Sass v. Cohen

IN THE SUPREME COURT OF
CALIFORNIA
DEBORAH SASS,
Plaintiff and Respondent,
v.
THEODORE COHEN,
Defendant and Appellant.
S255262
Second Appellate District, Division Two
B283122
Los Angeles County Superior Court
BC554035
December 24, 2020
Chief Justice Cantil-Sakauye authored the opinion of the
Court, in which Justices Corrigan, Liu, Cuéllar, Kruger,
Groban, and Guerrero* concurred.
________________________
*
Associate Justice of the Court of Appeal, Fourth Appellate
District, Division One, assigned by the Chief Justice pursuant to article
VI, section 6 of the California Constitution.
SASS v. COHEN
S255262
Opinion of the Court by Cantil-Sakauye, C. J.
Section 580, subdivision (a) of the Code of Civil Procedure
provides that “[t]he relief granted to the plaintiff, if there is no
answer, cannot exceed that demanded in the complaint . . . .”1
Thus, “in all default judgments the demand sets a ceiling on
recovery,” and a judgment purporting to grant relief beyond that
ceiling is void for being in excess of jurisdiction. (Greenup v.
Rodman (1986) 42 Cal.3d 822, 824 (Greenup).) In an accounting
action, however, a plaintiff does not know the sum certain owed
by the defendant. (See, e.g., Teselle v. McLoughlin (2009)
173 Cal.App.4th 156, 179 (Teselle) [“An action for accounting is
not available where the plaintiff alleges the right to recover a
sum certain or a sum that can be made certain by calculation”].)
As such, a complaint seeking an accounting cannot state the
precise amount of damages sought.
At issue in this case is how to reconcile the restrictions of
section 580 with the limitations inherent in an action for
accounting. Specifically, we must resolve whether a court may
award monetary damages in a default judgment to a plaintiff
who seeks an accounting when the complaint does not demand
a specific amount of monetary damages but instead asserts a
proportional interest in specified property.
1
All further unspecified statutory references are to the
Code of Civil Procedure.
1
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Applying our usual rubrics of statutory construction, we
conclude that in cases where plaintiffs seek monetary relief, the
mere fact that they have pleaded an accounting action does not
insulate them from the obligation to notify defendants of the
dollar amounts sought before such relief may be granted in
default. True, the text of section 580 does not point unerringly
to this result. Nonetheless, when section 580 is considered in
light of its purpose — “to guarantee defaulting parties adequate
notice of the maximum judgment that may be assessed against
them” (Greenup, supra, 42 Cal.3d at p. 826) — and in
conjunction with other statutes related to pleadings and default
judgments, we find the most reasonable interpretation of section
580 is that it requires plaintiffs to have alleged their “relief” in
terms of dollars if they are to receive monetary recovery. (§ 580,
subd. (a).)
Our conclusion is bolstered by other considerations.
Among these is the recognition that despite their relative lack
of knowledge about the precise amounts owing, plaintiffs
bringing accounting claims (1) are generally able to estimate
their damages, (2) must ultimately prove the sums to which they
are entitled after default, and (3) may request that the trial
court take an accounting in circumstances where an accounting
is necessary to discover the information needed to determine the
amount owing. In other words, plaintiffs’ inability to state a
precise amount of damages does not justify allowing pleadings
that, in the event of defaults, will not have apprised defendants
of the maximum dollar amounts to which they may be held
liable.
Accordingly, we hold, consistent with the Court of Appeal
below, that a plaintiff seeking an accounting is not excused from
section 580’s requirement to state a specific dollar amount to
2
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
support a default judgment granting monetary relief. In
particular, it is not enough that the complaint identifies the
assets in a defendant’s possession and requests some fraction of
their value.
The Court of Appeal reached a second, subsidiary issue as
to which we also granted review: the proper method by which a
court determines whether the amount awarded in a default
judgment exceeds that demanded. (See Sass v. Cohen (2019)
32 Cal.App.5th 1032, 1035 (Sass) [holding that “the amounts of
damages awarded and demanded are to be compared on an
aggregate basis”].) On closer examination, however, we find we
need not resolve that question in order to dispose of the matter
before us. As we shall explain, neither the trial court’s nor the
Court of Appeal’s calculation of damages implicated the
aggregate versus claim-by-claim subsidiary issue. This case
does not raise that question, and although we offer some words
of guidance to the courts, we reserve judgment on that issue for
another day.
I. BACKGROUND
The facts of this case are taken from plaintiff Deborah
Sass’s second amended complaint, the operative pleading upon
which she obtained a default judgment. (See, e.g., Title Ins. &
Trust Co. v. King Land & Improv. Co. (1912) 162 Cal. 44, 46
(Title Insurance) [“ ‘A default confesses all the material facts in
the complaint’ ”]; 7 Witkin, Cal. Procedure (5th ed. 2019)
Proceedings Without Trial, § 176 [“the defendant’s failure to
answer has the same effect as an express admission of the
matters well pleaded in the complaint”].)
In 2006, while still married, defendant Theodore Cohen
met and began a romantic relationship with plaintiff. In an
3
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
attempt to persuade plaintiff to move to Los Angeles with him,
Cohen made a number of promises. Plaintiff committed to
moving after reaching an “agreement” with Cohen that he
“would pay for all her living expenses for the rest of her life” and
that “all property and income acquired by them during their
relationship would be joint property.” During this time, Cohen
told plaintiff he was “buying us a house.” Cohen then proceeded
to purchase a property on Hollywood Boulevard (the Hollywood
property).
A short time thereafter, plaintiff moved to Los Angeles.
Cohen initially kept his promises, including by providing
plaintiff with a credit card and paying “all of the bills and all of
Plaintiff’s expenses.” Cohen also formed a company, Tag
Strategic LLC (Tag). Plaintiff “help[ed] out” at Tag, generating
through her efforts “approximately $1.4 million revenue for
Tag.” Despite her work, Cohen did not share Tag’s profits with
plaintiff. Instead, he told her he “was going to pay her $5,000 a
month as a ‘token gesture.’ ” Cohen, however, did not honor that
promise and instead paid plaintiff $2,000 a month for a span of
ten months.
By April 2011, plaintiff had become dissatisfied with the
relationship and left Los Angeles. In response to Cohen’s
importuning her to return, plaintiff sent Cohen an e-mail with
“a list of items that needed to be satisfied for her to consider
returning to him.” Cohen “agreed to Plaintiff’s list.” Plaintiff
understood from this that “Tag would be owned 50% by her and
Cohen, equally, as was all of the other income and property
obtained during the relationship.”
Mollified, plaintiff returned to Los Angeles, at which point
Cohen told her, “I am buying you a house.” Cohen then
4
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
purchased a house located on Oakley Drive (the Oakley
property). Sometime thereafter, Cohen sold the Hollywood
property. “Upon information and belief,” plaintiff alleged that
Cohen “made a profit of more than $300,000” from the sale.
At around the same time that Cohen bought the Oakley
property, plaintiff “purchased $25,000 worth of Class B shares
in Rock & Reilly’s LLC,” a company located in Los Angeles.
Although plaintiff made the purchase, the shares were held in
Cohen’s name.
Despite the couple’s various financial entanglements,
Cohen still had not divorced his wife. In December 2012,
plaintiff moved out of the Oakley property. For a while
thereafter, Cohen “continued to perform his agreement to
provide Plaintiff with financial support and pay all of her
expenses.” Eventually, Cohen stopped paying. Plaintiff sued.
Plaintiff’s complaint, brought against Cohen, Tag, and
multiple Doe, alleged seven causes of action. The first asserted
that Cohen breached the couple’s so-called Marvin agreement,
or a contract between nonmarital partners. (See Marvin v.
Marvin (1976) 18 Cal.3d 660, 665 (Marvin) [holding that “courts
should enforce express contracts between nonmarital
partners”].) Although demanding consequential damages for
that breach “in an amount to be determined at trial,” plaintiff
also requested “a constructive trust over (1) all of the property
purchased during the term of the relationship, (2) all of the
income earned by Tag since May 30, 2006, and (3) all income
earned by [Cohen] since May 2006.”
Plaintiff’s second cause of action was brought against Tag
for its “failure to pay wages.” Plaintiff also brought a claim for
the “waiting time penalties” she alleged she was “entitled to
5
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
[under] Labor Code § 203, equal to thirty (30) days wages.”
Plaintiff next asserted a claim for quantum meruit against all
defendants, seeking to “recover the reasonable value of the
services she provided to Tag.”
Plaintiff’s next claim is the focus of this case. In this cause
of action, she demanded “an accounting of all property
purchased and income earned during the relationship, including
but not limited to: (1) the Hollywood House, (2) the Oakley
House, (3) the Rock & Reilly stock, (4) Tag, and (5) all income
earned by [Cohen].”
Plaintiff’s final causes of action were for fraud and
fraudulent transfer of assets from Tag to Cohen. She alleged
within these causes of action that Cohen “repeatedly” made false
representations to her. As a result of Cohen’s
misrepresentations, plaintiff asserted she “suffered actual
damages in a sum to be determined at trial, which Plaintiff
alleges is in excess of at least the sum of $700,000, which
represents 50% of the revenue brought to Tag by Plaintiff, along
with an unknown sum which represents 50% of all profits
earned by Tag, and the additional sum of no less than
$3,000,000, which represents 50% of the fair market value of
(a) the Hollywood House received by defendant Cohen when he
sold that house without Plaintiff’s consent, and (b) the Oakley
House.” In addition to her actual damages, plaintiff prayed for
“special damages in a sum to be determined at trial.”
Plaintiff included a prayer for relief in her complaint, but
the prayer did not state any specific dollar figures. Instead, the
complaint asked for damages “in a sum to be proven at trial.”
Plaintiff served the complaint on Tag and Cohen and
subsequently served Cohen “a notice of punitive damages in
6
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
which she ‘reserve[d] the right to seek $4,000,000 in punitive
damages.’ ” (Sass, supra, 32 Cal.App.5th at p. 1037.)
Defendants failed to respond to the complaint. After the
entry of default, the trial court held a prove-up hearing at which
plaintiff introduced the testimony of a forensic accountant to
prove her damages. (Sass, supra, 32 Cal.App.5th at pp. 1037–
1038.) The court ultimately awarded plaintiff the following:
(1) $126,504 as plaintiff’s 50 percent share in the profits from
the sale of the Hollywood property; (2) $2,099,610, or half the
value of Tag, calculated via a “discounted cash flow approach of
valuation”; (3) $444,918, which is “one-half of the balance of the
funds remaining in the accounts” of Tag, an amount the court
awarded “for the breach of the agreement to share 50% of the
income received by Tag”; (4) $120,000 as unpaid wages for the
work plaintiff performed; (5) $5,000 in waiting time penalties;
and (6) $10,500 as compensation for the investment in Rock &
Reilly’s LLC. In addition, the court declared a constructive trust
over the Oakley property, ordering Cohen to transfer to plaintiff
a 50 percent interest in the property. The court also awarded
plaintiff $88,984 in punitive damages, a sum amounting to ten
percent of Cohen’s “balance in [various] bank accounts,” which
the court took as a proxy for Cohen’s net worth. Finally, the
court awarded prejudgment interest and costs.
The court denied plaintiff some of the relief sought. Most
notably, the court held that because plaintiff had pleaded that
she was a salaried employee of Tag, she was not entitled to the
$700,000 she asserted was the half of “the business she ‘brought
in’ to Tag.”
Three months after the default judgment was entered,
Cohen filed a motion to vacate the entry of default and default
7
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
judgment. Cohen argued that the judgment was void because
the sum granted in default exceeded what was demanded in the
complaint. The trial court denied the motion on the ground that
“it has been held [in Cassel v. Sullivan, Roche & Johnson (1999)
76 Cal.App.4th 1157] where a plaintiff alleges a cause of action
for accounting and knowledge of the debt due is within the
possession of the defendant, there is no notice requirement for
damages sought before entry of default judgment.”
Cohen appealed, arguing that contrary to Cassell, he was
entitled to such notice. The Court of Appeal agreed, holding that
“actions alleging an accounting claim . . . are not excused from
limitations on default judgments,” which means such judgments
may not “be entered for an amount in excess of the demand in
the operative pleadings.” (Sass, supra, 32 Cal.App.5th at
p. 1035.) The court acknowledged that Cassel held otherwise,
but after a careful examination of the case, the court “join[ed]
the growing majority of cases rejecting Cassel.” (Id. at p. 1043.)
The Court of Appeal thus reversed the trial court and
vacated its default judgment. (Sass, supra, 32 Cal.App.5th at
p. 1047.) The appellate court also recomputed the amount of
damages plaintiff could recover. Of note, unlike the trial court,
the Court of Appeal concluded that plaintiff was entitled to
collect the $700,000 referenced in the complaint,
conceptualizing it as the demand she had made “for the value of
Tag.” (Id. at p. 1046.) It remanded the case “with instructions
for the trial court to exercise its discretion whether to
(1) reinstate the default judgment after reducing the amount of
compensatory damages awarded [in accordance with the Court
of Appeal’s holding and calculations], or (2) vacate the
underlying default and allow plaintiff to file and serve an
8
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
amended complaint demanding the type and amount of relief
she seeks.” (Id. at pp. 1047–1048.)
In light of the conflict between Cassel and the decision
below, we granted review.
II. DISCUSSION
A. Whether Section 580 Bars Monetary Recovery
When a Plaintiff Bringing an Accounting Action
Fails To Plead a Specific Amount of Damages
Determining how section 580 applies to an accounting
action requires us to grapple with several strands of law,
including the nature of accounting actions, the constraints of
section 580, and our own authorities. We examine the threads
individually before proceeding to weave them together.
1. An action for an accounting
An action for an accounting has two elements: (1) “that a
relationship exists between the plaintiff and defendant that
requires an accounting” and (2) “that some balance is due the
plaintiff that can only be ascertained by an accounting.”
(Teselle, supra, 173 Cal.App.4th at p. 179; see also 5 Witkin, Cal.
Procedure, supra, Pleading, § 820.) The action carries with it an
inherent limitation; an accounting action “is not available where
the plaintiff alleges the right to recover a sum certain or a sum
that can be made certain by calculation.” (Teselle, at p. 179; see
also St. James Church of Christ Holiness v. Superior Court of
Los Angeles County (1955) 135 Cal.App.2d 352, 359.)
An action for an accounting has been characterized as “a
means of discovery.” (Teselle, supra, 173 Cal.App.4th at p. 180
[“the purpose of the accounting is, in part, to discover what, if
any, sums are owed to the plaintiff, and an accounting may be
used as a discovery device”].) This characterization is consistent
9
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
with the idea that a plaintiff seeking an accounting cannot
“allege[] the right to recover a sum certain” because he or she
lacks the information necessary to determine the precise
amount that may be due. (Id. at p. 179.) The plaintiff’s lack of
knowledge drives the need for discovery; and the fact that the
gap can be filled via discovery implies the information is within
the control of the defendant. In other words, the defendant in
an accounting action possesses information unknown to the
plaintiff that is relevant for the computation of money owed.
Although we infer that a defendant in an accounting
lawsuit has pertinent private information, there are limits to
this inference. We do not know that a defendant will always
have all the information necessary to compute the amount
owing to the plaintiff. (See Warren v. Warren (2015)
240 Cal.App.4th 373, 378–379 (Warren) [noting that
“[g]enerally, the defendant, not the plaintiff, in an accounting
action has the information necessary to determine its liability
for damages,” and “[g]enerally, the plaintiff does not have equal
access to that information” but finding that the case before the
court “does not fall under that general rule” (italics added)].)
Plaintiff in this case, although pleading for an accounting and
alleging that the assets are in Cohen’s possession, acknowledges
that such allegations give rise only to the assumption that
Cohen “has knowledge of the property as great, or greater than,
that of . . . plaintiff.” Even by plaintiff’s reckoning then,
accounting actions subsume cases in which the parties possess
equal amounts of information.
In short, the underpinning of an accounting action is an
information asymmetry between the parties, an asymmetry that
generally favors the defendant but never the plaintiff. Our goal
10
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
is to probe the consequences of this asymmetry in the context of
defaults.
2. Section 580 and related statutes
Section 580 is one of several statutory provisions
governing default. In relevant part, it states: “The 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; but in any other case, the court may grant the plaintiff
any relief consistent with the case made by the complaint and
embraced within the issue.” (§ 580, subd. (a).)
Section 580, subdivision (a) thus specifies two instances in
which the relief awarded in a default judgment is not limited to
“that demanded in the complaint”: those that fall within the
scope of section 425.11 or 425.115. Section 425.11 controls
actions “to recover damages for personal injury or wrongful
death.” (Id., subd. (b).) In such actions, “the amount demanded
shall not be stated” in a complaint.2 (§ 425.10, subd. (b).)
Instead, the plaintiff must serve on the defendant “a statement
setting forth the nature and amount of damages being sought.”
(§ 425.11, subd. (b).) As is relevant here, the plaintiff must serve
such a statement of damages “before a default may be taken.”
(Id., subd. (c).) Similarly, section 425.115 requires a plaintiff
seeking punitive damages to serve upon the defendant a form
statement “or its substantial equivalent” that gives the
defendant notice of the specific amount of punitive damages
2
The purpose behind this rule is to “ ‘protect the defendants
from adverse publicity resulting from inflated demands,
particularly in medical malpractice cases.’ ” (Schwab v. Rondel
Homes, Inc. (1991) 53 Cal.3d 428, 431.)
11
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
sought.3 (§ 425.115, subd. (b).) As with section 425.11, the
statement contemplated by section 425.115 must be served
“upon the defendant . . . before a default may be taken.”
(§ 425.115, subd. (f).)
Section 580, subdivision (a)’s requirement that the relief
granted “cannot exceed that demanded in the complaint” is
echoed by other statutory provisions. Section 425.10, for
instance, sets forth “the front-end statutory requirements for
pleading” that are enforced by the “back-end limitations”
imposed by section 580. (Sass, supra, 32 Cal.App.5th at
p. 1040.) Section 425.10 stipulates that a complaint “shall
contain . . . [a] demand for judgment for the relief to which the
pleader claims to be entitled.” (Id., subd. (a)(2).) Moreover, “[i]f
the recovery of money or damages is demanded, the amount
demanded shall be stated.”4 (§ 425.10, subd. (a)(2).)
3
The form statement laid out in section 425.115 looks like
this:
NOTICE TO _________ (Insert name of defendant or
cross-defendant): _________ (Insert name of
plaintiff or cross-complainant) reserves the right to
seek $_________ (Insert dollar amount) in punitive
damages when _________ (Insert name of plaintiff
or cross-complainant) seeks a judgment in the suit
filed against you.
(Insert name of attorney or party appearing in
propria persona)
(Date)
(Id., subd. (b).)
4
An exception to this requirement applies when an action
“is brought to recover actual or punitive damages for personal
injury or wrongful death.” (§ 425.10, subd. (b).) In such a case,
12
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Section 585, which describes the procedure for obtaining a
default judgment, contains similar language. The section
divides cases in which “the defendant fails to answer” into
different categories. (§ 585.) In “an action arising upon contract
or judgment for the recovery of money or damages only,” when
the defendant has been served “other than by publication,” “the
clerk, upon written application of the plaintiff . . . shall enter the
default of the defendant . . . and immediately thereafter enter
judgment for the principal amount demanded in the complaint,
in the statement required by Section 425.11, or in the statement
provided for in Section 425.115 . . . .” (Id., subd. (a).) Thus, in a
case in which the amount of damages is immediately
ascertainable, the default and default judgment are entered by
the clerk, almost simultaneously, “for the principal amount
demanded in the complaint” or in a statement of damages.
(Ibid.)
In all other cases, a plaintiff must seek a default judgment
from the court. In such cases, “[t]he court shall hear the
evidence offered by the plaintiff, and shall render judgment in
the plaintiff’s favor for that relief, not exceeding the amount
stated in the complaint, in the statement required by Section
425.11, or in the statement provided for by Section 425.115, as
appears by the evidence to be just.”5 (§ 585, subd. (b); see also
the amount of damages must be set out, not in a complaint, but
in a statement of damages in accordance with sections 425.11
and 425.115. (See §§ 425.11, 425.115.)
5
Subdivision (b) of section 585 also mentions “the taking of
an account.” (Ibid. [“If the taking of an account, or the proof of
any fact, is necessary to enable the court to give judgment or to
carry the judgment into effect, the court may take the account
13
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
id., subd. (c).) Here too, the judgment rendered in default cannot
“exceed[] the amount stated in the complaint” or the statement
of damages. (§ 585, subd. (b).)
3. Interpretative case law
Turning now to the case law, we see that our decisions
have consistently demanded a “strict construction” of section
580 — a construction that is informed by the text of section 580,
the language of surrounding pertinent provisions, and the
animating purpose of the statute. (Greenup, supra, 42 Cal.3d at
p. 826.)
We begin our overview of the case law with Burtnett v.
King (1949) 33 Cal.2d 805 (Burtnett). There, we held that a
complaint in which the plaintiff identified certain real estate as
“ ‘the community property of plaintiff and defendant’ ” (id. at
p. 806) but failed to request that the community property “be
awarded to anyone” (ibid.) did not give the defendant “notice or
warning that the property would be affected by a default
judgment” (id. at p. 811). Accordingly, the trial court — which
had granted the plaintiff the property — “wholly lacked
jurisdiction to render [such] a judgment.” (Id. at p. 807.) Our
analysis quoted the text of sections 580 and 585, emphasizing
that “[t]he statutes are very specific in their requirements for a
judgment following a default.” (Burtnett, at p. 806.) Given “the
or hear the proof, or may, in its discretion, order a reference for
that purpose. If the action is for the recovery of damages, in
whole or in part, the court may order the damages to be assessed
by a jury; or if, to determine the amount of damages, the
examination of a long account is involved, by a reference as
above provided.”].) Neither of the parties relies on this language
or suggests that this case implicates a reference for the “taking
of an account” under this provision. (Ibid.)
14
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
mandatory language” of these provisions, “the court’s
jurisdiction to render default judgments can be exercised only in
the way authorized by statute,” and the court “cannot act except
in a particular manner” so specified. (Id. at p. 807.) In short, a
court has no power to enter a default judgment other than in
conformity with the provisions governing default.
We next had occasion to interpret section 580 in Becker v.
S.P.V. Construction Co. (1980) 27 Cal.3d 489 (Becker). The
complaint filed in the case “sought damages ‘in excess of $20,000
. . . or according to proof.’ ” (Id. at p. 491.) The plaintiffs argued
that such a pleading “was sufficient under section 580 to provide
adequate notice of defendants’ potential liability for $26,457.50,”
which was the amount of compensatory damages the trial court
awarded after default. (Id. at pp. 492–493.) We rejected the
argument. “In effect,” we said, “[the plaintiffs] argue that
section 580 requires notice of the type of relief sought, but does
not restrict the award of damages to the specific amount stated
in the complaint.” (Id. at p. 493.) That argument cannot prevail
because “the language of section 580 does not distinguish
between the type and the amount of relief sought.” (Ibid.)
Our ruling rested not only on the text of section 580 but
also its purpose and the language of other pertinent provisions,
specifically, sections 425.10 and 585. Sections 425.10 and 585
both refer to the amount pleaded in the complaint and therefore
“support the view that defaulting defendants should not be
subject to damages in excess of an amount specifically set out in
the complaint.” (Becker, supra, 27 Cal.3d at p. 494 [“Section
425.10 requires that the amount of damages be pleaded in
causes of action . . . . In actions other than at contract, section
585, subdivision 2, provides that a default judgment may be
15
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
awarded only ‘for such sum (not exceeding the amount stated in
the complaint)’ ”].)
Regarding the purpose of section 580, we stated that the
primary intent of the provision “is to insure that defendants in
cases which involve a default judgment have adequate notice of
the judgments that may be taken against them.” (Becker, supra,
27 Cal.3d at p. 493.) We explained that a prayer like that found
in Becker, i.e., one that sought damages according to proof,
“cannot insure adequate notice of the demands made upon the
defendant.” (Id. at p. 494.) We acknowledged that it might
sometimes appear “reasonable” to find that such a prayer
“provided adequate notice of a defaulting defendant’s potential
liability.” (Ibid.) Yet, “no matter how reasonable it might
appear in a particular case,” “fundamental fairness” would be
“undermined if the door were opened to speculation” regarding
how such a prayer afforded requisite notice. (Ibid.) We thus
held that “a prayer for damages according to proof passes
muster under section 580 only if a specific amount of damages
is alleged in the body of the complaint.” (Ibid.)
We reiterated this principle in Greenup, supra, 42 Cal.3d
822. As we there stated, “no matter how reasonable an
assessment of damages may appear in the specific case, we
cannot open the door to speculation on this subject without
undermining due process . . . .” (Id. at p. 829.) Moreover,
adequate notice of the judgment that may be assessed in default
is “a protection to which every defendant is entitled,” even those
who “deliberately thwarted [the opposing party’s] discovery
efforts.” (Ibid.) Referring again to the “aim” of section 580 and
“related sections,” including sections 425.10 and 585, we said
that these provisions are intended “to ensure that a defendant
16
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
who declines to contest an action does not thereby subject
himself to open-ended liability.” (Greenup, at p. 826.)
Along the same lines, we explained that a defendant has
the right to choose to default, but the plaintiff must provide the
defendant with notice of potential damages so that the
defendant’s choice is an informed one. (See Greenup, supra,
42 Cal.3d at p. 829.) We also made clear that the notice afforded
to a defendant must be “formal notice of potential liability,”
which cannot be supplanted by “actual notice.” (Id. at p. 826.)
Finally, our most recent case concerning the matter, In re
Marriage of Lippel (1990) 51 Cal.3d 1160 (Lippel), offers a clear
articulation of the significance of section 580. Lippel concerned
a divorce obtained after the enactment of the Family Law Act.
(Civ. Code, former § 4000 et seq.; see also Ceja v. Rudolph &
Sletten, Inc. (2013) 56 Cal.4th 1113, 1121, fn. 5; In re Marriage
of Cantarella (2011) 191 Cal.App.4th 916, 919, fn. 1.) When the
plaintiff filed for dissolution, she used “a standard printed form
petition, which was statutorily authorized, that provided blank
spaces for the entry of certain statistical information and
contained boxes to be checked to indicate what relief was being
requested.”6 (Lippel, at p. 1163.) The plaintiff “checked the box
that indicated she was requesting child custody” but left blank
the box “relating to the issue of child support.” (Ibid.) Under
these circumstances, we found that the trial court’s order
requiring the defaulted defendant husband “to pay $100 per
6
The current version of the standard form petition may be
found on the judicial branch website. (Judicial Council Forms,
form FL-100
[as of Dec. 24, 2020] (hereafter Form FL-100).) All Internet
citations in this opinion are archived by year, docket number
and case name at .
17
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
month in child support” violated section 580. (Lippel, at
p. 1164.)
Our decision in Lippel reinforced the principle that there
was no exception to the requirements of section 580, save for
those instances as to which the Legislature has manifested a
clear intent to provide an exemption. In particular, Lippel
refused to “perpetuate an exception to section 580 in [marriage]
dissolution cases based on the idea that a prayer for general
relief in such cases supports an award of support.” (Lippel,
supra, 51 Cal.3d at p. 1171.) A line of cases predating the
Family Law Act had done just that, upholding default
judgments awarding monetary support to former spouses even
when the complaints did not demand such support or stated no
amount that would be requested as support. (See, e.g., Cohen v.
Cohen (1906) 150 Cal. 99, 101 [upholding a default judgment
awarding wife $10 a month in alimony although the wife’s
prayer only requested “a divorce and . . . ‘such other relief as
may be just and meet in the premises and within the jurisdiction
of the court’ ”]; Horton v. Horton (1941) 18 Cal.2d 579, 583 [“it is
our opinion that the judgment awarding to the wife $200 per
month . . . was directly responsive to the wife’s prayer for
reasonable sums for support and maintenance . . . and as so
framed this judgment cannot be said to transgress the limitation
of section 580”].) Lippel concluded that the “continued validity
[of such decisions] can no longer be supported.” (Lippel, supra,
51 Cal.3d at p. 1169.)
The above survey reveals that section 580 has been
interpreted strictly, “in accordance with its plain language,” in
conformance with its purpose, and as informed by other
statutory provisions governing default. (Lippel, supra,
51 Cal.3d at p. 1166.) Applying such a construction, we have
18
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
never (outside the marriage dissolution context) upheld a
default judgment under section 580 that awarded compensatory
damages in excess of the dollar amount demanded in the
operative pleading. The question before us is whether an
accounting action is sufficiently unique to warrant different
treatment.
4. Synthesis
In reconciling section 580’s constraints with the nature of
an accounting action, we begin with the text of the statute itself.
(See, e.g., Meza v. Portfolio Recovery Associates, LLC (2019)
6 Cal.5th 844, 856 [“ ‘ “When we interpret a statute, . . . ‘[w]e
first examine the statutory language, giving it a plain and
commonsense meaning. We do not examine that language in
isolation, but in the context of the statutory framework as a
whole in order to determine its scope and purpose and to
harmonize the various parts of the enactment. . . . If the
statutory language permits more than one reasonable
interpretation, courts may consider other aids, such as the
statute’s purpose, legislative history, and public policy.’ ” ’ ”].)
As noted, section 580 states in relevant part that “[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 . . . .” (Id., subd. (a).) On its face, section 580 simply
refers to “[t]he relief . . . demanded in the complaint” and does
not directly resolve the question of whether a plaintiff alleging
an accounting action must plead a dollar amount to recover
monetary relief in case of default. (Ibid.)
This does not mean, however, that section 580
affirmatively sanctions default judgments awarding money
19
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
damages when the operative pleading omits the amount
demanded. Because section 580 is not limited to complaints in
which money is requested, the Legislature’s use of the broad
term “relief” is understandable. After all, in cases in which only
equitable relief is prayed for, “[t]he relief granted to plaintiff[s]”
would not encompass any money judgment (ibid.), and, as such,
it would not make sense to say in those circumstances that “[t]he
amount granted to plaintiffs . . . cannot exceed that demanded
in the complaint.” In other words, because the Legislature did
not separately address instances in which money damages are
at stake in drafting section 580, it is sensible that the statute
uses the more encompassing word “relief.”
The language of section 580 itself is nonetheless revealing.
It points us to two additional statutory provisions, sections
425.11 and 425.115. When we examine these provisions, which
deal specifically with situations in which monetary relief is
requested, we see that the statutes require plaintiffs to give
notice to the defendants of the “amount” sought. (See § 425.11,
subd. (b) [“When a complaint is filed in an action to recover
damages for personal injury or wrongful death, the defendant
may at any time request a statement setting forth the nature
and amount of damages being sought”]; § 425.115, subd. (b)
[directing plaintiffs who seek punitive damages to serve upon
defendants a statement that requires the insertion of a dollar
figure as the amount demanded, or the “substantial equivalent”
of such a statement]; § 425.115, subd. (c) [referring to “the
amount set forth” in the statement described in subd. (b)].)
Section 425.115 is especially clear that by the term “amount,”
the Legislature means a dollar amount. (See § 425.115, subds.
(b), (c).) When section 580 is read in conjunction with sections
425.11 and 425.115, the prohibition imposed by section 580 is
20
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
apparent: The amount of monetary relief awarded in default —
whether as compensation in personal injury or wrongful death
actions or as punitives — cannot exceed the amount demanded
in the statement of damages.
Although sections 425.11 and 425.115 address a narrow
set of cases (those involving personal injury, wrongful death, or
punitive damages), the requirement that plaintiffs put
defendants on notice of “the amount demanded” is much
broader. (§ 425.10, subd. (a)(2).) Section 425.10 addresses the
content of complaints in general and requires that “[i]f the
recovery of money or damages is demanded, the amount
demanded shall be stated” in the complaint. (§ 425.10, subd.
(a)(2); see also § 425.10, subd. (b) [exempting cases covered by
§§ 425.11 or 425.115].) Again, when sections 425.10 and 580 are
considered together, section 580 is reasonably understood to
require that the amount of damages granted in default shall not
exceed “the amount demanded” in the complaint. (§ 425.10,
subd. (a)(2); see also Greenup, supra, 42 Cal.3d at p. 827 [“It
would undermine this concern for due process [inhering in the
requirement that plaintiffs put defendants on formal notice of
their demands] to allow the [default] judgment herein to stand
despite plaintiff’s failure to meet the requirements of sections
425.10 or 425.11”].)
The meaning of section 580 is likewise illuminated when
we consider section 585. (Accord Burtnett, supra, 33 Cal.2d at
p. 806 [interpreting § 580 in conjunction with § 585]; Becker,
supra, 27 Cal.3d at p. 494; Greenup, supra, 42 Cal.3d at p. 826.)
As mentioned, section 585 articulates the procedures by which
a default judgment may be entered against a defendant.
Subdivision (a) of section 585 allows the clerk, in certain
instances, to “enter judgment for the principal amount
21
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
demanded in the complaint.” The statute thus makes clear that
should a plaintiff seek “the recovery of money,” he or she must
have demanded a “principal amount” of damages in the
operative pleading. (§ 585, subd. (a).) Moreover, because the
clerk is able to simply enter the judgment “for the principal
amount demanded,” it appears inescapable that the “amount
demanded” refers to a dollar amount. (Ibid.)
Because the word “amount” carries this meaning in
subdivision (a) of section 585, we infer that it carries the same
meaning when used in subdivision (b). (See, e.g., People v.
Roberge (2003) 29 Cal.4th 979, 987 [“ ‘ “ ‘ “identical words used
in different parts of the same act are intended to have the same
meaning” ’ ” ’ ”].) Subdivision (b) addresses those instances
where, as here, the court enters the default judgment.
Subdivision (b) provides that in the case of a default, “[t]he
plaintiff thereafter may apply to the court for the relief
demanded in the complaint. The court shall hear the evidence
offered by the plaintiff, and shall render judgment in the
plaintiff’s favor for that relief, not exceeding the amount stated
in the complaint, in the statement required by Section 425.11,
or in the statement provided for by Section 425.115, as appears
by the evidence to be just.” Subdivision (b) thus equates the
“relief demanded in the complaint” with “the amount stated in
the complaint,” indicating that when money damages are
involved, the two terms mean the same thing. And, as we have
inferred from the textual evidence, the word “amount” in this
context means “dollar amount.” In short, when money damages
are involved, section 585, subdivision (b) is best understood to
mean that in the case of a default, the court shall render
judgment for an amount proved by evidence, so long as that sum
22
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
does not exceed the dollar amount stated in the complaint or
statement of damages.
Ironically, plaintiff points us to a 2007 amendment to
section 585 that only bolsters this conclusion. (Assem. Bill
No. 310 (2007–2008 Reg. Sess.).) Prior to the 2007 amendment,
section 585 stated, “The plaintiff [after an entry of default] may
apply to the court for the relief demanded in the complaint; the
court shall hear the evidence offered by the plaintiff, and shall
render judgment in his or her favor for such sum (not exceeding
the amount stated in the complaint, in the statement required
by Section 425.11, or in the statement provided for by Section
425.115), as appears by such evidence to be just.” (§ 585, former
subd. (b).) Plaintiff concedes that the term “such sum” as
employed by the statute “refer[s] . . . to a dollar figure.”
However, because that term was removed and replaced with
“the relief,” plaintiff contends that section 585 no longer
requires her to plead “a dollar figure.” (See § 585, subd. (b).)
The legislative history materials behind the 2007 amendment,
however, make clear that the amendment effected only
“technical and minor changes.” (Legis. Counsel’s Dig., Assem.
Bill No. 310 (2007–2008 Reg. Sess.), 5 Stats. 2007, Summary
Dig., p. 126.) As such, insofar as the term “such sum” references
a dollar amount, so does the term “the relief” as set out in the
current version of section 585.
The standard forms that litigants must file for entry or
judgment of default or to state damages in accordance with
section 425.11 reflect the same reading of the statutes. (See
Judicial Council Forms, form CIV-100
[as of
Dec. 24, 2020]; Judicial Council Forms, form CIV-050
[as of
23
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Dec. 24, 2020].) These forms, which must be completed and filed
before default may be taken, make clear that plaintiffs are
required to state a specific dollar amount as the relief
demanded.
To summarize, section 580 speaks of the “[t]he relief . . .
demanded in the complaint.” (Id., subd. (a).) When monetary
relief is involved, we have seen that the term “relief demanded”
means the “amount demanded.” Furthermore, the most natural
interpretation of “amount” is “dollar amount.” As such, in cases
in which a plaintiff seeks money damages, section 580 limits a
plaintiff’s relief in default to the dollar amount that has been
demanded in the operative pleading.
Plaintiff reads the statutes differently. In her reply brief,
she argues that because the various statutes refer to the
“amount demanded” or “principal amount demanded” instead of
“dollar amount,” they do not “preclude stating the amount in
other terms [than dollars], such as those used here: the value
or a stated portion of the value of a specific piece of property.”
We are not persuaded. Not only does such a reading seem less
consistent with the language of the pertinent provisions, but it
is also poorly suited for advancing the purpose of section 580.
That purpose — as our cases have reiterated — “is to insure that
defendants in cases which involve a default judgment have
adequate notice of the judgments that may be taken against
them.” (Becker, supra, 27 Cal.3d at p. 493; see also Greenup,
supra¸ 42 Cal.3d at p. 826.) In many circumstances, a request
for “a stated portion of the value of a specific piece of property”
will not enable defendants to ascertain their potential liability
without the plaintiff providing an estimate of the value of the
property.
24
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
To illustrate, suppose that a plaintiff alleges an
accounting claim that seeks to recover 50 percent of a closely
held company. That allegation would do little to inform
defendants of “the maximum judgment that may be assessed
against them.” (Greenup, supra¸ 42 Cal.3d at p. 826.) Due to
the lack of reliable market data, it can be difficult to value a
closely held company. (See In re Marriage of Micalizio (1988)
199 Cal.App.3d 662, 673–674.) Defendants thus may be
legitimately uncertain about the dollar value of their exposure.
Moreover, in the absence of an agreed-upon market value, many
factors could affect a person’s perceived monetary value of the
company, including varying accounting methodologies. (Barry
M. Wertheimer, The Shareholders’ Appraisal Remedy and How
Courts Determine Fair Value (1998) 47 Duke L.J. 613, 629
[“Each appraisal technique is but a way of estimating the ‘fair
value’ or ‘true value’ or ‘intrinsic value’ of a company, and
undeniably, ‘ “[v]aluation is an art rather than a science.” ’ The
valuation ‘answer’ given by each of these techniques is very
dependent on the assumptions underlying the calculations
employed.”].) Because defendants cannot predict which
methodology the plaintiff will select, such defendants would not
have notice of the damages “that may be assessed against them.”
(Greenup, at p. 826.)
Although our analysis thus far has not touched on the
accounting action, our conclusion remains the same when we
take the elements of an accounting claim into consideration. As
a preliminary matter, we observe that there is no inherent
conflict between the requirements of section 580, as we have
interpreted that provision, and the nature of an accounting
action. As plaintiff admits, even though parties seeking an
accounting cannot state a sum certain to which they are
25
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
entitled, they “are not precluded from providing an estimate of
the maximum value they may recover.” In other words,
although a plaintiff bringing an accounting action is not able to
say, “I am owed $7,248.61,” there is nothing about the action
that prevents him or her from pleading, “I believe I am owed an
amount in the neighborhood of $10,000” — an allegation that
would limit his or her recovery in case of default to $10,000. (See
Sass, supra, 32 Cal.App.5th at p. 1043 [“Because a plaintiff’s
ability to estimate a maximum value does not preclude the
necessity to fix the actual value, the nature of an accounting
claim does not justify a departure from section 580’s plain
language”]; Ely v. Gray (1990) 224 Cal.App.3d 1257, 1262 (Ely)
[observing that accounting “actions often include an estimate of
the amount of money due the complaining party although an
absolute amount is not specified”]; accord San Pedro Lumber Co.
v. Reynolds (1896) 111 Cal. 588, 592 [averring in an action
requesting an accounting “ ‘that plaintiff is unable to state the
precise amount of the several items, but, according to his
information and belief, charges that the full amount thereof
equals in the aggregate sixty-five thousand dollars, or
thereabouts’ ”]; Brea v. McGlashan (1934) 3 Cal.App.2d 454,
458–459 [describing similar pleading of a damages amount].)
Insofar as plaintiff’s argument has bite, it rests largely on
the fact that individuals alleging an accounting action lack the
necessary information to compute their damages whereas the
defendants in such actions may have that information. Under
this view, it appears unjust to require plaintiffs to give
defendants notice of their maximum exposure by pleading a
specific amount of damages when plaintiffs do not know what
that amount may be, but the defendants presumably do.
26
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Although seemingly attractive, this argument fails for a
number of reasons. First, because individuals need to include
only an estimate of their maximum damages and plaintiffs
alleging accounting claims have been able to include such an
estimate in their complaints, this suggests that plaintiffs’
relative lack of knowledge does not pose an insurmountable
obstacle to such pleadings. (See, e.g., Ely, supra, 224 Cal.App.3d
at pp. 1262–1263 [“A plaintiff may be able to include in the
complaint or prayer for relief an estimate of the amount due
him, be willing to be bound by that amount, and receive a default
judgment limited to that amount. Such a situation seems to
satisfy the due process notice requirement as well as the
accounting requirement that plaintiff not be able to figure a
specific amount.”].)
Furthermore, plaintiffs in default cases must still prove
their damages to obtain monetary recovery. (§ 585, subd. (b)
[specifying that when a plaintiff applies to the court for a default
judgment, “[t]he court shall hear the evidence offered by the
plaintiff, and shall render judgment . . . as appears by the
evidence to be just”]; see also, e.g., Kim v. Westmoore Partners,
Inc. (2011) 201 Cal.App.4th 267, 288 [“ ‘damages must be proved
in the trial court before the default judgment may be entered’ ”];
Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1745 (Ostling)
[“damages . . . despite default, require proof”]; Barragan v.
Banco BCH (1986) 188 Cal.App.3d 283, 302 (Barragan)
[“Plaintiffs in a default judgment proceeding must prove they
are entitled to the damages claimed”].) Because relief awarded
in default must be established by evidence, this means that all
plaintiffs — even those alleging an accounting action — must at
some point have a concrete idea of how much the defendants owe
them. At this juncture, the information asymmetry inherent in
27
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
an accounting action does not appear to pose an obstacle to
plaintiffs’ ability to state a sum.
Accordingly, requiring accounting plaintiffs to plead a
specific dollar amount to support a default money judgment is
not obviously onerous or unjust. (See Ely, supra, 224 Cal.App.3d
at pp. 1263–1264 [“We do not find such a requirement
burdensome since a plaintiff must be able, as this plaintiff was,
to prove some level of defendant’s financial liability to receive
an award of damages upon default”]; Van Sickle v. Gilbert (2011)
196 Cal.App.4th 1495, 1527 (Van Sickle) [following Ely]; Finney
v. Gomez (2003) 111 Cal.App.4th 527, 544 (Finney) [same].)
Plaintiffs can provide the required information in at least two
ways: (1) by including an estimate of the amount of damages in
the original complaint, “be willing to be bound by that amount,
and receive a default judgment limited to that amount” (Ely,
supra, 224 Cal.App.3d at p. 1262); or (2) by amending the
complaint to state the amount of damages more accurately once
they have gathered the necessary information to prove
damages.7
It is true that amending complaints in this fashion would
open the default and give defendants another opportunity to
respond. (See, e.g., Cole v. Roebling Constr. Co. (1909) 156
7
Ely approved of a third option: the use of a statement of
damages akin to those served in personal injury or wrongful
death cases. (Ely, supra, 224 Cal.App.3d at p. 1263.) As the
court below recognized, whether a statement of damages may be
used when the plaintiff does not plead a personal injury or
wrongful death action is an issue that has split the Courts of
Appeal. (See Sass, supra, 32 Cal.App.5th at p. 1040, fn. 10.)
Cohen has not pressed for this third option, and we do not
address that issue here.
28
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Cal. 443, 446 [“where, after the default of a defendant has been
entered, a complaint is amended in matter of substance as
distinguished from mere matter of form, the amendment opens
the default, and unless the amended pleading be served on the
defaulting defendant, no judgment can properly be entered on
the default”]; Engebretson & Co. v. Harrison (1981)
125 Cal.App.3d 436, 440 [“An amendment which significantly
increases the amount of damages sought is an amendment of
substance which must be served before a default can be
entered”]; Ostling, supra, 27 Cal.App.4th at p. 1744 [similar];
Leo v. Dunlap (1968) 260 Cal.App.2d 24, 28 [similar].) However,
we do not find such a result discouraging, given that “the policy
of the law [is] to favor, wherever possible, a hearing on the
merits . . . .” (Weitz v. Yankosky (1966) 63 Cal.2d 849, 854
(Weitz) [making this statement in the context of vacating a
default].) When individuals amend their complaints to
incorporate new information, it is reasonable to permit the
targets of those complaints to answer, and by so doing, allow the
litigation to proceed to “a hearing on the merits.” (Ibid.) The
alternative — permitting plaintiffs to proceed straight to default
without putting defendants on notice of sums that plaintiffs will
claim are owing — would be contrary to the purpose of section
580. (See, e.g., Becker, supra, 27 Cal.3d at p. 493.)
Second, not only has the Legislature forgone exempting
accounting actions from the scope of section 580, it has made
clear that plaintiffs pleading claims involving an information
asymmetry like that found in accounting actions are required to
give defendants notice of a specific amount of damages before a
default may be taken. Recall that individuals who seek punitive
damages must file a statement of damages in accordance with
section 425.115. This statement, as can be seen from the
29
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
template set out in the provision, requires plaintiffs to state that
they reserve the right to seek a maximum dollar amount as
punitives. (§ 425.115, subd. (b).) Crucially here, an important
factor in determining the proper amount of punitive damages is
a defendant’s financial condition. (See, e.g., Adams v.
Murakami (1991) 54 Cal.3d 105, 109 [holding that “an award of
punitive damages cannot be sustained on appeal unless the trial
record contains meaningful evidence of the defendant’s financial
condition” and “the plaintiff rather than the defendant [is
required] to introduce this evidence”]; Simon v. San Paolo U.S.
Holding Co., Inc. (2005) 35 Cal.4th 1159, 1185; Neal v. Farmers
Ins. Exchange (1978) 21 Cal.3d 910, 928.) A defendant’s
financial wherewithal is information uniquely within a
defendant’s knowledge and likely unknown to a plaintiff. Yet
despite plaintiffs’ relative lack of knowledge and the difficulty
some plaintiffs may experience in estimating their opponents’
financial worth, the Legislature still requires all plaintiffs to
inform the persons sued of the amount of punitive damages
being sought. In the face of such legislative choices, we see no
basis to infer that the Legislature intends for accounting actions
to be treated differently merely because some accounting
plaintiffs may likewise have difficulty approximating the
amounts owing.
Third, a feature of California law makes notice of damages
especially important for defendants contemplating default.
Unlike federal law,8 California law does not give defaulting
8
See, e.g., Federal Rules of Civil Procedure, rule 8(b)(6)
(28 U.S.C.) [“An allegation — other than one relating to the
amount of damages — is admitted if a responsive pleading is
30
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
defendants the right to contest the amount of damages. Our
authorities indicate that a defendant who defaults is “out of
court” and not entitled to participate in the prove-up hearing.
(Christerson v. French (1919) 180 Cal. 523, 525 [“A defendant
against whom a default is entered is out of court and is not
entitled to take any further steps in the cause affecting
plaintiff’s right of action”]; see also, e.g., Title Insurance, supra,
162 Cal. at p. 46 [same]; Harbour Vista, LLC v. HSBC Mortgage
Services Inc. (2011) 201 Cal.App.4th 1496, 1502 [explaining that
in “the ordinary default prove-up, . . . a defendant has no right
to participate”]; Garcia v. Politis (2011) 192 Cal.App.4th 1474,
1479 [“a case in which a defendant’s default has been taken
necessarily has no adversarial quality and the defaulted
defendant would have no right to participate in the motion”];
Barragan, supra, 188 Cal.App.3d at pp. 302–303 [despite
ordering a second judgment hearing to ascertain the defendant’s
net worth, stipulating that the defendant “is not entitled to
participate in any manner in the second judgment hearing”];
Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984)
155 Cal.App.3d 381, 385 [stating that the defendant “having
defaulted, knew it could not participate in a judgment hearing”];
required and the allegation is not denied”]; Bonilla v. Trebol
Motors Corp. (1st Cir. 1998) 150 F.3d 77, 82 [“The ordinary rule
is that a defaulting defendant is entitled to contest damages and
to participate in a hearing on damages, should one be held”];
Cement & Concrete Workers Dist. Council Welfare Fund v. Metro
Found. Contrs. Inc. (2d Cir. 2012) 699 F.3d 230, 234 [similar];
Geddes v. United Fin. Group (9th Cir. 1977) 559 F.2d 557, 560
[similar]; 10 Moore’s Federal Practice — Civil (2019) § 55.32 [“A
party who defaults by failing to plead or defend does not admit
the allegations in the claim as to the amount of damages. The
claimant must establish the amount of damages, and the
defaulting party is entitled to be heard on the matter.”].
31
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Don v. Cruz (1982) 131 Cal.App.3d 695, 702 [observing that the
defaulting defendant “did not and could not participate in the
judgment hearing”]; but see Cassel v. Sullivan, Roche &
Johnson, supra, 76 Cal.App.4th at p. 1159 (Cassel) [noting,
without comment, that a “ ‘prove-up’ hearing was held, in which
the [defendant] fully participated by presenting its own
witnesses and evidence, and cross-examining [the plaintiff’s]
witnesses”].) In light of the fact that defendants who are sued
in California courts do not appear to have the right to contest
damages after default, we must take special care to preserve the
notice given to such defendants.
Finally, we are mindful that excusing accounting actions
from the limitations on default judgments might encourage
strategic pleading of such actions. In this case, for example,
plaintiff prayed for an accounting of both the Hollywood and
Oakley properties. Yet, given that sales of real estate are
publicly recorded, the estimates of their market value are
readily available, and plaintiff has pleaded she simply wants
half the value of the properties (with no offsets for the fact that
Cohen borne all the acquisition costs or any mention of
differentiated maintenance costs), it is unclear why plaintiff
needed an accounting from Cohen to estimate the amount of
damages she was entitled to with regard to these assets. Were
we to rule for plaintiff, we would be giving her — and other
litigants — an additional incentive to plead such an action,
regardless of whether they are truly without means to estimate
the amount of dollars owing.
For these reasons, we hold that to support a default
judgment awarding monetary relief, a party alleging an
accounting action must have included in the operative pleading
an estimate of a specific amount of money. We acknowledge that
32
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
in some cases plaintiffs may truly have no idea of the amount of
damages they have suffered and can include no estimates of
damages in their complaints. In such instances, we recognize
the inequity to litigants who may be barred from recovery in
default proceedings because they lack the knowledge to assess
their damages.
Still, the inequity in such presumably unusual
circumstances does not justify allowing all plaintiffs alleging an
accounting action to sidestep the requirements of section 580 —
and this is especially so when other mechanisms exist to
ameliorate the unfairness that may inhere in some cases. When
a defendant fails to answer a complaint that seeks an accounting
but does not provide an estimate of damages, the trial court need
not proceed straight to a prove-up hearing. Assuming that the
plaintiff has demonstrated an entitlement to an accounting, the
court can order an accounting. (See § 585, subd. (b); Weiss v.
Blumencranc (1976) 61 Cal.App.3d 536, 538 [in a case in which
the plaintiff sought dissolution of a partnership, appointment of
a receiver, and an accounting, the court rendered a default
judgment finding there was a partnership, appointing a
receiver, “order[ing] a full accounting of all partnership assets
. . . [and holding] in abeyance the determination as to punitive
damages until the accounting of the assets of the partnership
was completed”].) The accounting affords the plaintiff “a means
of discovery,” furnishing him or her with information to
determine his or her damages. (Teselle, supra, 173 Cal.App.4th
at p. 180.) In this way, a plaintiff’s initial lack of knowledge
33
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
need not mean he or she is without remedy because of the
defendant’s default. 9
Plaintiff urges us to a different conclusion. Her argument
relies on a line of cases that began with Lippel and cumulated
in Cassel. As noted previously, Lippel was a marriage
dissolution case in which the plaintiff “initiated the action by
filing a standard printed form petition.” (Lippel, supra,
51 Cal.3d at p. 1163.) The issue in Lippel was whether, in
checking and not checking certain boxes contained in the
standard form, the plaintiff put the defendant on notice that she
was seeking a particular type of relief (child support). (Ibid.)
We did not there address whether such a plaintiff must, in
addition to checking the box for child support, give notice of a
specific amount of support sought (e.g., “$100 per month”). (Id.
at p. 1164.) However, in explaining our holding regarding the
type of relief requested, we said, “Coupled with the requirement
that the respondent be served with a copy of the petition
[citation], the manner in which these boxes are checked, or not
checked, informs and puts the respondent on notice of what
specific relief the petitioner is, or is not, seeking.” (Id. at
pp. 1169–1170.)
Seizing on this line, the Court of Appeal in In re Marriage
of Andresen (1994) 28 Cal.App.4th 873 (Andresen) held that a
plaintiff using a standard form petition to dissolve her marriage
need only put the defendant on notice that she was seeking a
9
Because the parties make no argument regarding the
availability of such an accounting procedure, we do not further
elaborate on its contours, including whether, following an
accounting, a plaintiff would need to amend the complaint and
thus reopen the default.
34
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
type of relief, and not a specific amount. (Id. at p. 879 [“due
process is satisfied and sufficient notice is given for section 580
purposes in marital dissolution actions by the petitioner’s act of
checking the boxes and inserting the information called for on
the standard form dissolution petition,” which does not solicit
specific dollar amounts].)
Plaintiff invites us to extend Andresen by applying it to
her case. Just as the plaintiff wife in Andresen was not required
to give the defendant husband notice of the amount of money
damages sought, plaintiff argues that she — a litigant in an
“accounting case also seeking equal division of the value of the
property in the defendant’s possession” — need not state a
specific amount of damages in her complaint either.
Even if we assume that Andresen was correctly decided,
the case is inapposite to the matter at hand. Andresen was a
marriage dissolution action;10 this litigation is not. Plaintiff and
Cohen were never married, and when plaintiff sued Cohen, she
did so by drafting a complaint, not by using a “standard printed
form petition.” (Lippel, supra, 51 Cal.3d at p. 1163; see also
Marvin, supra, 18 Cal.3d at p. 665 [“[t]he provisions of the
Family Law Act do not govern the distribution of property
acquired during a nonmarital relationship; such a relationship
remains subject solely to judicial decision”].) This difference is
significant.
10
Even within the context of “a form complaint in a marital
dissolution action,” Andresen has not been uniformly applied.
(In re Marriage of Kahn (2013) 215 Cal.App.4th 1113, 1119
[reasoning that “[i]t would be stretching Andresen too far to
apply it in this case”].)
35
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Andresen takes for granted that the “statutorily mandated
form . . . does not provide the ability to indicate an exact
amount” of relief sought. (Finney, supra, 111 Cal.App.4th at
p. 537; see Andresen, supra, 28 Cal.App.4th at p. 879.) The
implication is that a party using the standard form is not able
to disclose such information. A plaintiff filing a complaint is not
similarly constrained. Because a plaintiff using a complaint
faces no legal and few practical impediments to stating the
amount of damages, there is little reason to excuse the litigant
from doing so.
Plaintiff protests that distinguishing marriage dissolution
cases from accounting cases in this way “elevates form over
substance.” We do not think so. We are here called upon to
interpret a statute to determine whether it applies to require a
plaintiff seeking an accounting to plead a specific amount of
damages to support a default judgment. The language of section
580 carves out no exception for such a litigant. Accordingly, for
plaintiff’s argument to prevail, she must point us to other indicia
that the Legislature intended to treat accounting actions
differently from other claims. (See Lippel, supra, 51 Cal.3d at
pp. 1168–1171.) In the case of marriage dissolution, the
Legislature has arguably manifested such an intent by
“empower[ing] and direct[ing] the Judicial Council to create, as
a substitute for the traditional complaint, a mandatory printed
standard form petition.” (Id. at p. 1169.) The Legislature has
also specified that, unless otherwise agreed to by the parties,
“the trial court . . . must value and divide the community estate
of the parties equally.” (Andresen, supra, 28 Cal.App.4th at
p. 880; see Fam. Code, § 2550.) In so doing, the Legislature may
have placed marriage dissolution actions outside the ambit of
section 580. But the Legislature has not taken similar steps
36
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
with respect to accounting actions, and it is hardly an elevation
of form over substance to find significance in such legislative
choices.
Furthermore, the substance of accounting actions seeking
equal division of property is not sufficiently analogous to a
marriage dissolution such that those actions should be exempt
from the strictures of section 580. To assert otherwise, plaintiff
appears to make a two-step leap. First, she argues that an
accounting action like the one she brought is, at its core,
litigation over a breach of a Marvin agreement. Second, she
asserts that litigation concerning a Marvin agreement is akin to
a marital dissolution. Thus, she maintains, accounting actions
under which plaintiffs seek half of specifically identified assets
should be treated as if they are marital dissolution actions.
We reject plaintiff’s argument. Breaches of Marvin
agreements are not substantively the same as dissolutions of
marriages. Litigation regarding Marvin agreements proceeds
as a contract dispute. (See Marvin, supra, 18 Cal.3d at p. 684.)
The terms of the parties’ agreement — and not the default rules
and presumptions of property ownership legislated in the
Family Law Act — set the nonmarital couple’s obligations.
(Marvin, at p. 681.) In contrast to marital relationships, the
Family Law Act imposes no presumption that property acquired
during a nonmarital relationship is jointly owned or that upon
dissolution of the relationship, the property is to be divided
equally among the former partners. Marvin agreements, then,
are insufficiently analogous to marriages in terms of their
posttermination resolution to support a conclusion that they are
exempt from section 580’s requirement.
37
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Moreover, even if we were to assume, arguendo, that
accounting actions seeking half of identified assets are to be
treated like marital dissolutions, plaintiff still has not
persuaded us that she should prevail. After all, it is far from
clear that a less onerous standard applies in marital dissolution
cases, particularly given the current statutorily mandated forms
and the statutory disclosure obligations governing marital
dissolution actions.
True, marital dissolutions are subject to pleading
requirements different from those imposed by section 425.10.
More precisely, the current form governing marital dissolutions
(Form FL-100) instructs the petitioner to identify assets without
requiring information indicating the monetary value of those
assets. Nonetheless, the form provides an option to list assets
and debts in a property declaration. 11 The property declaration,
Form FL-160, instructs that when used as an (optional)
attachment to a petition or response, the party is to complete
the portions of the form listing the assets and debts and proposal
for division of those assets and debts in monetary terms
(columns A and F). By contrast, when a party completes this
form in connection with a request to enter default, all columns
on the form must be completed, including the “date acquired,”
“gross fair market value,” “amount of debt,” “net fair market
value,” and, again, a proposal for division stated in dollars
(columns B through F). (See Form FL-160.) In addition, with
limited exceptions, a petitioner in a marital dissolution action is
obligated to make extensive disclosures regarding all assets and
11
Judicial Council Forms, form FL-160
[as of Dec. 24,
2020] (hereafter Form FL-160).
38
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
debts and serve the other party with this information “either
concurrently with the petition for dissolution or legal
separation, or within 60 days of filing the petition.” (Fam. Code,
§ 2104, subd. (f); see also Fam. Code, §§ 2103, 2110; Judicial
Council Forms, form FL-140 [as of Dec. 24, 2020]; Judicial Council
Forms, form FL-142 [as of Dec. 24, 2020].) It is thus unclear that when
marital dissolutions end in defaults, the disclosures required are
anything less than what is required by section 580.
Plaintiff also seeks to rely on Cassel, supra,
76 Cal.App.4th 1157. Cassel extended Andresen to the context
of an accounting action, holding that “in an action seeking to
account for and value a former partner’s partnership interest
and for payment of that interest, the complaint need only specify
the type of relief requested, and not the specific dollar amount
sought.” (Id. at pp. 1163–1164.) The court in Cassel may have
been persuaded by the facts of the case, which, as alleged, led
the court to conclude that the defendant was “armed with [such]
information” that it “could precisely calculate the amount for
which it would be liable if it chose to default.” (Id. at p. 1163.)
Under such circumstances, the court reasoned that complaints
for accounting need not state “the specific dollar amount sought”
in order to satisfy section 580, because there is no foreseeable
“danger that defaulting defendants will be taken by surprise by
judgments entered against them, [since], like spouses facing
property division, they will be in possession of the essential
information necessary to calculate their potential exposure.”
(Cassel, at p. 1164.)
39
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Adherence to this aspect of Cassel has been spotty in the
decades since it was decided. Of the two published opinions that
have seemingly endorsed Cassel, both narrowed Cassel’s holding
so it did not apply to the facts of their case. (Warren, supra,
240 Cal.App.4th at p. 375 [“Although we agree with cases
finding that a plaintiff in an action for accounting need not give
notice of damages before a defendant’s default is entered, we
also find that an exception to that rule applies: where, as here,
plaintiff knew what his damages were and defendants did not
have access to that information, notice must be given before
default is entered”]; Schwab v. Southern California Gas Co.
(2004) 114 Cal.App.4th 1308, 1326 [Cassel “is a limited
exception to the statutory notice provisions, which does not
apply in the present case”].)
Other Courts of Appeal, including the court below, have
flatly refused to follow Cassel. (Sass, supra, 32 Cal.App.5th at
p. 1043 [joining “the growing majority of cases rejecting Cassel”];
Van Sickle, supra, 196 Cal.App.4th at p. 1527 [“we reject
Cassel”]; Finney, supra, 111 Cal.App.4th at pp. 541–542 [“the
rationale of Cassel runs counter to the primary purpose of
section 580 of ensuring notice and fundamental fairness”]; see
also Ely, supra, 224 Cal.App.3d at pp. 1263–1264 [a decision
preceding Cassel with which Cassel disagrees but other Courts
of Appeal have continued to follow].)
We do not find Cassel persuasive.12 If all that is needed to
satisfy section 580 is a lack of surprise to the defendants, then
12
We disapprove of Cassel v. Sullivan, Roche & Johnson,
supra, 76 Cal.App.4th 1157 — and the two cases following it,
Warren v. Warren, supra, 240 Cal.App.4th 373 and Schwab v.
40
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
there would be no reason to insist on formal notice of potential
liability. Actual notice should suffice. After all, when a
defendant actually knows what is owed, there is no “danger” of
surprise by a default judgment. (Cassel, supra, 6 Cal.App.4th
at p. 1164.) Yet, this is not our law. (See, e.g., Greenup, supra,
42 Cal.3d at p. 826 [“due process requires formal notice of
potential liability; actual notice may not substitute for service of
an amended complaint”]; Airs Aromatics, LLC v. CBL Data
Recovery Technologies, Inc. (2018) 23 Cal.App.5th 1013, 1019
[“courts have set aside default judgments that award more
damages than requested in the complaint even where a
defendant had actual notice of the damages the plaintiff
sought”]; Stein v. York (2010) 181 Cal.App.4th 320, 326
[“Plaintiff argues defendant received notice of the potential
damages that could be entered against him by virtue of his
[participation in this action]. This argument does not persuade
because constructive notice of potential liability does not satisfy
section 580.”].)
At its core, Cassel pointed to nothing other than a relative
informational imbalance between plaintiffs and defendants in
accounting actions to justify its holding. (Cassel, supra,
76 Cal.App.4th at p. 1163.) As we previously explained,
however, this is not enough.
Plaintiff alternatively argues that “even if the relevant
statutes are read to require notice of a sum certain, an exception
is warranted” for “accounting actions seeking equal division of
specified assets in the defendant’s hands.” As a preliminary
matter, we note that courts have no power to act in
Southern California Gas Co., supra, 114 Cal.App.4th 1308 — to
the extent they are inconsistent with our opinion.
41
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
contravention of the relevant statutes, especially when those
statutes delimit their jurisdiction. (See Burtnett, supra,
33 Cal.2d at p. 807 [“[T]he court’s jurisdiction to render default
judgments can be exercised only in the way authorized by statute.
It cannot act except in a particular manner, that is, by keeping
the judgment within the bounds of the relief demanded.”].)
At the heart of plaintiff’s argument, however, is a
contention that we must address — if only to ultimately reject.
The contention is that, regardless of how close they hew to the
statutory text, accounting complaints that identify the assets in
defendants’ possession and request half of their value give the
defaulting parties “adequate notice of the maximum judgment
that may be assessed against them.” (Greenup, supra, 42 Cal.3d
at p. 826.) And, the argument goes, that is all section 580
requires.
Although we have said that “[n]otice is at the heart of the
provision[s]” governing default, we have never endorsed the idea
that these provisions are necessarily satisfied whenever notice
has been given. (Greenup, supra, 42 Cal.3d at p. 827.) “The
statutes are very specific in their requirements for a judgment
following a default” (Burtnett, supra, 33 Cal.2d at p. 806), and
by their terms, they require that relief granted in default cannot
exceed “that demanded in the complaint” (§ 580, subd. (a)) or
“the amount stated in the complaint” (§ 585, subd. (b)). At the
very least then, the provisions require not mere notice, but
notice of a specific type: that of the amount requested. Put
differently, plaintiff has not persuaded us that the requirements
of the default statutes and the demands of due process for notice
are coterminous.
42
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Furthermore, we can draw no principled line that would
allow us to say that plaintiff’s pleading gives Cohen adequate
notice without opening the door to “speculation” regarding
whether functionally equivalent pleadings would also satisfy the
due process notice requirement embedded in section 580.
(Becker, supra, 27 Cal.3d at p. 494.) In this case, plaintiff asks
for half the value of the assets in Cohen’s possession. If a
request for a one-half share gives a defendant adequate notice
of the maximum judgment that may be taken, then perhaps a
demand for a rightful share should be adequate as well — at
least when the rightful share in the circumstances presented
may be exactly one half. Yet, whether we may presume that
individuals sued will know that the law as applied to the facts
of their case will translate “rightful share” to “one-half share” is
not at all clear. Similarly, the question of whether we may
assume that defendants know (or can readily determine) the
value of any asset in their possession — no matter how esoteric,
little transacted, or subject to differing, and perhaps subjective,
valuations — is fraught as well. In short, this is an area where
due process may be best protected by a bright-line rule, one that
states that if an individual requests money damages in a default
judgment, the individual must have demanded an amount of
said money in the operative pleadings.
Finally, plaintiff argues that requiring litigants to plead a
specific amount of damages will simply tempt them into naming
“exorbitant figures” in their complaints. Although we cannot
guarantee that no plaintiff will fall prey to such reckless
pleading, we believe a countervailing consideration is at play.
A pleading of potential damages affords a defendant notice,
which “enables [the] defendant to exercise his right to choose”
whether to default. (Greenup, supra, 42 Cal.3d at p. 829.) The
43
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
higher the figures an individual names in a complaint, the less
likely it is that the defendant will “giv[e] up his right to defend.”
(Ibid.) Thus, insofar as litigants think of defaults as an easy
win,13 they make the possibility of such a win more remote by
pleading “exorbitant figures.”
Furthermore, should a plaintiff provide an amount of
damages at the high end of estimates, this may have the benefit
of incentivizing a defendant to participate in the litigation, and
thus serving the law’s preference to resolve litigation on the
merits. (See, e.g., Weitz, supra, 63 Cal.2d at p. 854; Waybright
v. Anderson (1927) 200 Cal. 374, 377; Berri v. Rogero (1914)
168 Cal. 736, 740.) As we have discussed, a plaintiff may also
amend a complaint in advance of a prove-up hearing in order to
increase potential relief available through a default award.
A defendant may choose to participate if the increased relief
proves steep enough, and this, too, vindicates the judicial
preference to resolve litigation on the merits.
In short, individuals face various incentives in drafting
complaints, and we do not think that our holding here is likely
to warp their decisionmaking. To the extent our ruling might in
practice push some plaintiffs to increase estimates of their
damages, such a change in behavior is not without benefit — as
it may well encourage defendants to answer the complaints and
thus put the litigation on track to be resolved on the merits.
13
But see, e.g., Heidary v. Yadollahi (2002) 99 Cal.App.4th
857, 868 [emphasizing that trial courts must “act as
gatekeeper[s]” in default situations, “ensuring that only the
appropriate claims get through”]; Grappo v. McMills (2017)
11 Cal.App.5th 996, 1013–1014 [similar].
44
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
B. Remaining Contentions
After concluding — as we do — that the default judgment
in this case violated section 580, the Court of Appeal proceeded
to address and resolve an additional issue. The Court of Appeal
considered a situation in which “a plaintiff has specifically
enumerated separate items of compensatory damages in her
complaint” and asked, “[H]ow [under such circumstances] is a
court to assess whether the amount of such damages obtained
in a default judgment exceeds the amount demanded in the
complaint? Is the court to undertake this inquiry on an item-
by-item basis (comparing the amount awarded in the default
judgment for each item against the amount demanded for that
item in the complaint)? Or is the court instead to conduct a more
aggregated inquiry (comparing the total default judgment to the
total amount demanded in the complaint)?” (Sass, supra,
32 Cal.App.5th at p. 1044.)
We observe that the issue the Court of Appeal identified
arises in only a limited set of circumstances. Cohen concedes
that had plaintiff “simply asserted the total amount she sought
in the complaint’s prayer,” that total amount would set the
ceiling on the sum recoverable in default. If that is true, then
when the prayer for relief includes a total amount demanded,
there would be no question concerning the maximum sum the
trial judge may grant in default and, as such, no question as to
how a court should compare the default judgment against the
demand. Furthermore, even when a plaintiff fails to “assert[]
the total amount she sought in the complaint’s prayer,” the
proper method of comparison is an issue only when some of the
plaintiff’s claims (or items within a claim) are ultimately
unrecoverable.
45
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
Such circumstances were not presented here. The trial
court in this case calculated its damage awards without regard
to the amounts demanded in the operative complaint. When
Cohen later challenged the amount of monetary damages
awarded in the default judgment, the court cited Cassel and
explained that when a plaintiff alleges a cause of action for
accounting, “there is no notice requirement for damages sought
before entry of default judgment.” This was incorrect, but the
trial court’s calculation did not implicate the issue of how the
default judgment should be compared against the complaint. In
the court’s view, no comparison was necessary because plaintiff
did not need to put Cohen on notice of the “damages sought
before entry of default judgment” by including such a figure in
the complaint.
The Court of Appeal’s calculation of damages likewise does
not tread on the issue — but for a different reason. Based on
the allegation that she “brought to” Tag $1.4 million, the
appellate court awarded plaintiff $700,000 as her half share of
Tag’s value. According to the Court of Appeal, plaintiff
“demanded $700,000 for the value of Tag” and thus could be
granted this amount in default. (Sass, supra, 32 Cal.App.5th at
p. 1046.) An examination of the complaint, however, reveals
that plaintiff did not demand $700,000 as her entitlement to the
value of Tag. Instead, she demanded $700,000 as part of her
fraud claim, alleging that Cohen had falsely promised he would
give her “equity in Tag” (id. at p. 1036) and that this
misrepresentation caused her to “suffer[] actual damages,”
including “at least the sum of $700,000, which represents 50%
of the revenue brought to Tag by Plaintiff.” The revenue that
plaintiff, a single employee, generated for Tag — with no
mention regarding the cost of generating that revenue — has no
46
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
clear and defensible relation to the actual value of the company.
In short, plaintiff never alleged a figure for “the value of Tag.”
(Id. at p. 1046.) The question thus is whether she may recover
her half share of Tag’s value despite never alleging what that
value may be.
This question may be taken up by the trial court when, in
accordance with the Court of Appeal’s order, the case is
remanded to it. We thus affirm the Court of Appeal’s decision
without passing judgment on whether an aggregate approach or
a claim-by-claim (or item-by-item) basis is the proper method for
comparing an amount demanded in a complaint to an amount
awarded in default.
47
SASS v. COHEN
Opinion of the Court by Cantil-Sakauye, C. J.
III. CONCLUSION
We hold that a plaintiff alleging an accounting action must
plead a specific dollar amount to support a default judgment
awarding monetary relief. We express no view on the proper
method — whether that be on a claim-by-claim (or item-by-item)
or an aggregate basis — for comparing the amount granted in
default with the amount demanded in the complaint. Because
the Court of Appeal’s opinion accords with our own holding here,
we affirm its judgment.
CANTIL-SAKAUYE, C. J.
We Concur:
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
KRUGER, J.
GROBAN, J.
GUERRERO, J.*
________________________
*
Associate Justice of the Court of Appeal, Fourth Appellate
District, Division One, assigned by the Chief Justice pursuant to article
VI, section 6 of the California Constitution.
48
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Sass v. Cohen
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 32 Cal.App.5th 1032Rehearing Granted
__________________________________________________________________________________
Opinion No. S255262
Date Filed: December 24, 2020
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Frederick C. Shaller
__________________________________________________________________________________
Counsel:
Snell & Wilmer, Keith M. Gregory, Daniel G. Seabolt and Todd E. Lundell for Defendant and Appellant.
Law Offices of Robert S. Gerstein, Robert S. Gerstein; Law Offices of James P. Wohl, James P. Wohl and
Eileen P. Darroll for Plaintiff and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Todd E. Lundell
Snell & Wilmer L.L.P.
600 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
(714) 427-7000
Robert S. Gerstein
Law Offices of Robert S. Gerstein
171 Pier Avenue, #322
Santa Monica, CA 90405
(310) 820-1939