Timmann v. Napoli

Filed 2/22/08 Timmann v. Napoli CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from an order of the Superior Court of Los Angeles County,
Wendell R. Mortimer, Jr., Judge. Reversed.

David M. Dushane for Plaintiff and Appellant.

Morton, Lulofs & Wood and Larry E. Lulofs for Defendants and Respondents.

INTRODUCTION

Plaintiff and Appellant Swarnapali Timmann (Timmann) filed suit against a number of defendants, including defendants and respondents John F. Napoli (Napoli), JFN Project Consultants, a California corporation (JFN Consultants); and JFN Project Consultants Limited, a United Kingdom corporation (JFN Limited) (collectively defendants), for fraud and breach of contract, among other causes of action. According to Timmann, defendants breached an investment agreement by failing to pay interest on the principal amount and by failing to return the principal amount after Timmann canceled the agreement.

Timmann purported to serve JFN Limited, the United Kingdom corporation, with the summons and complaint in December 2004 and again in March 2007. JFN Limited did not respond to the purported December 2004 service of process. Instead, with respect to the March 2007 service of process, JFN Limited filed a motion to quash service of the summons and to dismiss the complaint on the basis that it had insufficient contacts with the State of California for the exercise of personal jurisdiction. Alternatively, JFN Limited asserted that the action should be dismissed against it pursuant to Code of Civil Procedure sections 583.410 and 583.420, subdivision (a), because Timmann did not timely serve it with the complaint. The trial court granted JFN Limiteds motion on both grounds and dismissed JFN Limited from the case. Timmann appealed.

We reverse. Timmann properly served JFN Limited in December 2004. JFN Limiteds 2007 motion to quash was therefore untimely. In addition, because Timmann properly served JFN Limited in December 2004, the trial court abused its discretion by dismissing the action against JFN Limited based upon Timmanns alleged dilatory service of process. The case is remanded to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Parties

a. Plaintiff Timmann is an individual who resides in the United Kingdom.

b. Defendant JFN Consultants is a California corporation, which does business in California and the United Kingdom.

c. Defendant JFN Limited is a consulting corporation organized and existing under the laws of the United Kingdom, with its principal place of business in the United Kingdom. According to the declaration of defendant Napoli, JFN Limited is not registered with the Secretary of State to conduct business in California. It has no physical facilities or bank accounts in California. JFN Limited has not provided or solicited consulting services in California.

d. At all relevant times, Defendant Napoli was the chief executive officer of JFN Consultants. In his declaration, he acknowledged that he was a director of JFN Limited.

2. The Investment Agreement

According to the allegations of the operative complaint, on January 15, 2004, Timmann and JFN Consultants executed an Inter-Party Private Agreement (the Agreement) pursuant to which Timmann agreed to loan JFN Consultants 625,000 in British pounds. The Agreement required Timmann to wire transfer the principal amount to JFN Consultants bank account as identified in Exhibit A to the Agreement. Exhibit A to the Agreement identified the bank as HSBC, located at 52 Oxford Street in London, England. Exhibit A also expressly stated that the account was in the name of JFN Project Consultants Limited. (Italics added.)

In consideration, commencing 30 days after Timmann wired the principal amount to JFN Limiteds account, JFN Consultants agreed to provide Timmann with 11 monthly payments of 41,667 and one final lump sum payment of 666,667 British pounds.^[1] The Agreement provided that if Timmann did not receive a periodic payment within five banking days from when it was due, she had the right to cancel the Agreement and receive a refund of the principal loan amount.

The Agreement also provided: Should any dispute arise as to the interpretation or breach of this Agreement, the signatories agree that the only legal jurisdiction in which this matter may be brought for dispute and litigation shall be the State or Federal courts located in the State of California, USA. The Agreement further provided that the law of California shall govern the Agreement.

Subsequently, Timmann wired the principal amount into JFN Limiteds bank account as required by the Agreement. After making two monthly installment payments, JFN Consultants failed to make any more monthly installments. Timmann then exercised her right to cancel the Agreement. Despite cancellation, JFN Consultants did not refund the principal amount to Timmann.

3. Timmann Files Suit

On appeal, Timmann represents that she filed the original complaint on November 12, 2004.^[2] On December 2, 2004, Timmann filed a first amended complaint alleging 12 causes of action. As against all defendants, Timmann alleged causes of action for breach of fiduciary duty, breach of written contract, violation of the Securities Act of 1933, negligence and fraud.

In the caption page to the first amended complaint, Timmann identified the defendants in pertinent part as follows: JFN Project Consultants, a California corporation and d.b.a. JFN Project Consultants Ltd. and DOES 1 to 100, inclusive.

In the general allegations on page 2 of the first amended complaint, Timmann designated the parties as follows: 4. The plaintiff[]alleges on information and belief that JFN Project Consultants[] is a California corporation and d.b.a. JFN Project Consultants Ltd. (JFN) doing business in the State of California, Los Angeles County and the United Kingdom. [] 5. The plaintiff[] alleges on information and belief that JFN Project Consultants Limited is an unknown entity not registered or qualified to do business in California.

Finally, with respect to Napolis relationship to JFN Consultants and JFN Limited Timmann alleged: The plaintiff further alleges on information and belief that at all times relevant herein, the defendant, Napoli, was and remains the chief executive officer, president, director, chairman and is either the sole or majority shareholder of JFN.

4. Service of the First Amended Complaint

On December 15, 2004, Timmann personally served Napoli with the summons and first amended complaint.

Also on December 15, 2004, Timmann separately and personally served Napoli with the summons and complaint as the president for JFN Project Consultants, Inc. d.b.a. JFN Project Consultants LTD.

Finally, on December 15, 2004 Timmann separately and personally served Kelly Ray Berkline, an attorney, purportedly as the agent for the service of process for JFN Project Consultants, Inc., a California Corporation and d.b.a. JFN Project Consultants LTD.

5. The Third Amended Complaint

The second amended complaint is not included in the record on appeal. On February 17, 2006, Timmann filed a third amended complaint, which is the operative complaint in this case. There, Timmann alleged that defendants engaged in an investment scheme to defraud Timmann. As against all defendants, Timmann alleged causes of action for breach of fiduciary duty, violation of the Securities Act of 1933, negligence, and money had and received.

The caption page and the designation of parties in the third amended complaint are identical to the allegations in the first amended complaint. The caption page of the third amended complaint indentified the defendants in pertinent part as: JFN Project Consultants, a California corporation and d.b.a. JFN Project Consultants Ltd. and DOES 1 to 100, inclusive.

Likewise, in the general allegations of the third amended complaint, Timmann designated the parties as follows: 4. The plaintiff[] alleges on information and belief that JFN Project Consultants[] is a California corporation and d.b.a. JFN Project Consultants Ltd. (JFN) doing business in the State of California, Los Angeles County and the United Kingdom. [] 5. The plaintiff[] alleges on information and belief that JFN Project Consultants Limited is an unknown entity not registered or qualified to do business in California . . . .

Moreover, with respect to Napolis relationship to JFN Consultants and JFN Limited, Timmann alleged in the third amended complaint: The plaintiff further alleges on information and belief that at all times relevant herein, the defendant, Napoli[,] was and remains the chief executive officer, president, director, chairman, and is either the sole or majority shareholder of JFN.

6. Service of the Third Amended Complaint

On February 17, 2006, Timmann served the third amended complaint upon counsel for JFN Consultants and JFN Limited.

In addition, on March 14, 2007, Timmann purported to effect service of process on JFN Limited by delivering the third amended complaint and summons to JFN Limited in the United Kingdom via Federal Express.^[3] Timmann received delivery confirmation on March 16, 2007.

7. JFN Limited Files Motion to Quash

Pursuant to Code of Civil Procedure section 418.10, on April 20, 2007, JFN Limited specially appeared and moved to quash service of the summons and third amended complaint and to dismiss the action against it. In its memorandum of points and authorities in support of the motion to quash, JFN Limited acknowledged: [JFN Limited] was named as a Defendant in the First Amended Complaint filed December 2, 2004.

8. Trial Court Grants Motion to Quash

Over Timmanns opposition, on May 23, 2007, the trial court granted JFN Limiteds motion to quash. The court dismissed the case against JFN Limited. The trial court ruled that JFN Limited had insufficient contacts with the State of California for the exercise of personal jurisdiction. Alternatively, the trial court dismissed the action pursuant to Code of Civil Procedure section 583.410 based upon Timmanns alleged delay in serving JFN Limited with the complaint. Timmann timely filed a notice of appeal.

CONTENTIONS

Timmann contends that: (1) she properly served JFN Limited in December 2004 and thus the motion to quash was untimely; (2) the trial court erred by finding that California could not exercise personal jurisdiction over JFN Limited; and (3) the trial court abused is discretion by dismissing the case for Timmanns alleged delay in serving JFN Limited with the complaint and summons. Because we agree with Timmanns first contention, we have no occasion to address her second or third contentions.

DISCUSSION

Code of Civil Procedure section 416.10 provides in pertinent part: A summons may be served on a corporation by delivering a copy of the summons and the complaint by any of the following methods: [] . . . [] (b) To the president, chief executive officer, or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general manager, or a person authorized by the corporation to receive service of process.

In addition, Corporations Code section 2110 provides: Delivery by hand of a copy of any process against a foreign corporation (a) to any officer of the corporation or its general manager in this state . . . shall constitute valid service on the corporation.

Finally, Code of Civil Procedure section 413.10 also allows service on a person outside the United States by a means reasonably calculated to give actual notice. The statute provides in pertinent part: Except as otherwise provided by statute, a summons shall be served on a person: [] . . . [] (c) Outside the United States, as provided in this chapter or as directed by the court in which the action is pending, or, if the court before or after service finds that the service is reasonably calculated to give actual notice, as prescribed by the law of the place where the person is served or as directed by the foreign authority in response to a letter rogatory. (Italics added.)

In this case, it is undisputed that on December 15, 2004, Timmann served by hand (i.e., personally served) Napoli as president of JFN Consulting dba JFN Limited. Napoli does not dispute that he was an officer of both JFN Consulting and JFN Limited. Thus, in compliance with Code of Civil Procedure section 416.10 and Corporations Code section 2110, Timmann served an officer, Napoli, of both corporations with a copy of the summons and complaint in December 2004.

JFN Limited responds, however, that the December 15, 2004 proof of service/summons was defective because it did not identify JFN Limited as a separate party, but instead as the dba of JFN Consulting. We reject this assertion and conclude that the December 15, 2004, service of process and summons was reasonably calculated to give JFN Limited actual notice of the action against it. (Code Civ. Proc.,  413.10.)

In Hammer Collections Co. v. Ironsides Computer Corp. (1985) 172 Cal.App.3d 899 (Hammer),^[4]the court faced a similar issue. There, the plaintiff served the defendant, Parthenon Company, Inc. (Parthenon), with a summons in which the plaintiff identified the defendant as follows: Ironsides Computer Corporation, also known as Parthenon Computers, Inc., a corporation, doing business as Ironsides Computers. (Id. at p. 901, some capitalization omitted.) The defendant, Parthenon, did not respond to the complaint on the basis that it had been served  [o]n behalf of Ironsides Computer Corporation.  (Id. at p. 900.) Parthenon asserted that it was not that corporation and it was not known by that name. The plaintiff then obtained a default judgment against Parthenon. (Ibid.) The parties agreed to set aside the default. Parthenon answered the complaint and filed a cross-complaint alleging abuse of process.

The Hammer court found that because service on Parthenon was valid, it could not maintain the cause of action for abuse of process. (Hammer, supra, 172 Cal.App.3d at p. 902.) The court rejected Parthenons assertion that because there was no entity denominated Ironsides Computer Corporation service was invalid. (Ibid.) Echoing Code of Civil Procedure section 413.10, quoted above, the court explained:     The provisions of this chapter should be liberally construed to effectuate service and uphold jurisdiction of the court if actual notice has been received by the defendant, and in the last analysis the question of service should be resolved by considering each situation from a practical standpoint. . . . The liberal construction rule, it is anticipated, will eliminate unnecessary, time-consuming, and costly disputes over legal technicalities, without prejudicing the right of defendants to proper notice of court proceedings.    (Ibid., original italics omitted.)

We find that there is no dispute that JFN Limited had actual notice of the lawsuit in December 2004. In its motion to quash service of the complaint, JFN Limited acknowledged that it was a named defendant in the first amended complaint. While the first amended complaint is not a model of clarity, it did identify JFN Limited in the caption page and separately identified JFN Limited in the allegations identifying each of the party defendants.

Moreover, it is undisputed that Timmann served the first amended complaint on Napoli as the president of JFN Limited. Thus, an officer of the company had actual knowledge in December 2004 that JFN Limited had been named as a defendant in the lawsuit.

We are left with the issue of whether the December 15, 2004, proof of service and summons was somehow fatally defective because it identified JFN Limited as the dba of JFN Consulting instead of identifying the parties separately. We conclude that the December 15, 2004, proof of service was not fatally defective. In Hammer, the Parthenon defendant was not separately identified, but was listed as the aka of another company, which did not even exist. Thus, the fact that JFN Limited was not separately identified but was designated as the dba of another defendant (i.e., JFN Consulting) company is not determinative of whether Timmann effectively served JFN limited in December 2004 by a method reasonably calculated to give JFN Limited actual notice of the case against it.

Based upon the foregoing, we conclude that Timmann served JFN Limited with the first amended complaint on December 15, 2004. Because JFN Limited did not file a motion to quash within 30 days after service of the first amended complaint, the motion to quash was untimely. (Code Civ. Proc.,  418.10, subd. (a).) It should therefore have been denied by the trial court. Likewise, because Timmann served JFN Limited in December 2004, the trial court abused its discretion by dismissing the case based upon the alleged dilatory service of process.

DISPOSITION

The order granting the motion to quash and dismissing JFN Limited is reversed. Costs on appeal are awarded to Timmann.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KITCHING, J.

We concur: KLEIN, P. J.

CROSKEY, J.

Publication Courtesy of California lawyer directory.

Analysis and review provided by Escondido Property line attorney.

^[1] Specifically, the Agreement provided: As compensation for the arrangement of providing such funding for this private transaction, TIMMANN is due to receive a specific sum from the net proceeds realized from factoring certain medium and long term institutional quality notes issued by major international AA and AAA rated banks (the bank Notes) that will be created and sold during the time of this private transaction . . . .

^[2] The original complaint is not included in the record on appeal.

^[3] With respect to service of process on JFN Limited, Timmann submitted a letter to the trial court from a United Kingdom law firm called Collins Solicitors. The firm wrote: Section 725 of the Companies Act 1985 prescribes the method for service of any document on a company registered in England and Wales. Section 725 states: A document may be served on a company by leaving it at or sending it to the companys registered office. 

^[4] The parties did not cite this case to the trial court or this court.