Radovic v. Brilliant CA2/3 ( 2020 )

Filed 12/15/20 Radovic v. Brilliant 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
MILAN RADOVIC, B299736
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. PC057589)
v.
RAPHAELE BRILLIANT,
Defendant and Appellant.
APPEALS from an order of the Superior Court of Los
Angeles County, Stephen P. Pfahler, Judge. Affirmed.
Friedman + Bartoumian and Heywood G. Friedman for
Plaintiff and Appellant.
Carter Sands and Eugene P. Sands for Defendant and
Appellant.
____________________________
Plaintiff Milan Radovic obtained a default judgment of
$359,523.34 against Raphaele Brilliant in his action for breach of
contract and fraud. The trial court granted in part Brilliant’s
motion to set aside the default judgment by vacating the tort and
exemplary damage awards, which reduced the judgment to the
contract damages of $80,000, plus interest and costs. In her
appeal, Brilliant contends that none of the causes of action state
claims for damages and so the court should have vacated the
default and default judgment. Radovic appeals contending that
the court erred in vacating the tort and punitive damages
awards. We affirm.
BACKGROUND
I. The litigation
Brilliant and Radovic were parties to a bulk sales contract
under which Brilliant agreed to pay $90,000 to buy assets of a
dog rescue and kennel business owned and operated by Radovic
under the name Top Dog Resort LLC. Full payment was due by
November 23, 2015. Relying on the contract, Radovic made plans
to relocate to Michigan which included selling his home and
wife’s business, and finding employment there. He received
$10,000 from Brilliant by the performance date. Thereafter,
Brilliant continued to represent that she would perform the
contract and began taking over the business. Two weeks later,
Brilliant informed Radovic that she would not pay the purchase
price and had decided to lease the premises. Radovic’s ensuing
complaint alleged breach of contract, promissory estoppel, false
promise, and intentional and negligent misrepresentation,
causing Radovic at least $478,000 in compensatory damages.
2
The complaint also prayed for punitive damages “for the willful
and malicious conduct of Defendants.”
Brilliant did not answer the complaint. Radovic sent
Brilliant a letter dated April 18, 2017, notifying her that he
intended to seek a default. The letter stated that the complaint
sought $180,000 in damages for certain claims and $298,000 for
others, and interest on the damages, costs, and expenses,
including attorney fees, along with “exemplary damages and such
other relief the Court deems proper.” Attached to the notice were
copies of the complaint and summons, and a draft notice of
Radovic’s request for entry of default.
II. The default and default judgment
In response to Radovic’s motion, the court entered
Brilliant’s default on May 2, 2017.
In June 2017, Radovic requested the court enter default
judgment against Brilliant. In support of his motion, Radovic
filed a statement of the case and supporting declarations. In his
declaration, Radovic described the factual basis for the complaint
and listed the items of damages he claimed to have suffered. In
particular, Brilliant paid an initial $10,000 but never paid the
$80,000 remainder by the due date of November 23, 2015. After
that date, Brilliant repeatedly promised to make the remaining
payments but never intended to do so. In reliance on her
promises, Radovic continued his efforts to relocate his family and
turned down an offer to purchase the business assets for $28,000
more than the contract price. Then, on December 6, 2015,
Brilliant indicated that she refused to pay and that she had
leased the property. Radovic declared he suffered $80,000 in
benefit-of-the-bargain damages; $28,000 in lost profits; $51,506 in
lost salary because his new job in Michigan was revoked and he
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did not find new employment until June 2016; $135,000 in lost
earnings from the business between November 2015 and June
2017, plus $45,000 in “punitive damages to offset the amount of
attorney[ ] fees incurred in the prosecution of these claims as well
as the enforcement of the judgment.” In all, Radovic requested
$339,506 in compensatory damages, plus $19,489.39 in interest,
and $527.95 in costs, for a total of $359,523.34, plus $50,000 in
punitive damages.
Radovic’s counsel declared that he had administered a
debtor’s examination of Brilliant at which she testified that she
had, among other things, received the complaint and notice of
default package, including the explanatory letter listing the
damages Radovic sought, both of which documents stated that
Radovic was seeking in excess of $450,000 plus punitive
damages.
The trial court entered default judgment against Brilliant
on July 7, 2017, in the amount of $339,506 plus interest and
court costs.
III. The motion to vacate the default judgment
A year and a half later, in January 2019, Brilliant moved to
vacate the default and default judgment. She contended that the
default judgment was void as beyond the trial court’s jurisdiction
because the amount of damages awarded exceeded the amount
alleged in the complaint, in violation of Code of Civil Procedure1
section 580, with the result the judgment was subject to collateral
attack at any time. Radovic’s violation of section 580 occurred
1
All further statutory references are to the Code of Civil
Procedure.
4
because he never served a statement on her identifying the
amount of punitive damages he sought as required by section
425.115, subdivisions (b) and (f). Brilliant also challenged the
contract damages on the ground the complaint failed to allege
that Radovic had authority to sell Top Dog Resort’s assets. She
attacked the tort damages reasoning that the complaint did not
state tort causes of action independent of the contract claim, and
that Radovic failed to provide sufficient evidence to support his
tort damages. Therefore, Brilliant argued, the complaint and
prove up failed to state any claim for damages and so the court
should vacate not simply the default judgment but the default as
well.
The trial court granted Brilliant’s motion in part. The
court denied Brilliant’s request to vacate the $80,000 in contract
damages, citing the contract attached to the complaint. However,
the court set aside the punitive damages award. The court also
vacated the damages awarded for lost future employment
opportunity, lost profits, and lost business earnings, noting that
these items did not qualify as special contract damages and they
were insufficiently supported by the prove-up package. The court
then rejected Radovic’s request to reargue the default prove up so
as to adduce adequate evidentiary support for the damages
beyond the $80,000.
The order amending the judgment reduced the default
judgment to $80,000 in contract damages, plus prejudgment
interest from the date Brilliant breached the contract, plus costs
for a total of $93,503.28. Both Brilliant and Radovic filed timely
appeals from the order modifying the judgment.
5
DISCUSSION
I. Collateral attack and jurisdiction
“When a defendant does not respond to a plaintiff’s
properly served complaint, the plaintiff may seek the entry of
default and, thereafter, a default judgment.” (Sass v. Cohen
(2019) 32 Cal.App.5th 1032, 1039–1040.)
A defendant may attack a void judgment at any time and is
not subject to a claim of laches. (§ 473, subd. (d); Airs Aromatics,
LLC v. CBL Data Recovery Technologies, Inc. (2018) 23
Cal.App.5th 1013, 1022–1023.) We independently review the
question of whether a default judgment is void. (Airs, at p. 1018.)
Section 580, subdivision (a) provides that the relief granted
to the plaintiff against a defaulting defendant “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.” (Italics added.) The complaint “fixes ‘a ceiling on
recovery,’ both in terms of the (1) type of relief and (2) the
amount of relief” (Sass v. Cohen, supra, 32 Cal.App.5th at
p. 1040), “but not prejudgment interest, attorney fees, or costs”
(ibid.). As for punitive damages, while the amount of that relief
cannot be pleaded in the complaint (§ 425.10, subd. (b)), section
425.115, subdivision (b) enables plaintiffs to preserve the right to
seek punitive damages in a default judgment by serving on the
defendant a statement of the amount (§ 425.115, subd. (f)).
Procedural due process requires notice be given so that the
defendant can decide whether to appear and defend. (Yu v.
Liberty Surplus Ins. Corp. (2018) 30 Cal.App.5th 1024, 1031.)
Section 580 is mandatory and strictly construed “ ‘in
accordance with its plain language.’ ” (Airs Aromatics, LLC v.
CBL Data Recovery Technologies, Inc., supra, 23 Cal.App.5th at
6
p. 1018.) A default judgment that exceeds the amount demanded
in the complaint or in the statutory statement of punitive
damages violates section 580 and is void as beyond a court’s
fundamental jurisdiction. (Id. at pp. 1022–1023.)
When assessing whether the default judgment exceeds the
relief “demanded in the complaint” (§ 580, subd. (a)), we “compare
the total compensatory relief granted by the default judgment to
the total compensatory relief demanded in the operative
pleadings.” (Sass v. Cohen, supra, 32 Cal.App.5th at p. 1044.)
We “add up the various, nonduplicative items of damages
demanded; the grand total is the price of default.” (Id. at
p. 1045.) However, as “compensatory and punitive damages are
different remedies in both nature and purpose, a ‘demand or
prayer for one is not a demand legally, or otherwise, for the other,
or for both.’ ” (Becker v. S.V.P. Construction Co. (1980) 27 Cal.3d
489, 494–495.) Thus, we separately compare the total punitive
damages demanded in the section 425.115 statement with the
total punitive damages awarded in the default judgment.
Here, the compensatory relief sought in the complaint was
$478,000. The amount awarded—$339,506—did not exceed the
demand.
Nonetheless, as noted, section 580, subdivision (a) also
precludes a judgment that exceeds “that demanded . . . in the
statement provided for by Section 425.115” (italics added), i.e., in
the punitive damages statement. Subdivision (b) of section
425.115 lists the items such a statement must contain to preserve
the plaintiff’s right to seek punitive damages, including the
parties’ names, the lawsuit, and the dollar amount of punitive
damages the plaintiff seeks. The plaintiff may use the form laid
out in the statute or serve a “substantial equivalent” of the
7
statement. (§ 425.115, subd. (b).) Service of the statement must
be made on the defendant “before a default may be taken, if the
motion for default judgment includes a request for punitive
damages.” (§ 425.115, subd. (f).)
In his appeal, Radovic first argues that the default
judgment did not violate section 580 because even including the
punitive damages, the total amount awarded was $118,000 less
than the amount the complaint demanded for compensatory
damages. Yet, as noted, compensatory and punitive damages are
assessed separately when reviewing a default judgment against
the amount demanded.
Next, Radovic argues that his attorney’s April 18, 2017
letter to Brilliant notifying her of his intent to seek a default
against her was the substantial equivalent of the statutory
statement. Radovic cites his attorney’s declaration that Brilliant
admitted she received the explanatory letter listing the damages
Radovic sought. He recites that where “the defendant admits
receiving actual notice of the punitive damages sought it would
be a travesty of justice, much less logic, to hold defendant did not
have actual notice.” (Cummings Medical Corp. v. Occupational
Medical Corp. (1992) 10 Cal.App.4th 1291, 1298.)
Even assuming the April 18, 2017 letter constituted a
substantial equivalent, it did not name a specific dollar amount
for punitive damages. Rather, the letter stated that Radovic
sought exemplary damages and such other relief the court deems
proper. “Where no amount of damages is demanded any amount
awarded is by definition greater than the amount demanded.”
(Falahati v. Kondo (2005) 127 Cal.App.4th 823, 830–831.) The
only documents we located in the record that named an amount
of punitive damages are the statement of the case and Radovic’s
8
declaration, both filed as part of Radovic’s prove up in support of
the default judgment. These prove-up documents do not qualify
as substantial equivalents of the statutory statement because
they were not served on Brilliant before Radovic sought entry of
default as required in section 425.115, subdivision (f). Hence, it
is irrelevant that Brilliant admitted to having received those
documents.
Accordingly, the award of punitive damages in the default
judgment violated section 580. The trial court did not err in
addressing Brilliant’s collateral attack on the default judgment.
II. The trial court did not err in declining to vacate the
contract damages.
Attacking the damages awarded Radovic for her breach of
the contract, Brilliant repeats verbatim the argument raised in
her motion to vacate the default judgment. She contends that the
complaint alleges Radovic operated the kennel that did business
under the name of Top Dog Resort, a limited liability company,
but omitted to allege, and Radovic failed to prove, that he was
authorized to sell the company’s assets, with the result that
Radovic himself was not damaged.2 She adds that where all of
the remaining causes of action are premised on the contract for
which Radovic failed to allege he was personally damaged, the
entire complaint fails to allege cognizable damage.
2 Brilliant adds that the Franchise Tax Board suspended
Top Dog Resort in May 2015. Of course, even if she were capable
of adducing that fact in a motion to vacate a judgment, it is
irrelevant because Radovic, not Top Dog Resort, entered into the
contract with Brilliant.
9
A default judgment cannot stand if the complaint’s
allegations fail to state a cause of action against the defaulting
defendant. (Kim v. Westmoore Partners, Inc. (2011) 201
Cal.App.4th 267, 282.) Thus, we may interfere with a complaint
that fails to state facts sufficient to constitute a cause of action.
(Ibid.) In contrast, collateral attack will not lie for the claim that
the judgment is not supported by substantial evidence (Molen v.
Friedman (1998) 64 Cal.App.4th 1149, 1156) because, as Brilliant
acknowledges, a default admits the well-pleaded allegations in a
complaint. (Kim, at p. 281.) Thus, if “the well-pleaded
allegations of the complaint do not state any proper cause of
action, the default judgment in the plaintiff’s favor cannot stand.”
(Id. at p. 282, italics added.) However, to the extent that the
complaint states at least one cause of action, the default
judgment based on that cause of action will stand. (See id. at
p. 272 [as gatekeeper evaluating application for default
judgment, trial court must ensure only appropriate claims “get
through”].)
Brilliant’s argument about the failure of the complaint to
allege contract damages is unavailing because the complaint
alleges at “all times . . . Radovic owned and operated a canine
boarding and kennel operation.” (Italics added.) Radovic
repeated that fact in his prove-up declaration. Having defaulted,
Brilliant did not file an answer raising the affirmative defense
related to Radovic’s authority to enter into the contract to sell.
(Cf. Berzon v. U.L.C. Corp. (1969) 274 Cal.App.2d 690, 697
[authority to enter into agreement is affirmative defense].)
Therefore, as the trial court explained in its ruling, Brilliant is
deemed to have admitted the factual allegation that Radovic
owned the assets listed in the contract and is precluded from
10
attacking that fact now. The contract cause of action remained
viable.
III. The tort causes of action
Brilliant contends that the tort causes of action, the third
for false promise, and the fourth and fifth for fraud, failed to state
claims for damages because they did not allege the breach of a
duty independent of the obligations under the contract. She
relies on Applied Equipment Corp. v. Litton Saudi Arabia Ltd.
(1994) 7 Cal.4th 503, 515, that “[c]onduct amounting to a breach
of contract becomes tortious only when it also violates an
independent duty arising from principles of tort law. . . . “[A]n
omission to perform a contract obligation is never a tort, unless
that omission is also an omission of a legal duty.” ’ ” Brilliant
quotes the allegations of the complaint that she “made repeated
promises to deliver the Payment . . . , but Brilliant never
delivered the Payment” and “Brilliant made repeated
representations to Radovic that she would deliver the Payment,
but those representations were false and Brilliant never
delivered the Payment.” (Italics added.) She argues these
allegations demonstrate that the complaint sounded only in
contract.
Radovic responds that his complaint properly stated a
cause of action for breach of contract and one for fraud based on
Lazar v. Superior Court (1996) 12 Cal.4th 631. However, Lazar
is distinguishable because that case involved the claim of
fraudulent inducement to contract. (Id. at pp. 461, 648–649.)
Radovic’s complaint does not allege fraudulent inducement to
contract.
Nonetheless, reviewing the complaint here, it alleges that
Brilliant both breached the contract and committed a separate
11
legal wrong, namely fraud. The complaint states that Brilliant
breached the contract by failing to pay $80,000 by November 23,
2015, the time for performance. Radovic had a cause of action for
breach of contract at that point. (Cf. Church v. Jamison (2006)
143 Cal.App.4th 1568, 1583 [breach of contract accrues when
there has been a breach].)
The complaint goes on to allege that after the November 23,
2015 breach, Brilliant repeatedly promised she would buy the
business assets, knowing she would not; she told employees that
she was buying the business causing one to quit and forcing
Radovic to work around the clock instead; she notified customers
that Radovic was out of business; she began using the name Top
Dog Resort without permission; and she continued to promise
that she would buy the business until it was too late for Radovic
to find another buyer. Then, on December 6, 2015, two weeks
after she breached the contract, Brilliant informed Radovic that
she had entered into a lease for the property and would not be
buying the business assets. Radovic alleges that he relied on
Brilliant’s repeated representations that she would be buying the
business assets by turning down another offer and by continuing
to arrange for a move to Michigan. For the negligent and
intentional misrepresentation causes of action, Radovic alleges
that despite Brilliant’s representations that she would pay him,
she never did. “ ‘The necessary elements of fraud are:
(1) misrepresentation (false representation, concealment, or
nondisclosure); (2) knowledge of falsity (scienter); (3) intent to
defraud (i.e., to induce reliance); (4) justifiable reliance; and
(5) resulting damage.’ ” (Alliance Mortgage Co. v. Rothwell (1995)
10 Cal.4th 1226, 1239, capitalization omitted.) The complaint
states causes of action for both breach of contract and fraud.
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IV. Damages
Radovic contends that the trial court erred in denying him
his claimed damages of $28,000 for the lost opportunity to sell the
business for more than Brilliant’s contract price, $51,506 for the
lost employment opportunity in Michigan, and $135,000 in lost
profits. On appeal, he insists that these are proper measures of
damage for Brilliant’s fraud.
“[T]ort damages are awarded to compensate the victim for
injury suffered. [Citation.] ‘For the breach of an obligation not
arising from contract, the measure of damages . . . is the amount
which will compensate for all the detriment proximately caused
thereby, whether it could have been anticipated or not.’ (Civ.
Code, § 3333.)” (Applied Equipment Corp. v. Litton Saudi Arabia
Ltd., supra, 7 Cal.4th at p. 516.)
A “defrauded party is ordinarily limited to recovering out-
of-pocket damages. [Citation.] The out-of-pocket measure of
damages ‘ “is directed to restoring the plaintiff to the financial
position enjoyed by him prior to the fraudulent transaction, and
thus awards the difference in actual value at the time of the
transaction between what the plaintiff gave and what he
received.” ’ ” (Fladeboe v. American Isuzu Motors Inc. (2007) 150
Cal.App.4th 42, 66.) Civil Code section 3343, subdivisions (a)(3)
and (a)(4), involving fraud in the purchase or sale of property
allows for lost profits as a component of “ ‘additional damage’ ”
when the loss was proximately caused by the fraud. (Stout v.
Turney (1978) 22 Cal.3d 718, 726.)
Even assuming Radovic was entitled to these damages for
Brilliant’s fraud, his prove up provided insufficient evidence to
make a prima facie case for damages.
13
Unlike the allegations of liability which are deemed
admitted upon default and need not be proven, to obtain a default
judgment, plaintiffs must prove entitlement to the damages
claimed. (Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1745.) A
prove up may be done at a hearing based on an evidentiary
showing with live testimony or, in the trial court’s discretion,
with affidavits or declarations setting forth “with particularity”
the facts that are “within the personal knowledge” of the
declarant. (§ 585, subd. (d).) In Los Angeles County, the
submission of declarations pursuant to section 585, subdivision
(d) is the preferred procedure to obtain a default judgment.
(Super. Ct. L.A. County, Local Rules, rule 3.201(a).) The
declarations must include sufficient evidence to establish a prima
facie case of entitlement to the damages. (Kim v. Westmoore
Partners, Inc., supra, 201 Cal.App.4th at pp. 281, 287–288.) That
is, although only a prima facie case need be made, the showing of
a prima facie case must be based on evidence. (Harbour Vista,
LLC v. HSBC Mortgage Services Inc. (2011) 201 Cal.App.4th
1496, 1503, fn. 6; cf. Taliaferro v. Davis (1963) 216 Cal.App.2d
398, 413 [finding for defendant where plaintiff adduced no
evidence at default hearings to support counts].)
Radovic argued Brilliant’s fraud caused him not to renew
his lease, prevented the sale of the assets to another buyer by
tying up the assets, while Brilliant leased the property out from
under him, depriving Radovic of any future income from the
business. Radovic stated in his prove-up declaration that as a
consequence, he was “unable to earn money from the Business
Assets Defendant took” from him and suffered what he called
out-of-pocket damages in the amount of $135,000 from
November 23, 2015 to June 15, 2017. But, Radovic provided no
14
explanation or evidence about how he arrived at this amount.
Radovic also declared that he received an offer to purchase the
business assets that was $28,000 more than his deal with
Brilliant but did not accept it in reliance on Brilliant’s promises.3
And as noted, Radovic claimed $51,506 in damages caused by his
inability to take the job in Michigan by December 14, 2015 and so
the job offer was revoked. Radovic explained that he had
accepted employment in Michigan with an annual salary of
$100,000 plus benefits of approximately $15,600 per year.
Although the numbers are specific and within Radovic’s personal
knowledge, they were not supported by any documentation. The
trial court did not err in finding that Radovic’s prove-up
application lacked a sufficient showing of support for damages
above the $80,000 benefit-of-the-bargain damages.
V. The trial court properly declined to vacate Brilliant’s
default.
Brilliant contends that because the complaint fails to state
any claim for damages, both the default and the default judgment
must be reversed.4 However, as analyzed, the complaint
3Insofar as this is a measure of contract and not tort
damages, this offer was not a circumstance about which Brilliant
was made aware and so this loss is not recoverable in contract.
(See Lewis Jorge Construction Management, Inc. v. Pomona
Unified School Dist. (2004) 34 Cal.4th 960, 968.)
4 Brilliant’s reliance on Heidary v. Yadollahi (2002) 99
Cal.App.4th 857 for this contention is misplaced. There, the
default, as opposed to the default judgment, was void on its face
because the trial court had no power to enter it. (Id. at p. 862.)
That is not the case here.
15
adequately stated causes of action for contract and fraud. The
default judgment is only void to the extent the relief awarded
exceeded the amount of punitive damages demanded. As the
challenged judgment only partially exceeded the trial court’s
jurisdiction, the court properly modified the judgment to save
that portion of the judgment that was not void. (Becker v. S.P.V.
Construction Co., supra, 27 Cal.3d at p. 495.)
Radovic contends that the trial court abused its discretion
by rejecting his request to cure the evidentiary defects in his
prove-up package. He cites no legal authority and fails to specify
what documents he would present at a new hearing. We may not
interfere with the trial court’s determination of damages unless
the award, or lack thereof, is “ ‘totally unconscionable and
without evidentiary justification.’ ” (Johnson v. Stanhiser (1999)
72 Cal.App.4th 357, 361.) Where “ ‘the issue on appeal turns on a
failure of proof at trial, the question for a reviewing court
becomes whether the evidence compels a finding in favor of the
appellant as a matter of law. [Citations.] Specifically, the
question becomes whether the appellant’s evidence was
(1) “uncontradicted and unimpeached” and (2) “of such a
character and weight as to leave no room for a judicial
determination that it was insufficient to support a finding.” ’ ”
(Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc.
(2011) 196 Cal.App.4th 456, 466.) As Radovic failed to submit
sufficient evidence of his damages, the trial court properly
eliminated those damages from the default judgment.
16
DISPOSITION
The order is affirmed. Each party to bear its own costs of
appeal.
NOT TO BE PUBLISHED.
DHANIDINA, J.
We concur:
LAVIN, Acting P. J.
EGERTON, J.
17