Opinion
G060902
04-26-2023
FLAVIO ALMEIDA et al., Plaintiffs and Respondents, v. RALPH GRACIE et al., Defendants and Appellants.
One LLP, Peter R. Afrasiabi and Alec Pierce Schulman for Defendants and Appellants. Mortenson Taggart Adams, Michael D. Mortenson, Teresa C. Alarcon and Robert A. Schultz for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
Appeal from a judgment and order of the Superior Court of Orange County No. 30-2019-01045252, Robert J. Moss, Judge. Affirmed.
One LLP, Peter R. Afrasiabi and Alec Pierce Schulman for Defendants and Appellants.
Mortenson Taggart Adams, Michael D. Mortenson, Teresa C. Alarcon and Robert A. Schultz for Plaintiffs and Respondents.
OPINION
BEDSWORTH, J.
INTRODUCTION
Ralph Gracie (Gracie) and Brazilian Jiu Jitsu, Inc. (Brazilian), appeal from an order denying their motion to set aside defaults entered against them on behalf of Flavio Almeida. Almeida sued Gracie and Brazilian after Gracie and another person physically assaulted him. Gracie was served by publication, and Brazilian through the California Secretary of State. Neither defendant answered, and Almeida first obtained a default and then a default judgment against them.
Gracie and Brazilian moved in the trial court to set the defaults aside. Gracie claimed that service by publication was improper because Almeida knew where he was for personal or mail service and had lied to the court about being unable to serve him by means other than publication.
The trial court denied the default set-aside motion. It ruled that appellants had failed to establish the elements necessary for both statutory and equitable relief by admissible evidence.
We affirm the order denying the motion to set aside the defaults. Appellants failed to submit evidence to establish all the elements required for relief from default. As a reviewing court, we can neither reweigh evidence nor reassess credibility, as appellants would have us do.
FACTS
In his complaint, Almeida alleged that he and Gracie are well known Brazilian jiu jitsu artists who operate competing jiu jitsu training studios. Almeida planned to open studios in Northern California, an area that Gracie regarded as his territory. Almeida alleged that Gracie threatened him in 2017 about his plans to open one studio. Then, in December 2018 at a jiu jitsu competition in Anaheim, Gracie and a colleague physically attacked Almeida. Gracie slammed his elbow into Almeida's face, and he and his colleague kicked Almeida as he lay on the ground.
Almeida and Gracie Barra Franchise Systems, Inc. (Systems), filed a complaint against Gracie, several Gracie limited liability companies, and Brazilian on January 17, 2019. After unsuccessful attempts to serve Gracie, both individually and as Brazilian's agent for service of process, Almeida moved in the trial court for permission to serve Gracie by publication and Brazilian through the Secretary of State. The application for this permission included declarations providing specific information regarding efforts to serve Gracie. The court granted permission to serve by Gracie by publication and Brazilian through the Secretary of State. The publication service was effected through the San Francisco Chronicle.
Almeida's company, Systems, was included as a plaintiff pursuant to an allegation that Gracie intended to harm Almeida's business as well as his person.
Brazilian's agent for service of process was Gracie, and the address given to the Secretary of State was in Danville, California. Almeida made several attempts to serve him at this address.
Neither Gracie nor Brazilian answered, and Almeida requested entry of default, which was granted. Almeida then moved for $20 million in damages each against Gracie and Brazilian.
On February 7, 2020, the court awarded Almeida $215,667.00 in damages for medical expenses and pain and suffering. It declined to award Systems anything. It denied the request for punitive damages on the ground that Almeida had not furnished sufficient admissible evidence of Gracie's wealth. Almeida moved for reconsideration, and the court denied this motion.
On April 5, 2021, Gracie and Brazilian moved to set aside the defaults under Code of Civil Procedure section 473.5 and the court's equitable power. Their main argument was that Almeida had obtained the court's permission to serve Gracie by publication under false pretenses and by fraud because Almeida knew quite well where Gracie was - he was in Brazil. Gracie claimed to have been living and training openly in Rio de Janeiro, amid the tightly-knit Brazilian jiu jitsu community where both he and Almeida were well known.
All further statutory references are to the Code of Civil Procedure.
Gracie ultimately returned to the United States, where he was arrested for assault. He entered a guilty plea and was sentenced to six months in jail and restitution of $50,000. He also had to take an anger management program and was placed on probation for three years.
The court denied the motion. It held that appellants had failed to meet the requirements of relief under section 473.5, which are (1) no actual notice of the lawsuit, (2) entry of default, (3) reasonable diligence, and (4) a meritorious defense. They also failed to submit a copy of an answer, another requirement. In addition, they failed to meet the requirements for equitable relief, which are (1) a meritorious defense, (2) a satisfactory reason for failure to respond, and (3) diligence in seeking relief to set aside the default.
The court also sustained all but two of Almeida's evidentiary objections to the two declarations submitted to support the set-aside motion. Thus all the statements about Almeida's knowledge of Gracie's whereabouts in Brazil were ruled inadmissible. The court declined to consider three declarations filed with appellants' reply, on the ground this evidence could have been submitted with the moving papers.
Judgment for $215,667 was entered in Almeida's favor on September 22, 2021. Gracie and Brazilian appealed from the judgment on November 24, 2021. The only issues on appeal, however, relate to the court's order denying the motion to set aside the defaults.
DISCUSSION
Before we discuss the specific theories under which appellants moved for relief from default, some general observations are in order. We review both theories for abuse of discretion. (Brockman v. Wagenbach (1957) 152 Cal.App.2d 603, 611 [relief under section 473.5]; Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981 [equitable relief] (Rappleyea).) As the moving parties, Gracie and Brazilian had the burden of proof to show that they met the requirements for a set-aside. (Luxury Asset Lending, LLC v. Philadelphia Television Network, Inc. (2020) 56 Cal.App.5th 894, 910.)
Appellants' main argument for both theories is that Gracie is so famous and well known in the Rio de Janeiro jiu jitsu community that Almeida, also famous and well known, could not have been ignorant of Gracie's whereabouts in Brazil, since everybody in the Rio community knew he was there. So Almeida's representations to the court that he did not know where Gracie was to serve him with the summons and complaint were false. Gracie and his niece submitted declarations to this effect to support the set-aside motion. These declarations focused mainly on Gracie's contention that Almeida must have known - or could easily have learned - that he was in Rio de Janeiro.
On appeal, appellants contend the trial court erred by disregarding this evidence. In their opening brief, they recite all the evidence placed before the trial court, even the evidence the court found inadmissible. In effect, they seek to retry the motion in this court.
Appellants have mistaken both their responsibilities in moving for relief in the trial court and our role as a reviewing court. As a reviewing court, we do not reweigh evidence or reassess credibility. Weighing evidence and making credibility calls are both the province of the trial court. (See Orange County Employees Assn. v. County of Orange (1988) 205 Cal.App.3d 1289, 1293.) On the contrary, we assume that the trial court ruled correctly, and it is the appellant's burden to demonstrate why this assumption is wrong. (Rojes v. Riverside General Hospital (1988) 203 Cal.App.3d 1151, 1162, overruled on other grounds, Passavanti v. Williams (1990) 225 Cal.App.3d 1602.)
Gracie and Brazilian have failed to challenge on appeal any of the specific evidentiary rulings the court made on the declarations submitted to support the set-aside motion. For the most part, these objections were sustained for lack of foundation, speculation, and hearsay. By failing to contest these rulings on appeal, appellants have waived any argument that this evidence was in fact admissible. (See Villa v. McFerren (1995) 35 Cal.App.4th 733, 739, fn. 4.)
Eliminating this evidence leaves very little to support the motion. The only statements remaining from Gracie's declaration are his admission that he was in Brazil after his assault on Almeida, that he grew up in Brazil and his mother lives there, that he goes to Brazil at least once a year, and that he was training at a Gracie Barra academy and teaching at his niece's jiu jitsu academy during his most current stay. His niece's declaration was likewise pruned of statements lacking in foundation, most notably for this appeal of statements about what "everybody" knew regarding Gracie's whereabouts in Brazil.
Appellants' disagreement with the trial court's evidentiary rulings is a general one, and their sole argument is that only slight evidence is necessary to set aside a default. Slight or not, the evidence must be admissible. The court ruled that specifically identified statements in the declarations were not admissible, and appellants present no argument or authority to the contrary.
The case cited to support this argument, Shamblin v. Brattain (1988) 44 Cal.3d 474, deals with a motion to set aside a default under section 473. (Id. at p. 477.) So does the case cited to support the argument that doubts are resolved in favor of relief. (Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 135.)
In their opening brief, appellants include citations to the reply declarations that the trial court refused to consider because they presented no new evidence. They make no argument whatsoever as to why the court erred in disregarding these declarations.
This brings us back to our role as a reviewing court when a party appeals from an order denying a motion for which he had the burden of proof. Because appellants bore the burden of proof, our review of these issues differs from the standard we would use for an appellant who contended the party with the burden of proof had not borne it, after the trier of fact concluded it had. In this case, the parties with the burden of proof, Gracie and Brazilian, contend, in essence, that they did bear it, after the trier of fact concluded they did not. "On appeal from a determination of failure of proof at trial, the question for the reviewing court is '"whether the evidence compels a finding in favor of the appellant as a matter of law."' [Citation.] Specifically, we must determine '"whether the appellant's evidence was (1) 'uncontradicted and unimpeached' and (2) 'of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.'"' [Citations.] We are also guided by the principle that the trial court's judgment is presumed to be correct on appeal, and we indulge all intendments and presumptions in favor of its correctness." (Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 769.)
"Where, as here, the judgment is against the party who has the burden of proof, it is almost impossible for him to prevail on appeal by arguing the evidence compels a judgment in his favor. That is because unless the trial court makes specific findings of fact in favor of the losing plaintiff [in this case, the losing moving party], we presume the trial court found the [moving party's] evidence lacks sufficient weight and credibility to carry the burden of proof. [Citations.] We have no power on appeal to judge the credibility of witnesses or to reweigh the evidence." (Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1486.) These parameters circumscribe our review.
I. Relief under Section 473.5
Appellants argue the court erred in finding their motion under section 473.5 untimely. The court did not so find. It observed that the motion would have been untimely under section 473, subdivision (b), had it been made on that basis. The motion was made on the basis of section 437.5 and the court's equitable power. Appellants also argue that the court failed to address their argument the default was void. The basis of this argument was that Almeida obtained permission to serve Gracie by publication by lying to the court. The evidence for this argument was the inadmissible evidence that everyone in the Rio jiu jitsu community knew that Gracie was there. The court addressed this contention in the minute order denying the motion to set aside the defaults. It stated it had carefully reviewed the evidence submitted at the time the order to serve through publication was requested before it allowed service by publication and that appellants submitted no admissible evidence of bad faith in obtaining this order.
Section 473.5, subdivision (a), provides, in pertinent part, "When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action."
As the trial court stated, to qualify for relief from default under section 437.5, appellants had to show (1) they received, through no inexcusable fault of their own, no actual notice of the action in time to appear and defend; (2) a default has been entered against them; (3) they acted with reasonable diligence in serving and filing the notice of motion to set aside the default; and (4) they had a meritorious defense. (Goya v. P.E.R.U. Enterprises (1978) 87 Cal.App.3d 886, 891.)
As to these elements, the court made two findings. First, appellants affirmatively failed to establish that their own neglect or avoidance of service did not cause the lack of notice and that they had a meritorious defense. Second, the court found that appellants had provided no evidence one way or the other regarding both whether they had received actual notice of the lawsuit in time to appear and defend and whether they had acted with reasonable diligence. This failure alone was sufficient to doom the set-aside motion. In addition, they failed to serve an answer or other responsive pleading as required by section 473.5, subdivision (b).
Section 473.5, subdivision (b), provides "A notice of motion to set aside a default or default judgment and for leave to defend the action . . . shall be accompanied by an affidavit showing under oath that the party's lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect. 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." Appellants argue the trial court erred in finding this element dispositive. It did not so find. This element was one of five elements that they failed to establish.
Appellants argue the trial court's findings of "no evidence one way or the other" mean they should prevail. This is incorrect. As they had the burden of proof, it was their task to present evidence of all the conditions needed to qualify for relief (see Ellard v. Conway (2001) 94 Cal.App.4th 540, 548 [evidence of lack of actual notice]), so this was a failure of proof.
Furthermore, Gracie's declaration did not state that he had no actual knowledge of the lawsuit or when he discovered the default. So the court had no evidence of his diligence in acting to set it aside. The failure to submit admissible evidence for two of the requisite conditions means that appellants failed to carry their burden of proof as to the entire motion. (See, e.g., Sakaguchi v. Sakaguchi (2009) 173 Cal.App.4th 852, 861-862 ["Notably, [defendant] does not declare that he lacked actual knowledge of the action, nor does the affidavit show that any lack of knowledge was caused by excusable neglect."]) Relief under section 473.5 was properly denied.
II. Equitable Relief
As the court stated in Rappleyea, supra, "'[W]hen relief under section 473 is available, there is a strong public policy in favor of granting relief and allowing the requesting party his or her day in court. Beyond this period there is a strong public policy in favor of the finality of judgments and only in exceptional circumstances should relief be granted.' [Citation.]" (Rappleyea, supra, 8 Cal.4th at pp. 981-982.)
Relief from default under the court's equitable powers requires the defendant to pass a three-part test. The defendant must show (1) a satisfactory excuse for his untimeliness, (2) a meritorious defense, and (3) diligence in seeking to set aside the default. (Kramer v. Traditional Escrow, Inc. (2020) 56 Cal.App.5th 13, 29; Rappleyea, supra, 8 Cal.4th at pp. 982-983.)
As with relief under section 437.5, defendants have the burden of proof to show that they qualify for equitable relief, and the court found that Gracie and Brazilian did not qualify. The court ruled that they had failed to establish both a meritorious defense and diligence in seeking to set aside the default. They must therefore show that this evidence was uncontradicted and unimpeached.
Once again, the court found that appellants had failed to present evidence of diligence, that is, evidence of when they received notice of the default. Once again, appellants argue that this means they win. Once again, they are wrong. They had the burden of presenting evidence as to when they received notice so that they could show they acted with due dispatch in seeking to set aside the default. No evidence means they did not meet this burden.
Gracie also argues that he has a meritorious defense, namely, a disagreement with the amount of damages awarded to Almeida. This is not what "meritorious defense" means. The defense is one to liability, for example, the expiration of a limitations period or an illegal contract. In this case, a meritorious defense might be self-defense. Gracie has, however, admitted that his assault on Almeida was inexcusable.
A defendant who wishes to contest the amount of the damages awarded in a default judgment does so by appealing from the judgment on that ground, and the argument on appeal is that the evidence supporting the amount of damages was insufficient. (See Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 288.) Although Gracie and Brazilian appealed from the judgment, their sole argument on appeal is that the court should have set aside the defaults themselves. They made no argument about the insufficiency of the individual items of evidence supporting Almeida's damages.
DISPOSITION
The default judgment and the order denying appellants' motion to set aside defaults are affirmed. Respondents are to recover their costs on appeal.
WE CONCUR: O'LEARY, P. J. MOTOIKE, J.