CANTRELL v. CHATOIAN (1986)

OPINION

STATEMENT OF THE CASE AND RELEVANT FACTS

This appeal arises out of a legal malpractice suit filed by plaintiff Cantrell against Attorney Chatoian in November 1980.   The action was grounded on Chatoian's alleged negligence in failing to file a personal injury suit on behalf of Cantrell within the applicable statute of limitations.   The malpractice complaint did not set forth the amount of damages sought to be recovered as required by Code of Civil Procedure section 425.10.¹ although a jurisdictional statement filed shortly thereafter indicated the amount in controversy exceeded $25,000.   The complaint, jurisdictional statement and a summons were personally served on Chatoian March 3, 1981.   On June 5, 1981, Chatoian filed his answer pro se.

On October 12, 1981, after Chatoian's repeated violation of superior court orders to answer written interrogatories served on him by Cantrell, the court ordered Chatoian's answer “be stricken as a sanction for the willful failure to make discovery.”

Several days later, Cantrell moved for a partial summary judgment against Chatoian.   Chatoian responded October 29, 1981, by moving for reconsideration of the order striking his answer.   On November 5, 1981, the superior court denied both the motion for reconsideration and the motion for summary judgment.

On February 25, 1982, Cantrell served Chatoian a statement of damages pursuant to section 425.11.   The total damages sought was $1,615,982.   On March 1, 1982, default was entered against Chatoian.   In its order, the court noted that “the provisions of Code of Civil Procedure section 585(b), and the cases decided thereunder, may preclude or limit the amount of any default judgment in the existing posture of the case.”   A motion to set aside the default was denied May 5.

Over two years later, on July 6, 1984, a default judgment was entered by Judge Pettitt against Chatoian for $1,615,982 plus costs.

On July 19, 1984, Chatoian moved for a new trial on the ground that he had not had proper notice of the potential damages claimed by Cantrell because the notice of damages had been served on him after his answer had been stricken.   According to Chatoian, the statement of damages did not provide the notice contemplated by section 585, subdivision (b) and case law because he could no longer defend the lawsuit.   Chatoian also argued that former section 581a, subdivision (c) prohibited the entry of a default judgment more than three years after service of the summons and complaint where the defendant has made no general appearance.

On September 4, 1984, Judge Pettitt denied Chatoian's motion for a new trial stating that such a motion would not lie after a default judgment.   However, Judge Pettitt then ordered the default judgment set aside and dismissed Cantrell's complaint based on the section 581a, subdivision (c) argument.   Judge Pettitt accepted Chatoian's argument that neither his answer which had been stricken nor his motion for reconsideration of the order striking the answer constituted a general appearance so that the default judgment had been entered more than three years after service of the summons and complaint with no general appearance by the defendant—all in violation of section 581a, subdivision (c).

Cantrell has appealed from the order setting aside the default judgment.

Chatoian has cross-appealed from the default judgment to protect his interests should that judgment be reinstated.

DISCUSSION

I. Cantrell's appeal.A. The trial court erred in vacating the default judgment under section 581a.

Section 581a, subdivision (c) authorized a trial court, on its own motion, to dismiss an action “if no answer has been filed after either service has been made or the defendant has made a general appearance, if plaintiff fails, or has failed, to have [a default] judgment entered within three years after service has been made or such appearance by the defendant, ․” While this statute was repealed after the events here described (Stats.1984, ch. 1705, § 3), it is clear that if an answer had not been filed a default judgment could be entered only within three years after service of summons or a defendant's general appearance.

In its explanatory memorandum, the trial court discounted the possibility that Chatoian had made such a general appearance.   Judge Pettitt implicitly agreed with the holding of Brown v. Ridgeway (1983) 149 Cal.App.3d 732, 197 Cal.Rptr. 327, that the striking of Chatoian's answer rendered the answer a nullity for all purposes.   He also specifically held that the motion for reconsideration of the order striking the answer was not a general appearance.   We conclude that both of these holdings were in error and require a reversal of the order vacating the default judgment and dismissing the complaint.

1. Chatoian's stricken answer constituted a general appearance.

 Brown v. Ridgeway, supra, held that where, as here, a defendant's answer is stricken, it is nullified as a pleading and thus eliminated as a general appearance;  hence, section 581a may be applied.   (Brown, supra, 149 Cal.App.3d at p. 736, 197 Cal.Rptr. 327.)   In reaching this conclusion, the Brown court relied entirely on Forbes v. Cameron Petroleums, Inc. (1978) 83 Cal.App.3d 257, 147 Cal.Rptr. 766.  Forbes dealt with the question of whether a demurrer, filed after a default and subsequently stricken on plaintiff's motion, constituted a general appearance.   The Forbes court concluded that, while the unauthorized demurrer was itself an appearance, once stricken it must be treated “ ‘as though it had never occurred.’ ”  (Forbes, supra, 83 Cal.App.3d at p. 266, 147 Cal.Rptr. 766, emphasis deleted.)

Forbes, although persuasive on its facts, is easily distinguishable from both Brown and the instant case.   The Forbes court faced a pleading which was stricken as an improper pleading, and one which the defendant never intended as conferring jurisdiction on the trial court.   The court in Forbes specifically noted that “the defendants [did not] intend to submit to the jurisdiction of the court, ․” (Ibid.)   In contrast, in both Brown and the case at bench, the defendants' pleadings (i.e., the answers) obviously were meant to invoke the trial court's jurisdiction, and were therefore general appearances.  (Jones v. Alexander (1950) 101 Cal.App.2d 44, 45, 224 P.2d 870.)   Chatoian's answer was stricken, not because it was in any way “ ‘unauthorized and void’ ” (Forbes, supra, 83 Cal.App.3d at p. 263, 147 Cal.Rptr. 766), but simply as a sanction.   Because there is no question that Chatoian knowingly, voluntarily and properly submitted to the court's jurisdiction by filing his answer, we cannot accept the proposition that the court lost its personal jurisdiction by imposing a sanction on Chatoian.

Nevertheless, the general appearance that Chatoian made by filing his answer occurred over three years before the judgment (answer filed June 5, 1981;  judgment entered July 6, 1984), and thus section 581a, subdivision (c) would have required dismissal.   Cantrell urges that the three-year period should have been tolled between the time that Chatoian's answer was filed and the date that Judge Hamlin ordered it stricken.   There is authority for the tolling of the section 581a limitation period in some circumstances.   For example, section 581a, subdivision (d) specifically tolled the statute during periods when a defendant was not amenable to the process of the court.   Nevertheless, tolling of the statute is not necessary in this case because we can find a general appearance within three years of the judgment.

2. Chatoian's motion for reconsideration of the order striking his answer constituted a general appearance.

 Judge Pettitt found that Chatoian's motion for reconsideration of the order striking the answer was not a general appearance.   In support for this conclusion, Judge Pettitt cited Salmonson v. Streiffer (1910) 13 Cal.App. 395, 110 P. 144, which held in essence that acts not enumerated in section 1014 cannot be appearances, as the language of section 1014 was “ ‘intended to settle all disputes upon the subject.’ ”  (Id. at p. 397, 110 P. 144.)   While Salmonson was in conformity with prior authority (see Vrooman v. Li Po Tai (1896) 113 Cal. 302, 305, 45 P. 470), the law has changed in the last 76 years.  (See Creed v. Schultz (1983) 148 Cal.App.3d 733, 739–740, 196 Cal.Rptr. 252.)  “It is established that a defendant may appear in ways other than those specifically designed in section 1014.   ‘․  “The test is—Did the party appear and object only to the consideration of the case or any procedure in it because the court had not acquired jurisdiction of the person of the defendant or party?   If so, then the appearance is special.   If, however, he appears and asks for any relief which could be given only to a party in a pending case, or which itself would be a regular proceeding in the case, it is a general appearance regardless of how adroitly, carefully or directly the appearance may be denominated or characterized as special.  [Citation.]” ’ ”  (Slaybaugh v. Superior Court (1977) 70 Cal.App.3d 216, 222, 196 Cal.Rptr. 252.)

“An act of a defendant by which he intentionally submits himself to the jurisdiction of the court in that action for the purpose of obtaining any ruling or order of the court going to the merits of the case ․ will be equivalent to an appearance, although not strictly in accordance with the terms of section 1014.”  (Davenport v. Superior Court (1920) 183 Cal. 506, 511, 191 P. 911) Chatoian's motion for reconsideration was intended to obtain a ruling of the court going to the merits of the case, even as his original act of filing an answer was to obtain a ruling on the merits.   Chatoian's counsel, in a declaration in support of the motion for reconsideration, specifically stated that he was “informed and belief [sic ] that he [Chatoian] has a good and valid defense to this case on the merits.”   Further, Chatoian's motion for reconsideration was filed October 29, 1981, less than three years before the default judgment was entered July 6, 1984;  thus, section 581a, subdivision (c) was not violated, and the trial court erred by setting aside the judgment and dismissing the complaint.

II. Chatoian's cross-appeal.

A. The trial court erred in holding that a new trial motion may not follow a default judgment.

 Chatoian's first argument is that a new trial motion may properly be made after a default judgment, and that Judge Pettitt thus erred in ruling that “such motion can not [sic ] be maintained after a default judgment has been entered.”   Chatoian cites Don v. Cruz (1982) 131 Cal.App.3d 695, 182 Cal.Rptr. 581, wherein the court, having examined the relevant authority, concluded:  “We see no reason to preclude a defaulting party from seeking a new trial (or, more precisely, a new judgment hearing) on the ground that damages are excessive as a matter of law when the same contention may be urged on direct appeal from the default judgment.”  (Id. at p. 704, 182 Cal.Rptr. 581.)   Cantrell makes no attempt to refute this authority in his respondent's brief.

The primary authority supporting Don v. Cruz, supra, is Carney v. Simmonds (1957) 49 Cal.2d 84, 315 P.2d 305.   After a lengthy discussion and analysis of existing case law, the Supreme Court concluded “that a motion for a new trial is proper procedure in any of the classes of judgments mentioned in the first group of cases above cited [including default judgments] whether the judgment is based on law or fact or both, except possibly in the case of default judgments or judgments by agreement or confession where there may be the question of the right of the moving party to make any objection to the judgment.”  (Id. at p. 90, 315 P.2d 305.)   This holding was subsequently clarified in Jacuzzi v. Jacuzzi Bros., Inc. (1966) 243 Cal.App.2d 1, 22, 52 Cal.Rptr. 147:  “[I]n the case of a default judgment, where the right of the moving party to make an objection to the judgment has not been forfeited, bargained away, or otherwise lost, he may use a motion for new trial to secure a reexamination of such questions of law, fact, or law and fact as were involved in the proceedings which culminated in the order for the entry of his default and the ensuing judgment.”

The court thus erred in denying Chatoian's motion for a new trial on the grounds that it was unauthorized:  it should have been reviewed on the merits.   Of course, the setting aside of the judgment made such review unnecessary at the time;  however, since that action was also error, it now becomes necessary to examine the contentions in the new trial motion on their merits.   The first of these contentions, that the default judgment was barred by section 581a, subdivision (c) has already been disposed of.   This leaves two arguments:  first, that the statement of damages was not timely filed under section 585, and second, that the judgment was excessive as a matter of law.

B. The trial court violated section 585 in allowing judgment for $1.6 million.

 Section 585, subdivision (b) limits the amount of a default judgment.   That section provides that, once default has been entered, the plaintiff “may apply to the court for the relief demanded in the complaint;  the court shall hear the evidence offered by the plaintiff, and shall render judgment in his or her favor for such sum (not exceeding the amount stated in the complaint ), as appears by such evidence to be just․”  (Emphasis added.)

The express requirement of the statute that the amount demanded be stated “in the complaint” obviously was not meant to be literally interpreted.   For example, under section 425.10, the amount sought may not be stated in complaints for personal injury or wrongful death.²  In order to assure notice to a defaulting defendant, however, section 425.11 requires that notice of the relief sought be given “before a default may be taken.”   The only reasonable way to read section 585 in conjunction with sections 425.10 and 425.11 is to interpret the section 585 requirement that relief be demanded “in the complaint” to include relief demanded pursuant to section 425.11.

Chatoian's answer was stricken October 19, 1981.   The statement of damages was served on Chatoian by mail February 25, 1982.   The default was entered March 1, 1982, four days later.

Was this notice of damages adequate under the relevant statutes?   Not according to dictum in Stevenson v. Turner (1979) 94 Cal.App.3d 315, 156 Cal.Rptr. 499.   In Stevenson, plaintiff neglected to serve defendant with the notification of damages required by section 425.11.   The appellate court reversed the default judgment, observing that “the clear import [of section 425.11] is to give defendant one ‘last clear chance’ to respond to the allegations of the complaint and to avoid the precise consequences which have obtained here:  a judgment for a substantial sum, well after the time for relief from default has passed, after an evidentiary hearing of which defendant did not receive notice (Code Civ.Proc., § 1010), and at which the proof was somewhat attenuated.”  (Id. at pp. 319–320, 156 Cal.Rptr. 499.)

Stevenson is obviously distinguishable, as notice was given to Chatoian;  Cantrell points this out.   However, that notice was infirm under the policy set forth in Stevenson, as it afforded Chatoian no opportunity to avoid the default and ensuing judgment.   Once his answer was stricken, Chatoian could take no action to avoid default, a fact recognized by the Legislature (after Chatoian's default was entered) when it amended section 586 to read, in part:

“In the following cases the same proceedings shall be had, and [default] judgment shall be rendered in the same manner, as if the defendant had failed to answer:

“․

“7. If a motion to strike the answer in whole, of the character specified in Section 585, is granted without leave to amend, ․”

Once Chatoian's answer was stricken, a default was thus assured.  “The major purpose of any notice provision is to prevent prejudice by allowing a respondent adequate time for preparation.”  (Shannon v. Sims Service Center, Inc. (1985) 164 Cal.App.3d 907, 916, 210 Cal.Rptr. 861.)   The notice required under section 425.11 is meaningless under these facts unless it comes prior to the striking of the answer.

Cantrell also argues that, when an answer is stricken and default judgment entered as a discovery sanction, damages are not limited by the amount stated in the complaint, and therefore notice is irrelevant.   Greenup v. Rodman (1985) 168 Cal.App.3d 769, 214 Cal.Rptr. 520, on which Cantrell initially relied, was granted review by the Supreme Court on August 1, 1985 (B005745).  In any event, the Greenup court was not faced with a question of a defendant who had not received notice of potential liability.   Even accepting arguendo that default as a discovery sanction differs from other defaults, for the notice required by section 425.11 (which applies to all defaults) to serve any purpose, it still must arrive in time for the defendant to avoid default.   (Stevenson v. Turner, supra, 94 Cal.App.3d at pp. 319–320, 156 Cal.Rptr. 499;  Shannon v. Sims Service Center, Inc., supra, 164 Cal.App.3d at p. 916, 210 Cal.Rptr. 861.)   Greenup specifically dealt with a defendant who “has had fair notice of all that plaintiff is seeking.”  (168 Cal.App.3d at p. 781, 214 Cal.Rptr. 520.)

In sum, a default judgment against a defendant who did not have fair notice of his potential liability, or a default judgment in excess of notice, is contrary to law.   In the instant case, the only effective notice that Chatoian had was that the amount in controversy exceeded $25,000.   Consequently, the judgment should be modified by striking the award of damages in excess of $25,000.   (See Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 495, 165 Cal.Rptr. 825, 612 P.2d 915.)

C. Proximate cause was adequately proven at the default hearing.

 Chatoian also contends that he should not be liable for any damages, because evidence he introduced in his May 17, 1982, memorandum of points and authorities in opposition to the entry of default judgment refutes the essential element of proximate cause.   In so arguing, he misapprehends the nature of the default judgment.   The defendant has no right to present evidence to a court considering a default judgment;  section 585, subdivision (b) provides that “the court shall hear the evidence offered by the plaintiff, and shall render judgment in his or her favor for such sum ․, as appears by such evidence to be just.”   While Judge Pettitt is presumed to have been aware of the various pleadings in this case, he would have been in error had he considered the documentary evidence filed with Chatoian's points and authorities in reaching judgment.   Any other holding would strip the default judgment hearing of its ex parte character under California law.  (See generally, Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385–387, 202 Cal.Rptr. 204.)   The evidence presented by plaintiff Cantrell before the trial court was sufficient to prove the element of proximate cause.

DISPOSITION

The trial court's order vacating the default judgment and striking Cantrell's complaint is reversed.   The matter is remanded to the trial court with directions to modify the judgment by striking the award in excess of $25,000.   Plaintiff to recover interest on the $25,000 judgment from July 6, 1984.   Each party to bear his own costs on appeal.

FOOTNOTES

1.   Unless otherwise indicated, all further statutory citations are to the Code of Civil Procedure.

2.   We note that the present action, one for legal malpractice, is neither an action for personal injury nor for wrongful death.   Thus, Cantrell's complaint should have included a prayer for specific damages.   However, this issue was neither raised below nor argued on appeal, and we therefore deem it to have been waived by appellant Chatoian.

FRANSON, Acting Presiding Justice.

MARTIN and BALLANTYNE, JJ., concur.