Judge: Wesley L. Hsu, Case: 21PSCV00537, Date: 2023-04-12 Tentative Ruling

Case Number: 21PSCV00537    Hearing Date: April 12, 2023    Dept: L

Plaintiffs Olivia Hernandez’s and Sugey Lopez’s Application for Default Judgment is DENIED without prejudice.

Background   

This lawsuit involves a Property Assessed Clean Energy (“PACE”)/Home Energy Renovation Opportunity (“HERO”) loan. Plaintiffs Olivia Hernandez (“Hernandez”) and Sugey Lopez (“Lopez”) (hereinafter collectively, “Plaintiffs”) contend that, in the fall of 2018, Esmeralda de Vasquez (“de Vasquez”) and Aldo Manuel Perez Martinez (“Perez”), acting as unlicensed agents for Danneco Construction (“Danneco”), came to Hernandez’s home located at 569 La Seda Road, La Puente, California 91744 (the “Property”) and represented to Hernandez that they could build an extra dwelling unit on same for $55,000.00, that they could help her obtain a loan for the project, that the loan would not take the form of a lien, that she would not have to repay the loan until the unit was complete and that rental income from the unit would pay for the loan. Although Hernandez was a Spanish speaker and the presentation was made in Spanish, the contracts provided to Hernandez were in English. Lopez is a co-owner of the Property. The total cost of the project was over $120,000.00 and the loan was ultimately recorded as a municipal tax lien against the home. Perez forged or fraudulently procedures Hernandez’s signature on a completion certificate before any work had been performed.

On October 4, 2021, Dan Thanh Danh’s (“Danh”) default was entered. On October 5, 2021, Danneco’s default was entered.

On January 3, 2022, de Vasquez’s and Perez’s defaults were entered.

On February 23, 2022, Plaintiffs filed a First Amended Complaint (“FAC”), asserting causes of action against Danneco, de Vasquez, Perez, Danh, County of Los Angeles (“County”) and Does 1-10 for:

1.                  Intentional Misrepresentation

2.                  Fraudulent Concealment

3.                  Negligent Misrepresentation

4.                  Financial Elder Abuse (Welf. & Inst. Code, §§ 15657.5-15657.6; Prob. Code, § 859)

5.                  Unfair and Deceptive Business Practices (Cal. Bus. & Prof. Code §§ 17200 et seq.)

6.                  Rescission of Contracts

7.                  Cancellation of Home Solicitation Contract (Cal. Civ. Code §§ 1689.5-1689.14)

8.                  Cancellation of Instruments (Civ. Code, § 3412)

9.                  Declaratory Relief

10.              Breach of Contract

11.              Breach of the Implied Warranty of Fitness for a Particular Purpose

On November 4, 2022, Plaintiffs dismissed County, with prejudice.

An Order to Show Cause Re: Default Judgment as to all Defaulted Defendants is set for April 12, 2023.

Discussion

Plaintiff’s Application for Default Judgment is denied without prejudice. The following defects are noted:

1.                  Plaintiffs’ requests for entry of default against Danneco, de Vasquez, Danh and Perez as to the FAC were rejected by the court on May 10, 2022. Plaintiffs are to brief for the court the issue of whether their FAC “opened the default.” (See Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2022) ¶ 5:9.5.)

2.                  The instant default prove-up packet pertains only to Danneco, Danh and Perez. Plaintiffs have not dismissed de Vasquez and Does 1-10 or filed an “application for separate judgment against specified parties under Code of Civil Procedure section 579, supported by a showing of grounds for each judgment.” (Cal. Rules Ct., Rule 3.1800, subd. (a)(7).) On December 14, 2022, the court denied Plaintiffs’ “Ex Parte Application for Separate Judgment for Defendant Esmeralda de Vasquez;” the minute order from that date states, in relevant part, that “[a]ll Defaulted Defendants should be included on the Default Judgment.”

3.                  Plaintiffs seek $537,676.28 as the “demand of complaint” set forth on Judicial Council Form CIV-100 [i.e., $133,919.07 in compensatory damages, $267,838.14 in Probate Code § 859 damages, $500 in Business & Professions Code § 7160 penalties, $1,500 in Civil Code § 3345 treble penalties and $133,919.07 in punitive damages (awarded as against Danneco, Danh and Martinez each)]; however, the prayer of Plaintiffs’ FAC generically refers to “compensatory damages,” “twice the amount of any property recovered pursuant to section 859 of the Probate Code,” “punitive damages,” “restitution,” “penalties and assessments,” a request for a declaration that the Home Improvement Contracts and Assessment Contract are each void and that no valid lien exists on the subject property arising from any of the alleged contracts at issue, cancellation of the aforesaid contracts, and preliminary and permanent injunctive relief. The only specific monetary figure referenced in the complaint as to Plaintiffs’ damages is $122,120.20. (FAC, ¶¶ 94, 108, 121-122, 133 and 172.) In actions for money damages a default judgment is limited to the amount demanded in the complaint. (See Greenup v. Rodman (1986) 42 Cal.3d 822, 824.) The amount demanded in the complaint is determined both from the prayer and from the damage allegations in the complaint. (National Diversified Services, Inc. v. Bernstein (1985) 168 Cal.App.3d 410, 417-418).

4.                  The proofs of service for Danh and Danneco as to Plaintiffs’ original complaint (Lee Decl., ¶¶ 2 and 3, Exhs. 1 and 2) and as to Plaintiffs’ FAC (Id., ¶¶ 15 and 16, Exhs. 12 and 13) do not reference that a Code of Civil Procedure § 425.115 statement of damages was served. There is no indication that Perez received notice of any such statement, either. This statement should have been published at the same time as the summons as to Perez [see below]. A Code of Civil Procedure § 425.115 statement of damages must be served on a defendant “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).) It must also be “served in the same manner as a summons.” (Code Civ. Proc., § 425.115, subd. (g).)

5.                  Plaintiffs have not provided the court with any evidence of Defendants’ respective financial conditions. A default judgment which includes punitive damages requires plaintiffs to provide evidence of defendants’ net worth. (See Cummings Medical Corp. v. Occupational Medical Corp. (1992) 10 Cal.App.4^th 1291, 1298 [“Evidence of the defendant’s financial condition is relevant to a punitive damages award in two ways. ‘[O]bviously, the function of deterrence. . . will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort. . . By the same token, of course, the function of punitive damages is not served by an award which, in light of the defendant’s wealth and the gravity of the particular act, exceeds the level necessary to punish and deter.’”].)

6.                  Plaintiffs have not submitted declarations.