Opinion
E070465
02-18-2020
CHRISTIE MARTINEZ, Plaintiff and Appellant, v. ENCORE SENIOR LIVING, LLC, Defendant and Respondent.
The Mirroknian Law Firm, and Reza Mirroknian, Hider Al-Mashat and Jackee Montano, for Plaintiff and Appellant. Hinshaw & Culbertson, and Frederick J. Ufkes and Aji N. Abiedu, for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. CIVDS1411000) OPINION APPEAL from the Superior Court of San Bernardino County. Donna G. Garza, Judge. Affirmed. The Mirroknian Law Firm, and Reza Mirroknian, Hider Al-Mashat and Jackee Montano, for Plaintiff and Appellant. Hinshaw & Culbertson, and Frederick J. Ufkes and Aji N. Abiedu, for Defendant and Respondent.
I.
INTRODUCTION
In 2014, plaintiff and appellant, Christie Martinez, sued several defendants, including, defendant and respondent, Encore Senior Living, LLC (ESL), for various claims related to her alleged wrongful termination. Martinez personally served her complaint at her former workplace, and Renee Lesley accepted it, purportedly on behalf of ESL. After ESL failed to timely respond to the complaint, Martinez moved for a default judgment against ESL, which the trial court granted in 2015.
Almost two years later, Martinez requested payment of the judgment from ESL. Because ESL had not received notice of Martinez's lawsuit or the judgment, ESL considered the judgment invalid and refused to pay. In March 2018, ESL moved to vacate the judgment, arguing that the trial court lacked jurisdiction over ESL because it had not been properly served. ESL simultaneously moved to be dismissed from the case because it had not been served within three years of Martinez's filing the complaint.
The trial court granted ESL's motion to vacate on the grounds of extrinsic fraud or mistake. The trial court also granted ESL's motion to dismiss and dismissed ESL from the case because Martinez failed to properly serve ESL within three years of filing her complaint.
Martinez appeals. She claims ESL's motion was untimely and that ESL was not entitled to relief from the judgment and, accordingly, ESL should not have been dismissed. We disagree and affirm the trial court's orders vacating the judgment and dismissing ESL.
II.
FACTUAL AND PROCEDURAL BACKGROUND
Martinez alleged she worked for ESL, Valley Crest Residential Care (Valley Crest) and SCI Business Solutions, Inc. (collectively, Defendants) from May 2011 until her termination in July 2012. In July 2014, she sued Defendants for various claims under the Fair Employment and Housing Act (Gov. Code, § 12940 et seq.), wrongful termination, and intentional infliction of emotional distress.
Martinez filed a proof of service of summons that stated her process server personally served her complaint and summons on ESL at 18521 Corwin Road in Apple Valley, which is the business address of Valley Crest, and a woman named Renee Lesley accepted service on behalf of ESL "as an authorized agent" of ESL.
In November 2014, Martinez requested an entry of default against ESL, who had yet to respond to her complaint. Martinez served the request for entry of default on ESL by mailing it to Lesley at the Corwin Road address. After a prove-up hearing a year later, the trial court entered a default judgment against ESL.
In July 2017, Martinez's counsel sent ESL correspondence requesting payment of the judgment. In August 2017, ESL's counsel responded by informing Martinez's counsel that ESL had never been served with the complaint or summons, Lesley was not authorized to accept service on ESL's behalf, and the judgment was therefore invalid. Martinez's counsel said he would look into the issue. In November 2017, Martinez's counsel told ESL's counsel that he considered the judgment valid and would not refrain from enforcing it.
ESL therefore moved under Code of Civil Procedure section 437, subdivision (d) to vacate the default judgment in March 2018. ESL argued the judgment was void because ESL had not been served with the complaint or summons, so the trial court lacked personal jurisdiction over ESL. In support of the motion, ESL submitted a declaration from its Executive Vice President, Chief Financial Officer, and Administrative Officer, Diane Bridgewater, who stated that (1) ESL had never received notice of Martinez's lawsuit, (2) ESL was never served with Martinez's complaint or summons, (3) the Corwin Road address is Valley Crest's business address, and was never the address of anyone authorized by ESL to accept service of process on ESL's behalf, and (4) Lesley was not authorized to accept service of process for ESL. Because ESL claimed it had never been served, it moved to dismiss the complaint for Martinez's failure to serve it within three years as required by section 583.250, subdivision (a).
Unless otherwise noted, all statutory references are to the Code of Civil Procedure.
Martinez opposed the motion as untimely. Martinez argued section 473.5, subdivision (a) imposes a two-year time limit on motions to vacate under section 473, subdivision (d), which ESL did not meet because it filed its motion more than two years after the judgment was entered. Martinez further argued that, even if ESL's motion was timely, it failed on the merits because she properly served ESL via Lesley, who represented to Martinez's process server that she was authorized to accept service on ESL's behalf. Martinez therefore asserted the trial court had personal jurisdiction over ESL, so the default judgment was entered validly, and ESL should not be dismissed.
The trial court granted ESL's motion to vacate "based on extrinsic fraud or mistake." The trial court also granted ESL's motion to dismiss "pursuant to [sections] 583.210 and 583.250," which provide that a defendant must be dismissed if not served with a complaint within three years of its filing.
Martinez timely appealed.
III.
DISCUSSION
Martinez contends the trial court erred because (1) ESL's motion to vacate was untimely, (2) she properly served ESL, and (3) ESL failed to establish the judgment should be vacated due to extrinsic fraud or mistake. We disagree on all three points.
A. ESL's Motion Was Timely
Relying primarily on Trackman v. Kenney (2010) 187 Cal.App.4th 175, Martinez asserts ESL's motion was untimely because it was not brought within the two-year limitations period mandated by section 473.5, subdivision (a). Martinez is correct the Trackman court held that a motion under section 473, subdivision (d) to vacate a void judgment for lack of service is subject to section 473.5, subdivision (a)'s two year time limit. (See Trackman v. Kenney, supra, at p. 180.) But numerous other courts have rejected the proposition. (See, e.g., Falahati v. Kondo (2005) 127 Cal.App.4th 823, 830 ["A void judgment can be attacked at any time by a motion under . . . section 473, subdivision (d)."]; Rochin v. Pat Johnson Manufacturing Co. (1998) 67 Cal.App.4th 1228, 1239 ["A judgment void on its face because rendered when the court lacked personal or subject matter jurisdiction . . . is subject to collateral attack at any time."]; Rockefeller Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd. (2018) 24 Cal.App.5th 115, 135-137, review granted Sept. 26, 2018, S249923 (Rockefeller) ["There is a wealth of California authority for the proposition that a void judgment is vulnerable to direct or collateral attack '"'at any time,'"'"]; Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 526-527 ["A void judgment, however, can be set aside at any time," citing § 473, subd. (d).].)
Although the California Supreme Court granted review in Rockefeller, its review appears to be limited to "the following issue: Can private parties contractually agree to legal service of process by methods not expressly authorized by the Hague Convention?" (Rockefeller Technology Investments (Asia) VII v. Changzhou Sinotype Technology Co. (2018) 426 P.3d 303.) Nonetheless, we may consider Rockefeller as persuasive authority. (Cal. Rules of Court, rule 8.1115(e)(1).)
We believe Trackman was incorrect on this point. As the California Supreme Court unambiguously held, "[w]hen a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void, and 'thus vulnerable to direct or collateral attack at any time.' [Citation.]" (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660, italics added.) A trial court lacks jurisdiction in a fundamental sense when it lacks personal jurisdiction over a party. (Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 288.) And a trial court lacks personal jurisdiction over a party that has not been properly served. (People v. American Contractors Indemnity Co., supra, at p. 660; Yeung v. Soos (2004) 119 Cal.App.4th 576, 582 ["If service of summons was not made or was improper, and actual notice was not received, the default judgment is void for lack of personal jurisdiction."].) Accordingly, ESL was entitled to bring its motion to vacate challenging the trial court's personal jurisdiction over it "at any time." (People v. American Contractors Indemnity Co., supra, at p. 660; Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249 [holding judgment attacked for lack of personal jurisdiction may be brought at any time].)
Regardless, the trial court granted ESL's motion to vacate due to extrinsic fraud or mistake. "[C]ourts have the inherent authority to vacate a default and default judgment on equitable grounds such as extrinsic fraud or extrinsic mistake." (Bae v. T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 97.) For that reason, motions to vacate for extrinsic fraud or mistake are "not governed by any statutory time limit." (Department of Industrial Relations v. Davis Moreno Construction, Inc. (2011) 193 Cal.App.4th 560, 570.) The trial court therefore permissibly used its inherent authority to hear ESL's motion to vacate. (Ibid.; see also Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980-981 [after the six-month deadline imposed by section 473, "a trial court may . . . vacate a default on equitable grounds even if statutory relief is unavailable"].)
B. The Trial Court Did Not Abuse its Discretion in Vacating the Default Judgment Due to Extrinsic Fraud and Mistake
Martinez contends the trial court abused its discretion when it vacated the default against ESL due to extrinsic fraud and mistake. We disagree.
The trial court's minute order states that it granted ESL's motion to vacate "based on extrinsic fraud or mistake," (italics added.) but did not specify whether it found both extrinsic fraud and extrinsic mistake. At the hearing, however, the trial court stated that its tentative decision was to grant ESL's motion "based on extrinsic fraud and mistake." (Italics added.) As outlined below, the same standards apply when assessing whether a judgment should be vacated for extrinsic fraud or mistake, so the discrepancy between the trial court's minute order and its stated ruling at the hearing on the motion is immaterial.
"A challenge to a trial court's order on a motion to vacate a default on equitable grounds is reviewed for an abuse of discretion." (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 503.) "The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court." (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479.) "[W]e will not disturb the trial court's factual findings where . . . they are based on substantial evidence. It is the province of the trial court to determine the credibility of the declarants and to weigh the evidence." (Falahati v. Kondo, supra, 127 Cal.App.4th at p. 828.)
Extrinsic mistake is "a term broadly applied when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits." (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 981.) "Extrinsic mistake is found when . . . a mistake led a court to do what it never intended." (Kulchar v. Kulchar (1969) 1 Cal.3d 467, 471-472.) For instance, extrinsic mistake occurs when a defendant has "a satisfactory excuse for failing to timely answer" a complaint. (Rappleyea v. Campbell, supra, at p. 982.) Similarly, "'[e]xtrinsic 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." [Citations.]'" (Bae v. T.D. Service Co. of Arizona, supra, 245 Cal.App.4th at p. 97.) "[T]he party seeking equitable relief on the grounds of extrinsic fraud or mistake must show three elements: (1) a meritorious defense; (2) a satisfactory excuse for not presenting a defense in the first place; and (3) diligence in seeking to set aside the default judgment once discovered." (Rodriguez v. Cho (2015) 236 Cal.App.4th 742, 750.) "When a default judgment has been obtained, equitable relief may be given only in exceptional circumstances." (Rappleyea v. Campbell, supra, at p. 981.)
We conclude the trial court did not abuse its discretion by granting ESL's motion to vacate the default judgment. First, ESL made the necessary "minimal showing" that it had a meritorious case. (Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1148.) ESL provided evidence showing that, at the time of Martinez's termination, ESL was no longer involved with the Valley Crest facility where she worked. In her declaration, Bridgewater explained that ESL had terminated its contract with the facility in January 2012, six months before Martinez's termination, which suggests ESL was not involved in the termination decision. This evidence was sufficient for ESL to meet its burden under the first factor. (See Mechling v. Asbestos Defendants (2018) 29 Cal.App.5th 1241, 1247 [defendant may meet its burden of showing it has a meritorious defense "by submitting . . . a declaration averring there is such a defense"].)
The trial court did not provide a statement of decision, nor did the parties request one. We are therefore bound by the doctrine of implied findings under which "the necessary findings of ultimate facts will be implied and the only issue on appeal is whether the implied findings are supported by substantial evidence." (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 267.) Further, we infer that the trial court made all the findings necessary to support its judgment. (Fladeboe v. American Isuzu Motors, Inc. (2007) 150 Cal.App.4th 42, 58.)
Second, ESL met its burden of showing that it had a satisfactory excuse for not defending the case—ESL was not served with Martinez's complaint and therefore was unaware of the lawsuit until years after the default judgment was entered. (See Mechling v. Asbestos Defendants, supra, 29 Cal.App.5th at p. 1248 [defendant had satisfactory excuse for not defending lawsuit because it had not been served with complaint "or other relevant pleadings"].)
Third, after becoming aware of the default in July 2017, ESL diligently sought to vacate it about eight months later, in March 2018. Martinez faults ESL for not doing so sooner, but she overlooks the fact that ESL's counsel met and conferred with her counsel between August and November 2017 in an apparent attempt to avoid having to bring a motion to vacate the judgment. Martinez's counsel did not inform ESL's counsel until November 2017 that he considered the default judgment valid and intended to enforce it. About four months later, ESL filed its motion to vacate the judgment. Substantial evidence supports the trial court's implied finding that ESL acted diligently to vacate the judgment. (See Lee v. An (2008) 168 Cal.App.4th 558, 566 [no diligence when defendant waited over two years to move to vacate default judgment]; Stiles v. Wallis, supra, 147 Cal.App.3d at p. 1150 [no diligence when defendant waited 20 months to move to vacate default judgment]; Mechling v. Asbestos Defendants, supra, 29 Cal.App.5th 1241, 1249 [diligence shown where defendant moved to vacate default judgments five months after retaining counsel to do so].) The trial court therefore did not err in vacating the default judgment against ESL.
As explained below, we also conclude the trial court did not err in finding that Martinez failed to properly serve ESL. Because Martinez failed to do so, the trial court lacked personal jurisdiction over ESL, so the default judgment was void. Although it was not the basis for the trial court's decision, the trial court also could have properly vacated the judgment as void for lack of personal jurisdiction. (See Yeung v. Soos, supra, 119 Cal.App.4th at p. 582 ["If service of summons was not made or was improper, and actual notice was not received, the default judgment is void for lack of personal jurisdiction."].) We therefore affirm the trial court's order vacating the default judgment against ESL.
C. The Trial Court Did Not Err in Dismissing ESL
Martinez contends the trial court erred in granting ESL's motion to be dismissed from the case due to her failure to serve ESL within three years of filing her complaint, because she properly served ESL. (§§ 583.210, 583.250.) We disagree.
Section 416.10 provides, in relevant part, that a corporation may be served by delivering a copy of the summons and the complaint to "a person authorized by the corporation to receive service of process." (§ 416.10, subd. (b).) This provision also applies to limited liability companies, such as ESL. (See Corp. Code, § 17701.16, subd. (a).)
Martinez contends she served ESL in accordance with section 416.10 by personally serving Lesley with a complaint and summons. She asserts Lesley was "a person authorized by [ESL] to receive service of process" because she represented to Martinez's process server that she was so authorized and she was Martinez's direct supervisor.
Lesley's statement, however, was not admissible to establish that she was authorized to accept service on ESL's behalf. As this Court explained in Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1437, "an extrajudicial statement of a person that he or she is the agent of another is not admissible to prove the fact of agency unless the statement is communicated to the principal and the principal acquiesces the statement." There is no evidence that occurred here, so Lesley's statement that she was an agent of Valley Crest is inadmissible. Martinez therefore failed to provide any admissible evidence establishing that she served ESL in accordance section 416.10. (Ibid.)Further, Bridgewater, stated in her declaration that she did not know who Lesley was, and that Lesley had never "been authorized by . . . ESL to receive service of process." Bridgewater further stated that the Corwin Road address where Martinez served Lesley was Valley Crest's business address, "has never been the address of . . . any person authorized by . . . ESL to receive service of process," and that no one authorized to receive service of process by ESL had been served with Martinez's complaint or summons.
We must defer to the trial court's implied factual findings if they are supported by substantial evidence. (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1323.)In light of Bridgewater's declaration and Martinez's lack of admissible evidence, we conclude substantial evidence supports the trial court's implied factual finding that Lesley was not authorized to accept service on ESL's behalf and that no one at ESL had ever been served with Martinez's complaint or summons. We therefore conclude the trial court did not err in implicitly finding that Martinez had not properly served ESL.
Martinez argues for the first time on appeal that she substantially complied with the requirements for service of process. Although ESL argued in its moving papers that Martinez did not do so, she provided no argument in response. Martinez therefore waived the issue. (See 366-386 Geary St., L.P. v. Superior Court (1990) 219 Cal.App.3d 1186, 1199 ["[R]eal parties failed to adequately raise this issue in the superior court, and it may not be raised for the first time on appeal."].)
Even if Martinez had not waived the argument, we would reject it on the merits. "A finding of substantial compliance can only be sustained where . . . the service relied upon by the plaintiff imparted actual notice to the defendant that the suit was pending and that he was bound to defend." (Carol Gilbert, Inc. v. Haller (2009) 179 Cal.App.4th 852, 855, italics added.) As Bridgewater's declaration confirms, ESL did not have actual notice of Martinez's lawsuit until years after the default judgment was entered—and about three years after Martinez filed her complaint. Martinez provided no evidence that suggests otherwise. Martinez therefore did not substantially comply with the requirements for service of process. (See ibid.)
As outlined above, substantial evidence supports the trial court's finding that Martinez did not properly serve ESL in 2014, when she served her complaint and summons on Lesley. Because Martinez failed to serve ESL by July 2017, three years after she filed her complaint, the trial court was required to dismiss ESL. (See County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1234 ["[O]nce the court determined the default judgment was void as a matter of law based on the lack of personal jurisdiction, it was required to dismiss this action"].) The trial court therefore did not err in granting ESL's motion to dismiss.
IV.
DISPOSITION
The trial court's orders vacating the default judgment against ESL and dismissing ESL are affirmed. Each party shall bear its own costs.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
CODRINGTON
J. We concur: MILLER
Acting P. J. MENETREZ
J.