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Tentative Ruling
Judge James Herman
Department 6 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107


Jessica Shipp vs Hiukei Liu

Case No: 1383232
Hearing Date: Wed Jun 26, 2013 9:30

Nature of Proceedings: Motion: Order Setting Aside Default & Default Judgment

Tentative Ruling: As set forth herein, the hearing on this motion is continued to 9:30 a.m. on July 17, 2013. Shipp may file and serve a supplemental opposition on or before July 3, 2013; Liu may file and serve a supplemental reply on or before July 10, 2013. Background: This is an action arising out of an automobile collision in Isla Vista, California, on October 13, 2009. Plaintiff Jessica Leigh Shipp alleges personal injuries and damages resulting from defendant Hiukei Liu’s negligent operation of the vehicle. Shipp filed her complaint on October 12, 2011. Shipp encountered difficulties in serving Liu with the summons and complaint because Liu could not be located. In an effort to locate Liu, counsel for Shipp, attorney Terence Geoghegan, spoke with Liu’s insurer, Farmers/ Mid-Century, asking about Liu’s insurance coverage for the accident and about locating Liu for service. (Geoghegan decl., ¶ 3.) Geoghegan asked Farmers if Farmers would accept service for Liu. (Ibid.) Farmers stated that it could not accept service and that it had no information to help locate Liu. (Ibid.; Dotta decl., ¶ 5.) On November 28, 2011,Geoghegan made the same request, and received the same reply, when Geoghegan attempted to reach the adjuster Geoghegan was told was assigned to this claim. (Geoghegan decl., ¶ 4.) On November 28, 2011, Geoghegan was also told that Farmers had no newer address for Liu and no information that might be helpful in finding such an address. (Ibid.) On June 5, 2012, the court entered its order permitting service on Liu by publication in the Daily Sound. Unfortunately, the Daily Sound ceased operations before publication of the summons was complete and Shipp was required to obtain a new order for publication in the Santa Barbara News Press. After service by publication was complete in the News Press, default was entered against Liu on January 3, 2013. A default judgment was entered by the court after the presentation of evidence on March 14, 2013, for damages in the amount of $15,000.00 and costs of $895.40, for a total judgment of $15,895.40. In support of this motion, Liu explains that she was in contact with her insurance agent immediately following the accident in 2009. (Liu decl., ¶ 3.) Liu resided at her previous address in Isla Vista until April 2010 when she moved to China. (Liu decl., ¶ 4.) Liu did not receive any phone calls or mail concerning the accident after she moved nor was she contacted by anyone in any way concerning the accident. (Ibid.) At some time after April 25, 2013, Liu was informed by a friend that Liu’s insurance company was trying to locate her regarding a lawsuit that had been filed against her concerning the accident. (Liu decl., ¶ 5.) Liu never saw any notice in the newspaper that she was being sued. (Ibid.) Farmers hired Liu’s present counsel on or about April 29, 2013. (Stub decl., ¶ 2.) Farmers provided Liu’s present counsel with the name of a local lawyer who is in contact with Liu’s family in China. (Stub decl., ¶ 3.) Counsel was then able to obtain information from Liu herself and promptly prepared this motion to set aside the default and default judgment. (Ibid.) Liu filed this motion to set aside the default and default judgment on June 3, 2013. Liu asserts that she had no actual notice of the lawsuit and therefore did not respond to the complaint. Liu had moved to China prior to the filing of this action. Shipp opposes the motion. Shipp argues that this matter is not now about a judgment against Liu, but about Farmers attempting to avoid payment of the judgment. Farmers stated that it had no helpful information, but was able to locate Liu after a default judgment had been proved up by Shipp. Shipp has been prejudiced by having to bring this case to trial again. In reply, Liu argues that the action is against Liu not against Farmers and that Liu did not have actual notice of the lawsuit and that Farmers was under a legal obligation not to disclose Liu’s personal information. Analysis: “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 has been 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 and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding 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.” (Code Civ. Proc., § 473.5, subd. (a).) “A notice of motion to set aside a default or default judgment and for leave to defend the action shall designate as the time for making the motion a date prescribed by subdivision (b) of Section 1005, and it shall 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. The party shall serve and file with the notice a copy of the answer, motion, or other pleading proposed to be filed in the action.” (Code Civ. Proc., § 473.5, subd. (b).) “Upon a finding by the court that the motion was made within the period permitted by subdivision (a) and 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, it may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action.” (Code Civ. Proc., § 473.5, subd. (c).) Shipp’s argument is mostly that Liu’s insurer has prejudiced Shipp by failing to assist Shipp in locating Liu for service. Shipp does not provide any facts which show that Liu had actual knowledge of the lawsuit at any time prior to April 25, 2013. Knowledge of the lawsuit by Liu’s insurer is insufficient to show actual knowledge by Liu. (See Goya v. P.E.R.U. Enterprises (1978) 87 Cal.App.3d 886, 891-892 [constructive knowledge does not constitute actual knowledge].) Liu thought that the matter had been resolved by her insurer prior to her moving. (Liu decl., ¶ 3.) Liu’s failure to further follow up does not constitute inexcusable neglect; Liu was not avoiding service. It appears to the court that this motion was made within the time period permitted by Code of Civil Procedure section 475.5, subdivision (a), and that Liu’s lack of actual notice in time to defend the action was not caused by Liu’s avoidance of service or inexcusable neglect. The court is therefore inclined to grant the motion to set aside the default and grant leave to Liu to defend this action on terms as may be just. “In the exercise of its discretion the court could consider a variety of factors including the history of the lawsuit, any delays in the procedural progress of the action and any circumstances bearing on prejudice and unfairness to plaintiff.” (Goya v. P.E.R.U. Enterprises, supra, 87 Cal.App.3d 886, 893.) Shipp has been prejudiced here by being forced to serve Liu by publication, to prove up a judgment, and to defend this motion. When asked, Farmers did not provide any information regarding Liu’s location. In reply, Farmers argues that it could not do so because of privacy concerns, citing Insurance Code section 791.13, subdivision (h), which states: “An insurance institution, agent, or insurance-support organization shall not disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction unless the disclosure is: [¶] … [¶] (h) In response to a facially valid administrative or judicial order, including a search warrant or subpoena.” Liu argues that Shipp did not seek information from Farmers by subpoena and absent a subpoena Farmers could not provide any information. Farmers did not state that it was refusing to provide information about Liu’s location because of Insurance Code section 791.13. Farmers affirmatively represented that it had no information that would be helpful to Shipp to locate Liu. Farmers did have such information, as is demonstrated by Farmers’ quick location of Liu when Shipp sought to collect the default judgment from Farmers directly. Farmers’ disclaimer made it unreasonable for Shipp to have served a subpoena on Farmers to obtain information that Farmers claimed did not exist. Although the court appreciates that Farmers did not have authority to accept service of the summons on behalf of Liu, Farmers nonetheless had an interest in resolving this matter on the merits because of Shipp’s post-judgment ability to enforce the judgment against Farmers. (Ins. Code, § 11580, subd. (b)(2).) When Liu was not available to defend the action directly, Farmers could have protected that interest directly by seeking to intervene in this action. (See Clemmer v. Hartford Ins. Co. (1978) 22 Cal.3d 865, 884-885.) Instead, Farmers disclaimed knowledge that would have avoided prejudice to Shipp. The court is inclined to condition the granting of this motion upon the payment by Liu of Shipp’s attorney’s fees and costs incurred in obtaining the default and default judgment. Evidence of the amount of such fees and costs are not now before the court. Accordingly, the court will continue the hearing of this motion to July 17, 2013. Shipp may file and serve such evidence and argument as she deems appropriate as to the amount of such fees and costs for the court’s consideration on or before July 3, 2013. Liu may file and serve a response on or before July 10, 2013. If the parties can agree as to an amount of such fees and costs in advance of the hearing, a stipulation to that effect would be sufficient.
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