Opinion
B332009
04-26-2024
QIAO CHEN et al., Plaintiffs and Appellants, v. FANG ZENG, Defendant and Respondent.
Kingswood Law and Jing Wang for Plaintiffs and Appellants. Paul Kujawsky for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County. No. BC689887 Michelle Williams Court and Colin P. Leis, Judges. Affirmed.
Kingswood Law and Jing Wang for Plaintiffs and Appellants.
Paul Kujawsky for Defendant and Respondent.
LUI, P. J.
Plaintiffs sued defendant but were unable to effect personal service of summons. Plaintiffs' request to serve defendant by publication was granted. A default and default judgment were ultimately entered. Defendant moved to set aside the default and default judgment as void for lack of personal jurisdiction. The motion was granted. Plaintiffs appealed, arguing defendant was properly served by publication and the motion was erroneously granted. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Complaint, Service by Publication, and Entry of the Default and Default Judgment
In January 2018, Qiao Chen, Guyang Zhao, and Xiao Feng Wu (plaintiffs) filed a complaint against California Investment Immigration Fund (CIIF), Victoria Chan, Tat Chan, and Fang Zeng. The complaint alleged multiple causes of action arising from the purported fraudulent operation of a regional center within the immigrant investor pilot program known as EB-5.
On May 22, 2018, plaintiffs filed an application to serve defendant Fang Zeng by publication. Plaintiffs' attorney declared under penalty of perjury that Fang Zeng was one of the owners and operators of CIIF in San Gabriel, California; CIIF has since closed; and plaintiffs had no information about Fang Zeng and could not locate any residence or physical address for her. Plaintiffs' attorney averred he had heard through plaintiffs and other sources that Fang Zeng and a codefendant "have fled to avoid prosecution."
Accompanying the application was the declaration of due diligence by Roger Garcia, a licensed process server retained by plaintiffs' attorney. Garcia averred on March 21, 2018, he was informed there was no date of birth, social security number, United States or Chinese passport or any other identification for Fang Zeng.
Garcia's declaration for service stated on March 28, 2018, he could not find Fang Zeng at CIIF's former business address, a hotel in San Gabriel. Nor was he able to obtain a forwarding address for the business. Over the next few days, Garcia visited eight different addresses in Los Angeles, Riverside, and San Bernardino counties associated with Fang Zeng. The addresses were listed in a skip trace report, which was attached to the declaration. Fang Zeng was not present at any address in the report. Those addresses that were residential properties were in civil forfeiture actions or for sale. Garcia also declared he researched business and social media Web sites and found nothing about Fang Zeng.
The trial court granted plaintiffs' application and authorized service by publication on Fang Zeng in the San Gabriel Valley Tribune. On September 4, 2018, plaintiffs filed a proof of service of summons and complaint, including a declaration attesting the summons had been published in the designated paper once per week during each of the four preceding weeks.
On November 19, 2018, plaintiffs filed a request for entry of default. The same day, the court clerk entered the default of Fang Zeng. On April 30, 2019, the trial court entered a default judgment against Fang Zeng and codefendants, awarding each plaintiff over $2 million.
II. Fang Zeng's Motion to Set Aside the Default and Default Judgment
On April 4, 2023, Fang Zeng specially appeared and moved to set aside the defaults and dismiss the lawsuit against her as void on several grounds, including lack of personal jurisdiction, ineffective service of process, inconvenient forum, and failure to comply with the Hague Service Convention.
The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638, is the exclusive method of service upon a defendant resident in a country which is a signatory to the convention." 'Failure to comply with the Hague Service Convention procedures voids the service even though it was made in compliance with California law.'" (Rockefeller Technology Investments (Asia) VII v. Changzhou Sino Type Technology Co., Ltd. (2020) 9 Cal.5th 125, 138.)
Fang Zeng submitted a supporting declaration that she is domiciled in China, which has always been her place of residence, business, and mailing address. Fang Zeng has neither lived in California nor has she resided, worked, or used as an address any locations listed in the skip trace report. Fang Zeng has never had an interest in nor owned, operated, or been the alter ego for CIIF; she has never had agents or employees in California nor has she conducted any business involving plaintiffs. She last visited and owned real property in California in 2017.
Fang Zeng also declared she was never served by substitute service, and never received notice of the suit, default, or default judgment. She first learned of the lawsuit in January 2023, when plaintiffs attempted to collect on the default judgment in China. Fang Zeng does not speak or read English, does not read the San Gabriel Valley Tribune, and has never read anything about this lawsuit in that newspaper. Fang Zeng averred that even if she were properly served, having to defend in California would impose a heavy burden as she and plaintiffs are residents of China.
III. Plaintiffs' Opposition to Motion to Set Aside the Default and Default Judgment
In opposition, plaintiffs requested the trial court take judicial notice of undated photographs, which identify Fang Zeng as "the chairman" of CIIF, plaintiffs' opposition to Fang Zeng's motion to set aside the default and default judgment in one of two related federal district court cases, and court orders denying the motions in both cases. Plaintiffs argued because these documents "impeach" Fang Zeng's declaration and her service by publication was proper, her motion should also be denied in state court.
IV. Trial Court's Ruling
A hearing on the motion was held on May 31, 2023, at which Fang Zeng specially appeared. The record contains no transcript of the proceedings. The trial court (a different bench officer than before) granted Fang Zeng's motion to set aside the default and default judgment. Pursuant to the minute order, the court found: "Plaintiffs did not effect personal or substitute service on specially appearing defendant Fang Zeng. Plaintiffs' service by publication did not attempt to locate defendant in China, where plaintiffs knew she was domiciled. Plaintiffs did not comply with the Hague Convention for Service. Defendant['s] opposition to plaintiff[s'] motion does not adequately address any of those facts [citation]; instead, plaintiffs focus on the purported merits of their case based on hearsay drawn from federal proceedings, which is putting the cart before the horse. [Citation]. Based on the foregoing, and given the public policy favoring resolution of cases on their merits, the court grants defendant's motion to set aside the default judgment and her default." Plaintiffs timely appealed.
DISCUSSION
I. Order Setting Aside the Default and Default Judgment Is Appealable
"An order vacating a default and default judgment is appealable as an order after final judgment." (Manson, Iver &York v. Black (2009) 176 Cal.App.4th 36, 42; accord, Shapiro v. Clark (2008) 164 Cal.App.4th 1128, 1137 ["a postjudgment denial (or grant) of relief from the default and the judgment" is appealable as "a special order after judgment on a statutory motion to set aside the judgment"]; see Code Civ. Proc., § 904.1, subd. (a) [appeal may be taken from an order made after an appealable final judgment].)
Further statutory references are to the Code of Civil Procedure.
II. Standard of Review
"The trial court's determination whether an order [or judgment] is void is reviewed de novo; its decision whether to set aside a void order [or judgment] is reviewed for abuse of discretion." (Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009, 1020; accord, Braugh v. Dow (2023) 93 Cal.App.5th 76, 86.) "[T]he reviewing court 'generally faces two separate determinations when considering an appeal based on section 473, subdivision (d): whether the order or judgment is void and, if so, whether the trial court properly exercised its discretion in setting it aside.'" (Pittman, at p. 1020; accord, Braugh, at p. 86.)
" 'The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason.'" (IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 646; accord, Austin v. Los Angeles Unified School Dist. (2016) 244 Cal.App.4th 918, 929.)
III. Default and Default Judgment Were Void Under Section 473, subdivision (d) for Lack of Personal Jurisdiction
A. Section 473, subdivision (d)
Section 473, subdivision (d) provides: "The court may, . . . on motion of either party after notice to the other party, set aside any void judgment or order." The statute permits a void judgment or order to be set aside without any mention of a time limit. (See Heidary v. Yadollahi (2002) 99 Cal.App.4th 857, 862.)
An order or judgment is void if a court "lack[s] fundamental authority over the subject matter, question presented, or party." (In re Marriage of Goddard (2004) 33 Cal.4th 49, 56; Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249 [A void judgment or order is"' "vulnerable to direct or collateral attack at any time"' "]; accord, Brue v. Al Shabaab (2020) 54 Cal.App.5th 578, 586.) Thus, if the trial court lacked personal jurisdiction over Fang Zeng, the default judgment was properly set aside as void.
B. Personal Jurisdiction
The rules governing the existence of personal jurisdiction are well-settled. Personal jurisdiction may be constitutionally based on a defendant's consent (Thomson v. Anderson (2003) 113 Cal.App.4th 258, 266) or a defendant's domicile at the time the lawsuit is commenced (Owens v. Superior Court (1959) 52 Cal.2d 822, 828).
Personal jurisdiction is also possible "if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate' "traditional notions of fair play and substantial justice." '" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444.) "A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are 'substantial . . . continuous and systematic.'" (Id. at p. 445.) "If the nonresident defendant does not have substantial and systematic contacts in the forum sufficient to establish general jurisdiction, he or she still may be subject to the specific jurisdiction of the forum, if the defendant has purposefully availed himself or herself of forum benefits [citation], and the 'controversy is related to or "arises out of' a defendant's contacts with the forum.'" (Id. at p. 446.)
Where, as here, the defendant challenges personal jurisdiction, "the plaintiff has the initial burden of 'demonstrating facts justifying the exercise of jurisdiction.'" (Strathvale Holdings v. E.B.H., supra, 126 Cal.App.4th at p. 1250.) If the plaintiff meets that burden, it then shifts to the defendant to show the exercise of personal jurisdiction would be unreasonable. (Vons Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal.4th at pp. 449, 476.) "When there is conflicting evidence, the trial court's factual determinations are not disturbed on appeal if supported by substantial evidence. [Citation.] When no conflict in the evidence exists, however, the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record." (Id. at p. 449.)
C. Plaintiffs Made No Showing Justifying the Exercise of Personal Jurisdiction
Plaintiffs made no factual showing to justify the trial court's assertion of personal jurisdiction over Fang Zeng. Instead, they argue, as they did before the trial court, that the default judgment was not void because service by publication was proper. In the trial court, plaintiffs attempted to support these arguments by seeking judicial notice of prior rulings made by a federal district court. However, the trial court properly ruled this was hearsay evidence. If this was plaintiffs' attempt to demonstrate that issues of personal jurisdiction had already been decided against Fang Zeng, the proper vehicle would have been collateral estoppel, not judicial notice. (See Key v. Tyler (2019) 34 Cal.App.5th 505, 534-536.)
Relying on rule 60 of the Federal Rules of Civil Procedure, the federal district court found no basis to grant relief from the default judgment. Unlike this lawsuit, plaintiffs demonstrated Fang Zeng knew about the judgment against her and chose not to intervene for almost four years. Here, in contrast, plaintiffs have not made the required showing justifying personal jurisdiction with competent admissible evidence.
The only proffered evidence concerning personal jurisdiction was Fang Zeng's declaration stating she was never domiciled in California or consented to personal jurisdiction. The declaration also indicated insufficient minimum contacts to establish general or specific personal jurisdiction. As this evidence is uncontroverted, the trial court properly determined it lacked personal jurisdiction over Fang Zeng. From our independent review, because the trial court lacked personal jurisdiction as a matter of law, the default and default judgment were void. The court did not abuse its discretion in setting aside the default and default judgment.
DISPOSITION
The order setting aside the default and default judgment against Fang Zeng is affirmed. Fang Zeng is to recover her costs on appeal.
We concur: CHAVEZ, J., HOFFSTADT, J.