually exhaustive. Because of due process concerns, service by publication is permissible only “as a last resort.” (Id. at p. 332.)

We need not dwell on the issue of whether any daylight separates the standard the trial court employed and the requirement of reasonable diligence, for here we conclude as a matter of law that Saidin’s efforts fell well short of reasonable diligence. Saidin had Schanzer’s cellphone number but did not call. Schanzer remained accessible on social media, but Saidin did not send a message. Saidin affirmatively stated that he had no information regarding Schanzer’s personal contacts and family members, yet, by Saidin’s own later admission, he knew the name and location of Schanzer’s family business and seemed to believe that Schanzer was in contact with the business. Finally, he also admitted he knew where Schanzer’s sister lived but never left a note or mailed anything to that address. If Saidin had disclosed these facts with his motion seeking permission to serve by publication, the motion would have been properly denied.

Where service by publication rests on a deficient and misleading showing, any default judgment procured as a result must be set aside. For example, in Stern v. Judson (1912) 163 Cal. 726, our Supreme Court affirmed a declaratory judgment setting aside a judgment obtained through service by publication because of false representations and fraud in the affidavits supporting publication. The court explained, that “[s]uch an affidavit is always ex parte, and . . . [w]hen a false affidavit is presented to the court for the purpose of obtaining an order for the service of summons by publication, this, of itself, is an act of fraud both upon the court which was induced to make the order thereon, and equally a fraud upon the defendant in the action.” (Id. at p. 735.) “[A]ny judgment based thereon will be set aside in an action by the defendant constructively served against the plaintiff claiming the benefit of the judgment thus fraudulently procured.” (Ibid.)

Applying Stern, the court in Donel held that the plaintiff failed to exercise reasonable diligence in attempting to locate the defendant prior to applying to serve the defendant by publication. (Donel, supra, 87 Cal.App.3d at p. 333.) The court concluded that although the plaintiff’s counsel took one reasonable step—searching telephone directories for the defendant’s last known address—counsel did not “take the one step which patently appeared to hold the most promise for locating” the defendant, namely an inquiry addressed to the defendant’s attorney. (Id. at p. 334.) So, in our case, Saidin’s attorney took several steps to locate Schanzer but did not pursue avenues which, in light of his client’s personal history with Schanzer, would have been obvious to one “who truly desired to give notice.” (Id. at p. 333.) Saidin not only failed to show due diligence, he failed to exercise it.

Because we conclude that service by publication was improper in this case, we need not address Saidin’s argument that a party’s failure to receive actual notice through proper service by publication is not extrinsic mistake. Saidin relies for this argument on Parage v. Couedel (1997) 60 Cal.App.4th 1037, 1044 and Giorgio, supra, 231 Cal.App.4th 241, 247 but, neither case addresses the validity of service by publication based on a false and misleading application. In Parage, the court affirmed denial of a request to vacate a default judgment because it held that constructive notice by publication was authorized by the pertinent statute addressing escheated property. (Parage, at pp. 1040–1043.) In Giorgio, the court concluded that efforts to locate the defendant through online searching, hiring two process servers, and attempting to send mail to the defendant’s last known address provided substantial evidence that the defendant “could not with reasonable diligence be served personally or by mail.” (Giorgio, at p. 248.) In our case, by contrast, undisputed evidence establishes that Saidin did not exercise the reasonable diligence required before he could rely on constructive notice by service of process.

We also need not address the parties’ disagreement about whether the order here may be affirmed on the alternate grounds of extrinsic fraud or improper service of the statement of damages. Because we conclude the trial court did not err in finding extrinsic mistake, those issues are moot.

DISPOSITION

The order setting aside the default and vacating the default judgment is affirmed. Schanzer is entitled to his costs on appeal.

 

_________________________

TUCHER, J.

WE CONCUR:

_________________________

POLLAK, P. J.

_________________________

BROWN, J.

Saidin v. Schanzer (A156680)