National Diversified Services, Inc. v. Bernstein

• Decision Date: 17 May 1985
• Citation: 214 Cal.Rptr. 113,168 Cal.App.3d 410
• Court: California Court of Appeals
• Parties: NATIONAL DIVERSIFIED SERVICES, INCORPORATED, an Illinois corporation, Plaintiff and Respondent, v. Fredric M. BERNSTEIN, Defendant and Appellant. A025362.

Page 113

214 Cal.Rptr. 113

168 Cal.App.3d 410

NATIONAL DIVERSIFIED SERVICES, INCORPORATED, an Illinois corporation, Plaintiff and Respondent, v. Fredric M. BERNSTEIN, Defendant and Appellant.

A025362.

Court of Appeal, Sixth District, California.

May 17, 1985.

As Modified May 22, 1985.

Ned E. Tolbert, Monterey, for defendant and appellant.

C. Michael McClure, Walker, McClure, Bohnen & Brehmer, Monterey, for plaintiff and respondent.

FOLEY, Associate Justice ^*.

Defendant Fredric Bernstein appeals from the November 7, 1983 order which denied his motion to vacate a default judgment entered against him and nonappealing codefendants on May 5, 1983, in the amount of $56,779.89. His appeal raises the questions whether a default judgment is void on its face when the record reflects the defendant was not served within three years of the commencement of the action and whether the complaint adequately notified him of the damages ultimately awarded.

The original complaint filed on June 4, 1979, did not name Bernstein as a defendant. Plaintiff National Diversified Services, Inc. alleged that on May 30, 1978, it entered into a written agreement with Ramsey Motor Co., Inc. to purchase two Ferrari automobiles for a total price of $75,284 and to pay for them by conveying a 1969 Trojan Voyager boat with a trade-in value of $22,500 and owing $52,784. Plaintiff alleged further that it had conveyed the boat, but defendants Ramsey Motor Co., Inc., Ray Ramsey, and Ferrari of Monterey had refused to deliver the automobiles. Plaintiff sought specific performance, or alternatively, "damages which are in excess of $10,000," and return of the boat. On November 20, 1981, plaintiff's motion to amend the complaint was granted, adding allegations designed to pierce the corporate veil of Ramsey Motor Co., Inc. to reach Ray Ramsey. Fredric Bernstein was named as Doe 1 by an amendment filed December 7, 1981. On January 29, 1982, Bernstein's motion to quash service on him by service on an attorney who represented him in other matters was granted. A return of service was filed on October 29, 1982, showing that Bernstein had been personally served in North Palm Beach, Florida on October 22, 1982. A request to enter his default was filed on November 26, 1982, which did not specify a judgment amount to be awarded, and his default was entered on the same day. The judgment was entered after a court trial against Ray Ramsey appearing in pro per and on behalf of Ramsey Motor Co., Inc. His motion to vacate was filed October 14, 1983.

The three years in which to serve Bernstein under former Code of Civil Procedure section 581a ¹ ran from June 4, 1979, when the original complaint was filed, although he was originally a fictitious defendant, and plaintiff does not contend otherwise. (Lopa v. Superior Court (1975) 46 Cal.App.3d 382, 387-388, 120 Cal.Rptr. 445, and cases there cited.) Defendant argues that because he was not served until October 22, 1982, over four months beyond the three-year period, the service was invalid and the resulting default judgment based thereon was void and subject to attack at any time.

In 1933, a provision was added to Code of Civil Procedure section 473 that: "The court may ... on motion of either party after notice to the other party, set aside any void judgment or order." This amendment codified the inherent power of the court to set aside an order or judgment void on its face at any time. (F.E. Young Co. v. Fernstrom (1938) 31 Cal.App.2d Supp. 763, 765, 79 P.2d 1117; Estate of Estrem (1940) 16 Cal.2d 563, 571-572, 107 P.2d 36.) If the judgment is void on its face, then the six months limit set by section 473 to make other motions to vacate a judgment does not apply. (Thorson v. Western Development Corp. (1967) 251 Cal.App.2d 206, 210-212, 59 Cal.Rptr. 299.)

Defendant's argument would benefit by citation to Pearson v. Superior Court (1932) 122 Cal.App. 571, 574-575, 10 P.2d 489, which held that a default judgment based upon an untimely return of summons "was void upon the face of the record for want of jurisdiction." (The case may be found by looking under the "Jurisdiction" annotation to § 581a in West's Annotated Codes.) Pearson relied on Vrooman v. Li Po Tai (1896) 113 Cal. 302, 305-307, 45 P. 470, which reversed a plaintiff's judgment based on an untimely return of service under a statutory predecessor of section 581a. Vrooman was not a default judgment. There defendant raised the question in his answer, rather than following the more usual practice of filing a motion to dismiss. (Id., at p. 304, 45 P. 470.)

Defendant should prevail if Pearson and the approach suggested by Vrooman retain vitality. According to Pearson, supra, 122 Cal.App. at page 575, 10 P.2d 489, when a return of summons was filed after the three-year period: "[T]he trial court then had jurisdiction in that proceeding to do nothing but dismiss the action upon its own motion or upon the motion of a party beneficially interested therein...."

In our view, however, the rationale of Pearson has succumbed to the evolution of the law regarding dismissals for failure to serve and return summons within three years. Several statutory and case law exceptions have developed since the time of Pearson, the net effect of which has been to make dismissal discretionary, rather than mandatory. The statute at the time of Pearson provided that no further proceedings shall be had in an action when summons was not returned within three years unless the defendant had made an appearance within three years, or unless the defendant was absent from the state or concealing himself within the state to avoid service. (See quotation of statute in Bellingham Bay L. Co. v. Western A. Co. (1917) 35 Cal.App. 515, 517, 170 P. 632; Stats. 1907, ch. 376, § 2, p. 712.) In 1949, the statute was amended to allow for an additional exception to dismissal when a written stipulation to extend time was entered into. (See Cahn v. Jones (1950) 101 Cal.App.2d 345, 348, 225 P.2d 570; Stats.1949, ch. 744, § 89, p. 1869.) In persuasive dictum contained in the 1958 case, Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736, 740-741, 329 P.2d 489, the court created an additional exception to mandatory dismissal when it was impracticable or futile to serve a summons and return it within three years. The court acknowledged a "discretionary power" to not dismiss. This case law exception was essentially codified by the 1982 amendment to former section 581a in subdivision (f)(2). In 1971, Tresway Aero, Inc. v. Superior Court (1971) 5 Cal.3d 431, 437-439, 96 Cal.Rptr. 571, 487 P.2d 1211, created yet another exception to mandatory dismissal based on an estoppel of the defendant. This case law exception was essentially codified by the 1982 amendment to former section 581a in subdivision (f)(1).

Thus, the law has evolved to where dismissal is "mandatory" with exceptions. (E.g., Busching v. Superior Court (1974) 12 Cal.3d 44, 51, 53, 115 Cal.Rptr. 241, 524 P.2d 369; see the 1982 amendment to § 581a adding subdivision (f).) A court retains jurisdiction over an action although a summons is not returned within three years at least until a motion to dismiss is granted. (Big Bear Mun. Water Dist. v. Superior Court (1969) 269 Cal.App.2d 919, 924, 75 Cal.Rptr. 580.) The court obviously has the discretion to retain jurisdiction if an exception applies.

Here defendant did not seek dismissal of the action upon receipt of service and the court did not dismiss the action on its own motion ² for any failure to serve summons on defendant or return the same within three years. Since dismissal would have been discretionary, the court did not lose jurisdiction to do other than dismiss the action. Instead the court retained jurisdiction over the action.

It is illogical to say any longer that a judgment based on a late return of summons is void on its face. A judgment is void on its face when a jurisdictional defect appears on review of the judgment-roll. (Canadian etc. Co. v. Clarita etc. Co. (1903) 140 Cal. 672, 674, 74 P. 301.) A late return is not necessarily invalid and its validity will often depend on factors not appearing in the record until opposition to a motion to dismiss is filed. For example, a party's appearance may avoid dismissal, although not filed within the three-year period. (General Ins. Co. v. Superior Court (1975) 15 Cal.3d 449, 454, 124 Cal.Rptr. 745, 541 P.2d 289, and cases there cited.) A written stipulation extending time also may avoid dismissal, although not filed within the three-year period. (Big Bear Mun. Water Dist., supra, 269 Cal.App.2d 919, 923-924, 75 Cal.Rptr. 580.) The facts justifying estoppel of a defendant or demonstrating the impracticability or futility of returning a summons also may not adequately appear on the face of the record absent a showing opposing a motion to dismiss.

It is established that a default judgment, at least one entered under Code of Civil Procedure section 585, subdivision 2 as here, is valid when based on actual service of summons on the defendant, though no proof of service is filed prior to entry of the judgment. (Herman v. Santee (1894) 103 Cal. 519, 523-525, 37 P. 509; Hibernia S. & L. Soc. v. Matthai (1897) 116 Cal. 424, 426, 48 P. 370.) It is inconsistent to maintain a default judgment can be valid without a proof of service, but it can become void if the proof is filed late. We do not wish to encourage counsel to withhold filing a return of summons until a default judgment is challenged for inadequate service, yet that would seem to have been the better course under Pearson, supra, 122 Cal.App. 571, 10 P.2d 489.

The modern rule must be that a judgment based on a late return of summons is irregular, but not void. In Drake v. Duvenick (1873) 45 Cal. 455, 463, 466, the court held that an irregularity in obtaining jurisdiction did not render the ensuing default judgment void and subject to collateral attack. Also a default judgment is...