Woolsey v. McMillan

Filed 7/12/07 Woolsey v. McMillan CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a postjudgment order of the Superior Court of Orange County, Stephen J. Sundvold, Judge. Reversed.

McMillan & Herrell, Shelly D. McMillan and Matthew B. Herrell for Defendants and Appellants.

Cornelius P. Bahan for Plaintiffs and Respondents.

* * *

Defendants Shelly McMillan and the law firm of McMillan & Bloch appeal from an order denying their motion to set aside a default judgment obtained by plaintiffs Clifford Woosley and the law firm of Gilbert, Kelly, Crowley & Jennett (Gilbert, Kelly). They assert several grounds for reversal. We conclude the judgment is void because plaintiffs second amended complaint failed to provide adequate notice of the relief demanded against defendants in violation of Code of Civil Procedure section 580, subdivision (a). Therefore, we reverse the order denying the motion to set aside the default judgment.

FACTS

This case arose from an extramarital affair between Woosley, a partner with Gilbert, Kelly, and Elisabeth Saret-Cook, formerly employed as a paralegal by the firm. The facts relating to their affair, the acrimonious atmosphere which developed at the firm, the settlement agreement negotiated between Saret-Cook and Gilbert, Kelly for her resignation from the firm, and the litigation between Saret-Cook and plaintiffs are contained in a published opinion issued by the Second District. (Saret-Cook v. Gilbert, Kelly, Crowley & Jennett (1999) 74 Cal.App.4th 1211, 1216-1225.)

After leaving the firm, Saret-Cook sued Woosley and Gilbert, Kelly for breach of contract, sex and pregnancy discrimination, unlawful retaliation, and wrongful termination. During the pendency of the litigation, several attorneys and law firms represented Saret-Cook at different times. Defendants represented her from December 1995 to March 1996 and again from May 6 to May 15, 1996.

Woosley cross-complained for intentional infliction of emotional distress, while Gilbert, Kelly cross-complained for declaratory relief to enforce the negotiated settlement. They were ultimately successful on both the complaint and cross-complaints, and the Second District affirmed the trial courts judgment in its entirety. (Saret-Cook v. Gilbert, Kelly, Crowley & Jennett, supra, 74 Cal.App.4th 1211.)

In August 1997, plaintiffs filed the present action for malicious prosecution against defendants and the other attorneys and law firms that had represented Saret-Cook in the prior lawsuit. Both plaintiffs sought recovery for attorneys fees and costs to defend themselves in an amount which will be shown according to proof, plus punitive damages in an amount to be determined at the time of trial . . . . In addition, Woosley sought damages in an amount . . . according to proof for losses attributable to impairment of [his] social and business standing in the community, his reputation, mental and emotional distress, loss of earnings and earning capacity, plus medical services and treatment . . . .

Paragraph 56 of the second amended complaint alleged as follows: The [Saret-Cook] matter went to trial before a jury . . . .  The court granted a . . . nonsuit in the second action. The jury unanimously found against Saret-Cook on the remaining issues . . . .  The jury also found in favor of Woosley on his cross-complaint, awarding him $450,000 in compensatory damages and $75,000 in punitive damages. The trial court later reduced the punitive damages award to $100 . . . .  The court also awarded $650,000 in attorneys fees to Gilbert, Kelly (out of about $930,000 requested) . . . .  In addition, the court awarded $275,000 in attorneys fees to Woosley (out of about $328,000 requested) . . . .  The court also entered a permanent injunction . . . in favor of Woosley and his family, barring Saret-Cook from contacting him or his family . . . .  Finally, the court found Saret-Cook in contempt . . . . (Capitalization omitted.)

Defendants did not file a response to the second amended complaint. On June 21, 2000, plaintiffs filed a request for entry of their default, which the clerk entered the same day.

Plaintiffs subsequently requested a prove-up hearing on defendants default. After a hearing and further clarification concerning the amount of plaintiffs damages, the trial court entered a default judgment against defendants. The judgment awarded Gilbert, Kelly $650,339.95, consisting of the attorney fees awarded in the prior lawsuit, plus costs of suit. As for Woosley, the judgment awarded him $725,439.95, consisting of the compensatory and punitive damages and the attorney fees awarded in the prior lawsuit, plus costs of suit.

Nearly one year later, defendants moved to set aside or vacate the default judgment. The trial court denied the motion.

DISCUSSION

1. Introduction

Defendants attack the validity of the default judgment entered against them on several grounds. Since they failed to seek relief from the default judgment within the six-month statutory period (Code Civ. Proc.,  473, subd. (b)), relief is available only where there has been [a showing of] extrinsic fraud or mistake (Weitz v. Yankosky (1966) 63 Cal.2d 849, 855), or where a judgment is void. (Code Civ. Proc.,  473, subd. (d) [The court may, upon motion . . . after notice to the other party, set aside any void judgment or order].) A judgment void on its face because rendered when the court lacked personal or subject matter jurisdiction or exceeded its jurisdiction in granting relief which the court had no power to grant, is subject to collateral attack at any time. [Citations.] (Sindler v. Brennan (2003) 105 Cal.App.4th 1350, 1353; see also Rochin v. Pat Johnson Manufacturing Co. (1998) 67 Cal.App.4th 1228, 1239.)

Although inarticularly stated, one contention asserted by defendants is that the default judgment is void because [t]here is no amount stated as to any of

the . . . categories of losses alleged in the amended complaint. We agree.

2. The Validity of the Damages Award

Code of Civil Procedure section 580 declares, in part, The relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint . . . . (Code Civ. Proc.,  580, subd. (a); see also  585, subd. (b) [judgment after default hearing allowed for such sum (not exceeding the amount stated in the complaint . . . ), as appears by such evidence to be just].) In accord with the fundamental concept of due process that a judgment against a defendant cannot be entered unless he was given proper notice and an opportunity to defend (In re Marriage of Lippel (1990) 51 Cal.3d 1160, 1166), section 580s primary purpose . . . is to guarantee defaulting parties adequate notice of the maximum judgment that may be assessed against them. [Citations.] (Id. at p. 1166.) Thus, the language of section 580 [is] mandatory, and limits a courts jurisdiction to render default judgments . . . only in the way authorized by statute. [Citation.] (Id. at p. 1167; see also Electronic Funds Solutions, LLC v. Murphy (2005) 134 Cal.App.4th 1161, 1176.)

Because of the foregoing principles, it is settled that a default judgment greater than the amount specifically demanded is void as beyond the courts jurisdiction. [Citations.] (Greenup v, Rodman (1986) 42 Cal.3d 822, 826; see also Heidary v. Yadollahi (2002) 99 Cal.App.4th 857, 864-865.) The prayer of plaintiffs second amended complaint, while identifying the categories of injuries allegedly suffered by them, sought damages only according to proof or in an amount to be determined at the time of trial. Standing alone, this allegation failed to provide adequate notice of defendants potential liability. (Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 494.)

But the allegations of a complaint may cure a defective prayer for

damages (Greenup v. Rodman, supra, 42 Cal.3d at p. 829), and a prayer for damages according to proof passes muster under section 580 . . . if a specific amount of damages is alleged in the body of the complaint. [Citation.] (Becker v. S.P.V. Construction Co., supra, 27 Cal.3d at p. 494, fn. omitted; see also Thorson v. Western Development Corp. (1967) 251 Cal.App.2d 206, 212-213.) Here, plaintiffs rely on paragraph 56 of the second amended complaint to satisfy the adequate notice of damages requirement. That paragraph fails to save the judgment.

First, paragraph 56 does not directly allege what compensable damages plaintiffs purportedly suffered that resulted from defendants misconduct. It merely summarizes the total amount awarded to plaintiffs by the jury and trial court in the Saret-Cook action. Such a circuitous allegation of damages fails to satisfy Code of Civil Procedure section 580, subdivision (a).

Ludka v. Memory Magnetics International (1972) 25 Cal.App.3d 316 presents an analogous case. There, the third cause of action of the complaint alleged the parties had entered into a contract whereby the defendant gave the plaintiff an option to purchase 2,500 shares of corporate stock of each of two corporations at 10 cents a share, and [the] defendants refusal to perform, and stated that [the] plaintiff elected to, and still elects, to exercise said option, to the damage of [the] plaintiff in a sum equal to the present market value of said shares, less [the] plaintiffs contracted cost thereof, to wit: $.10 per share. (Id. at p. 322.) However, the complaints prayer sought only damages according to proof . . . . (Ibid.) The Court of Appeal reversed a default judgment for the plaintiff on the third cause of action, finding [n]o amount of damages is directly alleged, and [s]uch a pleading read in conjunction with the prayer does not insure adequate notice of the demands made upon [the] defendant. (Id. at p. 323.)

The statutory restrictions on the amounts of damages awarded in a default judgment [are intended] to ensure that a defendant is given adequate notice of the amount

of the judgment that may be entered against the defendant, as required by due process. [Citation.] (Matera v. McLeod (2006) 145 Cal.App.4th 44, 61.) A complaint that merely provides criterion by which the defendant could indirectly calculate what the plaintiff could recover fails to satisfy due process. Thus, the second amended complaint did not provide defendants with the requisite notice of the relief demanded by plaintiffs in this action.

Second, Woosleys recovery of compensatory damages for Saret-Cooks infliction of emotional distress based on her actions which preceded the underlying lawsuit do not constitute recoverable damages in this action. In a malicious prosecution action, the victim of such a tort [may] . . . recover the cost of defending the prior action including reasonable attorneys fees [citations]; compensation for injury to his reputation or impairment of his social and business standing in the community [citations][;] and for mental or emotional distress [citation]. (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 51, fn. omitted.) But since the defendant in an action for malicious prosecution is liable . . . for [only] the damage caused by . . . step[s] regularly taken in the underlying litigation (Wong v. Earle C. Anthony, Inc. (1926) 199 Cal. 15, 18-19), the plaintiffs recovery is limited to losses sustained . . . as the direct and natural result of the proceeding complained of. [Citation.] (Id. at p. 18.) Merely because the amount of his emotional distress recovery appeared in the amended complaint did not mean it constituted recoverable damages in this action.

DISPOSITION

The order denying appellants motion to set aside the default judgment is reversed. The matter is remanded to the superior court with directions to vacate the prior ruling, enter an order granting the motion, and for further proceedings not inconsistent with this opinion. Appellants shall recover their costs on appeal.

RYLAARSDAM, ACTING P. J.

WE CONCUR:

MOORE, J.

IKOLA, J.

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