CASTAIC CLAY MANUFACTURING CO v. DEDES

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Court of Appeal, Second District, Division 4, California.

CASTAIC CLAY MANUFACTURING CO., et al., Plaintiffs and Respondents, v. Gus DEDES, Defendant and Appellant.

B007189.

Decided: April 27, 1987

John A. Slawson, Redondo Beach, for the bankruptcy estate of Gus Dedes, defendant and appellant. Lascher & Lascher, and Wendy C. Lascher, Ventura, for plaintiffs and respondents.

After a court trial, judgment was awarded plaintiff in the sum of $729,641.23 on a theory of slander of title.   Defendant appeals from the judgment.1

FACTS

Mike Mallow, Gus Dedes and Calvin Peterson were the sole shareholders of Castaic Clay Manufacturing Company (Castaic).   In 1977 Mallow purchased Dedes' 50 percent share and Peterson's 25 percent share of the company to become the sole shareholder.   Castaic is engaged in the business of manufacturing bricks on a 54 acre site where the plant and the clay supply are located.

In July 1979, the corporation applied to First Interstate Bank for a $2.8 million loan for the purposes of modernizing its brick manufacturing operation and constructing a tunnel, kiln, and driers.   It was anticipated the modernization would result in lower labor costs, reduced breakage, and a substantial energy saving.   The bank withdrew its commitment to make the loan when a preliminary title search unearthed certain deeds which adversely affected the marketability of the title.   In the chain of title was a deed dated December 19, 1975, purporting to convey title to the 54 acres to one Juan Perez.   The grant deed, which was recorded March 21, 1978, bore the notarized signature of Mike Mallow.   Also of record was a grant from Perez to Calvin and Cristina Peterson, dated June 16, 1978, and recorded October 10, 1978.   Thereafter, the Petersons instituted an unlawful detainer action against Castaic which was ultimately resolved in favor of Castaic.   On May 9, 1980, the Petersons executed a quitclaim deed to Castaic.   In February, 1981, the title issue having been resolved, a loan was made to Castaic and construction commenced on the modernization.   It was completed in February, 1982, and went into full operation in May, 1982.

The court trial proceeded on the third cause of action labeled slander of title, against Gus Dedes, all other causes of action and defendants having been dismissed.   The third cause of action and paragraphs one through eight of the first cause of action of the complaint, in substance, alleged the fraudulent recordings and requested damages as follows:  “25.   Each of the aforementioned recordings directly impaired the vendibility of the property on the open market in the sum of $50,000.”   The prayer of the complaint was for (a) general damages of $50,000;  (b) punitive damages of $1,000,000;  (c) damages caused plaintiff “by inconvenience and time suffered by plaintiff in removing the cloud on its title”;  and (d) for other and further relief as the court deems proper.

The judgment rendered against defendant was $500,000 for compensatory damages, $29,641.23 as special damages suffered in defending the unlawful detainer action, and $200,000 in punitive damages.   The court found against the defendant on his cross complaint for indemnification.   The complaint was never amended and no request was made to conform the complaint to proof.

ISSUES ON APPEAL

It is our understanding the defendant urges the following points as reversible error:  (1) The court was without jurisdiction to award compensatory damages in excess of $50,000 because the prayer was for $50,000;  (2) the damages awarded were speculative and, therefore, excessive;  (3) the “type” of damages awarded on the cause of action for slander of title was improper;  (4) the punitive damages awarded were excessive;  and (5) certain evidence the defendant offered was improperly refused.

I

1. Appellant argues that the court exceeded its jurisdiction in awarding compensatory damages in excess of the amount stated in the prayer for the third cause of action.   Moreover, he urges that the punitive damages awarded were in error by virtue of the compensatory damage award being erroneous.   The respondent argues that it is doubtful that a rule prohibiting an award in excess of a prayer exists in California.   Nonetheless, urges respondent, the award is proper under a prayer for general relief.

 It is the general rule that, in a contested case, in the absence of an amendment to the complaint to conform to proof, a court may not award the plaintiff a sum in excess of the amount of damages he claims to have sustained.  (Meisner v. McIntosh (1928) 205 Cal. 11, 269 P. 612;  Hooper v. Wells, Fargo & Co. (1864) 27 Cal. 11.)   It is not the prayer of a pleading which is controlling;  it is the averments of the pleading which determine the maximum sum which may be awarded the claimant.   In fact, recovery may be had in a contested case in the absence of a prayer so long as the allegations of the complaint fairly state the relief sought.  (See Miller v. Superior Court (1922) 59 Cal.App. 334, 338, 210 P. 832;  Hoffman v. Pacific Coast Const. Co. (1918) 37 Cal.App. 125, 127, 173 P. 776.)   This is a principle of long standing.

The Hooper case, supra, for example, was an action to recover the value of a package of gold bullion lost in shipment.   The complaint alleged damages of $10,750, but the verdict was for the sum of $11,740.87.   Our Supreme Court held that the defendant had to consent to a reduction to $10,750 or, in lieu thereof, a new trial be granted.   In Meisner, supra, the complaint and the prayer alleged loss of $1000 as the fair market value of land conveyed as a result of fraudulent representations.   At trial, the court found that the evidence established the fair market value at $1525 and rendered judgment for this amount.   On appeal, a unanimous court reduced the judgment to $1000 holding that the plaintiff was limited to the amount of his complaint in the absence of an amendment to conform to proof.   As authority for its position, the court referred to Burke v. Koch (1888) 75 Cal. 356, 17 P. 228;  Kerry v. Pacific Marine Co. (1898) 121 Cal. 564, 54 P. 89;  and 15 R.C.L. 604.   In Burke, the complaint and prayer were for $6500 for the damages suffered resulting from a fraudulent assignment and detention of personal property.   The judgment of $7470 was, accordingly, modified on appeal to the sum of $6500.

In Kerry, the plaintiff prayed for damages of $3000 for the negligent unloading of a cargo of pipes.   The ultimate facts alleged in the body of the complaint made clear plaintiff's claim was for a maximum of 4.5 cents per foot.   The court modified the judgment of $2390, which was within the prayer but, at five cents per foot, exceeded the claim of the complaint.   The court said:  “It is fundamental ․ a man may not recover in damages an amount greater than that which he pleads will compensate him for his injuries.”   (Kerry v. Pacific Marine Co., supra, 121 Cal. at p. 573, 54 P. 89.)   The reasons for the rule are stated at page 604, 15 Ruling Case Law:  “In order to give a judgment the merit and finality of an adjudication between the parties, it must be responsive not only to the proofs but to the issues tendered by the pleadings, because pleadings are the very foundation of judgments and decrees.   A judgment will be void which is a departure from the pleadings, and based upon a case not averred therein, since if allowed to stand it would be altogether arbitrary and unjust and conclude a point upon which the parties had not been heard.”

 In the case before the court, all allegations of the complaint other than those in the third cause of action were dismissed by stipulation of the parties.   That third cause of action constituted the body of the complaint.   The complaint alleged, inter alia, that the fraudulent recording and transfer of certain grant deeds cast a doubt on Castaic's title to the 54 acre site as a result of which the vendibility of that property on the open market was impaired in the sum of $50,000.   Also alleged was that the acts were perpetrated with malice for which plaintiff sought punitive damages of $1 million.   The prayer of the complaint reiterated that these sums should be awarded as general and punitive damages respectively.   Also prayed for was “damages caused plaintiff by inconvenience and time suffered by plaintiff in removing the cloud on its title.”

Applying the principles set forth herein, the maximum sum that should have been awarded as compensatory damages in accord with a fair reading of the allegations of the complaint and answer was $50,000.   An answer to the complaint having been filed, the parameters of the relief available were established by the allegations of the complaint and not by the prayer.   Because the prayer does not control, it provides no basis upon which to enlarge the relief requested by the pleadings.   Where the complaint, as here, alleges a specific sum as general damages, it is error to render judgment for a greater sum, and the judgment will be modified to reduce it.  (Meisner v. McIntosh, supra, 205 Cal. at p. 13, 269 P. 612;  Frost v. Mighetto (1937) 22 Cal.App.2d 612, 616–617, 71 P.2d 932;  Crofoot v. Blair Holdings Corp. (1953) 119 Cal.App.2d 156, 195, 260 P.2d 156.

Other authorities sometimes cited for the contrary position 2 are Johnson v. Polhemus (1893) 99 Cal. 240, 33 P. 908;  O'Donnell v. Kramer (1884) 65 Cal. 353, 4 P. 204 and Title Ins. and Trust Co. v. Ingersoll (1910) 158 Cal. 474, 111 P. 360.   In that regard, it should be noted that our Supreme Court in Meisner, supra, stated:  “None of these cases is directly in point, as in none of them was the direct question involved which is presented for determination in the present action.”  (Meisner v. McIntosh, supra, 205 Cal. at p. 14, 269 P. 612.)   To the extent plaintiff relies upon Singleton v. Perry (1955) 45 Cal.2d 489, 289 P.2d 794, that reliance is ill founded.   This is so because the court had no need to and did not deal with the issue of judgment in an amount in excess of the complaint or prayer.   The court ruled that any error in instructions was harmless since the jury verdict was well within the limits of the amount of damage alleged in the body of the complaint and the amount of the prayer.

Other authorities in accord with our ruling are Potter-Huffman Co. v. Witcher (1920) 48 Cal.App. 93, 96–97, 191 P. 725 (interpreting Code Civ.Proc., § 580) 3 Brown v. Ball (1932) 123 Cal.App. 758, 768, 12 P.2d 28;  Godfrey v. Steinpress (1982) 128 Cal.App.3d 154, 183, 180 Cal.Rptr. 95 (holding the award for punitive damages in the absence of a prayer was limited to the amount asserted in the complaint);  and Meyer Koulish Co. v. Cannon (1963) 213 Cal.App.2d 419, 433–434, 28 Cal.Rptr. 757.

Nor may plaintiff prevail by virtue of his prayer for damage for inconvenience and time in removing the cloud or on the prayer for general relief.   As we have stated, the extent of plaintiff's maximum recovery is determined by the complaint.

Barber v. LeRoy (1974) 40 Cal.App.3d 336, 115 Cal.Rptr. 272, is not of assistance to plaintiff for the reason that the counterclaim filed by the plaintiff, although it had no prayer for affirmative relief, raised the issue litigated which resulted in the judgment.   As we have already noted, damages may properly be awarded in the absence of a prayer.  Lawrence v. Shutt (1969) 269 Cal.App.2d 749, 75 Cal.Rptr. 533, referred to in LeRoy is inapposite because it is an equitable action in which rescission is the relief sought.  Knox v. Wolfe (1946) 73 Cal.App.2d 494, 505, 167 P.2d 3, is likewise an equitable proceeding and not here relevant.  Wright v. Rogers (1959) 172 Cal.App.2d 349, 342 P.2d 447, upon which plaintiff also relies, is consistent with our holding herein.   The court states at pages 367–368, 342 P.2d 447:  “The jurisdiction of the court to grant any particular relief depends not on the prayer but upon the issues—that is, on the scope of the complaint and the issues made or which might have been made under it—and any relief consistent with the issues raised may be granted regardless of the prayer.  [Citations.]”

We hold that in this case the averments of the complaint placed the defendant on notice that with regard to the issue to be litigated there was a possible actual loss of up to $50,000.   Accordingly, the judgment must be so modified.

II

Defendant contends that there was no basis for an award of punitive damages and in any case, the award was excessive.   It is his view, also, that the failure of the plaintiff to offer more than cursory evidence of defendant's wealth precludes an award of punitive damages.   The contentions are meritless.

 Exemplary damages are assessed for the purposes of punishing a defendant for his reprehensible conduct and to make an example of him.  (Merlo v. Standard Life and Acc. Ins. Co. (1976) 59 Cal.App.3d 5, 18, 130 Cal.Rptr. 416.)   Accordingly, punitive damages imposed must bear a reasonable relationship to the actual damages suffered.   There is, however, no rigid ratio mandated in the law between actual and punitive damages awarded.   (Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 644, 178 Cal.Rptr. 167.)   For an award to be proper, it is essential only that the plaintiff allege and prove the commission of a tortious act and actual damages resulting therefrom.   (Brewer v. Second Baptist Church (1948) 32 Cal.2d 791, 801–802, 197 P.2d 713;  Oakes v. McCarthy Co. (1968) 267 Cal.App.2d 231, 263, 73 Cal.Rptr. 127.)   In assessing the propriety of any punitive damages award, the evidence must be viewed in the light most favorable to the judgment.   The defendant was found, in this case, to have engaged in arrant conduct in causing to be recorded certain fraudulent deeds against plaintiff's title.   The record reflects that the judge rendered judgment for damages proximately caused by defendant's acts only after a period of time had passed and upon cool reflection.   We perceive no evidence of the influence of passion or prejudice upon the amount awarded and, therefore conclude the award was not excessive as a matter of law.

 Defendant's assertion that evidence of a defendant's wealth is a condition precedent to a proper award of exemplary damages is incorrect.   A court is entitled to consider the defendant's financial condition, if such evidence is presented, in order to rationally effect the purpose of exemplary damages.   Such evidence is not, however, an essential prerequisite to such an award.  (Hanley v. Lund (1963) 218 Cal.App.2d 633, 645, 32 Cal.Rptr. 733;   MacDonald v. Joslyn (1969) 275 Cal.App.2d 282, 293, 79 Cal.Rptr. 707.)   There is, in fact, merit in and authority for the position that it is the defendant's burden to present evidence of his financial status if he seeks to establish that award of punitive damages in excess of a given sum will wreak too great a penalty.  (See Vossler v. Richards Manufacturing Co. (1983) 143 Cal.App.3d 952, 964, 192 Cal.Rptr. 219.)

 Upon the foregoing considerations, the judgment is affirmed in all respects except as to the award of compensatory damages which is modified to $50,000.   The punitive and special damages awards shall remain undisturbed.   An award of punitive damages in excess of compensatory damages is not improper.  (Di Giorgio Fruit Corp. v. AFL–CIO (1963) 215 Cal.App.2d 560, 579–581, 30 Cal.Rptr. 350;  Drouet v. Moulton (1966) 245 Cal.App.2d 667, 670, 54 Cal.Rptr. 278.)

The judgment is modified and affirmed.   The parties shall bear their own costs on appeal.

FOOTNOTES

FOOTNOTE.  

1.   We originally filed this opinion May 8, 1985.   After the filing of the opinion it was revealed to us for the first time that Gus Dedes had filed a bankruptcy proceeding (Case No. 84–02584–M7, In re Gus Dedes, Debtor) which automatically stayed this matter.   Thereafter, the United States District Court gave its approval for this appeal to proceed and authorized the trustee for the bankruptcy estate to pursue this appeal and to employ John Slawson, Esquire as attorney for the estate.We, therefore, issue this opinion.

2.   See for example 3 Witkin on California Procedure (2d ed. 1971)  Pleading, section 376, pages 2039–2040, and Singleton v. Perry, supra, 45 Cal.2d at p. 499, 289 P.2d 794.

3.   Code of Civil Procedure section 580, enacted in 1872, provides:  “The relief granted to the plaintiff, if there be no answer, cannot exceed that which he shall have demanded in his complaint;  but in any other case, the Court may grant him any relief consistent with the case made by the complaint and embraced within the issue.”

DUNN, Associate Justice.* FN* Assigned by the Chairperson of the Judicial Council.

McCLOSKY, Acting P.J., and ARGUELLES, J.,* concur.