Opinion
H046906
05-28-2021
HOWARD LOO et al., Plaintiffs and Respondents, v. AMIR KHAN, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 1-13-CV-257101)
Defendant Amir Khan appeals from the denial of his motion to vacate a default judgment entered against him and in favor of plaintiffs. Khan maintains the judgment is void on its face because the declaration in support of publication of summons was insufficient, rendering the order for service by publication, the default, and the default judgment facially void. We agree and reverse.
Defendant has also used the aliases Amir Kahn, Tarandeep Gill, Tarran Gill, and Taran Gill.
Plaintiffs in this action are Howard Loo, Pawel A. Gebala also known as Paul Gebala, Kipp Watson, Blaise Kiss, Gary Jacob, Anthony Chang also known as Tony Chang, David Castaneda, Joshua Rising, AVyS Telecom S.L., Andor Rajci, Robert Hinkle, Dimitri Zelepuhin, Patrick Dukemajian, Catalin Beju, Mohamed Amine Faouani, Adam C. Hasbargen, Eugene Andry, Kai-Hong Cheang also known as Henry Cheang, Pedro Cunha, Max Hu, Rodrigo Benzaquen, Filip Kosmajac, Luke Reid, and Dan Handler.
I. BACKGROUND
A. Factual Allegations
We take the facts from the operative second amended complaint.
Khan is the controlling shareholder and director of TerraHash, Inc., a California corporation with its principal place of business in Santa Clara County. TerraHash purported to be a computer hardware company that produced and sold application-specific integrated circuit Bitcoin miners. In the summer of 2013, each plaintiff ordered one or more Bitcoin miners from TerraHash using TerraHash's online order-taking system. Each plaintiff paid for their order at that time in Bitcoin, U.S. dollars, or a combination of the two. Plaintiffs did not receive their orders by the promised delivery date, nor have they received them since; plaintiffs have requested but have not received refunds.
B. Procedural History
Plaintiffs sued Khan and TerraHash in December 2013. The operative second amended complaint asserts causes of action against Khan and TerraHash for fraud, negligent misrepresentation, conversion, claim and delivery, unjust enrichment, breach of contract, and breach of the implied covenant of good faith and fair dealing.
In June 2014, plaintiffs filed an ex parte application for publication of summons, by which they sought an order permitting Khan to be served via publication in the Santa Clara Weekly. In support of that application, plaintiffs filed the declaration of their attorney, Eric Sidebotham. Sidebotham declared that, "[o]n December 9, 2013, Plaintiffs attempted to serve the summons and complaint on Defendant Khan at his last known address . . . . When service was attempted on Defendant Khan at this location, it was determined that the residence was a boarding house, and that Defendant Khan appeared to no longer be residing at this location. The persons residing at the boarding house did not know of any forwarding address for Defendant Khan. Plaintiffs' process server performed substituted service on Defendant Khan, and then mailed the summons to Defendant Khan at this same location." Sidebotham further declared that plaintiffs "engaged a private investigator in Canada in an effort to locate Defendant Khan there; however Defendant Khan could not be found there."
Attached as an exhibit to the Sidebotham declaration was an affidavit of reasonable diligence executed by the process server. In it, she stated that she attempted to serve Khan at his last known address on the morning of December 7, 2013 and again on the following evening, but no one was home. She further stated that she performed substituted service on Khan on December 9, 2013 by serving his co-tenant and mailed the summons to Khan as well.
The trial court ordered that service of the summons on Khan be accomplished by publication in the Santa Clara Weekly. The summons was published in that publication on four dates in June and July 2014.
The trial court entered a default against Khan on June 26, 2015 and entered a default judgment against him in the amount of $224,185.49 on November 23, 2015.
Nearly three years later, on October 26, 2018, Khan moved to vacate the default judgment under Code of Civil Procedure section 473, subdivision (d), set aside the default, quash service of summons by publication, and dismiss the action for lack of personal jurisdiction. Among other things, Khan argued that the Sidebotham declaration contained hearsay, making it insufficient to support the application for service by publication under Kahn v. Matthai (1897) 115 Cal. 689 (Kahn), and rendering the default judgment void. Plaintiffs opposed the motion on grounds it was untimely, arguing that the two-year limitation applicable to motions to set aside facially valid judgments that are void for lack of proper service barred Khan's motion. The trial court agreed with plaintiffs and denied the motion as untimely. Khan timely appealed.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated. --------
II. DISCUSSION
A. Legal Principles
"Section 473, subdivision (d) provides in pertinent part: 'The court may, . . . on motion of either party after notice to the other party, set aside any void judgment or order.' [¶] 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,' " a two-year limitations period applies. (Trackman v. Kenney (2010) 187 Cal.App.4th 175, 180 (Trackman), citing 8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 209, pp. 814-815.) This "avenue[] of relief generally hinge[s] on evidence about the method of purported service." (Trackman, supra, at p. 181.)
By contrast, there is no time limit within which a section 473, subdivision (d) motion to set aside a facially void judgment must be made. (Trackman, supra, 187 Cal.App.4th at p. 181.) Such a challenge "does not hinge on evidence: A void judgment's invalidity appears on the face of the record . . . ." (Ibid.) Put differently, " ' "[a] judgment . . . is said to be void on its face when the invalidity is apparent upon an inspection of the judgment-roll." ' [Citations.]" (Calvert v. Al Binali (2018) 29 Cal.App.5th 954, 960 (Calvert).) Where the defendant does not answer the complaint, the judgment roll is statutorily defined to include: "the summons, with the affidavit or proof of service; the complaint; the request for entry of default with a memorandum indorsed thereon that the default of the defendant in not answering was entered, and a copy of the judgment; . . . and in case the service so made is by publication, the affidavit for publication of summons, and the order directing the publication of summons." (§ 670.)
"The declaration on which an order for the publication of summons is based must state probative facts of the declarant's own knowledge rather than hearsay information or merely legal conclusions. [Citations.] It has no probative value if it is hearsay as to the declarant and based on unsworn information. [Citation.] [¶] Declarations devoid of averment of facts personally known to the declarant to be true, that due diligence was exercised to effect personal service, 'have consistently been held to be insufficient, and orders for service by publications based on [such declarations] have uniformly been held to have been beyond jurisdiction and void. . . . It is established that, where orders for publication of summons are void by reason of the insufficiency of the affidavits therefor, defaults and default judgments entered and rendered on service made pursuant thereto are likewise void on their face, and should be set aside." (Sanford v. Smith (1970) 11 Cal.App.3d 991, 998-999 (Sanford).)
"The issue of whether a judgment is void on its face is a question of law, which we review de novo." (Calvert, supra, 29 Cal.App.5th at p. 961.)
B. Analysis
Here, plaintiffs submitted the Sidebotham declaration in support of their request for publication of summons. Sidebotham declared as follows: "On December 9, 2013, Plaintiffs attempted to serve the summons and complaint on Defendant Khan at his last known address . . . . When service was attempted on Defendant Khan at this location, it was determined that the residence was a boarding house, and that Defendant Khan appeared to no longer be residing at this location. The persons residing at the boarding house did not know of any forwarding address for Defendant Khan. Plaintiffs' process server performed substituted service on Defendant Khan, and then mailed the summons to Defendant Khan at this same location." The process server's affidavit of reasonable diligence, which was an exhibit to Sidebotham's declaration, indicated that she made three attempts to serve Khan at his last known address between December 7 and December 9, 2013, at which point she performed substituted service on Khan by serving his co-tenant.
It is clear from the foregoing that the process server, not counsel himself, went to Khan's last known address, determined that Khan was no longer residing there, and spoke with other residents. Accordingly, counsel's assertions that "it was determined that the residence was a boarding house, and that Defendant Khan appeared to no longer be residing at this location[, and that t]he persons residing at the boarding house did not know of any forwarding address for Defendant Khan" are hearsay.
Sidebotham further declared: Plaintiffs "engaged a private investigator in Canada in an effort to locate Defendant Khan there; however Defendant Khan could not be found there." The foregoing is hearsay because counsel's knowledge that Khan could not be found in Canada plainly is based on communications from the private investigator and not any personal knowledge. (See Kahn, supra, 115 Cal. at p. 692 [affidavit stating "that plaintiff's attorney placed the summons and complaint in the hands of five different persons (naming them) for service, and that they returned them with the information that they could not find defendant or see her, and that she cannot be found in the city or county" held to be "fatally defective" because it contained "but hearsay"].)
Because the Sidebotham declaration was based in significant part on hearsay information rather than "averment of facts personally known to the declarant to be true, that due diligence was exercised to effect personal service," it was insufficient. (Sanford, supra, 11 Cal.App.3d at p. 999.) It follows that the order for service by publication based on that insufficient declaration was "beyond jurisdiction and void" and that the resulting "default[] and default judgment[] . . . are likewise void on their face, and should be set aside." (Ibid.)
It bears repeating that the judgment is facially void. The declaration is part of the judgment roll. (Code of Civ. Proc., § 670; Calvert, supra, 29 Cal.App.5th at pp. 960-961.) The declaration's insufficiency is apparent from its face and renders the order for publication of summons and the resulting judgment facially void.
III. DISPOSITION
The order denying Khan's motion to vacate the default judgment, set aside the default, quash service of summons by publication, and dismiss the action for lack of personal jurisdiction is reversed. On remand, the trial court is directed to enter a new order vacating the default judgment, setting aside the default, and quashing service of summons by publication. Khan shall recover his costs on appeal.
/s/_________
ELIA, ACTING P.J. WE CONCUR: /s/_________
BAMATTRE-MANOUKIAN, J. /s/_________
DANNER, J.