LANDERS v. SEATON

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Court of Appeal, Second District, Division 5, California.

William R. LANDERS and Carol J. Landers, Cross-complainants and Appellants, v. Roberta SEATON and Darrel W. Benton, Cross-defendants and Respondents.

No. B047776.

Decided: August 21, 1991

John R. Broderick, Redondo Beach, for cross-complainants and appellants. Stradling, Yocca, Carlson & Rauth, Donald J. Hamman and Aleta Louise Bryant, Newport Beach, for cross-defendants and respondents.

Cross-complainants and appellants William R. Landers and Carol J. Landers appeal from the order setting aside a default and default judgment, which included punitive damages, entered against cross-defendants and respondents Roberta Seaton and Darrell W. Benton.   Appellants contend that the trial court was without jurisdiction to grant respondents' motion for reconsideration and motion to set aside the default and default judgment.   Appellants further contend that the trial court abused its discretion in granting respondents relief from default under Code of Civil Procedure section 473,1 after finding that respondents had not demonstrated mistake, inadvertence, surprise or excusable neglect.   Respondents contend that appellants waived their right to appeal, and that the trial court had jurisdiction to and did not abuse its discretion in granting the motion to set aside the default and default judgment.   We find that:  (1) the record is devoid of any facts demonstrating waiver of the right to appeal;  (2) the trial court had jurisdiction to reconsider its previous order denying relief from default;  (3) the trial court abused its discretion in vacating the default judgment after finding that there was no mistake, inadvertence, surprise or excusable neglect;  and (4) the punitive damages award in the default judgment is void because the trial court exceeded its jurisdiction in granting relief in excess of that prayed for in the cross-complaint.   We reverse.

FACTS AND PROCEDURAL BACKGROUND

Since 1976, respondents had resided together in a home owned by Seaton located at 3200 Oak Avenue, Manhattan Beach, California (“Seaton Property”).   During this period, Benton provided Seaton with 24–hour a day care because of Seaton's poor health.   Benton is 70 years old and Seaton is 90 years old.

In April 1988, Seaton offered to sell her property to her neighbors Mark Anello and Denise Smith for $280,000, if Anello and Smith could obtain financing.   Seaton never entered into a written agreement with Anello and Smith, never received a deposit from them and never said she would not accept another offer.   Seaton did agree, however, that she would not post a “For Sale” sign on the property for a reasonable period during which Anello and Smith would attempt to obtain financing.

Anello and Smith applied for a loan through Glendale Federal Savings and Loan Association (“Glendale Federal”).   On May 4, 1988, Glendale Federal sent appellant William Landers out to appraise the Seaton Property in connection with Anello and Smith's loan application.   After William Landers inspected the Seaton Property, he offered to purchase it from Seaton for $10,000 more than the amount Anello and Smith had offered to pay.   Seaton was interested in William Landers's offer because of her illness and financial situation.   She also wanted to avoid the stress of showing her house if Anello and Smith were unable to qualify for a loan.   When Seaton called William Landers in response to his offer, Landers asked Seaton if she had accepted a deposit towards the sale of her property, and Seaton answered that she had not.

On May 5, 1988, appellants made a deposit towards the purchase of the Seaton Property and opened escrow.   On July 27, 1988, escrow closed and the Seaton Property was sold to appellants.   Respondents moved to Cotati, California where Benton purchased a house for their residence.   After the purchase, appellants made approximately $10,000 worth of improvements on the Seaton Property, increasing the property's value by $60,000.

On August 31, 1988, Smith filed a complaint for breach of fiduciary duty and interference with economic relationship against appellants, arising from the sale of the Seaton Property.   On September 10, 1988, appellants were served with Smith's complaint which claimed an interest in the Seaton Property.   A lis pendens was recorded by Smith against the Seaton Property.

On September 12, 1988, appellants received an offer of $379,900 from an unrelated person to purchase the Seaton Property.   The prospective purchaser required that escrow close promptly.   Appellants accepted that offer the same day, expecting to make a substantial profit.

On November 1, 1988, appellants filed an answer to Smith's complaint and a cross-complaint against Smith and respondents for fraud and misrepresentation, interference with economic relation, breach of contract, quiet title and common count.   They requested $389,900 in general damages and $250,000 in punitive damages.   Appellants amended their cross-complaint to delete their request for a specific amount of punitive damages to comply with Civil Code section 3295, subdivision (e), which prohibits pleading an amount for punitive damages.

On November 9, 1988, appellants mailed to respondents a notice of deposition and request for production of documents in Smith's action, to which respondents did not formally respond.   Respondents called appellants' attorney and told him that because of their age and Seaton's poor health they could not travel.   Appellants' attorney said he would contact them with further arrangements, but never did.

On December 1, 1988, respondents were personally served with the summons and cross-complaint.   The summons informed them that they had 30 days in which to respond, that if they did not respond, they could lose the case and that they might want to contact an attorney.   On December 20, 1988, Seaton sustained injuries as a result of a blackout and was bedridden for one week.   As a result of this incident, respondents forgot about the lawsuit.

On January 5, 1989, appellant's attorney mailed respondents a letter telling respondents that he was entitled to enter a default against them, and that if he did not receive a response to the cross-complaint by January 9, 1989, he would “protect the interests of [his] clients, [appellants].”   At the bottom of the letter is a handwritten notation by appellants' attorney:  “1/9/89—He [Benton] called 1/9/89 & said he got these.   He told [appellants' attorney's secretary] he [would] call again, but he never did.”   On January 12, 1989, appellants filed a request for entry of default and original summons with the court.   Copies of the default filing were mailed to respondents on the same date.

On January 13, 1989, appellants and Smith entered into a settlement and a mutual general release in which all claims with respect to the property were dismissed and the lis pendens against the property was withdrawn in exchange for Smith receiving $25,000.   Smith recorded a notice of withdrawal of lis pendens against the property and filed a request for dismissal with prejudice of her complaint against appellants.   Appellants requested a dismissal with prejudice as to their cross-complaint against Smith, leaving respondents as the remaining parties.

The file in this matter was apparently misplaced by the court.   Appellants filed another request for entry of default and a duplicate of the original summons and proof of service.   Respondents' default was entered on March 28, 1989.   In connection with this second default filing, a Declaration Re Lost Summons, setting forth the chronology of events, was mailed to respondents on April 26, 1989.   The Declaration stated:  “When [respondents] failed to file responsive pleadings in the case, on January 12, 1989, I caused to be prepared a Request for Entry of Default, and, on that date, I signed the same, and caused it to be mailed to the above-entitled Court, at 825 Maple Ave., Torrance, California, along with the original Summons and Proof of Service, and our instructions that the same be filed and that the Default be entered.”   (Emphasis in original.)

After the default hearing on June 22, 1989, the default judgment against respondents in the amount of $60,551 in general damages and $25,000 in punitive damages for fraud was entered.   On approximately July 5, 1989, respondents received the copy of the abstract of judgment and a notice of lien on the Cotati property from the Sonoma County Recorder's Office.   Respondents immediately contacted an attorney.

On August 8, 1989, respondents filed a motion for an order vacating and setting aside the default and default judgment entered against them, pursuant to section 473, on the grounds that they failed to respond due to mistake, inadvertence, surprise and excusable neglect.   The court heard argument on the motion on August 31, 1989, and took the matter under submission.   On September 5, 1989, the court denied the motion.   The minute order denying the motion provided:  “While [respondents] give a one week excuse for some time in December 1988, they completely ignore and do not address the fact that counsel sent a letter to them on January 5, 1989, explaining what would happen if they did not respond.  [Respondents] do not mention the request to enter default served on them January 12, 1989.  [Respondents] ignore the Declaration re Lost Summons served on them April 26, 1989.   The court can only conclude that [respondents] chose to ignore the reality of the situation.   This is not excusable neglect but plain neglect which will not justify the granting of the motion.”

On September 15, 1989, pursuant to section 1008, respondents filed a motion for reconsideration of the denial of their motion to be relieved from the default judgment because of newly discovered facts.

On October 19, 1989, the court granted respondents' motion for reconsideration, set aside the default and order of dismissal and vacated the judgment.   The court found:

“1. [Respondents] do admit receiving the Declaration re Lost Summons but state that as lay persons they did not understand it.   The court finds that the language was sufficient to put [respondents] on notice to do something.

“2. [Respondents] claim they never received any other documents after service of the Summons and Complaint.   The court finds this difficult to believe especially because of the January 9, 1989 phone call from [respondent] Ben Benton shortly after the January 5, 1989 letter.

“3. The court has read and considered the case of Nicholson v. Rose (1980) 106 CA3d 457 [165 Cal.Rptr. 156] where the appellate court held that the trial court acted within its discretion in denying the motion to vacate and held that the judgment was supported by the evidence.   Despite that, the court reversed the default judgment stating:

‘Nevertheless and in spite of the force of the foregoing legal reasoning, default judgments, especially those in which punitive damages are awarded, are looked upon with disfavor․’  (Nicholson, Supra at 462[-]3 [165 Cal.Rptr. 156] )

“4. This court finds that this case certainly fits within the above concept.   Therefore, the motion to set aside the default and the default judgment is granted.   However, it is conditional upon [respondents] paying reasonable attorneys' fees and costs in the sum of $3,000 to compensate [appellants] for the extra expense necessitated by [appellants'] lack of diligence.   This is payable within 30 days and if not paid, then the default and judgment are reinstated by proof made upon ex parte application.”

DISCUSSION

IWaiver of Right to Appeal***

II

Renewal Motion

Appellants contend that the trial court was without jurisdiction to entertain respondents' motion for reconsideration.   They assert that the motion was not properly brought under section 1008, because no new facts were presented in the motion for reconsideration, and a court does not have inherent jurisdiction to reconsider an order denying a motion to set aside a default and default judgment.

After a judge rules on a motion, any party affected by the order may make a motion for reconsideration before the same judge, within 10 days after knowledge of the order, and based on an alleged different state of facts.   This statutory motion for reconsideration may be brought by any party.   It must comply with the 10–day time limitation, be brought before the same judge who made the original order and allege new facts.  (§ 1008, subd. (a).)  In addition, if a judge denies a motion, the moving party may make a subsequent application for the same order, based on an alleged different state of facts.   Such a statutory renewal motion may be made only by the moving party, is not subject to the 10–day time limitation and may be made before a different judge.  (§ 1008, subd. (b);  Graham v. Hansen (1982) 128 Cal.App.3d 965, 180 Cal.Rptr. 604.)

Respondents' motion for reconsideration pursuant to section 1008 was, regardless of its label, not a motion for reconsideration under section 1008, subdivision (a), but a subsequent application for the same order under section 1008, subdivision (b).   Respondents were the moving parties and brought the renewal motion before the same judge who had previously made the order denying their motion to vacate, based on an alleged different state of facts.   The trial court, however, concluded that respondents stated no new facts in support of their renewal motion.   Thus, we could conclude that the trial court abused its discretion in granting the renewal motion in the absence of new facts.3  Such a conclusion, however, would not be dispositive of this issue.

 The statutory scheme for renewal motions embodied in section 1008, subdivision (b) is not exclusive.   Trial courts also have inherent jurisdiction to reconsider certain of their rulings even in the absence of newly discovered evidence.  (Salowitz Organization, Inc. v. Traditional Industries, Inc. (1990) 219 Cal.App.3d 797, 807–808, 268 Cal.Rptr. 493.)   Thus, the reconsideration and renewal provisions of section 1008 are in addition to a court's traditional inherent power to reconsider its rulings.  (Greenberg v. Superior Court (1982) 131 Cal.App.3d 441, 445, 182 Cal.Rptr. 466.)

 Generally, courts have inherent jurisdiction to reconsider their interim rulings until those rulings become final by entry of judgment.  (Salowitz, supra, 219 Cal.App.3d at p. 807, 268 Cal.Rptr. 493.)   “The usual test for distinguishing between interim and final rulings is appealability.”  (Blue Mountain Development Co. v. Carville (1982) 132 Cal.App.3d 1005, 1013, 183 Cal.Rptr. 594.)   An order granting or denying a motion to set aside a default and default judgment under section 473 is an appealable final order.4  (Taliaferro v. Davis (1963) 216 Cal.App.2d 860, 863, 31 Cal.Rptr. 443;  Harth v. Ten Eyck (1939) 12 Cal.2d 709, 710, 87 P.2d 693;  Spellens v. Spellens (1957) 49 Cal.2d 210, 228, 317 P.2d 613.)   Therefore, under the general rule, one might conclude that a trial court has no inherent jurisdiction to reconsider an order made on a motion to vacate a default judgment, and that only the statutory motion is available.

 However, it has long been the rule in California that a trial court has jurisdiction to entertain a timely renewal of a motion under section 473 to set aside a default and default judgment.  (Lynch v. Betts (1962) 198 Cal.App.2d 755, 758, 18 Cal.Rptr. 345.)   A timely motion to reconsider the denial of the motion to set aside may be treated as a renewal of the motion.  (Hover v. MacKenzie (1954) 122 Cal.App.2d 852, 857, 266 P.2d 60.)   Such a rule may be criticized on “the ground that it creates uncertainty as to the status of the judgment, in that the trial court could continue indefinitely to vacate its denials.   This argument overlooks the time limitation of six months from the date of default for making [the motion to set aside the default and default judgment].”  (Lynch, supra, 198 Cal.App.2d at p. 758, 18 Cal.Rptr. 345.)

 Respondents' default was entered on March 28, 1989, and the default judgment was entered on June 22, 1989.   Respondents' motion to vacate the default and default judgment was filed on August 8, 1989, and the motion for reconsideration was filed on September 15, 1989.   Thus, both the original motion and the motion for reconsideration were filed within 6 months of the date of default.   Accordingly, it is appropriate to treat respondents' so-called motion for reconsideration under section 1008 as a non-statutory renewal of their motion to vacate the default and default judgment under section 473.   The trial court had inherent jurisdiction to consider such a timely renewal of respondents' section 473 motion and was not circumscribed by the more narrow provisions of section 1008.

III

Motion to Vacate

We, therefore, now consider the determinative issue on appeal, whether the trial court abused its discretion in granting respondents' motion to vacate the default and default judgment.

A. Punitive Damages

 A default judgment may be awarded if a cross-defendant fails to answer a cross-complaint.  (§ 585, subd. (e).)  The relief granted, however, may not exceed the amount demanded in the cross-complaint.  (§ 580.)   If a judgment exceeds the amount specifically demanded in the prayer or if the prayer is devoid of a specific amount or requests damages according to proof, then the defendant is deprived of his day in court and the prayer does not give adequate notice to the defendant.   Punitive damages and compensatory damages are different remedies, both in nature and purpose, and must be pled separately.   A demand or prayer for one type of damage does not constitute a demand or prayer for the other, or both.   A judgment in excess of the specific amount demanded for either general or punitive damages is void, even if the amount awarded for one type of damages is less than the total amount of damages alleged in the complaint.   The award, however, is void only as to the excess amount.  (Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 493–495, 165 Cal.Rptr. 825, 612 P.2d 915.)   A judgment made in excess of the court's jurisdiction is void on its face and may be reviewed any time even on appeal.  (Id. at p. 493, 165 Cal.Rptr. 825, 612 P.2d 915.)

 “Civil Code section 3295, subdivision (e) provides:  ‘No claim for exemplary damages shall state an amount or amounts.’   Thus, a plaintiff may not state the amount of punitive damages sought either in the body of the complaint or in the prayer.  [Fn. omitted.]   The statute does not specify how a plaintiff should notify the defendant of the amount of punitive damages sought.   However, a ‘default judgment greater than the amount specifically demanded is void as beyond the court's jurisdiction.’   [Citation.]  Due process requires a defendant in a case involving a default judgment be given adequate notice of the judgment that may be entered.   [Citation.]”  (Wiley v. Rhodes (1990) 223 Cal.App.3d 1470, 1472, 273 Cal.Rptr. 279.)   Since a complaint must be silent under Civil Code section 3295, subdivision (e) as to the amount of punitive damages sought, a plaintiff must furnish the defendant with notice of the amount of punitive damages sought prior to requesting entry of default.  (Id. at p. 1473, 273 Cal.Rptr. 279.)

 In this case, in order to comply with Civil Code section 3295, subdivision (e), appellants amended their cross-complaint to delete their request for a specific amount of punitive damages.   Thus, although appellants' cross-complaint gave notice to respondents that they were seeking $389,900 in compensatory damages, the record is devoid of any notice to respondents of the amount of punitive damages sought.   Therefore, that portion of the default judgment awarding appellants punitive damages in the amount of $25,000 is void as beyond the trial court's jurisdiction.   We conclude that the trial court should not have awarded appellants punitive damages.

B. General Damages

 Section 473 provides for relief from a default judgment, within a reasonable time which may not exceed six months, upon a showing of mistake, inadvertence, surprise or excusable neglect.   We review this determination for an abuse of discretion.  (Iott v. Franklin (1988) 206 Cal.App.3d 521, 527, 253 Cal.Rptr. 635.)   However, if a party fails to show mistake, inadvertence, surprise, or excusable neglect, the trial court is without discretion to grant relief from default.  (Id. at p. 528)

At the August 31, 1989 hearing on the original motion to vacate the default and default judgment, the trial court stated:  “[The motion's] denied on the evidence the [respondents] chose to ignore the suit.   No inadvertence [,] surprise, mistake or excusable neglect is shown, only neglect.”   Subsequently in its minute order of September 9, 1989, the court reiterated that respondents “chose to ignore the reality of the situation” and that he found only plain neglect not excusable neglect.

At the October 18, 1989 hearing on the renewal of the motion to vacate, the trial court stated that it was reconsidering its order in order to “get everything into the record” and for “the technical reason just to get documents in file.”   The court stated:  “Well, let me put it this way, I don't like the fact that it's happened, but the—all the evidence indicates to me all they did was ignore everything that happened.   I don't—I don't like the fact that a couple that's this old and infirm has a default judgment against them, especially for punitive damages.”   Subsequently in its minute order of October 19, 1989, the court stated that respondents received the Declaration Re Lost Summons which was sufficient to put respondents on notice to do something.   He also found that they received other documents after the service of the summons and complaint, including the January 5, 1989 letter from appellants' counsel.   He found further that respondents telephoned appellants' counsel on January 9, 1989.   The trial court then granted the motion for relief from default, ostensibly in the interests of justice, because the judgment included punitive damages.

 A trial court has broad discretion in determining whether to grant or deny a motion to set aside a default.   That discretion, however, must be exercised within the limits of the statute.   Here, the trial court expressly and specifically found that respondents did not demonstrate mistake, inadvertence, surprise or excusable neglect.   The record amply supports these findings.

 Although respondents are elderly and apparently unsophisticated in matters concerning litigation, the fact that they had adequate notice and simply did not take steps to protect their interests cannot be ignored.   Although Seaton was ill, only one week of disability due to her fall is accounted for in a series of events that extended over several months.   Where there is doubt as to whether the excuse offered is sufficient, then the discretion the trial court exercises will not be disturbed on appeal.   (Transit Ads, Inc. v. Tanner Motor Livery, Ltd. (1969) 270 Cal.App.2d 275, 279, 75 Cal.Rptr. 848.)

The trial court, after finding that respondents failed to demonstrate mistake, inadvertence, surprise or excusable neglect, reversed the default judgment in the interests of justice because default judgments are disfavored, especially where punitive damages are awarded.   We note that in ruling on the renewal of the motion, the trial court did not make new factual findings but simply reiterated its findings made previously.   We conclude that the court abused its discretion in granting relief under section 473, after making an explicit finding that mistake, inadvertence, surprise or excusable neglect had not been shown.  (See Iott, supra, 206 Cal.App.3d at p. 528.) 5

DISPOSITION

We reverse the trial court's order setting aside the default and vacating the entire judgment.   We remand the case to the trial court with directions to modify the judgment by striking the award of punitive damages.   The parties shall bear their own costs on appeal.

FOOTNOTES

1.   All further statutory references are to the Code of Civil Procedure, unless otherwise specified.

FOOTNOTE.   See footnote *, ante.

3.   It is not entirely clear whether a trial court abuses its discretion in granting a statutory renewal motion under section 1008, subdivision (b), in the absence of new facts.  (Josephson v. Superior Court (1963) 219 Cal.App.2d 354, 359, 33 Cal.Rptr. 196;  Film Packages, Inc. v. Brandywine Film Productions, Ltd. (1987) 193 Cal.App.3d 824, 830, 238 Cal.Rptr. 623.)

4.   The appeal lies from the default judgment or from a postjudgment order denying relief from default, rather than the prejudgment order denying the motion to vacate a default.  (Winter v. Rice (1986) 176 Cal.App.3d 679, 222 Cal.Rptr. 340.)

5.   The Nicholson v. Rose (1980) 106 Cal.App.3d 457, 165 Cal.Rptr. 156 case, upon which the trial court relied to reverse its prior order, is inapplicable.   In Nicholson, the court granted relief from default because the records were uncertain as to whether plaintiff's counsel attempted to contact defendants' counsel before the default was taken.   We have no such uncertainty demonstrated in the facts of the matter before us.

GRIGNON, Associate Justice.

TURNER, P.J., and BOREN, J., concur.

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