First Am. Title Ins. Co. v. Banerjee

87 Cal.App.5th 37

303 Cal.Rptr.3d 288

FIRST AMERICAN TITLE INSURANCE COMPANY, Plaintiff and Respondent,

v.Kaushik BANERJEE et al., Defendants and Appellants.

H048731

Court of Appeal, Sixth District, California.

Filed December 29, 2022

Jeffrey Lowenthal, Jill K. Cohoe, San Francisco, Steyer, Lowenthal, Bookrookas, Alvarez & Smith, LLP, for Plaintiff and Respondent

Paul A. Frassetto, San Francisco, Frassetto Law Offices, for Defendants and Appellants

Grover, J. Plaintiff First American Title Insurance Company, Inc. (First American) obtained a default judgment against defendants Kaushik Banerjee and Arkesh Ventures, Inc. (collectively, defendants) in an action to enforce a commission agreement related to the sale of real property. Defendants unsuccessfully moved to set aside the default judgment.

Defendants appeal from the order denying their motion to set aside the default; they have not directly appealed from the default judgment. Defendants argue the trial court was incorrect to find that substituted service of the original summons and complaint was properly effected. They also argue the judgment is void as to Banerjee because the complaint does not state a cause of action against him. For the reasons stated here, we will affirm the order denying the motion to set aside the default judgment.

I. TRIAL COURT PROCEEDINGS

The original plaintiff in this case was Golden Properties, Inc. dba California Golden Properties (Golden Properties). According to the complaint, Golden Properties acted as a real estate broker for a rental property owned by Arkesh Ventures, Inc. The complaint describes defendant Banerjee as "the President of [Arkesh Ventures] [who] had complete authority to enter into agreements" on behalf of the corporation. The complaint alleges "defendants, and each of them, were the agents, servants, employees, or alter egos of their co-defendants."

Golden Properties arranged for a tenant to lease the rental property in 2011 for five years. A commission agreement between Arkesh Ventures and Golden Properties required Arkesh Ventures to pay Golden Properties a commission if the tenant decided to buy the property. The commission would be three percent of the sales price.

The tenant exercised an option to renew the lease, and ultimately purchased the property from Arkesh Ventures in 2016 for $4,850,000. Golden Properties demanded that First American (as escrow holder for the sale) hold the three percent commission ($145,500) and an outstanding lease fee ($5,994.95). First American initially indicated it was holding the funds demanded by Golden Properties, but then did not pay Golden Properties. Arkesh Ventures and Banerjee refused to pay Golden Properties the commission. The complaint filed in March 2017 alleges a breach of contract cause of action against Arkesh Ventures and Banerjee, and a promissory estoppel cause of action against First American.

Golden Properties served the summons and complaint on Arkesh Ventures and Banerjee through substituted service. The process server described in a declaration of diligence that service was attempted at an address in Pleasanton on six occasions in March 2017. On the final attempt, someone at the Pleasanton address denied knowledge of Banerjee or Arkesh Ventures. According to the declaration, the process server then attempted service at a gated community address on Kingsmill Terrace in Dublin, California on seven occasions. Banerjee's name was listed on the directory, but there was no answer on the intercom and the process server was unable to gain access through the gate on those first seven attempts. On the eighth attempt at the Kingsmill Terrace address in April 2017, the process server served the documents by substituted service on a "co-resident" who indicated Banerjee was not home. (Capitalization omitted.) The process server also mailed a copy of the documents addressed to Banerjee at that Kingsmill Terrace address.

Defaults were entered against Arkesh Ventures and Banerjee in June 2017 after they did not file a responsive pleading. First American cross-complained against Arkesh Ventures and Banerjee for indemnity and contribution in July 2017. A proof of service indicates Banerjee was personally served the summons and cross-complaint by a process server in September 2017.

Golden Properties settled its claims with First American and assigned its claims against Arkesh Ventures and Banerjee to First American. The trial court entered an order substituting First American as the sole plaintiff in the action in June 2019. First American requested entry of default judgment as to Arkesh Ventures and Banerjee in December 2019. The trial court entered default judgment against Arkesh Ventures and Banerjee in May 2020.

Defendants moved to set aside the default and default judgment in June 2020 on three grounds: (1) that the judgment against Banerjee was void for failure to state a cause of action against him; (2) that the judgment was void because service of the original summons and complaint was improper; and (3) that the default judgment should be set aside for mistake, inadvertence, surprise, or excusable neglect ( Code Civ. Proc., § 473, subd. (b). Unspecified statutory references are to this Code.) Part of the evidence supporting the motion was a declaration from Banerjee stating he did not live at the Kingsmill Terrace address when the original summons and complaint was served by substituted service. As part of its opposition, First American attached a printout from the business search function on the California Secretary of State's website showing a mailing address for Arkesh Ventures that matches the Kingsmill Terrance address where substituted service occurred.

The trial court denied the motion by written order. The court found that defendants "were served by substitute service on 19 April 2017 at 6079 Kingsmill Terrace in the City of Dublin." The order notes the "process server declares that she left the summons and complaint with an individual who identified himself as a co-resident of the property" and who stated that "defendant Banerjee was not home at the time. The process server also mailed a copy of the summons and complaint to the defendants at this address." The court denied discretionary relief under section 473, subdivision (b), finding defendants did not act diligently. The court found that Banerjee was personally served with the cross-complaint in 2017, two months after default had been entered on the complaint. Defendants nonetheless waited more than two years before moving to set aside the default in 2020 after the default judgment had been entered. Finally, the court found the judgment was not void as to Banerjee because the complaint contained an alter ego allegation.

II. DISCUSSION

A. SUBSTITUTED SERVICE WAS PROPERLY EFFECTED

Challenging substitute service of the original summons and complaint, defendants contend the default judgment is void for lack of personal jurisdiction over them. A party may move to set aside a void judgment under section 473, subdivision (d). "A default judgment is void if the trial court lacked jurisdiction over the parties." ( Falahati v. Kondo (2005) 127 Cal.App.4th 823, 830, 26 Cal.Rptr.3d 104 ( Falahati ).) A default judgment entered against a defendant who was not served in the manner prescribed by statute is void. ( Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1444, 29 Cal.Rptr.2d 746.) "Under section 473, subdivision (d), the court may set aside a default judgment which is valid on its face, but void, as a matter of law, due to improper service." ( Ellard v. Conway (2001) 94 Cal.App.4th 540, 544, 114 Cal.Rptr.2d 399.) When, as here, the trial court considers disputed evidence related to whether service was proper, our review is for abuse of discretion. ( Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1440–1441, 168 Cal.Rptr.3d 114.) Under that standard, we defer to factual findings on disputed evidence so long as those findings are supported by substantial evidence.

"If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served ..., a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house ... in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address ... who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left." (§ 415.20, subd. (b).)

The trial court found defendants had been served the original summons and complaint by substituted service. That finding is supported by the process server's proof of service and declaration of diligence. The process server first attempted to serve the documents at an address in Pleasanton on multiple occasions before being informed Banerjee did not live there. Apparently at Golden Properties’ suggestion, the process server then attempted service at the Kingsmill Terrace address. The declaration of diligence notes the address is located in a gated community and that "the subject's name is listed on the directory." (Capitalization omitted.) The process server was unable to gain access through the gate on the first several dates when service was attempted. On the final attempt, the process server delivered the documents to someone who identified himself as a co-resident and indicated Banerjee was not at home. The person served was described on the proof of service as " ‘John Doe’ (refused to state name – 50 year old East Indian male, grey hair, 5’9", 170 pounds), co-resident." (Capitalization omitted.) (See Trackman v. Kenney (2010) 187 Cal.App.4th 175, 183, 114 Cal.Rptr.3d 619 [because persons in "charge of businesses or residences often refuse to give their true legal names,"...