Court Opinion

ID: 9804727
Source: CourtListenerOpinion
Date Created: 2023-08-31 17:07:26.988264+00
Date Added: 2024-06-11T10:17:51.241557
License: Public Domain

Filed 8/30/23 Navellier v. Putnam CA1/5
                NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                 FIRST APPELLATE DISTRICT

                                            DIVISION FIVE

 LOUIS NAVELLIER et al.,
          Plaintiffs and Appellants,
                                                               A166476
 v.
 DONALD PUTNAM et al.,                                         (City & County of San Francisco
                                                               Super. Ct. No. CGC19574779)
          Defendants and Respondents.
                                                               ORDER MODIFYING
                                                               OPINION; AND ORDER
                                                               DENYING REHEARING [NO
                                                               CHANGE IN JUDGMENT]

The opinion filed August 17, 2023 is modified as follows:

        (1)      In the first full paragraph on page 7, after the third sentence
which ends, “regardless of whether the defendant signs or mails back the
return receipt.” insert the following footnote:

              In a petition for rehearing, the Navellier Plaintiffs argue
        Government Code section 68081 requires this court to order
        supplemental briefing on the section 415.40 service by mail issue before
        deciding this appeal. We disagree. Government Code section 68081
        applies only if the appellate court’s decision is “based upon an issue
        which was not proposed or briefed by any party[.]” As interpreted by
        our Supreme Court, Government Code section 68081 does not require
        supplemental briefing when the parties had “the opportunity to brief
        any issues that are fairly included within the issues actually raised.”

                                                        1
      (People v. Alice (2007) 41 Cal.4th 668, 677.) One of the issues raised by
      the Navellier Plaintiffs in this appeal is whether service of the
      complaint and summons on Pileggi was impossible or impracticable
      such that the exception in subdivision (d) of section 583.240 applied to
      toll the time to serve Pileggi. Given that section 415.40 authorizes
      service on nonresident defendants by first-class mail, the issue of
      whether service on Pileggi by mail was impossible or impracticable was
      “ ‘fairly encompassed’ in the main issue” raised by the Navellier
      Plaintiffs. (See Church Mutual Ins. Co., S.I. v. GuideOne Specialty
      Mutual Ins. Co. (2021) 72 Cal.App.5th 1042, 1055, fn. 2.) Indeed, they
      even conclusorily asserted in their opening brief that “service by mail
      . . . was not possible.” “[T]he fact that [the Navellier Plaintiffs] did not
      address an issue, mode of analysis, or authority that is . . . fairly
      included within the issues [they] raised does not implicate the
      protections of [Government Code] section 68081.” (People v. Alice, at p.
      679.)
            We further observe that the Navellier Plaintiffs never requested
      leave to file a supplemental brief pursuant to California Rules of Court,
      rule 8.200(a)(4), even though this court issued a tentative opinion
      nearly a month before oral argument that addressed the issue of
      whether service on Pileggi by mail under section 415.40 was impossible
      or impracticable. (See Gee v. Greyhound Lines, Inc. (2016) 6
      Cal.App.5th 477, 487, fn. 6.) Nothing in the tentative opinion or the
      accompanying order prohibited them from requesting leave to do so.
            Finally, even if we were to grant rehearing to allow supplemental
      briefing on the issue, the outcome of this appeal would not change.
      (See People v. Sorden (2021) 65 Cal.App.5th 582, 592, fn. 4.) The
      Navellier Plaintiffs presented substantive arguments in their petition
      for rehearing as to why service on Pileggi by mail under section 415.40
      was impossible or impracticable during the three-year period for service
      of process. Having considered these arguments, we decline to modify
      our analysis in part II of the discussion section of the opinion.

This footnote will become footnote number 4, renumbering all subsequent
footnotes accordingly.
      This order does not effect a change in the judgment.
     The Navellier Plaintiffs’ August 25, 2023 petition for rehearing is
denied.

                                        2
Date: ________________
         08/30/2023                      Jackson, P.J.
                                    ________________________, P.J.

Navellier v. Putnam / A166476

                                3
Filed 8/17/23 Navellier v. Putnam CA1/5 (unmodified opinion)
                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.

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                 FIRST APPELLATE DISTRICT

                                            DIVISION FIVE

 LOUIS NAVELLIER et al.,
          Plaintiffs and Appellants,
                                                               A166476
 v.
 DONALD PUTNAM et al.,                                         (City & County of San Francisco
                                                               Super. Ct. No. CGC19574779)
          Defendants and Respondents.

        Plaintiffs and appellants Louis Navellier and Navellier & Associates,
Inc. (collectively, the Navellier Plaintiffs) appeal from an order granting
defendant and respondent John Pileggi’s motion to dismiss for failure to
timely serve him with the complaint and summons within three years. (Code
Civ. Proc., § 583.210, subd. (a).)1 They claim the trial court erred in granting
the motion because the three-year statutory period for service was tolled
when the COVID-19 pandemic made service impossible and impracticable,
and when the Judicial Council of California’s (Judicial Council) emergency
orders and rules stayed prosecution of the action. They also contend their
failure to timely serve Pileggi was excused because he was not amenable to
service during the entire three-year period. We reject these contentions and
affirm.

        1 Undesignated statutory references are to the Code of Civil Procedure.

                                                        1
                               BACKGROUND
      On March 26, 2019, the Navellier Plaintiffs sued Pileggi and several
other defendants for breach of contract, fraud, negligent misrepresentation,
and breach of the covenant of good faith and fair dealing. The complaint
alleged that the Navellier Plaintiffs loaned $1.5 million to FolioMetrix, LLC
(FolioMetrix). At that time, defendants Donald Putnam and Grail Partners,
LLC (Grail) were investors in FolioMetrix. FolioMetrix, then merged with
another investment firm and became RiskX, LLC (RiskX), another defendant.
Pileggi is allegedly a principal of RiskX, the investment advisor to defendant
American Independence Funds (AIF).
      According to the complaint, Putnam and Grail, on behalf of themselves
and the other defendants, agreed to assume the loans and repay the Navellier
Plaintiffs $1.5 million plus interest. Defendants then failed or refused to
repay the Navellier Plaintiffs. The complaint alleged that defendants made
false promises to repay the loans to induce Navellier & Associates, Inc. to
become a sub-advisor for a portfolio of AIF and defer payment of its
sub-advisory fee. The complaint further alleged that defendants were each
other’s agents and conspired with each other to commit the alleged fraud and
contract breaches.
      Nearly six months after the filing of the complaint, the trial court
issued an order to show cause why the case should not be dismissed for
failure to file a proof of service on defendants. The Navellier Plaintiffs
responded that in October 2019, they served counsel for Putnam and Grail
with the complaint and summons after he agreed to accept service on their
behalf. They then stated that the remaining defendants “have been difficult
to locate for service of the Complaint.”

                                           2
      The trial court continued the hearing on the order to show cause
multiple times from 2019 through 2021. The Navellier Plaintiffs filed
responses to the court’s November 2019 and April 2021 continued orders to
show cause, stating that they had been unable to locate and personally serve
Pileggi, and they requested permission to serve him by publication. They
supported their responses with their attorneys’ declarations, which did not
address their request to serve Pileggi by publication or include all the
contents required under section 415.50 for an order authorizing service by
publication. The record does not indicate that the court ruled on their
request or that they filed an affidavit that complied with section 415.50.
      As part of their latter response, the Navellier Plaintiffs provided a
process server’s affidavit of non-service, which showed two failed attempts to
personally serve Pileggi in June 2021 in Florida, where he was scheduled to
speak at an event. According to the affidavit, Pileggi “took himself off the
[speaking] schedule” and “disappeared” before the process server could find
him. They also provided two e-mails from a process server showing that he
twice attempted to serve Pileggi in August 2021 at an office in New York,
which was apparently his registered place of business. On the first attempt,
a tenant informed the process server that “he hasn’t seen anyone in the office
in months.”
      In July 2022, the Navellier Plaintiffs filed a proof of service showing
that Pileggi had been served via substitute service on his wife at his
residence in New York on June 14, 2022, more than three years and two
months after the commencement of the action. The proof of service showed
two failed attempts to personally serve Pileggi that same month at his
residence. The record does not indicate whether any other attempts to serve
Pileggi had been made between August 2021 and June 2022.

                                       3
      One week later, Pileggi moved to dismiss the action against him. He
argued that dismissal was mandatory under sections 583.210 and 583.250
because the Navellier Plaintiffs failed to serve him within three years after
commencing the action and because none of the statutory exceptions to
dismissal applied.
      The Navellier Plaintiffs countered that the time for service had been
tolled because Pileggi had not been amenable to process, because the
COVID-19 pandemic had made service impossible or impracticable, and
because the Judicial Council’s emergency orders had “stayed” the action.
They also argued that Pileggi was deemed served when Putnam and Grail
were served because they were in privity with Pileggi. In support, the
Navellier Plaintiffs submitted declarations from Navellier and a San
Francisco-based process server, the latter of whom said that service of
process during the COVID-19 pandemic was “very difficult, if not impossible,”
because people were reluctant to answer their doors and because most
employees were working remotely.
      The trial court granted the motion. It found that Pileggi was amenable
to process and that the Judicial Council orders did not toll the time to serve
Pileggi because they “pertain to filing documents, not service.” The court
further found that there was no authority supporting Plaintiffs’ assertion
that service on Pileggi’s co-defendants constituted service on him.
      The Navellier Plaintiffs timely appealed.
                                DISCUSSION
      The Navellier Plaintiffs concede that they did not serve Pileggi within
three years as required by section 583.210, subdivision (a) but contend their
time to do so was tolled or excused under section 583.240. As explained
below, this contention lacks merit.

                                       4
                                        I.
                 Legal Standards and Standard of Review
      A plaintiff must serve “a defendant within three years after the action
is commenced against the defendant.” (§ 583.210, subd. (a).) “[A]n action is
commenced at the time the complaint is filed.” (Ibid.) If a plaintiff fails to
serve a defendant within three years, dismissal is “mandatory and [] not
subject to extension, excuse, or exception except as expressly provided by
statute.” (§ 583.250, subd. (b).)
      Section 583.240 lists four conditions under which time is tolled and
excluded from the three-year period, three of which the Navellier Plaintiffs
contend applied here: (1) “[t]he defendant was not amenable to [service of]
the process of the court” (§ 583.240, subd. (a)); (2) “[t]he prosecution of the
action or proceedings in the action was stayed and the stay affected service”
(id., subd. (b)); and (3) service was “impossible, impracticable, or futile due to
causes beyond the plaintiff’s control” (id., subd. (d)). The provisions of section
583.240 are “construed strictly against the plaintiff.” (Shipley v. Sugita
(1996) 50 Cal.App.4th 320, 326.)
      “[T]he trial court has broad discretion in determining whether one of
the statutory excuses has been proved by plaintiff. [Citation.] Discretion ‘ “is
abused whenever the court exceeds the bounds of reason, all of the
circumstances being considered. [Citations.]” ’ [Citations.] The burden is on
the plaintiff to establish an abuse of discretion.” (A. Groppe & Sons Glass
Co., Inc. v. Fireman's Fund Ins. Co. (1991) 232 Cal.App.3d 220, 224–225.)
“ ‘The trial court’s findings of fact are reviewed for substantial evidence, its
conclusions of law are reviewed de novo, and its application of the law to the

                                         5
facts is reversible only if arbitrary and capricious.’ ”2 (Gaines v. Fidelity
National Title Ins. Co. (2016) 62 Cal.4th 1081, 1100.)
                                        II.
               Impossibility or Impracticability of Service
      The Navellier Plaintiffs first argue that the time to serve Pileggi should
be tolled for at least five months when the COVID-19 pandemic made it
impossible or impracticable to personally serve him. In support, they cite
declarations from two New York-based process servers.3 Those declarations
state that from March through August 2020, it was difficult, if not
impossible, for process servers to personally serve people in New York due to
the pandemic, and that many process server firms were essentially shut
down during that time. But even if true, this does not establish that it was
impossible, impracticable, or futile to serve Pileggi during the pandemic.
      The time for service is tolled where service “was impossible,
impracticable, or futile due to causes beyond the plaintiff’s control.”

      2 The authority the Navellier Plaintiffs cite as support for their

argument that the standard of review is de novo is consistent with this rule.
In Brown & Bryant, Inc. v. Hartford Accident & Indemnity Co. (1994) 24
Cal.App.4th 247, the Court of Appeal acknowledged that in general, “the
determination whether prosecution of an action was impossible,
impracticable, or futile . . . will not be disturbed on appeal unless an abuse of
discretion is shown.” (Id. at pp. 251–252.) In that case, however, the court
exercised its “independent judgment” to resolve a legal question—whether a
settlement agreement executed during the action made it impossible,
impracticable, or futile to proceed to trial within the statutory time limit.
(Id. at p. 252.)

      3 It is not clear from the record whether these declarations were

properly before the trial court. But we need not decide this issue because the
declarations do not help the Navellier Plaintiffs.

                                         6
(§ 583.240, subd. (d).) But “ ‘[t]he excuse of impossibility, impracticability, or
futility should be strictly construed in light of the need to give a defendant
adequate notice of the action so that the defendant can take necessary steps
to preserve evidence.’ ” (Dale v. ITT Life Ins. Corp. (1989) 207 Cal.App.3d
495, 502, italics omitted.) “ ‘[S]ervice . . . is ordinarily within the control of the
plaintiff.’ ” (Ibid., italics in original.)
      Even assuming personal service was impossible or impracticable during
part of the three-year service period in this case, the Navellier Plaintiffs
could have used a far simpler method to serve Pileggi. Section 415.40
authorizes service on a nonresident defendant by mailing him or her copies of
the summons and complaint “by first-class mail, postage prepaid, requiring a
return receipt.” Service is deemed effective 10 days after the mailing,
regardless of whether the defendant signs or mails back the return receipt.
(Johnson & Johnson v. Superior Court (1985) 38 Cal.3d 243, 248 [“Under
section 415.40, the required act was ‘sending a copy of the summons and of
the complaint to the person to be served by first-class mail, postage prepaid,
requiring a return receipt’ ”].) There is no evidence that the Navellier
Plaintiffs attempted to or were unable to serve Pileggi by mail in accordance
with section 415.40. And their assertions that it was “not possible” to effect
service by mail and that Pileggi’s residence was “not known or discoverable,
despite diligent searches,” are not supported by the record. Indeed, the
evidence they cite does not show what efforts, if any, they made to locate
Pileggi’s residential address. Therefore, the trial court was within its
discretion in refusing to toll the time to serve pursuant to section 583.240,

                                              7
subdivision (d) because the ability to serve Pileggi was not beyond the
Navellier Plaintiffs’ control.4
                                       III.
                        Amenable to Process of Court
      The Navellier Plaintiffs next contend Pileggi was not amenable to
service during most, if not all, of the three-year period because he was
out-of-state, his whereabouts were “hidden and unknowable,” and he dodged
service in Florida. Because the court was unable to “obtain[]” personal
jurisdiction over Pileggi by service of process, they contend their failure to
timely serve him should have been excused under section 583.240,
subdivision (a). Again, these contentions lack merit.
      Contrary to the assertion of the Navellier Plaintiffs, the phrase,
“amenable to process of court,” as used in section 583.240, subdivision (a),
refers to the court’s authority to exercise personal jurisdiction over a
defendant, and not to the defendant’s “reasonable availability, as a practical
matter, for service of process.” (Watts v. Crawford (1995) 10 Cal.4th 743, 758;
see also Perez v. Smith (1993) 19 Cal.App.4th 1595, 1599 [subdivision (a) of
section 583.240 does not excuse failure of service within three years “based on
defendants’ absence from the state or concealment”].) The cases cited by the
Navellier Plaintiffs are inapposite because they involve a court’s assertion of
personal jurisdiction over a defendant who was not validly served with
process. (See, e.g., County of San Diego v. Gorham (2010) 186 Cal.App.4th
1215, 1227 [default judgment void for lack of personal jurisdiction due to

      4 Having found that the trial court did not abuse its discretion in

impliedly finding that service of process on Pileggi by first-class mail was not
impossible, impracticable, or futile, we need not and do not address whether
service by publication was impossible or impracticable.

                                        8
fraudulent service of process].) So long as a defendant is “subject to being
served under applicable constitutional and statutory provisions,” the
defendant is amenable to process of court. (Watts v. Crawford, at p. 758,
italics in original.)
      That is the case here, as service upon Pileggi was constitutionally and
statutorily authorized. Although the Navellier Plaintiffs make much of the
fact that he lives out-of-state, they admit the trial court had the authority to
exercise personal jurisdiction over him “by virtue of his tortious acts and
contractual breaches with his co-conspirator here . . . .” (See Watts v.
Crawford, supra, 10 Cal.4th at p. 762, fn. 16 [“The bases of a state’s judicial
jurisdiction over individuals include . . . doing an act (e.g., executing a
contract), within the state”].) Section 413.10, subdivision (b), provided the
Navellier Plaintiffs with the means to serve Pileggi, including service by
first-class mail. (See Watts v. Crawford, at p. 762; §§ 413.10, subd. (b),
415.40.) And there is nothing in the record to indicate that Pileggi was
outside the court’s jurisdiction during any part of the statutory three-year
period. Therefore, he was amenable to process during that entire period.
Accordingly, the trial court did not abuse its discretion in finding that the
exclusion provided by section 583.240, subdivision (a) did not apply.
                                        IV.
                               COVID-19 “Stays”
      In March 2020, due to COVID-19, Governor Gavin Newson declared a
state of emergency and suspended any limitations on the Judicial Council’s
authority to issue emergency rules or orders. (In re M.P. (2020) 52
Cal.App.5th 1013, 1016–1017.) Acting on that authority, the Judicial Council
adopted emergency rules and orders to address the impact of the COVID-19
pandemic. (Id. at p. 1017.) The Navellier Plaintiffs argue that certain of

                                         9
those orders and rules stayed the prosecution of this action. Thus, the time
to serve Pileggi was tolled under subdivision (b) of section 583.240 for the
period during which those orders and rules were in effect. We disagree.
      Subdivision (b) of section 583.240 tolls the time for service when the
“prosecution of the action or proceedings in the action” is stayed and “the stay
affected service.” (§ 583.240, subd. (b).) To avail themselves of this tolling
provision, the Navellier Plaintiffs therefore must show that the Judicial
Council’s emergency orders and rules not only stayed the prosecution of this
action or its proceedings, they also affected service. (See Williams v. Los
Angeles Unified School Dist. (1994) 23 Cal.App.4th 84, 101–102 [exception
inapplicable to time period in which municipal court proceedings were
suspended due to pending transfer to superior court, because service of
summons and complaint was statutorily permissible while transfer was
pending]; Highland Stucco & Lime, Inc. v. Superior Court (1990) 222
Cal.App.3d 637, 644 [“The court’s stay of proceedings in the action clearly
affected the service of process in that it precluded service upon additional
defendants until the stay was lifted”].) They have failed to do so.
      In arguing that subdivision (b) of section 583.240 applied here, the
Navellier Plaintiffs focus on Judicial Council orders authorizing the Superior
Court to declare that March 18, 2020 through June 19, 2020 “be deemed
holidays for the purposes of computing the time for filing papers with the
Court under” sections 12 and 12a. (Italics added.) Section 12a provides that
if the last day to perform an act falls on a holiday, the time to perform the act
is extended to the next day that is not a holiday. Thus, these orders merely
extended the time for filing documents with the court; they did not affect the
time to serve process.

                                       10
       Nonetheless, the Navellier Plaintiffs insist that the Judicial Council
orders are not so limited. Although their argument is unclear, they appear to
contend that, because the orders refer to section 12 and because section 12, in
turn, extends “[t]he time in which any act provided by law is to be done” if the
last day to perform the act is a holiday, the orders were “tolling” orders
applicable to all “acts,” including service of process. But even assuming a
tolling order “stays” the prosecution of proceedings within the meaning of
section 583.240, subdivision (b), an issue that the Navellier Plaintiffs ignore,
we do not agree that the orders tolled the time for service of process. Indeed,
Plaintiffs’ interpretation requires us to read the orders’ reference to section
12 wholly out of context.
       Nor are we persuaded that the Judicial Council’s Emergency rule 9(a)
stayed the prosecution of the action and tolled the three-year period for
service. That rule provided that “the statutes of limitations and repose for
civil causes of action that exceed 180 days are tolled from April 6, 2020, until
August 3, 2020.” (Cal. Rules of Court, appen. 1, Emergency rule 9(a).) Under
its plain language, the rule only suspended the running of the limitations
period for initiating an action; it did not stay the prosecution of any actions or
suspend the time for service of process. (See Committee for Sound Water &
Land Development v. City of Seaside (2022) 79 Cal.App.5th 389, 403; People v.
Financial Casualty & Surety, Inc. (2021) 73 Cal.App.5th 33, 42 [“The plainly
intended meaning of Emergency rule 9 is that statutes of limitation and
repose for pleadings commencing civil causes of action . . . are temporarily
tolled”].)
       Accordingly, the trial court did not abuse its discretion in concluding
that the time to serve Pileggi with the complaint and summons was not tolled
under subdivision (b) of section 583.240.

                                       11
                                        V.
                     Service on Pileggi’s Co-Defendants
      Finally, the Navellier Plaintiffs argue that Pileggi was deemed served
in October 2019 when his co-defendants, Putnam and Grail, agreed to
acknowledge service, because they were in privity with each other. We
disagree.
      Service of process is not valid unless the statutory requirements for
service are met. (Schering Corp. v. Superior Court (1975) 52 Cal.App.3d 737,
741, accord Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426,
1433, 1439 & fn. 13 [affirming motion to dismiss for failure to serve
defendant within three years under section 583.210 because plaintiff did not
comply with sections 415.40 and 416.10 in serving defendant with process].)
Because a party in privity with a defendant is not one of the parties
authorized by statute to accept service on that defendant’s behalf, the
acknowledgement of service by Putnam and Grail did not effectuate service
on Pileggi. (See § 416.90; Crane v. Dolihite (2021) 70 Cal.App.5th 772, 785
[service is made on an individual defendant by delivering a copy of the
summons and of the complaint to the defendant personally or an agent of the
defendant “who is authorized by law or by appointment to receive service of
process,” italics in original].)
      Mooney v. Caspari (2006) 138 Cal.App.4th 704 does not suggest
otherwise. In that case, the Court of Appeal considered the privity between
the plaintiff and a third party in deciding whether to apply collateral estoppel
to bar the plaintiff’s legal malpractice claim. (Id. at pp. 707, 718.) It did not
consider whether any party had been properly served.
      In sum, the Navellier Plaintiffs have not established that the trial court
abused its discretion in granting Pileggi’s motion to dismiss.

                                        12
                                DISPOSITION
      The order granting Pileggi’s motion to dismiss is affirmed. Pileggi shall
recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)

                                       13
                                     _________________________

                                     Chou, J.

We concur:

_________________________
Jackson, P.J.

_________________________
Simons, J.

Navellier v. Putnam / A166476

                                14