From Casetext: Smarter Legal Research

Lu v. Qi

California Court of Appeals, Second District, Fifth Division
Jul 10, 2008
No. B201759 (Cal. Ct. App. Jul. 10, 2008)

Opinion

NOT TO BE PUBLISHED

APPEAL from an order and a judgment of the Superior Court of Los Angeles County No. GC034016, Joseph F. De Vanon, Judge.

Alexander Lebecki, for Defendant and Appellant.

Law Offices of Kurt Miller, Kurt Miller, for Plaintiff and Respondent.


TURNER, P. J.

I. INTRODUCTION

Defendant Shu Ying Qi, appeals from a June 26, 2007 order denying her Code of Civil Procedure sections 473 and 663 motions. We reverse the punitive damages award but otherwise affirm the order and judgment under review. We deny the sanctions motion of plaintiff, Jun Lu.

All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

II. BACKGROUND

On July 15, 2004, plaintiff filed a complaint which alleged claims for contract breach, common counts of money had and received, and fraud. Defendant allegedly promised to perform legal services for which she received payments of $18,400. But then defendant performed no legal services because she was not in fact an attorney. On August 20, 2004, plaintiff filed a proof of personal service of summons and complaint on defendant at 1826 South Santa Ysabella Drive, Rowland Heights, California 91748, on July 15, 2004 at 5:30 p.m. The proof of service was signed by Kurt Miller, who is plaintiff’s counsel. Also on August 20, 2004, plaintiff filed a request for entry of default and court judgment in the amount of $200,434.17 which included: $18,400 in damages; $180,000.00 in “special damages”; and $347.50 in costs. The default was entered as requested on August 20, 2004. On October 6, 2004, after a prove-up hearing, judgment was entered in plaintiff’s favor in the total amount of $200,434.17 which included $18,400 in damages, $180,000 in “punitive damages,” and $347.50 in costs. The trial court based its punitive damage award on the value of defendant’s home. On October 14, 2004, plaintiff filed a notice of entry of judgment. The proof of service indicated defendant had been served with the notice of entry of judgment on October 7, 2004.

On September 29, 2006, 19 months after the notice of notice of entry of judgment was served, defendant, in propria persona, filed a motion to set aside her default and default judgment pursuant to section 473. Attached to the motion was a proposed answer to the complaint. In the motion, defendant argued: the trial court had no jurisdiction over her because she had no actual notice of the action in time to defend against it; the trial court should exercise its broad equitable powers under section 473 to set aside the default and default judgment; the judgment was void; and plaintiff would be unable to assert prejudice from an order setting aside the default. In support of the motion, defendant declared that she had never been served with any papers in connection with this lawsuit. Defendant learned of the case and the judgment against her on July 12, 2006, when she received a copy of a letter in a related matter. When defendant learned of the judgment, she contacted an attorney, Richard Lucero, who advised her to file the motion to set aside the default and judgment.

Defendant further declared that she was not living in Rowland Heights, California at the time she was allegedly served. The Rowland Heights home was occupied in July of 2004 by another person “also of Chinese ethnicity.” Defendant was living in Moorpark, California in July 2004. Defendant denied having any business dealings with plaintiff. She also denied receiving any money from plaintiff.

On October 20, 2006, plaintiff filed his opposition to defendant’s motion. Plaintiff argued the motion was untimely under section 473.5, subdivision (a) because: defendant was served with written notice of entry of judgment by mail on October 7, 2004; adding 5 days for mail service, the 180-day period specified in section 473.5, subdivision (a) expired on March 11, 2005; and defendant’s motion was not filed until September 29, 2006. Plaintiff further argued that defendant would be unable to establish, as required by section 473, subdivision (b), a lack of actual notice that was not caused by avoidance of service or inexcusable neglect. This was because the Los Angles County Recorder’s Office sent defendant a notice of the abstract of judgment on October 8, 2004. In the event the trial court was considering granting the motion, plaintiff requested an evidentiary hearing.

In support of the opposition, plaintiff’s counsel, Mr. Miller, filed a declaration outlining how defendant was personally served on July 15, 2004. Mr. Miller declared: “Because this is a fraud case, I really wanted to personally serve [defendant] Shu Ying Qi. I called the plaintiff, Jun Lu, and asked him to go with me to the house at 1826 S. Santa Ysabella in Rowland Heights, [California]. On July 15, 2004 at 5:30 [p.m.], I went with Mr. Lu, to 1826 S. Santa Ysabella to serve a copy of the complaint on defendant Shu Ying Qi. I knocked on the door and an ethnic Chinese lady came to the door. When the lady answered the door, Mr. Lu told me that the lady that answered the door was Shu Ying Qi. . . . I handed her a copy of the summons, complaint and other [Case Management Conference] documents provided to me by the court clerk. She asked me in English what this was all about and I told her to get an attorney and have her attorney call me.” Mr. Miller then reiterated the circumstances of how the default judgment was entered. Mr. Miller mailed notice of entry of judgment to defendant at the Rowland Heights address on October 7, 2004. As of October 7, 2004, defendant was the owner of the Rowland Heights property. Defendant sold the property on May 25, 2005. Defendant attempted to sell the property to several parties. After Mr. Miller recorded the abstract of judgment, he received telephone calls from escrow companies asking him about the payoff amount. Mr. Miller also provided evidence that defendant had used a number of aliases in connection with the property she owned in Moorpark.

Plaintiff also filed a declaration. Plaintiff was with Mr. Miller on July 15, 2004. When Mr. Miller knocked on the door of the Rowland Heights house, defendant came to the door. Plaintiff identified defendant as the same lady who had taken his money. Mr. Miller and defendant both spoke English. Mr. Miller asked if defendant was Shu Ying Qui and she responded that she was.

Defendant’s motion to set aside the default and default judgment was scheduled for hearing on November 9, 2006. The trial court continued the matter for an evidentiary hearing on November 21, 2006. Defendant appeared at the hearing but neither plaintiff nor Mr. Miller appeared. Defendant gave sworn testimony through an interpreter. Defendant testified that she did not live in Rowland Heights in October 2004. Defendant also testified that she never received notice of this action until April 2006. The trial court granted the motion, set aside the default and the ensuing judgment, and deemed defendant’s answer to be filed. The trial court then set the matter for a case management conference on January 22, 2007.

On November 27, 2006, Mr. Miller, on behalf of plaintiff, filed an ex parte application for an order shortening time for a hearing to set aside the November 21, 2006 order granting relief from the default and default judgment. The motion was brought pursuant to section 473 on the ground that Mr. Miller’s failure to appear for the November 21, 2006 hearing was due to a calendar error. The trial court granted the ex parte application and set the matter for hearing on December 13, 2006.

On December 13, 2006, defendant did not appear for the hearing on plaintiff’s motion. At the December 13, 2006 hearing, the trial court granted plaintiff’s motion to set aside the November 21, 2006 order. Also on December 13, 2006, the trial court ordered an evidentiary hearing on defendant’s September 29, 2006 motion to set aside the default and default judgment. The evidentiary hearing was scheduled for January 5, 2007. Plaintiff was ordered to serve defendant by certified mail. On December 14, 2006, plaintiff filed a proof of service by certified mail of the trial court’s order.

On January 5, 2007, the hearing on defendant’s motion to set aside the default and default judgment was held. Defendant did not appear for the hearing. The trial court denied defendant’s motion to set aside the default and default judgment. The trial court found defendant had been personally served with summons and complaint on July 15, 2004, and notice of entry of judgment on October 7, 2004. On January 5, 2007, plaintiff served notice of entry of the trial court’s January 5, 2007 order on defendant.

On May 7, 2007, defendant filed the motion which is at issue in this appeal. The motion was to aside the January 5, 2007 order. That order denied defendant’s September 29, 2006 motion to set aside the default and default judgment. Defendant’s motion was brought pursuant to sections 473 and 473.5 on the ground that the January 5, 2007 order was taken through surprise, inadvertence, and excusable neglect. Defendant asserted she never received notice of the January 5, 2007 hearing. Defendant further sought relief under section 663 because: the evidence did not support a punitive damages award of 10 times the compensatory damages; the punitive damages award is not reasonably proportionate to any actual damages; and there was no evidence of her financial condition. Defendant argues she acted within a reasonable time after discovery of the failure to appear at the January 5, 2007 hearing.

Defendant reiterated her claims regarding lack of personal service of the summons and complaint in October 2004. She also claimed that she did not receive notice of the default judgment until 2006. Defendant claimed that she did not appear at the December 13, 2006 hearing because she was informed by her attorney, Walter Wenko, who has since been disbarred, that in all likelihood plaintiff would prevail. Defendant expected to appear at the case management conference on January 22, 2007 for a trial date. Defendant stated that she did not appear at the January 5, 2007 hearing because she never had notice of the hearing. She declared that, if she had notice, she would have appeared at the hearing. Defendant believed that the parties were scheduled to appear for a case management conference on January 22, 2007. Defendant went to Mr. Wenko’s office on January 19, 2007 and then learned a hearing had been held on January 5, 2007. Defendant also discovered that Mr. Wenko had been disbarred. Defendant declared that she would be destroyed financially by the $180,000 punitive damages award, which she did not have the ability to pay.

Defendant also relied on the declaration of Hongyi Gao. Mr. Gao moved into the Rowland Heights home in February of 2003 and remained there until May 2005. Mr. Gao paid rent to defendant’s daughter. Mr. Gao had no personal contact with defendant except by telephone. Mr. Gao was never served with any legal papers while living at the Rowland Heights address and never received nor accepted service of any legal papers on defendant’s behalf. Defendant was living at the Rowland Heights address until March 2004. As noted, plaintiff presented evidence defendant was served by Mr. Miller with the summons and complaint on July 15, 2004.

Plaintiff’s opposition argued that defendant was given notice of the January 5, 2007 evidentiary hearing, which was shown by a copy of the certified mailing to defendant at the Moorpark address. Plaintiff contended that defendant had failed to show that she was entitled to relief under section 473.5 because her September 29, 2006 motion for relief was untimely. Plaintiff argued the motion should have been made on or before April 9, 2005, which was 180 days (plus 5 days for mailing) after service of notice of entry of judgment on October 7, 2004. Plaintiff further argued defendant failed to produce evidence that she was not avoiding service. Plaintiff asserted relief under section 663 was unwarranted because there was evidence that: defendant made fraudulent transfers of the property; defendant was the true owner of the property; and the value and mortgage of the property was enough to support a punitive damages award against her.

Defendant’s May 7, 2007 motion was denied on June 26, 2007. In denying the motion, the trial court found: “My concern is that based on the history of this case and actions of your client, the impression I am getting is that [defendant] is in fact manipulating the system to avoid ever being held accountable or responsible. [¶] I have great reservations as to the claim or the declaration of the complaint they don’t have notice. They were never aware of what is going on. [¶] And the court attempted to remedy that on one occasion, and you came back to the same position we are in, they failed to appear and take the position they don’t have notice of the ongoing proceedings.” On August 24, 2007, defendant filed a notice of appeal from the June 26, 2007 denial of her motion pursuant to sections 473 and 663.

III. DISCUSSION

A. Defendant’s Contentions

Defendant argues the trial court abused its discretion on by vacating the November 21, 2006 order which granted her relief from the default and default judgment. Defendant challenges the June 26, 2007 order refusing to set aside the January 5, 2007 order. As noted, the default judgment was entered on October 6, 2004. The default judgment was set aside on November 21, 2006. The November 21, 2006 order was set aside on December 14, 2006, thus automatically reinstating judgment. Defendant’s motion to set aside the default and the ensuing judgment was denied on January 5, 2007. Defendant asserts the January 5, 2007 order should have been set aside because her failure to appear was the result of mistake or excusable neglect. In the alternative, defendant attacks that portion of the default judgment awarding $180,000 in punitive damages pursuant to section 663.

B. Relief Pursuant to Section 473

Defendant argues the trial court abused its discretion under section 473 with respect to the June 26, 2007 order. The decision to grant or deny a motion to set aside a default due to lack of personal service is addressed to the sound discretion of the court. (Weitz v. Yankosky (1966) 63 Cal.2d 849, 854; accord Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981; Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 317.) The discretion is not capricious or arbitrary but must be impartial and controlled by fixed legal principles. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233; Waite v. Southern Pacific Company (1923) 192 Cal. 467, 470; Burnete v. La Casa Dana Apartments (2007) 148 Cal.App.4th 1262, 1266.) A decision denying a motion to set aside a default is scrutinized more carefully than one granting relief because the law favors trial on the merits. (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 980; Elston v. City of Turlock, supra, 38 Cal.3d at p. 233.) In reviewing the evidence, an appellate court extends all legitimate and reasonable inferences to uphold the judgment. (In re Marriage of Connolly (1979) 23 Cal.3d 590, 597; see Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925.) No abuse of discretion occurred. On October 6, 2004 plaintiff submitted evidence Mr. Miller personally served defendant at her Rowland Heights home. Mr. Miller’s declaration constituted substantial evidence defendant was served.

Similarly, there is no merit to defendant’s argument the trial court abused its discretion in refusing to grant her an evidentiary hearing after she failed to appear on January 5, 2007. Defendant argues she never received notice of the January 5, 2007 hearing. But plaintiff provided documentary evidence that defendant was served by certified mail at her Moorpark address on December 14, 2006, of the notice of the hearing. The trial court rejected defendant’s claims that notice of the January 5, 2007 hearing had not been served. In so doing, the court found that the history of the case suggested that defendant was “in fact manipulating the system to avoid ever being held accountable or responsible” for the judgment. No abuse of discretion occurred when the trial court refused on June 26, 2007 to conduct an evidentiary hearing. (Velez v. Smith (2006) 142 Cal.App.4th 1154, 1160-1161; Eddy v. Temkin (1985) 167 Cal.App.3d 1115, 1121.)

C. Section 663

Defendant argues the trial court abused its discretion in refusing to set aside the default judgment under section 663 because: the default judgment violated section 580 by exceeding the amount demanded in the complaint; the complaint improperly stated that plaintiff was requesting $180,000 in punitive damages in violation of Civil Code section 3295, subdivision (e); plaintiff failed to provide a section 425.115 notice; there was no evidence showing that the trial court considered any of the pertinent facts before assessing $180,000 in punitive damages; and the punitive damages award was entered without any evidence of her net worth. We disagree with defendants that the judgment can be modified by reason of the section 663 contentions. We will address separately defendant’s due process contentions.

There is no merit to defendant’s section 663 contentions apart from her due process argument which we will discuss shortly. As plaintiff asserts, the section 663 motion was untimely. (§ 663a; County of Inyo v. City of Los Angeles (1984) 160 Cal.App.3d 1178, 1183.) Also, the complaint explicitly sought the imposition of $180,000 in punitive damages which is less than 10 times the amount of actual damages thereby giving defendant notice of her potential exposure. (§ 580; Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 493.) Moreover, no objection to the violation of Civil Code section 3295, subdivision (e) prohibition against setting forth the amount of punitive damages sought in the complaint was ever interposed in the trial court thereby forfeiting the issue. (Jordan v. Department of Motor Vehicles (1999) 75 Cal.App.4th 449, 469; Shapiro v. Ogle (1972) 28 Cal.App.3d 261, 268.) Defendant’s section 663 motion was correctly denied.

D. Punitive Damages

We agree with defendant that the punitive damage award must be reversed because there was no evidence of her net worth or a suitable substitute. (Adams v. Murakami (1991) 54 Cal.3d 105, 110-112, 116; Baxter v. Peterson (2007) 150 Cal.App.4th673, 680.) At oral argument we raised the issue of whether we could remand to allow plaintiff the opportunity to present that evidence. However, the rule appears to be that if the plaintiff has the full opportunity to present his or her case, then the punitive damage award must be stricken. (Baxter v. Peterson, supra, 150 Cal.App.4th at p. 681; Kelly v. Haag (2006) 145 Cal.App.4th 910, 914.)

E. Sanctions

In the respondent’s brief, plaintiff seeks an award of monetary sanctions. Plaintiff has failed to comply with the procedural requirements imposed by California Rules of Court, rule 8.276(b). On that ground, the sanctions motion is denied. (Mota v. Superior Court (2007) 156 Cal.App.4th 351, 357; Kajima Engineering and Construction, Inc, v. Pacific Bell (2002) 103 Cal.App.4th 1397, 1402.)

IV. DISPOSITION

The punitive damages award is reversed. In all other respects, the order and judgment under review are affirmed. Plaintiff, Jun Lu, is to recover his costs incurred on appeal from defendant, Shu Ying Qui.

We concur: MOSK, J., KRIEGLER, J.


Summaries of

Lu v. Qi

California Court of Appeals, Second District, Fifth Division
Jul 10, 2008
No. B201759 (Cal. Ct. App. Jul. 10, 2008)
Case details for

Lu v. Qi

Case Details

Full title:JUN LU, Plaintiff and Respondent, v. SHU YING QI, Defendant and Appellant.

Court:California Court of Appeals, Second District, Fifth Division

Date published: Jul 10, 2008

Citations

No. B201759 (Cal. Ct. App. Jul. 10, 2008)