Opinion
B207877
6-24-2009
JAIME AVILES, Plaintiff and Appellant, v. JEANNIE KIM, et al., Defendants and Respondents.
Monica R. Molina for Plaintiff and Appellant. Stephen A. Madoni for Defendants and Respondents.
Not to be published in the official Reports
Plaintiff Jaime Aviles, doing business as the Flower Patch, contends the court abused its discretion when it granted the motion to set aside the default judgment of defendants Jeannie Kim and Jeannie, Inc. and when it denied plaintiffs motion to reconsider setting aside the default judgment. In addition to countering plaintiffs arguments, defendants assert that the record and plaintiffs briefs are procedurally defective, requiring this court to either strike plaintiffs briefs in their entirety or strike certain portions of plaintiffs briefs. We reverse.
BACKGROUND AND PROCEDURAL HISTORY
On April 20, 2006, defendants entered into an agreement to sell their business, the Flower Patch, to plaintiff. On February 14, 2007, plaintiff filed a lawsuit against defendants for breach of contract alleging defendants had violated the agreement by competing with plaintiff within a seven mile radius of plaintiffs business within four years of the agreement.
To effectuate service, plaintiff hired Eric Mendez, a process server, who served an unidentified female with the summons and complaint at a business in Los Angeles on West Sixth Street (the Sixth Street address). Plaintiff asserted the unidentified female was Kim because the female matched Kims description. However, the record does not indicate Kim was actually present at the time of service nor does the record indicate that the summons and complaint was forwarded to defendants. Moreover, although Kim owned the Sixth Street address, it was not defendants principal place of business, which was in La Mirada on Meganwood Place (the Meganwood address). Defendants assert that, before this alleged substitute service took place, they had stopped conducting business at the Sixth Street address.
Despite the fact plaintiff claims she properly effectuated substitute service, defendants failed to appear and did not answer the complaint. Accordingly, the court entered a default judgment against defendants, considering only plaintiffs written declaration. Thereafter, plaintiff attempted to levy on the default judgment. On January 10, 2008, the Los Angeles County Sheriffs Department sent defendants a notice of levy under writ of execution of money judgment.
To stop the levy, on February 8, defendants filed a motion to set aside the default judgment and entry of default. Defendants claimed they were not given actual notice of the summons and complaint. In order to establish lack of actual notice, defendants offered Kims declaration, which stated: the first time defendants learned of this case was when they received the notice of levy; defendants were never personally served with the summons and complaint either as individuals or on behalf of any fictitious entities; defendants never received any documents relating to the lawsuit; and defendants had no actual notice in time to defend the action. What is more, defendants offered evidence proving plaintiff had incorrectly addressed the notice of levy. The notice incorrectly asserted the Meganwood address was located in Fullerton rather than La Mirada. Defendants did not file an answer or other proposed pleading with their motion to set aside.
Plaintiff filed her opposition, arguing defendants had received actual notice. In support of her opposition, plaintiff offered the proof of service of the summons and complaint for this case and the claim and order of a separate small claims case that Mendez had effectuated (the original small claims case). Plaintiff asserted Mendez, while serving the summons and complaint for this case at the Sixth Street address, also served the same unidentified female, who matched Kims description, with the claim and order for the original small claims case. Plaintiff averred that even though Kim did not appear in this case, Kim did appear at the hearing for the original small claims case. Plaintiff also offered evidence showing that during the initial course of these proceedings, plaintiff, via mail, sent to the Sixth Street address copies of the first amended complaint, notice of rulings, status reports, and eventually a request for default judgment and that the post office never returned such documents.
On February 28, one day before the scheduled hearing on defendants motion, plaintiff filed a supplemental declaration. The declaration averred that plaintiff had recently become aware of an additional small claims case in which Kim used the Sixth Street address as her correspondence address (second small claims case). Plaintiff asserted that evidence contradicted defendants statement they had ceased doing business at the Sixth Street address when Mendez effectuated substitute service. Plaintiff also requested the court take judicial notice of the writ of execution in the second small claims case.
At the hearing, defendants asserted that they did not receive plaintiffs supplemental declaration and that its filing was not timely. Moreover, although plaintiff claims she made arrangements to have the original small claims case delivered to the court, nothing in the record supports that statement. At the hearing, plaintiff asked the court to take judicial notice of three small claim cases. After taking the issue under submission, the court issued its order granting the motion and finding defendants had presented sufficient evidence indicating they were never given actual notice of the litigation pending against them and also finding plaintiff had failed to rebut the evidence presented.
On March 17, plaintiff filed a motion to reconsider the trial courts order, arguing she had new evidence which proved defendants had received actual notice. The new evidence was the second small claims case and another small claims case in which Kim again used the Sixth Street address as her correspondence address (third small claims case). Plaintiff also requested the court take judicial notice of the entire file in the second and third small claims cases.
Plaintiff filed a request for the court to permit the oral testimony of Grace Lee, stating Lee would testify she had personal knowledge defendants had received actual notice of the summons and complaint; and, during the time plaintiff served defendants, Kim was conducting business at the Sixth Street address.
Defendants filed their opposition, arguing the trial court should deny the motion on two grounds: one, the motion was untimely, and, two, plaintiff had not sufficiently explained why plaintiff had not submitted the new evidence in plaintiffs original opposition. At the hearing, the court specifically stated it would not make a ruling until it received the documents plaintiff sought to have judicially noticed. Furthermore, the trial court questioned plaintiff concerning Lees personal knowledge about whether defendants had actual notice of this case.
After further review, the court denied the motion for reconsideration on two separate grounds. First, plaintiff made the motion outside of the 10-day statutory period that Code of Civil Procedure section 1008, subdivision (a), prescribes and was therefore untimely. Second, the record indicated plaintiff was aware of the new facts at the time of the original hearing and thus was obligated to present them to the court at that time. The court concluded that there were no new facts justifying reconsideration of the courts order setting aside the default judgment.
Plaintiff filed a timely notice of appeal from the courts order denying her motion for reconsideration.
DISCUSSION
I. Motion to Set Aside The Default Judgment
Plaintiff argues the trial court abused its discretion when it granted defendants motion to set aside a default judgment. Although for sometime the law was unclear as to whether an order granting a motion to set aside a default judgment was appealable (see Savage v. Smith (1908) 154 Cal. 325; Hughson v. Superior Court (1932) 120 Cal.App. 658), it has now become settled law that an order granting a motion to set aside a default judgment is appealable as an order after a final judgment if the underlying judgment was appealable as a final judgment. (Elsea v. Saberi (1992) 4 Cal.App.4th 625, 628.) Hence, we decline defendants invitation to reconsider the rule.
Code of Civil Procedure section 473.5 permits a trial court to set aside a default or default judgment against a defendant and allow him to defend the action on its merits if (1) the defendant has not received, through no inexcusable fault of his own, actual notice of the action in time to appear and defend, and has not made a general appearance; (2) the trial court has entered the default or default judgment against the defendant; (3) the defendant has acted with reasonable diligence in serving and filing a notice of motion to set aside the default or default judgment; and (4) the defendant has a meritorious defense. (Goya v. P.E.R.U. Enterprises (1978) 87 Cal.App.3d 886, 891.)
Because the code section allowing a motion to set aside a default judgment is a remedial measure and courts are to construe it liberally, any doubts existing as to the propriety of the trial courts action are to be resolved in favor of a hearing on the merits. (Romer, OConnor & Co. v. Huffman (1959) 171 Cal.App.2d 342, 349.)
Additionally, when as here an issue is tried on affidavits, the rule of appellate review is that the evidence favoring the prevailing party establishes not only those evidentiary facts, but also all facts the court might reasonably infer from that evidence; and when the record contains substantial conflict in the facts the parties presented through their affidavits, an appellate court will not disturb the trial courts determination of those controverted facts. (Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at p. 891.)
Plaintiff argues defendants did not present sufficient evidence to prove they had not received actual notice. Plaintiff contends the evidence is insufficient because the only evidence defendants presented was Kims declaration in which she asserted she had not received actual notice and because the evidence plaintiff presented proved defendants had received actual notice.
Plaintiff argues the court should have taken judicial notice of a couple of small claims cases, which would have made it an uncontravened fact defendants had received actual notice. More particularly, plaintiff asserts that had the court taken judicial notice of the claim and order in the original small claims case, it would have shown: defendants received the claim and order for the original small claims case at the same time defendants received the summons and complaint for this case; defendants appeared at the hearing for the original small claims case; and, as such, a necessary inference is that defendants must have had actual notice of this case. What is more, plaintiff states that had the court taken judicial notice of the writ of execution in the second small claims case, it would have contradicted defendants assertion they had stopped doing business at the Sixth Street address. We conclude that argument is erroneous for several reasons.
Plaintiffs argument is erroneously premised on the assumption the court had to take judicial notice. The courts power to take judicial notice of court records is not compulsory; rather, it is discretionary. (See Evid. Code § 452; see also Evid. Code § 451 [asserting when "[j]udicial notice shall be taken." (Italics added.)].) Evidence Code section 452 states that "[j]udicial notice may be taken of the following matters to the extent that they are not embraced within Section 451." (Italics added.) Plaintiff has made no argument, nor can we deduce one from the record, that Evidence Code section 451 embraces taking judicial notice of any document in the original small claims case or in the second small claims case.
Additionally, even if the trial court should have taken judicial notice, plaintiffs argument is still incorrect because it fails to appreciate the distinction between taking judicial notice of a court record and the truth of an assertion stated in a court record. The mere fact that a court record makes an assertion does not make that assertion true, regardless of whether or not the court has taken judicial notice of the court record. (See Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882.)
"`Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter. The court may in its discretion take judicial notice of any court record in the United States. (Evid. Code, § 451.) This includes any orders, findings of facts and conclusions of law, and judgments within court records. However, while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files. Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof." (Citations & italics omitted.) (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort, supra, 91 Cal.App.4th at p. 882.)
Even if the court should have taken judicial notice of the fact the claim and order was filed in the original small claims case and the fact the court issued the writ of execution in the second small claims case, the court could not have taken judicial notice of every assertion in those files. Specifically, the assertions in the claim and order that state when and how the claim and order were served are not judicially noticeable and the assertion in the writ of execution that states defendants correspondence address was not judicially noticeable. Moreover, even if we assume arguendo that somehow the assertions in the claim and order were judicially noticeable, the inference that defendants received the claim and order at the same time defendants received the summons and complaint for this case and the inference that defendants must have had actual notice of this case are not judicially noticeable. (See Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort, supra, 91 Cal.App.4th at p. 885 ["The truth of any factual matters that might be deduced from official records is not the proper subject of judicial notice."].)
What is more, plaintiffs offer of the writ of execution in the second small claims case into evidence was untimely, thereby making such evidence outside the evidentiary record concerning this issue. Just one day before the hearing on defendants motion to set aside the default judgment, plaintiff filed its supplemental declaration in which plaintiff, for the first time, contended the discovery of, and offered into evidence, the second small claims case. Further, at the hearing, defendants stated they had not received notice of the supplemental documents. As such, plaintiffs supplemental declaration and its supporting documents were untimely. (See Code Civ. Proc., § 1005.)
Accordingly, when stripped of its judicial notice component, the issue in this case becomes whether the trial court abused its discretion when it granted defendants motion to set aside the default judgment given that the declarations that plaintiff offered and the declarations that defendants offered contradict each others narrative about actual notice.
The facts in this case are analogous to the facts in Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d 886 in which the appellate court affirmed the trial courts order setting aside the default judgment entered by the trial court. There, the appellate court concluded that, even though service of the summons and complaint was made on the defendants, such service did not result in actual notice of the action to them in time to defend. (Id., at p. 891.)
Concerning one of the defendants, the appellate court predicated this conclusion on the fact that the defendants supporting declarations established: the defendant was never personally served with the summons and complaint or amended complaint either as an individual or on behalf of any fictitious entities, never received any documents relating to the lawsuit, and never knew of the existence of the lawsuit, and had no actual notice in time to defend the action. (Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at pp. 891-892.) The appellate court found this lack of actual notice to be the case even though the plaintiffs opposing declarations alleged service on the defendant at his place of business, by handing the assistant of the defendant the summons and complaint and by thereafter mailing copies of the summons and complaint to that defendant. (Id., at p. 891.)
Additionally, concerning other defendants, the appellate court came to the same conclusion that the service did not result in actual notice on the basis the other defendants supporting declarations established that although these defendants were served with copies of the summons and complaint, they were unaware of the nature of the documents and stated the documents did not result in actual notice to them in time to defend the action. (Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at p. 892.) The appellate court found defendant lacked actual notice even though plaintiffs opposing declarations alleged service on these defendants at their personal residence. (Id., at p. 891.)
Similarly, here, defendants supporting declarations established that Kim was never personally served with the summons and complaint either as an individual or on behalf of her company, never received any documents relating to the lawsuit, and did not know of the existence of the lawsuit and that defendants did not have actual notice in time to defend this action. Accordingly, because the record supports the courts finding defendants did not receive actual notice, the finding must stand even though opposing documents assert the contrary. (Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at p. 892 ["If the trial court believed the supporting declarations, and obviously it did, then defendants met their burden of proof."].)
Further, the finding defendants had actual notice of this case is not a necessary inference that follows from the fact plaintiffs opposing documents assert Kim was simultaneously served with the summons and complaint in this case and with the claim and order in the original small claims case and assert Kim appeared at the original small claims case even though our review of the record indicates defendants do not challenge those assertions. Even if we assume those assertions are true, which the court did not have to do, the trial court was well within its discretion to infer defendants were not given actual notice.
The reason for the court having this discretion is that the finding of whether defendants had actual notice was a contraverted fact. Further, the fact defendants were simultaneously served and the fact defendants did not have actual notice of this case are not mutually exclusive facts; the court could have reasonably found both facts to be true. Accordingly, as long as we can make reasonable inferences based on the offered evidence in determining that factual question can be inferred, which, here, they can, this court cannot disturb the trial courts finding. (See Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at p. 892.)
Moreover, "[h]aving made its findings, the court then was invested with the discretion to set aside the default and default judgment `on such terms as may be just and allow such party to defend the action. . . . In the exercise of its discretion the court could consider a variety of factors including the history of the lawsuit, any delays in the procedural progress of the action and any circumstances bearing on prejudice and unfairness to plaintiff." (Citation omitted.) (Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at p. 893.)
One fact that the court could have considered was the probative value of plaintiffs opposing declarations. These opposing declarations have a very low probative value. They do not contend that defendants were personally served; rather, they assert that an unidentified female who seemingly fits Kims physical description was served. The opposing declarations do not even state the name of the person who was served or that persons relationship with defendants. All the opposing declarations assert is that the unidentified person seemed to be in control of the area. Further, the asserted address at which Kim was allegedly served was not defendants principal place of business. To the contrary, the address was a business defendants contended they had stopped operating before the time when plaintiff alleges service was effectuated. Moreover, the record does not contain any evidence indicating the unidentified woman forwarded the served documents to defendants.
Additionally, the court could have considered the overall logical flow of plaintiffs narrative. Plaintiffs narrative has substantial unexplained aspects. First, plaintiff fails to explain why plaintiff did not serve defendants at their principal place of business. Second, where plaintiffs documents assert the address of defendants principal place of business, they incorrectly state the street address was located in Fullerton, when it is located in La Mirada. Such peculiarities in plaintiffs narrative raise, at the very least, a question as to the veracity of plaintiffs narrative.
However, plaintiff also argues that the trial court abused its discretion when it granted defendants motion to set aside the default judgment because defendants did not provide proposed pleadings with their motion. Code of Civil Procedure section 473.5, subdivision (b) requires: "The party shall serve and file with the notice a copy of the answer, motion, or other pleading proposed to be filed in the action." In their opposition to appellants motion for reconsideration in the trial court, defendants stated they had not attached a proposed pleading because they had not seen the summons and complaint. Such an excuse is insufficient as the complaint is available at the court. Moreover, defendants failed to meet the burden of demonstrating the ability to defend the case on the merits in any manner, either at the trial court or here. Thus, we conclude the court abused its discretion when it set aside the default judgment. Accordingly, we need not address whether the court abused its discretion when it denied plaintiffs motion to reconsider.
II. Procedural Defects
In addition to countering plaintiffs arguments, in their opposition and separate motions, defendants assert the record and plaintiffs briefs are procedurally defective, and request this court either to strike plaintiffs briefs in their entirety or strike certain portions of plaintiffs briefs. We need not address the procedural issues with plaintiffs briefs nor do we need to address the deficiencies in the record as the basis for our decision is supported by portions of the record properly before this court.
DISPOSITION
The orders are reversed. Plaintiff to recover costs on appeal.
We concur:
PERLUSS, P. J.
ZELON, J. --------------- Notes: Plaintiff did not appeal the order setting aside the default judgment. A motion to reconsider extends the time to appeal the underlying order. (Cal. Rules of Court, rule 8.108(e).) Under the policy of liberally construing a notice of appeal and as defendants engage in an argument about whether the court abused its discretion when it granted that order, we will treat plaintiffs notice of appeal as including an appeal from that order. (See 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, §§ 560-564, pp. 638-644.)