Cruz v. Fagor America, Inc.

• Decision Date: 03 January 2007
• Docket Number: No. D048064.,D048064.
• Citation: 52 Cal.Rptr.3d 862,146 Cal.App.4th 488
• Court: California Court of Appeals Court of Appeals
• Parties: Alan C. CRUZ, Plaintiff and Appellant, v. FAGOR AMERICA, INC., Defendant and Respondent.

52 Cal.Rptr.3d 862

146 Cal.App.4th 488

Alan C. CRUZ, Plaintiff and Appellant, v. FAGOR AMERICA, INC., Defendant and Respondent.

No. D048064.

Court of Appeal, Fourth District, Division 1.

January 3, 2007.

Law Office of Harold D. Thompson, Harold D. Thompson and Anthony D. Thompson for Plaintiff and Appellant.

Grimm, Vranjes, McCormick & Graham and Kathleen McCormick, San Diego, for Defendant and Respondent.

AARON, J.

I. INTRODUCTION

Plaintiff Alan C. Cruz appeals from a postjudgment order of the trial court granting defendant Fagor America, Inc's (Fagor) motion to set aside default and default judgment. Approximately nine months after the court entered a default against Fagor for failing to defend against the action, Fagor made its first appearance, moving ex parte for an order shortening time to allow it to move to set aside the entry of default and the subsequent default judgment. The trial court granted Fagor's ex parte motion. After a hearing on the motion to set aside the entry of the default and default judgment, the court granted Fagor's request for relief on the grounds that the judgment was void for lack of effective service of the summons and complaint, and extrinsic mistake warranted equitable relief.

In order to resolve the question whether service of process was effective, we must determine whether Cruz met the statutory requirements for serving an out-of-state corporation by mail. Cruz addressed and mailed the summons and complaint, return receipt requested, to Fagor's president. The return receipt was signed by an individual who was not Fagor's president. However, Cruz submitted the declaration of his counsel attesting that counsel had received confirmation from a representative of the U.S. Postal Service that the individual who signed the return receipt was a Fagor employee who regularly received mail on Fagor's behalf. We conclude that Cruz met all of the statutory requirements for effective service of process on a foreign corporation, and that the trial court erred in concluding that the judgment was void for lack of valid service of process.

With regard to the trial court's decision to grant equitable relief on the basis of extrinsic mistake, our review turns on two findings of the trial court: that Fagor established a satisfactory excuse for failing to defend against the action and allowing default to be entered, and that upon learning of the default, Fagor demonstrated that it acted diligently to set aside the default. We conclude that Fagor failed to present a satisfactory excuse for its failure to defend against the action and to failed to show that it acted with diligence in seeking to set aside the default. The trial court thus abused its discretion in granting equitable relief.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual background

Cruz's parents purchased a pressure cooker from a vendor at the San Diego County Fair in the summer of 2001. On September 10, 2001, Cruz, who was 16 years old at the time, suffered burns on the left side of his torso and thigh when he attempted to take the lid off of the pressure cooker. Fagor is the American distributor of the pressure cooker.¹

On the date of the incident involving the pressure cooker, Cruz's parents sent an email to Fagor to alert the company about what had occurred. Fagor forwarded Cruz's complaint to its insurance broker, who forwarded the complaint to Fagor's general habihty insurer, American Equity Insurance Company (American Equity). The insurer opened a file and began an investigation of Cruz's claim.

On June 2, 2003, American Equity notified Cruz that it was denying liability. However, American Equity offered to reimburse Cruz for his medical payments up to $5,000. Cruz hired an attorney. In a letter dated July 21, 2004, Cruz's attorney notified American Equity that he was representing Cruz, and that Cruz intended to recover reimbursement for "all damages, [sic] sustained as a result of a burn incident arising from the use of Fagor's pressure cooker. American Equity reiterated its denial of Cruz's claim in a letter dated August 18, 2004.

B. Procedural background

Cruz filed a complaint against Fagor on December 1, 2004, alleging causes of action for negligence and product habihty. On December 14, 2004, Cruz, through his attorney, mailed the summons and complaint to Fagor by certified mail, return receipt requested. The envelope was addressed to "Patricio Barriga, Chairman of the Board, FAGOR AMERICA, INC., A Delaware Corporation, 1099 Wall Street, Lyndhurst, NJ 07071-3678."

The return receipt indicates that it was signed by an individual named Tina Hayes on December 22. Fagor did not file an answer. On February 9, 2005, Cruz mailed a copy of his request for entry of default to "Tina Hayes, Authorized Agent for, Patricio Barriga, Fagor America, Inc 1099 Wall St., Lyndhurst, N.J. 07071." The court denied Cruz's initial request for entry of default on the ground that Cruz had not established that Hayes was an "Authorized Agent to accept service." Although it is unclear from the record what, if anything, changed between Cruz's initial request for entry of default and a subsequent request, the court entered a default against Fagor on February 25, after Cruz submitted the new request for entry of default.

On February 22, 2005, a Fagor employee forwarded a copy of Cruz's request for entry of default to Fagor's insurance carrier.

A default judgment in the amount of $259,114.50 was entered against Fagor on May 31,2005.

Fagor did not make an appearance in the matter until November 29, 2005, when Fagor's attorneys appeared ex parte seeking an order shortening time to allow Fagor to file and have heard a motion to set aside the entry of default and default judgment. The record provides no indication as to why Fagor failed to make an appearance in the matter between late February 2005 and late November 2005, and Fagor's briefing sheds no light on this issue.

The trial court granted Fagor's ex parte request, and Fagor filed its moving papers on November 30, 2005. In response to Fagor's motion, Cruz's attorney filed a declaration in which he stated that he had spoken with a United States Postal Service employee in Lyndhurst, New Jersey, who informed him that Hayes was an employee of Fagor, and that she regularly received mail on behalf of the corporation.² Fagor submitted the declaration of Patricio Barriga in which he avers that he never received the summons and complaint.

The trial court heard Fagor's motion to set aside the entry of default and default judgment on January 27, 2006. On February 1, the trial court granted the motion. Cruz filed a notice of appeal on February 16.

III. DISCUSSION

The trial court granted Fagor's request to set aside the default and default judgment on two grounds: (1) that Cruz failed to effectively serve the summons and complaint imtiating this action, rendering the judgment void, and (2) that Fagor established that an extrinsic mistake had prevented it from litigating the action on the merits, such that equitable relief was warranted. For the reasons set forth below, we conclude that the trial court abused its discretion in setting aside the default and default judgment.

A. The trial court erred in setting aside the default and default judgment on the ground that the judgment was void due to ineffective service

Although a trial court has discretion to vacate the entry of a default or subsequent judgment, this discretion may be exercised only after the party seeking relief has shown that there is a proper ground for relief, and that the party has raised that ground in a procedurally proper manner, within any applicable time limits. (See generally Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2003)[¶] 5:276 et seq., p. 5-66 et seq. (rev.# 1, 2006) [describing various grounds, procedures and time limits applicable to seeking relief from default].) The proper procedure and time limits vary, depending on the asserted ground for relief.

Fagor sought relief from the trial court pursuant to Code of Civil Procedure section 473, subdivision (d),³ which provides in relevant part: "The court ... may, on motion of either party after notice to the other party, set aside any void judgment or order." Fagor contends that Cruz failed to effectuate proper service of the summons and complaint in this case, and that any default or judgment entered subsequent to the faulty service was thus void. The trial court agreed with Fagor that Cruz failed to effectuate proper service of process of the summons and complaint on Fagor, an out-of-state corporation. Cruz contends on appeal that the trial court erred in its determination of the issue of the validity of service of process on Fagor. We agree.

1. Standard of review

Initially, we address Fagor's contention that the trial court's decision to set aside a default judgment should be reviewed for an abuse of discretion. The inclusion of the word "may" in the language of section 473, subdivision (d) makes it clear that a trial court retains discretion to grant or deny a motion to set aside a void judgment. However, the question in this appeal is not whether or not the trial court abused its discretion when it decided to set aside the default judgment, but whether or not the default and default judgment were in fact void. A trial court has no statutory power under section 473, subdivision (d) to set aside a judgment that is not void: Once six months have elapsed since the entry of a judgment, "a trial court may grant a motion to set aside that judgment as void only if the judgment is void on its face." (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1441, 29 Cal.Rptr.2d 746 (Dill).) We review de novo a trial court's determination that a judgment is void.

2. Cruz properly served Fagor with the summons and complaint

"`A judgment or order is said to be void on its face when the invalidity is apparent upon an...