Judge: Joseph Lipner, Case: 23STCV17080, Date: 2024-03-27 Tentative Ruling

Case Number: 23STCV17080    Hearing Date: March 27, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Kapitus LLC (“Plaintiff”) seeks default judgment against Defendants Pal Percent Inc. (“Pal Percent”) and James Chung (collectively, “Defendants”).

Plaintiff requests:

(1) money judgment in the amount of $62,191.44, consisting of:

(a) damages in the amount of $54,219.00;

(b) interest in the amount of $5,303.06;

(c) costs in the amount of $695.00;

(d) attorney’s fees in the amount of $1,974.38;

The Court GRANTS Plaintiff’s request for default judgment.

Background

Plaintiff seeks to collect on that Defendants owe to it pursuant to an agreement that the parties entered (the “Agreement”).

Under the agreement, Plaintiff purchased the right to receive 6.5% of the revenue of Defendant Pal Percent’s business until Plaintiff received $55,970.00. Plaintiff paid defendant a gross amount of $38,600.00, with a net purchase price of $17,5900.00 after accounting for the closing fee and other payments provided for by the Agreement. Chung acted as a guarantor for Pal Percent.

The Agreement provided that Defendant would pay the money into an account and that Plaintiff would be authorized to debit $1,437.00 per week from the account (the “Minimum Amount”). The minimum amount was to be reconciled with Defendant’s actual revenue once every 30 days, if Defendant requested reconciliation. The Agreement provided that Defendant would not be entitled to reconciliation if Defendant defaulted.

Beginning on March 1, 2023, Defendant failed to make payments into the account adequate to cover the weekly Minimum Amount. Plaintiff gave notice of default to Pal Percent and Chung, but Defendants failed to pay the amounts due.

The Agreement provides that unpaid amount owed by Defendant would become due immediately upon Defendant’s default.

Plaintiff filed this action on July 21, 2023, raising claims for (1) breach of contract; and (2) breach of contract (guaranty).

Default was entered against Defendants on March 6, 2024.

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.

Discussion

Service of the Complaint and Summons

            Chung was served on September 1, 2023 at 800 S Harvard Blvd, Apt 301, Los Angeles, California 90005 by substitute service on his wife, Sophia Chung.

            Pal Percent was served on December 18, 2023 at the office of the California Secretary of State by substitute service on the Deputy Secretary of State, Pal Percent’s authorized agent for service of process.

Dismissal of Other Parties

The Doe defendants were dismissed from the action on March 13, 2024, pursuant to Plaintiff’s request.

Non-Military Status

Michael H. Delbick avers to Defendant’s non-military status.

Summary of the Case

Plaintiff provides a brief summary of the case in the Declaration of Vahan Gabrielyan. Plaintiff adequately pleads its causes of action in the Complaint.

Evidence of Damages

“Code of Civil Procedure section 580 prohibits the entry of a default judgment in an amount in excess of that demanded in the complaint.”  (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 286.) Moreover, “a statement of damages cannot be relied upon to establish a plaintiff's monetary damages, except in cases of personal injury or wrongful death.” (Ibid.) “In all other cases, when recovering damages in a default judgment, the plaintiff is limited to the damages specified in the complaint.” (Ibid.)

            David Zullo avers that Plaintiff owes an outstanding amount of $54,219.00 under the agreement, which includes a default fee of $2,500.00 and “other authorized fees.” (Zullo Decl. ¶ 11.)

Interest

The Complaint requests interest on the unpaid amount at the rate of 10% per annum.

Michael H. Delbick avers that $5,303.06 in interest has accrued from March 1, 2023 to February 21, 2024.

Memorandum of Costs and Disbursements

Plaintiff includes a memorandum of costs in the submitted Form CIV-100, averring that it expended $695.00 in costs.

Attorney’s Fees

            Plaintiff requests $1,974.38 in attorney’s fees.

This is an action on a contract. Because the judgment is between $50,000.01 and $100,000, the maximum recovery of attorney’s fees is equal to $1,890 plus 2% of the excess over $50,000.00. (Local Rule 3.214.) Thus, Plaintiff may request $1,974.38 in attorney’s fees. Plaintiff’s request is therefore proper.

Proposed Form of Judgment

            Plaintiff has submitted a proposed form of judgment consistent with the foregoing.

Submission of the Written Agreement

            California Rule of Court 3.1806 states that “unless otherwise ordered” judgment upon a written obligation to pay money 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.