Case Number: KC068094 Hearing Date: November 21, 2018 Dept: J

Re: Suyen, LLC v. Meher Teufenkjian, etc. (KC068094)

MOTION TO SET ASIDE DEFAULT AND DEFAULT JUDGMENT

Moving Party: Defendant Meher Teufenkjian

Respondent: Plaintiff/Judgment Creditor Suyen, LLC

POS: Moving OK; Opposing untimely (due 11/7/18 and filed 11/13/18) and served by regular mail in violation of CCP § 1005(b) and (c)

This is a commercial unlawful detainer action involving the real property located at 10701 and 10709 Garvey Avenue in El Monte. The complaint, filed 12/8/15, asserts a cause of action for Unlawful Detainer against Defendants Meher Teufenkjian aka Michael Teufenkjian dba Autosports European, Inc. (“Teufenkjian”), Scuderia Investments, LLC (“Scuderia”), Autosports European, Inc. (“Autosports”) and Does 1-10.

On 1/15/16, default was entered as to Scuderia and Autosports. On 4/6/16, Teufenkjian’s default was entered. On 4/18/16, a default judgment was entered the defendants. On 5/3/16, plaintiff filed its “Notice of Entry of Judgment or Order;” it had been mail served on 4/21/16.

Defendant Meher Teufenkjian (“Teufenkjian”) moves the court, in equity, for an order setting aside and vacating the default and default judgment entered against him on 4/18/16, on the basis of extrinsic fraud.

REQUEST FOR JUDICIAL NOTICE:

Teufenkjian’s request for judicial notice (“RJN”) is ruled on as follows: Granted as to Exhibit “1” (i.e., case summary report for this case); Granted as to Exhibit “2” (i.e., complaint filed 12/8/15 in this case), Granted as to Exhibit “3” (i.e., request for entry of default filed 12/31/15 in this case); Granted as to Exhibit “4” (i.e., Notice of Rejection Default/Clerk’s Judgment dated 1/4/16 in this case); Granted as to Exhibit “5” (i.e., proof of service of summons, complaint and prejudgment claim of right to possession filed 1/15/16 as to All Other Occupants in Possession in this case); Granted as to Exhibit “6” (i.e., proof of service of summons, complaint and prejudgment claim of right to possession filed 1/15/16 as to Autosports European, Inc. in this case); Granted as to Exhibit “7” (i.e., proof of service of summons, complaint and prejudgment claim of right to possession filed 1/15/16 as to Scuderia Investments, LLC in this case); Granted as to Exhibit “8” (i.e., proof of service of summons, complaint and prejudgment claim of right to possession filed 1/15/16 as to “Meher Teukenkjian aka ‘Michael Teufenkjian’ dba ‘Autosports European, Inc.’” in this case); Granted as to Exhibit “9” (i.e., Notice of Rejection Default/Clerk’s Judgment dated 1/20/16 and request for entry of default filed 1/15/16 in this case); Granted as to Exhibit “10” (i.e., “Notice of Case Management Conference” filed 12/8/15 in this case); Granted as to Exhibit “11” (i.e., proof of service of summons, complaint and prejudgment claim of right to possession filed 3/16/16 as to “Meher Teukenkjian aka ‘Michael Teufenkjian’ dba ‘Autosports European, Inc.’” in this case); Granted as to Exhibit “12” (i.e., proof of service of summons, complaint and prejudgment claim of right to possession filed 3/16/16 as to All Other Occupants in Possession in this case); Granted as to Exhibit “13” (i.e., 3/21/16 minute order in this case); Granted as to Exhibit “14” (i.e., request for entry of default filed 4/6/16 in this case); Granted as to Exhibit “15” (i.e., 4/14/16 minute order in this case); Granted as to Exhibit “16” (i.e., Application for Entry of Court Judgment After Surrender of Possession filed 4/18/16 in this case); Granted as to Exhibit “17” (i.e., judgment filed 4/18/16 in this case); Granted as to Exhibit “18” (i.e., Declaration of Due Diligence re Service of Summons, Complaint on Defendant Meher Teufenkjian, aka ‘Michael Teufenkjian’ an Individual dba ‘Autosports European, Inc.’” filed 4/20/16 in this case); Granted as to Exhibit “19” (i.e., Notice of Entry of Judgment or Order filed 5/3/16 in this case); Granted as to Exhibit “20” (i.e., Secretary of State Statement Statement of No Change filed 8/29/18 and California Secretary of State Statement of Information filed 12/20/12 as to Suyen, LLC); Granted as to Exhibit “21” (i.e., California Secretary of State Statement of Information filed 4/23/08 as to Scuderia Investments, LLC); Granted as to Exhibit “22” (i.e., California Secretary of State Statement of Information filed 3/31/15 as to Autosports European, Inc.) and Granted as to Exhibit “23” (i.e., California Secretary of State Statement of Information filed 3/27/18 as to The Hertz Corporation).

A party may move to set aside a default judgment by showing “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 619, 181. “’Extrinsic fraud usually arises when a party is denied a fair adversary hearing because he has been “deliberately kept in ignorance of the action or proceeding, or in some other way fraudulently prevented from presenting his claim or defense.”’ (Kulchar v. Kulchar (1969) 1 Cal.3d 467, 471). It occurs when ‘”the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff.”’ In those situations, there has not been ‘a real contest in the trial or hearing of the case,’ and the judgment may be set aside to open the case for a fair hearing. (Ibid.)” Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 47.

“While the grounds for an equitable action to set aside a default judgment are commonly stated as being those of extrinsic fraud or mistake, the terms are given a very broad meaning which tends to encompass all circumstances that deprive an adversary of fair notice of hearing whether or not those circumstances would qualify as fraudulent or mistaken in the strict sense. Thus a false recital of service although not deliberate is treated as extrinsic fraud or mistake in the context of an equitable action to set aside a default judgment. (Bennett v. Hibernia Bank, 47 Cal.2d 540, 558; Rest., Judgments, § 117, com. C, p. 565.).” Munoz v. Lopez (1969) 275 Cal.App.2d 176, 181.

It is Teufenkjian’s position that the proofs of service filed in this action are false, because they reflect that a “Mr. Igaerra,…person in charge of business over 18,” purportedly accepted substitute service on behalf of All Other Occupants in Possession, Teufenkjian, Autosports European, Inc. and Scuderia Investments, LLC at the same exact date and time (i.e., 12/11/15 at 4:11 p.m.) at two different buildings and addresses (i.e., 10701 and 10709 Garvey Avenue in El Monte [collectively, “Property”]). A person may be substitute served if a copy of the summons and complaint if left at the person’s usual place of business “in the presence of…a person apparently in charge of his or her office, place of business…, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left.” CCP § 415.20(b). “The term ‘usual place of business’ includes a defendant’s customary place of employment as well as his own business enterprise.” See Judicial Council Comment to CCP § 415.20.

At the outset, the court notes that the proofs of service were executed by a registered California process server, J. Fitzpatrick. “The return of a process server registered pursuant to Chapter 16 (commencing with Section 22350) of Division 8 of the Business and Professions Code upon process or notice establishes a presumption, affecting the burden of producing evidence, of the facts stated in the return.” Evidence Code § 647. “Under Evidence Code section 647, the proof of service ‘establishes a presumption, affecting the burden of producing evidence, of the facts stated in the return.’” Palm Property Investments, LLC v. Yadegar (2011) 194 Cal.App.4th 1419, 1428. Due to the statutory presumption, Teufenkjian is required to produce evidence that proper substitute service was not effectuated.

Teufenkjian explains that the lease agreement dated 12/20/10 was between Ta-Cheng Tung (“Mr. Tung”) and Tracy Tung (collectively, “Tungs”) as landlords, and himself on behalf of Scuderia Investments, LLC dba Autosports European, Inc. (Teufenkjian Decl., ¶7.) It was a five-year term for the property located at 10701 and 10709 Garvey Avenue in El Monte, 91733 (hereinafter, “10701 Garvey” or “10709 Garvey” and collectively, “the Property”). (Id.) Tuefenkjian believes that sometime after 2010, plaintiff purchased the property from the Tungs. (Id.) The entity address for Scuderia Investments, LLC (“Scuderia”), the lessee, master tenant and entity that made all the rent payments to plaintiff, was 10701 Garvey, even though it had no visual presence at the Property and only used the back office. (Teufenkjian Decl., ¶9.) Scuderia was an LLC he operated for many years. (Id.) He explains that Autosports European, Inc. (“Autosports”), a corporation he managed and operated, and Hertz Rental Car (“Hertz”) were both Scuderia’s subtenants; Autosports occupied 10701 Garvey, while Hertz occupied 10709 Garvey. (Id., ¶¶10-11.) Hertz was Scuderia’s subtenant from 2008. (Id., fn. 1). 10701 Garvey and 10709 Garvey are corresponding street numbers to two adjoined buildings, situated on the opposite ends of a single 15,067 square foot U-shaped lot. (Id., ¶12; Ghavidel Decl., ¶7, Exh. C.) The buildings are separated by a large empty parking lot with their own entrances on each side. (Id.) The entrance to 10701 Garvey is on the corner of Garvey and Granada, while the entrance for 10709 Garvey is approximately half a block away. (Teufenkjian Decl., ¶12.) Each building is distinctively identified by its corresponding business’ trade dress; for instance, 10701 was immediately under Autosports’ dark-blue and red window dressing and sign, whereas 10709 is immediately under the yellow Hertz banner and sign. (Ghavidel Decl., ¶¶8-9, Exh. D & E.) Teufenkjian attests that he does not know a Mr. Igaerra, that he has never communicated with him and that he has never met him. (Id., ¶14.) He “can only assume that [Mr. Igaerra] worked for [his] subtenant, Hertz.” (Id.) He disavows personal service. (Id., ¶14.) Teufenkjian further attests that the only employee working for him at the time was Emilio Ramirez (“Ramirez”), and that Ramirez was at the Property on 12/9/15, 12/10/15 and 12/11/15. (Id., ¶¶21-22.) Ramirez, in turn, has submitted a declaration attesting that he was working at Autosports, located at 10701 Garvey “on December 9th through December 11th” and that no one ever attempted to serve Teufenkjian, Autosports or Scuderia. (Ramirez Decl., ¶ 3.) Ramirez further attests that he has never met a Mr. Iguerra. (Id., ¶6.)

The court notes that Ramirez has failed to specify a year for “December 9th through December 11th;” while the court infers, for the purpose of this analysis, that Ramirez is referring to the year 2015, such clarification must be provided via a supplemental declaration provided at or before the time of the hearing.

In the absence of additional evidence from the process servicer, the uncontradicted evidence is that the process server did not effectuate valid substitute service on Teufenkjian.

The fact that Teufenkjian has established extrinsic fraud/mistake, however, does not automatically mean that he is entitled to relief: Due to the strong public policy in favor of the finality of judgments, equitable relief from default should be granted only in “exceptional circumstances.” Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981-982. To set aside a default judgment on equitable grounds, three requirements must be satisfied: “First, the defaulted party must demonstrate that it has a meritorious case. Second [], the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Last[], the moving party must demonstrate diligence in seeking to set aside the default once … discovered.” Id. at 982 (internal quotations omitted.)

Here, Teufenkjian sufficiently established each of these elements. Tefenkjian attests that sometime toward the second part of December 2015, he and Mr. Tung agreed that Scuderia would terminate its lease and Autosports would vacate the premises by the first week of January 2016, and that in exchange, Mr. Tung would forego any purported claims to back rent. (Id., ¶29.) He attests that Mr. Tung did not disclose the lawsuit to him during this time. (Id., ¶¶ 26 and 31.) Teufenkjian advises that he additionally agreed to transfer a sub-lease he had with Hertz (which had more than three years left) directly to Mr. Tung, that Mr. Tung said that was a “fair deal” and “would put an end to everything,” that they shook on it, and that he subsequently scheduled a meeting with Mr. Tung and Hertz’s general manager, wherein they all agreed that Hertz’s sub-lease would be transferred directly to Mr. Tung. (Id., ¶¶ 29-30.) Plaintiff does not submit a declaration from Mr. Tung in opposition to refute these statements.

Additionally, Tuefenkjian attests that he only discovered and understood that a default judgment was entered against him in July 2018, when he had to obtain the title report to his home to refinance same. (Id., ¶3.) He explains that he was unable to retain paid counsel due to his lack of financial resources and lack of knowledge of these proceedings, and only recently was able to come up with the money to retain counsel to have this motion filed. (Id., ¶ 37.) He claims that he never received the notice of entry of judgment that was purportedly mailed to his home in April 2016. (Id., ¶4.) He attests that, even though he met with Mr. Tung at the Property on numerous occasions from mid-December 2015 through 1/4/16, Mr. Tung never tried to serve him and did not disclose the lawsuit to him. (Id., ¶¶ 26 and 31.)

The motion, then, is granted. The default and default judgment is set aside as to defendant Teufenkjian only. The proposed Answer is deemed filed and served as of the date of the hearing. The court assumes that possession of the premises is no longer an issue and, accordingly, will set the matter for trial as a general civil action.