Opinion
B290644
03-05-2020
KAWADA COMPANY OF AMERICA LTD, Plaintiff and Appellant, v. EBANOS CROSSING, LLC, et al., Defendants and Respondents.
Howard L. Osias for Plaintiff and Appellant. Gotfredson & Associates, and E. Jay Gotfredson for Defendant and Respondent Kamran Zia Khan, personal representative of the estate of Respondent Zeshan Khan. Magnanimo & Dean, and Frank A. Magnanimo for Defendant and Respondent Dan Rottenstreich.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC669969) APPEAL from a judgment of the Superior Court of Los Angeles County, Daniel S. Murphy, Judge. Dismissed in part, affirmed in part. Howard L. Osias for Plaintiff and Appellant. Gotfredson & Associates, and E. Jay Gotfredson for Defendant and Respondent Kamran Zia Khan, personal representative of the estate of Respondent Zeshan Khan. Magnanimo & Dean, and Frank A. Magnanimo for Defendant and Respondent Dan Rottenstreich.
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A commercial landlord filed an unlawful detainer action against its tenant and, with permission of the trial court, served the complaint by posting it at—and mailing it to—the leased premises. The landlord did not disclose to the court that the tenant had abandoned the premises months before. The landlord went on to obtain a default against the tenant and its guarantors. All of the guarantors later moved to vacate the default, and a subset of them who had specially appeared also moved to quash service. The trial court granted both motions. The landlord appeals. We conclude that the order vacating the default is not appealable, and that both motions were properly granted on their merits. Accordingly, we dismiss in part and affirm in part.
FACTS AND PROCEDURAL BACKGROUND
I. Facts
Ebanos Crossing, LLC (Ebanos or the LLC) was formed to own and operate a "craft-cocktail lounge." It has seven members—Dan Rottenstreich (Rottenstreich), Justin Shapiro (Shapiro), Haris Bojic, Zeshan Kahn, Cory Jacobson, Drew Jacobson, and Paul Keo. The LLC designated Shapiro as its agent for service of process.
In November 2012, Ebanos signed a 10-year lease with Kawada Company of America, Ltd (Kawada) to rent retail restaurant space inside of a hotel Kawada owns on the edge of Little Tokyo in downtown Los Angeles (the premises). All seven members of Ebanos signed the lease on its behalf. All seven members also agreed to guaranty Ebanos's liability under the lease until the LLC deposited $25,000 as a supplemental security deposit after the lease's second anniversary.
In December 2016, Ebanos shut down its restaurant and abandoned the premises. Through its president, Kawada knew of Ebanos's abandonment at that time.
At some time prior to April 25, 2017, Kawada changed the locks on the premises so Ebanos's members could not access it.
II. Procedural Background
A. Kawada's unlawful detainer action , entry of default and request for default judgment
On July 27, 2017, Kawada filed a verified complaint for unlawful detainer against (1) Ebanos and (2) all seven of its members, "as Tenants and Individual Guarantors." In its complaint, Kawada sought (1) possession of the premises, (2) past due rent of approximately $143,185.35 plus the accrual of daily lost rent, and (3) reasonable attorney fees.
On August 10, 2017, Kawada applied to the trial court for permission to serve its unlawful detainer complaint by posting the complaint at the premises and simultaneously mailing it to the premises (so-called "nail-and-mail" service). In support of its application, Kawada submitted a declaration of its process server who attested that, after four attempts on four different days at each of two locations, he was "unable to effect personal service" upon (1) Ebanos and all seven of its members at the leased premises, and (2) Ebanos and Shapiro at the Los Feliz Boulevard address provided for Shapiro as Ebanos's agent for service of process on Ebanos's Statement of Information filed with the Secretary of State. The trial court granted the application on August 16, 2017.
Kawada proceeded to post the summons at the premises and mail it to the premises on August 28, 2017 and September 2, 2017.
On October 18, 2017, Kawada filed a Request for Entry of Default and Clerk's Judgment against Ebanos and all seven of its members for "restitution of the premises." The trial court checked the box for "Default entered as requested" and signed the request. At a subsequent hearing, Kawada maintained that "no judgment [of any sort] has been entered," "not even a default judgment for possession."
On January 17, 2018, Kawada filed a Request for Court Judgment seeking a default judgment of $223,741.86 against Ebanos and its seven members as guarantors compromised of the approximate back rent, $75,014.96 in holdover damages, costs and attorney fees.
B. Members' efforts to vacate default
1. Motion to vacate
On January 18, 2018, Rottenstreich moved to set aside the default entered by the trial court on October 18, 2017. A few weeks later, the six other members of Ebanos specially appeared to move to set aside the default. In support of these motions, each of the seven members of Ebanos filed a declaration attesting that he had never received actual notice of Kawada's lawsuit.
After further briefing, the trial court on March 2, 2018, granted both motions to set aside the default. The court reasoned that it was appropriate to set aside the default under Code of Civil Procedure section 473.5 because the evidence submitted by the members in support of their motions was "sufficient" to establish "that they never received service of summons" and because Kawada had submitted no contrary evidence. The court went on to note that "it was improper for [Kawada] to serve" the members through nail-and-mail service "at the [premises]" because Kawada knew that "the [premises] had been vacated several months earlier."
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
2. Motion for reconsideration
On March 29, 2018, Kawada filed a motion for reconsideration on the ground that the court's March 2, 2018 order had not properly applied section 415.45, the provision authorizing nail-and-mail service, when commenting on the propriety of service of process upon Ebanos's members. After the members filed written oppositions, the trial court on June 11, 2018 denied Kawada's motion. Specifically, the court (1) rejected as "unpersuasive" that the court's failure to address—and Kawada's predicate failure to raise—section 415.45 constituted a "new" circumstance warranting reconsideration, and (2) ruled that Kawada had "not" in any event "met [its] burden" of showing that nail-and-mail service under section 415.45 was appropriate.
C. Specially appearing members' motion to quash service
On March 14, 2018, which was a couple of weeks after the trial court vacated the default, the six specially appearing Ebanos members filed a motion to quash service on the ground that the nail-and-mail service at the premises was defective. After entertaining further briefing, the trial court on April 11, 2018, granted the motion to quash. The court reasoned that service by nail-and-mail at the leased premises under section 415.45 was not a "reliable means of acquainting interested parties" of the lawsuit because Kawada "was aware that the [premises] was vacated."
Rottenstreich did not join this motion; instead, he filed a verified answer to Kawada's unlawful detainer complaint.
D. Appeals
On June 11, 2018, Kawada filed a Notice of Appeal that expressly specified that it was appealing from the "April 11, 2018 order."
DISCUSSION
Kawada argues that the trial court erred (1) in granting the motions to vacate the default or, in the alternative, denying its motion to reconsider that ruling, and (2) in granting the motion to quash as to the specially appearing members.
I. Motions to Vacate Default and Related Motion for Reconsideration
A. Appellate jurisdiction
As a threshold issue, we must independently examine our own jurisdiction (California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 252), and our examination reveals two reasons why we do not have jurisdiction over Kawada's appeal of the trial court's orders vacating the default and denying reconsideration of that order.
We requested, received, and considered supplemental briefing from the parties on this issue.
First, Kawada's notice of appeal lists only one order from which Kawada is seeking appeal—the "April 11, 2018 order" (that is, the order granting the motion to quash). Nowhere does the notice of appeal purport to appeal the trial court's March 2, 2018 order vacating the default or its June 11, 2018 order denying reconsideration. Although we are generally required to liberally construe notices of appeal (In re Joshua S. (2007) 41 Cal.4th 261, 272), that requirement "does not apply if the notice is so specific it cannot be read as reaching a judgment or order not mentioned at all" (Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 173). "[W]hen a notice of appeal manifests a "'clear and unmistakable"' intent to appeal only from one order, we cannot liberally construe the notice to apply to a different, omitted order." (In re J.F. (2019) 39 Cal.App.5th 70, 76; Russell v. Foglio (2008) 160 Cal.App.4th 653, 661 [declining to apply liberal construction rule to reach a "further and different order" than the one appealed from]; cf. Girard v. Monrovia City School. Dist. (1953) 121 Cal.App.2d 737, 739-740 [notice of appeal following orders sustaining demurrers against two defendants lists only date of dismissal judgment against one defendant but refers to the "above-named defendants"; intent to appeal as to both defendants is "perfectly apparent"]; Aweeka v. Bond (1971) 20 Cal.App.3d 278, 282, fn. 1 [notice of appeal following "informal order denying" preliminary injunction and judgment that lists only judgment; intent to appeal "informal order" clear]; see also Boehm v. County of Merced (1985) 163 Cal.App.3d 447, 453, [failure to list specific issue in notice of appeal does not preclude consideration of that issue on appeal], superseded by statute on another ground in Watkins v. County of Alameda (2009) 177 Cal.App.4th 320, 322.) Because Kawada clearly and unmistakably designated its appeal as solely from the trial court's April 11, 2018 order, we may not construe the notice also to apply to the March 2, 2018 (motion to vacate) and June 11, 2018 (motion for reconsideration) orders that Kawada omitted.
Second, the record is a little unclear as to whether the trial court entered a default judgment solely for possession or merely a default. But no matter how this ambiguity in the record is resolved, Kawada's instant appeal is not properly before us. That is because an order vacating a default judgment for possession alone is not appealable where the appellant is seeking to enforce entitlements other than possession (Superior Motels, Inc. v. Rinn Motor Hotels, Inc. (1987) 195 Cal.App.3d 1032, 1044-1047 & fn. 8 [so holding]; First Western Development Corp. v. Superior Court (1989) 212 Cal.App.3d 860, 863 [same]), and Kawada is here seeking to enforce the liability of Ebanos's members for unpaid rent rather than possession of the premises. That is also because an order vacating a default (rather than a default judgment) is also not appealable. (Savage v. Smith (1908) 154 Cal. 325, 325; Turner v. Follmer (1948) 84 Cal.App.2d 815, 815; Davis v. Taliaferro (1963) 218 Cal.App.2d 120, 122.)
What is more, the non-appealability of the underlying order to vacate renders the trial court's subsequent order denying reconsideration non-appealable where, as here, it relies on facts or law that could have been raised earlier. (Cf. § 1008, subd. (g) ["if the order that was the subject of a motion for reconsideration is appealable, the denial of the motion for reconsideration is reviewable as part of an appeal from that order."]; In re Marriage of Burgard (1999) 72 Cal.App.4th 74, 80-81 [same]; see also Miller v. United Servs. Auto Ass'n (1989) 213 Cal.App.3d 222, 228, fn. 6 ["matters [that] could have been raised" earlier "do not constitute 'new facts'" for purposes of motions for reconsideration and appeal]; Santee v. Santa Clara County Office of Educ. (1990) 220 Cal.App.3d 702, 710 [motion for reconsideration that "raises new facts" may be separately appealable].)
B. Merits
Kawada's attacks on the trial court's orders vacating the default judgment (or default) and denying reconsideration also lack merit.
1. Motion to vacate
Pursuant to section 473.5, a trial court has the authority to vacate a default or default judgment if (1) the "service of summons has not resulted in actual notice to a party in time to defend the action," (2) the "lack of actual notice . . . was not caused by [the party's] own avoidance of service or inexcusable neglect," (3) "[a] default or default judgment has been entered against [the party]," and (4) the party moves to vacate the default judgment within the earlier of (a) 180 days of being served with notice of the default or default judgment or (b) two years after entry of the default or default judgment. (§ 473.5, subds. (a) & (c); Goya v. P.E.R.U. Enterprises (1978) 87 Cal.App.3d 886, 890-891 [setting out elements].) Once these eligibility requirements are satisfied, the decision whether to vacate a default or default judgment is discretionary (Bae v. T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 97-98), although "'very slight evidence is required to justify'" the exercise of this discretion because "'the policy of the law . . . favor[s] . . . a hearing on the merits'" (Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1444).
The Judicial Council Comment to this section also provides that the party must show that "he has a meritorious defense" (§ 473.5, Judicial Council Comment), and the Ebanos members in this case have attested that they are not liable for any unpaid rent because Ebanos deposited the supplemental $25,000 security deposit that, under the terms of the lease, eliminated their liability as guarantors. Kawada does not contest this showing on appeal.
The trial court did not abuse its discretion in granting relief to Ebanos's members under section 473.5. To begin, those members satisfied the statute's threshold eligibility requirements: Each member declared that he had not received actual notice of Kawada's lawsuit (cf. Rosenthal v. Garner (1983) 142 Cal.App.3d 891, 895 [requirement of actual notice under section 473.5 not satisfied by showing constructive notice]; Pulte Homes Corp. v. Williams Mechanical Inc. (2016) 2 Cal.App.5th 267, 274 [actual notice of agent is imputed to principal]); each explained that he had not evaded service or engaged in inexcusable neglect; a default or default judgment was entered against them; and they filed either motions to vacate approximately 90 days after the entry of default or default judgment. Further, the trial court's decision to grant relief was within its discretion, particularly in light of the policy favoring such grants.
Kawada complains that Ebanos's members were obligated by statute to file a statement of information with the Secretary of State listing their "complete business or residence addresses" (Corp. Code, § 17702.09), thereby suggesting that their failure to do so constitutes "inexcusable neglect" that renders them ineligible for relief under section 473.5. (Cf. Koski v. U-Haul Co. (1963) 212 Cal.App.2d 640, 645 [trial court did not err in denying motion to vacate when plaintiff served Secretary of State with summons pursuant to Corporations Code provisions].) We reject this argument for several reasons. To begin, the requirement of providing a current address applies to the LLC, its agent for service of process, and its "managers." (Corp. Code., § 17702.09, subds. (a)(1), (a)(2) & (a)(5).) But Ebanos (the LLC) did not move to vacate the default judgment; Shapiro (the LLC's agent for service of process) has been dismissed; and the remaining defendants—except for Rottenstreich—are merely members, not "managers." What is more, this statutory filing duty is "biennial[]" and Kawada failed to show that the individuals had missed any biennial deadline for updating. Even if we ignore the statute's inapplicability to nearly all of the individuals remaining in this case, all seven members were not inexcusably neglectful because, in the lease itself, they expressly agreed to let Kawada use the premise's address as their "address for delivery or mailing of notices." Kawada provides no authority for the proposition that the individual defendants were thereafter obligated to contact Kawada once Ebanos went out of business and vacated the premises in order to provide a current address. Nor, as Kawada relatedly argues, does such an obligation arise as a matter of "courtesy." In sum, the members cannot be inexcusably neglectful for not doing something they had no duty to do.
Ebanos specially appeared to request the trial court's permission to join in the specially appearing defendants' motion to vacate, but it appears from the record—including the trial court's treatment of the motion to vacate and Ebanos's failure to move to quash service—that such permission was denied.
In light of our analysis, we have no occasion to reach any of the alternative legal grounds for vacating the default or default judgment. (E.g., Sutter Health Uninsured Pricing Cases (2009) 171 Cal.App.4th 495, 513 ["one good reason is sufficient to sustain the order from which the appeal was taken"].)
2. Motion for reconsideration
A motion for reconsideration is statutorily authorized only when "based upon new or different facts, circumstances, or law." (§ 1008, subd. (a).) A ground that "could have been raised" previously is not a "new or different" ground that can support a motion for reconsideration. (Midwest TV v. Scott, Lancaster, Mills & Atha (1988) 205 Cal.App.3d 442, 454.) Because Kawada could have addressed the applicability of section 415.45 in its opposition to the members' motions to vacate, its motion for reconsideration based on that statute was properly denied.
II. Motion to Quash
Once a motion to quash is brought, the burden of proof shifts to the plaintiff "to establish the facts of jurisdiction by a preponderance of the evidence." (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 568 (Aquila).) For a court to acquire personal jurisdiction over a defendant by a particular method of service, that means must be statutorily valid and constitutionally valid. A method of service is constitutionally valid only if it provides "'notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action.'" (Greene v. Lindsey (1982) 456 U.S. 444, 449-550 (Greene), quoting Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306, 314, italics omitted; Olvera v. Olvera (1991) 232 Cal.App.3d 32, 43 [to satisfy due process, "[t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it."].) In evaluating whether service was proper (and hence whether a motion to quash should be granted), we review the trial court's factual findings for substantial evidence and its legal determination of whether service was statutorily and constitutionally valid de novo. (Aquila, at p. 568; see CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 1122 [motion to quash reviewed de novo].)
The trial court correctly determined that effectuating service by nail-and-mail was not "reasonably calculated" to impart notice to the three remaining specially appearing members still involved in this litigation. Although posting notice of an unlawful detainer action at the leased premises is typically sufficient to impart notice to the tenant (Greene, supra, 456 U.S. at p. 451 ["It is, of course, reasonable to assume that a property owner will maintain superintendence of his property . . ."]; Board of Trustees of Leland Stanford Junior University v. Ham (2013) 216 Cal.App.4th 330, 338-339 (Ham) ["it is therefore reasonable for the plaintiff to assume, at least initially, that personal service [of the tenant at the premises] will eventually be successful"]; Pierson v. Fischer (1955) 131 Cal.App.2d 208, 209-210 [service on tenant by publication in area of lease premises is reasonable]), it is not inevitably sufficient. As Ham noted, "each case must be evaluated on its own facts." (Ham, at p. 339.) Here, the trial court found that Kawada knew Ebanos had abandoned the premises by April 26, 2017 because, by that time, Ebanos had already ceased operations and Kawada had already changed the locks to the premises. Posting a notice at that abandoned location, and simultaneously mailing notices to it, are not acts reasonably calculated to apprise Ebanos or its members of the pending lawsuit, and the trial court did not err in so finding. Kawada asserts on appeal that it did not know the premises were abandoned until it obtained the default judgment for possession, but this assertion was excluded from evidence by the trial court and ignores that Kawada elsewhere admitted that it was aware that the premises were abandoned in December 2016 and that Kawada changed the locks on the premises in April 2017.
Kawada dismissed Shapiro, Corey Jacobson and Drew Jacobsen.
Kawada makes what boil down to two arguments in response. First, it contends at length that it made a sufficient showing that Ebanos's members could not "with reasonable diligence" have been personally served with a summons. However, this is merely one of the statutory preconditions for a trial court's authorization to permit nail-and-mail service under section 415.45. It does not speak to whether nail-and-mail service would itself comply with due process. As the trial court found and as we now agree, it would not, and this provides an independent ground for quashing such service. Second, Kawada suggests that the trial court was (and, by implication, that we are) bound by the trial court's initial determination that nail-and-mail service would be appropriate. We reject this suggestion. In its application for nail-and-mail service, Kawada did not disclose that the premises had been vacant for nearly eight months, that it had locked Ebanos out of the premises for nearly four months, or that the LLC members Kawada listed as "Tenants and Guarantors" were merely LLC members and never tenants on the premises. These facts are what rendered nail-and-mail service constitutionally ineffective, and we decline to give controlling weight to a court order obtained through nondisclosure of these material facts.
DISPOSITION
Kawada's appeal of the orders granting the motions to vacate and denying motion for reconsideration is dismissed. Kawada's appeal of the order granting the motion to quash service is affirmed. The defendants participating in this appeal are entitled to their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
/s/_________, J.
HOFFSTADT We concur: /s/_________, P. J.
LUI /s/_________, J.
ASHMANN-GERST