Case Name: Howard Loo, et al. v. TerraHash, Inc., et al.
Case No.: 2013-1-CV-257101

Before the Court is a motion by defendant Amir Khan to set aside a default judgment and quash service of summons.

I. Background

Plaintiffs allege defendant Amir Khan (“Khan”) defrauded them into purchasing application-specific integrated circuit chips for mining bitcoin from his company TerraHash, Inc. (“TerraHash”), which he then failed to deliver. They commenced this action against Khan and TerraHash by filing the original complaint in December 2013.

In June 2014, after filing the operative second amended complaint, Plaintiffs applied for an order authorizing service of the summons and complaint upon Khan by publication. They omitted an affidavit establishing the existence of a cause of action against Khan, and so the Court informed them that their application was incomplete. Plaintiffs thereafter cured the deficiency in their application, and the Court ultimately authorized service by publication. (Order of 06/09/2014.) A notice ran in the Santa Clara Weekly in June and July 2014.

On October 8, 2014, the Clerk entered default against Khan and TerraHash. Plaintiffs then requested a default judgment and presented evidence to substantiate their request. On November 23, 2015, the Court rendered judgment in the amount of $224,185.49 against TerraHash and Khan. Khan now moves to set aside the default judgment and quash service of summons.

II. Discussion

Khan moves to set aside the default judgment under Code of Civil Procedure section 473, subdivision (d), which authorizes a court to, “on motion of either party after notice to the other party, set aside any void judgment or order.” A judgment entered against a defendant who was not served and, thus, was not subject to personal jurisdiction is void. (Calvert v. Al Binali (2018) 29 Cal.App.5th 954, 960–61.) Khan asserts the judgment entered against him is void due to lack of personal jurisdiction because he was not properly served by publication.

Service is proper when it is accomplished in compliance with statutory procedures. (See Ziller Electronics Lab GmbH v. Super. Ct. (1988) 206 Cal.App.3d 1222, 1229; see also Ellard v. Conway (2001) 94 Cal.App.4th 540, 544.) Service by publication must be accomplished in conformity with the procedures in Code of Civil Procedure section 415.50, which states:

The court shall order the summons to be published in a named newspaper, published in this state, that is most likely to give actual notice to the party to be served. If the party to be served resides or is located out of this state, the court may also order the summons to be published in a named newspaper outside this state that is most likely to give actual notice to that party. The order shall direct that a copy of the summons, the complaint, and the order for publication be forthwith mailed to the party if his or her address is ascertained before expiration of the time prescribed for publication of the summons. Except as otherwise provided by statute, the publication shall be made as provided by Section 6064 of the Government Code unless the court, in its discretion, orders publication for a longer period.

Here, Khan does not challenge whether the published notice itself complied with the statutory requirements. For example, Khan does not argue Plaintiffs published notice in the wrong newspaper. (See, e.g., Calvert, supra, 29 Cal.App.5th at pp. 960–61.) And so, he does not identify any deviation from the statutory procedures quoted above sufficient to establish he was not properly served.
Instead, Khan challenges whether service by publication was warranted in the first instance. “A summons may be served by publication if upon affidavit it appears to the satisfaction of the court in which the action is pending that the party to be served cannot with reasonable diligence be served in another manner specified in this article and that…[a] cause of action exists against the party….” (Code Civ. Proc., § 415.50, subd. (a).) Khan asserts Plaintiffs did not demonstrate reasonable diligence in attempting to serve him through other means before seeking an order authorizing service by publication. In other words, Khan is essentially asking the Court to reconsider its prior ruling that the prerequisites for service by publication, including reasonable diligence, were satisfied. Khan cites no authority establishing he may properly request reconsideration of the order authorizing service by publication in this manner. The Court independently located one case in which an appellate court held a judgment was void because the prerequisites for service by publication were not satisfied, but that case is not analogous because the record affirmatively showed the plaintiff falsified information in its application. (See, e.g., Transamerica Title Insurance Co. v. Hendrix (1995) 34 Cal.App.4th 740, 744.) There is no such evidence of fraud here.

As a matter of substance, Khan’s assertion that Plaintiffs did not attempt, with reasonable diligence, to serve him through more direct means is unavailing because it is based on a mischaracterization of the evidence they presented to support their application. Contrary to what he states, Plaintiffs did not rely on bare or conclusory assertions that they could not find or serve him. Thus, Khan fails to demonstrate Plaintiffs did not, in fact, exercise reasonable diligence prior to applying for an order authorizing service by publication.
For these reasons, Khan’s argument about reasonable diligence is not well-taken.

Ultimately, Khan’s motion is untimely. “Where a party moves under section 473, subdivision (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. [Citation.]” (Trackman v. Kenney (2010) 187 Cal.App.4th 175, 180.) He filed his motion more than three years after entry of the default judgment in November 2015, and so his motion is untimely.

For all of these reasons, there is no basis for setting aside the default judgment. In reaching this conclusion, the Court notes that the entry of default itself, as distinct from the default judgment, also stands. “[T]he default and default judgment are separate procedures.” (Rutan v. Summit Sports, Inc. (1985) 173 Cal.App.3d 965, 970 [internal quotation marks and citation omitted].) “The latter does not necessarily have any bearing on, and may be set aside without disturbing, the former.” (Ibid.) Khan states his motion is made on the ground the default judgment is void. (Not. of Mot. at p. 1:11–12.) While there are a handful of references to the entry of default in his papers, he never actually addresses whether there is a basis for setting aside the entry of default itself as distinct from the default judgment. Accordingly, even if Khan demonstrated the default judgment should be set aside, he does not demonstrate there is a basis for setting aside the entry of default.

“The entry of a default terminates a defendant’s rights to take any further affirmative steps in the litigation….” (Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385–86.) Because the entry of default and default judgment stand, the Court does not consider whether service of the summons should be quashed for lack of personal jurisdiction.
In consideration of the foregoing, Khan’s motion is DENIED.