Opinion
A166585
06-15-2023
ORIGINAL INDIAN MEADOWS, LLC, Plaintiff and Respondent, v. BOTTLE ROCK VALLEY FARMS, LLC, et al., Defendants and Appellants.
NOT TO BE PUBLISHED
(Lake County Super. Ct. No. CV423174)
Rodriguez, J.
Defendants Bottle Rock Valley Farms, LLC, Charles Perry, and Bottle Rock Valley Farm, LLC, (collectively defendants) appeal a default and default unlawful detainer judgment as well as an order denying their motion to set aside the default. They argue plaintiff Original Indian Meadows, LLC (Meadows), contrary to its filed proofs of service, failed to personally serve defendants' designated agents for service of process with the summons and complaint. Defendants contend the process servers simply handed the documents to the proprietor of a commercial mailbox receiving agency (CMRA) where the agents' mailbox was located. And the proprietor did not thereafter mail the summons and complaint to defendants' agents as required by Business and Professions Code section 17538.5, which governs service through CMRAs. We agree service was defective, and the trial court abused its discretion by denying the motion to set aside the default and default judgment. Accordingly, we reverse.
While this case was being briefed, defendants requested judicial notice of court records in another proceeding involving the same parties. We deferred ruling on the motion and now deny it. The documents do not bear on our analysis. (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)
In 2021, Meadows subleased property to Bottle Rock Valley Farms, LLC, (Bottle Rock) for cannabis cultivation. Bottle Rock assigned the subleased area to Bottle Rock Valley Farm, LLC, (Bottle Rock Valley) a separate entity. Bottle Rock filed a limited liability company (LLC) certificate with the Secretary of State designating Charles as its agent for service of process. Similarly, Bottle Rock Valley filed a certificate identifying Desiree as its agent for service of process. The address for service for both entities is the same mailbox in Encino. The mailbox is located at a Bizzy Box, a CMRA.
For clarity, we use the first names when referring to Charles and Desiree Perry individually. No disrespect is intended.
On October 3, 2022, Meadows filed an unlawful detainer action against Bottle Rock seeking $220,000 in past due rent. (Subsequent dates refer to 2022.) It filed several proofs of service, which declared defendants were personally served with the summons and complaint on October 5 at the Encino mailbox. An employee of a registered process server stated she personally served Charles and Desiree by handing a summons and complaint to the person apparently in charge of the Bizzy Box. On October 13, Meadows filed a request for entry of default and default judgment, which the trial court immediately granted. Meadows then applied for a writ of possession of the property.
On October 26, defendants moved to set aside the judgment, arguing they were not served with the summons and complaint. Charles and Desiree declared they were not physically present at the time of service. They also argued substituted service was not justified because defendants are not in charge of the Bizzy Box. (Code Civ. Proc., § 415.20, subd. (a); undesignated statutory references are to this code.) In addition, defendants argued the Bizzy Box address at which Charles was allegedly served is neither his mailing nor office address. Moreover, despite ongoing litigation between the parties in a separate but related matter, Meadows's counsel did not inform defendants' counsel about this action. Instead, defendants only learned of it when a Bottle Rock employee was served with a notice to vacate by a sheriff on or about October 24.
Meadows maintained service was proper. It noted its process servers served the agents at the CMRA identified on the Bottle Rock and Bottle Rock Valley's LLC certificates. The trial court agreed and denied the motion to set aside the judgment. The court later amended the default judgment and awarded $296,345 in past due rent, damages, attorney fees and other costs.
DISCUSSION
Defendants argue the default and default judgment entered against them should be set aside because service of the summons and complaint was defective. We agree.
We reject Meadows's argument that defendants waived the right to contest the amended default judgment entered December 7. In addition to their appeals from the default judgment filed October 13, defendants separately and timely filed a notice of appeal from the amended default judgment - that appeal is presently before us. (Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 46.)
I.
A void judgment does not divest or grant rights - it has no legal effect. (OC Interior Services, LLC v. Nationstar Mortgage, LLC (2017) 7 Cal.App.5th 1318, 1330.) Upon the motion of an injured party or sua sponte, a trial court has the discretion to set aside any void judgment or order. (§ 473, subd. (d); Kremerman v. White (2021) 71 Cal.App.5th 358, 369 (Kremerman).) Reviewing an order granting or denying a motion to set aside requires two separate determinations - whether the judgment is void and, if so, whether the court properly exercised its discretion by granting or denying the motion. (Ibid.) "The trial court's determination whether a judgment is void is reviewed de novo; its decision whether or not to set aside a void order is reviewed for abuse of discretion." (Ibid.) "Because the law favors disposing of cases on their merits, 'any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.'" (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980.) Orders denying relief are" 'scrutinized more carefully'" than orders" 'permitting trial on the merits.'" (Ibid.)
A judgment in which the court lacks jurisdiction over the subject matter or the parties is void. (OC Interior Services, LLC v. Nationstar Mortgage, LLC, supra, 7 Cal.App.5th at p. 1330.) "[C]ompliance with the statutory procedures for service of process is essential to establish personal jurisdiction." (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1444 (Dill).) The filing of a proof of service creates a rebuttable presumption service was proper, but only "if the proof of service complies with the statutory requirements." (Id. at pp. 1441-1442.) A "default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void." (Id. at p. 1444.) A court may set aside a default judgment that, due to improper service is void as a matter of law. (Ellard v. Conway (2001) 94 Cal.App.4th 540, 544.) The plaintiff bears the burden of proof of proper service. (Dill, at p. 1441, fn. 14.)
II.
At the outset, Meadows argues defendants failed to request relief in the trial court on the basis of section 473, subdivision (b) -authorizing setting aside a judgment taken against parties because of their "mistake, inadvertence, surprise, or excusable neglect" - thus forfeiting the issue on appeal. That is of no moment. The relevant provision here is subdivision (d), not subdivision (b). Defendants do not allege their own "mistake, inadvertence, surprise, or excusable neglect." (Id., subd. (b).) Rather, they allege Meadows's failure to properly serve the summons and complaint resulted in a judgment the court should have set aside. And while defendants did not explicitly cite that statutory provision in the trial court - or on appeal - counsel did and does argue the judgment should be set aside because defendants were not served with the summons and complaint as required under the Code of Civil Procedure. Meadows and the trial court thus were on notice as to the nature of the issue alleged and relief sought. (Austin v. Los Angeles Unified School Dist. (2016) 244 Cal.App.4th 918, 930 [purpose of specifying grounds for a motion is to provide adverse party and court "adequate opportunity to address the issues presented"].) Whether the judgment is void due to improper service and should be set aside is therefore preserved for our review. (Ibid.) Moreover, even if it was forfeited, we would exercise our discretion to review the issue. (Bayside Timber Co. v. Board of Supervisors (1971) 20 Cal.App.3d 1, 5.)
III.
Meadows contends it properly served Bottle Rock and Bottle Rock Valley's agents for service of process at the address designated in the LLC certificates. It acknowledges Desiree and Charles - the agents - were not at the Bizzy Box on October 5 at the time of the alleged service, despite proofs of service stating they were personally served. Meadows nonetheless insists it properly served Bottle Rock and Bottle Rock Valley by personally providing the summons and complaint to the proprietor of the Bizzy Box, a CMRA, in compliance with sections 416.10 and 416.90, which respectively provide for service on a corporation and personal service on a person authorized to receive service of process on another person's behalf. We disagree.
LLCs must designate and continuously maintain an office and an agent - an individual who is a resident of the state - for service of process. (Corp. Code, § 17701.13, subds. (a), (c).) A summons and complaint may be personally served on the person designated as agent for service of process. (§ 416.10, subd. (a); Corp. Code § 17701.16, subds. (a)-(b)(1) [noting that, in addition to the provisions governing service in the Code of Civil Procedure, process may be served on LLCs through personal service to any individual designated as its agent].) If the "agent cannot with reasonable diligence be found at the address designated for personal delivery of the process," the Corporations Code contemplates (1) leaving the process at the agent's office or usual mailing address with the person apparently in charge and thereafter mailing a copy to that address or (2) mailing the process to the agent along with two copies of a notice and acknowledgment to be returned to the sender. (Corp. Code § 17701.16, subd. (c) [citing §§ 415.20, subd. (a) &415.30, subd. (a)].)
Alternatively, "if the only address reasonably known for the person to be served is a private mailbox obtained through a [CMRA]," service of process may be effected pursuant to Business and Professions Code section 17538.5. (§ 415.20, subd. (c).) Before it may receive service on behalf of a customer, a CMRA must obtain, among other things, authorization to act as an agent for service of process. (Bus. &Prof. Code, § 17538.5, subd. (c).) Once it has received such authorization, however, CMRAs are "required to accept service of process for and on behalf of any of their mail receiving service customers." (Id., subd. (d)(1).) Upon receiving process, the CMRA owner or operator must place a copy of the documents or notice the documents were received in the customer's mailbox. (Ibid.) In addition, the documents must be sent by first-class mail to the last known home or personal address of the customer, and the CMRA must obtain a certificate of mailing. (Ibid.) Service of process is perfected 10 days after the date of the mailing. (Ibid.)
Meadows suggests that, by delivering the process to the Bizzy Box proprietor, it served a person authorized by Charles and Desiree to receive service on their behalf under section 416.90. That statute authorizes process to be "served on a person not otherwise specified in [article 4 of the Code of Civil Procedure, part 2, title 5, chapter 4] by delivering a copy" of the process to "such person or to a person authorized by [them] to receive service of process." (§ 416.90.) But Meadows ignores that whether the CMRA proprietor validly accepted service is governed by Business and Professions Code section 17538.5. (See § 415.20, subd. (c); Los Angeles Unified School Dist. v. Garcia (2013) 58 Cal.4th 175, 193 [reading statutory provisions in the context of the statutory framework as a whole].) There is no evidence a copy of the summons and complaint - or a notice the documents were received - was placed in Charles and Desiree's mailbox within 48 hours of the proprietor's receipt. (Bus. &Prof. Code, § 17538.5, subd. (d)(1).) Nor is there evidence the proprietor mailed the documents to Charles and Desiree's last known home or personal address. (Ibid.) Accordingly, there is no evidence Meadows perfected service. (Kremerman, supra, 71 Cal.App.5th at p. 374 [improper service where plaintiff served a CMRA employee but the employee did not mail documents to defendant by first-class mail within the requisite time period].)
Moreover, the proofs of service were dated October 5, but the default judgment was entered on October 13 - less than the 10 days required for perfecting service when providing the summons and complaint to a CMRA operator. (Bus. & Prof. Code, § 17538.5, subd. (d)(1).)
We are unpersuaded by Meadows's further argument that service on the proprietor was proper because the proprietor was cloaked with ostensible authority to accept service of process on Charles and Desiree's behalf. Aside from reciting various Civil Code provisions defining and identifying liabilities of an agency relationship, Meadows fails to provide any evidence establishing an agency relationship between the CMRA owner and the Perrys. That Meadows's process servers in a different lawsuit against defendants served process on the Bizzy Box owner without objection does not establish the owner had ostensible authority to accept process. The record is silent on whether service in the other case was improper - for example, the owner may have mailed defendants the documents as required by the statute. And none of the cases Meadows cites address the circumstances here: serving an LLC through a CMRA. (See, e.g., Pasadena Medi-Center Associates v. Superior Court (1973) 9 Cal.3d 773, 779 [corporation's secretary-treasurer was clothed with ostensible authority to accept service of process]; Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 302-303 [suspended corporation with no designated agent may be validly served through a manager at the corporation's regional office]; Koski v. U-Haul Co. (1963) 212 Cal.App.2d 640, 645 [service on Secretary of State is valid when corporation did not designate an agent or previously designated agent cannot be found at address given].)
In sum, Meadows has not demonstrated service of the summons and complaint on Bottle Rock and Bottle Rock Valley was effective or valid. (Dill, supra, 24 Cal.App.4th at p. 1444.) And the LLCs were under "no duty to act upon a defectively served summons." (Kappel v. Bartlett (1988) 200 Cal.App.3d 1457, 1466.)
Having concluded the default judgment was void due to invalid service, we next consider the trial court's decision to deny the motion to set it aside. On this record, we conclude the court abused its discretion in denying defendants' motion. (Kremerman, supra, 71 Cal.App.5th at p. 369.) Defendants learned of the unlawful detainer action only after the sheriff posted a notice for them to vacate the property on October 24; they thereafter filed a motion to set aside the judgment two days later - approximately three weeks after the action was filed. (Id. at p. 374 [considering prompt movement to vacate default and default judgment when assessing whether court properly exercised discretion in denying motion to set aside a judgment].) The record also indicates Meadows and defendants were engaged in ongoing litigation, yet Meadows's counsel did not inform defendants' counsel of this action. Since the law favors resolving cases on their merits, any" 'doubts in applying section 473 must be resolved in favor'" of defendants, the parties seeking relief from default. (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 980.) Accordingly, the court should have granted the motion to set aside the void judgment. (§ 473, subd. (d).)
IV.
We similarly conclude the process servers handing a copy of the summons and complaint to the Bizzy Box proprietor did not constitute valid service on Charles. Leaving process with a CMRA is authorized "if the only address reasonably known for the person to be served is a private mailbox obtained through a [CMRA]." (§ 415.20, subd. (c), italics added.) But the record indicates Meadows knows Charles's home address - Charles made this statement in a declaration that Meadows does not contest.
Moreover, even if the only address Meadows reasonably knew for Charles was a private mailbox at a CMRA, nothing in the record indicates Charles actually received the process. As discussed above, service of process may be perfected by leaving a copy of the summons and complaint with the CMRA, the CMRA placing a notice or copy of the documents in the customer's mailbox, and the CMRA mailing the documents to the customer's last known home or personal address within five days after receipt. (§ 415.20, subd. (c); Bus. &Prof. Code § 17538.5, subd. (d)(1).) Given Charles's declaration he was not aware of the unlawful detainer action until the notice to vacate was posted by the sheriff on October 24, it appears the Bizzy Box failed to mail the documents to Charles. Thus, the default judgment was void and, for the reasons previously discussed, the trial court abused its discretion by denying the motion to set it aside as to Charles.
We reject defendants' request for sanctions against Meadows's counsel since defendants failed to file a separate sanctions motion, including a declaration supporting the amount of monetary sanctions sought as required under the court rules. (Cal. Rules of Court, rule 8.276 (a); Kajima Engineering and Construction, Inc. v. Pacific Bell (2002) 103 Cal.App.4th 1397, 1402.)
DISPOSITION
The order denying the motion to set aside the default and default judgment entered against defendants is reversed. We remand the matter with instructions to the trial court to vacate the entry of default and default judgment. Defendants are entitled to their costs on appeal.
WE CONCUR: FUJISAKI, ACTING P. J., PETROU, J.