2013-00143999-CL-CL

Midland Funding LLC vs. Cornel Anton

Nature of Proceeding: Motion to Quash Service of Summons and Vacate Default and Default

Filed By: McKinney, Aaron S.

Defendant Cornel Anton’s motion to vacate default and default judgment is granted.

The motion to quash service of summons is denied without prejudice.

This matter was set on today’s calendar after the Court granted Defendant’s ex parte application for an OST on May 31, 2018. Opposition was to be filed by June 7, 2018. Plaintiff did not file its opposition until June 8, 2018. Nevertheless, the Court considered the opposition.

Defendant moves to vacate the default and default judgment entered against him on July 17, 2014. He also moves to quash service of summons.

At the outset, while Defendant makes both a motion to quash and a motion to set aside, given Defendant is currently in default, the only motion that he may properly make is one to set aside the default. As Defendant’s default has been entered by the Clerk and not yet set aside, the Court has lost jurisdiction to address any action by the defaulted defendant other than a motion to vacate entry of default. (See, e.g. W. A. Rose Co. v. Municipal Court for Oakland-Piedmont Judicial Dist. (1959) 176 Cal. App. 2d 67, 72.) “[T]he entry of the default terminates [the defaulting defendant’s] rights to take any further affirmative steps in the litigation until either the default is set aside or a default judgment is entered.” (City of Riverside v. Horspool (2014) 223 Cal.App.4th 670, 681 (citing Garcia v. Politis (2011) 192 Cal.App.4th 1474, 1479; Devlin v. Kearny Mesa Amc/Jeep/Renault (1984) 155 Cal.App.3d 381, 385).) “Upon the failure of the

defendant to answer the complaint within the time allowed by law, and upon the entry of default, in the absence of fraud, the right of the defendant to participate in the litigation is terminated, and the subsequent filing of an answer or demurrer on his part is unauthorized and void, unless upon proceedings duly had, the default is first set aside. . . .” (Forbes v. Cameron Petroleums, Inc. (1978) 83 Cal.App.3d 257, 262-63 (citing cases).) Where “defendants’ default had already been entered, they had no standing to file any responsive pleading without first obtaining relief from the default.”

Defendant’s declaration indicates that he does not know anyone who fits the description of the person who the proof of service indicates was given the summons and complaint. (Anton Decl. ¶¶ 4, 5.) The individual is listed as a 50 year old woman with blonde hair, 5’11” tall and weighing 260 lbs. Defendant’s wife was 26 at the time and is 5’3” tall and weighs approximately 125 lbs. (Id. ¶ 5.) Defendant indicates that no guests were staying with him at the time of service. (Id. ¶ 6.) He declares that he was unaware of the lawsuit until just recently when he was informed of a levy on his bank account. (Id. ¶ 7.)

In moving to set aside the default and default judgment, Defendant cites to CCP § 473.5 and 473(d). Plaintiff argues that the motion is untimely under CCP §§ 473.5 and 473(d). Plaintiff is correct, as to these arguments. A motion seeking relief pursuant to CCP § 473.5 shall be served and filed within a reasonable time not to exceed the earlier of two years after entry of a default judgment or 180 days after service of written notice that a default or default judgment has been entered. (CCP § 473.5(a).) The instant motion was made almost four years after entry of default judgment. The motion to set aside pursuant to CCP § 473.5 is therefore untimely.

In addition, the motion is untimely to the extent it was made pursuant to CCP § 473(d). “Where a party moves under section 473(d) to set aside ‘a judgment that, though valid on its face, is void for lack of proper service, the courts have adopted by analogy the statutory period for relief from a default judgment’ provided by section 473.5, that is, the two year outer limit.” (Trackman v. Kenny (2010) 187 Cal.App.4th 175, 180 [citing 8 Witkin Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 209, pp. 814 -815.]) “A void judgment’s invalidity appears on the face of the record, including the proof of service.” (Id. at 181.) “Whether a proof of service is void does not depend on evidence outside the face of the record.” (Id. at 182.) Here, whether the judgment is void for lack of proper service depends on evidence outside the face of the record and thus the motion pursuant to CCP § 473(d) is governed by a two year time limit and as a result is also untimely.

However, the Court has the inherent power to grant equitable relief based upon extrinsic mistake and there is no time limit for such a motion, even though Defendant did not specifically refer to extrinsic mistake (though reference was made in reply). Extrinsic fraud or mistake “encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing.” (Marriage of Park (1980) 27 Cal.3d 337, 342.) A party may seek relief where he or she can show “that extrinsic fraud or mistake exists, such as a falsified proof of service, and such a motion may be made at any time, provided the party acts with diligence upon learning of the relevant facts.” ( Trackman v. Kenney (2010) 187 Cal. App.4th 175, 181.) Extrinsic fraud or mistake can “encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing.” (Marriage of Park (1980) 27 Cal.3d 337, 342.) “Examples of extrinsic fraud are:…failure to give notice of the action to the other party…” (City and County of San Francisco v. Cartogena (1995) 35 Cal.App.4th 1061, 1067.) “Extrinsic

fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding.” (Spom v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300.)

To be clear, after six months from entry of default, a trial court may still vacate a default on equitable grounds even if statutory relief is unavailable (Rappleyea v. Campbell (1994) 8 Cal. 4th 975, 981). The time limit for the filing of a motion for relief from default or default judgment is a reasonable time from discovery of the default or default judgment regardless of when it may actually have been entered ( Munoz v. Lopez (1969) 275 Cal. App. 2d 178, 181). Thus, relief may be granted when the defaulting party is diligent in making his or her motion for relief after learning of the entry of the default or default judgment. Factors to be considered in this regard are the failure of plaintiff to show any prejudice from any delay by defendant and the reasonableness of defendant’s actions in filing his or her motion for relief, in light of the circumstances known to defendant (Weitz v. Yankosky (1966) 63 Cal. 2d 849).

Plaintiff argues that Defendant was properly served by way of substitute service pursuant to CCP § 415.20(a) and that Plaintiff had phone conversations with Defendant prior to entry of the default and after the entry of default judgment in the summer of 2014. The return of process or notice, made by a registered process server (see California Business and Professions Code §22350 et seq.), “establishes a presumption, affecting the burden of producing evidence, of the facts stated in the return.” (California Evidence (Ev.C) §647; see Palm Properties Inv., LLC v. Yadegar (2011) 194 C.A.4th 1419, 1427 [in unlawful detainer action, exclusion of landlord’s proof of service on hearsay grounds was error; where service is carried out by registered process server, Ev.C. 647 eliminates necessity of calling process server as witness in unlawful detainer actions as in other actions]). As explained in Evidence Code section 604, “[t]he effect of a presumption affecting the burden of producing evidence is to require the trier of fact to assume the existence of the presumed fact unless and until evidence is introduced which would support a finding of its nonexistence, in which case the trier of fact shall determine the existence or nonexistence of the presumed fact from the evidence and without regard to the presumption.” Here, however, Defendant’s evidence demonstrates that the person with whom the summons and compliant were left did not match the description of anyone that resided at Defendant’s residence and further that Defendant did not have any visitors at the time of service. Plaintiff attempts to set forth conversations that it had with Defendant at or around the time default and default judgment were entered in this action in 2014, and how Defendant never mentioned any service defect. However, the evidence of the conversations is set forth in Plaintiff’s counsel’s declaration and does not indicate any specific individual from Plaintiff who spoke with Defendant. (Pogosian Decl.) There is no actual declaration from Plaintiff which provides any evidence that Plaintiff actually had any conversation with Defendant, only a declaration from Plaintiff’s attorney Mr. Pogosian indicating that Plaintiff did. The Court notes that Mr. Pogosian was not even admitted to the State Bar until December 2015 and it is entirely unclear how he could have personal knowledge of these communications which Plaintiff purportedly had with Defendant in 2014. The declaration thus has insubstantial probative value. Further, none of these purported conversations could show that Defendant was properly served. The fact that Plaintiff may have mailed requests for entry of default and notice of judgment to Defendant’s home address does not demonstrate that Defendant was validly served in the face of Defendant’s showing that he was not. Again, the information is contained in Mr. Pogosian’s declaration and

relates to conduct that occurred in 2014 before Mr. Pogosian was even an attorney. Regardless, “[N]o California appellate court has gone so far as to uphold a service of process on the ground that the defendant received actual notice when there has been a complete failure to comply with the statutory requirements for service.” (Summers v. McClanahan (2006) 140 Cal.App.4th 403, 414.) Thus, even if Defendant had actual notice of the lawsuit as a result of the request for entry of default, the judgment is nevertheless void as he has shown that he was not served with the summons and complaint.

Here, Defendant has shown that he was never served with the summons and complaint and he has promptly sought relief after discovering the existence of the action. As the Court has said numerous times, it is California’s “policy that cases should be decided on their merits.” (Smeltzley v. Nicholson Mfg. Co. (1977) 18 Cal.3d 932, 936.)

The motion is granted. As a result, the default and default judgment entered on July 17, 2014 are set aside.

Given that Defendant was never served with the summons and complaint, he has no duty to file an answer at this time.

Though not specifically requested, the writ of execution issued on April 18, 2018 based on the judgment is recalled and quashed. “A judgment, when vacated, cannot be effective for any purpose.” (Levy v. Drew (1935) 4 Cal.2d 456, 459.) Further, any funds levied upon in Defendant’s bank accounts must be returned to Defendant forthwith.

Plaintiff argues that if the Court vacates the judgment that it should order the funds in Defendant’s bank account on which it has levied, placed in an escrow account pending the outcome of the case because it believes that Defendant may move the funds if the levy is released. The Court rejects this argument. There is no authority for such an order, especially where it has been shown that Defendant was never validly served with the summons and complaint. Indeed, such an order would effectively preclude Defendant from accessing his funds and would be akin to a pre-judgment attachment without Plaintiff having to go through the statutory requirements for such a pre-judgment remedy.

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.