Cheryl Kelmar vs EdFinancial Services LLC

Case Number

24CV04095

Case Type

Hearing Date / Time

Mon, 04/07/2025 - 10:00

Nature of Proceedings

CMC; Motion ISO Entry of Default; Motion re Entry of Default; Motion to Remove Vexatious Litigant Status; 2 Motions to Compel Discovery; Motion to Set Aside Default

Tentative Ruling

Cheryl Kelmar v. EdFinancial Services LLC                    

Case No. 24CV04095

           

Hearing Date: April 7, 2025                                                    

HEARING:              (1) Plaintiff’s July 30, 2024, Motion And Order To Compel Discovery

                                    (2) Motion For A Continuance

                                    (3) Plaintiff’s December 11, 2024, Motion And Order To Compel Discovery

                                    (4) Motion To Set Aside Default On Edfinancial Services, LLC

                                    (5) Motion In Support Of Entry Of Default

                                    (6) Motion To Remove Vexatious Litigant Status Under Code of Civil Procedure Section 391

                                   

ATTORNEYS:        For Plaintiff Cheryl Kelmar: Self Represented

                             For Defendant Edfinancial Services, LLC: Mollie F. Benedict, Aggie B. Lee, Tucker Ellis LLP

TENTATIVE RULING:

(1) The motion of plaintiff for an order to compel discovery filed on July 30, 2024, is denied.

(2) The motion of plaintiff for a continuance of plaintiff’s July 30, 2024, motion to compel discovery is ordered off-calendar.

(3) The motion of plaintiff for an order to compel discovery filed on December 11, 2024, is denied.

(4) The motion of defendant Edfinancial Services, LLC, to set aside default is granted. The default of defendant entered on December 11, 2024, is vacated.

(5) The motion of plaintiff in support of entry of default is denied.

(6) The motion of plaintiff for an order to remove plaintiff’s vexatious litigant status is denied, without prejudice.

Background:

On July 17, 2024, plaintiff Cheryl Kelmar (Kelmar), who has been declared to be a vexatious litigant, filed with court approval a complaint against defendant Edfinancial Services, LLC (EFS), alleging two causes of action: (1) breach of contract; and (2) common counts. The complaint is prepared on a form approved for use by the Judicial Council of California. As alleged or effectively alleged by Kelmar in the complaint:

Kelmar has sent to EFS three certified letters over a span of 2 years requesting that it produce a copy of a student loan contract (the student loan) which Kelmar signed in 2008, but EFS has ignored Kelmar’s request. (Compl., ¶ BC-1(a).) EFS charges Kelmar 20 percent of Kelmar’s income as a monthly payment for the student loan. (Id. at ¶ BC-2.) Interest on the student loan has soared causing the initial $10,000 of debt to increase to over $50,000. (Id. at ¶¶ BC-4 & CC-1(b)(6).) Though Kelmar cannot afford a payment of $600 per month, EFS has not provided Kelmar with an alternative monthly payment or allowed Kelmar a more affordable option. (Id. at ¶ BC-4 & CC-1(b)(6).) Kelmar requests damages in the amount of $25,000 inclusive of interest, and a reasonable monthly payment of $150. (Id. at ¶ 10.)

Court records reflect that on July 30, 2024, Kelmar filed a motion (the July 30 Motion) for an order to compel discovery of the original student loan between Kelmar and Navient LLC (Navient), which Kelmar contends was transferred to EFS. (See July 30 Motion, ¶¶ 1, 3, 5 & 7.) The July 30 Motion was originally set for hearing on November 1, 2024.

On September 30, 2024, Kelmar filed a civil subpoena duces tecum (the September 30 Subpoena), which is prepared on a form adopted for mandatory use by the Judicial Council of California. The September 30 Subpoena does not state the name of a witness to whom it is directed, and includes an order directing a witness to appear in Department 4 on November 1, 2024, and to produce records described in attachment one to that subpoena.

On October 11, 2024, Kelmar filed a second civil subpoena duces tecum (the October 11 Subpoena) prepared on the same mandatory Judicial Council form described above, which is directed to EFS “c/o National Registered Agent”.

Also on October 11, 2024, Kelmar failed a motion for an order (the Motion to Continue) continuing the July 30 Motion.

On November 4, 2024, the Court entered an order continuing the July 30 Motion and the Motion to Continue to January 13, 2025. (See Nov. 4, 2024, Order & Notice of Case Re-Assignment & Dec. 2, 2024, Minute Order.)

On December 11, 2024, the default of EFS was entered as requested by Kelmar.

Also on December 11, 2024, Kelmar filed a third civil subpoena duces tecum (the December 11 Subpoena), which his prepared on the same mandatory Judicial Council form and which directs EFS “c/o National Registered Agent” to appear and produce records on January 13, 2025, and separately filed a motion for an order (the December 11 Motion) compelling EFS to produce the records described in the December 11 Subpoena.  

On January 10, 2025, EFS filed a motion for an order (the Set Aside Motion) setting aside or vacating the default of EFS entered on December 11, 2024, on the grounds that Kelmar failed to comply with statutory procedures for service of the summons and complaint on EFS. The Set Aside Motion was set for hearing on April 7, 2025.

On January 13, 2025, the Court entered a Minute Order holding the July 30 Motion, the Motion to Continue, and the December 11 Motion in abeyance, and continuing these motions to April 7, 2025, to be heard concurrently with the Set Aside Motion.

Also on January 13, 2025, Kelmar separately filed an opposition to the Set Aside Motion and an “Affidavit In Support To Compel Discovery” in which Kelmar provides written authorization for EFS to release Kelmar’s personal records. (Jan. 13, 2025, Affidavit, ¶¶ 1-6.)

On March 20, 2025, Kelmar filed a “motion in support of entry of default” (the Default Motion), and separately filed a motion (the Application) for an order removing Kelmar’s name from the statewide vexatious litigant list.

Analysis:

(1) The Motion to Continue

As further detailed above, the July 30 Motion was continued once to January 13, 2024, and again to April 7, 2025, as further detailed above. The Court has no record reflecting that Kelmar requested a different hearing date for the July 30 Motion or submitted any objections to these hearing dates. Therefore, it appears to the Court that the Motion to Continue has been mooted by the continuances of the July 30 Motion described above. For these reasons, the Court will order the Motion to Continue off-calendar.

(2) The Set Aside Motion

In the Set Aside Motion, EFS contends that Kelmar was required to serve EFS in this action by personally delivering a copy of the summons and complaint to its designated agent for service of process pursuant to Corporations Code section 17701.16, which sets forth the requirements for valid service of process on a limited liability company. (See Corp. Code, § 17701.16, subd. (b).) EFS asserts that Kelmar did not deliver a copy of the summons and complaint to an individual with authority to accept service of process on behalf of EFS in compliance with statutory requirements. Because Kelmar did not serve a copy of the summons and complaint in the manner required by statute, EFS argues, the default entered on December 11, 2024, is void.

“Knowledge by a defendant of an action will not satisfy the requirement of adequate service of a summons and complaint.” (County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1226 (Gorham).) “In the absence of a voluntary submission to the authority of the court, compliance with the statutes governing service of process is essential to establish that court’s personal jurisdiction over a defendant.” (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1439 (Dill); see also Sternbeck v. Buck (1957) 148 Cal.App.2d 829, 832 [“[s]ervice of summons in conformance with the mode prescribed by statute is deemed jurisdictional”].)

In circumstances where the jurisdiction of the court over a defendant has not been established by statutorily compliant service of process, any default entered against that defendant is void and may be challenged at any time. (Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1250 (Strathvale); Gorham, supra, 186 Cal.App.4th at p. 1228 [where there has been a failure of service of process upon a defendant, the court has inherent power to vacate a subsequent default as void].) Under Code of Civil Procedure section 473, “[t]he court … may, on motion of either party after notice to the other party, set aside any void judgment or order.” (Code Civ. Proc., § 473, subd. (d); Gorham, supra, 186 Cal.App.4th at p. 1228 [if invalidity of order does not appear on its face, it may be attacked by motion “usually made under a statute providing for such relief within certain time limits or a reasonable time”].)

“When a defendant challenges the court’s personal jurisdiction, the plaintiff has the initial burden of ‘demonstrating facts justifying the exercise of jurisdiction.’ [Citation.]” (Strathvale, supra, 126 Cal.App.4th at p. 1250; Dill, supra, 24 Cal.App.4th at p. 1441 [the evidentiary burden rests on plaintiff].) A proof of service which “complies with the statutory requirements regarding such proofs[]” is, absent contradictory evidence, sufficient to give rise to a presumption of proper service. (Dill, supra, 24 Cal.App.4th at pp. 1441-1442.)

Court records reflect that on August 6, 2024, Kelmar filed in this action a “Proof Of Service Of Summons” (the proof of service) which was ostensibly signed, under penalty of perjury, on August 1, 2024, by an individual identified as John White (White). (Aug. 6, 2024, Proof of Service, ¶ 8.) In the proof of service, White declares that he is not a registered California process server. (Id. at ¶ 7(a)-(e)(1) & 8.) White further declares that on August 1, 2024, White personally delivered a copy of the summons and complaint filed by Kelmar in this action to “National Registered Agents” (National), at an address located in Las Vegas, Nevada. (Id. at ¶¶ 3(b), 4, & 5(a).) White also declares that National is authorized to receive service of process for EFS, and that the “notice to person served” on the summons was completed on behalf of EFS “c/o” National pursuant to Code of Civil Procedure section 416.10. (Id. at ¶¶ 3(a), 5(a), & 6(d).)

To qualify for transacting business in the State of California, a foreign corporation must state in a certificate of qualification the “name of an agent upon whom process directed to the corporation may be served within this state” which must comply with subdivision (b) of Corporations Code section 1502. (Corp. Code, § 2105, subd. (a)(6).) In addition, before a foreign entity may designate a corporation as its agent for service of process, the designated corporation must file a certificate stating, among other things, a street address in this state “wherein any entity designating it as such agent may be served with process”, the name of each person employed at each office “to whom it authorizes the delivery of a copy of any such process”, and the corporation’s “consent that delivery thereof to any such person at the office where the person is employed shall constitute delivery of any such copy to it, as such agent.” (Corp. Code, § 1505, subd. (a)(1)-(3).)

A summons may be served on a corporation by delivering a copy, with the complaint, “[t]o the person designated as agent for service of process as provided by any provision in Section 202, 1502, 2105, or 2107 of the Corporations Code (or Sections 3301 to 3303, inclusive, or Sections 6500 to 6504, inclusive, of the Corporations Code, as in effect on December 31, 1976, with respect to corporations to which they remain applicable).” (Code Civ. Proc., § 416.10, subd. (a).)

Hand delivery of “a copy of any process against a foreign corporation” to “any person named in the latest certificate of the corporate agent filed pursuant to Section 1505 shall constitute valid service on the corporation.” (Corp. Code, § 2110.)

Relevant here, a foreign limited liability company must also designate and maintain an agent for service of process in the State of California, which may include a corporation that has filed the certificate required under Corporations Code section 1505 and further discussed above. (Corp. Code, § 17701.13, subd.(a)(2).) Under Corporations Code section 17701.16, delivery of a copy of any process “to any person named in the latest certificate of the corporate agent filed pursuant to [Corporations Code] [s]ection 1505 shall constitute valid service on the corporation.” (Corp. Code, § 17701.16, subd. (b).)

Available information and evidence submitted by EFS to rebut any presumption of proper service that may arise from the proof of service filed by Kelmar shows that EFS is a limited liability company which was formed in Nevada, which maintains its principal office in Tennessee, and which does not have a street address or office in the State of California. (Benedict Decl., Exh. D.) Kelmar does not appear to dispute these matters. For example, Kelmar submits as exhibit B to the opposition filed on January 13, 2025, a copy of the “entity information” of EFS set forth on the website of the California Secretary of State which shows that EFS is an out of state limited liability company formed in Nevada. (Jan. 13, 2025, Opp. at p. 1 & Exh. B.)

The available information and evidence also shows that on May 15, 2024, EFS filed with the California Secretary of State a “Statement of Information Limited Liability Company” (the SOI) in which EFS designated “National Registered Agents, Inc.” as its agent for service of process. (Benedict Decl., ¶¶ 5, 7, & Exhs. D & F.) The “entity information” submitted by Kelmar in support of her January 13, 2025, opposition to the motion also reflects that the “agent” for EFS is identified as “National Registered Agents, Inc.” (Opp. at Exh. B.)

The Court infers from the information and evidence presented by the parties in support of and in opposition to the Set Aside Motion that “National Registered Agents, Inc.” identified in the SOI and in the “entity information” submitted by Kelmar is the same entity identified in the proof of service. The Court will therefore also refer to this entity as National.

The record also reflects that National is a corporation, and that on August 4, 2023, National filed with the California Secretary of State a “Registered Corporate Agent for Service of Process Certificate” (the Certificate) in which National designated an address located in Glendale, California (the Glendale address) where any entity that has named National as agent for service of process may be served with process. (Benedict Decl., Exh. E, ¶ 3.) Information appearing in the Certificate also shows that National identified eighteen employees at the Glendale address who are authorized to accept delivery of any copy of service of process on any entity who has designated National as its agent for service of process. (Benedict Decl., Exh. E, ¶ 3 & Attachment Item 4.) Kelmar offers no reasoned factual argument to dispute these matters.

For all reasons discussed above, to effect valid service on EFS under Code of Civil Procedure section 416.10, Kelmar is required to deliver a copy of any process to a person named in the Certificate filed by National at the Glendale address further described above. There is no information or evidence in the record showing that a copy of the summons and complaint was delivered to any person identified in the Certificate or to the Glendale address. For these reasons, EFS has shown that, notwithstanding information appearing in the proof of service, Kelmar failed to effect valid service of the summons and complaint filed in this action on ESF. 

Noted above, the opposition of Kelmar to the Set Aside Motion filed on January 13, 2025, also shows without dispute that National is the designated corporate agent for service of process on EFS. In the Default Motion, which the Court will deem and consider as an opposition to the Set Aside Motion absent an objection by EFS, Kelmar contends that attorney Matthew Eshelman accepted service of the summons and complaint on behalf of EFS. (Mar. 20, 2025, Motion, Exh. A.) There is no information or evidence showing that this individual was designated by EFS as its agent for service of process. (See, e.g., Corp. Code, § 17701.16, subd. (b).) Moreover, even if the Court were to assume without deciding that this individual was designated by EFS as its agent (and the Court makes no findings in this regard), there is nothing in the record presently before the Court showing that Kelmar delivered a copy of any process to this individual.

For all reasons discussed above, Kelmar has failed to show that the Court acquired jurisdiction over EFS by “service of process in strict compliance with the requirements of our service statutes.” (Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1229.) For this reason, and notwithstanding that the Court will also deem the Default Motion as an opposition to the Set Aside Motion, the Court will also deny the Default Motion.

Kelmar appears to contend that the Set Aside Motion was not filed in a timely manner or sufficiently prior to the hearing. “Code of Civil Procedure section 1005 sets forth the procedure for giving a written notice of motion and supporting papers.” (Iverson v. Superior Court (1985) 167 Cal.App.3d 544, 547, fn. omitted.) That statute provides that “all moving and supporting papers shall be served and filed at least 16 court days before the hearing.” (Code Civ. Proc., § 1005, subd. (b).) If notice of a motion is served by mail, “the required 16-day period of notice before the hearing shall be increased by five calendar days if the place of mailing and the place of address are within the State of California….” (Code Civ. Proc., § 1005, subd. (b).)

Though the proof of service attached to the Set Aside Motion indicates that a copy of that motion was served on Kelmar by electronic mail, the Court has no record showing that Kelmar consented to electronic service in this action. (Code Civ. Proc., § 1010.6, subd. (c)(1)-(3).) Notwithstanding whether electronic service of the Set Aside Motion on Kelmar is valid, the record also reflects that notice of the Set Aside Motion was mailed to Kelmar within the State of California on January 10, 2025. (Motion at pdf p. 8.) Because the Set Aside Motion was set for a hearing on April 7, 2025, or approximately two months after the motion was mailed to Kelmar, notice of that motion was timely provided under Code of Civil Procedure section 1005, subdivision (b).

Furthermore, to the extent the default of EFS entered on December 11, 2024, is void for lack of jurisdiction for all reasons further discussed above, it may be challenged at any time. (Strathvale, supra, 126 Cal.App.4th at p. 1250.) Even if the Court were to consider the Set Aside Motion under subdivision (b) of Code of Civil Procedure section 473, because the Set Aside Motion was filed on January 10, 2025, less than a month after the default of EFS was entered, the motion was made “within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Code Civ. Proc., § 473, subd. (b).)

On April 1, 2025, Kelmar filed a response (the response) to the reply of EFS filed on March 28, 2025. Kelmar cites no legal authority authorizing the filing of any response to the reply of EFS, nor is the Court aware of any such authority. (See, e.g., Code Civ. Proc., § 1005, subd. (b).) For this reason, the Court declines to consider the unauthorized April 1, 2025, response of Kelmar to EFS’ reply.

For all reasons discussed above, the present record before the Court reflects that Kelmar failed to deliver a copy of the summons and complaint to a person identified in the Certificate at the Glendale address of National, the corporate agent for service of process designated by EFS. As valid service of the summons and complaint on EFS has not been effected in strict compliance with the service statutes further discussed above, the Court has not acquired jurisdiction over EFS. Therefore, the default of EFS entered on December 11, 2024, is void. (Calvert v. Al Binali (2018) 29 Cal.App.5th 954, 960-961.) For these and all further reasons discussed above, the Court will grant the Set Aside Motion and order that the default of EFS be vacated.

Request for judicial notice:

EFS requests that the Court take judicial notice of the SOI, the Certificate, and of the business entity information for EFS (the entity information) appearing on the website of the California Secretary of State as of December 26, 2024. (RJN at p. 3; Benedict Decl., ¶¶ 5-7 & Exhs. D-F.) The SOI, the Certificate, and the entity information are proper subjects of judicial notice. (Evid. Code, § 452, subds. (c) & (h); City of Alameda v. Sheehan (2024) 105 Cal.App.5th 68, 81-82.) Furthermore, as EFS may present extrinsic evidence to show why service of the summons and complaint as stated in the proof of service was not valid or effective, these records are relevant to the issues presented in the Set Aside Motion. (Strathvale, supra, 126 Cal.App.4th at p. 1249; Gorham, supra, 186 Cal.App.4th at p. 1228.)

For all reasons discussed above, the Court will grant EFS’ request for judicial notice of the SOI, the Certificate, and the entity information. Judicial notice does not extend to the truth of any factual matters asserted in these records. (Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1090.)

(3) The July 30 Motion and December 11 Motion

As Kelmar has, for all reasons discussed above, demonstrated valid or proper service of process on EFS sufficient for the Court to acquire jurisdiction over EFS, the July 30 Motion and the December 11 Motion are premature and will be denied on that basis. Even if the Court were to consider these motions on their merits, there exist procedural and substantive deficiencies which also warrant their denial.

For example, the July 30 Motion arises from what appear to be informal oral and written requests for a copy of the student loan which were made by Kelmar during phone calls and in certified letters sent to EFS. (July 30 Motion, ¶¶ 1-4.) A party may obtain discovery by any one of the methods prescribed under Code of Civil Procedure section 2016.010 et seq., which sets forth “procedures and restrictions specific to the method of discovery.” (Irvington-Moore, Inc. v. Superior Court (1993) 14 Cal.App.4th 733, 738.) The parties to an action “may modify the statutory discovery procedures by written stipulation … and, unless restricted by the trial court, are free to utilize any of the prescribed discovery methods during the action in any sequence….” (Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 402.)

Apart from informal phone calls and letters identified in the July 30 Motion, Kelmar offers no information or evidence to show that Kelmar sought to obtain discovery of the student loan by a method authorized under the discovery statutes. Kelmar also fails to set forth, and the Court is unaware of, any legal authority which would permit the Court to order EFS to produce the student loan under the circumstances present here. Kelmar also has failed to submit a separate statement in compliance with California Rules of Court, rule 3.1345(a), or to explain with reasoned argument why a separate statement is not required. Kelmar’s failure to submit the required separate statement alone justifies a denial of the July 30 Motion. (Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 893.)

As to the December 11 Motion, the mandatory form used by Kelmar to prepare the December 11 Subpoena is generally approved and intended for use in ordering a person to testify at, and to bring specific documents or things to, a trial or court hearing pursuant to Code of Civil Procedure section 1985 et seq. (See Cal. Rules of Court, rule 1.31; Code Civ. Proc., § 1985 et seq.) Considering that EFS is a named defendant and there is no trial or other hearing for which the December 11 Subpoena would be appropriate or required, the grounds on which Kelmar seeks to compel discovery of the records described in the December 11 Subpoena is unclear.  

Further, the record reflects that Kelmar failed to serve with the December 11 Subpoena the supporting affidavit required under Code of Civil Procedure section 1985, subdivision (b), and to include a statement of “the exact materials or things desired and that the party or person has them in his or her possession or under his or her control.” (Code Civ. Proc., § 1987, subd. (c); see also Seven Up Bottling Co. of Los Angeles v. Superior Court (1951) 107 Cal.App.2d 75, 77 [general discussion].)

The examples provided above are intended to be illustrative but not exhaustive with respect to the procedural and substantive deficiencies which justify a denial of the July 30 Motion and December 11 Motion.

(4) The Application

“A vexatious litigant subject to a prefiling order under [Code of Civil Procedure] [s]ection 391.7 may file an application to vacate the prefiling order and remove his or her name from the Judicial Council’s list of vexatious litigants subject to prefiling orders. The application shall be filed in the court that entered the prefiling order, either in the action in which the prefiling order was entered or in conjunction with a request to the presiding justice or presiding judge to file new litigation under Section 391.7. The application shall be made before the justice or judge who entered the order, if that justice or judge is available. If that justice or judge who entered the order is not available, the application shall be made before the presiding justice or presiding judge, or his or her designee.” (Code Civ. Proc., § 391.8, subd. (a).)

The record reflects that this Court did not declare Kelmar to be a vexatious litigant and did not enter a prefiling order under Code of Civil Procedure section 391.7 in this action. For these reasons, the Application is procedurally inappropriate under Code of Civil Procedure section 391.8. Therefore, the Court will deny the Application, without prejudice to Kelmar re-filing the Application in an appropriate forum as prescribed under Code of Civil Procedure section 391.8.