Judge: Joseph Lipner, Case: 24STCV14560, Date: 2024-12-02 Tentative Ruling
Case Number: 24STCV14560 Hearing Date: December 2, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
JOSE LUIS PULIDO, Plaintiff, v. NELSON A. MANCIA, et al., Defendants. |
Case No:
24STCV14560 Hearing Date: December 2, 2024 Calendar Number: 10 |
Plaintiff Jose Luis Pulido (“Plaintiff”) seeks default
judgment against Defendants Nelson A. Mancia (“Mancia”) and NZM Inc. (“NZM”)
(collectively, “Defendants”).
Plaintiff requests:
(1) money judgment in the amount of $1,573,567.39,
consisting of:
(a) compensatory damages in the
amount of $360,000;
(b) punitive damages in the amount
of $1,080,000.00;
(c) prejudgment interest in the
amount of $125,654.80;
(d) costs in the amount of $912.59;
and
(e) attorney’s fees in the amount
of $7,000.
The Court would enter the default judgment if the proposed
judgment were modified to (a) delete punitive damages, which are not
appropriate for the reasons set forth below; and (b) reduce attorney fees to $6,746.54.
This case relates to a loan agreement between Plaintiff and
Defendants.
Plaintiff is a first-generation immigrant from Mexico.
Plaintiff is not fluent in English and cannot write in English.
In March 2020, Mancia, who speaks Spanish, introduced
himself to Plaintiff and represented that Mancia was a licensed real estate
broker who had a clothing factory. (Jose Luis Pulido Decl. ¶ 7.) Mancia’s real
estate license (DRE License No. 00961623) had in fact been revoked as early as
September 16, 1993, and has not been reinstated at any point since its
revocation. (Jose Luis Pulido Decl. ¶ 8, Ex. 1.)
Mancia represented to Plaintiff that if Plaintiff made a
loan to Mancia in the principal amount of $211,000.00 (the “Principal Amount”)
in connection with a real estate transaction, Plaintiff would receive the
Principal Amount and interest in the amount of $360,000.00 in return.
On March 22, 2021, at Mancia’s direction, Plaintiff issued
Defendant NZM, a company owned by Mancia, a check for $90,000.00. On the same
day, Plaintiff delivered $121,000.00 in cash to Mancia.
Plaintiff alleges that Mancia utilized his representation
that he was a licensed real estate broker and the fact that Plaintiff is not
fluent in English to induce Plaintiff to rely on Mancia in drafting a note
secured by deed of trust. On March 29, 2021, Mancia executed that note (the
“Note”). (See Complaint, Ex. A; Jose Luis Pulido Decl., Ex. 4.) The Note
provides that Mancia would pay the amount of $360,000.00 to Plaintiff by April
23, 2021. The Note provides that the whole sum of principal and interest
becomes payable immediately in the event of default.
Mancia failed to provide or record a deed of trust against
real property for Plaintiff’s benefit. Plaintiff alleges that Mancia never
intended to do so.
On April 23, 2021, Mancia did not pay any amounts to
Plaintiff in connection with the Note. Plaintiff alleges that Mancia never
intended to do so.
Following April 23, 2021, Plaintiff made several attempts to
contact Mancia to recover the amounts owed under the Note.
Plaintiff alleges that NZM is wholly controlled by Mancia
such that NZM is Mancia’s alter ego.
Plaintiff filed this action on June 11, 2024. The Complaint
raises claims for (1) breach of written contract (promissory note); (2) fraud
(intentional misrepresentation); (3) fraud (negligent misrepresentation); (4)
breach of fiduciary duty; (5) conspiracy; and (6) accounting.
On August 1, 2024, default was entered against Mancia.
On August 27, 2024, default was entered against NZM.
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 that are 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.
According
to the proof of service filed on June 14, 2024, Mancia was served on June 13,
2024 at 9354 Otto St, Downey, CA 90240 via personal service.
According
to the proof of service filed on July 16, 2024, NZM was served on July 15, 2024
at 9354 Otto Street, Downey, CA 90240 via personal service on Mancia, the CEO
and person authorized to receive service.
The Doe defendants were dismissed from the action on November
4, 2024, pursuant to Plaintiff’s request.
Plaintiff has filed a form CIV-100 seeking default judgment.
Daniel B. Lopez avers to Defendant’s non-military status.
Plaintiff provides a brief summary of the case in its
Summary of Case and Nature of Plaintiffs’ Claim. Plaintiff adequately pleads his
causes of action in the Complaint.
“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.) Moreover, a plaintiff must submit 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.)
Plaintiff seeks $360,000.00 in compensatory damages.
On March 22, 2021, Plaintiff loaned Mancia a total of
$211,000.00. (Jose Luis Pulido Decl. ¶¶ 9-11.) Plaintiff declares that the Note
provided that Mancia would pay Plaintiff a sum of $360,000.00 by April 23,
2021. (Jose Luis Pulido Decl. ¶ 14.) Plaintiff attached to the complaint a copy
of the note which, though it contains blank spaces, also states the amount of
$360,000 at the top and states that Mancia would pay “the sum of Three Hundreds
and sixty Thousands. .. payable April 23, 2021.” (See Jose Luis Pulido Decl., Ex. 4; Complaint
Ex. 1.)
Plaintiff
identifies an issue that the agreed-to interest from March 22, 2021 to April
23, 2021 was well in excess of the statutory maximum of 10 percent.
“The essential elements of usury are: (1) The transaction
must be a loan or forbearance; (2) the interest to be paid must exceed the
statutory maximum; (3) the loan and interest must be absolutely repayable by
the borrower; and (4) the lender must have a willful intent … to take the
amount of interest which he receives[.]” (Ghirardo v. Antonioli (1994) 8
Cal.4th 791, 798.) “A transaction is rebuttably presumed not to
be usurious.” (Ibid. [emphasis in original].)
The California Constitution provides for a maximum interest
rate of the higher of either (1) 10 percent, or (2) 5 percent plus the Federal
Reserve rate on loans to member banks. (Cal. Const., Art. XV § 1.) However,
this limitation does not apply to loans made or arranged by a licensed real
estate broker. (Cal. Const., Art. XV § 1; see also Civ. Code, § 1916.1.)
A borrower may be estopped from recovering
usurious interest paid where the borrower procured the loan through fraud. (Buck
v. Dahlgren (1972) 23 Cal.App.3d 779, 788.) In Buck, “[the borrower]
took the initiative in seeking the loan, he suggested the terms and conditions
upon which the loans were made, including the terms concerning penalties and
prepayment of interest. [The borrower] induced [the lender] to make the
additional loan of $7,000 with knowledge the security for the total
indebtedness was worth substantially less than the loan principal of $50,560.9 [The
borrower] had no intention or expectation of repaying the loan when he
requested the extension in 1966, and anticipated foreclosure on the mortgaged
property; [the borrower’s] representation the loan would be repaid upon
completion of certain projects was false. Moreover, [the borrower] was an
experienced real estate developer, while [the lender] was a native of Sweden
who had been in the United States for only a few years. Although he had an
education in engineering at the time he came to the United States, [the lender]
did not know much English and could not write in that language.” (Id. at
p. 789.) “Accordingly, … the trial court properly found [the borrower] was
estopped from claiming the loans from respondent were usurious.” (Id. at
p. 791.)
The
facts here are analogous. Mancia approached Plaintiff seeking a loan for a real
estate transaction. Mancia falsely represented that he was a licensed real
estate agent. Mancia induced Plaintiff to rely on Mancia to draft the
English-language Note because Plaintiff was not fluent in English and could not
write in English. Mancia falsely represented to Plaintiff that Mancia would
provide a deed of trust to secure the Note. Plaintiff has alleged, and the
Court must accept on default judgment, that Mancia did not intend to repay the
loan.
The
Court also notes that, due to Mancia’s representation that he was a licensed
real estate agent, the facts as Plaintiff believed them to be based on Mancia’s
representation would not have compelled a conclusion that the loan agreement
was usurious.
Thus,
the Court finds that Mancia is estopped from asserting that the interest
provided for in the Note is usurious.
The
Court therefore finds that Plaintiff’s claim for $360,000.00 is not usurious.
Plaintiff requests punitive damages in the amount of
$1,080,000.00.
“In an action for the breach of an obligation not arising
from contract, where it is proven by clear and convincing evidence that the
defendant has been guilty of oppression, fraud, or malice, the plaintiff, in
addition to the actual damages, may recover damages for the sake of example and
by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) “Malice” is
defined as conduct intended to cause injury to a person or despicable conduct
carried on with a willful and conscious disregard for the rights or safety of
others. (Turman v. Turning Point of Cent.
Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable
conduct subjecting a person to cruel and unjust hardship, in conscious
disregard of the person’s rights. (Ibid.)
“Fraud” is an intentional misrepresentation, deceit, or concealment of a
material fact known by defendant, with intent to deprive a person of property,
rights or otherwise cause injury. (Ibid.)
“Exemplary damages are proper in cases involving fraud and
may be allowed even though the tort incidentally involves a contract.” (Southern
California Disinfecting Co. v. Lomkin (1960) 183 Cal.App.2d 431, 451.)
In order to obtain punitive damages on default judgment, a
Plaintiff must serve a notice of intent to seek punitive damages that is
compliant with Code of Civil Procedure, section 425.115. The notice must state
the name of the defendant to which notice is given, the names of the plaintiff
and their attorney, the fact that the plaintiff reserves the right to seek
punitive damages against the defendant, and the amount of punitive damages.
(Code Civ. Proc., § 425.115, subd. (b).) “The plaintiff shall serve the
statement upon the defendant pursuant to this section before a default may be
taken, if the motion for default judgment includes a request for punitive
damages.” (Code Civ. Proc., § 425.115, subd. (f).)
Plaintiff’s notice of punitive damages contains the
information required by section 425.115(b). (Lopez Decl., Ex. 8.)
Mancia was defaulted on August 1, 2024. According to the
proof of service filed on October 17, 2024, Plaintiff’s notice of punitive
damages was personally served on Mancia on October 17, 2024 at 9354 Otto
Street, Downey, CA 90240.
Because the notice of punitive damages was not served before
default was taken as required by section 425.115(f), punitive damages are not
permissible here.
The Complaint requests interest on the unpaid loan amount. (Complaint
at p. 5:13-14.) Because the parties agreed that Mancia would pay Plaintiff
$360,000.00 by April 23, 2021, the amount of damages can be made certain from
the time of breach.
“If a contract entered into after January 1, 1986, does not
stipulate a legal rate of interest, the obligation shall bear interest at a
rate of 10 percent per annum after a breach.” (Civ. Code, § 3289, subd. (b).)
The Note appears not to specify an interest rate. (Jose Luis
Pulido Decl., Ex. 4.) Thus, the Court applies a rate of 10 percent.
Plaintiff provides his interest calculations showing that he
is owed $125,654.80 in interest running from April 23, 2021 to October 18,
2024. (Lopez Decl. ¶¶ 6-7.) The Court finds that this amount is appropriate.
Plaintiff includes a memorandum of costs in the submitted
Form CIV-100. Daniel B. Lopez avers that Plaintiff expended $7,912.59 in costs.
$7,000.00 of these costs are listed as “Attorney’s Fees (Contract)”.
Plaintiff must seek attorney’s fees as attorney’s fees – not
as generic costs of litigation. Attorney’s fees have their own structure
provided by the Local Rules, as discussed immediately below. The Court notes
that Plaintiff only includes this fee request in his memorandum of costs, and
not in the cost section on the first page of the Form CIV-100, which properly
requests $912.59 in costs.
The Court sets Plaintiff’s costs at $912.59.
Plaintiff
requests $7,000.00 attorney’s fees.
This is an action on a contract.
Because the judgment is over $100,000, the maximum recovery of attorney’s fees
is equal to $2,890 plus 1% of the excess over $100,000. (Local Rule 3.214.) The
excess over $100,000 here is $385,654.80. 1% of that amount is about $3,856.54
(rounded down). Plaintiff’s maximum fee is therefore $6,746.54.
Plaintiff’s request exceeds this amount. The Court therefore
reduces Plaintiff’s attorney’s fees to $6,746.54.
Plaintiff
has submitted a proposed form of judgment.
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.
Plaintiff does not need to submit a statement of damages
because this is not a personal injury or wrongful death case.