Judge: Gary I. Micon, Case: PC052908, Date: 2025-06-13 Tentative Ruling

Case Number: PC052908    Hearing Date: June 13, 2025    Dept: F43

Dept. F43

Date: 06-13-25

Case # PC052908, Stabile, et al. v. Seward, et al.

Trial Date: None set.

MOTION TO VACATE AND MODIFY PLAINTIFFS’ RENEWED DEFAULT JUDGMENT

MOVING PARTY: Defendant Michelle LeClair

RESPONDING PARTIES: Jeffrey Stabile and Marguerite O. Stabile

RELIEF REQUESTED

Order vacating the renewed default judgment obtained on October 17, 2023 and modifying the underlying default judgment amount of $4,477,938.25 by $72,000.

RULING: Plaintiffs’ application for renewal of default judgment is vacated.  Defendant Michelle LeClair’s motion to modify default judgment is granted.  Plaintiffs are directed to submit a new application for renewal of judgment along with a default prove up package in conformity with the court’s ruling.

SUMMARY OF ACTION

On April 25, 2012, plaintiffs Jeffrey Stabile and Marguerite O. Stabile (Plaintiffs) sued defendant Michelle Kenen Seward, now Michelle LeClair, (Defendant) and other defendants.

Plaintiffs alleged that Defendant defrauded Plaintiffs into loaning their entire life savings, one-half a million dollars, into a company Defendant set up to finance her separate her role as a Hollywood and Broadway producer.  According to the signed investment contracts, Defendant promised Plaintiffs a 15% per annum return on their investment for five years, with that rate increasing to 18% per annum if Defendant defaulted.  Defendant received Plaintiffs’ money and had the full $500,000 plus in hand by no later than October 1, 2010.  However, Defendant failed to ensure that Plaintiffs were repaid which resulted in a default on loans and a breach of contract.

The operative Third Amended Complaint (3AC), filed July 12, 2013, alleged fifteen causes of action: (1) breach of written contracts; (2) breach of investment agreement and guarantees; (3) professional negligence; (4) breach of fiduciary duty; (5) fraud; (6) negligent misrepresentation; (7) constructive fraud; (8) constructive trust; (9) conversion; (10) money had and received; (11) accounting; (12) violating Bus. & Prof. Code, §§ 17200, et seq.; (13) fraud in violation of Cal. Blue Sky Laws; (14) negligence per se/torts in essence; and (15) violating Cal. Welfare & Inst. Code, §§ 15610, et seq., Elder Abuse.

After several discovery disputes, the court sanctioned Defendant, struck her Answer, and entered default against her.  Plaintiffs later requested default judgment, seeking $8,957,938.25 in damages.  This request included $2 million in emotional distress damages.  Plaintiffs claimed that, after adding lost principal and contractual interest to their emotional distress damages, this damages lodestar should then be trebled under California’s Elder Abuse law.  

On November 17, 2015, the court entered default judgment against Defendant in the amount of $4,477,938.20 in damages, $74,421.25 in attorneys’ fees, $3,517 in costs, and post-judgment interest at 10% per year.  (Default Judgment - filed 11/17/15.)  The judgment included emotional distress damages and trebled damages.  (Ibid.)

On October 17, 2023, Plaintiffs filed an application to renew the judgment for $4,477,938.45 plus an additional $45 filing fee.  (Renewal Application - filed 10/17/23.)  The notice of renewal was filed on October 18, 2023.  (Notice of Renewal - filed 10/18/23.) 

On January 9, 2024, Plaintiffs filed an enforcement action against Defendant in the State of Georgia, seeking to domesticate and enforce the default judgment.  (Declaration of Samantah K. Burdick, ¶ 2; Exh. A.)  Defendant was served the Notice of Renewal on Defendant via U.S. mail on November 7, 2024.  (Amended Proof of Service - filed 11/13/24.)

On January 6, 2025, Defendant moved to modify the default judgment amount.  Plaintiffs opposed on June 2, 2025, and Defendant replied on June 6, 2025.

SUMMARY OF ARGUMENTS

Defendant asserts that the court should modify the default judgment to reflect the $72,000 Plaintiffs already received from Defendant in 2017 and to remove all emotional damages and any trebling of damages.  Plaintiffs did not notify Defendant about the statutory bases for trebling damages.

Plaintiffs do not oppose Defendant’s arguments but are willing to deduct the $72,000 from the current default judgment amount.  The 3AC sufficiently alleged each cause of action against Defendant.

REQUEST FOR JUDICIAL NOTICE

Plaintiffs ask the court to take judicial notice of the following exhibits pursuant to Evid. Code, § 450 et seq.:

·         Exhibit 1 - Declaration of Plaintiff’s Counsel, Robert L. Bastian, Jr. in support of request for default judgment

·         Exhibit 2 - Exhibit Nos. 1-10 in support for Plaintiffs’ request for default judgment filed on November 17, 2015

·         Exhibit 3 - Minute Order dated December 17, 2013

The court grants Plaintiffs’ request pursuant to Evid. Code, § 452, subd. (d).

ANALYSIS

A judgment creditor may renew a judgment by filing an application for renewal of judgment in the court in which the judgment was entered.  (Code Civ. Proc., § 683.120, subd. (a).)  The filing of the application extends the period for enforceability of the judgment for a period of ten years from the date the application was filed.  (Code Civ. Proc., § 683.120, subd. (b).)  The judgment debtor must serve the renewal notice on the judgment debtor either personally or by first class mail, and the proof of service must be filed with the court before any enforcement of the renewed judgment is allowed.  (Code Civ. Proc., § 683.160, subds. (a)-(b).)  The judgment debtor has 60 days from service to file a motion to vacate or modify the renewal.  (Code Civ. Proc., § 683.160, subd. (b).)

A motion to vacate a renewal of judgment may be filed under Code of Civil Procedure §¿683.170.  The motion to vacate a renewal of judgment may be based on any ground that would be a defense to an action on the judgment including that the judgment entered was incorrect.  (Code Civ. Proc., § 683.170(a).)  Following vacation of a renewed judgment, “another and different renewal may be entered, including, but not limited to, the renewal of the judgment in a different amount if the decision of the court is that the judgment creditor is entitled to renewal in a different amount.”  (Code Civ. Proc., § 683.170, subd. (c).) “The judgment debtor bears the burden of proving, by a preponderance of the evidence, that he or she is entitled to relief under section 683.170.”  (Fidelity Creditor Service, Inc. v. Browne (2001) 89 Cal.App.4th 195, 199.) 

CCP Section 473(b) states as follows: 

The court may, upon any terms as may be just, relieve a party…from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.

The law favors hearings on the merits, so any doubts as to the application of section 473 should be resolved in favor of the party seeking relief from default. (See Shapiro v. Clark (2008) 164 Cal.App.4th 1128, 1139-1140.)

Defendant asserts that the court should vacate the renewal of judgment and modify it to comply with the court’s limited subject matter jurisdiction and Defendant’s statutory and constitutional rights.  The default judgment is void because it exceeded the maximum judgment which could only be ascertained from the four corners of the 3AC.  The 3AC did not enumerate Plaintiffs’ alleged emotional distress damages, and their trebling of damages under the Elder Abuse statute

A plaintiff’s default judgment demand for relief must not exceed the amounts alleged in the complaint.  (Code Civ. Proc., § 580, subd. (a); In re Marriage of Lippel (1990) 51 Cal.3d 1160, 1167 [“[S]ection 580 . . . deprives a trial court of jurisdiction to enter a judgment against a defaulting defendant which awards greater relief than that sought in the plaintiff’s complaint.”].)  However, the court may grant “any relief consistent with the case made by the complaint and embraced within the issue. The court may impose liability, regardless of whether the theory upon which liability is sought to be imposed involves legal or equitable principles.”  (Code Civ. Proc., § 580, subd. (a).)  For example, in a breach of contract case, a court may award damages “for all detriment proximately caused” by the breach, including “the value of services rendered in reliance upon [a] promise.”  (Perry v. Lambourne (1960) 177 Cal.App.2d 662 [citing Civ. Code, § 3300].)

The 3AC complaint sought damages from Defendant for the $500,000 principal investment, pre-judgment interest at the contract rate of 18% per year, and emotional distress.  (3AC, ¶¶ 70, 85-86, 92-93, 100-101, 107.) 

Plaintiffs requested default judgment of $74,421.25 in attorneys’ fees, $3,517.00 in costs, and $8,880,000 in damages:  $2,220,000 in general damages [($500,000 principal + $240,000 interest) x 3] plus $740,000 times 3.  The court ultimately granted judgment of $4,400,000 in damages, $74,42.25 in attorneys’ fees, and $3,517 in costs.

Defendant contends that the court should not have awarded any emotional damages or pre-judgment interest because Plaintiffs did not specifically enumerate the amount they sought for both.  Plaintiffs did not allege any facts to quantify their emotional damages and only state they suffered “tort damages to be proven at trial” or enumerate their emotional distress damages until they moved for default judgment.  Plaintiffs’ emotional damages are incidental to their primary claims—default on loan agreements.  Further, because Plaintiffs did not submit a statement quantifying their emotional damages before default (See Code Civ. Proc., § 425.11, subd. (c)), Plaintiffs requests for emotional damages is fatal to their default judgment.

If the relief requested in a complaint is complicated, consisting primarily of nonmonetary relief, the plaintiff must present sufficient evidence for the court to carry out its judgment.  (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 287.)  Although non-economic damages are difficult to fix, the complaint must still provide an educated guess of such damages.  (Janssen v. Luu (1997) 57 Cal.App.4th 272, 279)  “If no specific amount of damages is demanded, there is no adequate notice to the defendant—and a default judgment entered under those conditions is void.”  (Janssen v. Luu (1997) 57 Cal.App.4th 272, 279.)  For personal injury cases, such as those involving emotional damages or punitive damages, the plaintiff must serve a statement setting forth the nature and amount of the damages on defendant before default is entered.  (Code Civ. Proc., §§ 425.11, subds. (b)-(c), 425.115, subd. (f).)

The court has reviewed Defendant’s evidence and Plaintiffs’ evidence from their default judgment filings.  The evidence indicates that Plaintiffs’ allegations against Defendant were based in Defendant defaulting on the loan agreements rather than on personal injuries or emotional distress.  Neither Defendant’s evidence nor Plaintiffs’ evidence indicate that Plaintiff quantified her emotional distress damages in the 3AC or served a statement enumerating and specifying their emotional damages prior to entry of default or default judgment against Defendant.

Because Plaintiffs did not provide timely notice of their putative emotional damages prior to default or present evidence or allegations to support emotional damages until the default judgment hearing, the court voids the portion of the default judgment awarding emotional damages to Plaintiffs.

Next, Defendant contends that Plaintiffs were not entitled to trebling of their damages under California’s Elder Abuse law (Welf. & Inst. Code, § 15610) or any other statutory enhancement provision. 

The 3AC cites the Elder Abuse Act to treble Plaintiffs’ damages, but the default judgment papers cited both Probate Code § 859 and the Elder Abuse Act.  (Plaintiffs’ Exh. 1: Bastian Dec., ¶¶ 96-97.)  The Elder Abuse Act’s damages provision does not mention trebling or multiplying damages.  (See Welf. & Inst. Code, § 15657.5, subd. (a), (e).)  Additionally, the 3AC fails to allege facts sufficient facts, showing that Plaintiffs were over the age of 65 when the alleged elder abuse commenced or when what portion of their damages they attributed to the elder abuse.  (3AC - filed 7/12/13 [stating Plaintiffs’ ages as 68 and 70 at time the 3AC was filed].)  Because Plaintiffs could not treble damages under the Elder Abuse Act, they cited a different statutory provision in their default judgment without giving Defendant proper notice.

Plaintiffs’ supporting papers also cited Probate Code section 859, which requires that a person found liable for elder abuse to pay twice the value of the property recovered in an action.  (Prob. Code, § 859.)  Plaintiffs did not include the Probate Code section in their 3AC or performing the correct calculations on their damages.  Therefore, it was an error for the court to treble or multiply damages using the Elder Abuse Act or Probate Code section 859.

Plaintiffs do not directly oppose Defendant’s arguments but suggest that the court modify the judgment to cover the damages alleged in the 3AC.

Plaintiffs assert that the court should deny Defendant’s motion as presented and instead modify the judgment amount to $1,956,45.70.  Plaintiffs state that they are entitled to the $500,000 principal and 18% per annum rate of return on the $500,000 due to Defendant’s failure to fulfill her promise to return what was paid from October 1, 2010 through judgment day of November 17, 2015.  The 18% rate of return translates to a daily sum of $246.58—$461,835.62 (1873 days 12/1/2011 through 11/17/2015).  (Declaration of David N. Lake; Exh. B.)  Attorneys’ fees and costs on November 17, 2015 was $77,938.25.  (Ibid.)  Thus, at the time of default judgment, Defendant owed $1,039,773.87: $500,000 principal; $461,835.62 rate of return; and $77,938.25 attorney fees and costs.  Next, Defendant also owed post-judgment interest of 10% of the judgment amount of $1,039,773.87 from November 17, 2015 through December 31, 2016 because Defendant made a single $72,000 payment towards the judgment in 2017—$284.87 daily for 410 days totaling $116,796.52.  (Ibid.)  The new judgment amount as of December 31, 2016 was $1,156,570.38.  (Ibid.)

Defendant made a single $72,000 payment in 2017 which reduced the total judgment to $1,084,570.38.  Beginning January 1, 2017, the daily post-judgment interest at 10% rate was $297.14.  Through the date of the motion hearing (June 13, 2025), the total interest is $916,684.83.  This brings the actual total remaining due to $2,001,255.21.  Plaintiffs claim this brings the total to $1,956,458.70, but this does not match the numbers provided in Plaintiffs’ supporting papers.

Plaintiffs do not necessarily concede that the elder abuse statute is inapplicable, but they do not present any evidence or arguments directly countering Defendant’s arguments or fully supporting their presented numbers.

Next, Defendant argues that the court should reject Plaintiffs’ arguments because Plaintiffs asks the court to use certain interest rates while applying the wrong date ranges.  Defendant also contends that the 18% interest rate is usurious and unreasonable, that any interest received during the term of the loans must be credited to the principal, and that Plaintiffs are not entitled to the enchance contractual interest.  Further, by conceding that the statute underlying their attorneys’ fees award is inapplicable, Plaintiffs cannot recover attorneys’ fees.  Plaintiffs’ post-judgment interest calculation ignores their waiver of collection of the majority of accrued post-judgment interest and applies the go-forward interest to the wrong lodestar.

            The promissory notes’ interest rates are usurious.

California’s constitution limits the maximum rate of interest on non-consumer loans to the higher of 10 percent per annum or 5 percent plus the rate of interests prevailing on the 25th day of the month preceding the earlier od the date of the extension of the contract to the make the loan.  (Cal. Const., art. XV, § 1.)  “A transaction is usurious if there is a loan at greater than the legal rate of interest or an exaction at more than the legal rate for the forbearance of a debt or sum of money due.”  (O’Connor v. Televideo Sys., Inc. (1990) 218 Cal.App.3d 709, 713.)  If the loan is usurious, the creditor is only entitled to repayment of the principal sum.  (Korchemny v. Piterman (2021) 68 Cal.App.5th 1032, 1042-43.)  “[I]nterest payments that were made at the usurious rate should be credited against the principal balance in any action to collect on the note.”  (Id. at pp. 1042-43.)  “[T]he payee of a note with a usurious interest provision would be entitled to damages in the nature of interest at the legal rate for that period of time which the obligor on the note withheld the principal beyond the date of maturity.”  (Epstein v. Frank (1981) 125 Cal.App.3d 111, 123.)

The evidence shows that the principal loan amount was $500,000 and that the loan agreements included a 15% annual rate of return for five years which rose to 18% if Defendant defaulted.  Both interest rates are usurious because they far exceed the constitutional maximum limit.  Thus, it was an error for the court to include the $240,000 interest amount in Plaintiffs’ default judgment.  Further, because Plaintiffs present inaccurate and incomplete evidence showing of the dates Defendant made payments prior to her default, the current remaining principal amount cannot be determined.  Therefore, any interest payments Plaintiffs received from August 2010 through November 2011, must be credited towards the principal.  (Bastian Dec., ¶¶ 92-94.)

The 18% default interest rate is also unenforceable because it is punitive in character.  Contractual provisions enhancing interest rates for late payments are unenforceable if when measured against the unpaid loan balance, they are punitive in nature.  (Garrett v. Coast & Southern Federl Savings & Loan Ass’n (1973) 9 Cal.3d 731, 740; Ridgley v. Topa Thrift & Loan Ass’n (1998) 17 Cal. 4th 970, 978.)  The 18% rate is penal in nature because it is an attempt to punish Defendant and coerce her into making regular payments to Plaintiffs.  Therefore, the 18% rate is unenforceable.

The default judgment did not state a valid basis for attorneys’ fees and costs.

A party may only recover attorney fees if allowed by statute or a contract governing the parties.  (Civ. Code, §§ 1033.5, subd. (a)(10)(A), 1717, subd. (a); see also Riverside Mining Limited v. Quality Aggregates (2024) 104 Cal.App.5th 269, 275.)  In addition to Probate Code, § 859, Plaintiffs now state they are entitled to attorney fees based on a clause in their promissory notes.  (Opposition, p. 5, fn. 5.)  However, Plaintiffs did not raise this ground in their default judgment papers.  Because the court has determined that neither the Elder Abuse Act nor Probate Code, § 859 are applicable to Plaintiffs’ default judgment, and Plaintiffs did not raise the attorney fee provision in the promissory notes until their opposition, the court erred in granting Plaintiffs request for attorneys’ fees

Plaintiffs did not properly requests post-judgment interest in their renewal application.

An application for renewal of a monetary judgment must show the amount of the judgment that the moving party wishes to renew on the date the application is filed.  (Code Civ. Proc., § 683.150, subd. (c).)

Plaintiffs’ application seeks to renew a judgment amount of $4,477,938.45 plus an additional $45 filing fee.  This amount does not include the accrual of post-judgment interest that Plaintiffs mention in their opposition.  Further, the dates Plaintiffs list in their calculation do not reflect Defendant’s $72,000 post-judgment payment are unclear.

Therefore, Plaintiffs cannot seek any post-judgment interest which accrued between November 17, 2015 and October 17, 2023.

The court finds that Plaintiffs’ renewal application is incomplete and lacks sufficient evidence to support renewing the original default judgment amount.  The original default judgment amount was incorrect due because Plaintiffs’ failed to give Defendant adequate notice of the basis of their emotional damages and trebling of damages.  Further, the default judgment awarded attorneys’ fees based on an inapplicable statute.

Therefore, the court denies Plaintiffs’ application to renew their default judgment is vacated, and Defendant’s motion to modify the underlying judgment is granted.

CONCLUSION

Plaintiffs’ application for renewal of default judgment is vacated.

Defendant Michelle LeClair’s motion to modify default judgment is granted.

Plaintiffs are directed to submit a new renewal of judgment application with a revised default prove-up package in conformity with the court’s ruling.

Defendant LeClair to give notice.