Court Opinion

ID: 2826922
Source: CourtListenerOpinion
Date Created: 2015-08-13 02:13:42.273852+00
Date Added: 2024-06-11T11:31:23.398935
License: Public Domain

Filed 8/12/15 Tiara de La Pacifica Homeowners Assn. v. Heilan 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                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

TIARA DE LA PACIFICA
HOMEOWNERS ASSOCIATION
                                                                       G050413
     Plaintiff and Respondent,
                                                                       (Super. Ct. No. 30-2012-00593993)
         v.
                                                                       OPINION
EDITH HEILAN,

     Defendant and Appellant.

                   Appeal from a judgment of the Superior Court of Orange County, Andrew
P. Banks, Judge. Reversed and remanded with directions.
                   Law Offices of Alexandria C. Phillips and Alexandria C. Phillips for
Defendant and Appellant.
                   The Perry Law Firm, Michelle A. Hoskinson, Noelle J. Hirneise, and
Nadine S. Soliman for Plaintiff and Respondent.
                                             *               *               *
              Defendant Edith Heilan appeals from a default judgment against her in
plaintiff Tiara de la Pacifica Homeowners Association’s action to foreclose a real
property assessment lien and for damages for defendant’s breach of her covenant to pay
assessments levied by plaintiff. Defendant contends the court acted beyond its
jurisdiction by entering a default judgment against her “that was [five] times the amount
requested in the Complaint” and therefore the default judgment is void under Code of
Civil Procedure section 580.1 She further contends the court abused its discretion by
failing to set aside the “underlying default” pursuant to a stipulation between the parties.
We agree with defendant’s first contention, but not the second. Accordingly we reverse
the judgment. Upon remand, plaintiff is given the option of amending the complaint to
allege the greater amount claimed (which would open the default) or to reapply for a
default judgment limited to the amount requested in the complaint.

                                           FACTS

              We begin our factual recitation by stating two rules which every appellant
must follow. First, an appellant must include all “significant facts” in his or her brief.
(Cal. Rules of Court, rule 8.204(a)(2)(C).) Failure to state all of the evidence fairly in the
brief waives the alleged error. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal. 3d 875,
881.) Second, an appellant’s contentions must be supported by reasoned argument. (Cal.
Rules of Court, rule 8.204(a)(1)(B).) An unsupported contention is deemed abandoned.
(In re Phoenix H. (2009) 47 Cal. 4th 835, 845.)
              Defendant’s appellate brief omits critical facts and, although she recounts
much legal authority, she does so without analyzing how her authority relates to the

1             All statutory references are to the Code of Civil Procedure unless otherwise
stated.

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significant facts in this case. We could simply affirm the judgment on the ground that
defendant’s claims of error have been waived or abandoned on appeal. But even the most
cursory review of the evidence submitted to the trial court in support of plaintiff’s
application for a default judgment establishes that the judgment far exceeds any amount
demanded in the complaint. Accordingly, because the judgment is clearly void, we
instead choose to ignore the defects in defendant’s briefing. Having detected the error,
we will not affirm a void judgment.
              Plaintiff’s August 27, 2012 complaint alleged that defendant failed to pay
real property assessments levied pursuant to the terms of a declaration of covenants,
conditions and restrictions (CC&R’s) recorded against defendant’s real property. The
complaint prayed for foreclosure of the assessment lien and “damages in the principal
sum of $11,180.86, with interest thereon at the rate of 10 percent per annum from [June
1, 2010], plus reasonable attorney’s fees and costs according to proof, and that this
amount be supplemented and increased at the rate of $264.00 Monthly from [August 1,
2012], to the date of judgment, and at the rate of [$10] per month in late charges or such
other sum as may be rightfully assessed by plaintiff prior to entry of judgment herein, for
a total amount according to proof.”2
              Defendant’s default was entered on October 19, 2012. A default judgment
was entered on October 25, 2013. On November 27, 2013, defendant filed a motion
under section 473, subdivision (b) requesting that the default judgment (not the
underlying default) be set aside. On January 29, 2014, the parties filed a stipulation and
proposed order to set aside both the default entered by the court clerk “on or about
October 19, 2012 against Defendant” and the “default judgment entered by the Court
against Defendant on or about October 25, 2013.” The stipulation further stated that the

2             At the time the complaint was filed, the amount of the demand was under
$25,000. On October 3, 2013, the court granted plaintiff’s motion to reclassify the action
from limited civil to unlimited civil jurisdiction.

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court clerk “should please conform as ‘Filed’ Defendant’s Answer to Complaint, an
original, efiled, or fax copy of which Defendant shall submit within ten days of the
service of this fully executed Stipulation on Defendant.”
              On February 7, 2014, the court vacated the October 25, 2013 default
judgment against defendant pursuant to the January 29, 2014 stipulation, but declined to
set aside the underlying October 19, 2012 default on the ground it lacked jurisdiction to
do so because the six-month time limitation under section 473, subdivision (b) had long
since expired. As a result, that portion of the stipulation permitting defendant to file an
answer within 10 days became inoperative — the answer could not be filed because the
default remained.
              On June 13, 2014, plaintiff requested a new (redundant) entry of default,
and requested a new default judgment against defendant in the amount of $61,174.47.
The court clerk entered the redundant default as requested on June 13, 2014.
              The requested default judgment of $61,174.47 included: “Principal as
demanded in the Complaint” of $11,180.86; “Principal accrued from the date of the
complaint” of $40,960.57, and the proposed judgment clarified that the total “principal”
demanded included accrued interest; “Court costs” of $812.50; and “Attorneys’ Fees” of
$8,220.54.
              The evidence submitted in support of the requested judgment included a
declaration from Mayra Campos, self described as “an authorized representative” for
plaintiff, which attached a “true and correct copy of Plaintiff’s account ledger evidencing
the indebtedness of Defendant for delinquent assessments.” That account ledger showed
that the “principal accrued from the date of the complaint” (August 27, 2012) included:
(1) Monthly assessments of $399 from September 1, 2012 through May 1, 2013; (2)
Monthly assessments of $409 from June 1, 2013 through May 1, 2014; (3) A monthly
assessment of $429 on June 1, 2014; (4) Monthly special assessments of $260.66 from
September 1, 2012 through December 1, 2012; (5) A one time “accelerated” special

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assessment of $23,639.67 on December 17, 2012; (6) A monthly $10 “late charge” from
August 31, 2012 through May 31, 2014; (7) A monthly $10 “late statement fee” from
August 31, 2012 through May 31, 2014; and (8) Interest compounded monthly at the rate
of 10 percent per annum.
              In addition, plaintiff’s application for default judgment included a request
for attorney fees in the amount of $8,220.54, and court costs in the amount of $812.50.
              On June 23, 2014, the court entered a default judgment of foreclosure of
real property assessment lien and/or money damages against defendant in the amount
requested of $61,174.47. On June 27, 2014, plaintiff mailed notice of entry of judgment
to defendant. On July 10, 2014, defendant filed a notice of appeal, appealing from the
June 23, 2014 default judgment against her.3

                                      DISCUSSION

The Default Judgment is Void Under Section 580
              On appeal defendant contends the default judgment is void under section
580 because plaintiff’s complaint sought $11,180.86 in damages. Defendant does not
mention that the complaint additionally prayed for an increase of $264 (plus a $10 late
fee) for every month from August 1, 2012 to the date of the judgment, with interest at the
rate of 10 percent per annum, and reasonable attorney fees and costs. But the rule cited
by defendant is sound. “The relief granted to the plaintiff, if there is no answer, cannot
exceed that demanded in the complaint, in the statement required by Section 425.11, or in
the statement provided for by Section 425.115.”4 (§ 580, subd. (a).) “The purpose of

3             Although defendant’s notice of appeal fails to specify the date of the default
judgment from which she appeals, she clarifies in the Statement of Appealability in her
opening brief that she appeals from the default judgment entered on June 23, 2014.

4             Section 425.11 governs statements of damages in personal injury or

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section 580 is to require the plaintiff to provide notice of the maximum amount of the
defendant’s potential liability.” (Electronic Funds Solutions, LLC v. Murphy (2005) 134
Cal. App. 4th 1161, 1174.) “[A] prayer for damages according to proof passes muster
under section 580 only if a specific amount of damages is alleged in the body of the
complaint.” (Becker v. S.P.V. Construction Co. (1980) 27 Cal. 3d 489, 494, italics
added.) “[S]ection 580 is to be interpreted, in accordance with its plain language, to
deprive a trial court of jurisdiction to enter a judgment against a defaulting defendant
which awards greater relief than that sought in the plaintiff’s complaint.” (In re
Marriage of Lippel (1990) 51 Cal. 3d 1160, 1167.) Accordingly, “[a] default judgment
is . . . void when the damages awarded are in excess of what is specified in the
complaint.” (Heidary v. Yadollahi (2002) 99 Cal. App. 4th 857, 864.) “Questions of
jurisdiction are never waived and may be raised for the first time on appeal.” (Petty v.
Manpower, Inc. (1979) 94 Cal. App. 3d 794, 798-799.)
              Applying these principles to the evidence offered in support of the default
judgment, it is apparent the judgment far exceeds the amount specified in the complaint
in several respects. Putting the late charges and interest charges aside for the moment,
the prayer of the complaint requested the principal amount of $11,180.86 plus “$264.00
per month from 8/01/2012, to the date of judgment.” Since the complaint was filed on
August 12, 2012, we interpret that prayer to include the assessments made on August 1,
2012 as part of the principal amount of $11,180.86. Thus, beginning with the monthly
assessment on September 1, 2012 through the monthly assessment made on June 1, 2014
(the last monthly assessment before the date of judgment), the maximum amount to
which plaintiff was entitled as part of this portion of the prayer is $5,808 (22 months x
$264 per month). But on this portion of the prayer the court awarded a whopping

wrongful death cases, and section 425.115 governs statements notifying defendant of the
amount of punitive damages sought. Neither section applies to this breach of contract
case.

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$33,610.31, consisting of nine monthly charges of $399, 12 monthly charges of $409, a
one month charge of $429, four monthly charges of $260.66, and one charge of
$23,639.67, exceeding this portion of the prayer by more than six times.
              Similarly, the prayer of the complaint limited late charges to $10 per
month. The judgment awarded late charges of $10 per month plus something
characterized as a “late statement fee” of $10 per month for 22 months, or an extra $220.
              Finally, the prayer requested interest “at the rate of 10% per annum.” The
proof submitted to the court added 10 percent interest compounded monthly. It has long
been the rule, however, that “in the computation of interest upon any bond, note, or other
instrument or agreement, interest shall not be compounded, nor shall the interest thereon
be construed to bear interest unless an agreement to that effect is clearly expressed in
writing and signed by the party to be charged therewith.” (9C West’s Ann. Civ. Code
(2010 ed.) foll. § 1916.12, designated as § 1916-2, p. 212.) Here, the complaint did not
pray for compound interest, nor did it pray for interest on assessments levied after the
date of the complaint. It only prayed for interest at the rate of 10 percent per annum on
the principal sum of $11,180.86. Moreover, there was no proof of an agreement
permitting the charging of compound interest. The CC&R’s offered in evidence
provided: “Any Assessment provided for in this Declaration which is not paid when due
shall be delinquent. If any such Assessment is not paid within thirty (30) days after the
delinquency date, a late charge of Ten Dollars ($10.00) shall be levied and the
Assessment shall bear interest from the date of delinquency at the rate of ten percent
(10%) per annum.” (Italics added.) This provision calls for the accrual of simple interest
on each unpaid assessment, not a monthly compounding of interest as included in the
judgment.
              “It 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,

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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.” (Heidary v.
Yadollahi, supra, 99 Cal.App.4th at p. 868.) That did not happen here. As a result, the
default judgment is void pursuant to section 580.

The Court Correctly Refused to Set Aside the Default
              Defendant contends the court abused its discretion by “failing to exercise
its equitable powers to set aside the underlying default . . . pursuant to [the parties’]
stipulation to set aside Default and Default Judgment.”5 We disagree. First, defendant’s
initial November 27, 2013 motion sought to set aside the then extant default judgment
under section 473, subdivision (b). Defendant did not request the court to set aside the
October 19, 2012 default, although she did submit a proposed answer to the complaint,
which, of course, could not have been filed unless the default was also set aside. At the
last minute, defendant obtained a stipulation from plaintiff to set aside both the default
and the default judgment, but the court declined to set aside the default, citing its lack of
jurisdiction to do so. At no time did defendant argue in the trial court that the stipulation
could somehow invoke the equitable powers of the court to set aside the underlying
default entered on October 19, 2012. For that reason alone, defendant has forfeited her
right to raise that issue on appeal. “‘[I]t is fundamental that a reviewing court will
ordinarily not consider claims made for the first time on appeal which could have been
but were not presented to the trial court.’ Thus, ‘we ignore arguments, authority, and
facts not presented and litigated in the trial court. Generally, issues raised for the first
time on appeal which were not litigated in the trial court are waived.’” (Newton v.
Clemons (2003) 110 Cal. App. 4th 1, 11, fn. omitted.)

5            The order declining to set aside the underlying default may be reviewed as
an intermediate ruling upon review of the appealable final judgment. (§ 906.)

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              Despite the forfeiture of this issue, defendant nevertheless argues on appeal
that the court has the equitable power to set aside a default, even where it is out of time to
do so under section 473. (See, e.g., Rappleyea v. Campbell (1994) 8 Cal. 4th 975, 981
[“trial court may . . . vacate a default on equitable grounds even if statutory relief is
unavailable”].) But, on the merits, defendant fails to mention that the cases in which
equitable relief has been granted have involved extrinsic fraud, extrinsic mistake, and,
perhaps, duress. (See 8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in
Trial Court, § 215 et seq., p. 823.) Defendant does not cite any authority, and we have
found none, that would allow a court to set aside a default by the consent of the parties
after the statutory time has expired. Accordingly, although we reverse the default
judgment entered on June 13, 2014, we affirm the court’s order declining to set aside the
October 19, 2012 default.

Remedies on Remand
              Although we reverse the default judgment for its violation of section 580, it
also appears that plaintiff presented evidence which, if true and not subject to offset or
mitigation, would entitle it to greater relief than that pleaded under its operative
complaint. “In the interest of fairness, plaintiff[] should have the option of either
proceeding with the new default prove-up with the [existing] damage limitation, or
amending the complaint to state the full amount of damages [it] seek[s]. [Citation.] If
plaintiff[] select[s] the latter option, the default will be vacated, entitling defendant to
either attack the pleadings, or answer the amended complaint.” (Electronic Funds
Solutions, LLC v. Murphy, supra, 134 Cal.App.4th at p. 1177.) For the guidance of the
court and parties on remand, we note that unless a different agreement between the
parties (other than the CC&R’s) is presented, compound interest is not permitted. We
also note that reasonable attorney fees incurred in prosecuting this action are not subject

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to the section 580 limitation. (See Simke, Chodos, Silberfeld Anteau, Inc. v. Athans
(2011) 195 Cal. App. 4th 1275, 1278.)

                                      DISPOSITION

              The judgment is reversed, and the cause remanded with directions to vacate
the award of compensatory damages and the judgment of foreclosure based thereon. The
trial court shall conduct a new damages prove-up hearing to determine the amount of
plaintiff’s damages limited to the amounts prayed in the operative complaint and
consistent with this opinion. Alternatively, plaintiff may elect to amend its complaint to
increase the amount of damages being sought, at which point defendant’s default will be
opened. Defendant is awarded her costs incurred on this appeal.

                                                 IKOLA, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

ARONSON, J.

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