Account Management Services v. Melahoures CA4/3 ( 2024 )

Filed 10/2/24 Account Management Services v. Melahoures 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
ACCOUNT MANAGEMENT
SERVICES, INC.,
G063315
Plaintiff and Respondent,
(Super. Ct. No. 30-2022-01266072)
v.
OPINION
KONSTANTINOS U.
MELAHOURES,
Defendant and Appellant.
Appeal from a postjudgment order of the Superior Court of
Orange County, Donald F. Gaffney, Judge. Affirmed.
Loveless Law Firm and Andrea Scurry Loveless for Defendant
and Appellant.
Law Office of Gary A. Bemis OC and Gary A. Bemis for Plaintiff
and Respondent.
* * *
Defendant Kostantinos U. Melahoures (Melahoures) appeals from
a postjudgment order denying his motion to set aside a default and default
judgment entered against him in favor of plaintiff Account Management
Services, Inc.1 He argues the trial court abused its discretion by denying his
motion because he did not receive actual notice of the lawsuit in time to
defend. He also contends the court made various incorrect findings in denying
his motion. We disagree with Melahoures’ contentions and affirm.
STATEMENT OF FACTS
I.
THE COMPLAINT AND SERVICE OF PROCESS
In June 2022, plaintiff filed a form complaint against Melahoures
and Southland asserting causes of action for common counts. Among other
things, the complaint alleged both defendants owed money to plaintiff “for
work, labor, services and materials rendered at the . . . request of defendant[s]
and for which defendant[s] promised to pay.” According to the complaint, “the
claim(s) sued on was duly assigned, transferred and set over to plaintiff . . . by
Pacific Medical Laboratory, Inc., and plaintiff is now the owner and holder
thereof.”
1 The trial court denied the motion to set aside the default and
default judgment as to both Melahoures and his company, defendant
Southland Family Urgent Care, Inc. (Southland). But the opening brief
indicates the only issue on appeal is whether the court erred by refusing to
set aside the default judgment against Melahoures. The notice of appeal also
appears to have been filed only by Melahoures. We accordingly refer to
Melahoures as the appellant even though the opening brief refers to both
Melahoures and Southland as appellants.
2
On July 8, 2022, a registered process server served the summons
and complaint by substituted service. According to the proofs of service, the
process server left the summons and complaint with “Maribelle R. –
Administrative Assistant – Person Authorized to Accept” at Southland’s
business address in Mission Viejo. The process server also mailed copies of
the documents to the same business address, and his declaration of diligence
stated he unsuccessfully attempted to personally serve Melahoures and
Southland on two prior occasions at the same address.
II.
DEFAULT AND DEFAULT JUDGMENT
Plaintiff requested entry of default in September 2022 and
mailed the request to Melahoures and Southland at Southland’s business
address. On the same day, plaintiff filed the proofs of service. Melahoures
and Southland’s defaults were entered as requested on September 30, 2022.2
In November 2022, plaintiff filed a request for entry of default
judgment and mailed a copy of the request to Southland’s business address.
The court entered a default judgment against Melahoures and Southland on
2 It is not clear from the record if plaintiff’s counsel notified
Melahoures’ counsel of his intent to take a default before filing the request
with the trial court. (Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 135-140
[holding an attorney is obligated to inform opposing counsel of an impending
default and to provide opposing counsel with a reasonable opportunity to file a
responsive pleading]; Shapell Socal Rental Properties, LLC v. Chico’s FAS, Inc.
(2022) 85 Cal.App.5th 198, 213 (Shapell) [same].) Melahoures has not provided
any records suggesting this issue was argued before the trial court, and neither
party raises the issue on appeal. We accordingly need not address the issue.
(Perez v. Grajales (2008) 169 Cal.App.4th 580, 591 [“‘[I]t is fundamental that a
reviewing court will ordinarily not consider claims made for the first time on
appeal which could have been but were not presented to the trial court’”].)
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November 16, 2022. On the same day, Melahoures and Southland attempted
to file an answer to the complaint, but the court rejected the filing because it
had entered the defaults over a month prior.
III.
MOTION TO SET ASIDE THE DEFAULT AND DEFAULT JUDGMENT
In June 2023, Melahoures and Southland brought a motion under
Code of Civil Procedure section 473.53 to set aside the default and default
judgment. They argued they did not receive actual notice of the action.
Although the proofs of service indicated the process server mailed a copy of
the summons and complaint to Southland’s business address, they claimed
they never received the documents. Instead, they asserted they first learned
about the action in May 2023 when they received a notice of levy.
Melahoures and Southland also argued substitute service was
improper under section 415.20. They claimed Southland’s administrative
assistant was not authorized to accept service on Melahoures’ behalf. They
further suggested plaintiff should have attempted personal service at
Melahoures’ home address rather than his business address.
In opposition, plaintiff argued Melahoures and Southland were
properly served with the summons and complaint and had notice of the action
in time to defend. In support of its opposition, plaintiff submitted the
declaration of its president. According to plaintiff’s president, Melahoures
called plaintiff’s counsel on July 20, 2022, around two weeks after service of
the summons and complaint. The call was forwarded to plaintiff’s president
who spoke to Melahoures. During their phone call, Melahoures requested a
10-day extension to file an answer to the complaint. Plaintiff’s president
3 All further statutory references are to the Code of Civil
Procedure.
4
stated: “The extension was granted,” and “the new date for [d]efendants to
answer the complaint was August 30, 2022.” Plaintiff’s president also stated
Melahoures called a second time on August 9, 2022 and spoke to him and an
employee of the third party that had assigned its claims to plaintiff. The
parties discussed the accounts for collection but were not able to reach any
resolution. Plaintiff’s president subsequently called Melahoures on August
29, 2022 and August 30, 2022, but did not receive a response.
In reply, Melahoures and Southland relied on section 473,
subdivision (b) and argued they had shown “mistake, inadvertence and
excusable neglect in failing to timely respond to the complaint, and [in] their
delay in moving to seek relief.” They suggested plaintiff “took advantage of
[defendants’] misunderstanding regarding the impending settlement of [the]
dispute.” They also attached a copy of their proposed answer to the
complaint.
IV.
THE COURT’S ORDER
In September 2023, the court denied the motion to set aside the
default and default judgment. First, the court held Melahoures was properly
served via substituted service. Relying on section 415.20, subdivision (b), the
court explained a plaintiff may use substitute service if after exercising
reasonable diligence, the defendant could not be personally served. The court
emphasized the process server attempted to personally serve Melahoures at
Southland’s business address on two prior occasions. The court concluded
these attempts qualified as “‘reasonable diligence.’” The court also rejected
the assertion that Southland’s administrative assistant was not authorized to
accept service on Melahoures’ behalf because Melahoures did “not dispute
that the receptionist was a person ‘apparently in charge of his or her office
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10-2-24[or] place of business.’” The court further noted Melahoures and
Southland did not argue substituted service on Southland was insufficient.
Second, the court did not find any basis to set aside the default or
default judgment under section 473.5. According to the court, there was
evidence Melahoures and Southland knew about the lawsuit in time to
defend. The court noted Melahoures called plaintiff’s counsel and spoke to
plaintiff’s president in July 2022 before defendants’ defaults were entered.
During that conversation, Melahoures requested and was granted an
extension of time to file an answer to the complaint. The court further found
the motion to set aside was untimely because it was not filed until June
2023—more than seven months after the default judgment was entered on
November 16, 2022. Finally, the court held Melahoures and Southland did
not comply with section 473.5, subdivision (b) because they did not file a
proposed answer with their motion. Although Melahoures and Southland
filed a proposed answer with their reply papers, the court found this did not
comply with the statutory requirements.
Melahoures timely filed a notice of appeal in November 2023.
DISCUSSION
Melahoures argues the court erred by denying the motion to set
aside the default and default judgment against him. He contends the court’s
various findings were erroneous and that he did not have actual notice of the
action in time to defend. We disagree. It was reasonable for the court to find
Melahoures had actual notice of the lawsuit. Any other purported findings
articulated by the trial court to deny the motion are inconsequential because
we uphold the decision of the trial court if it is correct on any ground.
(Grappo v. McMills (2017) 11 Cal.App.5th 996, 1006.)
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I.
APPLICABLE LAW AND STANDARD OF REVIEW
Pursuant to section 473.5, a party may file a motion to set aside a
default or default judgment “[w]hen service of a summons has not resulted in
actual notice to [the] party in time to defend the action.” (§ 473.5, subd. (a).)
The moving party “must show, by affidavit, that his or her lack of actual
notice in time to defend the action was not caused by his or her avoidance of
service or inexcusable neglect.” (Shapell, 85 Cal.App.5th at p. 212.)
The notice of motion must be served within “the earlier of: (i) two
years after entry of a default judgment against him or her; or (ii) 180 days
after service on him or her of a written notice that the default or default
judgment has been entered. (§ 473.5, subd. (a).) The moving party also must
“serve and file with the notice a copy of the answer . . . or other pleading
proposed to be filed in the action.” (Id., subd. (b).)
The court may set aside the default or default judgment “[u]pon a
finding by the court that the motion was made within the period permitted by
subdivision (a) and 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 . . . .” (§ 473.5, subd. (c).)
We review an order denying relief under section 473.5 for abuse
of discretion. (Shapell, supra, 85 Cal.App.5th at p. 212.) “‘“‘[T]he provisions of
section 473 . . . are to be liberally construed and sound policy favors the
determination of actions on their merits.’”’” (Id. at p. 212.) “An order denying
relief is therefore scrutinized more carefully than an order granting relief and
permitting trial on the merits.” (Id. at p. 213.) Nevertheless, a motion to set
aside a default or default judgment is addressed to the sound discretion of the
trial court and will be overturned only if the court’s ruling exceeds the bounds
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of reason. (Ibid.) In reviewing for an abuse of discretion, we also determine
whether the trial court’s factual findings are supported by substantial
evidence. (County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215,
1230.)
II.
THE COURT DID NOT ERR
Here, we find no abuse of discretion in the trial court’s denial of
Melahoures’ motion to set aside the default and default judgment. The
motion was primarily based on Melahoures’ lack of actual notice of the
lawsuit. In a declaration in support of the motion, Melahoures stated: “A
summons in this action has never been delivered to me from another person
duly authorized by me to accept service on my behalf, nor to the best of my
knowledge, has any person who is known to me accepted service on my behalf
in this action, either personally or on behalf of my business, Southland . . . .”
Plaintiff responded to the motion to set aside with declarations from the
process server, which detailed attempts to personally serve Melahoures and
the service of the summons and complaint on “Maribelle R. – Administrative
Assistant – Person Authorized to Accept” at Southland’s business address.
Plaintiff also provided evidence that Melahoures called plaintiff’s counsel 12
days after the process server had served the summons and complaint. The
call was forwarded to plaintiff’s president who spoke to Melahoures. During
their conversation, Melahoures requested an extension to file an answer to
the complaint, which he would not have been able to do if he was unaware of
the claims against him or Southland. This conversation occurred more than
two months before the defaults were entered.
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Given the above facts, it was reasonable for the court to find
Melahoures had actual notice of the lawsuit. (Ellard v. Conway (2001) 94
Cal.App.4th 540, 548 [holding the defendants had actual notice of the lawsuit
where they called the plaintiff’s attorney a few weeks after service of the
summons and complaint to discuss settling the case].) The court’s finding is
also consistent with its implied finding that Melahoures’ declaration, which
claimed he did not receive the summons and complaint, was not credible.
(People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc.
(1999) 20 Cal.4th 1135, 1143 [an appellate court must accept the trial court’s
implied findings of fact supported by substantial evidence].) Credibility is an
issue for the fact finder, and it is not our role to reweigh evidence or assess
credibility. (Ribakoff v. City of Long Beach (2018) 27 Cal.App.5th 150, 162.)
Melahoures’ opening brief focuses on some of the trial court’s
findings, which he claims were erroneous. First, he claims the court
mistakenly found he did not dispute “the administrative assistant [who was
served] was an individual ‘apparently in charge’ of the office.” He appears to
suggest substitute service was ineffective or improper. Section 415.20,
subdivision (b) governs substitute service on individuals and provides: “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 . . . usual
place of business . . . in the presence of . . . a person apparently in charge of
his or her office, place of business, or usual mailing address other than a
United States Postal Service post office box, at least 18 years of age, 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
9
were left.” (Italics added.) Melahoures’ declaration generally denied receiving
a summons from anyone authorized to accept service on his behalf. But he did
not provide any evidence about “Maribelle R.” and her role at his company or
dispute she was “apparently in charge” of the office.
Second, Melahoures argues the court erred by finding his motion
was untimely because it was filed more than seven months after entry of the
default judgment. As noted ante, a motion to set aside is timely if it served
and filed within the earlier of: (1) two years after entry of a default judgment,
or (2) 180 days after service of a written notice that the default or default
judgment has been entered. (§ 473.5, subd. (a).) Here, the motion was filed
within two years of entry of the default judgment—it was entered on
November 16, 2022, and the motion was filed on June 29, 2023. But it is not
clear if the motion was filed within 180 days after service of a written notice
of entry of the default or default judgment. The record does not indicate if or
when Melahoures was served with written notice of entry of the default or
default judgment. Assuming arguendo the motion was timely, contrary to the
trial court’s findings, there is still no basis to reverse. Melahoures’ motion
was premised on his lack of actual notice of the lawsuit, but there was
evidence he had actual notice of the lawsuit.
Third, Melahoures claims the court erred by finding he had
improperly attached a proposed answer to the reply brief as opposed to his
moving papers. He insists this was an “egregious ground” to deny the motion
because substantial compliance with the statute was sufficient. Once again,
there is no need to reverse on this ground because there was evidence
Melahoures had actual notice of the lawsuit in time to defend. We “uphold
the decision of the trial court if it is correct on any ground.” (Grappo v.
McMills, supra, 11 Cal.App.5th at p. 1006.)
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Fourth, assuming he had actual notice of the action, Melahoures
argues he was not aware he, as opposed to Southland, was personally liable
for the debt. He suggests “[t]his can be seen from the fact that Melahoures
immediately responded when [plaintiff] placed a levy.” He concludes he could
have assumed he was named in the lawsuit as Southland’s officer rather than
in his individual capacity. The evidence contradicts this argument. Although
Melahoures claims to have first learned about the action in May 2023 when
he received a notice of levy, he attempted to file an answer to the complaint
several months before the notice of levy on November 16, 2022. The answer
was on behalf of both Melahoures, individually, and Southland.
Finally, Melahoures generally argues the court did not consider
his “argument that there was a misunderstanding on the part of one or both
[defendants] ‘regarding the impending settlement of this dispute.’” But
Melahoures did not provide any details to the trial court about the alleged
“misunderstanding” or settlement discussions. The court accordingly had no
basis to find “excusable neglect” on this ground.
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DISPOSITION
The postjudgment order is affirmed. Plaintiff shall recover its
costs incurred on appeal.
SANCHEZ, ACTING P. J.
WE CONCUR:
MOTOIKE, J.
GOODING, J.
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