Court Opinion

ID: 2797549
Source: CourtListenerOpinion
Date Created: 2015-04-29 21:02:06.924436+00
Date Added: 2024-06-11T11:29:23.967212
License: Public Domain

Filed 4/29/15 Gregory v. Saldana CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                         (Yolo)
                                                            ----

KEN GREGORY,                                                                                 C073988

                   Plaintiff and Appellant,                                   (Super. Ct. No. CVCV112597)

         v.

RAFAEL SALDANA,

                   Defendant and Respondent.

         In California, service of process on an individual defendant may be made by
substitute service on “a person apparently in charge of [the defendant’s] office, place of
business, or usual mailing address.” (Code Civ. Proc.,1 § 415.20, subd. (b).) Here, when
plaintiff Ken Gregory (Gregory) sued defendant Rafael Saldana (Saldana) for breach of
oral contract, the process server left the summons and complaint at a location the trial

1        All further statutory references are to the Code of Civil Procedure.

                                                             1
court found was “a valid business address for defendant Saldana,” but not with a “person
[who was] apparently in charge.” (§ 415.20, subd. (b).) After finding the substitute
service invalid, the trial court set aside a default and default judgment that previously had
been entered at Gregory’s request.
       On appeal, Gregory challenges the trial court’s order setting aside the default and
default judgment. We affirm, holding: (1) there was substantial evidence the substitute
service of the summons and complaint was invalid and there was no actual notice to
Saldana; (2) the standard of review for setting aside a default judgment is abuse of
discretion; and (3) the trial court acted within its discretion in granting Saldana’s motion
to set aside the default and default judgment.
                   FACTUAL AND PROCEDURAL BACKGROUND
       Saldana is in a sole proprietorship doing business as Saldana Bros. Trucking, in
the business of trucking hay. The “[p]hysical [b]usiness [a]ddress” of Saldana Bros.
Trucking as listed on its fictitious business name statement is 12996 County Road 102 in
Woodland. The “[b]usiness [m]ailing [a]ddress” is listed as post office box 584 also in
Woodland.
       Saldana grew up in Mexico, where he went to school until age 12. Thereafter, he
did not attend school either in Mexico or California. Saldana “do[es] not read English,”
so he “rel[ies] on friends to explain to [him] what documents mean if documents are
presented to [him].”
       Working with Saldana is his brother, Manuel Saldana, who is an employee of
Saldana in Saldana Bros. Trucking. Saldana’s brother and his brother’s son, Fredi
Saldana (Fredi), have lived at 34209 County Road 23A since 2010. Saldana has not lived
there during this time. According to Fredi, “[t]he U.S. Postal Service and other
carriers . . . sometimes deliver documents and/or packages to 34209 County Road 23A.
If the mail or package is not addressed to [Fredi], [he] usually ignore[s] it.” Saldana
“does not come into [34209 County Road 23A] without invitation and does not receive

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mail there on a regular or any other basis.” Saldana “does not read English and therefore
[Fredi] feel[s] it is a waste of [Fredi’s] time to give [Saldana] mail because [Saldana]
cannot understand it anyway.”
       Also working with Saldana is his daughter, Linda Saldana, who does the
paperwork for Saldana Bros. Trucking. Saldana’s daughter sent invoices to Gregory in
January 2010 and August 2010 listing the address of Saldana Bros. Trucking as “34209
Hwy 23A” in Woodland.
       In November 2011, Gregory sued Saldana for breach of an oral contract that was
allegedly entered into in April 2010 regarding Saldana purchasing alfalfa grown by
Gregory.
       On December 14, 2011, Gregory’s attorney mailed to Saldana at “34209 Highway
23A” copies of the summons, complaint, civil case cover sheet, and notice of case
management conference, along with a notice and acknowledgement of receipt form.
According to a declaration filed by Gregory’s attorney, the next day (December 15),
Saldana called him, said he had received the documents, and wanted to know what they
were. Gregory’s attorney then explained the documents to him.
       Saldana never returned the notice and acknowledgement of receipt form.
       On January 31, 2012, a process server went to 34209 County Road 23A and left
with Fredi a copy of the summons and complaint. The proof of service listed “Freddie”
as a “[c]o-[r]esident of [Saldana] and [m]anager of S[aldana] B[ros].” The process
servicer later mailed copies of the documents to the same address. According to a
declaration filed by Fredi, he “never told anybody that [he] was a ‘co-resident’ with
[Saldana].” He “never told anybody that [he] was a [m]anager of S[aldana] B[ros]. and
[he] ha[s] never been a [m]anager of S[aldana] B[ros].” He “ha[s] never been employed
by [Saldana] or S[aldana] B[ros]. and ha[s] no relationship with [Saldana] other than
being his nephew . . . .”

                                             3
       In March 2012, Gregory filed a request for entry of default, which the court
entered on March 16, 2012. The request for entry of default was mailed to “34209
County Road 23A” on July 11, 2012.
       In August 2012, a default judgment totaling $ 92,098.34 was filed. The judgment
left blank whom the judgment was against.
       In September 2012, Saldana was personally served with an application and order
to appear for a debtor’s examination on September 20, 2012.
       On November 16, 2012, an amended default judgment was filed naming Saldana
as the defendant whom the judgment was against.
       On December 14, 2012, a deputy sheriff personally served Saldana with a bench
warrant that listed the case of “Gregory” “vs.” “Saldana” with a bail amount of
$93,974.44. Saldana signed the bench warrant, promising to appear in court at a debtor’s
examination on January 31, 2013. According to a declaration filed by Saldana, he “did
not know any time before December 14, 2012 that [he] had been sued by [Gregory].”
December 14, 2012, when he met with the deputy sheriff and was given a bench warrant
(for failing to appear at an order of examination), was “the first notice [he] had of the . . .
lawsuit.”
       After Saldana received notice of the lawsuit and bench warrant on December 14,
2012, it took Saldana “a couple of weeks to have a friend read and explain to [him] what
it was.”
       On January 31, 2013, Saldana appeared at the debtor’s examination.
       On February 15, 2013, Saldana filed in pro. per. a motion to set aside the default
and default judgment because he did not have notice of the lawsuit. In it, he asked for
“time to find [l]egal [c]ounsel and . . . answer the . . . complaint to supply all
information.”
       On February 21, 2013, Saldana appeared at a continuation of the debtor’s
examination.

                                               4
       On March 11, 2013, Saldana found a lawyer to represent him.
       On March 13, 2013, Saldana’s lawyer filed a motion to set aside the default and
default judgment.
       On April 24, 2013, the trial court granted the motion to set aside the default and
default judgment “pursuant to C.C.P. §473.5.” The summons and complaint were left at
34209 County Road 23A, which was “a valid business address for defendant Saldana, but
. . . the substitute service of the summons and complaint at that address was not proper
and valid service.” The motion was “timely made because it was filed within two years
after entry of the default judgment.” As a “condition to setting aside of the default and
default judgment,” Saldana has to pay “$2,000 to plaintiff G[regory] because defendant
S[aldana] was not diligent in moving to set aside the default and default judgment.”
       Gregory filed a timely notice of appeal from the trial court’s order granting relief
from default and default judgment.
                                       DISCUSSION
       On appeal, Gregory contends that the substitute service was valid, Saldana
received actual notice, and, applying a de novo standard of review, the trial court erred in
ruling that Saldana’s motion to set aside the default and default judgment was timely.
       As we will discuss below, we hold: (1) there was substantial evidence the
substitute service of the summons and complaint was invalid and there was no actual
notice to Saldana; (2) the standard of review for setting aside a default judgment is abuse
of discretion; and (3) the trial court acted within its discretion in granting Saldana’s
motion to set aside the default and default judgment.

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                                              I
              There Was Substantial Evidence To Support The Trial Court’s
            Findings That Substitute Service Of The Summons And Complaint
                Were Invalid And There Was No Actual Notice To Saldana
       To reach the issue of whether the trial court erred in granting Saldana’s motion to
set aside the default and default judgment under section 473.5, we must first address the
threshold issue raised by Gregory of whether the substitute service of the summons and
complaint was valid. Only if the substitute service was invalid did the trial court have the
discretion to set aside the default and default judgment. (§ 473.5, subds. (a), (c).) The
trial court found the service invalid. We review this factual finding for substantial
evidence. (Stafford v. Mach (1998) 64 Cal. App. 4th 1174, 1182.)
       Substitute service on an individual may be made “by leaving a copy of the
summons and complaint at the person’s . . . usual place of business, or usual mailing
address other than a United States Postal Service post office box, in the presence of . . . a
person apparently in charge of his or her office, place of business, or usual mailing
address other than a United States Postal Service post office box, at least 18 years of age,
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. Service of a
summons in this manner is deemed complete on the 10th day after the mailing.”
(§ 415.20, subd. (b).)
       Gregory claims that Saldana was properly served by substitute service under
section 415.20, subdivision (a). But subdivision (a) is inapplicable here. Saldana
operates his business as a sole proprietorship. Subdivision (a) applies to substitute
service on corporations (§§ 416.10, 416.20), joint stock companies or associations
(§ 416.30), unincorporated associations (§ 416.40) and public entities (§ 416.50). (§

                                              6
415.20, subd. (a).) “ ‘A sole proprietorship is not a legal entity itself. Rather, the term
refers to a natural person who directly owns the business . . . .’ ” (Providence
Washington Ins. Co. v. Valley Forge Ins. Co. (1996) 42 Cal. App. 4th 1194, 1199.) Thus,
service on a sole proprietorship is completed in the same manner as service on an
individual, and we turn next to determining whether there was substantial evidence of
lack of service on Saldana.
                                                A
                   There Was Substantial Evidence Of Lack Of “Substantial
                        Compliance” With The Substitute Service Statute
          While it is “ ‘well settled that strict compliance with statutes governing service of
process is not required,’ ” there must still be “[s]ubstantial [c]ompliance.” (Summers v.
McClanahan (2006) 140 Cal. App. 4th 403, 410.) “[A] finding of substantial compliance
requires three preconditions.” (Carol Gilbert, Inc. v. Haller (2009) 179 Cal. App. 4th 852,
865.) One, “there must have been some degree of compliance with the offended statutory
requirements.” (Id. at p. 866.) Two, “the objective nature and circumstances of the
attempted service must have made it ‘ “ ‘highly probable’ ” ’ that it would impart the
same notice as full compliance.” (Ibid.) And three, “it must in fact have imparted such
notice, or at least sufficient notice to put the defendant on his defense. In this regard, it is
not enough that the process inform the defendant of the fact of a lawsuit, or even of a
lawsuit in which his name appears. Due process requires notice of ‘the duty to defend.’ ”
(Ibid.)
          Applying these three factors here, there was substantial evidence to support the
trial court’s finding “the substitute service of the summons and complaint at [34209
County Road 23A] was not proper and valid service.”
          One, there was substantial evidence of the lack of requisite degree of compliance
because Fredi was not “a person apparently in charge of [Saldana’s] office, place of
business, or usual mailing address . . . .” (§ 415.20, subd. (b), italics added.) According

                                                 7
to Fredi’s declaration (which the trial court necessarily credited because of its factual
finding that substitute service was invalid), he “never told anybody that [he] was a ‘co-
resident’ with [Saldana].” He “never told anybody that [he] was a [m]anager of
S[aldana] B[ros.] and [he] ha[s] never been a [m]anager of S[aldana] B[ros].” He “ha[s]
never been employed by [Saldana] or S[aldana] B[ros]. and ha[s] no relationship with
[Saldana] other than being his nephew . . . .”
         While Gregory points to the “declaration of diligence” from the process server that
states to the contrary, the trial court made its own determination of witness credibility.
The trial court’s determination of controverted facts and implied findings are conclusive
and will not be disturbed on appeal. (Stafford v. Mach, supra, 64 Cal.App.4th at p.
1182.)
         Two, there was substantial evidence that the objective nature and circumstances of
the service on Fredi did not make it highly probable that it would impart the same notice
as full compliance. (Carol Gilbert, Inc. v. Haller, supra, 179 Cal.App.4th at p. 866.) On
January 31, 2012, a process server went to 34209 County Road 23A and left with Fredi a
copy of the summons and complaint. According to Fredi’s declaration (which, as we
have explained, the court credited), Saldana “d[oes] not come into [34209 County Road
23A] without invitation and does not receive mail there on a regular or any other basis.”
And (which we have earlier recounted), Fredi “never told anybody that [he] was a ‘co-
resident’ with [Saldana],” he “never told anybody that [he] was a [m]anager of S[aldana]
B[ros.] and [he] ha[s] never been a [m]anager of S[aldana] B[ros].” He “ha[s] never been
employed by [Saldana] or S[aldana] B[ros]. and ha[s] no relationship with [Saldana]
other than being his nephew . . . .” Thus, there was no objective evidence that notice to
Fredi would result in notice to Saldana.
         And three, there was substantial evidence the service here did not give Saldana
notice of any kind, let alone of his duty to defend. (Carol Gilbert, Inc. v. Haller, supra,
179 Cal.App.4th at p. 866.) Fredi “usually ignore[s]” mail or packages “not addressed to

                                              8
[him].” And, in the event mail or packages are addressed to Saldana, Fredi “feel[s] it is a
waste of [his own] time to give [Saldana] mail because [Saldana] cannot understand it
anyway,” because Saldana “does not read English.”
                                              B
                  Gregory’s Contentions Regarding Saldana’s Purported
               Actual Notice Contravene The Standard Of Appellate Review
       Gregory contends that Saldana had actual notice of the lawsuit because Saldana
received a letter sent by Gregory’s trial counsel with copies of the summons, complaint,
and acknowledgement of service. According to Saldana, however, he “did not know any
time before December 14, 2012 that [he] had been sued by [Gregory].” He was unable to
read the letter sent by Gregory’s trial counsel with the copies because he “do[es] not read
English.” He learned of the lawsuit only when he “received the [b]ench [w]arrant from
the deputy.”
       Gregory discounts this evidence, stating it is supported only by Saldana’s
“unsubstantiated assertion,” and there was evidence Saldana “lacked[d] any credibility.”
       Gregory’s attack of a witness’s credibility is misplaced, as it ignores the deference
that we as an appellate court must give to a trial court’s explicit and implicit factual
findings (Shamblin v. Brattain (1988) 44 Cal. 3d 474, 479) and “presumptions [we]
indulge[] in favor of [the] correctness” of a trial court’s judgment or order (In re
Marriage of Arceneaux (1990) 51 Cal. 3d 1130, 1133). “Even though contrary findings
could have been made, an appellate court should defer to the factual determinations made
by the trial court when the evidence is in conflict. This is true whether the trial court’s
ruling is based on oral testimony or declarations.” (Shamblin, at p. 479.) Here, the
declaration of Saldana conflicted with that of Gregory’s attorney on when Saldana had
actual notice of the lawsuit. The trial court impliedly credited Saldana’s declaration, and
we must defer to that factual finding on appeal.

                                              9
                                              II
                     The Standard Of Review Of The Trial Court’s Order
          Setting Aside A Default And Default Judgment Is Abuse Of Discretion
       Gregory next contends the standard that governs our review of the trial court’s
order setting aside the default judgment is a de novo review. His contention does not
acknowledge the difference between setting aside defaults and default judgments
involving facial deficiencies in judgments or orders pursuant to section 473,
subdivision (d) and setting aside defaults and default judgments on affidavits under
section 473.5, as happened here.
       Section 473, subdivision (d) provides as follows: “The court may, upon motion of
the injured party, or its own motion, correct clerical mistakes in its judgment or orders as
entered, so as to conform to the judgment or order directed, and may, on motion of either
party after notice to the other party, set aside any void judgment or order.” Where a
motion is made under this subdivision based on a factual defect, the motion can be set
aside only if the facial defect is “ ‘is apparent upon an inspection of the judgment-roll.’ ”
(Dill v. Berquist Construction Co. (1994) 24 Cal. App. 4th 1426, 1441.)
       In contrast, motions to set aside default judgments under section 473.5 go beyond
the judgment roll. A motion under section 473.5, subdivision (b) “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.”
“Upon a finding by the court that the motion was made within the period permitted . . .
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 or default
judgment on whatever terms as may be just and allow the party to defend the action.” (§
473.5, subd. (c).)
       Here, the trial court granted Saldana’s motion to set aside the default and default
judgment “pursuant to C.C.P. §473.5.” “[W]here a plaintiff has contested a motion to

                                             10
vacate a default judgment by way of affidavits or other evidence that goes beyond the
judgment roll . . . of necessity our review goes beyond the judgment roll. [Citation.] In
determining any issues raised by such evidentiary matters, our review is governed by the
familiar abuse of discretion standard. [Citation.] That standard requires we defer to
factual determinations made by the trial court when the evidence is in conflict, whether
the evidence consists of oral testimony or declarations.” (Ramos v. Homeward
Residential, Inc. (2014) 223 Cal. App. 4th 1434, 1440-1441.)
                                              III
          The Trial Court Was Within Its Discretion To Grant Saldana’s Motion
          To Set Aside The Default And Default Judgment Under Section 473.5
       Gregory makes two arguments in support of his contention the trial court erred in
setting aside the default. First, he claims Saldana had actual notice of the lawsuit. We
have already reviewed and rejected this argument in part IB of the Discussion above.
Second, he claims that Saldana’s motion was not filed within a reasonable time after his
default was entered. As we explain below, the trial court was within its discretion to
conclude otherwise.
       “The notice of motion shall be served and filed within a reasonable time, but in no
event exceeding the earlier of: (i) two years after entry of a default judgment against him
or her; or (ii) 180 days after service on him or her of a written notice that the default or
default judgment has been entered.” (§ 473.5, subd. (a).) The time for filing a motion
under section 473.5 “expressly commence[s] upon entry of the judgment rather than upon
entry of the default.” (Rogers v. Silverman (1989) 216 Cal. App. 3d 1114, 1126.)
       Here, the trial court’s implied finding that the motion was filed and served within
a reasonable time was supported by the evidence and thus within the trial court’s
discretion. Saldana “did not know any time before December 14, 2012 that [he] had been
sued by [Gregory].” On December 14, 2012, when he met with the deputy sheriff and
was given a bench warrant (for failing to appear at an order of examination), was “the

                                              11
first notice [he] had of the . . . lawsuit.” On February 15, 2013, which was two months
after his first notice, he filed in pro. per. his motion to set aside the default. On March 13,
2013, which was three months after this first notice, his retained counsel filed a motion to
set aside the default and default judgment.
       To the extent Gregory argues that a three-month delay “absent satisfactory
explanation for the delay” was a reason to deny Saldana relief from default, it was well
within the court’s discretion to allow relief from default, because Saldana accounted for
this delay. After receiving the first notice of the lawsuit and bench warrant on
December 14, 2012, when he met with the deputy sheriff, it took Saldana “a couple of
weeks to have a friend read and explain to [him] what it was.” Saldana “do[es] not read
English,” so he “rel[ies] on friends to explain to [him] what documents mean if
documents are presented to [him].” About two weeks after having the documents
explained to him, Saldana filed in pro. per. his motion to set aside the default and default
judgment on February 15, 2013. In his motion, he explained that he needed time to find
an attorney to represent him. In the interim, Saldana appeared at a debtor’s examination
on January 31, 2013, and a continuation of that examination on February 21, 2013.2 Less
than one month after filing his pro. per. motion to set aside the default, Saldana found a
lawyer to represent him on March 11, 2013. Within two days of finding a lawyer,

2       Gregory claims that Saldana’s personal appearances at the debtor’s examinations
“waiv[ed] any alleged defect in connection with the service of summons, complaint
and/or default judgment documents making a general appearance in the action.” Gregory
does not explain how these involuntary appearances at debtor’s examinations are the
same as general appearances in the underlying action. Section 1014 defines what
constitutes a defendant’s “appear[ance] in an action” and explains it is “when the
defendant answers, demurs, files a notice of motion to strike, files a notice of motion to
transfer . . . , moves for reclassification . . . , gives the plaintiff written notice of
appearance, or when an attorney gives notice of appearance for the defendant.” This
definition does not include the involuntary appearances at debtor’s examinations that
Saldana made here.

                                              12
Saldana, through his lawyer, filed the instant motion to set aside the default judgment on
March 13, 2013. These explanations for Saldana’s three-month delay support the trial
court’s implied finding of reasonableness.
       Finally, we note this implied finding was consistent with the trial court’s order
requiring Saldana to pay $2,000 to Gregory because, as the trial court put it, Saldana was
not “diligent” in moving to set aside the default and default judgment. The trial court had
the discretion to impose this “term” (the payment of $2,000) because there was evidence
it was “just” under the circumstances. (§ 473.5, subd. (c) [“Upon a finding by the court
that the motion was made within the period permitted . . . 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 or default judgment on
whatever terms as may be just and allow the party to defend the action”].) Gregory’s
counsel attached a declaration in opposition of the motion to set aside the default
judgment. In it, Gregory’s counsel declared that because of Saldana’s “delay” in
retaining an attorney and moving to set aside the default judgment, Gregory had to incur
additional attorney fees and was unable to timely pay off a crop loan, causing Gregory to
have to sell some farm equipment. The trial court reasonably could have credited the
evidence that Saldana did not have actual notice of the lawsuit until December 14, 2012,
given his inability to read English, which caused him greater delay in taking action to
defend himself against the lawsuit, but that the three-month delay still showed a lack of
diligence, requiring monetary compensation to Gregory for expenses he incurred because
of that delay.

                                             13
                                      DISPOSITION
       The judgment (order setting aside the default and default judgment) is affirmed.
Saldana is entitled to his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1)&(2).)

                                                        ROBIE                 , Acting P. J.

We concur:

      MURRAY                , J.

      HOCH                  , J.

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