Judge: Joseph Lipner, Case: 23STCV12545, Date: 2023-12-18 Tentative Ruling

Case Number: 23STCV12545    Hearing Date: January 29, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff TP I Investment, LLC (“Plaintiff”) seeks default judgment against Defendant Freevolt USA, Inc. (“Defendant”).

Plaintiff requests:

(1)  damages in the amount of $241,608.72;

(2)  interest in the amount of $21,859.00; and

(3) costs of suit in the amount of $570.00.

The Court DENIES Plaintiff’s request for default judgment.  Case law indicates that an assignment of interest in a debt must be reflected in the complaint in order to form a basis for a default judgment.  Accordingly, service of an amended complaint reflecting the assignment will be necessary.

Background

          This is a contract case. On April 26, 2021, Plaintiff and Defendant entered into a written agreement (the “Agreement”) for Defendant to install a solar panel system at Plaintiff’s property. The solar panel was still not operational as of November 3, 2023.

The Agreement provided that if the solar panel system was not operating by September 25, 2021, Defendant would pay Phuc Thien Phan, the Managing Member of Plaintiff, a sum of $30,000.00. (Phan Decl. ¶ 4, Exh. A at p. 1.) In addition, Defendant would pay Mr. Phan’s electric bill for the meter connected to solar for each month that the system was not operational from September 25, 2021 until the system is fully operational with permission to operate from the Los Angeles Department of Water and Power (“LADWP”). (Phan Decl. ¶ 4, Exh. A at p. 1.)

          Defendant has not made the foregoing payments.

          Plaintiff filed this action on June 6, 2023.

Default was entered against Defendant on September 6, 2023.

Plaintiff filed this application for default judgment on November 15, 2023.

December 18, 2023, the Court continued the hearing on default judgment because Phan, who is not a party, and not Plaintiff, was the real party in interest.

On January 8, Plaintiff filed a Declaration of Phuc Thien Phan indicating that Phan had assigned his rights to receive payments for his electricity bill and to sue on the nonpayment thereof to Plaintiff.

Legal Standard

CCP § 585 permits entry of a judgment after a Defendant has failed to timely answer after being properly served.  A party seeking judgment on the default by the Court must file a Form CIV-100 Request for Court Judgment, and:

(1) Proof of service of the complaint and summons;

(2) A dismissal of all parties against whom judgment is not sought (including Doe defendants) or an application for separate judgment under CCP § 579, supported by a showing of grounds for each judgment (CRC 3.1800(a)(7);

(3) A declaration of non-military status as to the defendant (typically included in Form CIV-100) (CRC 3.1800(a)(5));

(4) A brief summary of the case (CRC 3.1800(a)(1));

(5) Admissible evidence supporting a prima facie case for the damages or other relief requested (Johnson v. Stanhiser (1999) 72 Cal.App.4th 357, 361-362);

(6) Interest computations as necessary (CRC 3.1800(a)(3));

(7) A memorandum of costs and disbursements (typically included in Form CIV-100 (CRC 3.1800(a)(4));

(8) A request for attorney’s fees if allowed by statute or by the agreement of the parties (CRC 3.1800(a)(9)), accompanied by a declaration stating that the fees were calculated in accordance with the fee schedule as per Local Rule 3.214.  Where a request for attorney fees is based on a contractual provision the specific provision must be cited; (Local Rule 3.207); and

(9) A proposed form of judgment (CRC 3.1800(a)(6));

(10) Where an application for default judgment is based upon a written obligation to pay money, the original written agreement should be submitted for cancellation (CRC 3.1806). A trial court may exercise its discretion to accept a copy where the original document was lost or destroyed by ordering the clerk to cancel the copy instead (Kahn v. Lasorda's Dugout, Inc. (2003) 109 Cal.App.4th 1118, 1124);

(11) Where the plaintiff seeks damages for personal injury or wrongful death, they must serve a statement of damages on the defendant in the same manner as a summons (Code Civ. Proc. § 425.11, subd. (c), (d)).

(California Rules of Court rule 3.1800.)

Pursuant to Code Civ. Proc., § 1033.5(a)(1), items are allowable as costs under Section 1032 if they are “filing, motion, and jury fees.”

A party who defaults only admits facts well pleaded in the complaint or cross-complaint.  (Molen v. Friedman (1998) 64 Cal.App.4th 1149, 1153-1154.)  Thus, the complaint must state a claim for the requested relief. “[W]hen recovering damages in a default judgment, the plaintiff is limited to the damages specified in the complaint.” (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 286.)

Discussion

Service of the Complaint and Summons

The proof of service filed by Plaintiff on August 22, 2023 shows that E. Ratliff served the complaint and summons on Defendant’s authorized agent for service of process, Bartosz Makas, on June 13, 2023 at 42005 Cook Street, Suite 310, Palm Desert, CA 92260.

Dismissal of Other Parties

The Court has dismissed the Doe defendants from this case at Plaintiff’s request.

Non-Military Status

Dana Seyler avers that Defendant is not in military service.

Summary of the Case

Plaintiff provides a brief summary of the case in the Declaration of Phuc Thien Phan.

As noted above, under the Agreement, Defendant owes the late fee and electricity bill reimbursements to Phan, who is not a party to this action. Ordinarily an LLC is considered a separate legal entity, distinct from its members and managers, with separate and distinct liabilities and obligations. (Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 220.) Phan’s rights are therefore separate from Plaintiff’s rights, even though Phan is the managing member of Plaintiff. Thus, Phan is the real party in interest in this action, and ordinarily must be joined as a plaintiff. 

At the previous hearing on this application for default judgment, Plaintiff’s counsel suggested that Phan assign his rights to Plaintiff. The Court continued the hearing to allow Plaintiff to do so.

Upon further research, however, it appears that evidence alone of assignment is not sufficient. “Generally, one suing as an assignee must allege and prove the assignment to recover on the assigned claim.” (Emerald Bay Community Assn. v. Golden Eagle Ins. Corp. (2005) 130 Cal.App.4th 1078, 1091.) “However, unless defendant could show it was misled or would be prejudiced by plaintiff's failure to allege the assignment, the trial court would have probably abused its discretion if it denied recovery solely on this ground.” (Ibid.) The assignment of the right to sue is not a technicality, but a substantive right which must be alleged and proven like any other material allegation. (Sterling Adjustment Co. v. Laher Auto Spring Co. (1931) 116 Cal.App. 100, 101.)

Although the facts alleged in the complaint (other than damages) are deemed admitted on default judgment, they must still be alleged. Furthermore, it is possible that defendant was prejudiced by lack of the allegation of an assignment.  For example, a defendant may choose to default because it does not believe that the party suing it is actually able to obtain relief.

Thus, in order for Plaintiff to recover on the contract, it must amend the Complaint to allege the assignment of Phan’s rights to recover on the contract to Plaintiff and serve the amended complaint on Defendant. If Defendant defaults on the amended complaint, Plaintiff may then seek default judgment as normal.

Evidence of Damages

Phan avers that he is owed $211,608.72 in electricity bills under the agreement, plus the $30,000.00 late fee. (Phan Decl. ¶ 4-8; Exh. A at p. 1.)

Interest

Plaintiff seeks interest in the amount of $21,859.00. Dana Seyler avers to the accuracy of this calculation based on the statutory rate of 10% per annum. (Seylers Decl. at ¶ 2, Unmarked Exbibit at p. 1; see also Civ. Code, § 3289, subd. (b).)

Memorandum of Costs and Disbursements

Plaintiff provides a memorandum of costs wherein Dana Seyler avers that Plaintiff spent $570.00 in costs on this action.

Attorney’s Fees

          Plaintiff does not seek attorney’s fees in this action.

Proposed Form of Judgment

          Plaintiff provides a proposed form of judgment.

Submission of the Written Agreement

          California Rule of Court 3.1806 states that “unless otherwise ordered” judgment upon a written obligation requires a clerk’s note across the face of the writing that there has been a judgment. Here, Plaintiff has not submitted the original documents. The Court does not discern any practical need for such a clerk’s note on the written obligation in the current case and therefore orders that it need not be included. If this causes any issues for any party or non-party they are authorized to bring the matter to the Court’s attention. 

Statement of Damages

Plaintiff does not need to submit a statement of damages because this is not a personal injury or wrongful death case.