TAT Capital Partners, Ltd. v. Feldman

• Decision Date: 12 June 2020
• Docket Number: H044004
• Court: California Court of Appeals Court of Appeals
• Parties: TAT CAPITAL PARTNERS, LTD., et al., Plaintiffs and Respondents, v. DAVID FELDMAN, Defendant and Appellant.

TAT CAPITAL PARTNERS, LTD., et al., Plaintiffs and Respondents, v. DAVID FELDMAN, Defendant and Appellant.

H044004

COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT

June 12, 2020

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Santa Clara County Super. Ct. No. 2005-1-CV-035531)

David Feldman, who is representing himself, appeals from postjudgment orders, filed September 14, 2016, that (1) denied his motion to set aside and vacate a 2010 judgment in favor of TAT Capital Partners, Ltd. (TAT), Sands Brothers Venture Capital LLC, and SB New Paradigm Associates LLC (the latter two entities collectively, Sands, and all three, respondents) and (2) directed Feldman to pay monetary sanctions of $8,025 to Sands pursuant to Code of Civil Procedure section 128.5.¹ (See § 904.1, subds. (a)(2), (a)(12).) The challenged judgment was affirmed by our prior opinion. (See ante, fn. 1.)

This court's prior opinion stated the following facts. TAT and Sands were venture capital firms that each held or owed a certain percentage of the shares of ZF Micro Devices (Devices). Devices had "contracted with National Semiconductor Corporation (NSC) to produce the embedded 'ZFx86' microchip." ZF Micro Solutions (Solutions) was the successor company to Devices.² Feldman was the founder and chief executive officer (CEO) of Devices and the president and CEO of Solutions. In a separate case, Solutions sued NSC on several grounds and ultimately settled. In this case, the trial court determined that existing contracts provided that TAT and Sands would receive their pro rata share of any Solutions' recovery from the NSC litigation, after deduction of attorney fees and litigation costs. The jury found in favor of TAT and Sands on breach-of-contract allegations, and TAT and Sands were awarded damages. Individual defendants to whom Solutions had transferred NSC proceeds were found to be "fraudulent transferees," and damages were imposed on them.

In our prior opinion, this court addressed multiple contentions and, as indicated, affirmed the judgment. In this appeal, Feldman contends that the challenged judgment is "void on its face." Feldman claims that (1) TAT and Sands were legally incapable of maintaining the action before they complied with Corporations Code sections 2105, subdivision (a), and 2203, subdivision (c), and therefore the trial court lacked jurisdiction to proceed with the action; (2) the trial court violated the one final judgment rule and due process by severing the first amended cross-complaint (cross-complaint) and not adjudicating all affirmative defenses in the action; and (3) TAT and Sands "induced errors" by "[m]isrepresenting essential issues of fact and law" and committed "extrinsicfraud regarding their California activities and status[, which] denied [Feldman's] right to present evidence of their incapacity."

We find no basis for reversal of the challenged orders and affirm them.

IProcedural History

Long before the filing of Feldman's 2016 motion to set aside and vacate the judgment, defendants filed a postjudgment motion requesting an order setting aside and vacating the judgment and compelling plaintiffs and their attorneys to return all monies obtained from defendants. It was heard on January 24, 2014. The trial court denied the motion, and the ruling was appealed (H040790). Pursuant to defendants' request for dismissal of their appeal, this court dismissed the appeal.

On July 27, 2016, Feldman, acting in propria persona, filed a new postjudgment motion for an order setting aside and vacating the judgment and compelling plaintiffs and their attorneys to return all monies obtained from him and all the other defendants. The motion asserted that the judgment was void because (1) the trial court "lacked the jurisdiction" to grant relief to TAT and Sands without their prior compliance with all of the requirements of Corporations Code section 2203, subdivision (c); (2) the trial court "lacked the jurisdiction to grant relief to the [Sands] entities to proceed with their claims that were time-barred at the time the [Sands] entities registered with the Secretary of State"; (3) "no final judgment could be entered" because Solutions' "mandatory cross-complaint . . . was improperly severed"; and (4) the trial court denied defendants' due process rights by refusing to allow their affirmative defenses to be heard. (Emphasis omitted.) Feldman brought the motion pursuant to section 473, subdivision (d), which provided that a court upon motion may set aside a void judgment or order.

A hearing on Feldman's motion was held on August 25, 2016, and the trial court denied the motion. In its written order, the court stated that the motion constituted a motion to reconsider its prior rulings that had been decided adversely to Feldman and thatFeldman had not satisfied the requirements of section 1008 for bringing a motion for reconsideration. The court also determined that Feldman was barred "as a matter of law" from again raising challenges to final adverse rulings that had been subject to judicial review.

The trial court further found that Feldman's motion was frivolous, meritless, unreasonable, and brought in bad faith and for the purpose of harassing TAT and Sands within the meaning of section 128.5. It determined that Sands had reasonably incurred attorney fees in the amount of $7,875.00 (17.50 hours at an hourly rate of $450) and costs in the amount of $ 150.00 in opposing Feldman's motion. It ordered Feldman to pay $8,025 to Sands.

IIDiscussion

A. Governing Law

1. Void Judgments and Merely Voidable Judgments

Under subdivision (d) of section 473, a "court . . . may, on motion of either party after notice to the other party, set aside any void judgment or order." Also, "a court has inherent power, apart from statute, to correct its records by vacating a judgment which is void on its face, for such a judgment is a nullity and may be ignored. [Citations.]" (Olivera v. Grace (1942) 19 Cal.2d 570, 574 (Olivera).)

" 'Lack of jurisdiction in its most fundamental or strict sense means an entire absence of power to hear or determine the case, an absence of authority over the subject matter or the parties.' " [Citation.] When a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void, and 'thus vulnerable to direct or collateral attack at any time.' [Citation.]" (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660 (American Contractors Indemnity Co.).) "Because it concerns the basic power of a court to act, the parties to a case cannot confer fundamental jurisdiction upon a court by waiver, estoppel, consent, or forfeiture. [Citation.]" (Quigley v. GardenValley Fire Protection Dist. (2019) 7 Cal.5th 798, 807 (Quigley).) " '[A]n act beyond a court's jurisdiction in the fundamental sense is null and void' ab initio. [Citation.]" (People v. Lara (2010) 48 Cal.4th 216, 225 (Lara).) "Defects in fundamental jurisdiction therefore 'may be raised at any point in a proceeding, including for the first time on appeal,' or, for that matter, in the context of a collateral attack on a final judgment. [Citation.]" (Quigley, supra, at p. 807.)

"By bringing an action, [a] plaintiff subjects himself [to the court's jurisdiction] both as to the claim sued upon and as to any counterclaim or cross-complaint that a defendant may bring against him under the local law of the state. [Citations.]" (Judicial Council com., 14A West's Ann. Code Civ. Proc. (2004 ed.) foll. § 410.10, p. 378; see Nobel Farms, Inc. v. Pasero (2003) 106 Cal.App.4th 654, 658-659; Adam v. Saenger (1938) 303 U.S. 59, 67-68.) In general, a court acquires jurisdiction over a defendant by personal service of a summons (§ 410.50, subd. (a)) or "whenever the defendant has made a general appearance in the case. [Citations.]" (Judicial Council com., 14A West's Ann. Code Civ. Proc. (2004 ed.) foll. § 410.50, pp. 514-515; see §§ 410.50, subd. (a), 1014.) " 'The principle of "subject matter jurisdiction" relates to the inherent authority of the court involved to deal with the case or matter before it.' [Citation.]" (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 196.) "Jurisdiction of the court over the parties and the subject matter of an action continues throughout subsequent proceedings in the action." (§ 410.50, subd. (b).)

In contrast, there may be a lack of jurisdiction in a non-fundamental sense when a court exceeds its power under governing law. " '[T]hough the court has jurisdiction over the subject matter and the parties in the fundamental sense, it has no "jurisdiction" (or power) to act except in a particular manner, or to give certain kinds of relief, or to act without the occurrence of certain procedural prerequisites.' " (Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 288 (Abelleira).) But "[i]f the lower court has power to make a correct determination of a particular issue, it clearly has power to make anincorrect decision, subject only to appellate review and not to restraint by prohibition." (Id. at p. 287; see In re Marriage of Goddard (2004) 33 Cal.4th 49, 56 ["Once a court has established its power to hear a case, it may make errors with respect to areas of procedure, pleading, evidence, and substantive law. [Citations.]"].)

" When a court has fundamental jurisdiction, but acts in excess of its jurisdiction, its act or judgment is merely voidable. [Citations.] That is, its act or judgment is valid until it is set aside, and a party may be precluded from setting it aside by 'principles of estoppel, disfavor of collateral attack or res judicata.' [Citation.] Errors which are merely in excess of jurisdiction should be...