Filed 8/17/22 Kim v. Lee CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from an order of the Superior Court of Los Angeles County, Stuart M. Rice, Judge. Affirmed.

Manning & Kass, Ellrod, Ramirez, Trester LLP, Jeffrey Tsao, Steven C. Amundson and Mark R. Wilson for Defendant and Appellant.

Henry M. Lee, Hoffman & Pomerantz, LLP and Andrew S. Pomerantz for Plaintiff and Respondent.

__________________________

Yong Lee appeals from an order denying YNOT Community Services and Lee’s motion under Code of Civil Procedure section 473.5^[1] to set aside the default and default judgment entered against them. On appeal, Lee contends the trial court abused its discretion in denying the motion because he was never served with the summons and complaint, he did not have actual notice of the action, and his lack of notice was not caused by his inexcusable neglect or avoidance of service. We find no abuse of discretion and affirm.

• FACTUAL AND PROCEDURAL BACKGROUND

1. 1. Filing and Service of the Complaint

On June 20, 2018 Nam Won Kim filed a complaint against YNOT, Pacific Bridge Housing Corporation,^[2] and Lee, alleging among other causes of action violations of the California Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.) and Labor Code, unfair business practices, and intentional infliction of emotional distress. Kim alleged he was employed by YNOT and Pacific Bridge, and Lee was YNOT’s chief executive officer. Further, Kim alleged his employers violated California wage and hour laws by failing to pay him the minimum wage, overtime wages, and wages upon termination, and to provide him with required meal and rest breaks. Moreover, Kim was harassed and discriminated against because of his religious beliefs, and on or about July 3, 2017 he was constructively discharged.

On September 7, 2018 Kim filed a proof of service of the summons and complaint and an affidavit of reasonable diligence stating Lee was served on August 31, 2018 by substituted service on Colin Kim[3] as the “person in charge.”[4] The proof of service, signed under penalty of perjury by the process server, David Hernandez, described Colin Kim as “male, Asian, 35-45 years old, 5 feet 6 inches, 140 pounds, black hair.” According to the affidavit of reasonable diligence (also signed by Hernandez under penalty of perjury), Hernandez attempted personal service five times at Lee’s business address, 1721 North Broadway, Los Angeles, CA 90031 (North Broadway address) prior to serving him by substituted service. On August 31 Hernandez “spoke to . . . Colin Kim, person in charge,” and effected substituted service on Lee by serving the summons and complaint on Colin Kim, who was “apparently in charge of the office or usual place of business of the person served.” On the same day Hernandez mailed copies of the summons and complaint to Lee at the North Broadway address.

1. 2. Entry of Default

On October 23, 2018 Kim filed a request for entry of default against YNOT, and the default was entered the same day. A default was entered against Lee on January 9, 2019. According to the proof of service of the request for default against Lee, executed under penalty of perjury by Randy Song, on January 9 the request was served by mail on YNOT and Lee at the North Broadway address. On December 3, 2019 Kim filed a default judgment packet as to YNOT and Lee including a brief summary of the case, declaration from Kim, memorandum of costs, and request for court judgment. The attached proof of service signed under penalty of perjury by Nicholas Enriquez states on December 3, 2019 the request for court judgment was served by mail on YNOT and Lee at the North Broadway address. On December 4, 2019 the trial court set a hearing on an order to show cause re: entry of default judgment for January 28, 2020. On January 24 the court issued a minute order acknowledging that Kim sought attorneys’ fees and requiring Kim to file a revised proposed judgment that contained the amount of requested attorneys’ fees and supporting documentation. The court continued the hearing on the order to show cause re: entry of default judgment to February 21, 2020.

1. 3. Motion for Relief from Default

On February 6, 2020 YNOT and Lee filed a joint motion for relief from default, supported by declarations from Colin Kim, Lee, and attorney Steven C. Amundson. YNOT and Lee also submitted a compendium of exhibits with a proposed answer.^[5] Colin Kim averred he was employed by YNOT Community Services as a “program director.” According to Colin Kim, he first became the designated agent for service of process in March 2019, as described in YNOT’s March 28, 2019 statement of information filed with the California Secretary of State. Prior to March 2019, “YNOT’s registered agent for service of process was Reverend Samuel Lee,” and Colin Kim was not “specifically authorized to receive service of process on behalf of YNOT.” The March 2019 statement of information listed Peter Yoon Choh as the chief executive officer and Colin K. Kim as the agent for service of process.

Colin Kim acknowledged he received the request for entry of default judgment as to YNOT and Lee. But he declared, “Prior to receipt of the request for entry of default judgment in December 2019, I did not receive any documents related to this lawsuit. The request for entry of default [judgment] is the first document I received concerning this matter. Prior to receipt of the request for entry of default judgment in December 2019, none of YNOT’s management team received any documents, or were made aware of any documents, indicating that this lawsuit had been filed and was pending against Defendants, or that defaults had been entered.”

Colin Kim stated further that YNOT’s office building had problems with the mail delivery system, explaining, “[YNOT] utilizes a small office space inside the Young Nak Presbyterian Church, which is multi-story building located at 1721 N. Broadway, Los Angeles, California 90031. The Church covers the entire block, and the buildings across the street also use the same mailing address. The Church has hundreds of small offices, of which YNOT leases a very small space.” Further, “[m]ail intended for Defendant YNOT is received by the Church, together with all other mail using the same address (including the church), and YNOT’s mail is then diverted to YNOT after Church personnel sort the mail. As such, any and all mail that is intended for YNOT and addressed to 1721 N. Broadway does not come directly to YNOT, but instead, must first be identified and sorted by the Church to be delivered. Errors in the sorting and delivery process may result in YNOT never receiving mail that is otherwise addressed to YNOT at the Broadway address.”

Colin Kim added that upon receiving the request for entry of default judgment in December 2019, YNOT and Lee “immediately sought legal counsel” to understand how they were served without actual notice and to defend against the claims. YNOT and Lee had meritorious defenses and would not have allowed a default to be entered. Amundson confirmed that his law firm was retained in December 2019. Amundson attempted to meet and confer with Kim’s counsel to reach an informal resolution of the case and the defaults, but “[t]hese efforts ultimately proved futile.”

Lee stated in his declaration, “I have never been personally served with any documents pertaining to this lawsuit. I was unaware that this lawsuit existed until February of 2020, when I was contacted by defense counsel and informed for the first time, that I was named individually as a defendant in this lawsuit.” Lee added that his “lack of actual notice about this lawsuit was not the result of [his] avoidance of service or inexcusable neglect.”

In their memorandum of points and authorities, YNOT and Lee argued they did not receive the summons, complaint, or requests for entry of default, and they “had no idea that this lawsuit was going on” until they received the request for entry of judgment.[6] As soon as they received notice of the lawsuit, they immediately retained counsel. YNOT and Lee argued they were not properly served with the summons and complaint and they were entitled to relief from default under section 473.5 because they did not receive actual notice and acted promptly to seek relief.

In his opposition Kim argued section 416.10 authorizes service on a corporation by serving a “general manager,” and Colin Kim identified himself as a “‘manager.’” Kim asserted that Colin Kim was not truthful in saying he never received the summons and complaint, and the proof of service signed by Hernandez contradicted the assertion.[7] Further, Kim filed the declaration of Lucie J. Lee, an employee of the law offices of Henry Lee, which represented Kim. Lucie Lee stated she spoke to the firm’s office assistant, Jeff Kim, who told her Colin Kim called the office and identified himself as the program manager for YNOT. Colin Kim requested someone in the law firm call him back. On September 5, 2018 Lucie Lee spoke with Colin Kim, who stated he received a package from the law firm but Kim never worked for YNOT and “the documents had nothing to do with [YNOT].”

Henry Lee submitted a declaration attaching an email from Jeff Kim to Lucie Lee and others at the law firm documenting his conversation with Colin Kim. According to the email, Jeff Kim “received a phone call this morning from ‘Colin Kim’ from [YNOT]. The phone conversation consisted of Mr. Colin Kim questioning why he received such document regarding the . . . matter. Mr. Colin Kim claims that Nam Won Kim never worked for [YNOT], and believes that he may have received the document . . . because Stella Kim used to be the executive director at [YNOT].” The email contained the office and cell phone numbers for Colin Kim and described Colin Kim’s position at YNOT as the “Program manager.”

YNOT and Lee filed a joint reply on October 22, 2020. The reply argued as to Lee that Kim did not dispute that Lee was never personally served with any documents and was not aware of the lawsuit until February 2020. Further, even if Colin Kim was untruthful, this did not “cast doubt” on Lee’s undisputed testimony that he did not have actual notice.[8]

1. 4. Trial Court Ruling Denying the Motion

Following a hearing on October 29, 2021, the court issued a written ruling denying YNOT and Lee’s motion.[9] The court construed the motion for relief from default as a motion to vacate the default and default judgment because a judgment was incorrectly entered against YNOT and Lee while the motion was pending “due to a glitch in the [court] system.”[10]

The trial court found YNOT received actual notice of the summons and complaint by personal service on August 31, 2018 on Colin Kim. Further, YNOT had not met its burden to show Colin Kim was not the registered agent for service because YNOT only submitted the March 2019 statement of information showing designation of Colin Kim as the registered agent, but not the 2018 statement of information that would have shown whether he was the registered agent at the time of service in August 2018. Further, the January 2, 2020 statement of information submitted by YNOT, which designated Colin Kim as YNOT’s chief financial officer, was inconsistent with Colin Kim’s declaration signed a month later (on February 4, 2020) stating he was YNOT’s program director.

The trial court found Colin Kim’s declaration lacked credibility given YNOT’s failure to submit the 2018 statement of information and the call from Colin Kim to Kim’s attorneys on September 5, 2018. The court explained, “Any remaining credibility in Colin’s statement that he never received the summons and complaint is eradicated in view of plaintiff’s evidence—an email from Jeff Kim—documenting a phone call that plaintiff’s counsel received from Colin Kim on September 5, 2018, in which Colin identified himself as YNOT’s ‘program manager,’ stated that he received a package from plaintiff’s counsel’s office, and asserted that Nam Won Kim never worked for YNOT.”

The court also observed that neither YNOT nor Lee disputed that the address on the proofs of service was the correct business address, and the default documents were mailed to Colin Kim and Lee at the same address. Further, YNOT and Lee failed to produce any evidence that the building was having difficulty delivering mail to the tenants.

The court found Lee failed to meet his burden to show he did not receive actual notice, observing “Lee’s declaration merely states that he was unaware of this lawsuit until February 2020.” The court based its ruling on “all the evidence and circumstances discussed in connection with YNOT’s service, and in the absence of any explanation as to how Yong Lee could not have received the complaint that was mailed to him at his business address and specifically addressed to him . . . .”

Lee timely appealed.

• DISCUSSION

1. 1. Section 473.5 and Standard of Review

Section 473.5, subdivision (a), provides, “When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment is entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment.” (§ 473.5, subd. (a).) The motion must “be accompanied by an affidavit showing under oath that the party’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect.” (Id., subd. (b).) The party requesting relief must also file and serve a copy of the proposed answer or other responsive pleading to be filed in the action. (Ibid.)

The motion must be filed within a reasonable time, but no later than the earlier of two years after entry of the default judgment or 180 days after service of written notice of entry of the default or default judgment. (§ 473.5, subd. (a).) If the motion is timely and the moving party’s “lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect, [the court] may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action.” (Id., subd. (c).)

Section 473.5 “empowers a court to grant relief from a default judgment where a valid service of summons has not resulted in actual notice to a party.” (Anastos v. Lee (2004) 118 Cal.App.4th 1314, 1319.) Actual notice in section 473.5 is defined as “‘“genuine knowledge of the party litigant.”’” “‘Actual knowledge has been strictly construed, with the aim of implementing the policy of liberally granting relief so that cases may be resolved on their merits.’” (Ellard v. Conway (2001) 94 Cal.App.4th 540, 547.) Further, actual notice “‘does not contemplate notice imputed to a principal from an [agent’s] actual notice.’” (Tunis v. Barrow (1986) 184 Cal.App.3d 1069, 1077.)

We review the denial of a motion for relief from default or default judgment for abuse of discretion. (Rios v. Singh (2021) 65 Cal.App.5th 871, 885 [trial court did not abuse discretion in denying motion to set aside default where defendant had actual notice of lawsuit in time to file response to complaint]; Sakaguchi v. Sakaguchi (2009) 173 Cal.App.4th 852, 861-862 [trial court did not abuse discretion in denying motion to set aside default judgment where defendant did not declare he lacked actual knowledge or show absence of inexcusable neglect]; Anastos v. Lee (2004) 118 Cal.App.4th 1314, 1318 [trial court did not abuse discretion in denying motion to set aside default judgment where defendant did not show lack of actual notice or that the lack of notice was not caused by inexcusable neglect or avoidance of service].) “‘“The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its discretion for that of the trial court.”’” (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1339; accord, Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479; McClain v. Kissler (2019) 39 Cal.App.5th 399, 414.) “‘The burden is on the complaining party to establish abuse of discretion, and the showing on appeal is insufficient if it presents a state of facts which simply affords an opportunity for a difference of opinion.’” (McLain at p. 414.)
However, where the trial court makes a factual finding that the moving party has failed to meet his or her burden of proof (here to show Lee had no actual notice of the lawsuit), “‘the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law.’” (Juen v. Alain Pinel Realtors, Inc. (2019) 32 Cal.App.5th 972, 978-979; accord, Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 769; Dreyer’s Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838.) “‘Specifically, the question becomes whether the appellant’s evidence was (1) “uncontradicted and unimpeached” and (2) “of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.”’” (Juen, at p. 979; accord, Dreyer’s Grand Ice Cream, at p. 838.) “[U]nless the trial court makes specific findings of fact in favor of the losing [party], we presume the trial court found the [losing party’s] evidence lacks sufficient weight and credibility to carry the burden of proof. [Citations.] We have no power on appeal to judge the credibility of witnesses or to reweigh the evidence.” (Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1486.)

At the same time, we recognize there is a strong public policy in favor of setting aside a default or default judgment and affording a trial on the merits. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 235; see Luxury Asset Lending, LLC v. Philadelphia Television Network, Inc. (2020) 56 Cal.App.5th 894, 907-908 [“‘t is the policy of the law to favor, whenever possible, a hearing on the merits, and appellate courts are much more disposed to affirm an order where the result is to compel a trial on the merits than they are when the judgment by default is allowed to stand and it appears that a substantial defense could be made.’”].)

1. 2. [i]The Trial Court Did Not Abuse Its Discretion in Denying Lee’s Motion Under Section 473.5

Lee contends the trial court abused its discretion in denying the motion because the court improperly penalized Lee for Colin Kim’s lack of credibility, and the court placed an impossible burden on Lee to show he never received the documents that were mailed to him at his business address. Although we acknowledge the strong public policy favoring trial on the merits, the court did not abuse its discretion.

In finding Lee did not met his burden to show lack of actual notice, the trial court relied on the proof of service showing Hernandez mailed a copy of the complaint to Lee at the North Broadway address that Lee acknowledged was accurate. Further, as the court observed, the default-related documents were also mailed to Lee at the same address, which the court found “suggests that defendants did receive the documents in the mail.” Specifically, on January 9, 2019 the request for entry of default was mailed to Lee at the North Broadway address. Then, on December 3, 2019 the request for court judgment was mailed to Lee at the North Broadway address. Three different people declared under penalty of perjury the documents were mailed to Lee at his business address: Hernandez (summons and complaint), Song (request for entry of default), and Enriquez (request for court judgment). In light of this evidence that three documents relating to service of the complaint or entry of default were mailed to Lee at the North Broadway address, the court observed that YNOT and Lee “provide[d] no evidence that their building was having problems delivering mail to its tenants.”

Colin Kim set forth reasons why mail could be misplaced, including that the mail was first received by the church, then sorted to be delivered to the tenants. But YNOT and Lee did not submit any evidence that the nature of mail sorting at the building that could result in lost mail actually did, instead relying on Colin Kim’s statement that “[e]rrors in the sorting and delivery process may result in YNOT never receiving mail that is otherwise addressed to YNOT at the Broadway address.” (Italics added.) And, as discussed, the trial court did not find Colin Kim credible, a finding supported by substantial evidence, including Colin Kim’s call to Kim’s law firm on September 5, 2018 acknowledging receipt of the service documents and the lack of evidence that he was not the designated agent for service of process in 2018 (submitting only the 2019 statement of information).

Lee’s statement in his declaration that he had “never been personally served with any documents pertaining to this lawsuit” is accurate—personal service was on Colin Kim, not Lee.[11] However, given the evidence that documents related to the lawsuit and default were mailed to Lee on three occasions, Lee’s cursory statement as to actual notice that he “was unaware that this lawsuit existed until February of 2020” when he was contacted by defense counsel is not “‘“uncontradicted and unimpeached”’” and “‘of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.’”” (Juen v. Alain Pinel Realtors, Inc., supra, 32 Cal.App.5th at p. 979; accord, Dreyer’s Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th at p. 838.) Certainly the summons and complaint mailed to Lee’s business address to effectuate substituted service could have been misdirected. But the credibility of that assertion was undermined by Lee’s conclusory claim that all three documents separately mailed to that address as attested to by three different individuals were never received by him. Contrary to Lee’s contention, the court’s finding was based on service of the three documents, not imputation to Lee of Colin Kim’s lack of credibility. It is not our role on appeal “to judge the credibility of witnesses or to reweigh the evidence.” (Bookout v. State of California ex rel. Dept. of Transportation, supra, 186 Cal.App.4th at p. 1486.)

Lee’s argument that the trial court placed an impossible burden on Lee to show why he did not receive the mailed notice also lacks merit. Lee could have presented evidence explaining why he would not have received all three documents, including, for example, a declaration from a building representative explaining that the building had prior problems with mail that did not reach its tenants. Or Lee could have presented evidence that he or others at YNOT had not received mail addressed to them. He did not. In light of the court’s finding that Lee failed to show lack of actual notice, the court did not abuse its discretion in denying Lee’s motion to set aside the default and default judgment.

DISPOSITION

The order denying Yong Lee’s motion to set aside the default and default judgment is affirmed. Nam Won Kim is entitled to recover his costs on appeal.

FEUER, J.

We concur:

PERLUSS, P. J.

WISE, J.^*

[1] All further undesignated statutory references are to the Code of Civil Procedure.

[2] Pacific Bridge was later dismissed from the action.

[3] We refer to the parties as Kim and Lee. However, we refer to Colin Kim and other individuals with the last names Kim or Lee by their full names to avoid confusion.

[4] We have omitted the capitalization in the filed documents.

[5] YNOT and Lee requested the trial court take judicial notice of a number of documents in the compendium of exhibits, including YNOT’s articles of incorporation, amendment to the articles, and YNOT’s statements of information filed with the California Secretary of State on March 28, 2019 and January 2, 2020. The court granted the request for judicial notice as to the existence of the documents, but not the truth of the matters asserted in the documents.

[6] The memorandum of points and authorities refers to receipt of the request of entry of judgment by “defendants,” citing to the declaration of Colin Kim. But as discussed, Lee stated in his declaration that he did not learn of the lawsuit until he was contacted by Kim’s counsel in February 2020.

[7] YNOT and Lee also argued the judgment was void because Kim sought recovery for emotional pain and suffering but failed to serve a statement of damages. The trial court correctly rejected this argument, and Lee does not assert the argument on appeal.

[8] YNOT and Lee also filed objections to the declarations of Henry Lee and Lucie Kim, which the trial court overruled. The objections are not in the appellate record, and Lee does not on appeal challenge the court’s ruling on the objections.

[9] There was no court reporter at the hearing.

[10] On February 11, 2020 a court judgment was entered in favor of Kim against YNOT and Lee in the amount of $191,287.99, including attorneys’ fees, costs, and prejudgment interest.

[11] The trial court did not base its denial of relief on personal service on Colin Kim, noting section 416.10’s provision allowing substituted service on an agent for service of process only applies to a corporation. Rather, the court based its ruling on its finding Lee had actual notice.

* Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.