Friday, November 20, 2015

From Now on, Just Demand $1 Trillion . . .

Dhawan v. Biring, No. B257977 (D2d5 Oct. 28, 2015)

Plaintiff here what I and every lawyer who has filed a
state court complaint arising from a business dispute has probably also done. Notwithstanding Code of Civil Procedure § 425.10(a)(2)—which says that “[i]f the recovery of money or damages is demanded [in a non-personal injury case] the amount demanded shall be stated—Plaintiff’s prayer for relief said only that he was entitled to damages “according to proof.” After all, in a case where the damages calculation likely depends on the testimony an expert who might not even be hired for many months, who wants to commit?

Generally it makes no difference. Under
Code of Civil Procedure § 580(a), in a contested case the court can grant any relief consistent with the complaint, regardless of whats in the prayer. But when defendant defaults, it becomes a bigger deal, because in those circumstances § 580(a) expressly prohibits any award of relief not demanded in the complaint. 

Defendant here did default, however, and that put Plaintiff in a pickle. Amending his complaint to state the now-absolutely necessary damages demand would require Plaintiff to serve Defendant anew and thus effectively relieve Defendant from the entered default on the original complaint. What’s the chance a defendant defaults twice? So to avoid that option, Plaintiff served Defendant with a “statement of damages” under Code of Civil Procedure § 425.11—which authorizes this practice in personal injury cases where, as an exception to the general rule, a plaintiff is not allowed to plead a damages number. The trial court ultimately entered a default judgment on the amount in the notice.

More than a year later, Defendant moved to vacate the judgment as void under
Code of Civil Procedure § 473(d) because the damages exceeded those pleaded in the complaint. The court of appeal agrees, and reverses. 

Because of the due process issues implicated in defaults, § 580 gets strictly construed. Prior cases have held, for instance, that if the number isn’t in the complaint, it’s not enough even if Defendant had actual notice of the damages. Given that, the court isn’t inclined to let § 425.11 serve as an end-around of the facial requirement under § 580 that an ordinary plaintiff plead his damages in his complaint. For the same reason, Plaintiff couldn’t smuggle notice of his regular damages onto his statement of his punitive damages—the amount of which which also can’t be pleaded—as required under Code of Civil Procedure § 425.115. 

Further, a default judgment for more than demanded damages isn’t just voidable; its full-blown void. So it is subject to collateral attack under § 473(d), which doesn’t have the same time limits and factual predicates that apply to an attack on a merely voidable judgment under § 473(b).


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