Opinion ID: 405927
Heading Depth: 1
Heading Rank: 3

Heading: The property division judgment

Text: 27 The property division judgment was a cash award of $9,997,355.57, arrived at as follows. After Fred had been declared in default Verone submitted to Fred a request for admissions concerning the value of their marital estate subject to division under California's community property laws. Fred did not respond. Verone moved to have these unanswered requests taken as admitted. The trial court, acting through a judge pro tem, granted this motion and thus found the marital estate to be valued at $19,994,711.14. Rather than dividing the assets in kind or offsetting one asset for another, the court awarded all of the assets to Fred and granted Verone a cash judgment of one-half this amount as a cash offset in lieu of her entire share of the marital estate. Fred contends that the property judgment was grossly inflated because he is worth less than $7 million. He seeks to attack the judgment on grounds that we divide into three groupings: (1) the cash offset was invalid as exceeding the statutory powers of the California court and as exceeding the prayer for relief in Verone's complaint; (2) the method of proof was so defective as to deny due process; and (3) the California court's exercise of jurisdiction over property located out of state was unconstitutional because Fred was not domiciled in California.
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
35 Where damages are unliquidated a default admits only defendant's liability and the amount of damages must be proved. Uva v. Evans, 83 Cal.App.3d 356, 147 Cal.Rptr. 795, 800 (1978) (damages must be proved in the trial court before the default judgment may be entered); Petty v. Manpower, Inc., 94 Cal.App.3d 794, 798, 156 Cal.Rptr. 622, 624 (1979) (damages except when fixed by contract must be proved); Cal.Code Civ.Pro. § 585(b) (procedure for default judgment: the court shall hear the evidence offered by plaintiff, and shall render judgment ... for such sum ... as appears by such evidence to be just). Fred contends that the sole method of proof of the value of the marital estate was that the California court took his failure to respond to Verone's request for admissions as being an admission of the facts stated therein. As Fred describes California law, once he was in default he no longer had a right to appear in court to respond to the request for admissions, see Jones v. Moers, 91 Cal.App. 65, 266 P. 821, 822 (1928), and therefore there was an entire lack of proof of the amount of relief. Assuming the truth of these contentions, this procedure is not grounds for collateral attack under either California or federal law. 36 (1) California law 37 Despite the mandatory nature of the requirement in Cal.Code Civ.Pro. § 585(b) that proof be taken to justify the amount of a default judgment, the requirement is not jurisdictional under California law and therefore does not subject an irregular default judgment to collateral attack. 14 The rule in California is that generally failure of the court to comply with the requirements of § 585(b) constitutes at most but an erroneous exercise of jurisdiction ... (and) not an absence of jurisdiction; ... (a) judgment entered by a court (not in conformity with § 585(b) ) is therefore merely voidable, and not void, and can only be attacked by appeal or motion made within six months thereafter. Baird v. Smith, 216 Cal. 408, 14 P.2d 749, 751 (1932). This general statement holds true for § 585(b)'s requirement of proof. An analogous provision is Cal. Civil Code § 4511, which requires in divorce proceedings that no decree of dissolution can be granted upon ... default ... but the court shall ... require proof of the grounds alleged. In Hamblin v. Superior Court, 195 Cal. 364, 233 P. 337, 341 (1925), the court held that a failure to comply with the requirements of this section would not render the judgment void but results in mere error, correctible only by means of a direct attack. Moreover, outside of the default context the California Supreme Court has twice stated that even a judgment entered without a trial cannot be attacked collaterally. Gray v. Hall, 203 Cal. 306, 313, 265 P. 246, 251 (1928); Ex Parte Bennett, 44 Cal. 84, 87 (1872).(2) Federal principles 38 Under federal law, Fred contends that the total lack of competent proof of the value of the marital estate is grounds for denying full faith and credit because the lack of proof violates due process of law. A judgment rendered in violation of due process is indeed void and therefore need not be enforced under 28 U.S.C. § 1738 or the full faith and credit clause of the Constitution. Kremer v. Chemical Construction Corp., --- U.S. ----, ---- & n.24, 102 S.Ct. 1883, 1897 & n.24, 72 L.Ed.2d 262 (1982) (A state may not grant preclusive effect ... to a constitutionally infirm judgment and other state and federal courts are not required to accord full-faith-and-credit to such a judgment.); Wetmore v. Karrick, 205 U.S. 141, 149, 27 S.Ct. 434, 436, 51 L.Ed. 745 (1907) (full faith and credit does not apply to a judgment rendered without jurisdiction or otherwise wanting in due process of law); Simer v. Rios, 661 F.2d 655, 663 (7th Cir. 1981), cert. denied, --- U.S. ----, 102 S.Ct. 1773, 72 L.Ed.2d 177 (1982); Compton v. Alton Steamship Co., 608 F.2d 96, 106 (4th Cir. 1979); VTA, Inc. v. Airco, Inc., 597 F.2d 220, 224-25 (10th Cir. 1979); O'Boyle v. Bevil, 259 F.2d 506, 516 (5th Cir. 1958), cert. denied, 359 U.S. 913, 79 S.Ct. 590, 3 L.Ed.2d 576 (1959) (Cameron, J., concurring); Bass v. Hoagland, 172 F.2d 205, 209 (5th Cir.), cert. denied, 338 U.S. 816, 70 S.Ct. 57, 94 L.Ed. 494 (1949) (a judgment, whether in a civil or criminal case, reached without due process of law is without jurisdiction and void, and attackable collaterally ... by resistance to its enforcement if a civil judgment); 1B Moore's Federal Practice P 0.406(2), p. 905; 7 id. at P 60.25(2), p. 309-11. 39 The due process requirements in a civil case where only property interests are at stake are, of course, much less stringent than in a criminal case involving life and liberty interests. Thus ordinarily all that due process requires in a civil case is proper notice and service of process and a court of competent jurisdiction; procedural irregularities during the course of a civil case, even serious ones, will not subject the judgment to collateral attack. See Windsor v. McVeigh, 93 U.S. 274, 282, 23 L.Ed. 914 (1876); 7 Moore's, supra, at P 60.25(2), p. 309-10. However, a departure from established modes of procedure (can) render the judgment void, Windsor, supra, 93 U.S. at 283, where the procedural defects are of sufficient magnitude to constitute a violation of due process, or, as sometimes more circularly put, where the defects are so unfair as to deprive the ... proceedings of vitality, Eagles v. U. S., 329 U.S. 304, 314, 67 S.Ct. 313, 319, 91 L.Ed. 308 (1946), or where the procedural irregularities are serious enough to be deemed jurisdictional, Yale v. National Indemnity Co., 602 F.2d 642, 644 (4th Cir. 1979); Recent Cases, 62 Harv.L.Rev. 1400, 1401 (1949). See generally Restatement of the Law of Judgments § 8 (1942). 40 The leading case allowing collateral attack of a default judgment for procedural errors during the course of a jurisdictionally proper proceeding is Bass v. Hoagland, 172 F.2d 205 (5th Cir.), cert. denied, 359 U.S. 816, 70 S.Ct. 57, 94 L.Ed. 494 (1949), noted in Recent Cases, 62 Harv.L.Rev. 1400. In Bass the plaintiff sued to enforce a default judgment obtained in another federal court. In the original trial court the defendant appeared, answered, and requested a jury trial. Defense counsel then withdrew. On the day of trial defendant was not present. The trial judge treated the defendant in default because of the earlier withdrawal of his counsel and entered judgment for the plaintiff in the precise amount requested in his complaint, without a jury trial and apparently without taking any evidence. Defendant was not aware of the trial date, was given no notice prior to the entry of the default judgment, and was fraudulently not informed of the judgment until more than two years after it was entered. The court held that the combination of these errors resulted in a denial of due process. 15 41 The alleged procedural errors in the instant case, although they are serious and seem to present a case of injustice, Bass, supra, 172 F.2d at 208, do not approach the level of irregularity found in Bass to constitute a due process violation. In Bass the initial entry of default was held invalid because it was entered for improper grounds. Id. at 209-10. 16 This alone might warrant collateral attack. See Hovey v. Elliott, 167 U.S. 409, 17 S.Ct. 841, 42 L.Ed. 215 (1897) (holding default judgment subject to collateral attack where entered improperly as a punishment for contempt); Windsor v. McVeigh, 93 U.S. 274, 23 L.Ed. 914 (1876) (same for default entered because defendant was a confederate). Here Fred was properly found in default for failing to answer. The Bass court also found that, even if entry of default was proper, entry of the default judgment was not preceded by three days notice as required by federal rules. Id. at 209, 210. In this case Fred was notified prior to the determination of the property issues. Also, unlike the defendant in Bass, Fred was served with the property division judgment and therefore might have appealed it or moved to set it aside under the more lenient six month rules. See Cal.Code Civ.Pro. § 473 (allowing relief from judgment within six months for, inter alia, surprise and excusable neglect). Finally, in Bass the court gave considerable emphasis to the denial of the defendant's Seventh Amendment right to a jury trial. 172 F.2d at 209, 210. Unlike in Bass, Fred does not claim a constitutional right to a jury trial in the California state court, nor did Fred make a demand for a jury trial. 42 The only respect in which this case and Bass are similar is the allegation that there was a total lack of evidence to support the amount of the award. 17 This is not a sufficient irregularity under federal principles to subject the California judgment to collateral attack. First, there is no indication from Bass that the lack of evidence on damages alone would have subjected the judgment to collateral attack. This was one of many defects recited by the court as leading to the conclusion that due process was not afforded. See 172 F.2d at 209. Second, regardless of what due process requires where a defendant has not defaulted, 18 the Supreme Court has stated that no hearing at all is required by the due process clause when a defendant is in default. Boddie v. Connecticut, 401 U.S. 371, 378, 91 S.Ct. 780, 786, 28 L.Ed.2d 113 (1971). 19 Because Fred was properly held in default no hearing on damages was required by procedural due process; therefore any deficiencies in the proof of damages did not deny Fred the process he was due. Finally, Fred was not entirely foreclosed from presenting proof of the value of his estate. Even assuming he was barred from appearing at the damage hearing while in default, he might have moved to vacate the default 20 or to set aside the default judgment, and he might have appealed the default judgment. See note 14 supra. 43 The holding in Bass is a rare exception to the normal rules of collateral attack. 6 Moore's, supra, at P 55.09, p. 204 (an occasional atypical case not establishing a general rule); 7 id. at P 60.25(2), p. 309-11. While the principle of Bass has full effect in this court, Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), it does not apply on this set of facts. 21 44 No lesser ground than a judgment rendered in violation of due process will suffice for collateral attack in this case. Fred contends that collateral attack is allowed in order to avoid manifest injustice. Garner v. Giarrusso, 571 F.2d 1330, 1336 (5th Cir. 1978); Tipler v. E. I. duPont de Nemours and Co., 443 F.2d 125, 128 (6th Cir. 1971). The authorities cited for this proposition all arise in the administrative agency context, however, where principles of res judicata do not apply with as great a rigor but instead the traditional doctrine ... (is) qualified or relaxed to whatever extent is desirable for making it a proper and useful tool for administrative justice. K. Davis, Administrative Law Treatise § 18.03, p. 553 (1958). In civil court cases, while there might be isolated instances where the principles of res judicata do not apply with full force, see 1B Moore's, supra, at PP 0.405(11), (12), there is no general equitable exception to the doctrine, Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 401, 101 S.Ct. 2424, 2429, 69 L.Ed.2d 103, 110 (1981), and the facts of this case do not fall within any of the developed exceptions, see Key v. Wise, 629 F.2d 1049, 1067 (5th Cir. 1980), cert. denied, --- U.S. ----, 102 S.Ct. 682, 70 L.Ed.2d 647 (1981); compare 1B Moore's, supra, at PP 0.405(11), (12). 22 45
46 Virtually all of the property that was the basis for the property division judgment was located outside of California. The California court exercised jurisdiction to divide the property under California's quasi-community property statute, which treats as community property all property acquired by a spouse while domiciled elsewhere that would have been community property if the spouse had been domiciled in California at the time of acquisition. Cal. Civil Code § 4803. Fred contends that under the laws of Florida, where he claims to be domiciled, this property is not subject to division and that therefore application of California's quasi-community property statute was unconstitutional because he has insufficient contacts with the state. 47 The district court did not address this contention so we must determine whether it was adequately presented below. This defense was first mentioned obliquely in Fred's answer to the supplemental complaint, 23 and again mentioned in his motion for new trial filed after the district court's entry of summary judgment for Verone. 24 For several reasons, neither instance was sufficient to preserve the issue for appeal. 48 First, the defense concerning quasi-community property mentioned in Fred's answer to the supplemental complaint was abandoned. At no time during the lengthy district court proceedings did Fred develop this argument in his briefs to the court, through oral argument, or through citation of authority. In particular, the point was not even mentioned in the two briefs filed by Fred in opposition to summary judgment. Failure to brief and argue an issue is grounds for finding that the issue has been abandoned. See U. S. v. Indiana Bonding & Surety Co., 625 F.2d 26, 29 (5th Cir. 1980) (defense waived even though listed in pretrial order because no evidence presented and not mentioned in proposed findings of facts and conclusions of law); Tedder v. F. M. C. Corp., 590 F.2d 115 (5th Cir. 1979) (point abandoned on appeal where raised in statement of issues but not addressed elsewhere in brief). We do not rest on this default alone, however, for Fred did not include this defense in his pretrial stipulation of the issues to be determined by the court. The district court ordered the parties to reach an agreed pretrial stipulation. Fred filed his unilaterally and Verone accepted with some changes not relevant here. We find, then, as in Tomlinson v. Lefkowitz, 334 F.2d 262, 263 (5th Cir. 1964), cert. denied, 379 U.S. 962, 85 S.Ct. 650, 13 L.Ed.2d 556 (1965) that: 49 (t)he parties agreed by stipulation ... what issues of fact and law were to be decided by the trial court. This point was not included in those issues remaining open for consideration. Thus the appellant should not be permitted to raise the issue here for the first time. 50 See also Automated Medical Laboratories, Inc. v. Armour Pharmaceutical Co., 629 F.2d 1118, 1123 (5th Cir. 1980) ( 'When the defendant has waived his affirmative defense by failing to ... have it included in a pretrial order of the district court that superseded the pleadings, he cannot revive the defense in a memorandum in support of a motion for summary judgment.' ); F.R.Civ.P. 16 (pretrial order when entered controls the subsequent course of the action). 51 Second, the thirteenth-hour raising of the issue in Fred's motion for a new trial will not cure these defaults. Again, the point was not briefed, nor was it mentioned in the hearing the court held on the motion. Moreover, an argument first raised in a postjudgment motion is simply too late. Excavators & Erectors, Inc. v. Bullard Engineers, Inc., 489 F.2d 318, 320 (5th Cir. 1973). Accord Hanson v. Denckla, 357 U.S. 235, 243-44, 78 S.Ct. 1228, 1234, 2 L.Ed.2d 1283 (1958) (argument raised in lower court for first time in motion for rehearing was not seasonably presented and need not be addressed on review); Sanford Brothers Boats, Inc. v. Vidrine, 412 F.2d 958, 971 (5th Cir. 1969). 52 An issue not properly preserved for appeal will generally not be considered unless the issue is a purely legal one and the asserted error is so obvious that the failure to consider it would result in a miscarriage of justice. Payne v. McLemore's Wholesale & Retail Stores, 654 F.2d 1130, 1145 (5th Cir. 1981), cert. denied, --- U.S. ----, 102 S.Ct. 1630, 71 L.Ed.2d 866 (1982). Here we find that neither prong of the plain error exception is met. First, this issue is thoroughly factridden. It depends on whether Fred and Verone were domiciled in California, 25 which assets are located out of state and their value, and whether those assets were acquired at a time when the acquiring spouse was not domiciled in California. 53 Second, California's exercise of jurisdiction over the marital assets does not plainly render the property judgment subject to collateral attack. Assuming that an unconstitutional exercise of jurisdiction occurred, it is possible that taking cognizance of this jurisdictional defect is foreclosed under principles of res judicata. 26 Although judgments void for lack of jurisdiction will not be enforced, jurisdiction may not be questioned if the issue was fully and fairly litigated in the rendering court, Underwriters National Assurance Co., supra, --- U.S. at ---- - ----, 102 S.Ct. at 1315-68, 71 L.Ed.2d at 570-74, or, even if not litigated, if the attacking party had a full and fair opportunity to litigate the issue, Sherrer v. Sherrer, 334 U.S. 343, 351, 68 S.Ct. 1087, 1091, 92 L.Ed. 1429 (1948). Fred made a special appearance in California to quash service of process, contending in part that simple residence was not constitutionally sufficient to support jurisdiction in a matrimonial case for purpose of support, attorney's fees or other in personam orders, but instead domicile is required. The court ruled that residence was sufficient. Thus, the alleged unconstitutionality appears to have been fully litigated and decided in the California court, which would foreclose Fred from any collateral attack on this issue. 27