Behm v. Clear View Technologies , 193 Cal. Rptr. 3d 486 ( 2015 )

Filed 10/8/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
PAMELA BEHM, H040032
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 1-11-CV206163)
v.
CLEAR VIEW TECHNOLOGIES,
Defendant and Appellant.
Pamela Behm asserts that she was persuaded by the false representations of
officers and directors of Clear View Technologies (CVT) to invest approximately
$200,000 in the company. CVT claimed to be developing BarMaster, a product that
would measure pours of alcohol with such precision that it would save large sums of
money for purveyors of adult beverages and reap great profits for CVT. When CVT had
financial difficulties and Behm discovered the product did not have the viability she had
been assured, she filed a lawsuit against CVT and its officers and directors seeking
compensatory damages “in a sum exceeding $200,000.”
During the course of the underlying litigation, CVT failed to produce discovery
and to comply with court orders. Behm obtained terminating sanctions against CVT, and
a default was entered against the company. Behm procured a default judgment for
$1,264,668.83, including $924,000 in punitive damages. Thereafter, CVT moved to
vacate the default and the default judgment, arguing that it did not have sufficient notice
of the amount of punitive damages under Code of Civil Procedure section 425.115,
subdivision (f)1 and that it was entitled to mandatory relief from default under section
473, subdivision (b) because the default was incurred due to the mistake, inadvertence,
surprise, or neglect of its prior attorney, Chang Yi. The trial court granted the motion in
part, vacating the default judgment after finding the notice of damages was insufficient.
However, it denied CVT’s request to be relieved from the underlying default. Both
Behm and CVT have appealed the court’s order.
For the reasons set forth below, we affirm. Due process requires that when a
plaintiff moves for discovery terminating sanctions and seeks punitive damages, a
statement under section 425.115, subdivision (f) must be served a reasonable time before
obtaining those sanctions. Notice must be sufficient to afford a defendant the opportunity
to fairly appraise the full amount of damages sought by the time he or she needs to
respond and oppose the motion.
FACTUAL AND PROCEDURAL BACKGROUND
On July 28, 2011, Behm filed a complaint against CVT alleging she was
defrauded when she invested $200,000 in the company.2 The complaint alleged a total of
seven causes of action, some against CVT only, and the others against CVT and several
other individual defendants consisting of officers and directors of CVT. These
defendants included Paul Mula Sr. and Paul Mula II. Though Behm did not request a
specific amount of damages for emotional distress, lost wages, or punitive damages, she
did request “compensatory damages of no less than $200,000, plus interest, or in such
additional amount as is proven at trial.”
According to Behm, she successfully served CVT and Mula II with her complaint.
However, she was unsuccessful in her attempts to serve some of the other named
1
Unspecified statutory references are to the Code of Civil Procedure.
2
The complaint also named several of CVT’s officers and employees who are not
a party to this appeal.
2
defendants, because CVT’s offices were always closed when service attempts were made.
In early September 2011, Behm asked Yi, who was representing CVT and the individual
defendants, to accept service on behalf of CVT’s employees and officers. Yi refused
Behm’s request. Subsequently, Behm served a special interrogatory on CVT asking it to
produce the last known home addresses of each of the individual defendants, excluding
Mula II. Behm also propounded on CVT a set of inspection demands, requesting some of
CVT’s business records.
CVT’s response to the special interrogatory was due October 31, 2011. On that
day, Yi requested an extension to finalize CVT’s response by November 4, 2011. Behm
agreed. By November 7, 2011, Behm had yet to receive a response, so she e-mailed Yi.
Yi replied and explained that many of CVT’s officers were not located in Santa Clara, so
he had been unable to finalize discovery. That same day, Yi served CVT’s response via
mail. CVT’s reponse consisted primarily of objections and included CVT assertion that
the interrogatory was now moot, because Behm had failed to serve all the defendants
within 60 days of filing her complaint. The response did not contain usable information
about the defendants’ addresses.
On November 14, 2011, Behm filed an ex parte application to extend time to serve
her complaint on the defendants that had yet to be served. The court granted Behm’s
application and ordered her to complete service as soon as possible.
Afterwards, Behm filed a motion to compel a response to her special interrogatory
and her request for inspection of CVT’s records. On January 30, 2012, CVT filed an
opposition where it again argued that it need not provide the information because the time
to serve the named defendants had expired. On February 16, 2012, the court granted
Behm’s motion to compel and ordered CVT to serve code-compliant verified responses
to Behm’s special interrogatory and to produce all documents responsive to Behm’s
3
inspection request by an extended deadline. The court further ordered CVT to pay
monetary sanctions.
CVT failed to produce any documents responsive to Behm’s request by the
deadline. Subsequently, on April 2, 2012, Behm informed CVT that she would be
seeking monetary and nonmonetary sanctions against the company for its discovery
violations. Behm gave CVT a few weeks to comply with the court’s orders, which it
failed to do.
On April 27, 2012, Behm filed a motion for terminating sanctions. CVT did not
oppose the motion.
Several weeks later and just prior to the hearing on Behm’s motion set for June 8,
2012, a tentative ruling was issued by the court granting the motion for terminating
sanctions, which order automatically became the order of the court on June 8, 2012,
pursuant to California Rules of Court, rule 3.1308(a) and local court rule.3 In that ruling,
the court indicated it would strike CVT’s answer and would enter a default against the
company.
On June 11, 2012, three days after the court adopted the ruling granting
terminating sanctions, Behm served CVT a notice pursuant to section 425.115 reserving
the right to seek $1 million in punitive damages.
On June 15, 2012, the court signed a written order that echoed the ruling adopted
on June 8, 2012, granting Behm’s motion for terminating sanctions. The order was filed
on June 25, 2012.
3
Santa Clara County has a local rule that provides that a “tentative ruling will
automatically become the order of the Court on the scheduled hearing date if . . . if the
contesting party fails to timely notice an objection to the other side and the Court.”
(Super. Ct. Santa Clara County, Local Rules, civ. rule 8E.)
4
On July 1, 2012, Yi filed a motion for reconsideration on behalf of CVT. The
court denied the motion.
On March 5, 2013, Behm applied for a default judgment against CVT, requesting
$1,264,668.83 in damages, which comprised of $200,000 in compensatory damages,
$108,000 in emotional distress damages and lost wages, $32,487.67 in prejudgment
interest, $924,000 in punitive damages, and $181.16 in court fees. Punitive damages
were calculated as three times the total compensatory damages including the emotional
distress damages sought by Behm. A few weeks later, the trial court granted Behm’s
application for a default judgment and awarded her all of the requested damages.
On June 10, 2013, CVT brought a motion to set aside the default and the default
judgment pursuant to section 473, subdivision (b). At that point, CVT was no longer
represented by Yi. The motion asserted that CVT was entitled to relief from default,
because the default was solely the result of Yi’s negligence and failures.4 CVT also
argued that the award of damages to Behm violated its due process rights, because it was
not adequately informed of the amount of compensatory and punitive damages that Behm
would seek.
After a hearing, the court granted CVT’s motion in part, vacating the default
judgment on the basis that the award of compensatory and punitive damages in excess of
the amount pleaded in the complaint violated CVT’s due process rights. However, the
court left the default intact after finding Yi’s affidavit of fault lacked credibility and
declared that Behm was authorized to apply for another default judgment for the amount
4
Earlier, default was also entered against Mula Sr. and Mula II. On March 25,
2013, Mula II successfully set aside his default after retaining new counsel based on a
separate declaration of fault signed by Yi. Mula Sr. has also filed a separate motion for
relief from default based on another declaration of fault prepared by Yi. The default
judgments entered against Mula Sr. and Mula II are not a part of this appeal.
5
of compensatory damages alleged in the complaint. Both Behm and CVT have appealed
from this order.
DISCUSSION
1. Behm’s Appeal
On appeal, Behm argues that the court erred in vacating the default judgment and
the award of punitive damages, because the punitive damages notice served on CVT was
timely and comported with due process.
a. Standard of Review and Legal Framework
“Our standard of review is well articulated by the California Supreme Court in
Elston v. City of Turlock (1985) 38 Cal. 3d 227, 233: ‘A motion seeking [relief from
default] lies within the sound discretion of the trial court, and the trial court’s decision
will not be overturned absent an abuse of discretion. [Citations.] However, the trial
court’s discretion is not unlimited and must be “ ‘exercised in conformity with the spirit
of the law and in a manner to subserve and to impede or defeat the ends of substantial
justice.’ ” [Citations.] [¶] Section 473 is often applied liberally where the party in default
moves promptly to seek relief, and the party opposing the motion will not suffer
prejudice if relief is granted. [Citations.] In such situations “very slight evidence will be
required to justify a court in setting aside the default.” [Citations.] [¶] Moreover, because
the law strongly favors trial and disposition on the merits, any doubts in applying section
473 must be resolved in favor of the party seeking relief from default [citations].
Therefore, a trial court order denying relief is scrutinized more carefully than an order
permitting trial on the merits.’ ” (McCormick v. Board of Supervisors (1988) 198
Cal. App. 3d 352, 359-360.)
b. Notice of Punitive Damages Under Section 425.115, Subdivision (f)
Due process requires that defendants be provided with sufficient notice of the
relief a plaintiff seeks prior to entry of a default. (Van Sickle v. Gilbert (2011) 196
6
Cal. App. 4th 1495, 1520-1521 (Van Sickle).) “ ‘The logic underlying this principle is
simple: a defendant who has been served with a lawsuit has the right, in view of the
relief which the complainant is seeking from him, to decide not to appear and defend.
However, a defendant is not in a position to make such a decision if he or she has not
been given full notice.’ ” (Id. at p. 1520.)
“To effectuate this due process principle, California law provides that where a
plaintiff seeks to recover money or damages, the amount sought generally must be stated
in the complaint. (§ 425.10, subd. (a)(2).)” (Van Sickle, supra, 196 Cal.App.4th at p.
1520.) However, there are exceptions to this general rule. Pertinent here is the exception
provided in Civil Code section 3295, subdivision (e), which states that “[n]o claim for
exemplary [i.e., punitive] damages shall state an amount or amounts” to be sought.
Nonetheless, the Legislature has ensured that the due process requirement satisfied
when a complainant seeks punitive damages. Under section 425.115, subdivision (b), a
complainant seeking punitive damages should serve a statement notifying the defendant
of the amount of damages sought. Section 425.115, subdivision (f) provides that “[t]he
plaintiff shall serve the statement upon the defendant pursuant to this section before a
default may be taken, if the motion for default judgment includes a request for punitive
damagesof notice is still satisfied when a complainant seeks punitive damages. Under
section 425.115, subdivision (b), a complainant seeking punitive damages should serve a
statement notifying the defendant of the amount of damages sought. Section 425.115,
subdivision (f) provides that “[t]he plaintiff shall serve the statement upon the defendant
pursuant to this section before a default may be taken, if the motion for default judgment
includes a request for punitive damages.”
As a general rule, “[t]he relief granted to the plaintiff, if there is no answer, cannot
exceed that demanded in the complaint, in the statement required by Section 425.11, or in
the statement provided for by Section 425.115 . . . .” (§ 580, subd. (a).) Therefore, a
7
default judgment entered with a damages award higher than the amount either
enumerated in the complaint or stated in a notice made pursuant to section 425.115 is
void. (Greenup v. Rodman (1986) 42 Cal. 3d 822, 826 (Greenup).) “This rule applies to
defaults entered as a terminating sanction for misuse of the discovery process . . . .”
(Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans (2011) 195 Cal. App. 4th 1275, 1286.)
Notably, sections 580, 425.11, and 425.115 do not specify when a statement of
punitive damages must be served on a defendant prior to a default in order for due
process to be satisfied. (Matera v. McLeod (2006) 145 Cal. App. 4th 44, 61 (Matera).)
Therefore, Behm argues that there is no timing requirement and service of a notice is
proper at any time before entry of default. Behm insists that the trial court improperly
read into the statute a due process requirement that simply does not exist.
We disagree. Both the Fourteenth Amendment of the Federal Constitution and the
California Constitution contain due process guarantees. Section 425.115’s failure to
specifically state a due process requirement does not render a notice of punitive damages
outside the scope of the federal and state constitutional assurances of due process of law.
Quite the contrary, “ ‘[i]t is fundamental to the concept of due process that a defendant be
given notice of the existence of a lawsuit and notice of the specific relief which is sought
in the complaint served upon him.’ ” (Van Sickle, supra, 196 Cal.App.4th at p. 1520.)
This includes a notice of the punitive damages sought.
At issue is how much notice is required. “The governing standard for purposes of
due process was stated in Schwab v. Rondel Homes, Inc. (1991) 53 Cal. 3d 428, 435,
albeit in dictum: ‘A defendant is entitled to actual notice of the liability to which he or
she may be subjected, a reasonable period of time before default may be entered.’ ”
(Matera, supra, 145 Cal.App.4th at p. 61, italics added.)
Several cases have discussed what constitutes a reasonable period of time. In
Matera, two defendants appealed following the entry of a default judgment against them
8
and the denial of their motion for relief from default under section 473, subdivision (b).
(Matera, supra, 145 Cal.App.4th at p. 49.) In part, the defendants argued that the
plaintiffs failed to serve the statement of punitive damages within a reasonable period of
time before the default was taken, because they were served with the statement a mere
two days before the court struck the defendants’ answer and entered their defaults. (Id. at
p. 62.) The Matera court agreed, concluding that “two days before the entry of default
was not a reasonable period of time to apprise the defendants of their substantial potential
liability for purposes of due process.” (Ibid.)
In Electronic Funds Solutions, LLC v. Murphy (2005) 134 Cal. App. 4th 1161
(Electronic Funds), the plaintiffs filed a motion for terminating sanctions at the same
time they served the defendants with a statement of punitive damages. (Id. at p. 1172.)
The court determined that the notice was timely, rejecting the defendants’ claim that the
notice violated their due process rights because it was not given until they made the
decision to thwart the discovery process. (Id. at p. 1178.)
In Electronic Funds, the court stated that “[b]ecause service occurred before the
entry of default, the notice of punitive damages was timely.” (Electronic Funds, supra,
134 Cal.App.4th at p. 1178.) Behm seizes upon this sentence, asserting that Electronic
Funds therefore holds that service of a statement of punitive damages at any time before
a default was entered satisfies due process.
We disagree with Behm’s interpretation of Electronic Funds. Electronic Funds
held that a service of a notice of punitive damages made concurrently with a motion for
terminating sanctions comports with due process. Furthermore, it rejected the argument
that notice must be given before a litigant decides to destroy evidence or evade the
discovery process. To the extent the sentence quoted by Behm from the Electronic
Funds decision asserts that service at any time prior to the entry of default is proper, this
statement is merely dicta. “An appellate decision is not authority for everything said in
9
the court’s opinion but only ‘for the points actually involved and actually decided.’ ”
(Santisas v. Goodin (1998) 17 Cal. 4th 599, 620.)
Contrary to Behm’s claims, we are left with two guideposts to assist in our
determination of whether Behm’s punitive damages notice was timely served. In Matera,
the court concluded that service of the notice two days prior to the court’s entry of a
default judgment did not provide sufficient notice. In Electronic Funds, serving a notice
presumably at least 16 days prior to the hearing on the motion requesting terminating
sanction was sufficient.5
As an aside, the parties dispute the exact date the default was taken. Behm claims
that it is clear the default was taken on the date the signed order by the court was filed,
which would be on June 25, 2012. CVT argues the default was effectively taken when
the court adopted its tentative ruling almost two weeks before on June 8, 2012.
Regardless of which date is used (June 8, 2012, or June 25, 2012), Behm’s notice of
damages falls squarely between the timelines considered by Matera and Electronic
Funds. Behm served her notice of punitive damages after the court issued and adopted a
tentative ruling granting the motion, but more than two days before the order entering the
default was filed.
We agree with Electronic Funds that a notice of punitive damages filed
concurrently with a motion for terminating sanctions provides parties sufficient notice. A
concurrent notice of punitive damages would fully apprise parties of the potential liability
they may face should they choose not to oppose the motion and terminating sanctions are
5
Section 1005 provides in pertinent part that “[u]nless otherwise ordered or
specifically provided by law, all moving and supporting papers shall be served and filed
at least 16 court days before the hearing.” (§ 1005, subd. (b).) Therefore, since the
notice of damages in Electronic Funds was served at the same time as the motion for
terminating sanctions, the notice was presumably served at least 16 days prior to the date
of the hearing.
10
ordered. Here, the timing of Behm’s notice is more analogous to the scenario set forth in
Matera, because she filed it after her motion for terminating sanctions and after the court
issued and adopted its tentative order. “The striking of a defendant’s answer as a
terminating sanction leads inexorably to the entry of default.” (Matera, supra, 145
Cal.App.4th at p. 62.) To meaningfully oppose a motion for terminating sanctions, a
defendant must file and serve a written response at least nine days before the hearing
date. (§ 1005, subd. (b).) “[D]ue process requires notice to defendants, whether they
default by inaction or by wilful obstruction, of the potential consequences of a refusal to
pursue their defense.” (Greenup, supra, 42 Cal.3d at p. 829.) By not filing a statement
of punitive damages until after the hearing on the order terminating sanctions (and the
court adopted its tentative ruling), Behm, like the plaintiffs in Matera, effectively
deprived CVT of notice of the full potential consequences of foregoing its last chance to
change its course of noncompliance and nonopposition, demonstrating to the court that it
will take part in the litigation process. Behm failed to give CVT sufficient notice of its
potential liability.
Behm argues that Electronic Funds holds that a defendant does not have a due
process right to receive notice of punitive damages prior to making any discovery
violations. We agree with the reasoning set forth in Electronic Funds that to be sufficient
a notice need not be received before a party commits discovery violations. However,
Behm’s reliance on this principle is misplaced. Here, CVT does not claim that due
process was violated because it did not receive the punitive damages notice prior to it
committing sanctionable actions. Rather, CVT’s claim is that the timing of the notice
deprived it of the opportunity to fairly appraise the amount of damages sought by Behm
prior to the time it needed to respond and oppose the motion for terminating sanctions.
Behm insists that this court should deviate from Matera, because Matera did not
recognize the distinction between notice requirements for compensatory damages and for
11
punitive damages, and it erroneously relied on cases that were decided prior to the
enactment of section 425.115. We disagree with Behm that Matera is inapplicable or
should be reconsidered and we agree with Matera’s analysis that reasonable notice must
be given of all damages, including punitive damages, prior to entry of a default.6
Lastly, Behm argues that earlier service of a notice under section 425.115,
subdivision (f) would have served no due process function. She cites section 425.115,
subdivision (c), which states that “[i]f the plaintiff seeks punitive damages pursuant to
Section 3294 of the Civil Code, and if the defendant appears in the action, the plaintiff
shall not be limited to the amount set forth in the statement served on the defendant
pursuant to this section.” Therefore, she claims that she could have served a notice to
CVT that she sought $1 in punitive damages, but could have later sought millions of
dollars in damages after the court granted the motion for terminating sanctions. Whether
this wily tactic would be successful under the law is an issue that is not before us.
Behm’s argument ignores the fact section 425.115, subdivision (f) unequivocally requires
a notice be served, regardless of the amount.
Accordingly, we do not find the court erred when it vacated the default judgment,
because the statement of damages was not served within a reasonable period of time
before the default was taken.
6
In her combined reply brief and cross-respondent’s brief, Behm claims we
should not follow Matera because the appellate court violated the doctrine of
constitutional avoidance by reaching the due process issue. She opines that the damages
issue presented there could have been decided on nonconstitutional grounds. (Sanchez v.
City of Modesto (2006) 145 Cal. App. 4th 660, 671 [“[p]rinciples of judicial self-restraint .
. . require us to avoid deciding a case on constitutional grounds unless absolutely
necessary; nonconstitutional grounds must be relied on if they are available.”].)
Regardless of whether the Matera court could have avoided the constitutional question
raised in that case, we are not necessarily bound by its decision. However, we find its
reasoning persuasive and applicable to this case.
12
c. Compensatory Damages
CVT argues that, as a separate and individual cause for reversal of the default
judgment, Behm also failed to provide it with sufficient notice of the compensatory
damages. Accordingly, CVT asserts that even if we were to find reasonable notice of
punitive damages was given, the default judgment must be vacated.7
Under section 580, subdivision (a), a default judgment “cannot exceed that which
[the plaintiff] shall have demanded in his complaint.” “[A] default judgment greater than
the amount specifically demanded is void as beyond the court’s jurisdiction.” (Greenup,
supra, 42 Cal.3d at p. 826.) Courts have applied this principle even to those prayers for
relief requesting damages “ ‘in excess’ ” of a specific amount, as Behm did here. (Becker
v. S.P.V. Construction Co. (1980) 27 Cal. 3d 489, 492.) The rationale is that this type of
prayer for relief cannot give a defendant the required notice of the damages sought. (Id.
at p. 494.)
Here, although Behm sought compensatory damages “in a sum exceeding
$200,000,” she did not request additional damages to compensate her for emotional
distress or for lost wages. As a result, the default judgment’s award of $308,000 in
compensatory damages was improper. And, the court’s decision to vacate the default
judgment was, therefore, also appropriate for this separate and independent reason.
2. CVT’s Cross-appeal
CVT has cross-appealed from the same order, arguing that the court erred in
vacating only the default judgment when it should have vacated both the default and the
default judgment. CVT further claims that the default should have been set aside
7
This issue was first raised in CVT’s combined respondent’s brief and cross-
appellant’s opening brief. Behm did not address this argument in her combined reply
brief and cross-respondent’s brief. Neither did CVT raise this issue again in its cross-
appellant’s reply brief. However, since CVT argues this claim, we address it here.
13
entirely, because the failures of CVT to comply with Behm’s discovery requests solely
resulted from the negligence of its former attorney, Yi. We address the latter claim first.
a. Mandatory Relief from Default
CVT claims the trial court erred when it did not grant it mandatory relief from
default based on the affidavit of fault submitted by Yi.
As we articulated in the previous section of our opinion, the standard of review
from the court’s grant or denial of a motion for relief from default is well-settled. “ ‘A
motion seeking [relief from default] lies within the sound discretion of the trial court, and
the trial court’s decision will not be overturned absent an abuse of discretion.’ ”
(McCormick v. Board of Supervisors, supra, 198 Cal.App.3d at p. 359.)
Section 473, subdivision (b) states in pertinent part that “[n]otwithstanding any
other requirements of this section, the court shall, whenever an application for relief is
made no more than six months after entry of judgment, is in proper form, and is
accompanied by an attorney’s sworn affidavit attesting to his or her mistake,
inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk
against his or her client, and which will result in entry of a default judgment, or (2)
resulting default judgment or dismissal entered against his or her client, unless the court
finds that the default or dismissal was not in fact caused by the attorney’s mistake,
inadvertence, surprise, or neglect.” (Italics added.)
“In considering whether the trial court properly denied relief under section 473[,]
[subdivision] (b), the first question is the sufficiency of defendants’ showing of attorney
fault, if believed, to trigger the mandatory relief provisions of that statute. Since this
determination depends on the application of legal principles to a set of facts that is, for
this purpose, undisputed, it presents a pure question of law as to which we are in no
respect bound by, or obliged to defer to, the trial court’s express or implied
determination.” (Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179
14
Cal. App. 4th 868, 896, overruled on a different point in Even Zohar Construction &
Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal. 4th 830.) An affidavit of
fault need not show that the attorney’s mistake, inadvertence, surprise, or neglect was
excusable. (Cisneros v. Vueve (1995) 37 Cal. App. 4th 906, 909.)
“In certain situations, section 473 mandates relief on the basis of an attorney’s
affidavit ‘unless the court finds that the default or dismissal was not in fact caused by the
attorney’s mistake, inadvertence, surprise, or neglect.’ The statute clearly involves an
assessment of credibility by the trial court.” (Johnson v. Pratt & Whitney Canada, Inc.
(1994) 28 Cal. App. 4th 613, 622 (Johnson); Cowan v. Krayzman (2011) 196 Cal. App. 4th
907, 915; but see Cisneros v. Vueve, supra, 37 Cal.App.4th at p. 912 [concluding that the
“ ‘unless’ ” clause of § 473, subd. (b) “is not a credibility testing device, it is a causation
testing device. The statute mandates relief ‘unless the court finds that the default . . . was
not in fact caused by the attorney’s mistake, inadvertence’ etc.”].)
We defer to the trial court’s determination of credibility and do not reweigh
evidence or reassess the credibility of witnesses. (Johnson, supra, 28 Cal.App.4th at p.
622.) If the evidence gives rise to reasonable conflicting inferences, one of which
supports the trial court’s determination, we will affirm the court’s finding on appeal. (Id.
at p. 623.)
Here, the trial court discounted Yi’s affidavit of fault as lacking credibility. This
determination is supported by the record. The court reasonably inferred a lack of
credibility based on the contradictions and discrepancies between Yi’s affidavit and his
earlier representations to the court. For example, Yi’s affidavit of fault asserted that he
was unable to complete the response to Behm’s special interrogatory, with no mention of
any delay resulting from CVT’s staff. That affidavit contradicts Yi’s earlier
representations to the court and to Behm, when he claimed he had trouble fulfilling the
discovery request because of his clients’ lack of cooperation. The affidavit also
15
contradicts a statement in Yi’s motion for reconsideration of the order granting
terminating sanctions, where Yi claimed that he was unable to complete the interrogatory
because he had difficulty contacting the various defendants and had trouble accessing
their business user accounts and e-mails.
Yi’s affidavit further stated that he was unable to comply with the court’s order
that he produce documents pursuant to Behm’s motion to compel out of his own mistake,
inadvertence, surprise and neglect. He also asserted he failed to submit evidence that
CVT’s financial difficulties precluded CVT from producing the documents requested. In
his earlier motion for reconsideration, however, Yi had provided different excuses for the
failure to comply, never mentioning any claim of his own “mistake, inadvertence,
surprise, or neglect.” In that motion for reconsideration, Yi asserted that he was not
informed of CVT’s dramatically reduced staffing until May 2012, and that, by that time,
there was no staff left to produce any discovery; but, that was long after the court had
granted the motion to compel and the deadlines to produce the discovery had passed.
In sum, most of Yi’s prior statements attributed the delay in producing the
discovery request to his clients, CVT and the other named defendants in the suit. Yi
forfeited his credibility when, in his subsequent affidavit, he attempted “to change the
facts and blame himself.” (Todd v. Thrifty Corp. (1995) 34 Cal. App. 4th 986, 992.)
Based on these inconsistencies, we cannot find that the court erred in finding Yi’s
affidavit to be incredible, therefore denying mandatory relief under section 473,
subdivision (b).8
8
We note that in CVT’s motion to vacate the default and the default judgment,
CVT asserted that Yi had submitted a separate affidavit of fault in support of vacating
Mula Sr.’s default. However, Yi’s affidavit of fault submitted in support of vacating
Mula Sr.’s default is factually different than the affidavit he submitted in support of
vacating CVT’s default. Therefore, it has no bearing on the case before us. Furthermore,
CVT’s motion indicated that default had already been set aside for Mula II based on
(continued)
16
b. Proper Remedy
We conclude that the court did not err when it vacated the default judgment,
because the punitive damages award was void. We further find the court did not err in
denying mandatory relief under section 473, subdivision (b), because there was support
for the court’s determination that Yi’s affidavit of fault was not credible. Under this
scenario, CVT argues that the proper remedy is to order the trial court to vacate the
underlying default in addition to the default judgment, because the notice statutes
regarding damages are aimed at the entry of a default.
CVT relies on Van Sickle, supra, 196 Cal. App. 4th 1495. The court in Van Sickle
contemplated what the proper remedy was in an action where the plaintiff failed to notify
the defendant of the damages she sought. (Id. at pp. 1528-1529.) The Van Sickle
plaintiff did not include a prayer for relief in her complaint, nor did she serve the
defendant with a statement of damages prior to the taking of a default. (Id. at p. 1523.)
Therefore, the appellate court concluded that it was appropriate to reverse the default
judgment and to set aside the default. (Id. at p. 1529.) In so concluding, the court noted
that case law has recognized it may be possible to simply modify a default judgment to a
lesser amount as warranted in the complaint. (Ibid.) However, the better approach,
considering there was no amount specified in the plaintiff’s complaint, was to vacate the
underlying default and allow the plaintiff to amend the complaint and serve the amended
complaint on the defendant. (Ibid.)
Van Sickle is distinguishable. Here, Behm already included in her prayer for relief
a request for $200,000 in compensatory damages. Therefore, it was not improper for the
court to reverse only the default judgment. There is no need for Behm to amend her
another affidavit of fault submitted by Yi. However, the court did not set aside default
based on a finding that Yi’s affidavit of fault was credible. Rather, in that situation the
court set aside the default based on Yi’s affidavit based on the parties’ stipulation
17
complaint and re-serve the amended complaint on CVT and the other named defendants.
Unlike the plaintiff in Van Sickle, Behm’s complaint was not deficient for failing to
specify an amount of compensatory damages sought.
“Vacating the default judgment has no necessary effect on the underlying default
and simply returns the defendant to the default status quo ante. [Citation.] Ordinarily
when a judgment is vacated on the ground the damages awarded exceeded those pled, the
appropriate action is to modify the judgment to the maximum amount warranted by the
complaint.” (Ostling v. Loring (1994) 27 Cal. App. 4th 1731, 1743.) This general rule
was acknowledged in Electronic Funds. However, the Electronic Funds court
determined that under the specific circumstances of their case, the better course of action
was to vacate the award in its entirety, because the trial court had applied an incorrect
measure of damages. (Electronic Funds, supra, 134 Cal.App.4th at p. 1177.) Further,
“[i]n the interest of fairness” the Electronic Funds court gave the plaintiffs the
opportunity to amend their complaint to state the full amount of damages sought, because
the plaintiffs had obtained the default judgment before the publication of an appellate
decision holding that a notice of compensatory damages in excess of those alleged in the
complaint under section 425.11 was not a substitute for an amended complaint except in
personal injury or wrongful death cases. (Ibid.) Here, the trial court did not utilize an
incorrect measure of damages and there has not been a recent decision clarifying the
sufficiency of a notice of damages. Rather, like Ostling, the damages awarded simply
exceeded the amount pleaded in the complaint.
In Julius Schifaugh IV Consulting Services, Inc. v. Avaris Capital, Inc. (2008) 164
Cal. App. 4th 1393, the appellate court held that a plaintiff whose default judgment has
been vacated because the relief granted exceeds that which was demanded in the
complaint may be given the option of “accepting a reduced judgment or amending the
complaint and putting the entire matter back at issue.” (Id. at p. 1397.) “But if the
18
plaintiff chooses the latter, the court should vacate the default, ‘ “entitling defendants to
either attack the pleadings, or answer the amended complaint.” ’ ” (Rodriguez v. Cho
(2015) 236 Cal. App. 4th 742, 755.)
Here, the trial court opted not to give Behm a choice between accepting a reduced
judgment or amending the complaint. Instead, it authorized Behm to apply for a new
default judgment against CVT for compensatory damages to the extent alleged in the
complaint. Essentially, the trial court’s action below produces the same result as if it had
modified the default judgment by striking the excess amount of damages. Such a
decision is within the court’s discretion, and we find no error with it.
DISPOSITION
The trial court’s order vacating the default judgment and denying Clear View
Technologies’ motion for relief from default is affirmed. Each party is to bear their own
costs on appeal.
19
Walsh, J.*
WE CONCUR:
Rushing, P.J.
Elia, J.
Behm v. Clear View Technologies
H040032
*
Judge of the Santa Clara County Superior Court assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
Trial Court: Santa Clara County Superior Court
Superior Court No. 1-11-CV206163
Trial Judge: Hon. Mark Pierce
Counsel for Plaintiff/Appellant: Grellas Shah
Pamela Behn George Grellas
Dhaivat H. Shah
David I. Siegel
Counsel for Defendant/Appellant: Ropers, Majeski, Kohn & Bentley
Clear View Technologies Michael J. Ioannou
J. Mark Thacker
Terry Anastassiou
Behm v. Clear View Technologies
H040032