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Default Judgments (including for accounting and related damages) remain limited to what is set forth in the pleading (Sass v. Cohen (2019) 32 Cal.App.5th 1032.)

On Behalf of | May 21, 2019 | Civil Procedure, New Case Law |

Due process prevails.  A common mistake is pleading damages (other than as limited in Family/PI/wrongful death cases) according to proof without providing the defendant with a number of possible damages.  The result is a default but no money to the plaintiff.  The law states a default judgment cannot exceed the type and amount of relief sought in plaintiff’s operative pleading.  (Code Civ. Proc., § 580, subd. (a).)  A similar problem occurs in an accounting action seeking damages related to the valuation of a business without stating what the damages may be.  Now, the courts clearly require a clear statement of what the total amount of the judgment could be. E.g. $1,000,000 or according to proof even on an accounting cause of action.

The courts have now held that if you only allege a certain dollar amount of damages, (e.g. 50% of a million dollar home) then that is what you are limited to.  If you only say 50% of the value of the business without stating what is the approximate value of the business, that may be a problem for the plaintiff on default.  This applies even if you allege in excess of $25,000 or according to proof, you cannot obtain relief greater than $25,000.  The Court of Appeal held: “We hold that actions alleging an accounting claim or otherwise involving the valuation of assets are not excused from limitations on default judgments and, in so doing, add our voice to the growing chorus of cases so holding. We also hold that the amounts of damages awarded and demanded are to be compared on an aggregate basis.”  (Sass v. Cohen (Cal. App. 2nd Dist., Div. 2, Mar. 7, 2019) 32 Cal.App.5th 1032.)  Note, this case is a Marvin v. Marvin (1976) 18 Cal.3d 660, 674-675, 684 type of case.  The Plaintiff in this case was the woman the [married] man imported from London to be his life time lover and business partner.  Just after meeting the woman the defendant asked her to move to California, seven years later he dumped her.

The Sass v. Cohen case does a nice job analyzing the issue.  I am also pleased it mentioned this cite in a footnote: “In such instances, the default is less of an affirmative “tactical” choice not to participate in the lawsuit in the first place (Stein v. York (2010) 181 Cal.App.4th 320, 325) and more of a sanction for making bad “tactical” choices in how to litigate a case in which the defendant initially decided to participate.”