Opinion
B300533
08-31-2020
D.R. GROUP LLC, Plaintiff and Respondent, v. KALCHEIM LAW GROUP, P.C., et al., Defendants and Appellants.
Allen Matkins Leck Gamble Mallory & Natsis and Francis N. Scollan, for Defendants and Appellants. Aires Law Firm, Timothy Carl Aires and Nathan Budzinski, for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC498355) APPEAL from a judgment of the Superior Court of Los Angeles County. Edward B. Moreton, Jr., Judge. Affirmed. Allen Matkins Leck Gamble Mallory & Natsis and Francis N. Scollan, for Defendants and Appellants. Aires Law Firm, Timothy Carl Aires and Nathan Budzinski, for Plaintiff and Respondent.
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Defendants and appellants Kalcheim Law Group, P.C., Kalcheim Legal P.C., and Michel Henri Kalcheim (also known as Mitch Kalcheim) (collectively, Kalcheim et al.) appeal following the denial of their motion to vacate entry of default judgments entered against them in a lawsuit filed by plaintiff and respondent D.R. Group, LLC (D.R. Group). Kalcheim et al. contend the default judgments are void under Code of Civil Procedure section 413.10, subdivision (c) because they were improperly served with the summons and complaint by substitute service, and because the motion was heard by a judge other than the judge to which the matter was assigned. We affirm.
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
A. Parties and Complaint
Kalcheim Law Group, P.C. (Kalcheim Law Group) and Kalcheim Legal, P.C. (Kalcheim Legal) are California corporations. Michel Henri Kalcheim (also known as Mitch Kalcheim) (Kalcheim) is an attorney licensed by the California State Bar.
On December 31, 2012, D.R. Group, LLC filed a complaint against Kalcheim Law Group, asserting three causes of action for breach of contract (third party beneficiary) and causes of action for open book account, account stated, and quantum meruit, alleging that Kalcheim Law Group and unidentified Doe defendants failed to pay class action administrator fees pursuant to three agreements. On January 3, 2013, D.R. Group's counsel filed an amendment to the complaint identifying "Doe 1" as Kalcheim Legal. On January 23, 2013, D.R. Group filed a second amendment to the complaint identifying "Doe 2" as Kalcheim.
B. Service of Process
On January 14, 2013, a process server attempted to serve Kalcheim Legal at 9300 Wilshire Boulevard, Suite 508, in Beverly Hills. That address was listed as the address of the corporation in its November 7, 2011 statement of information filed with the California Secretary of State. In a due diligence declaration filed in the superior court on January 22, 2013, the process server stated, "Business at given address is vacant. Bad address." (Capitalization omitted.)
A similar statement of information with respect to Kalcheim Law Group, with the same address of 9300 Wilshire Boulevard, Suite 508, was filed with the California Secretary of State on September 26, 2011. The statements of information for both Kalcheim Law Group and Kalcheim Legal listed "Paracorp Incorporated" as the agent for service of process. (Capitalization omitted.) Each statement of information was signed by Kalcheim as president and reported that Kalcheim was the chief executive officer, secretary, and chief financial officer.
D.R. Group sought to dismiss this appeal with respect to the two corporate entities because they were suspended by the California Franchise Tax Board. Each entity filed a certificate of revivor in this court, and we denied the motion to dismiss.
The State Bar's records demonstrate that between January 16, 2013 and October 17, 2014, Kalcheim reported his address to the State Bar as 9913 Sunset Boulevard in Beverly Hills.
On January 18, 2013, D.R. Group emailed a copy of the complaint to Kalcheim, stating, "See attached complaint." Kalcheim responded the same day, stating, "Please be informed Kalcheim Law Group is no longer in existence. [¶] I am not practicing law at the moment. [¶] And I live in France. [¶] Maybe we can work something out but I really don't want Dan wasting his time and money. [¶] I like Dan[;] he is a great guy[.] I hope we can work something out. [¶] This is a privileged [s]ettlement communication." The email included two phone numbers for Kalcheim; an "office" number with a "310" area code and a "cell" number with a "213" area code. D.R. Group's counsel responded, asking only, "What's your proposal?" and not addressing Kalcheim's statement that he was living in France. No response to D.R. Group's question appears in the record.
D.R. Group requested that we take judicial notice, pursuant to Evidence Code section 459, that area codes 213 and 310 are for telephone numbers in Los Angeles County. We granted the request on May 12, 2020.
After the January 18, 2013 email exchange, a registered process server attempted to serve Kalcheim Legal once on January 22, 2013 and twice on January 23, 2013 at 9913 Sunset Boulevard, in each case with no answer at the door. On January 24, 2013, the process server substitute served Kalcheim Legal at 9913 Sunset Boulevard by leaving a copy of the summons and complaint with " 'John Doe,' person in charge, Hispanic, male, 35 years old, brown eyes, 5 feet, 9 inches, 175 pounds." (Capitalization omitted.) The proof of service states that the process server completed substitute service on a business by leaving the documents with "a [p]erson in charge at least 18 years of age apparently in charge of the office or usual place of business of the person served" and that the process server "informed him or her of the general nature of the papers." The substitute service was followed by mail service sent to the same address on January 25, 2013, and the proof of service was filed on February 1, 2013.
A registered process server attempted to serve Kalcheim individually on September 9, 11, 14, and 17, 2013, and to serve Kalcheim Law Group on September 9, 11, 14, 17, and 20, 2013, at 9913 Sunset Boulevard, in each case with the process server unable to gain access to the "gated residence." (Capitalization omitted.) On September 23, 2013, Kalcheim and Kalcheim Law Group were served by substitute service by leaving copies of the documents with Stanley Heller at the 9913 Sunset Boulevard address and then serving copies by mail to the same address. Heller was Kalcheim's stepfather and was a licensed attorney. In the proofs of service filed on September 27, 2013, Heller is described as "co-occupant, white, male, 75 years old, gray hair, blue eyes, 5 feet 10 inches, 180 pounds." (Capitalization omitted.)
In a supplemental declaration filed in support of his motion to vacate the default judgment, Kalcheim stated that "[i]n 2013, I lived in France at 204 BD Bineau Neuilly Sur Seine, France." A copy of Kalcheim's French lease agreement for the period October 29, 2012 to October 28, 2015 was attached as an exhibit to the supplemental declaration. In the declaration, Kalcheim asserts that "[a]t no time did [D.R. Group's counsel] ask me whether I would accept service on behalf of the [c]orporation. At no time did he inform me of any other [d]efendant in the matter. Furthermore, he did not ask me if I would waive service or sign a notice of acknowledgment of service. Had he asked[,] I may very well have accepted service on behalf of the named [c]orporation." Kalcheim's declaration also states that he "routinely returned to California during the years 2013-2017." Kalcheim alleges that Heller is now deceased and that he "died after suffering from severe and visible Alzheimer's," and that Heller "never gave me any papers and made any indication that something was given to him." Kalcheim alleges that he was never aware or had notice of any pending suit against himself individually or Kalcheim Legal.
During 2013, Kalcheim was the subject of disciplinary proceedings before the State Bar, appearing in propria persona. In an April 2013 filing in connection with that matter, Kalcheim provided 9913 Sunset Boulevard as his address. The superior court took judicial notice of that filing. In connection with this appeal, and in response to appellants' opening brief, D.R. Group requested that we take judicial notice of an unrelated case before this court, case number B235406, in which Kalcheim and Kalcheim Law Group were listed as counsel between August 25, 2011 and July 16, 2013. We provisionally granted that request, subject to reconsideration. We now grant that request for judicial notice. D.R. Group contends that the participation of Kalcheim in the unrelated appeal demonstrates that Kalcheim Law Group continued to operate and that Kalcheim was indeed practicing law in California during the period in question. Nothing provided in the record on appeal demonstrates that Kalcheim was actually in California during the relevant time period, but Kalcheim filed documents in that case under the name of Kalcheim Law Group and was using the address 9300 Wilshire Boulevard, Suite 508.
In appellants' opening brief, Kalcheim et al. assert that both corporate entities had registered agents for service of process and D.R. Group could have served the registered agents rather than substitute serving them at the 9913 Sunset Boulevard address. In response, D.R. Group filed a second request for judicial notice, requesting that we take judicial notice of a filing from the California Secretary of State demonstrating that Paracorp Incorporated resigned as the agent for service of process for Kalcheim Legal on March 22, 2012. We granted that request for judicial notice on April 2, 2020. Paracorp Incorporated was the agent for service of process for Kalcheim Law Group during the period of time covered by the service of process in this case.
C. Entry of Defaults , Default Judgment and Motion to Vacate
None of the defendants answered the complaint. The superior court's docket reflects that defaults were entered on October 7, 2013 and November 18, 2013, and a default judgment was entered on December 17, 2013. Although the filings are listed in the docket, those documents are not included in the record designated by Kalcheim et al. before this court.
Kalcheim et al. moved to vacate the December 17, 2013 default judgment on May 28, 2019, and filed a proposed answer to the complaint and a request for judicial notice the same day. In support of the motion, Kalcheim et al. filed declarations from Kalcheim and his counsel, Talin V. Yacoubian. The motion to vacate the default judgment was made pursuant to section 473, subdivision (d), asserting that Kalcheim et al. were not personally served or properly substitute served and had no actual or constructive notice of the lawsuit, and that as a result, the judgment is void. Kalcheim et al. also sought dismissal of the case with prejudice pursuant to section 583.210, on the ground that the three-year window for returning the summons had passed. Critically for the resolution of this appeal, the motion to vacate the default judgment did not also seek to vacate the defaults entered against each of the three defendants, and did not raise the issue of service pursuant to the Hague Convention.
Convention on the Service Abroad of Judicial & Extrajudicial Documents in Civil or Commercial Matters, Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (the Hague Convention).
D.R. Group filed its opposition to the motion to vacate the default judgment on May 29, 2019. The opposition argued that substituted service was authorized for both Kalcheim individually and the corporate entities, and that D.R. Group was permitted to rely upon the current office address Kalcheim reported to the State Bar.
D. Ruling by Superior Court
The superior court conducted a hearing on the motion to vacate the judgment on July 9, 2019 and issued its order denying the motion on July 10, 2019. The order does not provide a reason for the denial, stating only that "[a]fter an in-chambers review, the court rules as follows: [¶] Motion to set aside/vacate judgment is denied." (Capitalization omitted.) The record on appeal does not include a transcript from the July 9, 2020 hearing.
DISCUSSION
A. Standard of Review
Whether a judgment is void due to improper service is a question of law that we review de novo. (Sakaguchi v. Sakaguchi (2009) 173 Cal.App.4th 852, 858.)
B. Adequacy of the Record
D.R. Group argues that Kalcheim et al. have failed to provide an adequate record for review on appeal, given that the record does not include a transcript of the July 9, 2019 hearing on the motion for relief from the default. The July 10 minute order denying relief does not address the reasoning for the denial of the motion to vacate the judgment. It is Kalcheim et al.'s burden to furnish a record adequate for review. (Srithong v. Total Investment Co. (1994) 23 Cal.App.4th 721, 725, fn. 3.) To the extent the record does not include documents or arguments, we presume that what occurred at the hearing supports the judgment. (Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1200-1201 (Hearn).)
C. Applicability of Hague Convention
Kalcheim et al. argue that the Hague Convention applies to the service of process in this case, but did not raise that issue in the motion to vacate the default judgment. New legal arguments, such as the contention that the Hague Convention applies to Kalcheim's service, normally cannot be asserted for the first time on appeal. (Nellie Gail Ranch Owners Assn. v. McMullin (2016) 4 Cal.App.5th 982, 997.) " ' " 'Generally, issues raised for the first time on appeal which were not litigated in the trial court are waived. [Citations.]' " [Citation.] "Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider. [Citation.] In our adversarial system, each party has the obligation to raise any issue or infirmity that might subject the ensuing judgment to attack. . . ." [Citations.]' " (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564.) Kalcheim et al. invite us to consider this issue as presenting an issue of law on undisputed facts such that it may be raised for the first time on appeal. We decline to do so. Because their Hague Convention argument "contemplates a factual situation the consequences of which are open to controversy" and those issues were not put at issue in the trial court, the opposing party should not be "required to defend against it on appeal." (Panopulos v. Maderis (1956) 47 Cal.2d 337, 341.)
D. Assigned Judicial Officer
Kalcheim et al. assert that the motion to vacate the default judgment should have been heard by Judge Dierdre Hall, in Department 49, to whom the case was assigned for all purposes. Instead, the motion to vacate the default judgment was heard by Judge Edward Moreton, in Department 44. In addition to finding no error, we conclude that this issue was waived, because Kalcheim et al. filed the motion in Department 44. Further, the record discloses no evidence that Kalcheim et al. objected at the hearing to the judicial officer that considered their motion.
E. Failure to Move to Set Aside Defaults
D.R. Group argues that because Kalcheim et al.'s motion sought to vacate only the default judgment, not the defaults, the defaults would remain and D.R. Group would be entitled, upon remand, to a renewed judgment. In Cumberpatch v. Nolan (1954) 125 Cal.App.2d 205 (Cumberpatch), presented with a similar procedural challenge, the court concluded that this issue is "decisive, namely, that defendant['s] default has never been set aside. Therefore it is unnecessary to consider the others, for the reason that '. . . even if there were a sound basis for reversing the order, such a reversal would serve no useful purpose. Neither the motion to set aside the default judgment nor this appeal from the denial of that motion is an attack upon the entry of the default. Even if the judgment were now vacated, such action would be abortive. The entry of default, from which [the] appellant does not seek relief by this appeal, stands of record against [the appellant] and entitles the [respondent] to a judgment upon [the] complaint.' [Citation.]" (Id. at pp. 207-208.) The same is true here. The motion to vacate the default judgment specifically sought to vacate the December 17, 2013 default judgment. The motion concludes with a request that the superior court "set aside the entry of judgment, and allow them to defend the case on its merits."
In response, Kalcheim et al. argue that setting aside the default judgment but not the defaults would reflect "an unfounded view of this [c]ourt's authority to do justice." Kalcheim et al. assert that the "fundamental premise of this appeal is that the [t]rial [c]ourt lacked jurisdiction over [d]efendants because they were never properly served." Kalcheim et al. cite to Transamerica Title Ins. Co. v. Hendrix (1995) 34 Cal.App.4th 740, 746, for the rule that where the manner of service is improper, the trial court has "a legal duty, not merely discretionary power, to vacate the default it ha[s] erroneously entered." (Ibid.) The issue here, however, is that Kalcheim et al. did not make such a request of the trial court that was improperly denied. Instead, Kalcheim et al. seek to introduce that issue for the first time in this court. For this reason, we agree with D.R. Group that Cumberpatch precludes relief from the order denying the motion to vacate the default judgment because Kalcheim et al. did not challenge the defaults in their motion and they were not addressed in the appealed-from order.
F. Effectiveness of Substitute Service
On the merits, Kalcheim et al. argue they were never served in accordance with the law, and that substitute service under section 415.20 was not properly completed because they were served at 9913 Sunset Boulevard. They assert that the Sunset Boulevard address was not a usual place of business or usual mailing address for Kalcheim individually or for the Kalcheim entities. Finally, they contend that the proofs of service submitted by D.R. Group were fraudulent and contain misrepresentations.
" '[C]ompliance with the statutory procedures for service of process is essential to establish personal jurisdiction. [Citation.] Thus, a default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void. [Citation.]' (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1444.) Under section 473, subdivision (d), the court may set aside a default judgment which is valid on its face, but void, as a matter of law, due to improper service." (Ellard v. Conway (2001) 94 Cal.App.4th 540, 544.)
Section 415.20, subdivisions (a) and (b) authorize substitute service in lieu of personal delivery. Subdivision (b) provides that "[i]f a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, as specified in Section[s] 416.60, 416.70, 416.80, or 416.90, a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. Service of a summons in this manner is deemed complete on the 10th day after the mailing." (§ 415.20, subd. (b).) Subdivision (a) authorizes substitute service on an entity such as the two corporate defendants without such a demonstration of reasonable diligence. (§ 415.20, subd. (a).)
Statutes governing substitute service shall be " ' "liberally construed to effectuate service and uphold jurisdiction if actual notice has been received by the defendant . . . . [Citation.]" [Citations].' " (Hearn, supra, 177 Cal.App.4th at p. 1201.)
Here, Kalcheim et al. contend that D.R. Group knew that Kalcheim was living in France based on the January 18, 2013 email, and that as a result, D.R. Group should not have relied upon the address Kalcheim provided to the State Bar as his " 'usual mailing address.' " Kalcheim et al. argue that Business and Professions Code section 6002.1, which requires that a licensed member of the bar must provide the State Bar with " '[t]he licensee's current office address and telephone number or, if no office is maintained, the address to be used for State Bar purposes or purposes of the agency charged with attorney discipline' " should not suffice. (Bus. & Prof. Code, § 6002.1, subd. (a)(1).) Kalcheim et al. assert that Kalcheim Law Group was "not conducting business" and had "no 'usual place of business,' " and that the address Kalcheim provided to the State Bar was a "specific-purpose address" pursuant to the statute regarding attorney discipline. The evidence before the trial court included an order from the State Bar that referenced the need for Kalcheim to "return to the United States from his current home in France," but also included the 9913 Sunset Boulevard address as Kalcheim's address of record for those proceedings. The proof of service for that order includes mail service on Kalcheim at 9913 Sunset Boulevard. Moreover, as shown by the documents submitted in connection with the third request for judicial notice before this court, Kalcheim Law Group was listed as counsel of record in at least one proceeding before this court during the period of time in question, at the 9300 Wilshire Boulevard address at which the first attempt as service of process was made.
D.R. Group argues that Kalcheim et al. failed to demonstrate that service upon them at the address Kalcheim provided to the State Bar was not " 'reasonably calculated to give [them] actual notice of the proceedings and an opportunity to be heard.' " We agree. In Hearn, an attorney was substitute served at the business address used on the attorney's letterhead and reported to the State Bar, which was a private post office box. After three attempts to personally serve the attorney at that address, the process server left the documents at issue with the mail store clerk, which was determined to be valid substitute service. (Hearn, supra, 177 Cal.App.4th at p. 1201.) Kalcheim et al. contend that Hearn is distinguishable, in that the address reported to the State Bar in that case was also included on that defendant's letterhead. Here, this was not the case. Further, Kalcheim et al. argue that in Hearn, there was additional notice provided by the plaintiffs, including a letter to the defendant, an email indicating that default was pending, and a notice and acknowledgement for the defendant to sign. In the instant case, the record is devoid of evidence to support such additional notifications. Kalcheim et al. do not demonstrate, however, that the requirements of section 415.20 include a requirement for such supplemental notifications. Further, although the record in this case does not demonstrate that the Sunset Boulevard address was used on letterhead, the address was not only provided to the State Bar, the evidence before the superior court included that the address was actually used by Kalcheim to receive mail during the pendency of disciplinary proceedings occurring contemporaneously with the service of process at issue in this case. On these facts, we conclude that the Sunset Boulevard address was a "usual mailing address" for Kalcheim et al.
With respect to the proofs of service, Kalcheim et al. allege that the following statements on the proofs of service constitute misrepresentations such that the proofs of service are demonstrably fraudulent: that Heller was a "co-occupant" and a " 'competent' member of the household"; that Kalcheim Law Group was served pursuant to section 415.95 rather than section 415.20; that the 9913 Sunset Boulevard address was a "business" or "office"; and that the unidentified "John Doe" was the "person in charge" of the "office or usual place of business." In denying the motion to vacate the default judgment, the trial court rejected these challenges to the proofs of service. Given that service was accomplished both by leaving the documents with the named recipients, Doe and Heller, and followed up with service by mail at the 9913 Sunset Boulevard address that Kalcheim had reported to the State Bar as his address for disciplinary proceedings and at which he received service of process in connection with those proceedings, we find no basis on which to conclude that the substitute service was ineffectual. This is true for the entity defendants as well, which were substitute served by service on Kalcheim, the president of each entity, at the 9913 Sunset Boulevard address, pursuant to Code of Civil Procedure section 415.20, subdivision (a).
Finally, Kalcheim et al. argue that under section 583.210, the action must be dismissed upon a finding that there was no valid service of process. Given our conclusions herein, this argument is moot.
DISPOSITION
The judgment is affirmed. The parties to bear their own costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J. We concur:
CHANEY, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.