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Carol Gilbert, Inc. v. Haller

November 24, 2009


(Santa Clara County Super. Ct. No. CV057324). Trial Judge: The Honorable James C. Emerson.

The opinion of the court was delivered by: Rushing, P.J.


Plaintiff Carol Gilbert, Inc., sought to join defendant Amit Haller in this action as a Doe defendant, but served a summons on him that omitted the statutory notice that he was served by that fictitious name. When Haller failed to answer, plaintiff secured a default judgment for some $40,000. The trial court denied Haller‟s motion to vacate the judgment, reasoning that the papers served gave him actual notice of the suit and substantially complied with statutory requirements. We question whether such a rationale can ever sustain a default judgment over a defendant‟s objection that service did not comply with statutory requirements. Assuming it can, a finding of substantial compliance can only be sustained where (1) the record shows partial or colorable compliance with the requirement on which the objection is predicated; (2) the service relied upon by the plaintiff imparted actual notice to the defendant that the suit was pending and that he was bound to defend; and (3) the manner and objective circumstances of service were such as to make it highly likely that it would impart such notice. Because the first of these requirements was not met here, we will reverse the order denying defendant‟s motion to vacate.


On or about February 1, 2006, plaintiff filed a complaint naming Stoa Restaurant and Wine Bar (Stoa), Yoav Gilat, and Does 1 through 25 as defendants.*fn1 She alleged a single cause of action for breach of a contract signed by defendant Gilat on or around March 10, 2004, engaging plaintiff as exclusive agent to locate a suitable property for a restaurant. Plaintiff alleged that she found numerous properties, including one at 632 Emerson Street in Palo Alto, which she repeatedly brought to Gilat‟s attention. In May, Gilat gave notice that he was terminating the contract. Although it was terminable only for cause, plaintiff agreed to its termination, while reminding Gilat of the properties she had already identified. Shortly after termination, she alleged, defendants negotiated a lease for the Emerson Street property. They had, she continued, "terminated the Contract for the purpose of avoiding the payment of [her] commission in violation of the Termination clause of the contract." She prayed for $30,000 "or such other amount that CGI is owed as commission under the Contract, to be proved at trial," plus interest and costs.

The complaint‟s only allegations concerning fictitiously named defendants were, "Plaintiff is ignorant of the true names and capacities, whether individual, corporate, associate, or otherwise, of Defendants sued herein as DOES 1 through 25, inclusive ("Does‟), and therefore sues these Defendants by such fictitious names and will ask leave of the court to amend this Complaint to show their true names and capacities when the same are ascertained. Plaintiff is informed and believes, and on that basis alleges, that each of the Defendants designated by such fictitious name could or may assert interest [sic] in the subject matter of this litigation." It was alleged that each of the defendants was acting at all times as the agent and employee of each other defendant.

Summons was served on Gilat, personally and on behalf of Stoa, on February 22, 2006. On April 15, 2006, Gilat promulgated, and apparently served, a document entitled "Defendant Answer: Yoav Gilat," which the court accepted as a responsive pleading, though it was not in proper form.*fn2 In it Gilat stated that in operating the restaurant, which had closed after five months, he had acted at all times as the agent of the restaurant‟s owners. He acknowledged that he was a partner in the restaurant or in one or both of two entities that owned it, but asserted that under the partnership agreement he was not liable for "guaranteed [liabilities] of the partnership," and therefore "should be exempt from this matter." He identified Haller as one of seven "legal entities and individuals that held interest in STOA restaurant." He further asserted that in his first meeting with plaintiff, he had informed her that another realtor had already shown him the Emerson Street location, among others. To reflect this fact he had interlineated plaintiff‟s contract to expressly except " "sites shown by Mike Costa (Terranomics).‟ " He made numerous further assertions in derogation of plaintiff‟s claims.

Plaintiff‟s attorney later declared that based on this pleading and ensuing conversations with Gilat, he concluded that Haller was "a principal of Defendant STOA, and likely the real party in interest in this case." On or about April 25, 2006, he filed on plaintiff‟s behalf an "Amendment Substituting True Name for Fictitious Name (C.C.P. § 474)," which recited that plaintiff had "learned the true name of the defendant designated in the Complaint as Doe I, and substitutes the true name, Amit Haller, for the fictitious name whenever it appears in the Complaint."

On May 7, 2006, a process server handed Haller, at his home, copies of a summons, the complaint, and the Doe amendment. Plaintiff filed a declaration of service on May 16, 2006. It stated that the "name of party as shown on documents served" was "AMIT HALLER sued herein as DOE 1." However, the copy of the summons actually received by Haller, and eventually filed by him with the court, was left blank in the space designated to notify him that he was sued as a fictitiously named defendant. It appeared as follows:

Consistent with this appearance, the second page of the declaration of service also stated that "The "Notice to the Person Served‟ (on the summons) was completed" to show service "as an individual defendant" and did not claim to have shown service "as the person sued under the fictitious name of (specify)."

On June 13, 2006, at plaintiff‟s request, the clerk entered Haller‟s default. The clerk subsequently entered Stoa‟s default. The clerk refused to enter judgment, however, on the ground that, Gilat having answered the complaint, any default judgment must be entered by the court. Plaintiff thereafter caused Gilat to be dismissed from the action without prejudice. On November 15, 2006, the clerk again refused to enter judgment on the ground that accrued interest could not be calculated from the face of the complaint.

On January 25, 2007, plaintiff submitted declarations in support of an application for a default judgment. She in substance repeated the allegations of the complaint, i.e., that she had identified numerous properties including Emerson Street, and that defendants had terminated the contract to avoid paying her commission. She did not address the assertions in Gilat‟s answer that the Emerson property had been brought to his attention by another agent and expressly excluded from the contract. Her attorney filed a declaration to the effect that she had incurred attorney fees of $4,330. On February 2, 2007, the court entered a judgment by default against Haller and Stoa in the amount of $41,713.00. On March 6, 2007, plaintiff served notice of entry of judgment.

Nearly a year later, on February 5, 2008, plaintiff‟s counsel caused an earnings withholding order to be served on Haller‟s employer. Some time thereafter Haller was served with a notice of creditor‟s examination. He thereupon filed a motion to vacate the judgment and set aside the default on the grounds that they were void. In the motion he contended that "he was not properly named as a defendant in substitution for Doe 1, nor was he properly served under Code of Civil Procedure section 474." In the supporting memorandum, he asserted that the judgment was deficient in numerous respects, including that the summons served on him did not comply with Code of Civil Procedure section 474 (§ 474), which requires that such a summons notify the recipient that he is sued as a fictitiously named defendant.

On June 13, 2008, the court denied the motion to vacate, finding that Haller had actual notice of the suit and that Gilbert had "substantially complied with Code of Civil Procedure section 474 by filing an "Amendment Substituting True Name for Fictitious Name‟ on ...

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