SCHWAB v. RONDEL HOMES INC

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Court of Appeal, Fourth District, Division 3, California.

David SCHWAB et al., Plaintiffs and Appellants, v. RONDEL HOMES, INC., et al., Defendants and Respondents.

No. G006662.

Decided: August 31, 1989

Andrew K. Ulich and Meserve, Mumper & Hughes, Irvine, for plaintiffs and appellants. Chase, Rotchford, Drukker & Bogust, Patrick A. Long, Kirstin H. Simonson, Long & Williamson and John S. Williamson, Santa Ana, for defendants and respondents.

OPINION

David Schwab and Bill Allen obtained a default judgment in their action against Rondel Homes and individual defendants based on a denial of rental housing to Allen as a handicapped person.   The trial court set aside the default and default judgment because Schwab and Allen failed to serve the defendants with a statement of damages.   On appeal, Schwab and Allen claim their action was not one for personal injury and therefore a statement of damages was not required.   We reverse with directions to enter judgment for plaintiffs.

I

Allen, a deaf person, and Schwab, his roommate, sued Rondel alleging Rondel had refused to rent an apartment to them because Allen owned a signal dog.   The complaint alleged a denial of equal access to housing in violation of Civil Code section 54.1, subdivision (b)(5), and prayed for damages under section 54.3.   The prayer requested damages for each plaintiff for mental and emotional distress and for “further monetary and pecuniary losses and damages” in amounts according to proof;  treble statutory damages;  attorneys fees in an amount according to proof;  and punitive damages of $500,000.

Rondel was personally served with the summons and complaint in early November 1987;  it failed to answer after the expiration of an extension of time to respond, and its default was entered on December 24.

At the prove-up hearing in January 1988, Allen testified he showed the manager a card identifying his dog as a signal dog for the deaf and also gave him a booklet explaining the right of a deaf person to have a signal dog;  notwithstanding these explanations, the manager refused to rent to him.   He testified this caused him to be “emotionally upset and distraught” and he had to rent another apartment at a higher rent.   Schwab testified he had several conversations with Rondel's district manager about the refusal to rent which revealed “flagrant abuses.”   Schwab also testified he suffered mental and emotional distress.   The court awarded each plaintiff “the principal sum of $50,000,” punitive damages of $100,000, attorney's fees of $2,500, and costs of $166.

In April 1988 the court granted Rondel's motion to set aside the default and default judgment, finding the plaintiffs should have served a statement of damages because “the vast majority of their actual damages resulted from personal injuries.”   On appeal, Schwab and Allen claim a statement of damages was not required because the action was not one for personal injuries;  alternatively, they claim if the statement of damages was required, the court should have modified the default judgment rather than setting it aside.

II

 Since the result is controlled by the legislative scheme regarding default judgments in excess of the demand, it does not matter whether the action is characterized as one for personal injuries.  Code of Civil Procedure sections 580 and 585 1 provide a defaulting defendant cannot be made subject to a judgment in excess of the demand of the complaint.   Section 425.10 prohibits a plaintiff from stating the amount of damages sought in a personal injury or wrongful death action;  but section 425.11 requires such a plaintiff to give the defendant notice of the amount sought by way of a statement of damages.   Thus, in both personal injury and nonpersonal injury actions, a default judgment in excess of the demand is void.  “Section 580, and related sections 585, 586, 425.10 and 425.11, aim to ensure that a defendant who declines to contest an action does not thereby subject himself to open-ended liability.   Reasoning that a default judgment that exceeds the demand would effectively deny a fair hearing to the defaulting party, the Courts of Appeal have consistently read the code to mean that a default judgment greater than the amount specifically demanded is void as beyond the court's jurisdiction.  [Citations.]”  (Greenup v. Rodman (1986) 42 Cal.3d 822, 826, 231 Cal.Rptr. 220, 726 P.2d 1295.)

 Schwab and Allen argue, even if the default judgment was improper, the trial court erred by setting it aside in its entirety rather than modifying it.   Citing Greenup v. Rodman, supra, 42 Cal.3d 822, 231 Cal.Rptr. 220, 726 P.2d 1295 and Morgan v. Southern Cal. Rapid Transit Dist. (1987) 192 Cal.App.3d 976, 237 Cal.Rptr. 756, they argue the punitive damage award should remain because it is less than the amount in the prayer and the compensatory damages award should be reduced to the jurisdictional minimum of the superior court.

Greenup v. Rodman, supra, 42 Cal.3d 822, 231 Cal.Rptr. 220, 726 P.2d 1295 involved a complaint by a minority shareholder against the majority shareholder for the fraudulent transfer of assets and intentional infliction of emotional distress.   The trial court struck the defendant's answer as a discovery sanction and entered a default judgment in excess of the prayer of the complaint.   The complaint asked for $100,000 in punitive damages;  all other damages were subject to proof.   The default judgment awarded $338,000 in compensatory damages and $338,000 in punitive damages.

The Court of Appeal affirmed, holding a default for discovery violations was exempt from the limit on damages under section 580.   The Supreme Court reversed, holding the demand sets a ceiling on recovery in all default judgments.

The court then amended the award to conform with section 580 by looking to the allegations of the complaint.   Because each cause of action “concluded with the allegation that [plaintiff] suffered damage ‘in an amount that exceeds the jurisdictional requirements of [the superior] court [,]’ ” the Supreme Court found she had given “sufficient notice to defendants that she claimed at least $15,000 in compensatory damages․  The compensatory award should therefore be reduced to the extent that it exceeds $15,000.”   (Greenup v. Rodman, supra, 42 Cal.3d at p. 830, 231 Cal.Rptr. 220, 726 P.2d 1295.)   The punitive damage award was reduced to $100,000 to conform with the prayer.

Greenup was relied on in Morgan v. Southern Cal. Rapid Transit Dist., supra, 192 Cal.App.3d 976, 237 Cal.Rptr. 756.   There, defendant's answer was stricken as a discovery sanction and a default judgment was entered for $90,000.   The complaint alleged negligence resulting in plaintiff's personal injury and, in compliance with Code of Civil Procedure section 425.10, did not specify the amount of damages sought.   Applying Greenup 's rationale, the Morgan court concluded a personal injury plaintiff seeking default as a discovery sanction must comply with section 425.11 and modified the judgment to the jurisdictional minimum of the superior court.

We see no meaningful distinction between Greenup and Morgan and the case before us.   True, Schwab and Allen's default judgment resulted from a failure to answer rather than a discovery sanction.   But the Greenup court's concern for notice was applied equally to both situations:  “We conclude that due 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.”  (Greenup v. Rodman, supra, 42 Cal.3d at p. 829, 231 Cal.Rptr. 220, 726 P.2d 1295.)

III

 Rondel claims if we reverse the order setting aside the default, the judgment on behalf of Schwab cannot stand because it was in excess of the superior court's jurisdiction.   Rondel points out that Schwab is not deaf and thus his action for damages under Civil Code section 54.1 fails to state a cause of action.

Civil Code section 54.1, subdivision (b)(5) provides:  “It shall be deemed a denial of equal access to housing accommodations ․ for any person, firm, or corporation to refuse to lease or rent housing accommodations to ․ a deaf person on the basis that such person uses the services of a signal dog ․ or to refuse to permit such a person ․ to keep a signal dog ․ on the premises.”   Section 54.3 allows a person denied the right of equal access to recover damages.

Although Schwab is not a deaf person, his right to associate with a deaf person is protected under the statutory scheme.   This same issue has arisen in several cases under the Unruh Civil Rights Act, which provides in part:  “All persons within the jurisdiction of this state are free and equal, and no matter what their race, color, religion, ancestry, or national origin are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.”  (Former Civ.Code, § 51, Stats.1961, ch. 1187, § 1, p. 2920.)

In In re Cox (1970) 3 Cal.3d 205, 90 Cal.Rptr. 24, 474 P.2d 992, a man was asked to leave a shopping mall because he was talking to a friend who “wore long hair and dressed in an unconventional manner.”   The Supreme Court held arbitrary discrimination for this association, although not expressly covered by the Unruh Act, was prohibited by it.   And the Court of Appeal in Winchell v. English (1976) 62 Cal.App.3d 125, 133 Cal.Rptr. 20, applied the same principle to find discrimination against a white person for his association with a black person actionable under the Unruh Act.  (See also Hubert v. Williams (1982) 133 Cal.App.3d Supp. 1, 184 Cal.Rptr. 161.)

It makes no sense to protect a deaf person's right to equal housing and not the right of one who lives with him.   We thus find Schwab's complaint stated a cause of action under Civil Code section 54.1.

Accordingly, we reverse the order setting aside the default.   The superior court is directed to enter a judgment awarding each plaintiff compensatory damages of $25,000 and punitive damages of $100,000 plus attorneys fees and costs.   Appellants are entitled to costs on appeal.

FOOTNOTES

1.   All subsequent statutory references are to the Code of Civil Procedure unless otherwise noted.

WALLIN, Associate Justice.

SCOVILLE, P.J., and CROSBY, J., concur.

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