Judge Lynette Gridiron Winston, Case Number: 23PSCV03708, Date: 2024-04-17 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: 23PSCV03708, Date: 2024-04-17 Tentative Ruling

Plaintiff’s request for entry of default judgment is DENIED without prejudice.

This is an action for breach of contract and common counts in connection with a bank loan. On November 30, 2023, plaintiff PNC Bank, National Association, successor by merger from Compass Bank (Plaintiff) filed this action against defendants Householding Consulting Group Inc. (Household), Denise G. Gallego (Gallego) (collectively, Defendants), and Does 1 through 100, alleging causes of action for breach of loan agreement, breach of guaranty, money lent, and account stated.

On January 31, 2024, default was entered against Defendants. On April 3, 2024, Plaintiff submitted a request for entry of default judgment.

Code of Civil Procedure section 585 permits entry of a default judgment after a party has failed to timely respond or appear. (Code Civ. Proc., § 585.) A party seeking judgment on the default by the court must file a Request for Court Judgment, and: (1) a brief summary of the case; (2) declarations or other admissible evidence in support of the judgment requested; (3) interest computations as necessary; (4) a memorandum of costs and disbursements; (5) a proposed form of judgment; (6) a dismissal of all parties against whom judgment is not sought or an application for separate judgment under Code of Civil Procedure section 579, supported by a showing of grounds for each judgment; (7) exhibits as necessary; and (8) a request for attorneys’ fees if allowed by statute or by the agreement of the parties. (Cal. Rules of Court, rule 3.1800.)

Plaintiff seeks default judgment against Defendants in the total amount of $231,210.97, including $200,000 in damages, $1,410.69 in late charges, $25,302.78 in interest, $3,890.00 in attorney fees, and $607.50 in costs. The Court finds a few problems with Plaintiff’s request for entry of default judgment. First, Plaintiff’s late charges do not match the amount alleged in the complaint. The complaint alleges a late charge of $1,010.69, (Compl., ¶¶ 20-21; Id., Prayer for Relief, ¶ 3), but Plaintiff requests $1,410.69 in the default judgment package, (CIV-100, ¶ 2, subd. (b)(1); JUD-100, ¶ 6, subd. (a)(2).) Plaintiff’s default judgment request exceeds the amount of damages demanded in the complaint, which the Court cannot grant. (See Code Civ. Proc., § 585, subd. (a).)

Second, Plaintiff’s prejudgment interest calculation is lacking in detail, as it does not provide the start date of the calculation. (See Summary of Case, p. 5, ¶ 2; Mascia Decl., p. 5, ¶ 2.) The Court also notes that the laws of the State of Delaware govern the underlying loan agreement and guaranty. (Compl., Ex. 1, p. 24 of pdf, ¶ 10.16; Id., Ex. 1, p. 34 of pdf, ¶ 17; Id., Ex. 2, p. 48 of pdf, ¶ 20.) This means the laws of the State of Delaware govern the prejudgment interest determination here. (Airs Aromatics, LLC v. CBL Data Recovery Technologies Inc. (2020) 50 Cal.App.5th 1009, 1014.)[1] Alternatively, if this were under California law, there would be a problem with the 16.8% default interest rate exceeding the maximum legal interest rate of 10%. (See Civ. Code § 3289, subd. (b).) Either way, Plaintiff needs to provide greater detail regarding the prejudgment interest rate it seeks here for the Court to properly assess the amount requested. (See Cal. Rules of Court, rule 3.1800, subd. (a)(3).)

Third, it is unclear to the Court if Plaintiff is entitled to recover attorney’s fees here as to Defendant Household. The Court could not find an attorney’s fees provision in the original loan agreement or reinstated loan agreement between Plaintiff and Defendant Household. (See Compl., Ex. 1.) The guaranties on the other hand do contain attorney’s fees clauses. (See Compl., Ex. 2, p. 41 of pdf; Id., p. 43 of pdf, ¶ 1, subd. (a).) It also appears to the Court that the maximum Plaintiff would be entitled to recover in attorney’s fees here would be $1200.00. Civil Code section 1717.5, subdivision (b), provides that the attorney’s fees recoverable in connection with a claim for common counts is the lesser of $1200.00 or the amount available under a local fee schedule, which would be Local Rule 3.214 in this case. (Civ. Code, § 1717.5, subd. (b).) Plaintiff’s calculation under Local Rule 3.214 exceeds the $1200.00 permitted under Civil Code section 1717.5, subdivision (b). (Mascia Decl., 5:4-14.)

Based on the foregoing, Plaintiff’s request for entry of default judgment is DENIED without prejudice.

[1] The Court also notes that the original loan agreement and guaranty were governed by California law. (Compl., Ex. 1, p. 12 of pdf; Id., Ex. 2, ¶ 41 of pdf). But, the reinstated agreements indicate Delaware law, so that is what governs here. (See Airs Aromatics, LLC, supra, 50 Cal.App.5th at p. 1014.)