Judge: Yolanda Orozco, Case: 21STCV28586, Date: 2023-02-24 Tentative Ruling
Case Number: 21STCV28586 Hearing Date: February 24, 2023 Dept: 31
(1) REQUEST FOR ENTRY OF DEFAULT JUDGMENT AND
(2) REQUEST FOR AMENDED JUDGMENT
On August 3, 2021, Plaintiff Jerrold A. Fine (“Plaintiff”) filed a complaint against Defendant Teri Lee Bernardi, Green Grown Bulk, Inc. (“GGB”), and Does 1 through 10 for (1) breach of written contract, (2) money lent, (3) money had and received, (4) open book account, and (5) account stated. Plaintiff alleges Defendants borrowed money from Plaintiff and failed to repay him.
GGB was served with a copy of the summons and complaint on September 1, 2021. (Fine Decl. ¶ 14, Ex. 6.) Default was entered against GGB on October 13, 2021. (Fine Decl. ¶ 15, Ex. 7.)
On November 14, 2022, Summary Judgment was granted in favor of Plaintiff and against Defendant Terri Lee Barnardi.
On November 16, 2022, Plaintiff moved for Default Judgment against Defendant GGB. The Court denied Default Judgment on December 16, 2022.
On November 17, 2022. Defendant Terri Bernardi filed an Appeal that was eventually dismissed.
On January 17, 2023, Plaintiff renewed his request for Default Judgment and a Motion to Amend Judgment.
Does 1 to 10 were dismissed on January 18, 2023.
LEGAL STANDARD
A. Default Judgment
Code of Civil Procedure section 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 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; (7) a dismissal of all parties against whom judgment is not sought or an application for separate judgment under CCP § 579, supported by a showing of grounds for each judgment; (8) exhibits as necessary; and (9) a request for attorneys’ fees if allowed by statute or by the agreement of the parties. (Cal. Rules of Court, rule 3.1800.)
B. Request for Amended Judgment
The Code of Civil Procedure Section 187 gives every court the power and authority to carry its jurisdiction into effect, including amended judgment to add additional judgment debtors, and thereby make the additional judgment debtor liable on the judgment. (See Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 280.) Amending a judgment, pursuant to section 187, in order to add an alter ego of an original judgment debtor is an equitable procedure based upon the theory that the Court is not amending the judgment to add a new defendant, but is merely inserting the correct name of the real defendant. (McClellan v. Northridge Park Townhome Owners Assn. (2001) 89 Cal.App.4th 746, 752.)
TENTATIVE RULING:
The Court CONTINUES the hearing on Plaintiff’s request for Default Judgment so that Plaintiff can submit a corrected CIV-100 form and proposed judgment.
Plaintiff’s Request to Amend the Judgment is DENIED.
DISCUSSION
a. Summary of Case and Damages Sought
Defendant Terri Lee Bernardi is the chief executive officer, sole director, and sole shareholder of Green Grown, Bulk, Inc. (“GGB”). (Soffer Decl. ¶¶ 15, 16, Ex. 10; Fine Decl. ¶¶ 3, 4.)
On May 15, 2019, Bernardi signed a Promissory Note wherein Plaintiff lent Bernardi and GGB at a total of $150,000.00 with an interest rate of 10% per annum. (Fine Decl. ¶ 5, Ex. 1.) The Promissory Note provided that Bernardi would make payments on the loan beginning June 19, 2019, until December 14, 2019, at which time all outstanding amounts were due and payable. (Fine Decl. ¶ 5.) The Promissory Note also provided that Bernardi was liable for legal costs, including attorney’s fees, for costs incurred in connection with collecting on the Promissory Note. (Id.) The Promissory Notes states that it is also a “business loan.” (Id. Ex. 1.)
Unable to pay the Promissory Note, Plaintiff, and Bernardi, on behalf of herself and GGB, executed a second loan (the “Loan Agreement”) on January 9, 2020. (Fine Decl. ¶ 6.) The Loan Agreement modified the Promissory Note and allowed further cash advances and modified the repayment schedule. (Id. Ex. 2.) The Loan Agreement refers to Bernardi as TB and states:
“TB owns and operates Green Growth Bulk, Inc. When referring to TB, by reference this includes Green Grown Bulk as well.”
(Fine Decl. Ex. 2.)
Plaintiff discovered in or about April 2021, that Bernardi had failed to comply with the terms set out in the Loan Agreement and that Bernardi and GGB had breached their obligations under the Loan Agreement. (Fine Decl ¶¶ 9, 10.)
On or about June 11, 2021, Plaintiff provided Bernardi and GGB an account of all amounts due under the Promissory Note and the Loan Agreement (the “Loan Accounting”). (Fine Decl. ¶ 11, Ex. 3.) Per the Loan Accounting Bernardi/GGB paid back $23,000.00 of the $564,060.00 lent, with Bernardi and GGB owing a total of $541,060.00. (Id.)
Plaintiff also provided Bernardi and GGB an accounting of all amounts paid on Bernardi’s behalf in connection with her purchase of two personal items (a ring and a car) and freight charges relating to GGB as outlined in the Expenditures Accounting. (Fine Decl. ¶ 12.) The sum due on the Expenditures Accounting was $75,407.00. (Id. Ex. 4.) In total, Bernardi and GGB owe $616,467.00 ($541,060.00 plus $75,507.)
Plaintiff’s Complaint specified that Plaintiff sought general damages in the amount of $631,467.00, along with prejudgment interest in that amount, and attorney’s fees, expenses, and costs. (See e.g., Compl.) Therefore, GGB had proper notice of the amount of damages sought by Plaintiff in the Complaint. (See Code Civ. Proc., § 580.)
b. Prejudgment Interest
Plaintiff provides a calculation of interest owed on the Promissory Note ($541,060.00) and Loan Agreement ($75,507) totaling $616,467.00 in damages based on ten percent (10%) interest per annum. (Soffer Decl. ¶ 13, Ex. 9.) Calculations begin from the date disbursements were made to the default date of June 11, 2021 and continue to February 24, 2023. (Id.)
On the Loan Agreement, pre-default interest is $79,869.53 and post-default interest is $92,350.93, totaling $172,220.46. On the Expenditures Accounting, the pre-default interest is $3,294.64 and the post-default interest is $12,870.86, totaling $16,165.50.
The total prejudgment interest is correctly calculated to be $188.385.96 ($172,220.46 plus $16,165.50).
c. Attorney Fees and Costs
The Promissory Note expressly provides for Attorney’s Fees. (Fine Decl. Ex. 1)
However, Plaintiff is not seeking that Defendant GGB pay attorney’s fees. (See CIV-100.) Instead, the proposed judgment request that Defendant Barnardi, severally but not jointly, pay $75,972.17 for attorney’s fees and costs.
Accordingly, no attorney’s fees are sought regarding Defendant GGB.
d. Applicability of a Separate Judgment
California Rules of Court, rule 3.1800 provides that a party seeking a default judgment must file “[a] dismissal of all parties against whom judgment is not sought or 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 of Court, rule 3.1800(a)(7).)
“In an action against several defendants, the Court may, in its discretion, render judgment against one or more of them, leaving the action to proceed against the others, whenever a several judgment is proper.”
(Code Civ. Proc., § 579 [bold added].)
Here, the Court appropriately rendered summary judgment against Defendant Bernardi before considering the motion for default judgment against Defendant GGB. (See Mirabile v. Smith (1953) 119 Cal.App.2d 685, 689 [finding that the trial judge was precluded from entering a default judgment against a defaulting defendant until the determination of the action on its merits regarding the liability of the non-defaulting defendant because “[t]he judgment sought to be obtained in the present action is a joint, and not a several judgment, predicated upon a claimed partnership or joint venture liability.”] [italics original].)
The payment due under the Loan Agreement and Expenditure Accounting is $616,467.00 and both Defendant GGB and Defendant Bernardi are jointly liable for that amount and for the pre-judgment interest owed. However, Plaintiff fails to show that the Defendants are also severally liable for the damages owed. The Court notes that liability as to several defendants is presumed to be joint and not several. (Civ. Code, § 1431.) The common law rule is “‘that several persons contracting together with the same party for one or the same act shall be regarded as jointly and not as individually or separately liable, in the absence of any words to show that a distinct as well as entire liability was intended to fasten upon the promisors.’” (Berg v. Pulte Home Corp. (2021) 67 Cal.App.5th 277, 294 citing Farmers’ Exchange Bank v. Morse (1900) 129 Cal. 239, 243.) Here, Plaintiff fails to present any evidence or language in the Promissory Note or Loan Agreement that supports Plaintiff’s assertion that liability for the loan is joint and severable.
At issue is whether a separate Judgment against GGB is appropriate given that its liability for damages and the prejudgment interest owed to Plaintiff is not severable from Defendant Bernardi’s liability.
In Cuevas v. Truline Corp. (2004), the Second District found that separate and partial judgments do not run afoul of the one final judgment rule:
“The one final judgment rule for appellate proceedings does not, as Truline and Martinez argue, prohibit separate or partial judgments against some, but not all, defendants. Such incomplete or partial dispositions are familiar in our jurisprudence. For example, Code of Civil Procedure section 579 allows entry of judgment against one defendant while continuing the action against another defendant. (Citation.) The law also permits separate judgments against defaulting and non defaulting defendants. In addition, it allows separate judgments by summary judgment. Proposition 51 permits separate judgments for noneconomic damages. (Civ. Code, § 1431.2.) What the one final judgment rule prohibits is appealing from partial dispositions while other unresolved matters remain pending against other parties.”
(Cuevas v. Truline Corp. (2004) 118 Cal.App.4th 56, 60–61 [bold added].)
Accordingly, the Court may grant Plaintiff’s request for Default Judgment against Defendant GGB for $616,467.00 in damages and $188,385.96 in prejudgment interest. The Court may also amend the judgment to add that GGB is jointly liable for the $616,467.00 in damages and $188,385.96 in prejudgment interest along with Defendant Bernardi.
The Court DENIES Plaintiff’s request to hold GGB “jointly and severally liable” for any damages requested by Plaintiff’s proposed judgment.
Request for Amended Judgment
Pursuant to section 187, Plaintiff moves for an Amended Judgment of the November 28, 2022 summary judgment entered against Defendant Bernardi and requests that Defendant GGB be incorporated into the judgment pursuant to Plaintiff’s Motion for Default Judgment.
As stated above, Plaintiff has failed to show that Defendant GGB is “jointly and severally” liable for the damages owed. Accordingly, the proposed judgment cannot be amended to show that GGB is also severally liable for the damages.
Furthermore, to add Defendant GGB as an alter ego of the original judgment debtor:
“the judgment creditor must show, by a preponderance of the evidence, that:‘(1) the parties to be added as judgment debtors had control of the underlying litigation and were virtually represented in that proceeding; (2) there is such a unity of interest and ownership that the separate personalities of the entity and the owners no longer exist; and (3) an inequitable result will follow if the acts are treated as those of the entity alone.’”
(Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 280.)
Here, Plaintiff failed to discuss, let alone prove, the above elements.
Accordingly, the Court DENIES Plaintiff’s request to add Defendant GGB as a Judgment Debtor.
The Motion to Amend the Judgment is DENIED.
Conclusion
At the hearing on this Motion, it was agreed that Plaintiff will file two forms of judgment, one for each Defendant. Each judgment will indicate that the Defendants are jointly liable for $616,467.00 in damages and $188,385.96 in prejudgment interest. Only the judgment against Bernardi will include attorneys' fees granted and costs in the amount of $75,972.17.
The Court GRANTS the Request for Entry of Default Judgment against Defendant GGB, and DENIES the Request to Amend the Judgment