Judge: Michael E. Whitaker, Case: 24SMCV00765, Date: 2025-01-21 Tentative Ruling

Case Number: 24SMCV00765    Hearing Date: January 21, 2025    Dept: 207

TENTATIVE RULING

Plaintiff Barbara Byrnes on behalf of Byrnes Children and Family Trusts (“Plaintiff”) requests for default judgment against Defendants Jacob Chait and I.M. Chait Gallery/Auctioneers, Inc. (“Defendants”) in the amount of $218,168.53, which is composed of special damages in the amount of $181,155.72; prejudgment interest in the amount of $32,706.17; costs in the amount of $605.08; and attorneys’ fees in the amount of $3,701.56.

            a.         Damages 

            Plaintiff’s Complaint alleges seven causes of action for (1) Breach of Contract; (2) Breach of Implied Contract; (3) Negligence; (4) Breach of Fiduciary Duty; (5) Fraud; (6) Violation of Civil Code section 1812.600 et seq.; and (7) violation of Business & Professions Code section 17200 et seq.  

            Defendants were personally served with a copy of the summons and complaint on March 5, 2024. Default was entered against Defendants on April 15, 2024, and the Doe defendants were dismissed on June 4, 2024.

            Plaintiff’s Complaint seeks $182,609.80 in damages. (See Compl.)  Therefore, Plaintiff does not seek damages in excess of what is pled in the Complaint. (See Code Civ. Proc., § 580, subd. (a) [“The relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint”]; Levine v. Smith (2006) 145 Cal.App.4th 1131, 1136-1137 [“when recovering damages in a default judgment, the plaintiff is limited to the damages specified in the complaint”].) 

            In support, Plaintiff provides the Declaration of Barbara Byrnes, attached to which is an unsigned copy of the consignment agreement between Plaintiff and Defendants, along with a representation that a signed copy was never returned to Plaintiff, but that on or about May 20, 2022, after obtaining Plaintiff’s signature, Defendants removed 243 items from Plaintiff’s parent’s home to be sold for auction on consignment.  (Byrnes Decl. ¶¶ 2-12 and Ex. 1.)

            Plaintiff further declares that the proceeds from the sale of Plaintiff’s property total $244,671.15, and the amount owed to Plaintiff, after the commission is subtracted, totals $181,155.72.  (Byrnes Decl. ¶¶ 31-32 and Ex. 9.)  Yet, Defendants have not paid Plaintiff.  (Byrnes Decl. ¶ 35.)

            Thus, Plaintiff has provided evidence demonstrating her entitlement to the requested $181,155.72 in damages.

b.         Punitive Damages

            Although not yet part of Plaintiff’s formal default judgment request, in or about December 2024, Plaintiff served a Statement of Damages showing punitive damages in the amount of $543,467.16 to the individual defendant via publication and the entity via the California Secretary of State. 

            “[D]ue process requires notice to defendants, whether they default by inaction or by wilful obstruction, of the potential consequences of a refusal to pursue their defense. Such notice enables a defendant to exercise his right to choose—at any point before trial, even after discovery has begun—between (1) giving up his right to defend in exchange for the certainty that he cannot be held liable for more than a known amount, and (2) exercising his right to defend at the cost of exposing himself to greater liability. To this end, . . . , ‘The rules governing default judgment provide the safeguards which ensure that defendant's choice is a fair and informed one.’” (Greenup v. Rodman (1986) 42 Cal.3d 822, 829.)

            To that end, Code of Civil Procedure section 425.11 provides in pertinent part: “When a complaint is filed in an action to recover damages for personal injury or wrongful death, the defendant may at any time request a statement setting forth the nature and amount of damages being sought. The request shall be served upon the plaintiff, who shall serve a responsive statement as to the damages within 15 days. In the event that a response is not served, the defendant, on notice to the plaintiff, may petition the court in which the action is pending to order the plaintiff to serve a responsive statement. If no request is made for the statement referred to in subdivision (b), the plaintiff shall serve the statement on the defendant before a default may be taken.” (Code Civ. Proc., § 425.11, subds. (b)-(c), emphasis added.)

            And “a plaintiff's . . . failure to give formal notice of the amount of money damages it seeks constitutes a critical defect in the proceedings. The clerk or judge has no authority to enter a default unless and until formal notice is given. And failure to give formal notice may deprive a

defendant of due process. For these reasons, a default entered without formal notice of the amount or other relief or amount sought is invalid.” (Schwab v. Southern California Gas Co. (2004) 114 Cal.App.4th 1308, 1324-1325, citations omitted.) But “by its terms section 425.11 requires that a plaintiff personally serve on defendant a statement setting forth the nature and amount of damages being sought; it does not require the statement to be filed with the court.” (Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1147, disapproved of on other grounds by Lewis v. Ukran (2019) 36 Cal.App.5th 886.)

            Here, as a threshold matter, a Statement of Damages pursuant to Code of Civil Procedure 425.11 may satisfy the due process requirements to put a defendant on notice of the amount at issue before a default is taken in personal injury and wrongful death cases only.  (See Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1302 and Cal. Judges Benchbook, Civ. Proc. Before Trial § 16.16, p. 1924 [noting].)  Because this case is not a personal injury or wrongful death case, service of a statement of damages will not cure the due process issue.

Equally important, in determining how much to award in punitive damages, Plaintiff needs to provide evidence of Defendants’ financial condition. (Adams v. Murakami (1991) 54 Cal.3d 105, 119.) “[T]he purpose of punitive damages is not served by financially destroying a defendant. The purpose is to deter, not to destroy.” (Id. at p. 112.) “[A] punitive damages award is excessive if it is disproportionate to the defendant’s ability to pay.” (Ibid., citations omitted.) For this reason, the United States Supreme Court has explained that there are constitutional limitations on punitive damages awards. (State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 416.) “It has been recognized that punitive damages awards generally are not permitted to exceed 10 percent of the defendant’s net worth.” (Weeks v. Baker &McKenzie (1998) 63 Cal.App.4th 1128, 1166.)  Plaintiff has advanced any evidence of Defendants net worth. 

Therefore, the Court finds that awarding punitive damages (which are not yet formally part of Plaintiff’s default judgment request in any event) is improper.

c.         Pre-Judgment Interest 

            The interest computation for the $32,706.17 requested is stated as follows:  

·       $181,155.72 principal balance * 10% contractual interest rate ÷ 365 days/year = $49.63 daily interest for the 659 days from August 10, 2022 to May 30, 2024. 

            Therefore, Plaintiff is entitled to the requested pre-judgment interest.

            d.         Attorneys’ Fees and Costs 

Code of Civil Procedure section 1033.5, which outlines recoverable costs to a prevailing party under Code of Civil Procedure section 1032, permits the recovery of attorneys’ fees when authorized by contract, statute, or law.  (Code Civ. Proc., § 1033.5, subd. (a)(10).)  Code of Civil Procedure section 1021 provides “[e]xcept as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties [….]”  Similarly, Civil Code section 1717 provides “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”  (Civ. Code, § 1717, subd. (a).)

The Code of Civil Procedure defines the “prevailing party” as follows:

[T]he party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party” shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.

(Code Civ. Proc., § 1032, subd. (a)(4).)  Section 14.8 of the agreement provides:

Attorney’s Fees: Should any party institute any action or proceeding in court, including in any bankruptcy proceeding, to enforce or seek an interpretation of any provision hereof or for damages by reason of an alleged breach of any provision of this Agreement, the prevailing party shall be entitled to recover from the losing party such amount as the court may adjudge to be reasonable attorneys' fees for services rendered. The prevailing party shall be entitled to recover the above attorneys' fees even if the losing party or parties should become the subject of an order for relief under Title 11 of the United States Bankruptcy Code, or any successor statute or any other applicable statute.      

(Ex. 1 to Byrnes Decl.)

            Local Rule 3.214 provides that reasonable attorneys’ fees in a contract case for amounts over $100,000 are $2,890 plus 1% of the excess over $100,000.  Here, that amount is $3,701.56, the amount Plaintiff requested.  Therefore, Plaintiff’s request for attorneys’ fees is granted.

            Plaintiff also requests $605.08 in costs composed of $437.25 in filing fees, $42.40 in process server fees, and $125.43 in FedEx mailings. (CIV-100.) Plaintiff’s request for costs is granted as Plaintiff is the prevailing party in this action. (Code Civ. Proc., § 1032, subd. (a)(4).)

CONCLUSION

            Plaintiff’s request for default judgment is granted, less the claim for punitive damages.

DATED:  January 21, 2025                           ________________________________

                                                                        Michael E. Whitaker

                                                                        Judge of the Superior Court