BECKER v. CONSTRUCTION CO INC (1979)

H. Peter Becker and Ute Becker appeal from an order vacating a default judgment.

Appellants sued S.P.V. Construction Co., Inc., and George S. Soles seeking compensatory and punitive damages for breach of contract, negligence, negligent misrepresentation and fraud in connection with the construction of a residence. As to the cause of action for breach of contract, recovery was also sought against Argonaut Insurance Company, surety on S.P.V.‘s performance bond.

The complaint and summons were served on S.P.V. on June 29, 1976, by delivery of a copy of each to George S. Soles, President of S.P.V. The default of S.P.V. was entered on January 19, 1977. By stipulation the default was set aside on April 1, 1977, and S.P.V. was given 15 days to plead to the complaint.

No answer was filed and the court on August 9, 1977, made an order permitting the entry of a new default. The defaults of S.P.V. and George S. Soles were accordingly entered on August 10, 1977. On November 7, 1977, judgment by default was rendered against them in the amount of $26,457.50 plus $2,500 attorney's fees and costs.

Appellants point to Thorson v. Western Development Corporation (1967) 251 Cal.App.2d 206, 59 Cal.Rptr. 299, where the appellate court upheld a default money judgment though the prayer was for damages according to proof. In Thorson, the body of the complaint gave notice of the demand in that it contained a specific allegation of damage in the amount of $10,000. Here, there is no such specific allegation, but both the body of the complaint and the prayer give notice of demand to the extent of $20,000, the amount below which, it was alleged, the damages suffered by appellants could not be reduced. Because the judgment purported to award a sum greater than the demand of which respondents were given notice under Code of Civil Procedure section 580, the judgment could not be sustained as to the full amount of the award, $26,457.50. In our view, the complaint did give effective notice of demand to the extent of $20,000, and it appears that if appellants had consented to a reduction of the award to that amount the judgment could have been sustained following appropriate modification. But both in the trial court and on appeal there has been no acquiescence by appellants in any modification of the judgment; appellants have maintained, contrary to the authorities, that the judgment is effective as to its full amount.

It was not an abuse of discretion for the trial court to vacate the judgment.

The order is affirmed.

I dissent.

The statutory provisions for pleading and for entry of default judgment recognize two compelling policies. On the one hand, reasonably prompt relief must be afforded a plaintiff when a defendant declines to respond to a complaint. (See Beall v. Munson (1962) 204 Cal.App.2d 396, 400, 22 Cal.Rptr. 333.) On the other hand, there must be an assurance that a defendant will not be held liable for alleged breach or wrongdoing without fair notice and opportunity to answer. (Anderson v. Mart (1956) 47 Cal.2d 274, 282, 303 P.2d 539.) Believing that the defendant in the instant case has had reasonable notice and ample opportunity to respond to the complaint against it, and that the court's obligation to afford the plaintiffs redress will not be served by further delay, I would reverse the order of the superior court which vacated the earlier default judgment for plaintiffs.

The defendant does not claim that it lacked notice of the proceedings against it charging breach of contract, negligence, misrepresentation and fraud. It could hardly do so: more than nine months after service of process, and two and one-half months after entry of default, counsel for defendant obtained a stipulated extension in which to answer the complaint. Even then, after repeated efforts by plaintiffs' attorney to elicit some response, including several mailings of requests to enter default, defendant failed to file an answer. Four months after the first default was set aside by stipulation of the parties, a second default was entered. Three months later, the trial court entered judgment upon that default after accepting plaintiffs' submitted evidence. Eight more months passed before the defendant company bestirred itself to attack the judgment as “void.”

The issue of voidness in the case of this judgment is concerned only with the Amount of damages awarded by the trial court. Defendant argues that the award was in violation of Code of Civil Procedure section 580, which prohibits the court from granting relief “in excess of” that demanded. The purpose of this restriction is to ensure notice to the defendant of the extent of its jeopardy. (Anderson, supra.) Defendant asserts a failure of notice in that the complaint demanded $100,000 punitive damages and an amount exceeding $20,000 compensatory damages, while the court ultimately awarded damages of $26,457.50 plus costs and fees. The implication is that a demand for $120,000 was not sufficient to encourage the defendant to file an answer, but that a demand for $126,457.50 would have been.

Even if we view the compensatory damages apart from the claim for $100,000 in punitive damages, defendant was not subjected to unfair surprise: the complaint and prayer announced that damages could be proven somewhat in excess of the approximate figure of $20,000 as, in fact, they were. This is neither a case of the court awarding a different Type of relief than that prayed for (see, e. g., Lee v. Ski Run Apts. Assoc. (1967) 249 Cal.App.2d 293, 57 Cal.Rptr. 496), nor of the court awarding a sum in damages where no sum was mentioned in the complaint or prayer (Ludka v. Memory Magnetics Int'l. (1972) 25 Cal.App.3d 316, 101 Cal.Rptr. 615), such that the defendant could justifiably claim surprise. Defendant here was notified of a specific sum in punitive damages sought and an approximate sum of compensatory damages, as well as of the plaintiffs' intention to submit proof of somewhat greater compensatory damages. Notified of these claims, and ultimately faced with a judgment for some of them, the defendant maintained its silence for more than two years before challenging the adequacy of the plaintiffs' pleadings.

The plaintiffs in the present case did not present an “open-ended” prayer for any relief according to proof, but rather alleged a firm figure for punitive damages and a reasonable index figure for compensatory damages which should have put the defendant on notice of the scope and nature of its potential liability. There are no reported cases dealing with a complaint precisely like the one before us. Because it asks for compensatory damages Exceeding $20,000, the complaint does not violate the requirement of Code of Civil Procedure section 580 that relief may not exceed that demanded. Because neither case precedent nor statute provide explicit guidance in determining the adequacy of a complaint worded like the present one, we must apply the principles underlying default judgment: adequate relief for the plaintiff who has not been answered and sufficient protection for the defendant by fair notice. Three years and a substantial (albeit one-sided) flow of notices, inquiries, forms and summons have now passed since the complaint was originally served; the plaintiffs have a compelling claim to a final adjudication of their rights. Set against this, the defendant's contention that the trial court granted relief beyond the scope of fair notice to the defendant by awarding $26,457.50 when the plaintiff had asked for more than $20,000 (in addition to $100,000 punitive damages) pales into triviality, particularly since the defendant failed for so long to respond to the allegedly indefinite demand or, indeed, to answer the complaint at all.

Even if the trial court, in vacating judgment, was correct in its finding that an award of more than $20,000 was not within the compass of the pleadings, this determination should not have the effect of voiding the entire judgment, because the original court had the power to grant relief Up to $20,000 plus costs. The compensatory figure of $20,000 appears in both the complaint and prayer, and the dollar amount of costs or fees taxed properly to the defendant need not be specified in the pleadings. (Richee v. Gillette Realty Co. (1929) 97 Cal.App. 365, 275 P. 477; see also Code Civ.Proc., s 585(1), (2).)¹ To add appellate procedural insult to trial court procedural injury, appellants are now told that the judgment they obtained “could have been sustained” to the extent of $20,000 but because they have not “acquiesced” in any such modification, they cannot collect $20,000. As in Monopoly they must return to “Go” and start all over again. At no time at the trial court level or here was any offer of modification made by respondents, the trial court or this court but because appellants have “refused to acquiesce in any such modification” they lose No authority is cited for the proposition that refusal to acquiesce in a non-offer results in a forfeiture of an otherwise valid judgment.

In summary, it is my view that: (a) the initial judgment awarded by the trial court was not in violation of any statutory restriction, because relief was granted exactly according to the terms of the demand; (b) the underlying statutory purpose has been fulfilled in that defendant was given notice of the extent of its jeopardy; (c) the judgment is not “void,” because it meets both the spirit and the somewhat ambiguous letter of the law; (d) even if the “minimum amount” formulation of the demand for compensatory damages is somewhat unusual, the defendant was put on notice of at least $20,000 in claims and therefore only that portion of the judgment in excess of $20,000 is even arguably in excess of jurisdiction and so voidable. (e) This court's view that the trial court did not abuse its discretion in setting aside a judgment which this court finds perfectly valid on the ground that appellant did not “acquiesce” in a modification which was never offered, strains belief.

Where, as here, the defendant has had reasonable notice of the claims against it and has declined, over a long period of time, to respond to those claims, the policy of granting plaintiffs a final adjudication of their rights should prevail, and the full judgment accorded upon default should be restored.

I would reverse the judgment.

FOOTNOTES

1.  For examples of situations in which a default judgment may be modified rather than entirely set aside, see Uva v. Evans (1978) 83 Cal.App.3d 356, 147 Cal.Rptr. 795 (default judgment remanded for modification of excessive damages award), Kass v. Young (1977) 67 Cal.App.3d 100, 136 Cal.Rptr. 469 (reversed default judgment and ordered class maintainability hearing before judgment could be entered, but left entry of default intact such that liability could not be challenged) and Lee v. Ski Run Apts. Assoc., supra (reversed only the portion of money damages awarded on default which had not been demanded in the complaint, upholding the balance of the judgment which did not exceed jurisdiction).

CHRISTIAN, Associate Justice.

CALDECOTT, P. J., concurs.