Judge: Kevin C. Brazile, Case: 22STCV32953, Date: 2023-12-19 Tentative Ruling

Hearing Date: December 19, 2023

Case Name: Melamed v. Krstanovic, et al.

Case No.: 21STCV40853

Matter: Non-Appearance Case Review Re: Default Judgment

Ruling: The Default Judgment Application is denied without prejudice. 

Plaintiff to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

This is an action arising from an unpaid oral loan.  Plaintiff Shahla Melamed seeks default judgment against Defendants Gabrijel Krstanovic and Seaside Construction Management Company, LLC.  

The default judgment application is sufficient in all respects except the request for $5 million in punitive damages.  This is because no evidence of Defendants’ financial condition is provided.  

Indeed, when assessing punitive damages on default judgment, courts consider the following three factors: (1) the reprehensibility of the defendant’s conduct; (2) proportionality—i.e., whether the amount of the award bears a reasonable relationship to the damage actually suffered by the plaintiff; and (3) whether the award is reasonable in light of the defendant’s financial condition.  (Baxter v. Peterson (2007) 150 Cal.App.4th 673, 679.)  The purpose of punitive damages is to deter, without being excessive.  (Adams v. Murakami (1991) 54 Cal.3d 105, 112.)  “A reviewing court cannot make a fully informed determination of whether an award of punitive damages is excessive unless the record contains evidence of the defendant’s financial condition.”  (Id. at p. 110.)

Plaintiff urges the Court to follow Cummings Med. Corp. v. Occupational Med. Corp. (1992) 10 Cal.App.4th 1291, 1298 in which it was stated that “where the defendant has been guilty of fraud, punitive damages may properly be based on evidence of the profitability of the defendant's misconduct.”

The Court, however, will not follow Cummings and will instead follow Kenly v. Ukegawa (1993)16 Cal.App.4th 49, 57 wherein it was said that “in most cases there must be evidence of the defendant's net worth in order to support the punitive damage award. An award based solely on the alleged ‘profit’ gained by the defendant, in the absence of evidence of net worth, raises the potential of its crippling or destroying the defendant, focusing as it does solely on the assets side of the balance sheet without examining the liabilities side of the balance sheet. Without evidence of the entire financial picture, an award based on ‘profit’ could leave a defendant devoid of assets with which to pay his other liabilities.”

Therefore, the default judgment application is denied without prejudice.  Plaintiff is to file an amended proposed judgment in which punitive damages are omitted.  The corresponding fee request should be adjusted.

Plaintiff to give notice.