Strathvale Holdings v. E.B.H.

• Decision Date: 26 January 2005
• Docket Number: No. B169603.,B169603.
• Citation: 25 Cal.Rptr.3d 372,126 Cal.App.4th 1241
• Court: California Court of Appeals Court of Appeals
• Parties: STRATHVALE HOLDINGS et al., Plaintiffs and Appellants, v. E.B.H., et al., Defendants and Respondents.

25 Cal.Rptr.3d 372

126 Cal.App.4th 1241

STRATHVALE HOLDINGS et al., Plaintiffs and Appellants, v. E.B.H., et al., Defendants and Respondents.

No. B169603.

Court of Appeal, Second District, Division 4.

January 26, 2005.

Law Office of Gary Kurtz and Gary Kurtz, Woodland Hills, for Plaintiffs and Appellants.

Shaub, Williams & Nunziato, David R. Shaub and Lisbeth Bosshart, Los Angeles, for Defendants and Respondents.

EPSTEIN, P.J.

Plaintiffs in a suit arising from a fraudulent investment scheme appeal from orders of the trial court dismissing three defendants, Eytan Halevy, Maria Halevy, and Daniel Halevy, for want of personal jurisdiction. We dismiss as untimely the purported appeal from the order granting Eytan Halevy's motion to quash service of summons and complaint (and to dismiss) on the ground of lack of personal jurisdiction. We reject plaintiffs' argument that the other two defendants, Eytan's wife, (whose full name is Maria Luisa De Abreu Freire Bandeira Halevy; hereafter Maria), and Eytan's son, Daniel Bandeira Halevy (Daniel) failed to preserve their challenge to the court's personal jurisdiction over them. We affirm the order vacating default judgments as to them.

FACTUAL AND PROCEDURAL SUMMARY

This is an action arising from a fraud scheme involving Rob Nite, conducted through his business, Manor Financial Services. Plaintiffs¹ allege they invested over $1,000,000 and were promised returns of $102,000,000. The defendants are various entities² and individuals. We are concerned with only three of the individual defendants in this appeal — Eytan Halevy (Eytan), Maria, and Daniel.³ According to the allegations of the complaint, the defendants came into possession of at least $750,000 of the proceeds of the Manor Financial scheme, part of which was invested by plaintiffs, and part which apparently came from other victims.

The complaint alleges that Eytan, Maria, and Daniel had "substantial contact with the State of California, including without limitation, deriving the funds at issue in this action from California and from fraudulent activities which occurred in California." Plaintiffs sought imposition of a constructive trust, a resulting trust, and alleged causes of action for conversion and unfair business practices.

Eytan successfully moved to quash service of summons and complaint, and for dismissal of the action on the ground of lack of personal jurisdiction. The motion was granted on August 1, 2002, based on the trial court's finding that there was no basis to assert personal jurisdiction over Eytan.

In February 2003, plaintiffs obtained entry of defaults against Daniel and Maria. In March 2003, Maria and Daniel moved to quash service of summons, to vacate the defaults and dismiss the action on the grounds of lack of personal jurisdiction and inconvenient forum, under Code of Civil Procedure sections 473 and 418.10, subdivision (a)(1).⁴

Maria and Daniel argued that service of process upon them was void because plaintiffs failed to comply with the Hague Service Convention, the exclusive method of service upon a defendant resident in a country which is a signatory to the convention. They also argued the court lacked personal jurisdiction over them because they lack minimum contacts with this forum. They submitted declarations that they are citizens and residents of Portugal; never lived in California; never treated California as their domicile; never owned real or personal property in California; have not done business in California; have not engaged in or solicited business in California; have not advertised or sold goods or services in California; have not availed themselves of the privilege of conducting business in California; have not voted or held any license from California; have never sued in California; and have never been employed by a California employer.

Maria's declaration stated that Eytan was deceased. She said she had received the notice of the filing of the original summons and proof of service on herself, and her son, as well as on the entity defendants "E.B.H. Financial Holdings, S.A., Maritime Finance Ltd., EBH Servicoos Financieros Limitida, EBH Financial Services Mongolia Ltd, Bohi Tower, Ltd., and Maritime Ltd." She disclaimed any knowledge of the activities of these entities and said she did not know why proofs of service for these entities were sent to her residence. Maria declared that she had not participated in these entities and was not aware of their object. Maria further declared that the plaintiffs are unknown to her, she had never had any personal or business contact with them, nor had she had personal or business dealings with any person whom she knew to have received monies from any of plaintiffs. Maria said she had no involvement in this action until she received the default papers.

Daniel's declaration was similar. He denied any knowledge or participation in the activities of the entity defendants. He also denied any contact, personal or business, with plaintiffs, or with persons he knew to have received money from plaintiffs.

In opposition to the motion brought by Maria and Daniel, plaintiffs argued there was no showing of a reason to set aside the default. They contended service was properly effected under the Hague Service Convention. Plaintiffs took the position that the trial court could not consider the personal jurisdiction issue because the motion to quash was untimely, and the requirements necessary to set aside the default had not been satisfied. This argument was premised on the assertion that Maria and Daniel had waived the personal jurisdiction issue by not filing a timely objection to personal jurisdiction. Plaintiffs did not address the merits of the jurisdictional issues.

On April 28, 2003, Maria and Daniel filed a separate motion to vacate default as void on the grounds of lack of personal jurisdiction under section 473, subdivision (d). They asserted personal jurisdiction was lacking because there was no valid service of process and because they lacked minimum contacts with California. This motion was supported by a declaration by Maria reiterating her lack of contact with this forum.

Plaintiffs opposed the motion on the ground that Maria and Daniel had not demonstrated the grounds to set aside a default under section 473, subdivision (b), although the motion was brought under section 473, subdivision (d). Plaintiffs asserted: "There is absolutely no legitimate basis to set aside the default, so this court may not address the substantive jurisdictional issues." They did acknowledge: "If the summons and complaint were not properly served, then jurisdiction never attached in this case, and the default may be declared void. That is one of narrow exceptions to the exclusivity of Code of Civil Procedure § 473. See Taylor v. Varga, 37 Cal.App.4th 750, 761 (1995)." Plaintiffs went on to argue that service of process was proper under the Hague Service Convention.

In response to Maria and Daniel's argument that the default was void because the California court did not have personal jurisdiction, plaintiffs argued that the default was not void because service was proper. They cited authority to the effect a judgment that is void for lack of jurisdiction, but the invalidity of which does not appear on its face, may be set aside on motion within a reasonable time after its entry. (Citing Fidelity Bank v. Kettler (1968) 264 Cal.App.2d 481, 484, 70 Cal.Rptr. 500.) From this, plaintiffs concluded: "The instant case involves a default which is presumptively valid based on the court file, and defendants' challenge is based on the evidence presented in their moving papers. Thus, according to defendants' own authority, the default cannot be declared void." Plaintiffs also argued that Maria and Daniel had waived the personal jurisdiction defect by failing to raise it before entry of default. In a surreply, plaintiffs argued that objections to personal jurisdiction do not render a default void.

We are not provided with the transcript of the hearing. The trial court granted both the motion to quash and the motion to vacate default. An order of dismissal terminating the action states the basis for the trial court's ruling: "This Court found that there was no personal jurisdiction over defendants Maria Luisa de Abreu Freire Bandeira Halevy and Daniel Bandeira Halevy." On that basis, the court vacated the default and then dismissed the action against those two defendants. Plaintiffs appealed from the order of dismissal.

DISCUSSION

I

We dispose of the purported appeal from the order granting Eytan Halevy's motion to quash service of summons and complaint (and to dismiss) on the ground of lack of personal jurisdiction. (§ 418.10, subd. (a)(1).) The order granting the motion was appealable under section 904.1, subdivision (a)(3). (Gould, Inc. v. Health Sciences, Inc. (1976) 54 Cal.App.3d 687, 126 Cal.Rptr. 726.) Under California Rules of Court, rule 2, an appeal must be filed within 60 days of mailing by the court of the notice of entry or a file-stamped copy of the order; 60 days from notice by a party; or 180 days after entry of judgment. The motion was granted on August 1, 2002 by minute order, which did not direct that a written order be prepared. Under California Rules of Court, rule 2(c)(2), the entry date of an appealable order is the date it is entered in the permanent minutes unless the minute order directs the preparation of a written order. The order granting Eytan Halevy's motion was thus "entered" for the purposes of calculating the time to appeal, on August 2, 2002. (See Hughey v. City of Hayward (1994) 24 Cal.App.4th 206, 208-209, 30 Cal. Rptr.2d 678.)

The notice of appeal was not filed until August 20, 2003, more than one year from the order granting the motion to quash. Under section 906, on appeal, we may not review any order from which a separate appeal might have been taken. (See In re Marriage of Curtis (1992) 7 Cal.App.4th 1,...