Tuesday, January 26, 2010
C.A. Tosses $2.65 Million Default Judgment Against Attorney
By a MetNews Staff Writer
The Fourth District Court of Appeal yesterday threw out a $2.65 million default judgment against a Newport Beach attorney.
Div. Three ruled that the judgment against Michael G. York was void because the complaint filed by his former client failed to state the amount of damages sought.
York represented Ruth Stein in a personal injury action that was dismissed and unsuccessfully appealed. Stein then sued York, alleging causes of action for legal malpractice, breach of fiduciary duty, and fraud, seeking “compensatory damages according to proof,” “punitive damages,” “costs of suit” and “such other and further relief as the court deems just and proper,” but did not specify an amount of damages.
The parties engaged in various pretrial procedures, including the exchange of discovery, although York never filed an answer. Stein eventually filed a request for entry of default, and the dollar amount demanded on the request was “0.00.”
After Orange Superior Court Judge Robert J. Moss entered the default, Stein offered to set it aside if York would agree to file an answer, but York declined to do so.
York later stipulated to trial for a default prove-up hearing, at which Moss noted that the complaint did not contain a prayer for damages and asked Stein for the amount of relief requested. Stein requested $2.61 million in damages, including $135,000 for medical and prescription costs, $1.475 million for past lost earnings, and $1 million for pain and suffering.
Moss declined Stein’s request to set aside the default and amend the complaint to include a statement of damages, but then ruled in her favor and awarded her $2.65 million.
York moved to modify the amount, arguing the order was void because it awarded an amount in excess of that requested in the complaint and because he had not received adequate notice.
The trial judge denied York’s motion to modify, finding that the attorney was in default and therefore lacked standing to challenge the damage award. Moss further determined that York had waived his right to object to the amount of damages because he had been “actively involved in discovery giving him every opportunity to find out the amount of plaintiff’s claim…[,] declined to set his own default aside when plaintiff was willing to do so[,]… and had the opportunity to present evidence in opposition to plaintiff’s claim, but declined to do so.”
Writing for the appellate court, Justice William F. Rylaarsdam explained that Code of Civil Procedure Sec. 580(a)—which provides that the relief granted to a plaintiff upon a defendant’s default cannot exceed the amount demanded in the complaint—requires a plaintiff to plead damages with specific notice to a defendant.
Pointing to the California Supreme Court’s 1980 opinion in Becker v. S.P.V. Construction Co., Inc. 27 Cal.3d 489, he wrote:
“If no specific amount of damages is demanded, the prayer cannot insure adequate notice of the demands made upon the defendant….A complaint that merely prays for damages according to proof without specifying any amount cannot satisfy section 580.”
While York’s decision not to file an answer “may have been a tactical move,” Rylaarsdam said, it was permissible for the attorney to rely on the absence of a statement of damages in the complaint and York was entitled to have a default entered against him.
Justices Eileen C. Moore and Richard D. Fybel joined Rylaarsdam in his decision.
The case is Stein v. York, G040457.
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