Filed 2/20/14
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ARIEL V. RAMOS, D063740
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2011-00055649-
CU-OR-NC)
HOMEWARD RESIDENTIAL, INC.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Diego County, Robert P.
Dahlquist, Judge. Affirmed.
Southland Law Center and Rick L. Raynsford for Plaintiff and Appellant.
Wright, Finlay & Zak, T. Robert Finlay and Charles C. McKenna for Defendant
and Respondent.
Our Code of Civil Procedure provides a number of ways to serve process on a
corporation doing business in the state. The most common method is by service on the
corporation's designated agent for service of process. (Code Civ. Proc.,1 § 416.10,
1 All further statutory references are to the Code of Civil Procedure.
subd. (a).) Otherwise, a corporation may be served by personally delivering a summons
and complaint to those corporate officers, managers and employees identified in section
416.10, subdivision (b), or by delivering process to someone in charge of the office of
one of the individuals identified in section 416.10, subdivision (b) and then mailing the
individual a copy of the summons and complaint. (§ 415.20.)
Here, the plaintiff used none of the methods prescribed in the Code of Civil
Procedure for service of process on a corporation. Rather, the plaintiff simply left a
summons and complaint with someone who was in charge of a branch office of the
defendant corporation and then mailed the corporation, rather than any individual officer
or manager, a copy of the summons and complaint. Although service was defective, the
plaintiff nonetheless obtained a default against the corporation and a $254,000 default
judgment.
Because service on the corporation was defective, the trial court properly granted
the corporation's motion to set aside the default and default judgment. Accordingly, we
affirm its order doing so.
FACTUAL AND PROCEDURAL BACKGROUND
Well before this litigation was initiated, on December 17, 2007, defendant
American Home Mortgage Servicing, Inc. (AHMSI/Homeward)2 filed a statement with
the Secretary of State's office designating CT Corporation System (CT) as its agent for
2 On May 29, 2012, American Home Mortgage Servicing, Inc. changed its name to
Homeward Residential, Inc. Because in the record and briefs the corporation is referred
to alternatively as AHMSI and Homeward, for the sake of clarity we will refer to the
corporation as AHMSI/Homeward.
2
service of process. The designation stated that CT's address is 818 W. Seventh Street,
Los Angeles, CA 90017.
On June 23, 2011, plaintiff Ariel V. Ramos filed a complaint against
AHMSI/Homeward that alleged a number of causes of action related to the foreclosure of
a deed of trust on Ramos's home.
A process server retained by Ramos attempted to serve AHMSI/Homeward at an
office the corporation operated in Irvine. In attempting to effect service on
AHMSI/Homeward, Ramos's process server asked to speak to whomever was in charge
of the Irvine office. A woman responded to his request and identified herself as being in
charge of the office. The process server handed the woman the summons and complaint,
and she advised the process server that she could not accept the documents. The process
server was unable to obtain the name of the woman to whom he delivered the summons
and complaint.
Later, Ramos's process server mailed a copy of the summons and complaint to
AHMSI/Homeward at the Irvine address. However, the copy was not addressed to any
officer or named individual but instead was simply sent to AHMSI/Homeward.
On July 21, 2011, Ramos's counsel received in the mail the summons and
complaint that had been served at the Irvine address. Attached to the summons and
complaint, on a sheet of paper with AHMSI/Homeward's letterhead, was an unsigned
message which stated: "Please send to our registered agent at: [¶] CT Corporation [¶]
350 North Saint Paul Street [¶] Dallas, Texas 75201 [¶] 214-979-1172."
3
On August 18, 2011, and again on September 26, 2011, Ramos's counsel sent
electronic facsimile letters to AHMSI/Homeward's legal department stating that Ramos
had filed a complaint against AHMSI/Homeward, that AHMSI/Homeward had not
responded and that Ramos had requested entry of its default.
Based on the delivery to AHMSI/Homeward's Irvine office, on March 23, 2012,
AHMSI/Homeward's default was entered.
On July 3, 2012, Ramos obtained a $254,155 default judgment against
AHMSI/Homeward.
On November 27, 2012, Ramos executed a notice of levy on a bank account
owned by AHMSI/Homeward. On November 30, 2012, the bank notified
AHMSI/Homeward of the levy of execution.
AHMSI/Homeward filed its motion to set aside the default and default judgment
on January 14, 2013. Ramos opposed AHMSI/Homeward's motion on the grounds he
had properly served the corporation and that, in any event, any defect in service was
merely technical and did not deprive AHMSI/Homeward of actual notice of the action.
Ramos relied upon the declaration of his counsel who, among other matters, stated that
AHMSI/Homeward had not provided the Secretary of State's office with an agent for
service of process and that he had sent AHMSI/Homeward notice of the action.
On February 14, 2013, while AHMSI/Homeward's motion was pending, the
Orange County Sheriff's Department disbursed to Ramos's counsel the $254,190 the
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sheriff had obtained from AHMSI/Homeward's bank account.3
On March 22, 2013, the trial court granted AHMSI/Homeward's motion to set
aside the default and default judgment. The trial court found that service on
AHMSI/Homeward was defective and that, in any event, AHMSI/Homeward was entitled
to discretionary relief from the default and default judgment. The trial court also ordered
Ramos to return to AHMSI/Homeward the funds that had been disbursed to him and his
attorney.4
Ramos filed a timely notice of appeal from the judge's order setting aside the
default and default judgment.
I
Where, as here, a motion to vacate is made more than six months after entry of a
judgment, a trial court may grant a motion set aside that judgment as void only if the
judgment is void on its face. (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th
1426, 1441; § 473, subd. (d).) "'A judgment or order is said to be void on its face when
the invalidity is apparent upon an inspection of the judgment-roll'. [Citation.]" (Dill v.
3 In later discovery conducted by AHMSI/Homeward, Ramos's counsel disclosed he
transferred one-half of the proceeds to Ramos and kept one-half for himself. Counsel
further disclosed that he had used the funds he obtained from AHMSI to, among other
things, pay an outstanding debt to the Internal Revenue Service, pay bonuses to
independent contractors who worked with his law firm, and pay other business and
personal expenses. Ramos returned to AHMSI/Homeward $70,000 of the $127,000 he
had received from his lawyer and stated that he had used the remaining funds to pay
personal expenses.
4 See footnote 3, ante.
5
Berquist Construction Co., supra, at p. 1441.)
When a judgment by default has been entered, the judgment-roll is limited to the:
summons, proof of service of the summons, complaint, request for entry of default, copy
of the judgment, notice of any ruling overruling a demurrer interposed by the defendant
and proof of service thereof, and, if service was by publication, affidavit for publication
and order directing it. (§ 670, subd. (a).) Because any defect in service must appear on
the face of the judgment-roll as delimited by the documents specified in section 670,
subdivision (a), our review of a trial court's order finding such a facial defect is of
necessity de novo. (See Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 496.)
However, where a plaintiff has contested a motion to vacate a default judgment by
way of affidavits or other evidence that goes beyond the judgment-roll as set forth in
section 670, subdivision (a), of necessity our review goes beyond the judgment-roll.
(See, e.g., Dill v. Berquist Construction Co., supra, 24 Cal.App.4th at 1441 [defect in
service that appears on face of judgment-roll shifts "evidentiary burden" to plaintiff].) In
determining any issues raised by such evidentiary matters, our review is governed by the
familiar abuse of discretion standard. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479.)
That standard requires we defer to factual determinations made by the trial court when
the evidence is in conflict, whether the evidence consists of oral testimony or
declarations. (Ibid.; Goya v. P.E.R.U Enterprises (1978) 87 Cal.App.3d 886, 891.)
Thus, here, we review the trial court's finding of a facial defect in service de novo.
However, the trial court's implied rulings rejecting Ramos's attempt to show substantial
6
compliance and its finding that, in any event, ASHMI/Homeward is entitled to equitable
relief from the default and default judgment, were made on the basis of the parties'
conflicting declarations. Accordingly, we review those rulings for abuse of discretion.
(See Shamblin v. Brattain, supra, 44 Cal.3d at p. 479; Rappleyea v. Campbell (1994) 8
Cal.4th 975, 981 [equitable relief from judgment reviewed for abuse of discretion].)5
II
The face of the judgment-roll here and, in particular, the proof of service Ramos
relies upon, fails on its face to show that AHMSI/Homeward was properly served with
the summons and complaint.
By its terms, section 416.10 permits service on a corporation that is not a bank by
way of: service on an individual or entity designated as an agent for service of process
(§ 416.10, subd. (a)); service on one of the 11 officers or managers of the corporation
specified in section 416.10, subdivision (b); service on a person authorized by the
corporation to receive service (§ 416.10, subd. (c)); or service in a manner authorized by
the Corporations Code (§ 416.10, subd. (d)). In turn, section 415.20 permits substituted
service on a person specified in section 416.10 by leaving the summons and complaint
"in his or her office . . . with the person who is apparently in charge thereof." (§ 415.20,
5 We recognize that in Cruz v. Fagor America, Inc., supra, 146 Cal.App.4th at page
496, the court stated: "We review de novo a trial court's determination that a judgment is
void." This statement is somewhat overly broad. Trial court determinations based on
review of the face of the judgment-roll set forth in section 670, subdivision (a) are subject
to de novo review; however, we do not believe de novo review applies to other trial court
determinations made on conflicting evidence outside the face of the judgment-roll
specified in section 670, subdivision (a). (See Shamblin v. Brattain, supra, 44 Cal.3d at
p. 479; Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d at p. 891.)
7
subd. (a), italics added.)
While section 415.20, subdivision (a) permits substituted service on "the person to
be served as specified in Section 416.10," where the proof of service fails to identify any
such person, the proof of service is defective. As the court in Dill v. Berquist
Construction Co., supra, 24 Cal.App.4th at pages 1435-1436 stated with respect
analogous provisions of section 415.40: "[T]he distinction between a 'party' and a 'person
to be served' on behalf of that party . . . is central to the statutory scheme governing
service of process. 'The words "person to be served" are words of precision, used
throughout the act, intended to refer to the "individual" to be served, and not to the
"party." For example, reference is to the vice president of defendant corporation who is
being served on behalf of the corporate defendant, and not to the corporate defendant.'
[Citation.] Since a corporate defendant can only be served through service on some
individual person, the person to be served is always different from the corporation."
(Italics added & fn. omitted.)
Ramos does not assert that service was on the designated agent for service of
process or on a person authorized to receive service, and he does not contend that service
was accomplished in a manner authorized by the Corporations Code. More importantly,
Ramos's proof of services does not identify any of the 11 other persons specified in
section 416.10, subdivision (b)—officers or managers of the corporation—as the person
served. Indeed, no individual is identified on the proof of service; rather, the only person
identified on the proof of service is AHMSI/Homeward itself. The proof of service
8
further states that a copy of the summons and complaint were thereafter mailed, not to
any individual, but to AHMSI/Homeward at its Irvine address. Because the face of
Ramos's proof of service fails to identify any individual specified in section 416.10,
subdivision (b) who was served on behalf of the corporation, on its face, the proof of
service and, hence, the judgment-roll, show that the judgment is void for lack of proper
service. (See Dill v. Berquist Construction Co., supra, 24 Cal.App.4th at pp. 1436,
1441.)
III
The facial defect in the judgment-roll is not the end of our inquiry. Because, as in
Dill v. Berquist Construction Co., "the proofs of service demonstrate that the copies of
the summons were addressed solely to the corporations, rather than to any of the requisite
persons to be served," AHMSI/Homeward was "not required to present any evidence in
order to establish the invalidity of the service and the resulting lack of personal
jurisdiction." (Dill v. Berquist Construction Co., supra, 24 Cal.App.4th at p. 1441, fn
omitted.) Thus, the burden then fell on Ramos to show that, notwithstanding the facial
defect in service, service nonetheless substantially complied with the requirements of the
Code of Civil Procedure. (Id. at p. 1442.)
It is axiomatic that strict compliance with the code's provisions for service of
process is not required. (Pasadena Medi-Center Associates v. Superior Court (1973) 9
Cal.3d 773, 778; Dill v. Berquist Construction Co., supra, 24 Cal.App.4th at p. 1436;
Espindola v. Nunez (1988) 199 Cal.App.3d 1389, 1391.) "Although some decisions
9
under pre-1969 statutes required strict and exact compliance with the statutory
requirements [citation], the provisions of the new law, according to its draftsmen, 'are to
be liberally construed. . . . As stated in the Nov. 25, 1968, Report of the Judicial
Council's Special Committee on Jurisdiction, pp. 14-15: "The provisions of this chapter
should be liberally construed to effectuate service and uphold the jurisdiction of the court
if actual notice has been received by the defendant, and in the last analysis the question
of service should be resolved by considering each situation from a practical
standpoint. . . ." The liberal construction rule, it is anticipated, will eliminate
unnecessary, time-consuming, and costly disputes over legal technicalities, without
prejudicing the right of defendants to proper notice of court proceedings.' [Citation.]"
(Pasadena Medi-Center Associates v. Superior Court, supra, at p. 778.) "Thus,
substantial compliance is sufficient." (Dill v. Berquist Construction Co., supra, at
p. 1437.)
In general, substantial compliance with the code occurs when, although not
properly identified in a proof of service, the person to be served in fact actually received
the summons. (Dill v. Berquist Construction Co., supra, 24 Cal.App.4th at p. 1437; see
also Olvera v. Olvera (1991) 232 Cal.App.3d 32, 39-41.) "[W]hen the defendant is a
corporation, the 'person to be served' is one of the individuals specified in section 416.10.
Therefore, [plaintiff] could be held to have substantially complied with the statute if,
despite his failure to address the mail to one of the persons to be served on behalf of the
defendants, the summons was actually received by one of the persons to be served." (Dill
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v. Berquist Construction Co., supra, at p. 1437.) However, mere receipt of the summons
by an unknown employee of the corporation who is not a person specified in section
416.10 does not necessarily establish substantial compliance. (Id. at pp. 1438-1439.)
Evidence that shows the name of the person who received the summons and complaint as
well as the person's title or capacity is required by statute (§ 417.10) and, without it, a
trial court need not infer that a person specified in section 416.10 actually received the
summons and complaint.
Here, Ramos did not provide the trial court with any evidence identifying the
person to whom the summons and complaint was delivered in Irvine or other evidence
from which it might be inferred a person specified in section 416.10 actually received the
documents. According to a declaration submitted by AHSMI/Homeward, none of the
officers or managers specified in section 416.10, subdivision (b) are located at its Irvine
office and no employee there is authorized to receive process. AHSMI/Homeward's
declaration further states that until it received notice that its bank account had been
levied, it had no notice of Ramos's complaint. Given this record, which does not show
that anyone specified in section 416.10 or otherwise authorized to receive service had
actual notice of the summons and complaint, the trial court could properly conclude that
Ramos failed to show he substantially complied with sections 416.10 and 415.20.
In sum, the record here shows both that on its face the judgment is void for lack of
proper service and that Ramos did not otherwise show substantial compliance with the
requirements for service on a corporation. Thus, the trial court did not err in vacating the
11
default and default judgment as void.
IV
As we have noted, in the alternative, the trial court found that AHMSI/Homeward
was entitled to discretionary relief from the judgment under section 473.5, subdivision
(a), which permits relief from a default judgment if "service of a summons has not
resulted in actual notice to a party in time to defend the action . . . ." Contrary to Ramos's
argument, the trial court did not abuse its discretion in providing AHMSI/Homeward
with relief under section 473.5.
In reviewing the court's grant of discretionary relief from default, we note: "It is
the policy of the law to favor, whenever possible, a hearing on the merits. Appellate
courts are much more disposed to affirm an order when the result is to compel a trial on
the merits than when the default judgment is allowed to stand. [Citation.] Therefore,
when a party in default moves promptly to seek relief, very slight evidence is required to
justify a trial court's order setting aside a default. [Citation.] In the present case,
[defendant] promptly moved to have the default judgment set aside once he learned of it.
The trial court's order granting relief was within its sound discretion and, in the absence
of a clear showing of abuse of discretion, should not be disturbed. [Citations.]"
(Shamblin v. Brattain, supra, 44 Cal.3d at p. 478.) "'"Even in a case where the showing
. . . is not strong, or where there is any doubt as to setting aside of a default, such doubt
should be resolved in favor of the application."'" (Rosenthal v. Garner (1983) 142
Cal.App.3d 891, 898.)
12
We recognize that relief under section 473.5 is available only where the
defendant's lack of actual notice "was not caused by his or her avoidance of service or
inexcusable neglect." (§ 473.5, subd. (b).) Here, Ramos contends that
AHSMI/Homeward failed to provide the Secretary of State with an agent for service of
process and that it ignored the written and telephonic notice of the action his counsel
provided to various employees of the corporation. Thus, Ramos contends any lack of
actual notice was caused by AHSMI/Homeward's own inexcusable neglect.
The record does not support Ramos's contention that no agent for service of
process was provided to the Secretary of State. AHSMI/Homeward provided a
declaration and documentation which shows that AHSMI/Homeward provided the
Secretary of State with an agent for service of process in 2007, well before Ramos
initiated this litigation. Thus, on this record, the trial court could conclude that
AHSMI/Homeward acted reasonably in providing California litigants with ready means
of serving process on it.
With respect to the notice counsel provided to various AHSMI/Homeward
employees, we note that none of them are the persons to be served specified in section
416.10 and there is no proof they were otherwise responsible for responding to litigation
initiated in this state. For its part, AHSMI/Homeward provided a declaration which
asserted that until it received the notice of levy from its bank, it had no notice of Ramos's
complaint. The trial court could readily resolve this conflict in the evidence by
concluding that the employees who were advised of the litigation by Ramos's counsel
13
assumed that, if a complaint had been properly served on the corporation, those
responsible for responding to it would do so. (See Olvera v. Olvera, supra, 232
Cal.App.3d at p. 41 [fragmentary knowledge of action not necessarily actual notice].) At
most, Ramos established excusable neglect on the part of AHSMI/Homeward's
employee's.
In sum, the trial court could reasonably find that AHSMI/Homeward did not have
actual notice of the summons and complaint and that its ignorance was not the result of
any attempt to avoid service or inexcusable neglect. Thus, we find no abuse of discretion
in the alternative relief the trial court ordered under section 473.5.
DISPOSITION
The order is affirmed. AHSMI/Homeward to recover its costs of appeal.
BENKE, Acting P. J.
WE CONCUR:
HUFFMAN, J.
AARON, J.
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