Giorgio v. Synergy Management Group ( 2014 )

Filed 10/14/14; pub. order 11/6/14 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
JOHN GIORGIO, B248752
Defendant and Appellant, (Los Angeles County Super. Ct.
No. LC094005)
v.
SYNERGY MANAGEMENT GROUP,
LLC,
Plaintiff and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County, Frank J.
Johnson, Judge. Affirmed.
Bitton & Associates and Ophir J. Bitton for Defendant and Appellant.
Buchalter Nemer, Michael B. Fisher, Oren Bitan, for Plaintiff and Respondent.
_______________________
In this intentional tort action, the trial court denied defendant John Giorgio’s
motion, made pursuant to Code of Civil Procedure 473, subdivision (d),1 to set aside the
entry of default and any subsequent default judgment, in favor of plaintiff Synergy
Management Group, LLC (Synergy). Giorgio contends on appeal that the court erred in
denying the motion because he was never properly served with either the original or the
first amended complaint. We affirm.
STATEMENT OF FACTS AND PROCEDURE
On May 6, 2011, Synergy, on behalf of its predecessor in interest ASI
Management, LLC, filed its original complaint in this action. The original complaint
alleged Giorgio “converted the assets of [Synergy]’s assignor by submitting false expense
reports resulting in the misappropriation of assets belonging to [Synergy]’s assignor” and
“committed fraud by submitting false expense reports to [Synergy]’s assignor with the
intent to deceive [Synergy]. [Synergy] reasonably relied on the accuracy of expense
reports submitted by [Giorgio]. As a direct result of [Synergy]’s reliance on the
representations made by [Giorgio], [Synergy]’s assignor paid moneys to [Giorgio] to
which he was not entitled.” Synergy sought compensatory and punitive damages
according to proof, in an amount greater than $10,000 but less than $25,000, thereby
designating the case as a limited civil case.
On May 7, 2011, Synergy personally served Giorgio with the original complaint at
a North Carolina airport.2 Giorgio never responded to the original complaint. In his
1All further statutory references are to the Code of Civil Procedure, unless
otherwise stated.
2Service was established by the Proof of Service of Summons form (§ 425.12)
filed May 24, 2011.
2
declaration, Giorgio claimed he had been living and working in Europe since October 1,
2009, and was only visiting the United States at the time of service.
On June 13, 2011, Synergy filed its first amended complaint which sought
increased damages in the amount of $254,687.11, reclassifying the matter from a limited
to an unlimited civil case.3 On June 13, 2011, Synergy mailed the amended complaint to
an address in the Netherlands (Prinsengracht 694, 1017 KZ Amsterdam), thought to be
Giorgio’s residence. Giorgio never responded to the amended complaint. In his
declaration, Giorgio claimed he did not receive it because he had not lived or worked in
the Netherlands since April 14, 2011.
On August 29, 2011, Synergy filed a request for entry of default against Giorgio.
The clerk entered default the same day.
In October 2011, Giorgio learned about the default that had been entered, and on
January 30, 2012, retained local counsel. On February 6, 2012, Giorgio filed a motion to
set aside default (§ 473, subd. (d)) on the grounds that “(a) GIORGIO was not properly
served with the Summons, Complaint and First Amended Complaint; (b) the entry of
default violates due process of law and is void; and (c) GIORGIO has not been properly
served and has not appeared in the action and therefore must be properly served before
default may be entered.” On March 21, 2012, the trial court granted Giorgio’s motion to
set aside the default.4
Synergy then conducted a search for Giorgio’s address by utilizing online search
engines such as Accurint, Google.com, and White Pages. Synergy located one address
3 The first amended complaint also corrected a scrivener’s error in the original
complaint, which erroneously listed Ronald Freson as plaintiff on page 4 and 5 of the
original complaint. The remainder of the original complaint, including the summons,
correctly listed Synergy as plaintiff.
4 No reporter’s transcript of the hearing on the motion to set aside entry of default
was provided by either party, only a case summary listing the proceeding held and the
trial judge’s ruling.
3
that Giorgio was associated within the last two years in California—1109 South Wooster
Street, #3, Los Angeles, 90035 (Wooster Address). On June 4, 2012, Synergy sent by
certified mail a copy of the summons, complaint and acknowledgment of receipt of
service addressed to Giorgio at the Wooster Address. Shortly thereafter Synergy
received a “Return to Sender-Unclaimed” envelope from the United States Post Office.
On June 7, 2012, Synergy obtained a letter from Groot & Evers, a bailiff firm in the
Netherlands, confirming that Giorgio had “migrated to the United States of America
since the 17th of October 2011, the last known address is 1109 South Wooster Street,
CA-90035 Los Angeles (United States of America). The last known and registered
address in The Netherlands was Prinsengracht 694, 1017 KZ Amsterdam (The
Netherlands).” On June 12, 2012, Synergy hired a processor server from Janney &
Janney Attorney Services to personally serve Giorgio at the Wooster Address but was
unsuccessful because no one would answer the door. On June 18, 2012, Synergy mailed
a written request to the United States Postal Service to provide any forwarding or change
of address for Giorgio at the Wooster Address. The Postal Service response dated June
29, 2012, verified that Giorgio continued to receive mail at the Wooster Address and
there was no change of address on file for Giorgio. Synergy then hired the Cromwell
Group, Attorney Services, specializing in difficult service of process. Process servers
attempted to effectuate service on Giorgio at the Wooster Address on six occasions, but
they were all unsuccessful because no one would answer the door. The Cromwell Group
ran several databases and found other addresses for family members and tried
unsuccessfully to effectuate service on Giorgio at those addresses.
On September 20, 2012, Synergy filed an application for publication (§ 415.50).5
5 The application included the Declaration of Michael B. Fisher (Synergy’s
counsel of record); Non Service Report and Declaration of Diligence Of Ryan Lusting
(processor server of Janney & Janney); Declaration of Lilia Alanis (account executive of
the Cromwell Group); June 4, 2012 Notice and Acknowledgment of Receipt and
Certified Mail Receipt to the Wooster Address along with the “Return to Sender-
4
On September 27, 2012, the trial court granted Synergy’s application for publication.
The summons on the first amended complaint was published in the Los Angeles Daily
Journal for four consecutive weeks. Service by publication of the summons on the first
amended complaint was completed on November 2, 2012, and Giorgio’s response was
due on or before December 3, 2012. On November 6, 2012, Synergy mailed courtesy
copies of the application for publication, order for publication, proof of publication,
summons on first amended complaint, first amended complaint, clerk’s notice of
transmittal re-classification, notice of case assignment, and alternative dispute resolution
package to Giorgio’s counsel of record. Giorgio did not file an answer, or otherwise
respond, to the amended complaint.
On December 4, 2012, Synergy filed a request for entry of default against Giorgio,
which was entered by the court clerk on the same day. A copy of this request was mailed
to Giorgio at the Wooster Address and to Giorgio’s counsel of record. On February 1,
2013, Synergy filed its request for entry of default judgment against Giorgio and mailed a
copy of this request to Giorgio at the Wooster Address and to Giorgio’s counsel of
record. In support of the request for default judgment, Synergy included a November 15,
2011 invoice from Giorgio listing the Wooster Address as his current address to “[m]ake
all checks payable to John Giorgio.” Synergy also included multiple invoices from
Giorgio that listed the Wooster Address during the time of his employment.
On February 6, 2013, Giorgio filed a motion to set aside entry of default and any
subsequent default judgment on the grounds that the service by publication was improper
(§ 473, subd. (d)). In his motion, Giorgio stated he had neither lived nor worked in
California since October 1, 2009, and was not in California at the time the summons was
published in the Los Angeles Daily Journal.
On March 12, 2013, the trial court held a hearing on Giorgio’s motion. The court
noted that “conspicuously absent from Mr. Giorgio’s declaration is any explanation at all
Unclaimed” envelope returned by the United States Post Office; the June 7, 2012 letter
from Groot & Evers; and the June 18, 2012 letter to the Postal Service with its response.
5
as to how [the Wooster Address] in Los Angeles came to be associated with him. And it
appears that at least the United States Post Office is of the opinion that he still apparently
receives mail there. In addition to the statement from the investigators in . . . the
Netherlands . . . .” The court found that Giorgio “made a deliberate tactical decision to
not respond to this matter” and denied Giorgio’s motion, entering default judgment in
favor of Synergy for $254,687.11 in damages and costs. On March 22, 2013, Giorgio
filed a motion for reconsideration of the court’s order denying Giorgio’s motion. On
May 2, 2013, the trial court denied Giorgio’s motion for reconsideration, finding “there is
nothing in this motion that’s new or that couldn’t have been presented in the last motion.”
On May 10, 2013, Giorgio filed a notice of appeal from the default judgment.
DISCUSSION
Giorgio contends the trial court erred by denying his motion to set aside the
default and default judgment under section 473, subdivision (d),6 because the judgment is
void for lack of proper service.
Giorgio first argues on appeal that service of the original complaint by personal
service was improper. On May 6, 2011, Synergy filed its original complaint and
personally served Giorgio at a North Carolina airport the following day. Thereafter,
Synergy filed its first amended complaint on June 13, 2011. “‘It is well established that
an amendatory pleading supersedes the original one, which ceases to perform any
function as a pleading. [Citations.]’ [Citation.] ‘Such amended pleading supplants all
prior complaints. It alone will be considered by the reviewing court. [Citations.]’
6 Under section 473, subdivision (d): “The court may, upon motion of the injured
party, or its own motion, correct clerical mistakes in its judgment or orders as entered, so
as to conform to the judgment or order directed, and may, on motion of either party after
notice to the other party, set aside any void judgment or order.” A judgment is void if the
defendant was never served with the summons and complaint. (See § 410.50, subd. (a).)
6
[Citation.]” (Foreman & Clark Corp. v. Fallon (1971) 3 Cal. 3d 875, 884.) On February
6, 2012, Giorgio conceded in his reply to Synergy’s opposition to set aside the first
default that “the original complaint has been abandoned and superseded by the [first
amended complaint], and can no longer function as a pleading.” Because the original
complaint is not before us, we will disregard Giorgio’s contention that service of the
original complaint was improper. (See Sylmar Air Conditioning v. Pueblo Contracting
Services, Inc. (2004) 122 Cal. App. 4th 1049, 1054.)
Giorgio further argues that service of the first amended complaint by mail to the
Netherlands was improper. However, the trial court agreed with Giorgio and granted the
motion to set aside the default entered on August 29, 2011, based on improper service to
the Netherlands. We therefore conclude that Synergy’s service by mail to the
Netherlands is of no legal significance given the fact that the trial court was in agreement
with Giorgio and Synergy is not contesting that ruling on appeal. Our inquiry will solely
focus on Giorgio’s contention that service by publication was improper.
Standard of Review
“‘“A motion to vacate a default and set aside [a] judgment (§ 473) ‘is addressed to
the sound discretion of the trial court, and in the absence of a clear showing of abuse . . .
the exercise of that discretion will not be disturbed on appeal.’” [Citations.] The
appropriate test for abuse of discretion is whether the trial court exceeded the bounds of
reason. [Citation.]’ [Citation.]” (Strathvale Holdings v. E.B.H. (2005) 126 Cal. App. 4th
1241, 1249.) Whether the evidence is oral testimony, affidavits, or documents, when
there is conflicting evidence, the trial court’s express and implied factual determinations
are not disturbed on appeal if supported by substantial evidence. (Id. at p. 1250; Kulko v.
Superior Court (1977) 19 Cal. 3d 514, 519, fn. 1, revd. on other grounds (1978) 436 U.S.
84.) “‘So far as it has passed on the weight of evidence or the credibility of witnesses,
[the trial court’s] implied findings are conclusive . . . . When an issue is tried on
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affidavits, the rule on appeal is that those affidavits favoring the contention of the
prevailing party establish not only the facts stated therein but also all facts which
reasonably may be inferred therefrom, and where there is a substantial conflict in the
facts stated, a determination of the controverted facts by the trial court will not be
disturbed.’ [Citations.]” (Kulko v. Superior Court, supra, at p. 519, fn. 1.) However,
“[w]here the question on appeal is whether the entry of default and the default judgment
were void for lack of proper service of process, we review the trial court’s determination
de novo. (Cruz v. Fagor America, Inc. (2007) 146 Cal. App. 4th 488, 495-496.)” (Hearn
v. Howard (2009) 177 Cal. App. 4th 1193, 1200.)
Service by Publication
Giorgio contends the service by publication did not provide him actual notice
because he was not living or working in California since October 1, 2009. We disagree
and explain below.
Our Supreme Court stated, “[T]he governing statutes afford the plaintiff a variety
of means by which to effect service upon the defendant. Service may be accomplished
by means of personal delivery of the summons and complaint to a party (§ 415.10), by
delivery to the business office or dwelling of certain classes of parties (§§ 415.20,
416.10–416.90), by mailing (with an acknowledgment of receipt) to a party (§ 415.30),
or, if a party is out of state, by any of the preceding means or by first class mailing,
requiring a return receipt (§ 415.40). Finally, if service upon a party by these enumerated
means proves impossible, service may be effected through publication, which must be
authorized by court order. (§ 415.50.)” (Watts v. Crawford (1995) 10 Cal. 4th 743, 748.)
Section 415.50 provides in pertinent part: “A summons may be served by
publication if upon affidavit it appears to the satisfaction of the court in which the action
is pending that the party to be served cannot with reasonable diligence be served in
another manner specified in this article . . . . [¶] . . . [¶] The court shall order the
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summons to be published in a named newspaper, published in this state, that is most
likely to give actual notice to the party to be served . . . . The order shall direct that a
copy of the summons, the complaint, and the order for publication be forthwith mailed to
the party if his or her address is ascertained before expiration of the time prescribed for
publication of the summons.” (§ 415.50(a)-(b), italics added.) Although “[w]e think it
safe to say that there is really little expectation that a defendant so served will in fact
acquire actual notice from the publication.” (County of Riverside v. Superior Court
(1997) 54 Cal. App. 4th 443, 450.)
Substantial evidence supports the trial court’s finding that Giorgio could not with
reasonable diligence be served personally or by mail. In response to the trial court
granting Giorgio’s motion to set aside the entry of default, Synergy conducted a search
for any addresses associated with Giorgio. Synergy conducted a search online and only
was able to locate one address associated with Giorgio, the Wooster Address. On June 4,
2012, Synergy attempted to serve Giorgio by mail to that address but received a “Return
to Sender Unclaimed” envelope from the United States Postal Service. But on June 7,
2012, a bailiff firm in the Netherlands confirmed that Giorgio had migrated to the United
States since October 17, 2011, and his last known address is the Wooster Address.
Synergy hired a process server on January 12, 2012, to personally serve Giorgio at the
Wooster Address but was unsuccessful because no one answered the door. Thereafter,
Synergy received a response from the Postal Service regarding its written request to
provide any forwarding or change of address for Giorgio at the Wooster Address. The
Postal Service verified that Giorgio continued to receive mail at that address and there
was no change of address on file. Based on that information, Synergy hired Cromwell
Group, Attorney Services, which specialize in difficult service of process. Process
servers attempted to effectuate service on Giorgio at the Wooster Address on six
occasions, but they were all unsuccessful because again, no one would answer the door.
Given these facts, it was reasonable for the trial court to conclude the summons and
complaint could not be served personally or by mail. (Compare Transamerica Title Ins.
9
Co. v. Hendrix (1995) 34 Cal. App. 4th 740, 745 [where the defendant’s home address was
not known but his post office address was known, it was error to conclude that service by
mail was not required before ordering notice by publication, because “a post office box is
a sufficient address for compliance with . . . section 415.30”].)
Giorgio contends the summons on the first amended complaint was not published
in a newspaper that would most likely give him actual notice. However, in support of the
request for default judgment, Synergy included a November 15, 2011 invoice from
Giorgio listing the Wooster Address as his current address to “[m]ake all checks payable
to John Giorgio.” This invoice was transmitted after the first default against Giorgio was
entered in this case, which was five months after Synergy filed its first amended
complaint. Moreover, the trial court properly noted during the hearing on Giorgio’s
motion to set aside the default and default judgment that Giorgio has never provided an
explanation for why he is associated with the Wooster Address. The United States Postal
Service, along with an investigator in the Netherlands believed Giorgio also lived at the
Wooster Address and found no other address on record associated with him. Giorgio also
failed to mention to the trial court or in his opening brief what newspaper would have
given him actual notice. (Khourie, Crew & Jaeger v. Sabek, Inc. (1990) 220 Cal. App. 3d
1009, 1013 [“It is established that a defendant will not be permitted to defeat service by
rendering physical service impossible”].) Contrary to Giorgio’s contentions, we find
Synergy had reason to know Giorgio resided at the Wooster Address, and substantial
evidence supported Synergy’s election of a newspaper in Los Angeles as the newspaper
“most likely to give actual notice to the party to be served . . . .” (§ 415.50, subd. (b); see
Olvera v. Olvera (1991) 232 Cal. App. 3d 32, 42-43.) We conclude service by publication
was proper and affirm the default judgment against Giorgio.
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DISPOSITION
The judgment is affirmed. Synergy is awarded costs on appeal.
KRIEGLER, J.
We concur:
MOSK, Acting P. J.
GOODMAN, J. *
* Judge of the Los Angeles County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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Filed 11/6/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
JOHN GIORGIO, B248752
Defendant and Appellant, (Los Angeles County Super. Ct.
No. LC094005)
v.
SYNERGY MANAGEMENT GROUP, ORDER CERTIFYING OPINION
LLC, FOR PUBLICATION
Plaintiff and Respondent.
THE COURT:
The opinion in the above-entitled matter filed on October 14, 2014, was not
certified for publication in the Official Reports. Upon respondent’s request and for good
cause appearing, it is ordered that the opinion shall be published in the Official Reports.
Pursuant to California Rules of Court, rule 8.1105(b), this opinion is certified for
publication.
_______________________________________________________________________
KRIEGLER, J. MOSK, Acting P. J. GOODMAN, J.*
* Judge of the Los Angeles County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.