Ben Soleimani.com v. Brightpearl, Inc.
| Docket Number | B316351,B318921 |
| Decision Date | 08 June 2023 |
| Parties | BEN SOLEIMANI.COM, INC., Plaintiff and Respondent, v. BRIGHTPEARL, INC., Defendant and Appellant. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No 20STCV05473, Robert B. Broadbelt, Judge.
Dentons US, Jae K. Park, Derek A. Auito and Gaspare J. Bono for Defendant and Appellant.
Plante Lebovic, Brian C. Plante, Ira D. Lebovic and Gregory M Golino for Plaintiff and Respondent.
Plaintiff and respondent Ben Soleimani.com, Inc. ("Soleimani") filed a breach of contract action against defendant and appellant Brightpearl, Inc. After personally serving the operative complaint and summons on Brightpearl's designated agent for service of process Soleimani obtained entry of default and, later, a default judgment against Brightpearl.
Brightpearl subsequently appeared and filed a motion to set aside the default judgment pursuant to Code of Civil Procedure section 473.5. subdivision (b)[1], asserting it lacked actual notice of the action. Despite being in default, it also filed a motion to compel arbitration, citing an arbitration provision incorporated into the parties' contract. The trial court denied the motion to set aside the default judgment, concluding that proper service to Brightpearl's designated agent for service of process provided Brightpearl with actual notice of the lawsuit. Brightpearl filed a notice of appeal.
While that appeal was pending, the trial court denied Brightpearl's motion to compel arbitration. The trial court concluded it had no jurisdiction to hear the motion due to both the existing judgment and pending appeal, and that no arbitrable controversy existed because judgment already had been entered. Brightpearl appealed the order. We consolidated the appeals.
Soleimani moved to dismiss both appeals as untimely. Brightpearl opposed the motion. The motion is not well taken and is denied. Both appeals are timely under the applicable California Rules of Court.
The order denying the motion to set aside the default judgment is affirmed. Contrary to Brightpearl's contentions, the arbitration provision in the parties' contract did not deprive the trial court of subject matter jurisdiction to enter a default judgment. We further agree with the trial court that proper, personal service upon Brightpearl's designated agent effected actual notice on the corporation for purposes of section 473.5. In light of our conclusion that the default judgment remains in effect, we dismiss the appeal of the order denying the motion to compel arbitration as moot.
Soleimani filed a breach of contract action against Brightpearl on February 11, 2020. Soleimani filed a first amended complaint (FAC) against Brightpearl on September 29, 2020. In the FAC, Soleimani alleged that it entered into a contract with Brightpearl on or about September 27, 2019, pursuant to which Brightpearl agreed to install and have "up and running" certain software by "mid-December" 2019 in exchange for Soleimani's upfront payment of $41,750.00. Soleimani alleged that it timely made the payment, but Brightpearl failed to uphold its end of the bargain. Soleimani asserted causes of action for breach of contract, money had and received, and fraud. It sought $41,750.00 in actual damages and punitive damages according to proof.
According to a proof of service form filed on November 5, 2020, Soleimani personally served CT Corporation System with the FAC, summons, and other related documents on October 1, 2020. It is undisputed that CT Corporation System was Brightpearl's designated agent for service of process as defined in section 416.10, subdivision (a),[2] and that Soleimani properly and personally served CT Corporation System. Brightpearl did not appear.
On February 23, 2021, Soleimani filed a request for entry of default and clerk's judgment. Soleimani represented that it had mailed a copy of the form to Brightpearl at its Austin, Texas address prior to filing it, on January 19, 2021. The clerk entered default on February 23, 2021. On February 25, 2021, the trial court scheduled an order to show cause re: entry of default judgment for May 6, 2021.
On April 22, 2021, Soleimani filed an ex parte application for entry of default judgment against Brightpearl, in the contract amount of $41,750.00 plus interest. It concurrently filed a declaration in support of its allegations and requested damages, a copy of its contract with Brightpearl,[3], and a declaration in support of its interest calculation of $5,554.98, accruing at a rate of $11.43/day. Soleimani waived attorney fees related to the default judgment.
The trial court entered default judgment for Soleimani and against Brightpearl on April 26, 2021. The default judgment awarded Soleimani $41,750.00 in damages, $5,554.98 in prejudgment interest, and $621.40 in costs.
Approximately six weeks later, on June 2, 2021, Brightpearl filed a motion to set aside the default judgment pursuant to section 473.5, which authorizes a party against whom default or default judgment was entered to "serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action" "[w]hen service of a summons has not resulted in actual notice . . . in time to defend the action." (§ 473.5, subd. (a).) A section 473.5 motion must "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," as well as "a copy of the answer, motion, or other pleading proposed to be filed in the action." (§ 473.5, subd. (b).)
Brightpearl attached the sworn declaration of Justin Press, one of its senior vice presidents. Press asserted that he first learned of the action on May 3, 2021, when an employee scanned the application for entry of default and clerk's judgment that Soleimani mailed on January 19, 2021 and filed on February 23, 2021.[5] Press further asserted that he "contacted CT Corporation Service [sic]" on May 4, 2021, and learned that it had been served with the summons and complaint and sent them to Brightpearl's Texas address via UPS. Press stated that Brightpearl never received the UPS package, though UPS records showed it was delivered on October 5, 2020; he surmised "the parcel was left unattended by UPS and became lost, or it was received by someone unaffiliated with Brightpearl who failed to deliver it to Brightpearl."
Brightpearl argued that this turn of events deprived it of actual notice of the action. It further argued that it met the other requirements for relief under section 473.5, because it timely filed the motion to set aside and its lack of notice of the suit was not due to its avoidance of service or inexcusable neglect. Brightpearl additionally contended that "justice will not be served if the default judgment is allowed to stand," because the contract between Soleimani and Brightpearl incorporated the Terms and Conditions of Service containing both an arbitration provision and a forum selection provision designating New York courts as the judicial venue. It requested that the court "set aside the default judgment and allow Brightpearl to file a motion to compel arbitration."[6]
In addition to the Press declaration, Brightpearl also attached to its motion a copy of the document it received from Soleimani, a copy of a text conversation Press had with a UPS customer service representative, and a copy of Brightpearl's contract with Soleimani, including the Terms and Conditions of Service. Brightpearl also provided a declaration from one of its attorneys, to which it attached the online register of trial court actions and a copy of the Statement of Information on file with the California Secretary of State identifying CT Corporation System as its agent for service of process. It also attached a copy of an email counsel sent to Soleimani's counsel summarizing a May 5, 2021 conversation in which Soleimani's counsel refused Brightpearl's counsel's request to "stipulate to set aside the default judgment entered against Brightpearl." [7]
Soleimani opposed the motion. Soleimani contended that Brightpearl, a corporation, could only act through its agents and therefore could obtain actual notice only through an agent with the proper authority. That agent, Soleimani argued, was Brightpearl's designated agent for service of process, CT Corporation System, whom it properly served. Soleimani further asserted it would be "completely inequitable" and "against public policy" to set aside the default judgment where a corporation elects to designate an agent for service of process while "disavowing service of a summons and complaint" made on that agent.
Brightpearl filed a reply in support of its motion. It also provided a declaration from its Employee Experience Manager, who was responsible for visiting Brightpearl's office weekly during the pandemic to collect and distribute mail. She stated that she was the only employee with this responsibility, no other employees were authorized to sign for and accept parcels or packages, and she did not see an envelope or parcel containing the summons or FAC until she "saw a document tilted, 'Request for Entry of Default'" on May 3, 2021. It is unclear whether the trial court considered this belatedly filed declaration.
The trial court provided a tentative ruling denying the motion in advance of the August 30, 2021 hearing. The appellate record does not contain a reporter's transcript or settled statement regarding this...
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