Filed 6/22/20 McGinley v. Schwartz CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

MICHAEL R. MCGINLEY,

Plaintiff and Respondent,

v.

RICHARD SCHWARTZ,

Defendant and Appellant.

G057292

(Super. Ct. No. 30-2017-00954169)

O P I N I O N
Appeal from a judgment of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Reversed and remanded.

The Judge Law Firm, James A. Judge and David Mangikyan for Defendant and Appellant.

Ray & Gourde, Thomas L. Gourde and Kari A. Martin for Plaintiff and Respondent.

* * *

Plaintiff Michael R. McGinley hired defendant Richard Schwartz to remodel his home. According to McGinley, Schwartz went over the contract price, charged him twice for certain work, charged him for unperformed work, made various misrepresentations about his license and pricing, and eventually abandoned the job, forcing McGinley to hire someone else to finish the project. McGinley sued Schwartz for breach of contract, negligent and intentional misrepresentation, and related claims, and eventually obtained a default judgment against him for $80,000, plus attorney fees and costs.

Schwartz challenges the default judgment, asserting McGinley failed to offer sufficient evidence to support his damages claim of $80,000. We agree. Consequently, we reverse the default judgment entered in McGinley’s favor and remand this matter to the trial court for further proceedings.

FACTS

According to the operative first amended complaint, in late 2013, McGinley hired Schwartz, who does business as Pacific Coast Tile & Stone, to remodel his home. Schwartz led McGinley to believe he is a licensed general contractor; in fact Schwartz is only licensed to perform tile work.

McGinley alleges they entered into a home improvement contract reflected by Invoice No. 21381, in which Schwartz agreed to perform certain construction and remodeling work for $26,200. According to McGinley, the $26,200 “[c]ontract price” included demolition and remodeling of his kitchen and powder room, popcorn ceiling removal, painting, and the installation of recessed lighting, undermount cabinet lighting, several doors, flooring, fireplace tile, and audio/visual components.

McGinley paid Schwartz an initial deposit and then made several progress payments, as required by Invoice No. 21381. McGinley also paid several extra invoices for “additional charges” associated with Schwartz’s work. In the end, McGinley paid Schwartz a total of $48,105.14, but Schwartz never finished the job.

McGinley now challenges those charges. He asserts Schwartz not only went over the $26,200 contract price, but also charged him twice for certain work, charged him for unperformed work, made various misrepresentations about his progress and pricing, and eventually abandoned the project, forcing McGinley to hire someone else to finish the work at an estimated cost of $3,289.40. McGinley further alleges he had to purchase wall plates on his own at Home Depot for $80.86.

McGinley filed an unverified complaint against Schwartz for (1) breach of contract, (2) violation of Business & Professions Code section 7159, (3) negligent misrepresentation, (4) intentional misrepresentation, (5) promissory estoppel, (6) rescission, and (7) unjust enrichment. In his first, third, fourth, sixth, and seventh causes of action, he claimed damages either “in excess of,” “not less than,” or “approximately” $75,000. His prayer for relief and other causes of action did not specify a damages dollar amount.

McGinley served Schwartz with the complaint; Schwartz did not file a responsive pleading. Seven weeks later, per McGinley’s request, the clerk entered a default against Schwartz.

McGinley applied for a default judgment and submitted supporting declarations by himself and his attorney. McGinley’s declaration largely mirrored his complaint and then summarily asserted, “Due to Defendant’s breach of the agreement, I have been damaged in the amount of $75,000.00 for Defendant’s failure to complete the project.” His declaration did not explain how he reached that figure, made no reference to the other six causes of action, and did not explain what damages he sustained as a result of the conduct underlying each of those claims.

The trial court declined to enter a default judgment against Schwartz: “Under CCP 580 [this] Court is limited to what is demanded in the Complaint, and the Complaint does not have a dollar demand. Complaint must be amended and re-served.”

McGinley filed a first amended complaint, which asserted the same seven causes of action as the original complaint and concluded McGinley was “damaged in a sum of $80,000.00.” The prayer for relief sought “compensatory damages of $80,000,” unspecified consequential damages, prejudgment interest, attorney fees, costs, and such other relief as the court deemed proper.

McGinley served Schwartz with the amended complaint, and Schwartz again failed to file a responsive pleading. McGinley obtained another default.

Appearing in pro per, Schwartz filed a motion to set aside the default on the grounds of mistake, surprise, inadvertence, or excusable neglect. (See Code Civ. Proc., § 473.) The trial court denied the motion without prejudice on the grounds of improper service and lack of notice. Schwartz did not refile the motion.

Six weeks later, McGinley applied for a default judgment and submitted supporting declarations by himself and his attorney. After reciting the same information that appeared in the first amended complaint’s factual allegations section, McGinley summarily concluded, “Due to Defendant’s breach of the agreement, I have been damaged in the amount of $80,000.00 for Defendant’s failure to complete the project.” Once again, his declaration provided no explanation for that figure and made no reference to the other six causes of action. It also did not explain how his damages had increased from $75,000 to $80,000 since he executed his previous declaration.

Evidently satisfied by McGinley’s amended complaint and default package, the trial court entered a default judgment against Schwartz a week later, awarding damages of $80,000, attorney fees of $500, and costs of $547.51.

Schwartz then hired an attorney and filed a motion for relief from default on the grounds of mistake, surprise, inadvertence, or excusable neglect. The trial court denied the motion because Schwartz “fail[ed] to explain why he did not timely file an answer.” It further noted Schwartz had told the court seven months earlier that “he was working on a response, yet never filed one,” and it reasoned Schwartz “clearly sat on his rights.”

Schwartz appealed from the default judgment.

DISCUSSION

The sufficiency of damages evidence offered to support a default judgment is subject to appellate review. (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 272, 288 (Kim).) Schwartz asserts we must reverse the default judgment because McGinley failed to offer sufficient evidence to support his damages claim. We agree.

The applicable law is straightforward. Code of Civil Procedure section 585 governs the procedures for obtaining a default judgment. If a complaint seeks only compensatory damages in a sum certain that is readily ascertainable from the allegations of the complaint or statement of damages, the clerk may enter a default judgment for that amount. (Code Civ. Proc., § 585, subd. (a).) But where, as here, the complaint seeks either nonmonetary relief or monetary relief in an amount that requires an accounting, additional evidence, or the exercise of judgment to ascertain, the plaintiff must request entry of judgment by the court. (§ 585, subd. (b).) In such cases, the amount demanded in the complaint sets a jurisdictional ceiling on the amount of the default judgment; a default judgment in excess of that amount is void. (David S. Karton, A Law Corp. v. Dougherty (2009) 171 Cal.App.4th 133, 150.)

If a defendant defaults, the plaintiff is not automatically entitled to a default judgment in the amount demanded in the complaint. “Instead, it is incumbent upon the plaintiff to prove up his damages, with actual evidence” (Kim, supra, 201 Cal.App.4th at p. 272), and “affirmatively establish his entitlement to the specific judgment requested” (id. at p. 287). A “conclusory demand” (id. at pp. 287-288) for a default judgment in an amount that bears “absolutely no relationship to the allegations of [the] complaint” or evidence does not suffice (id. at p. 288).

A trial court may not simply award the plaintiff a default judgment for whatever amount is requested. (Kim, supra, 201 Cal.App.4th at p. 272.) The “court’s role in the process of entering a default judgment is a serious, substantive, and often complicated one.” (Id. at p. 273.) As we have repeatedly cautioned, “‘[i]t is imperative in a default case that the trial court take the time to analyze the complaint at issue and ensure that the judgment sought is not in excess of or inconsistent with it. It is not in plaintiffs’ interest to be conservative in their demands, and without any opposing party to point out the excesses, it is the duty of the court to act as gatekeeper, ensuring that only the appropriate claims get through. That role requires the court to analyze the complaint for itself—with guidance from counsel if necessary—ascertaining what relief is sought as against each defaulting party, and to what extent the relief sought in one cause of action is inconsistent with or duplicative of the relief sought in another. The court must then compare the properly pled damages for each defaulting party with the evidence offered in the prove-up.’” (Id. at p. 272, italics added.)

It was incumbent upon McGinley to prove up his damages with actual evidence to affirmatively establish his entitlement to $80,000, and it was the trial court’s duty to ensure McGinley carried that burden. Neither happened here. McGinley’s first amended complaint alleged he “sustained damages in a sum of $80,000.00,” and his declaration in support of the default package contained similar language. But McGinley never provided any explanation of how he was damaged in the amount of $80,000, much less any evidence supporting that figure.

At best, the evidence suggests McGinley paid Schwartz $21,905.14 more than the alleged contract price of $26,200; McGinley had to hire someone else to finish the work at an estimated cost of $3,289.40; and McGinley had to purchase wall plates on his own at Home Depot for $80.86. On this record, we cannot see how McGinley’s actual damages could approximate $80,000, and McGinley does not attempt to explain the calculation in his appellate brief.

We therefore reverse the default judgment and remand this matter to the trial court for further proceedings. On remand, the court in its discretion may either enter a reduced judgment based on the evidence before it, allow McGinley to reapply for a default judgment (this time with actual evidence supporting his damages calculation), or allow McGinley to file a second amended complaint. (See Behm v. Clear View Technologies (2015) 241 Cal.App.4th 1, 17.) Should McGinley pursue the third option, the new complaint will put the matter back at issue and enable Schwartz to assert affirmative defenses, including any applicable statute of limitations defenses.

DISPOSITION

The judgment is reversed, and the matter is remanded to the trial court for further proceedings consistent with this opinion. In the interests of justice, each party shall bear his own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

GOETHALS, J.

WE CONCUR:

FYBEL, ACTING P. J.

IKOLA, J.