Filed 8/1/17 County of Orange v. Chen CA4/3



NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE


COUNTY OF ORANGE,

Plaintiff and Respondent,

v.

KANG SHEN CHEN,

Defendant and Appellant.


G053312

(Super. Ct. No. 07CC12128)

O P I N I O N

Appeal from a postjudgment order of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed. Request for judicial notice. Granted.
Kang Shen Chen, in pro. per., for Defendant and Appellant.
Leon J. Page, County Counsel, and Adam C. Clanton, Deputy County Counsel, for Plaintiff and Respondent.
* * *
INTRODUCTION
The County of Orange (the County) obtained a judgment against Kang Shen Chen (Chen) and Chen’s wife in 2007. In 2015, Chen filed a motion to vacate or set aside the judgment on the ground it was procured through extrinsic fraud and/or extrinsic mistake. Chen contends that because the County did not list a lawsuit against him and his wife in the adjustment plan the County filed in its bankruptcy proceedings in 1996, Chen and his wife had a defense of res judicata or estoppel against the County’s lawsuit. We conclude, as did the trial court, that Chen’s lack of knowledge of the contents of a publicly-available document filed in a federal court does not amount to extrinsic fraud or extrinsic mistake. We therefore affirm.

STATEMENT OF FACTS AND PROCEDURAL HISTORY
In December 1994, the County filed a voluntary petition under Chapter 9 of the Bankruptcy Code. The County’s plan of adjustment was filed in March 1996. The adjustment plan did not specifically reserve the right to bring a potential lawsuit against Chen and his wife.
Chen acquired property in Anaheim in 1987. The property was subject to the County’s resource preservation easement. No later than 1990, the County learned that Chen had made changes to the property subject to the easement. In 2007, the County served Chen and his wife with a complaint for declaratory relief, damages for trespass, a permanent injunction, and an order directing Chen and his wife to restore the easement and adjacent land owned by the County to their natural open-space conditions. In 2009, following a bench trial, the court entered judgment in favor of the County. Chen appealed, and this court affirmed the judgment. (County of Orange v. Kang-Shen Chen (Aug. 26, 2011, G042746).) Chen’s petition for review to the California Supreme Court was denied.
In 2015, Chen and his wife filed a motion, pursuant to Code of Civil Procedure section 473 to vacate or set aside the judgment. Chen and his wife argued that the judgment was void, having been obtained through extrinsic fraud and/or extrinsic mistake. The trial court denied the motion, and Chen filed a notice of appeal.

DISCUSSION
I.
STANDARD OF REVIEW
We review an order denying a motion to vacate a judgment under Code of Civil Procedure section 473 for abuse of discretion. (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 257-258; Rodriguez v. Henard (2009) 174 Cal.App.4th 529, 535.) A trial court’s findings supporting its order denying a motion to vacate a judgment are reviewed for substantial evidence. (Pelayo v. J. J. Lee Management Co., Inc. (2009) 174 Cal.App.4th 484, 493.)

II.
NO EXTRINSIC FRAUD OR EXTRINSIC MISTAKE SHOWN
Chen contends that the motion to vacate should have been granted because extrinsic fraud or extrinsic mistake made the judgment void. Chen contends that the County committed extrinsic fraud or extrinsic mistake by failing to tell the Chens that the lawsuit against the Chens had not been mentioned in its bankruptcy reorganization plan, and that the Chens therefore had a complete defense to the lawsuit.
“The terms ‘extrinsic fraud’ or ‘mistake’ ‘are given a broad meaning and tend to encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing. It does not seem to matter if the particular circumstances qualify as fraudulent or mistaken in the strict sense.’ [Citation.] ‘Extrinsic mistake involves the excusable neglect of a party.’ [Citation.] It is a term that broadly applies ‘when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits.’ [Citation.] ‘Extrinsic mistake is found when a party becomes incompetent but no guardian ad litem is appointed [citations]; when one party relies on another to defend [citations]; when there is reliance on an attorney who becomes incapacitated to act [citations]; when a mistake led a court to do what it never intended [citations]; when a mistaken belief of one party prevented proper notice of the action [citations]; or when the complaining party was disabled at the time the judgment was entered [citations]. Relief has also been extended to cases involving negligence of a party’s attorney in not properly filing an answer [citations]; and mistaken belief as to immunity from suit.’ [Citation.] [¶] In contrast, mistake is intrinsic and not a valid ground for setting aside a judgment ‘if a party has been given notice of an action and has not been prevented from participating therein.’ [Citation.] In this circumstance, the mistake goes to the merits of the prior proceeding which the moving party should have guarded against at the time.” (In re Marriage of Thorne & Raccina (2012) 203 Cal.App.4th 492, 505.)
In this case, the fraud or mistake, if any, could only have been intrinsic, and not extrinsic. As they acknowledge, the Chens had full and fair notice of the lawsuit. They were served with the summons and responded to the complaint; filed motions; participated in discovery; and participated in a four-day bench trial. Any fraud or mistake was intrinsic because it went to the merits of the lawsuit, specifically the alleged defense. Further, the document that was allegedly fraudulently kept from the Chens was a document filed in federal court, and available to the public.
Chen relies heavily on In re County of Orange (Bankr. C.D. Cal. 1997) 219 B.R. 543 to support his argument that he was the victim of extrinsic fraud or mistake. That case, however, only addresses the issue whether Chen had a valid defense based on the County’s failure to list a claim against Chen in the reorganization plan. It has no bearing on whether Chen was prevented from raising that defense, and therefore whether the judgment against Chen may be vacated due to extrinsic fraud or extrinsic mistake.
Chen’s argument on the applicability of In re County of Orange has already been addressed and rejected by the bankruptcy court. Chen filed an adversary proceeding against the County in its bankruptcy proceeding. Chen sought damages “for the unauthorized taking of property in violation of the Debtor’s chapter 9 second amended bankruptcy plan of adjustment; quiet title; declaratory relief; and for an order vacating the state court judgment.” Chen contended that because a lawsuit against Chen had not been mentioned in the County’s approved bankruptcy plan, it never had the right to pursue the present lawsuit against him and his wife. The bankruptcy court granted the County’s motion to dismiss with prejudice.
In the bankruptcy court’s tentative ruling, which was adopted as the court’s order, the court provided the following analysis, relevant to the present case: “[Chen]’s contention is that if the [County] intended to pursue ‘causes of action or lawsuits post-confirmation, i.e. after the Plan was confirmed by the bankruptcy court, it was required specifically to reserve the right to sue in the Plan by making a specific reference to a targeted defendant.’ . . . The court disagrees. Pursuant to [title 11 United States Code] § 904, in order for this court to restrict [the County]’s post-petition right to sue, [the County] would have had to expressly consent to such a restriction. There has been no consent by [the County] to restrict this authority and [the County] has retained its power to sue. As such, this court lacks jurisdiction pursuant to § 904 to interfere with [the County]’s exercise of its sovereign power to sue [Chen] in state court.”
“[Chen] cites to In re County of Orange, [supra,] 219 B.R. 543 . . . for the proposition that [the County]’s attempted reservation of right to sue fall[s] short as it was no more than a general reservation of rights, which is ineffective to prevent the application of res judicata. . . . However, In re County of Orange did not involve the County’s power to sue in state court, or the implication of [title 11 United States Code section] 904. In that case, after plan confirmation, the County filed an objection to a claim held by noteholders relating to a claim of $64 million in taxable notes issued by the County. [Citation.] The court determined that it had jurisdiction to consider the claim objection issue because it ‘retained jurisdiction under the terms of the Plan and confirmation order to resolve all disputes arising out of the classification or payment of a claim, including objections to the allowance or priority of claims.’ [Citation.] As the case involved a claim objection within the bankruptcy proceeding itself, and did not involve any lawsuit by the County in state court, the Court’s decision to exercise its jurisdiction did not constitute any interference with the County’s power to sue. Therefore, In re County of Orange has nothing to do with the County’s power to sue in state court, or section 904 of title 11 of the United States Code.
“Moreover, the case is much narrower than [Chen] suggests and turns on issues of res judicata among the actual parties to the bankruptcy. The court concluded that the doctrine of res judicata barred the County’s objection to the noteholders’ claim. [Citation.] The court reasoned that as part of the voting process, prior to confirmation, a debtor is required to provide adequate information and ‘[h]ad the County indic[a]ted . . . [the basis of its objection to] the noteholder’s claims . . . the noteholders would surely have objected to the confirmation of the Plan on this ground.’ [Citation.] The court therefore concluded that ‘a cause of action that is known preconfirmation that would alter a creditor’s treatment under the plan must be specifically reserved. If not, the plan proponent is barred by res judicata from asserting the specific cause of action.’ [Citation.] The scope of that case turned on the specific relationship of notice between debtor and creditors during the plan process. It does not, as [Chen] suggests, further restrict whether [the County] may bring a separate state court action against a person or entity unrelated to the plan confirmation process, or bankruptcy at all.
“Notwithstanding the foregoing, it bears mentioning that [Chen’s] legal theory does not pass muster under the facts he pleads. [Chen]’s theory appears to be that if [the County] had a claim against [Chen] prepetition, such claim should have been disclosed in the disclosure statement and/or plan, citing [Kelley v. South Bay Bank (In re Kelley) (Bankr. 9th Cir. 1996)] 199 B.R. 698 . . . . [Chen] concedes that there was no pending litigation between [Chen] and [the County] at the time of plan confirmation. . . . As there was no litigation at issue at the time of the disclosure statement and plan, there is insufficient evidence in the record showing that [the County] held a claim against [Chen] at the time of the bankruptcy filing. Importantly, even if [the County] held such a claim prepetition and failed to disclose it in its disclosure statement, it would have been incumbent upon [Chen] to have raised the issue of res judicata or equitable estoppel during the course of the state court litigation. Now that a final judgment has been entered in the state court action, this court has no authority or jurisdiction to impact the state court judgment in any way.”

III.
JUDGMENT IS NOT VOID ON ITS FACE
A judgment is void on its face when the invalidity appears on the judgment roll, which includes the proof of service of summons. (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 496.)
The basis of Chen’s argument is that he and his wife had a complete defense to the County’s lawsuit because the County had not identified this potential lawsuit in its plan of readjustment in the bankruptcy court. Such a defense, if it existed, would not have been apparent on the face of the judgment and/or the judgment roll. The judgment was not void on its face.
DISPOSITION
The postjudgment order is affirmed. Respondent to recover costs on appeal.



FYBEL, J.

WE CONCUR:



ARONSON, ACTING P. J.



IKOLA, J.