Judge Christian R. Gullon, Case Number: 22PSCV00373, Date: 2023-09-27 Tentative Ruling

Judge: Christian R. Gullon, Case: 22PSCV00373, Date: 2023-09-27 Tentative Ruling

This case arises from an oral contract. Plaintiffs Art and Theresa Saracho (collectively, “Plaintiffs”) allege the following against Defendant Mario Lemus (“Defendant”): In March 2021, the parties entered into an oral agreement[1] wherein Defendant would prepare the necessary plans to obtain the required permits to construct an ADU on the subject property. Defendant ceased all work, requiring Plaintiffs to complete the project. The FAC seeks damages totaling $127,912.00.

On April 13, 2022, Plaintiff filed suit against Defendant MARIO LEMUS, as an individual and dba MAXIMUM VARIETIES STRUCTURES for:

On August 25, 2022, Plaintiffs filed an application for default judgment, which on 1/26/23 the court denied with prejudice because the complaint sought damages “in an amount not less than $100,000.00”, which amounted to open-ended liability.

On February 27, 2023, Plaintiffs filed their first amended complaint (FAC) for the same COAs against the same Defendants.

On August 2, 2023, the court entered default against Defendants. That same day, Plaintiffs filed the instant application for default judgment.

The application is denied for a couple of reasons, notably (1) unclear evidence and (2) certain damage(s) are not recoverable.

As a complaint governs the amount of damages and an application for default judgment must submit evidence in support thereof,[2] the court turns to the relevant allegations in the FAC that delineate the payments subject to the instant judgment:

- Plaintiffs allege LEMUS indicated the cost for the construction was $57,000.00 and a ten (10) percent deposit was required. On June 5, 2021, Plaintiffs allege they gave LEMUS a payment of $5,700.00 as down payment for the construction. (FAC ¶¶ 16, 20)

- Plaintiffs allege LEMUS further required a payment of two thousand dollars ($2,000.00) to prepare the plans and submit the permit request (FAC ¶17)

- On or about May 22, 2021, Plaintiff paid an additional $3,000.00 to Defendant for the construction. (FAC ¶19)

- on June 16, 2021, they gave LEMUS a check in the amount of ten thousand dollars ($10,000.00) for material and labor. (FAC ¶23)

- June 21, 2021, they gave LEMUS an additional check in the amount of thirteen thousand dollars ($13,000.00) (FAC ¶24)

Adding the payments, $5,700 + $2,000 + $2,000 + $3,000 + $10,000 + $13,000 equals $35,700.[3]

However, Plaintiffs’ declaration does not clearly evidence the payments. (Plaintiffs’ declaration generally sights to Exhibit 1 for the invoices.)

For example, the date of the first invoice provided is to 5/22/2021. Based upon the FAC, the payment on 5/22/2021 was $3,000. (Plaintiffs’ Decl., p. 8 of 47 of PDF.) But according to the invoice, the payment made on 5/22/2021 was for $1,200, not $3,000. By way of another example, the next invoice is dated to 6/04/2021 with a payment of $51,300.00. (Plaintiffs’ Decl., p. 9 of 47 of PDF.) However, the FAC does not allege that a payment was made on 6/04/2021.

Thus, as the evidence does not match the allegations, the application is denied without prejudice. Upon refiling, the court requests that each allegation that mentions a payment be tied to a specific exhibit.

Plaintiffs also seek judgment for monies beyond payments. Plaintiffs’ declaration explains the following costs sought:

b. Costs to repair the Property due to Defendants’ negligent work totaling $55,390.00;[4]

In support of costs to complete the new project, Plaintiffs cite to Exhibit 3. However, while the invoice (dated to 12/26/2022) bears the $55,390.00 total, it is unclear whether such payment has been made. Rather, it appears that this will be the cost “to prepare” the project. (See Plaintiffs’ Decl., ¶28 [“The cost to complete the new construction project and repair damage caused by Defendant’s negligent work is approximately $55,390.00 plus an additional $5068.33 to prepare the plans for the construction and obtain the permits.”].)

Thus, it appears Plaintiffs are attempting to recover for a cost not yet incurred. And if Plaintiffs have not yet started the construction to repair Defendant’s work/complete the project, then Plaintiffs’ attempted recovery for RV storage would likely not be recoverable as Plaintiffs have a duty to mitigate damages,[5] and it is unreasonable to not have resumed construction since Defendant’s abandonment of the project in October 2021.

Additionally, Plaintiffs seek to recover for potential rent. (See Plaintiffs’ Decl., ¶35 [“Lastly, we intended to construct the ADU so that we could rent it out and earn rental income. We had a prospective tenant that was prepared to enter into a twelve (12) month lease agreement beginning in November 2021 at a monthly rental rate of $1,161.00.”].) But the FAC does not seek special damages/consequential damages nor does the FAC allege that Defendant was aware of such special damages. As the court in Hadley v. Baxendale 156 Eng. Rep. 145 (Ex. Ch. 1854) concluded, a party injured by a breach of contract can recover only those damages that either should “reasonably be considered ... as arising naturally, i.e., according to the usual course of things” from the breach, or might “reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.” (Id. at 151.) On the basis of the two rules of Hadley v. Baxendale, contract law has conventionally distinguished between general or direct damages on the one hand (i.e., damages that flow from a given type of breach without regard to the buyer's particular circumstances) and special or consequential damages on the other (e.g., consequential damages). And as to the latter form of damages, they can be recovered only if, at the time the contract was made, there was reason to foresee that the consequential damages were the probable result of the breach. Put simply, when calculating expectation damages, it is subject to limitations of what parties contemplated (i.e., foreseeable) during the time of contract formation. Here, however, Plaintiffs have not alleged that Defendant was made aware that the ADU must be completed by November 2021 for the purpose of a lease agreement. Plus, Plaintiffs’ have not provided evidence that a tenant was secured (e.g., advertisements for the tenancy, the lease, etc.).

In sum, Plaintiffs have not provided clear evidence of their payments nor a (legal) explanation as to why they are entitled to certain damages beyond general damages. Based on the foregoing, the application is denied without prejudice.

[1] According to Plaintiffs, they requested a written documentation, but Defendant did not provide such.

[2] (See Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267 [on a default judgment, the court must compare the properly pled damages for each defaulting party with the evidence offered in the prove-up].)

[3] As noted in the court’s first tentative, the court is uncertain as to Plaintiffs’ computation. The payments added equals $35,700, not $33,700.00. (See FAC ¶69; see also Plaintiffs’ Decl., ¶38 [“Monies paid directly to Defendants totaling $33,700.00”].)

[4] Though Defendant performed some work (demolished the inside of their garage and removed concrete from their driveway FAC ¶57), it was done in an unworkmanlike manner that it caused damage to the property such that the work done needs to also be repaired.

[5] “The doctrine of mitigation of damages holds that ‘[a] plaintiff who suffers damage as a result of ... a breach of contract ... has a duty to take reasonable steps to mitigate those damages and will not be able to recover for any losses which could have been thus avoided.’ [internal citation omitted]. Under the doctrine, ‘[a] plaintiff may not recover for damages avoidable through ordinary care and reasonable exertion.’” (Agam v. Gavra (2015) 236 Cal.App.4th 91, 111.)