Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County. Abraham Khan, Judge. Affirmed in part, reversed in part, and remanded with directions., Los Angeles County Super. Ct. No. KC043232
David S. Fisher for Defendant and Appellant.
Pfeifer & Reynolds, Michael R. Pfeifer and James P. Finerty for Plaintiff and Respondent.
ASHMANN-GERST, J.
Appellant James J. Jeknavorian (Jeknavorian) appeals from a trial court order denying his motion pursuant to Code of Civil Procedure section 473.5 to set aside the default judgment entered against him and in favor of respondent SCME Mortgage Bankers, Inc. (SCME). He also challenges the judgment on the grounds that (1) it is based upon a dismissed cause of action, and (2) the damage award exceeds the damages sought in the complaint.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
We conclude that the trial court did not abuse its discretion in denying Jeknavorian’s motion. Accordingly, we affirm the entry of judgment against Jeknavorian. However, because the amount of damages awarded against him does exceed those sought in the complaint, the judgment must be reduced from $535,291.88 to $400,000.
FACTUAL AND PROCEDURAL BACKGROUND
The complaint
On November 19, 2003, SCME initiated this lawsuit, alleging causes of action for breach of contract, intentional misrepresentation, negligent misrepresentation, negligence, breach of fiduciary duty, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, unjust enrichment, unfair business practices, and civil conspiracy. The complaint sought “general damages in an amount to be proven at the time of trial, but in no event less than $400,000.”
The complaint alleges that SCME entered into an origination agreement with Online Financial Services (Online), pursuant to which Online would submit mortgage loans to SCME to fund. On or about August 14, 2000, Online submitted two loans to SCME for 19641 Wells Drive, Tarzana, in the aggregate sum of $648,000.
Shortly after the loans were funded, the borrower defaulted. SCME repurchased the loans, conducted a foreclosure sale, and resold the property at a loss.
Although the complaint names eight individuals and entities, Jeknavorian was not originally named as a defendant. In fact, the complaint makes no allegations that Jeknavorian was involved in the underlying transactions.
Jeknavorian’s attorney is named as a defendant
On January 18, 2005, SCME named Thomas Hanrahan (Hanrahan), Jeknavorian’s attorney, as a Doe defendant.
Jeknavorian is named as a defendant
On January 25, 2005, SCME named Jeknavorian as a Doe defendant, Doe 3. SCME was ordered to serve Jeknavorian by February 17, 2005.
Only the first (breach of contract—damages), second (breach of contract—specific performance), seventh (intentional interference with prospective economic advantage), eighth (negligent interference with prospective economic advantage), ninth (unjust enrichment), and tenth (civil conspiracy) causes of action are alleged against Doe 3.
SCME Dismisses Its Fraud Cause of Action
On February 3, 2005, SCME dismissed its fraud cause of action from the complaint.
SCME files proofs of service with the trial court alleging service upon Jeknavorian
SCME filed multiple proofs of service. As pertains to this appeal, on February 28, 2005, SCME filed a “proof of service-summons” asserting that Jeknavorian had been served. According to the proof of service, dated February 24, 2005, SCME had effected substituted service upon Jeknavorian on February 19, 2005, at 10:50 a.m. at 3753 Calle Joaquin, in Calabasas, by leaving the summons and complaint, and related documents, with Robin Miller (Miller). It later filed a proof of service by mail, indicating that SCME had mailed the served papers to Jeknavorian at that address.
On March 1, 2005, SCME filed another “proof of service-summons,” confirming that service was effected on February 19, 2005, at 10:50 a.m. at 3717 Calle Joaquin, in Calabasas, by leaving the served documents with Miller. The follow-up proof of service by mail, filed March 10, 2005, indicates that SCME mailed Jeknavorian the served documents on February 22, 2005, to that address.
On March 10, 2005, SCME’s process server filed a declaration of reasonable diligence, asserting that SCME attempted to serve Jeknavorian at both Calle Joaquin properties. Specifically, he visited the 3753 Calle Joaquin location on February 15, 2005, and February 16, 2005, but there was no answer at the door. On February 17, 2005, Miller answered the door and informed him that she was the current tenant of the property and had been so for the past three years.
The declarant also averred that he visited the 3717 Calle Joaquin location on three occasions; twice (February 17, 2005, and February 18, 2005) there was no answer at the door. On the third attempt, Jeknavorian was not in, and the process server effected substituted service upon Miller.
Jeknavorian’s default
On April 15, 2005, the trial court entered Jeknavorian’s default. Notice of the entry of default was served upon Jeknavorian at 3717 Calle Joaquin.
Jeknavorian’s motion to vacate his default
On November 10, 2005, Jeknavorian filed his motion to vacate default, pursuant to section 473.5. He asserted that he never received service of the summons and complaint. He never lived at 3717 Calle Joaquin. Rather, Miller, a renter, lived there at the time of the alleged service.
According to Jeknavorian, he did not learn of this lawsuit until October 31, 2005. At that time, his current counsel, David S. Fisher (Fisher) informed him that he had been named in this lawsuit. Fisher apparently had participated in a telephone call with Hanrahan, who advised him of the lawsuit.
SCME’s Opposition to Jeknavorian’s Motion
SCME opposed Jeknavorian’s motion, arguing that Jeknavorian had been properly served at 3717 Calle Joaquin, the address given by Jeknavorian for his bail bond and also the address on file with the Clerk of the Criminal Court for the County of Los Angeles. Moreover, SCME pointed out that the documents mailed to Jeknavorian at that address were never returned to SCME or its attorneys. Not even Miller contacted SCME’s counsel to advise that the documents were served upon the wrong address.
SCME then argued that Jeknavorian’s declaration filed in support of his motion was not credible. For example, although he declared that he never lived at 3717 Calle Joaquin, he failed to advise the trial court where in fact he did live at the relevant times. He also did not deny that the 3717 Calle Joaquin address was one of his “dwelling[s],” or “place[s] of abode,” or “place[s] of business,” or one of his “mailing addresse[s],” as required by section 415.20, subdivision (b).
Finally, SCME asserted that Jeknavorian’s motion was not timely, as the request for entry of default was served on April 15, 2005, more than 180 days before Jeknavorian’s motion to vacate the default was filed.
In support of its opposition, SCME offered a declaration from Kim Rumsey (Rumsey), a private investigator. Rumsey was retained by SCME’s counsel to conduct a “‘skip trace’” on Jeknavorian. As part of her investigation, Rumsey determined that “in addition to a criminal indictment against him in Los Angeles Superior Court . . ., Jeknavorian was also the subject of a second set of criminal charges for Grand Theft and five (5) other crimes involving forged instruments, false financial statements, and other criminal conduct involving monetary instruments.” He had pled guilty and, according to his probation officer, he had been placed under house arrest.
Rumsey then conducted a search of credit headers and determined that a judgment lien had been recorded against Jeknavorian at 3717 Calle Joaquin. That same property also was the address of Jeknavorian on a UCC filing by the City of Los Angeles, Office of the City Attorney.
Additionally, Rumsey discovered that the 3717 Calle Joaquin property had been acquired on May 5, 2001, by “James Joseph,” an alias used by Jeknavorian.
Jeknavorian’s Reply
Jeknavorian filed a reply brief on November 16, 2005. In addition to objecting to the opposition as untimely, he challenged the evidence offered by Rumsey as unauthenticated hearsay.
In support of his reply brief, Jeknavorian filed a declaration, asserting that he never resided at, never maintained as his usual place of abode, and never maintained an office at the property located at 3717 Calle Joaquin. Rather, at the time he was purportedly served, he resided at 3753 Calle Joaquin. According to Jeknavorian, “[t]he 3717 Calle Joaquin property was only one of many properties the District Attorney liened in connection with its case. The true fact is that the District Attorney liened the property involuntarily, and not that [Jeknavorian] gave the property as collateral for a bail bond. The 3717 Calle Joaquin [property] was soon thereafter released by the District Attorney.”
Finally, Jeknavorian asserted that he never avoided service of process in this case.
Original Hearing on Jeknavorian’s Motion
The trial court heard oral argument on November 17, 2005, and continued the matter to January 20, 2006, to allow the parties to submit supplemental briefs.
Miller’s Deposition
On December 14, 2005, SCME served a deposition subpoena on Miller. It did not, however, give notice to Jeknavorian of her deposition. Jeknavorian learned of the scheduled deposition on December 23, 2005, and objected to it because he did not receive notice and because he was unavailable at that time.
Miller voluntarily attended the deposition on January 4, 2006.
SCME’s Supplemental Opposition to Jeknavorian’s Motion
On January 6, 2006, SCME filed its supplemental memorandum of points and authorities in opposition to Jeknavorian’s motion. It argued that Jeknavorian had actual notice of the lawsuit, as he had received copies of the summons and complaint (and other documents) from Miller. Specifically, Miller rented the property located at 3717 Calle Joaquin from Jeknavorian. On the date of service, the process server rang the door bell at that address and asked for “Jim.” When Miller informed him that “Jim” did not live there, the process server dropped the documents inside the gate. Miller picked up the documents and put them in her office, where they remained for approximately one week, after which time she called her landlord, “James Joseph,” and left him a message advising him that some legal papers had been delivered for him and he might want to come and get them.
When Jeknavorian did not go and get the papers, she dropped them off at the mailbox of his house, at 3753 Calle Joaquin, approximately three weeks later. She also left a message for Jeknavorian advising him that she had dropped the papers in his mailbox.
Even if Jeknavorian did not have actual notice of the lawsuit, such purported lack of knowledge was the result of his own avoidance of service or inexcusable neglect.
Jeknavorian’s Supplemental Reply
In addition to reiterating the same arguments made in his original motion papers, in his supplemental reply brief, Jeknavorian urged the trial court to disregard Miller’s deposition transcript on the grounds that SCME failed to give notice to Jeknavorian. Alternatively, even if Miller’s deposition testimony were considered, it did not support SCME’s position. Rather, she testified that she held onto the envelope that purportedly contained the served documents for approximately a month or two before dropping them off at Jeknavorian’s mailbox.
Jeknavorian also asserted that he never avoided service or was guilty of inexcusable neglect.
SCME’s Rebuttal to Jeknavorian’s Supplemental Reply
In response to Jeknavorian’s supplemental reply brief, SCME asserted that because he was in default, Jeknavorian was not entitled to notice of Miller’s deposition. And, even though he was not entitled to notice of the deposition, he had actual notice of it.
In any event, Miller’s deposition testimony confirmed that Jeknavorian had actual notice of this lawsuit and, if he did not, he attempted to avoid service.
Continued Hearing on Jeknavorian’s Motion
On January 23, 2006, the trial court denied Jeknavorian’s motion. Based upon Miller’s deposition testimony, it found that Jeknavorian had actual knowledge of the summons and complaint. The trial court stated: “It appears to me there was enough communicated to him that he would have known that there was a lawsuit pending and just avoided getting information that would have clearly shown that.” In so ruling, the trial court expressly found Jeknavorian’s affidavits not credible.
By this time, the case had been reassigned to a new trial court judge.
Default Judgment Against Jeknavorian
On June 14, 2006, SCME filed its papers in support of default judgment. In its brief, SCME asserted that Jeknavorian was the “‘mastermind’ behind the massive fraud that [was] the subject of this case.” It claimed damages in the amount of $535,291.88 and sought “a Judgment for Fraud in that amount.”
On July 18, 2006, judgment was entered against Jeknavorian in the amount of $535,291.88.
Jeknavorian’s Appeal
This timely appeal followed.
DISCUSSION
I. Jeknavorian’s Motion to Vacate Default Judgment
Jeknavorian argues the trial court abused its discretion in denying his motion to vacate the default judgment under section 473.5. That statute authorizes a trial court to set aside a default judgment: “(a) 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 . . . . [¶] (b) A notice of motion to set aside a default or default judgment . . . 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. [¶] (c) Upon a finding by the court that the motion was made within the period permitted by subdivision (a) and that his or her lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect, it may set aside the . . . default judgment . . . .” (§ 473.5, subds. (a), (b) & (c).)
We review an order denying relief under section 473.5 for abuse of discretion. (Ellard v. Conway (2001) 94 Cal.App.4th 540, 547; Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) Even if a defendant has knowledge of the lawsuit from an independent source, if the service of summons has not resulted in actual notice to a defendant, he may seek relief under section 473.5. (Ellard v. Conway, supra, at p. 548; Olvera v. Olvera (1991) 232 Cal.App.3d 32, 40–41.) But relief may not be granted if the lack of actual notice in time to defend was the result of inexcusable neglect or avoidance of service. As we discuss, the record here supports the trial court’s findings that Jeknavorian was not entitled to relief.
First, the evidence established that Jeknavorian was properly served via substituted service. Section 415.20, subdivision (b) provides, in relevant part: “If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served . . . 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 . . . 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 . . . 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.” (§ 415.20, subd. (b).) SCME complied with these statutory requirements. It served Jeknavorian at his usual mailing address, 3717 Calle Joaquin.
While Jeknavorian contends that this address is not his usual mailing address, the evidence indicates otherwise. The 3717 Calle Joaquin address was given by Jeknavorian for his bail bond and was also the address on file with the Clerk of the Criminal Court for the County of Los Angeles. Moreover, according to Rumsey’s search of credit headers, a judgment lien had been recorded against Jeknavorian at 3717 Calle Joaquin. That same property also was the address of Jeknavorian on a UCC filing by the City of Los Angeles, Office of the City Attorney. Finally, Rumsey discovered that the 3717 Calle Joaquin property had been acquired on May 5, 2001, by “James Joseph,” an alias used by Jeknavorian.
Jeknavorian challenges service on the grounds that he no longer owned the property located at 3717 Calle Joaquin at the time he was served; according to Jeknavorian, he sold the subject property on September 10, 2003. This argument is not compelling. In denying Jeknavorian’s motion, the trial court found Jeknavorian not credible. Given the evidence that he used 3717 Calle Joaquin as at least one of his addresses, coupled with Miller’s testimony that she was continuing to rent the property at that location from Jeknavorian, the trial court acted within its discretion in disregarding Jeknavorian’s assertion that he did not own the property at which he was served.
Second, the evidence established that Jeknavorian knew he was being sued or inexcusably avoided service. As Miller testified, on February 19, 2005, a process server rang her doorbell and asked for “Jim or James, whatever.” When she told him that no one lived there by that name, he dropped the papers, which were contained in an envelope, and said something like “consider them served.” The name on the envelope was either James Joseph or James Jeknavorian.
Miller took the envelope to her office, where the papers sat for probably a week, before she called Jeknavorian. She left him a message, informing him that legal papers had been delivered to him at 3717 Calle Joaquin and he “might want to come get them.” Despite her message, Jeknavorian never got them. About two or three weeks later, she dropped the envelope in Jeknavorian’s home mailbox, at 3753 Calle Joaquin, where she had dropped off mail to him before.
In light of this evidence, the trial court acted within its discretion in concluding that Jeknavorian had actual notice of the lawsuit or his lack of notice was the result of inexcusable neglect or avoidance of service.
On appeal, as below, Jeknavorian contends that the trial court should have disregarded Miller’s deposition testimony because SCME did not give notice of the deposition to Jeknavorian. We disagree. “Entry of defendant’s default instantaneously cuts off its right to appear in the action. The defendant is ‘out of court.’ It has no right to participate in the proceedings until either (a) its default is set aside (in which event, it may respond to the complaint), or (b) a default judgment is entered (in which event, it may appeal).” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2001) ¶ 5:6, p. 5–2 (rev. #1, 1999).)
“For example, a defaulting defendant has no right to take depositions of plaintiff’s witnesses, or to appear in court at the ‘prove up’ hearing in an attempt to block entry of a default judgment.” (Weil & Brown, supra, ¶ 5:6, p. 5–2.) In other words, “[e]ntry of default ousts the court of jurisdiction to consider any motion other than a motion for relief from default.” (Weil & Brown, supra, ¶ 5:7, p. 5–2.)
The legal authority cited by Jeknavorian holds the same. Section 2025.240, subdivision (a) provides, in relevant part: “The party who prepares a notice of deposition shall give the notice to every other party who has appeared in the action.” (§ 2025.240, subd. (a).) Because Jeknavorian was in default, he had not “appeared” in the action. As such, he was not entitled to notice of Miller’s deposition.
In asking us to reverse, Jeknavorian directs us to alleged inconsistencies in the evidence below, such as (1) portions of Miller’s testimony in which she stated that she held onto the envelope for about a month or two (as opposed to a couple of weeks) before delivering them to Jeknavorian’s home, and (2) the conflicting proofs of service, both of which indicate that Jeknavorian was served via substituted service upon Miller at both 3717 Calle Joaquin and 3753 Calle Joaquin at the same date and time. These purported discrepancies do not compel reversal. The trial court exercised its discretion, considered the evidence, and found that Jeknavorian had been properly served. It is not within our province to second guess the trial court’s interpretation of the evidence.
In arguing that his motion was timely, Jeknavorian places much emphasis on how much time Miller may have held onto the envelope before delivering it to his home. The trial court found Jeknavorian’s motion timely, and SCME does not challenge this finding. Thus, we do not address this issue.
Jeknavorian urges us to reverse the default judgment pursuant to Summers v. McClanahan (2006) 140 Cal.App.4th 403 (Summers). Summers bears no resemblance to this case. In that case, the Court of Appeal considered section 416.90, which authorizes personal service on a defendant “‘by delivering a copy of the summons and of the complaint . . . to a person authorized by him to receive service of process.’” (Summers, supra, at p. 411.) After reviewing the historical background of section 416.20 and the case law’s liberal construction of the statute, the Court of Appeal determined that service upon the defendant’s personal manager was inadequate. The defendant had not authorized the personal manager to accept service of process as her agent, and the personal manager never so represented. Moreover, the plaintiff offered no evidence as to why the summons and complaint were delivered to the personal manager and not the defendant’s attorney. Finally, service could not be upheld on the theory that a close connection between the defendant and her personal manager made it “‘“highly probable”’” that the defendant would receive actual notice. (Summers, supra, at p. 414.)
In contrast, as set forth above, SCME served the summons and complaint upon Jeknavorian at an address that he used as one of his addresses. No one is claiming that service was proper because Miller was authorized to accept service on his behalf.
II. The Judgment Impermissibly Awards Excessive Damages Against Jeknavorian
Jeknavorian challenges the judgment on the grounds that (1) it is based upon the fraud cause of action, which was dismissed prior to entry of judgment; and (2) it is for an amount that exceeds the amount sought in the complaint.
Jeknavorian’s challenge to the judgment on the grounds that it was based solely upon a dismissed cause of action is unpersuasive. In the judgment, the trial court found that Jeknavorian intentionally interfered with SCME’s business relationships. The damage award was based upon this finding. Because this cause of action was alleged against Jeknavorian and proven by affidavit, the judgment may stand.
However, a portion of the damage award must be reversed as void. Section 580, subdivision (a), provides, in relevant part: “The relief granted to the plaintiff, if there is no answer, cannot exceed that [which he shall have] demanded in [his] complaint.” (§ 580, subd. (a).) In other words, the statute limits the amount of compensatory damages that can be awarded in a default judgment to the amount demanded in the complaint. The goal of section 580, which has been strictly construed by the courts, is “to ensure that a defendant who declines to contest an action does not thereby subject himself to open—ended liability.” (Greenup v. Rodman (1986) 42 Cal.3d 822, 826 (Greenup).) “The notice requirement of section 580 was designed to insure fundamental fairness. Surely, this would be undermined if the door were opened to speculation, no matter how reasonable it might appear in a particular case, that a prayer for damages according to proof provided adequate notice of a defaulting defendant’s potential liability.” (Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 494.) Thus, “a default judgment greater than the amount specifically demanded is void as beyond the court’s jurisdiction.” (Greenup, supra, at p. 826.)
Here, the complaint sought damages “in no event less than $400,000” in connection with the causes of action alleged against Jeknavorian as the third Doe defendant. It follows that SCME is not entitled to a default judgment for more than $400,000. (See, e.g., Becker v. S.P.V. Construction Co., supra, 27 Cal.3d at pp. 494–495 [a prayer for “damages in excess of $20,000” will not support a default judgment for more than that amount].) As such, the default judgment is void as to $135,291.88, the excess over the $400,000 pled in the complaint. (Ibid.)
Although not raised by the parties, we note that the judgment’s award of costs is proper. The complaint sought costs of suit, separate and apart from the $400,000 demand.
DISPOSITION
The order of the trial court denying Jeknavorian’s motion to vacate his default is affirmed. The judgment is reversed and remanded to the trial court with directions to modify the judgment to limit the award of damages to $400,000. The parties are to bear their own costs on appeal.
We concur: BOREN, P. J., CHAVEZ, J.