Holt v. Kormann Rockster Recycler GmbH

• Decision Date: 28 March 2012
• Docket Number: Super. Ct. No. 30-2009-00323416,G045086
• Parties: RICHARD B. HOLT, Plaintiff and Appellant, v. KORMANN ROCKSTER RECYCLER GMBH, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

RICHARD B. HOLT, Plaintiff and Appellant, v. KORMANN ROCKSTER RECYCLER GMBH, Defendant and Respondent.

G045086

Super. Ct. No. 30-2009-00323416

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

Dated: March 28, 2012

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

Appeal from an order of the Superior Court of Orange County, Robert J. Moss and David T. McEachen, Judges. Affirmed.

Fasel & Fasel, Thomas A. Fasel and Frank R. Fasel for Plaintiff and Appellant.

Law Offices of John R. Walton, John R. Walton and Nikki Ma for Defendant and Respondent.

INTRODUCTION

Richard B. Holt sued Kormann Rockster Recycler GmbH (Kormann), Rockster North America (RNA), and Stephane Guerchon for various causes of action arising out of an agreement to buy a rock-crushing machine. Holt attempted service of process on all three defendants under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, article 10 (Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638) (the Hague Service Convention), by having Guerchon served at his home in Montreal, Quebec, Canada, even though Kormann is an Austrian company and Austria is not a signatory to the Hague Service Convention. Guerchon and his family own RNA, which is a Canadian corporation, and he is not an officer, director, agent, or employee of Kormann. The summons served on Guerchon did not provide the statutorily required notice that he was being served on behalf of Kormann under Code of Civil Procedure section 416.10.¹

Holt obtained a default judgment against Kormann after it failed to respond to the complaint. More than six months after entry of judgment, the trial court granted Kormann's motion to vacate the default judgment and quash service of summons. Holt appeals from the trial court's order granting Kormann's motion. (§ 904.1, subd. (a)(3) [order quashing service of summons is appealable].)

We affirm. The default judgment was void on its face because the summons did not comply with section 412.30, which requires in an action against a corporation that the summons notify the person being served that he or she is being served on behalf of the identified corporation. The summons in this case did not provide that information and did not impart actual notice to Guerchon that he was being served onbehalf of Kormann. We reject Holt's argument that Kormann was required to register with the California Secretary of State.

FACTS

Holt, a California resident, is a licensed California grading and demolition contractor. Kormann is an Austrian corporation that manufactures rock-crushing machines. Its principal place of business is Ennsdorf, Austria. Kormann is not registered or qualified to do business in California and does not maintain a registered agent for service of process in the state.

RNA is a Canadian corporation with its principal place of business in Montreal, Quebec, Canada. Guerchon is a resident of Montreal and is RNA's chief executive officer. He and his family own 100 percent of RNA, which is not a subsidiary of Kormann. RNA has the exclusive right to sell, distribute, and service Kormann products in North America. Upon making a sale of equipment, RNA orders the equipment from Kormann, which manufactures the item and sells it to RNA, which distributes the equipment to the buyer.

Holt became interested in purchasing a Kormann rock crusher when he saw an advertisement in a trade magazine. In August 2009, he contacted Guerchon at RNA to ask about purchasing a rock crusher. Ultimately, Holt and RNA entered into a written purchase order agreement by which Holt agreed to purchase a Rockster R1100 "demo unit" from RNA for 352,378 euros. Holt paid the 10 percent deposit by making a wire transfer of $52,200 to RNA's bank account at Bank TD Canada Trust.

Several weeks later, Holt notified RNA that he wanted to cancel the purchase agreement and requested the return of his deposit. The reason for the request and whether it was justified are disputed issues in the lawsuit.

Guerchon contacted Kormann to request cancellation of Holt's order. Wolfgang Kormann of Kormann informed Guerchon the deposit could not be refundedand the order could not be cancelled unless RNA paid a fee. When Guerchon related this information to Holt, he replied: "The ball is in your court as President of [RNA]. I dealt with you, not [Kormann] in Austria."

PROCEDURAL HISTORY

In November 2009, Holt filed a complaint against RNA, Guerchon, and Kormann, seeking recovery of the deposit, damages for lost profits and emotional distress, attorney fees, and punitive damages under eight causes of action.

Holt's attorneys initiated service of process on all three defendants through the Hague Service Convention. The United States and Canada are signatories to the Hague Service Convention; Austria is not. Pursuant to the Hague Service Convention, Attorney Frank R. Fasel provided the Ministry of Justice of the Province of Quebec with a request for service on Guerchon, RNA, and Kormann. The Ministry of Justice dispatched a process server to Guerchon's home in January 2010. The process server encountered Sandrine Guerchon, Guerchon's wife, and served the papers on her.

Several days later, Fasel filed, in the Orange County Superior Court, a declaration of service on Guerchon. In February 2010, Holt attempted to file a request for entry of default against all three defendants, but the court rejected the document because a proof of service on RNA and Kormann had not been filed. A few days later, Fasel filed a declaration of service on RNA, Guerchon, and Kormann, claiming they had been personally served on "January 11, 2009" (the correct year is 2010). Accompanying the declaration of service was a certificate of service signed by the Canadian process server, who stated he served Sandrine Guerchon on January 11, 2010.

On the day the second declaration of service was filed, Fasel also filed a second request for entry of default against all three defendants. The trial court ordered entry of default only against Kormann because RNA and Guerchon had appeared andfiled a motion to quash. According to Holt's opening brief, RNA and Guerchon ultimately answered the complaint.

In July 2010, Holt filed a request for a default judgment against Kormann in the amount of $168,204.48. Holt filed a declaration of mailing signed by his counsel, Thomas A. Fasel, stating the request for entry of default judgment was served on Kormann by mail to Guerchon's home address in Montreal, Quebec, Canada. A default judgment against Kormann in the amount of $175,029.68 was signed by the court and entered on July 16, 2010.

In February 2011, Kormann filed a motion to quash and set aside default judgment (Motion to Quash) asserting insufficiency of service of process and lack of personal jurisdiction. Holt opposed the Motion to Quash. Judge Robert J. Moss orally granted the Motion to Quash on the ground Kormann had not been served properly with the summons and complaint. Judge David T. McEachen signed the formal order granting the Motion to Quash, quashing service of the summons and complaint on Kormann, and vacating the default judgment against it as void ab initio. Holt timely appealed.

OVERVIEW AND STANDARD OF REVIEW

"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." (§ 473.5, subd. (a).) A motion to quash service of summons may be made concurrently with the motion to set aside the default or default judgment. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) ¶ 3:398, pp. 3-93 to 3: 94 (rev. #1, 2010).)

A default judgment entered against a defendant who was not served with a summons in the manner prescribed by law is void. (Hearn v. Howard (2009) 177Cal.App.4th 1193, 1200.) Under section 473, subdivision (d), the trial court may set aside a default judgment that is void as a matter of law, due to improper service of process. (Hearn v. Howard, supra, at p. 1200.) Once six months have elapsed from entry of judgment, a trial court may set aside the judgment as void only if it is void on its face. (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 496.) A judgment is void on its face when the invalidity appears on the judgment roll, which includes the proof of service of summons. (Ibid.) We review de novo the trial court's determination the judgment is void. (Ibid.)

DISCUSSION

I.The Hague Service Convention Does Not Apply.

Holt argues Kormann was properly served with the summons and complaint pursuant to the Hague Service Convention. Kormann is an Austrian corporation, and Austria is not a signatory to the Hague Service Convention. (See State of California v. Western Natural Rubber, Inc. (1991) 235 Cal.App.3d 1495, 1499 ["As Austria is not a signatory to the Hague Convention, the State had to arrange for service through the United States Embassy in Austria"]; Prewitt Enterprises, Inc. v. Organization of Petroleum Exporting Countries (2003) 353 F.3d 916, 922-923, fn. 10 ["while the United States is party to the Hague Service Convention, Austria is not"].)

Holt argues service on Kormann pursuant to the Hague Service Convention was proper because RNA is a subsidiary or distributor of Kormann, RNA is a Canadian corporation, and Canada is a signatory to the Hague Service Convention. The evidence showed that Guerchon and his family own RNA, which is not a subsidiary of Kormann. Guerchon is the chief...