Navellier v. Putnam

1

LOUIS NAVELLIER et al., Plaintiffs and Appellants, v. DONALD PUTNAM et al., Defendants and Respondents

A166476

California Court of Appeals, First District, Fifth Division

August 17, 2023

NOT TO BE PUBLISHED

Order Filed Date: 8/30/23

(City & County of San Francisco Super. Ct. No. CGC19574779)

ORDER MODIFYING OPINION; AND ORDER DENYING REHEARING

The opinion filed August 17, 2023 is modified as follows:

(1) In the first full paragraph on page 7, after the third sentence which ends, "regardless of whether the defendant signs or mails back the return receipt." insert the following footnote:

In a petition for rehearing, the Navellier Plaintiffs argue Government Code section 68081 requires this court to order supplemental briefing on the section 415.40 service by mail issue before deciding this appeal. We disagree. Government Code section 68081 applies only if the appellate court's decision is "based upon an issue which was not proposed or briefed by any party[.]" As interpreted by our Supreme Court, Government Code section 68081 does not require supplemental briefing when the parties had "the opportunity to brief any issues that are fairly included within the issues actually raised."

(People v. Alice (2007) 41 Cal.4th 668, 677.) One of the issues raised by the Navellier Plaintiffs in this appeal is whether service of the complaint and summons on Pileggi was impossible or impracticable such that the exception in subdivision (d) of section 583.240 applied to toll the time to serve Pileggi. Given that section 415.40 authorizes service on nonresident defendants by first-class mail, the issue of whether service on Pileggi by mail was impossible or impracticable was" 'fairly encompassed' in the main issue" raised by the Navellier Plaintiffs. (See Church Mutual Ins. Co., S.I. v. GuideOne Specialty Mutual Ins. Co. (2021) 72 Cal.App.5th 1042, 1055, fn. 2.) Indeed, they even conclusorily asserted in their opening brief that "service by mail . . . was not possible." "[T]he fact that [the Navellier Plaintiffs] did not address an issue, mode of analysis, or authority that is . . . fairly included within the issues [they] raised does not implicate the protections of [Government Code] section 68081." (People v Alice, at p. 679.)

We further observe that the Navellier Plaintiffs never requested leave to file a supplemental brief pursuant to California Rules of Court, rule 8.200(a)(4), even though this court issued a tentative opinion nearly a month before oral argument that addressed the issue of whether service on Pileggi by mail under section 415.40 was impossible or impracticable. (See Gee v. Greyhound Lines, Inc. (2016) 6 Cal.App.5th 477, 487, fn. 6.) Nothing in the tentative opinion or the accompanying order prohibited them from requesting leave to do so.

Finally even if we were to grant rehearing to allow supplemental briefing on the issue, the outcome of this appeal would not change. (See People v. Sorden (2021) 65 Cal.App.5th 582, 592, fn. 4.) The Navellier Plaintiffs presented substantive arguments in their petition for rehearing as to why service on Pileggi by mail under section 415.40 was impossible or impracticable during the three-year period for service of process. Having considered these arguments, we decline to modify our analysis in part II of the discussion section of the opinion.

This footnote will become footnote number 4, renumbering all subsequent footnotes accordingly.

This order does not effect a change in the judgment.

The Navellier Plaintiffs' August 25, 2023 petition for rehearing is denied.

CHOU J.

Plaintiffs and appellants Louis Navellier and Navellier &Associates Inc. (collectively, the Navellier Plaintiffs) appeal from an order granting defendant and respondent John Pileggi's motion to dismiss for failure to timely serve him with the complaint and summons within three years. (Code Civ. Proc § 583.210, subd. (a).)^[1] They claim the trial court erred in granting the motion because the three-year statutory period for service was tolled when the COVID-19 pandemic made service impossible and impracticable, and when the Judicial Council of California's (Judicial Council) emergency orders and rules stayed prosecution of the action. They also contend their failure to timely serve Pileggi was excused because he was not amenable to service during the entire three-year period. We reject these contentions and affirm.

BACKGROUND

On March 26, 2019, the Navellier Plaintiffs sued Pileggi and several other defendants for breach of contract, fraud, negligent misrepresentation, and breach of the covenant of good faith and fair dealing. The complaint alleged that the Navellier Plaintiffs loaned $1.5 million to FolioMetrix, LLC (FolioMetrix). At that time, defendants Donald Putnam and Grail Partners, LLC (Grail) were investors in FolioMetrix. FolioMetrix, then merged with another investment firm and became RiskX, LLC (RiskX), another defendant. Pileggi is allegedly a principal of RiskX, the investment advisor to defendant American Independence Funds (AIF).

According to the complaint, Putnam and Grail, on behalf of themselves and the other defendants, agreed to assume the loans and repay the Navellier Plaintiffs $1.5 million plus interest. Defendants then failed or refused to repay the Navellier Plaintiffs. The complaint alleged that defendants made false promises to repay the loans to induce Navellier &Associates, Inc. to become a sub-advisor for a portfolio of AIF and defer payment of its sub-advisory fee. The complaint further alleged that defendants were each other's agents and conspired with each other to commit the alleged fraud and contract breaches.

Nearly six months after the filing of the complaint, the trial court issued an order to show cause why the case should not be dismissed for failure to file a proof of service on defendants. The Navellier Plaintiffs responded that in October 2019, they served counsel for Putnam and Grail with the complaint and summons after he agreed to accept service on their behalf. They then stated that the remaining defendants "have been difficult to locate for service of the Complaint."

The trial court continued the hearing on the order to show cause multiple times from 2019 through 2021. The Navellier Plaintiffs filed responses to the court's November 2019 and April 2021 continued orders to show cause, stating that they had been unable to locate and personally serve Pileggi, and they requested permission to serve him by publication. They supported their responses with their attorneys' declarations, which did not address their request to serve Pileggi by publication or include all the contents required under section 415.50 for an order authorizing service by publication. The record does not indicate that the court ruled on their request or that they filed an affidavit that complied with section 415.50.

As part of their latter response, the Navellier Plaintiffs provided a process server's affidavit of non-service, which showed two failed attempts to personally serve Pileggi in June 2021 in Florida, where he was scheduled to speak at an event. According to the affidavit, Pileggi "took himself off the [speaking] schedule" and "disappeared" before the process server could find him. They also provided two e-mails from a process server showing that he twice attempted to serve Pileggi in August 2021 at an office in New York, which was apparently his registered place of business. On the first attempt, a tenant informed the process server that "he hasn't seen anyone in the office in months."

In July 2022, the Navellier Plaintiffs filed a proof of service showing that Pileggi had been served via substitute service on his wife at his residence in New York on June 14, 2022, more than three years and two months after the commencement of the action. The proof of service showed two failed attempts to personally serve Pileggi that same month at his residence. The record does not indicate whether any other attempts to serve Pileggi had been made between August 2021 and June 2022.

One week later, Pileggi moved to dismiss the action against him. He argued that dismissal was mandatory under sections 583.210 and 583.250 because the Navellier Plaintiffs failed to serve him within three years after commencing the action and because none of the statutory exceptions to dismissal applied.

The Navellier Plaintiffs countered that the time for service had been tolled because Pileggi had not been amenable to process, because the COVID-19 pandemic had made service impossible or impracticable, and because the Judicial Council's emergency orders had "stayed" the action. They also argued that Pileggi was deemed served when Putnam and Grail were served because they were in privity with Pileggi. In support, the Navellier Plaintiffs submitted declarations from Navellier and a San Francisco-based process server, the latter of whom said that service of process during the COVID-19 pandemic was "very difficult, if not impossible," because people were reluctant to answer their doors and because most employees were working remotely.

The trial court granted the motion. It found that Pileggi was amenable to process and that the Judicial Council orders did not toll the time to serve Pileggi because they "pertain to filing documents, not service." The court further found that there was no authority supporting Plaintiffs' assertion that service on Pileggi's co-defendants constituted service on him.

The Navellier Plaintiffs timely appealed.

DISCUSSION

The Navellier Plaintiffs concede that they did not serve Pileggi within three years as required by section 583.210 subdivision (a) but contend their time to do so was tolled or excused under section 583.240. As explained below, this contention...