Opinion ID: 405927
Heading Depth: 2
Heading Rank: 1

Heading: Cash offset

Text: 28 In dividing a marital estate California courts are empowered where economic circumstances warrant to award any asset to one party on such conditions as it deems proper to effect a substantially equal division of the property. Cal.Civil Code § 4800(b)(1). For example, one spouse might be awarded the television on the condition that the other keep the microwave, if the two are substantially of equal value. The court might also award an asset to one spouse and award the other spouse a monetary judgment as a cash equalization. See, e.g., Weinberg v. Weinberg, 67 Cal.2d 557, 432 P.2d 709, 63 Cal.Rptr. 13, 17-18 (1967); In re Marriage of Clark, 80 Cal.App.3d 417, 145 Cal.Rptr. 602, 605 (1978). The California Supreme Court has emphasized the broad range of discretion which § 4800 vests in the trial court. In re Marriage of Connolly, 23 Cal.3d 590, 603, 153 Cal.Rptr. 423, 430, 591 P.2d 911, 918 (1979) (considerable discretion, a maximum degree of allowable flexibility). 29 Fred argues with some force that awarding a cash judgment as Verone's entire share of the marital estate is unprecedented in California law and that there was a total absence of findings of economic circumstances warranting any offset as required by § 4800. Conceding that the trial court may have committed egregious error, we cannot agree that the California court exceeded its powers or jurisdiction in granting an entire cash offset given the discretionary terms in which § 4800(b)(1) is viewed by the California law. 10 Nor does the failure to find economic circumstances render the judgment subject to collateral attack. In Badillo v. Badillo, 123 Cal.App.3d 1009, 1012, 177 Cal.Rptr. 56, 58 (1981), the court held concerning an alleged unequal division of property that even though the offset failed to comply with Civil Code section 4800 ... the error ... is not void or subject to collateral attack. An analogous case is Armstrong v. Armstrong, 15 Cal.3d 942, 544 P.2d 941, 126 Cal.Rptr. 805 (1976) where the court refused to allow collateral attack of a judgment that permitted a husband to meet his child support obligations by relying on his children's trust funds, even though such a judgment is authorized only upon a finding that the husband did not have sufficient resources of his own, and such a finding was lacking. Similarly here, the lack of the requisite finding of economic circumstances does not render the judgment void. 30 Fred also contends that, assuming the California court acted within its statutory powers, no notice was given in the complaint that a cash offset was sought and therefore the judgment rendered in default is void. California law, like federal, provides that a default judgment cannot exceed that which ... (was) demanded in (the) complaint. Cal.Code Civ.Pro. § 580; see F.R.Civ.P. 54(c). In California a failure to comply with this requirement renders the judgment void and subject to collateral attack. Burtnett v. King, 33 Cal.2d 805, 205 P.2d 657 (1949) (holding no jurisdiction to divide community property where there was no demand for such relief). The policy supporting this rule is that a defendant in default must be given notice of what judgment may be taken against him. 205 P.2d at 658. 31 Applying this rule, the court in Wilkinson v. Wilkinson, 12 Cal.App.3d 1164, 91 Cal.Rptr. 372 (1970) held that where the complaint prayed that the community property ... be awarded to the (wife), a default judgment awarding all of the community property to the husband and awarding the wife a sum of money in lieu of her interest in the community property was void and outside the court's jurisdiction. 91 Cal.Rptr. at 373-74. The court reasoned that the husband had a right to ... assume that the court at worst would do no more than award all of the (property) to the wife. Id. 32 Despite the close similarity of Wilkinson it is not controlling here. In Wilkinson the wife prayed specifically that the community property be awarded to her. Here Verone prayed broadly that property rights be determined as provided by law and that the court render such judgments ... as are appropriate. As discussed above, the trial court was vested with broad discretion in effecting an offset, and so, absent a restrictive prayer for relief such as that in Wilkinson, Fred was put on notice that he was potentially subject to a monetary judgment. 11 The kind of relief awarded was therefore within the prayer for relief. 33 The cash judgment of $9,997,355.57 exceeded, however, the amount of relief encompassed by the complaint. Section 580, in requiring that a default judgment cannot exceed the prayer for relief, limits the judgment in the amount of relief as well as the kind of relief. Becker v. S.P.V. Construction Co., Inc., 27 Cal.3d 489, 493-94, 162 P.2d 915, 917, 165 Cal.Rptr. 825, 827 (1980). Section 580 is designed to insure fundamental fairness through notice to the defaulting party of the amount of the judgment that may be taken against him. Id., 162 P.2d at 918, 165 Cal.Rptr. at 828. One aspect of fundamental fairness, in the view of the California Supreme Court, is that defaulting defendants should not be subject to damages in excess of an amount specifically set out in the complaint.... If no specific amount of damages is demanded, the prayer cannot insure adequate notice of the demands made upon the defendant. Id., 162 P.2d at 917-18, 165 Cal.Rptr. at 827-28. Thus, the California Supreme Court has interpreted § 580 to require that unless a specific sum is contained in the complaint, a monetary default judgment is subject to collateral attack. Id. See also Petty v. Manpower, Inc., 94 Cal.App.3d 794, 797, 156 Cal.Rptr. 622, 624 (1979) (It would appear that where no specific amount of damages is requested that any amount would be in excess of that demanded.); Ludka v. Memory Magnetics International, 25 Cal.App.3d 316, 323, 101 Cal.Rptr. 615, 619 (1972) (cited with approval in Becker, supra ). 34 Verone's general prayer that property rights be determined and that the court render such judgments as are appropriate does not meet this requirement of specific notice of the amount of cash judgment that Fred was subject to. 12 Allegations elsewhere in the complaint cure this defect to a certain extent. In her complaint Verone alleged that the marital estate subject to division consisted of property valued in excess of $15,000,000.00. This specification in the body of the complaint meets the requirements of Cal.Code Civ.Pro. § 580. Thornson v. Western Development Corp., 251 Cal.App.2d 206, 212, 59 Cal.Rptr. 299, 303 (1967) (cited with approval in Becker, supra, 27 Cal.3d at 494). Specifying that the value of the marital estate is in excess of $15 million does not fully encompass the amount awarded in the property division judgment, however, for that award was based on a valuation of the estate at $19,994,711.14. Verone is limited in her recovery to the largest amount specifically requested in the complaint. Becker, supra, 27 Cal.3d at 493. In Becker, the plaintiff prayed for compensatory damages in excess of $20,000. The California Supreme Court held that the maximum amount of compensatory damages that could be awarded was $20,000, and, following its rules of collateral attack, reduced the judgment to this amount. Likewise, here, the largest cash judgment that Fred could have anticipated from the complaint was $7,500,000, one half of $15,000,000. The judgment in excess of this is open to collateral attack in California and subject to modification. Therefore, the principal amount of the judgment on property rights may be enforced only up to $7.5 million. 13