Opinion
D073461
11-30-2018
JARED TEACH et al., Cross-complainants and Respondents, v. IMAGINE TILE & STONE, INC., Cross-defendant and Appellant.
David Abraham Pomeranz for Cross-defendant and Appellant. Law Office of Matthew P. Tyson and Matthew Perry Tyson for Cross-complainants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00022571-CL-BC-NC) APPEAL from an order of the Superior Court of San Diego County, Earl H. Maas III, Judge. Affirmed. David Abraham Pomeranz for Cross-defendant and Appellant. Law Office of Matthew P. Tyson and Matthew Perry Tyson for Cross-complainants and Respondents.
Imagine Tile & Stone, Inc. (Imagine Tile) appeals an order denying its motion to set aside a default judgment under Code of Civil Proceduresection 473.5, contending: (1) the court applied the wrong legal standard in ruling that its president, Daniel Ellis, failed to show he did not receive notice of the verified initial cross complaint filed by Jared and Shari Teach (the Teaches); and (2) it was entitled to relief because Daniel's son, Matthew Ellis, another Imagine Tile principal, also declared he had not received notice of the amended cross-complaint but the court's ruling did not address his declaration. We affirm.
Undesignated statutory references are to the Code of Civil Procedure.
We refer to the Ellises by their first names to avoid confusion.
FACTUAL AND PROCEDURAL BACKGROUND
In August 2015, the Teaches filed a verified cross-complaint against Imagine Tile and other cross-defendants. A proof of service states that on September 24, 2015, Daniel was personally served a summons and a verified cross-complaint, among other documents.
Another cross-defendant, Jose Luis Gudino dba Gudino's Landscape, is not a party to this appeal.
A proof of service dated November 2, 2015, shows the Teaches filed a verified first amended cross-complaint that day and served it by mail on Matthew, who was Imagine Tile's agent for service of process. The Teaches alleged causes of action for breach of implied covenant, negligence, rescission, and "fraudulent inducement to home improvement contract." They alleged as to all claims that Daniel was a contractor who was responsible for a home improvement construction project at the Teaches' residence. They alleged Imagine Tile oversaw the project and Daniel directed the Teaches to hire another contractor, Gudino, to undertake the improvements. The final project had several flaws, and the Teaches incurred damages exceeding $25,000.
In December 2015, the Teaches moved for entry of default against Imagine Tile. In November 2016, the court entered judgment by default against Imagine Tile.
In April 2017, Imagine Tile moved to set aside the default and default judgment, seeking relief under section 473, subdivision (b) based on mistake, inadvertence, and excusable neglect. Addressing the merits, it argued that "none of the pleadings or documents on file show any signed contract by Imagine [Tile], there is no evidence that Imagine [Tile] or any of its employees ever received any type of compensation, and there is no contract between Plaintiff and Defendant that even mentions the name 'Imagine [Tile].' " Imagine Tile proffered that its principals were not contractors on the Teaches' project and did no physical work on it; rather, Daniel only forwarded a proposal from Gudino to the Teaches for an initial bid.
Daniel stated in a supporting declaration: "I understand that the proof of service shows I was personally served a cross-complaint; however, I have no recollection of it. Presuming it was properly served, I must have mistakenly set it aside, discarded it, or in other manner mistakenly forgotten about it. I instinctively must have believed it was mis-addressed, because I was not involved in the underlying matters. [¶] . . . Later, according to the Court record, my son Matthew was mailed an amended cross-complaint, and still later Imagine Tile [] was mailed a notice of entry of default, none of which I ever saw. [¶] . . . Imagine Tile [] wishes to defend itself against the false allegations. I understand that I must have made the mistake or inadvertently failed to respond, and I apologize for any action or inaction that has caused this situation." (Some capitalization omitted.) Daniel stated that it was not until February 2017, and by chance, that his attorney learned about the Teaches' lawsuit.
Matthew stated in a supporting declaration: "I have reviewed the proof of service of the amended cross-complaint sent to me by the Teach[es]'s attorney, and I have no recollection whatsoever of ever receiving any such document. [¶] . . . I also do not recall ever seeing or receiving the notice of entry of judgment sent by the Teach[es]'s attorney to Imagine Tile []. Sometimes I get the mail and sometimes I do not. I am certain I have never received either of these documents." (Some capitalization omitted.) Imagine Tile also filed a proposed answer to the cross-complaint.
The Teaches argued the motion was untimely and therefore the court lacked authority to grant statutory or equitable relief. They relied on a declaration by Michael Lupo, a licensed contractor. Lupo stated he has known Daniel and worked with him on several projects. In September 2015, Daniel telephoned him and said the Teaches were suing him, but Daniel's attorney had told him "he did not have to answer." Lupo added: "Subsequently I had roughly a dozen other calls with [Daniel] from late 2015 through the end of 2016 in which [Daniel] made passing references to the Teaches['] lawsuit." Lupo said that in a January 2017 telephone call, Daniel admitted a judgment had been entered against him but claimed that it would "never hold up in court." In April 2017, they again talked about the lawsuit, and Daniel said his attorney was going to sue the Teaches and their attorney.
The Teaches also argued Imagine Tile did not show it defaulted because of extrinsic fraud or mistake. They pointed out that Evidence Code sections 641 and 647 contain a presumption that a letter correctly addressed and properly mailed is received in the ordinary course of mail. They claimed there was no inexcusable neglect under section 473.5. Further, the Teaches' attorney, Matthew Tyson, stated in an October 2016 declaration that he tendered a claim against contractor's bond for judgment debtor against Imagine Tile and sent a letter to the American Contractors Indemnity Company (ACIC) that Imagine Tile had defaulted in that action. He enclosed a copy of the Teaches' verified first amended cross-complaint. The following month, ACIC copied its reply addressed to attorney Tyson to Imagine Tile. On December 5, 2016, ACIC again wrote attorney Tyson, attaching Imagine Title's November 13, 2016 e-mail reply.
Daniel stated in the email: "First off, Imagine [T]ile [] had nothing to do with that job. There is no tile work on that job. There was no proposal or no contract. We never were paid anything. It was just a referral to the Teach[es]. We are not a landscape company. Our name is no where [sic] on any paper work. They never paid Matthew Ellis or Daniel Ellis or Imagine Tile [] for anything. We have no idea way [sic] they think we are responsible for something we were never involved in. This was just a referral. I don't understand why we are responsible if we did absolutely no tile work and never paid anything. Please let me know when this is settled." --------
In July 2017, the court denied the motion because it "was filed more than six months after entry of the default and no request for equitable relief was" made.
In August 2017, Imagine Tile filed a second motion to set aside the default and default judgment, this time under section 473.5. It included declarations by Daniel and Matthew that were almost identical to those submitted in the previous motion. Daniel declared, "I understand that the Proof of Service shows I was personally served a cross-complaint; however, I have no recollection of it. In a very real sense, I had no actual notice of this proceeding. I did not know of it. If I did not know of it, I could not have defended the suit on behalf of Imagine [Tile]. Therefore, Imagine [Tile] did not know of it. Imagine [Tile] itself had no actual knowledge of the proceeding and could not have defended itself."
In November 2017, the court denied Imagine Tile's motion to set aside default and default judgment under section 473.5: "[Imagine Tile] has failed to show that it did not have actual notice of the cross-complaint. . . . Daniel [] simply alleges that he did not 'recall' being personally served on [September 24, 2015]. [] Lupo alleges that in the last week of September 2015 he received a call from Daniel [] in which [Daniel] stated that he had been sued by the Teaches and that his attorney told him that he 'did not have to answer[.]' "
DISCUSSION
Imagine Tile contends the court "selectively and improperly" used Daniel's declaration that he had "no recollection" of being served the verified cross-complaint as the "sole factor" in concluding Imagine Tile failed to show actual lack of notice, thus the court ignored the portion of Daniel's declaration specifying he had received no notice.
Section 473.5 authorizes the trial court to provide relief from a default or default judgment for lack of actual notice. Section 473.5, subdivision (a), provides: "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."
The defaulting party must serve and file the notice of motion within a reasonable time but no later than two years after entry of the default judgment or 180 days after service of a written notice of entry of the default or default judgment, whichever is earlier. Section 473.5, subdivision (b) further requires the moving party to provide "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." When these conditions are met, the trial court "may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action." (§ 473.5, subd. (c).)
We review the trial court's order granting or denying a motion for relief from default and its findings regarding actual notice for abuse of discretion. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478; Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1440-1441, fn. 5.)
We reject Imagine Tile's claim the court selectively and improperly used Daniel's declaration. Its comment about Daniel's lack of recollection was not "the sole factor" used in concluding Imagine Tile failed to show actual notice. As noted, the court specifically pointed to Lupo's declaration that in September 2015, Daniel was aware of the lawsuit and did not respond to it. Lupo's declaration provided the court with enough information upon which to make a credibility determination that Daniel had actual notice of the Teaches' lawsuit, and thus deny Imagine Tile's motion for relief from the default judgment under section 473.5.
Imagine Tile concedes Evidence Code section 641's presumption applies here. That statute states: "A letter correctly addressed and properly mailed is presumed to have been received in the ordinary course of mail." But Imagine Tile contends that Daniel and Matthew deny that they received the notice.
It is true that a presumption of receipt is rebutted upon testimony denying receipt. (Slater v. Kehoe (1974) 38 Cal.App.3d 819, 832, fn. 12; accord, Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 421-422.) However, here, "[t]he disappearance of the presumption does not mean there is insufficient evidence to support the trial court's finding [i.e., of receipt of notice]." (Craig v. Brown & Root, Inc., at p. 422; accord, Bear Creek Master Assn. v. Edwards (2005) 130 Cal.App.4th 1470, 1486.) When the evidence is in conflict and "the trial court could reasonably conclude the [defendants] had actual notice in time to defend," the trial court has discretion to deny the motion for relief from default. (Ellard v. Conway (2001) 94 Cal.App.4th 540, 548.) Here, there is no claim that the proofs of service in the clerk's transcript were fabricated. Because the proofs of service fail to unequivocally establish that Daniel was not personally served with the summons and complaint, he is not entitled to reversal of the order denying his motion to set aside the default judgment.
"A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness." (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) As the reviewing court, we do not reweigh or evaluate the credibility of witnesses or the evidence presented, and we must defer to the trier of fact's express or implied findings. (Escamilia v. Department of Corrections & Rehabilitation (2006) 141 Cal.App.4th 498, 514.) Thus, we find the court did not abuse its discretion when it denied Imagine Tile's motion to set aside the default.
Imagine Tile argues the court erred by failing to specifically address Matthew's claim he lacked notice, and his denial that he received the amended verified cross-complaint: "The manner of service alone created enough doubt for an analysis to be done, as requested in the motion. ([E].g., this was not a registered or certified document and no signature was required, nor obtained[.]) [¶] Further, based on the totality of the circumstances, the [c]ourt was obliged to consider and rule upon the motion as it applied to Matthew Ellis, on behalf of Imagine [Tile], in that Imagine [Tile] had no connection to the underlying events sued upon."
We conclude the fact the court's minute order and judgment did not mention Matthew's declaration does not mean the court failed to take it into account. Rather, we may reasonably infer that given the similarity of language used in Daniel and Ellis's declarations, in rejecting Daniel's, the court was also rejecting Matthew's claim that his failure to "recollect" receiving notice of the lawsuit qualified as inexcusable neglect under section 473.5. "If he failed to read the complaint he was guilty of gross negligence. If he did read it and disregarded its allegations he was guilty of careless and indifferent conduct. In either event relief should be denied." (Davis v. Thayer (1980) 113 Cal.App.3d 892, 906.) In any event, it sufficed that the court's ruling mentioned Daniel's declaration because, as Imagine Tile's president, if he received notice as the Lupo declaration states he did, then the company also was on notice regarding the lawsuit.
Having addressed this claim on the merits, we need not address the Teaches' claim that Imagine Tile impermissibly delayed in seeking relief under section 473.5.
DISPOSITION
The order is affirmed. Jared and Shari Teach are awarded costs on appeal.
O'ROURKE, Acting P.J. WE CONCUR: IRION, J. GUERRERO, J.