Wiley v. Rhodes
FREDERICK WILEY Et Al., Plaintiffs and Respondents, v. JUNE RHODES Et Al., Defendants and Appellants
- Area
- civil
- Panel
- Daniel J. Kremer (author)
Analysis
The trial court entered a default judgment awarding plaintiffs $100,000 in punitive damages and $3,808 in attorney fees as costs, despite the complaint not specifying the punitive amount or pleading entitlement to fees. The Court of Appeal reversed the punitive damages and attorney fee awards, holding that due process requires specific notice of the amounts sought before a default judgment can be entered, and affirmed the remainder of the judgment.
| Ruling reviewed | Standard | The court | The model |
|---|---|---|---|
Award of $100,000 in punitive damages“We conclude the superior court should not have awarded Wiley punitive damages against Rhodes.” | de novo | error | agree with court The court correctly applied the due process principles from Greenup v. Rodman, which hold that a default judgment cannot exceed the amount specifically demanded or notified to the defendant. Since Civil Code section 3295(e) prohibits stating the amount in the complaint, the plaintiff was required to provide separate notice of the specific punitive amount sought before default; failing to do so rendered the award void for lack of jurisdiction. |
Award of $3,808 in attorney fees as costs“We thus conclude the superior court should not have awarded Wiley attorney fees as costs.” | de novo | error | agree with court The court correctly held that attorney fees are not recoverable as costs in a default judgment unless the complaint specifically pleads entitlement and prays for them. Relying on Becker v. S.P. V. Construction Co., the court found that the complaint's silence on this issue deprived the defendant of adequate notice, violating due process. |
Authorities
- relied: Greenup v. Rodman (1986) 42 Cal.3d 822 — Due process requires notice to defendants of the potential consequences of a refusal to pursue their defense, and in all default judgments, the demand sets a ceiling on recovery.
- relied: Becker v. S.P. V. Construction Co. (1980) 27 Cal.3d 489 — A default judgment awarding attorney fees is improper if the complaint does not specifically pray for such fees, as it fails to provide adequate notice to the defendant.
The appellate opinion: sound — The opinion is sound because it correctly identifies the due process requirement for specific notice of damages in default judgments and applies the controlling precedent from Greenup and Becker to the specific statutory context of Civil Code section 3295(e). It logically extends the principle that 'the demand sets a ceiling on recovery' to punitive damages where the statute prohibits pleading the amount, thereby requiring separate notice.
After the defendants defaulted, the superior court entered a default judgment for the plaintiffs awarding $28,399.88 in general damages with interest, $100,000 in punitive damages, and $3,808 in costs including attorney fees, although the complaint stated no amount of punitive damages and did not plead or pray for attorney fees. The Court of Appeal reversed the punitive damage and attorney fee portions of the judgment as entered without the notice due process requires, and affirmed the remainder.
| Ruling reviewed | Standard | The court | The model |
|---|---|---|---|
Award of $100,000 punitive damages on default judgment where the complaint, as required by Civil Code section 3295(e), stated no amount of punitive damages and plaintiffs gave no separate pre-default notice of the amount sought“We conclude the superior court should not have awarded Wiley punitive damages against Rhodes.” | de novo | error (procedure) | agree with court The court does not articulate a standard of review but treats the question as one of law: whether a default judgment may include punitive damages of which the defendant had no notice of amount. Greenup v. Rodman holds the demand sets a ceiling on recovery in all default judgments and that due process requires notice of the potential consequences of not defending; Becker v. S.P.V. Construction Co. applies the same principle under Code of Civil Procedure section 580. Because section 3295(e) forbids pleading the amount, the court reasonably concludes the plaintiff must give separate notice before taking default, by analogy to Code of Civil Procedure section 425.11 for personal injury cases. A bare allegation of entitlement to punitive damages tells the defendant nothing about exposure, so the reasoning follows directly from the Supreme Court authority. |
Award of $3,808 attorney fees as costs on default judgment where the complaint neither alleged a contractual or statutory basis for fees nor demanded them in the prayer“Here Wiley’s complaint did not allege entitlement to attorney fees. We thus conclude the superior court should not have awarded Wiley attorney fees as costs.” | de novo | error (procedure) | agree with court Becker v. S.P.V. Construction Co., 27 Cal.3d at page 495, reversed an attorney fee award in a default judgment because the complaint did not pray for fees; the facts here are indistinguishable. The court also notes (fn. 5) the plaintiffs did not request fees on the request to enter default as rule 870(a) contemplates. The result is squarely controlled by binding Supreme Court precedent. |
Authorities
- relied: Greenup v. Rodman (1986) 42 Cal.3d 822 — In all default judgments the demand sets a ceiling on recovery; a default judgment greater than the amount specifically demanded is void as beyond the court's jurisdiction, and due process requires defendants have notice of the potential consequences of declining to defend.
- relied: Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489 — Under Code of Civil Procedure section 580 a default judgment may not exceed the relief demanded in the complaint; an attorney fee award in a default judgment must be reversed where the complaint did not pray for attorney fees.
The appellate opinion: sound — The opinion correctly extends Greenup and Becker to the situation created by Civil Code section 3295(e), reasoning that the statutory bar on pleading an amount cannot eliminate the due process requirement of notice before default, and it resolves the attorney fee issue by direct application of Becker. Its reliance on a practice guide to fill the statutory gap is somewhat thin, but the core holding rests on binding Supreme Court authority and the result is well supported.
Opinion — Kremer
Opinion
KREMER, P. J.Defendants June Rhodes et al. (Rhodes) appeal the portions of a default judgment favoring plaintiffs Frederick and Joanne Wiley (Wiley) awarding punitive damages and costs. Rhodes attacks the punitive damage award and costs as violating due process. We reverse those portions of the judgment. We affirm the remainder of the judgment.
*1472 I
Facts and Procedural History
In November 1988 Wiley sued Rhodes for damages for breach of oral contract, fraud and misrepresentation, concealment, conversion and breach of fiduciary duty. Wiley’s complaint alleged Rhodes improperly charged and retained a $20,000 fee for arranging a home refinance loan for Wiley. Wiley’s complaint sought $20,000 general damages plus interest, unspecified punitive damages and unspecified costs. Ultimately Wiley took the default of each defendant.
After a default prove-up hearing and memorandum of costs filed by Wiley, the superior court awarded Wiley $28,399.88 general damages including interest, $100,000 punitive damages and $3,808 costs including attorney fees. Rhodes appeals.
II
Discussion
A
Punitive Damages
Rhodes contends the punitive damage award violated due process because before entry of default judgment Rhodes was not given notice of the specific amount of punitive damages Wiley would seek. We agree.
Civil Code 1 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. 2 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.” (Greenup v. Rodman (1986) 42 Cal.3d 822, 826 [231 Cal.Rptr. 220, 726 P.2d 1295].) Due process requires a defendant in a case involving a default judgment be given adequate notice of the judgment that may be entered. (Cf. Becker v. *1473 S.P. V. Construction Co. (1980) 27 Cal.3d 489, 493 [165 CaI.Rptr. 825, 612 P.2d 915].)
The Code of Civil Procedure contains several sections intended to ensure defendants who decline to contest lawsuits do not subject themselves to open-ended liability. (See Code Civ. Proc., §§ 580, 585, 586, 425.10, 425.11; Greenup v. Rodman, supra, 42 Cal.3d at p. 826.) Code of Civil Procedure section 425.10—a statute similar to Civil Code section 3295, subdivision (e)—provides in an action for personal injury or wrongful death the amount of damages shall not be specified in the complaint. Code of Civil Procedure section 425.11 provides in such case the plaintiff must give notice to the defendant of the amount of special and general damages sought before a default may be taken. That requirement ensures defendants are given notice of exactly what they may lose under a default judgment that may be assessed against them. (Cf. Greenup v. Rodman, supra, 42 Cal. 3d at p. 826.) Permitting the punitive damage award here would contravene the concern for due process underlying statutes such as Code of Civil Procedure section 425.11.
In Greenup v. Rodman, supra, 42 Cal. 3d 822, a case antedating section 3295, subdivision (e), involving a default entered as a discovery sanction, the superior court awarded plaintiff more damages than specified in the complaint. The Supreme Court decreased the award to those sums pleaded. The court stated: “We conclude that due process requires notice to defendants, whether they default by inaction or by wilful obstruction, of the potential consequences of a refusal to pursue their defense. Such notice enables a defendant to exercise his right to choose—at any point before trial, even after discovery has begun—between (1) giving up his right to defend in exchange for the certainty that he cannot be held liable for more than a known amount, and (2) exercising his right to defend at the cost of exposing himself to greater liability.” (Id. at p. 829.) The court also stated: “We conclude that in all default judgments the demand sets a ceiling on recovery.” (Id. at p. 824.) Similarly, we conclude because Wiley’s complaint was silent as to the amount of punitive damages sought, Wiley should have furnished Rhodes with notice of the amount sought before requesting entry of default. (Cf. Greenup v. Rodman, supra, 42 Cal. 3d at p. 830.) 3
*1474 We disagree with Wiley’s contention allegations in the complaint claiming entitlement to punitive damages “appropriate to punish or set example of defendants” constituted sufficient notice to satisfy due process. Wiley would leave defendants to speculate about the potential consequences of refusing to pursue a defense. (Greenup v. Rodman, supra, 42 Cal. 3d at pp. 826, 829; Becker v. S.P. V. Construction Co., supra, 27 Cal.3d at p. 494.) A general allegation of entitlement to punitive damages is not reasonably calculated to apprise the defendant of potential financial liability for punitive damages if judgment is taken by default. 4
We conclude the superior court should not have awarded Wiley punitive damages against Rhodes.
B
Costs
The superior court awarded Wiley $3,808 attorney fees as costs. Rhodes challenges the cost award as violating due process. Rhodes asserts Wiley’s complaint did not allege any contract authorizing attorney fees and did not demand attorney fees. We agree.
If Wiley was entitled by statute or contract to attorney fees, that fact should have been pleaded in the complaint and a demand included in the prayer. (Weil & Brown, Cal. Practice Guide, supra, §6:169.1, rev. #1, 1990.) In Becker v. S.P. V. Construction Co., supra, 27 Cal.3d at page 495, the Supreme Court reversed an attorney fee award in a default judgment because the complaint did not pray for attorney fees. Here Wiley’s complaint did not allege entitlement to attorney fees. We thus conclude the superior court should not have awarded Wiley attorney fees as costs. 5
*1475 Disposition
The portions of the judgment awarding Wiley punitive damages and attorney fees as costs are reversed. The remainder of the judgment is affirmed. Each side shall bear its own costs on appeal.
Benke, J., and Huffman, J., concurred.
All statutory references are to the Civil Code unless otherwise specified.
The statutory purpose is preventing use of a punitive damage claim as a financial bludgeon. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (Rutter 1990) § 6:173.2, rev. #1, 1989.)
An attorney practice manual notes: “No procedure similar to CCP § 425.11 is provided for punitive damage claims. [¶] However, it seems clear that prior to entry of default, some sort of notice to defendant would be required [citation].” (Weil & Brown, Cal. Practice Guide, supra, § 6:173.4, rev. #1, 1989.)
Further, “[a]s mentioned earlier, it is no longer proper to allege in the complaint the amount or amounts of punitive damages sought. [Civ.C. § 3295(e) . . . .] [¶] However, the statute does not specify how defendant is to be provided with notice of the amounts claimed where a default judgment is sought. [¶] Comment: Since notice is an essential element of due *1474 process [citation], the Legislature’s failure to provide for notice cannot be construed to excuse the requirement of notice before entry of default.” (Weil & Brown, Cal. Practice Guide, supra, § 5:37.15, rev. #1, 1990, italics in original.)
We note nothing in section 3295, subdivision (e), prohibits a plaintiff from giving the defendant notice—separate from the complaint—of the amount of punitive damages sought. (Accord Weil & Brown, Cal. Practice Guide, supra, § 5:37.16, rev. # 1> 1990.)
We note Wiley also failed to request attorney fees as costs on the request to enter default. (Cal. Rules of Court, rule 870(a).)
Cites, in this corpus
- Greenup v. Rodman L.A. 32093 · 1986-11-13
- Becker v. S.P v. Construction Co. S.F. 24125 · 1980-07-03
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