Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. SC077728, Allan J. Goodman, Judge.
Steven R. Friedman for Plaintiff and Appellant.
Keith A. Fink and Associates, Keith A. Fink, S. Keven Steinberg, and Brendan Y. Joy for Defendants and Appellants.
CHAVEZ, J.
Terminating sanctions were entered against Dromy International Investment Corporation (Dromy International) and Ely Dromy (collectively “Dromy”) for repeated failures to respond to discovery and comply with discovery orders. A judgment was entered in favor of Steve Erdman (Erdman). Dromy appeals from the judgment, arguing that the trial court erred in granting terminating sanctions against it and that Dromy’s due process rights were violated by the court’s entry of an award of monetary damages. Dromy also appeals the trial court’s denial of its motions for relief from judgment and for new trial.
Erdman cross-appeals from the trial court’s order granting Dromy’s motion to vacate the judgment and modifying the judgment. The modification reduced the award from $1,363,532.32 to $381,850.05.
We affirm.
BACKGROUND
The Marina Pointe Condominium development in Los Angeles was owned by seller Channel Gateway, L.P. (Channel Gateway). Channel Gateway’s principal was Jona Goldrich. Erdman, who is in the real estate development and construction business, had close ties to Goldrich and was responsible for much of the construction of Marina Pointe. The buyer of the property was Crescent Heights, a client of Dromy. Dromy was engaged by Crescent Heights to find and broker purchases of real estate in the Los Angeles area under a written agreement between Crescent Heights and Dromy.
Erdman and Ely Dromy entered into an agreement that Erdman would be paid “50% of any fee or any other sort of compensation received by [Ely Dromy] from Crescent Heights for said project” in return for helping to introduce and broker the parties into the real estate transaction.
The transaction between Channel Gateway and Crescent Heights closed, but neither party would honor the agreement to pay any fee. Erdman had no contractual relationship with either Channel Gateway or Crescent Heights; however, Dromy International commenced litigation against both the buyer and seller. The matter was tried and Dromy International prevailed. The matter was affirmed in a non published decision of this court (Dromy Int’l. Inv. Corp. v. Channel Gateway, L.P. (Feb. 27, 2003, B150992)).
Erdman demanded an accounting of all monies received by Dromy. Dromy refused. Erdman commenced this action against Dromy on June 20, 2003.
Erdman specifically alleged that “each defendant... was the agent and/or employee, and/or alter ego, and/or partner and/or joint venturer and/or successor in interest and/or trustee of each of the remaining defendants, and in doing the acts hereinafter alleged, was acting within the course and scope of such agency and employment or relationship.”
PROCEDURAL HISTORY
Erdman’s First Amended Complaint (FAC), filed January 9, 2004, asserted causes of action against Dromy for (1) breach of contract, (2) imposition of constructive trust and injunctive relief, and (3) accounting.
1. Erdman propounds discovery
On May 20, 2005, Erdman issued his first set of discovery. Erdman propounded requests for admissions, requests for production of documents, form interrogatories, and special interrogatories. The parties jointly applied to the court for a continuation of the July 2005 trial date, which the court continued to November 1, 2005.
On June 6, 2005, through its attorney Dana Cole (Cole), Dromy requested and received an extension of time to July 15, 2005, to respond to all outstanding discovery. On July 15, 2005, through its attorney Michael Simkin (Simkin), Dromy “notified” Erdman that its responses would not be served until July 22, 2005. On July 25, 2005, Dromy finally served responses. However, the responses were inadequate. Instead of providing accurate information, Dromy used “objections to avoid disclosing the facts, witnesses and documents related to this case.” Erdman asserted that all such objections were waived because Dromy failed to respond within the time allowed.
On August 31, 2005, Erdman’s attorney, Steven Friedman (Friedman), sent Dromy a letter addressed to both of its attorneys, Simkin and Cole. The letter was sent “to meet and confer on two topics.” The first was Friedman’s request for convenient dates to depose Dromy, to which Simkin and Cole had not responded. The second was to address their “absolute refusal to provide mandated discovery.” Erdman’s attorney never received a substantive response to this letter.
2. Erdman’s first motion to compel
On September 8, 2005, Erdman filed his first motion to compel and for sanctions. He sought an order compelling responses to his form interrogatories (set one), request for admissions, special interrogatories, and request for production of documents. He also sought monetary sanctions, the appointment of a discovery referee, and a continuance of the trial date to allow for the conclusion of discovery. On October 11, 2005, the trial court heard and granted Erdman’s motion to compel. The court ordered Dromy to provide full and complete responses without objection, and production of documents, on December 5, 2005. The court also imposed monetary sanctions and continued the trial date to September 5, 2006, in order to allow Erdman to obtain discovery.
3. Erdman’s continued efforts to obtain discovery
On September 29, 2005, Ely Dromy failed to appear for his scheduled deposition. Erdman’s counsel had received no notice that he objected or that he would not appear. Erdman’s counsel took a certificate of nonappearance.
On December 5, 2005, the date on which Dromy’s responses were due pursuant to court order, no responses or documents were served. On December 6, 2005, Dromy’s attorney Simkin served late responses to Erdman’s form interrogatories, special interrogatories, and requests for admission. The responses contained improper objections and failed to provide any meaningful responses. Erdman’s counsel did not receive documents that he requested.
On January 18, 2006, Erdman’s counsel issued another meet and confer letter to Dromy’s counsel, offering to give them additional time to comply with the court’s order in exchange for additional time to file a second motion to compel. The offer was not accepted.
4. Erdman’s second motion to compel
On January 20, 2006, Erdman filed motions: (1) to enforce the prior court order of October 11, 2005; (2) to compel additional answers and responses to special interrogatories, form interrogatories and production of documents; and (3) for sanctions including evidential and terminating sanctions. Dromy filed a late opposition on February 14, 2006. On February 23, 2006, the court heard the second motion to compel. The court issued a second order finding the supplemental responses to be in violation of the court’s order of October 11, 2005, and ordered those responses to be nullities. The court set a meet and confer date of March 10, 2006, and ordered fully compliant responses to be served no later than March 27, 2006. The court warned Dromy: “Should defendants continue to fail to comply with today’s discovery order in any material respect, the Court will consider the issuance of non-monetary and monetary sanctions upon proper motion by plaintiff.”
The court later struck Dromy’s untimely opposition brief, noting that it had previously reminded Dromy’s counsel of the need to timely serve and file opposition briefs.
The court determined that Erdman had failed to show an entitlement to terminating or issue sanctions at that time.
5. Events following the second motion to compel
On March 10, 2006, counsel met and conferred at Dromy’s counsel’s office for over two and a half hours. With the consent of all parties, the meet and confer session was recorded. On March 13, 2006, Erdman’s counsel telephoned Dromy’s counsel to inquire if any further meet and confer was required. Erdman’s counsel received no response. On March 16, 2006, Erdman’s counsel again followed up by letter regarding the outstanding discovery, inquiring whether any remaining problems needed to be worked out.
On March 27, 2006, the court ordered due date for Dromy’s discovery responses, Dromy’s counsel sent Erdman’s counsel a fax informing him that Dromy’s counsel was “still trying to revise the discovery to conform to [Erdman’s counsel’s] request” and that the information would be “deliver[ed] to [Erdman’s counsel’s] office later in the week when I complete the latest round of revisions.” No responses were ever served.
In April, Erdman’s counsel telephoned Dromy’s counsel, who stated that he was having some trouble but that the responses would be forthcoming. On May 23, 2006, when appearing in court on a different matter, Erdman’s counsel happened upon Dromy’s counsel. Erdman’s counsel inquired “in a friendly but firm manner” about the overdue responses, and reminded counsel of the court’s order and the impending trial date. Dromy’s counsel again informed Erdman’s counsel that he would receive the responses. Erdman’s counsel never received any responses.
On July 21, 2006, Erdman’s counsel issued second notices of deposition to Dromy. On July 31, 2006, Dromy International failed to appear without objection or notice, and a certificate of nonappearance was taken.
6. Erdman’s motion to strike Dromy’s answer
On July 24, 2006, Erdman filed a motion to strike the answer of Dromy, or, in the alternative, for an order precluding all affirmative defenses; to deem all requests for admissions admitted; and for an order awarding monetary sanctions (motion to strike). On August 15, 2006, the court heard and granted the motion to strike the answer and ordered terminating sanctions. The court found:
“Notwithstanding the clear and unambiguous language of [the February 23, 2006] order, Defendants failed to serve the Court-ordered discovery responses on or before 3/27/06. Instead the Plaintiff got only delay and obfuscation. In fact, it is now mid-August 2006, trial is only three weeks away, and defendants still have not served any further discovery responses. And they seek to justify this conduct with a number of unreasonable excuses, thereby once again demonstrating a lack of regard for, if not outright contempt for, their discovery obligations and this Court’s orders.
“Defense counsel ask that the Court decline to impose terminating sanctions on their clients because any failure to comply is counsel’s fault, not the clients’. However, defense counsel have failed to present proper evidence on this issue.... Nor have they cited any authority on this issue.... Here, the evidence establishes that the failures to respond to discovery -- both on the part of client and counsel were ‘willful, tactical, egregious and inexcusable.’ [Citation.]
“Given the months-long lack of cooperation in discovery, as well as Defendants’ continuing bad faith conduct (including their specious assertion that they are the wronged parties in this discovery dispute), there is no indication that a less drastic sanction than a doomsday sanction will generate compliance.”
After the terminating sanctions against Dromy were entered on August 15, 2006, the court ordered Erdman to prepare a request for entry of judgment and “file all prove-up documents required by Code of Civil Procedure [section] 585.” On September 6, 2006, Erdman filed a declaration stating that Dromy had received two checks, one from Crescent Heights in the amount of $675,528.78 and another from Channel Gateway in the amount of $1,382.082.24. Erdman declared that “Dromy had agreed to pay... me the 50% of the monies or benefits received by Dromy” in connection with the transaction. Thus, Erdman requested judgment “of 50% of the $2,057,920.39 received by Dromy equaling $1,028,960.19” plus 10 percent simple interest from July 31, 2003, through the present.
On September 14, 2006, Dromy filed a motion for relief from judgment. On October 18, 2006, the trial court denied the motion. On October 25, 2006, a judgment was entered in favor of Erdman in the amount of $1,363,532.32.
7. Dromy’s motions for new trial and to vacate the judgment
On November 7, 2006, Dromy filed two motions: a motion for a new trial and a motion to vacate the judgment. Dromy claimed that the judgment was erroneous. Dromy’s main argument was that because Erdman’s FAC failed to allege any specific damage amount, the judgment was entered in violation of Dromy’s due process rights.
Dromy’s motion to vacate also argued, among other things, that the judgment must be limited to a percentage of the fee received from Crescent Heights and not include a percentage of the fees received from Channel Gateway. Dromy quoted language from the FAC, which quoted language from the agreement between Ely Dromy and Erdman, stating that Erdman would receive “50% of any fee or any other sort of compensation received by [Ely Dromy] from Crescent Heights for said project.” Dromy’s motions were heard on December 19, 2006.
On January 31, 2007, the trial court granted Dromy’s motion to vacate the judgment by modifying the judgment. The court noted that the first question was whether “the allegations of this complaint [were] sufficient to put the defendants on notice of the amount sought?” The court concluded that “the amount due to and received by the defendants (and the one-half due to the plaintiff) was well known to the defendants and defendants have had in their possession the data from which that amount could easily be calculated; derivatively, the amount due to plaintiff could also be readily calculated.” Thus, the court concluded that Dromy had sufficient notice of the potential damages.
However, the court further concluded that, based on the allegations of the complaint, the proper amount of recovery was “one-half of the monies received from Crescent Heights for said project.” The court expressed its decision that the words “from Crescent Heights for said project” were “words of limitation with respect to the source and amount of funds.” The court ultimately concluded that “fair notice to the other side... requires a limitation.” Because the prior judgment, entered on October 25, 2006, awarded Erdman half the money received from both Crescent Heights and Channel Gateway, the court concluded that “the Judgment entered on October 25 must be vacated and reentered in the correct amount.” The total sum of the judgment was revised to $381,850.05.
On February 20, 2007, Dromy filed its notice of appeal “from the Superior Court judgment of January 31, 2007 against Defendants, including all pre-judgment rulings and orders.” On March 13, 2007, Erdman filed his notice of cross-appeal from the judgment entered January 31, 2007, and order of December 19, 2006, vacating the judgment of October 25, 2006.
DISCUSSION
I. Direct appeal
A. The trial court did not abuse its discretion in issuing terminating sanctions
Dromy’s first argument is that the trial court erred in issuing terminating sanctions because Dromy’s conduct was not willful, and lesser sanctions would have been appropriate.
We review the court’s order to determine whether the trial court abused its discretion in imposing this sanction. (Collisson & Kaplan v. Hartunian (1994) 21 Cal.App.4th 1611, 1619-1620.) Under this standard, we give substantial deference to the trial court’s decision. We will affirm the trial court’s order “unless it is arbitrary, capricious, whimsical, or demonstrates a ‘“manifest abuse exceeding the bounds of reason....”’ [Citations.]” (In re Marriage of Chakko (2004) 115 Cal.App.4th 104, 108.)
In issuing the order granting “doomsday” sanctions, the trial court expressly stated its understanding that such sanctions were drastic and generally disfavored. However, terminating sanctions are permissible under Code of Civil Procedure section 2023.030, subdivision (d) for, among other things:
All further statutory references are to the Code of Civil Procedure unless otherwise noted.
“(d) Failing to respond or to submit to an authorized method of discovery.
“(e) Making, without substantial justification, an unmeritorious objection to discovery.
“(f) Making an evasive objection to discovery.
“(g) Disobeying a court order to provide discovery.”
(§ 2023.010, subds. (d), (e), (f), & (g).)
The court properly set forth the three facts which must be found prior to the imposition of terminating sanctions: (1) there must be a failure to comply; (2) the failure must be willful; and (3) there must be a prior court order compelling compliance with discovery that has been disobeyed. (Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545; Ruvalcaba v. Government Employees Ins. Co. (1990) 222 Cal.App.3d 1579, 1580-1581.)
These facts were present in the current matter. Erdman issued his first requests for discovery on May 20, 2005. He was forced to bring his first motion to compel on September 8, 2005, having received no adequate response. On October 11, 2005, the trial court granted Erdman’s motion to compel, ordering Dromy to provide full and complete responses no later than December 5, 2005, and imposing monetary sanctions. Dromy never complied, forcing Erdman to bring a second motion to compel on January 20, 2006. This motion was also granted, with an order that Dromy must fully comply no later than March 27, 2006. The court warned Dromy that, should it fail to comply, further sanctions may be imposed.
Dromy still did not comply. Thus, on July 24, 2006, over a year after he first served the discovery, Erdman sought terminating sanctions. At that time, Dromy was in violation of two court orders, and Erdman’s discovery had not been properly answered since it was served 14 months before. The court found Dromy’s failure to be “‘willful, tactical, egregious and inexcusable.’” The court specifically found that no lesser sanction would generate compliance.
Dromy’s main argument involves the nature of its actions. Despite the trial court’s specific finding to the contrary, Dromy argues that its failure to comply with the trial court’s discovery orders was not willful. Dromy refers to the declaration of Cole, one of Dromy’s attorneys, filed on October 7, 2005, in which Cole provided an explanation for his initial failure to properly respond to Erdman’s discovery. After the second motion to compel, Cole declared, he attempted to meet and confer with Erdman and intended to fix the deficiencies with the responses. In his declaration of January 14, 2006, Cole asserted that he “attempted to answer the requests to the best of his ability and made repeated attempts to personally meet and confer with [Erdman’s attorney] who ignored these attempts.”
The trial court considered Cole’s declarations and nevertheless found that Dromy had provided nothing more than “unreasonable excuses” to justify its conduct. As set forth above, the record supports the court’s finding. Ample evidence showed that Dromy was willfully evading its discovery obligations. The trial court had continued the trial date twice for the express purpose of allowing Dromy to give Erdman the discovery essential to Erdman’s trial preparation. The court had heard and granted two motions to compel, imposed significant monetary sanctions, and specifically warned Dromy that further sanctions were possible if Dromy did not comply. Nevertheless, Dromy ignored the orders and failed to serve sufficient responses. The trial court did not believe Dromy’s excuses for these failures to be sincere, and we do not reevaluate that credibility determination.
Dromy also makes much of its service of discovery responses on August 14, 2006 -- the day before the hearing on Erdman’s motion to strike. At the hearing on August 15, 2006, Erdman’s counsel informed the court of various deficiencies in those responses, including the fact that they were not verified. Even if these responses had been sufficient, as the court pointed out, “the submission yesterday of whatever was submitted is not before the court today, and the court is not going to review it. It’s too little and too late; mostly, it’s too late.”
The facts before the trial court were sufficient to support the imposition of terminating sanctions under the law. The trial court’s order was well reasoned. Under the circumstances, no abuse of discretion occurred.
B. The trial court did not err in declining to grant relief from default under the mandatory provisions of section 473, subdivision (b).
Dromy next challenges the trial court’s denial of its motion for relief from judgment. Dromy argues: (1) that the trial court improperly treated the motion as a motion for reconsideration of the trial court’s grant of terminating sanctions, and (2) that Dromy was entirely unaware of the discovery dispute and therefore should not be punished for it.
Dromy also argues that the trial court was mistaken in its belief that Dromy’s counsel’s mistakes were deliberate. Because we have already addressed this issue in section I.A., and have concluded that substantial evidence supports the trial court’s findings that Dromy’s actions were willful and tactical, we do not address it again here.
A trial court’s ruling on a motion seeking relief from judgment under section 473 is generally reviewed for abuse of discretion. (Robbins v. Los Angeles Unified School Dist. (1992) 3 Cal.App.4th 313, 319.) However, where the application of the mandatory relief provision under section 473, subdivision (b) does not turn on disputed facts, it presents a pure question of law subject to de novo review. (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 612.) Where the trial court has resolved disputed factual issues, we do not substitute our judgment for the trial court’s express or implied findings which are supported by substantial evidence. (Shandralina G. v. Homonchuk (2007) 147 Cal.App.4th 395, 411.)
1. Section 473, subdivision (b)
Section 473, subdivision (b) (hereafter “section 473(b)”), has two parts. The first allows the trial court to “relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” Whether or not to grant this type of relief is discretionary with the court. (Jerry’s Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th 1058, 1069 (Jerry’s Shell).)
The second part of section 473(b) provides:
“Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.”
“This is often referred to as the mandatory provision because it is said that ‘[w]here there is an attorney’s affidavit of fault, the relief is mandatory unless it is determined that the attorney was not actually the cause....’ [Citations.]” (Jerry’s Shell, supra, 134 Cal.App.4th at pp. 1069-1070.)
The terms “default” and “dismissal” were “‘not written to cover every situation where a dismissal occurs due to attorney misfeasance.’” (Jerry’s Shell, supra, 134 Cal.App.4th at p. 1070, quoting Yeap v. Leake (1997) 60 Cal.App.4th 591, 600.) Instead, application of the statute’s mandatory relief provisions is limited to situations where “‘a defendant fails to appear’” and such “‘failure to appear is the fault of counsel,’” or where a “‘plaintiff fails to appear in opposition to a dismissal motion’” and “‘that failure to appear is the fault of counsel.’” (Jerry’s Shell, at p. 1070.) California courts have agreed that “an overly expansive interpretation of the term ‘dismissal’ should be avoided.” (Id. at p. 1071.)
In Jerry’s Shell, the Court of Appeal, Second Appellate District, declined to extend the mandatory relief provisions of section 473(b) to a situation where the moving party’s complaint had been dismissed for deliberate failure to respond to discovery. (Jerry’s Shell, supra, 134 Cal.App.4th at p. 1074.)
2. Dromy’s motion for relief from judgment under the mandatory provisions of section 473(b) was properly denied
We first address Dromy’s contention that the trial court improperly treated the motion for relief from judgment as a motion for reconsideration of the trial court’s grant of terminating sanctions. Because the trial court focused on the previous court orders, Dromy argues, the trial court “dismissed and perhaps ignored the merits of [Dromy’s] Motion for Relief from Default Judgment and instead improperly equated [Dromy’s] actions to the actions of their counsel.” Dromy argues that the trial court ignored Cole’s declaration filed in support of Dromy’s motion for relief from judgment, claiming that the trial court “did not determine whether Mr. Cole’s actions as described in his declaration were actions of fault and neglect under [section] 473(b) because the trial court was examining Mr. Cole’s affidavit concerning the terminating sanctions declaration, not the relief from default judgment declaration.”
The trial court’s decision was based largely on Jerry’s Shell. In Jerry’s Shell, service station franchisees who had sued an oil company failed to respond to discovery and to comply with discovery orders, therefore their action was dismissed. In determining that the plaintiffs’ motion for relief under section 473(b) was properly denied, the court stated: “A party cannot justly be permitted to seek relief under section 473(b) from sanctions imposed for deliberate failure to respond to discovery or oppose discovery motions.” (Jerry’s Shell, supra, 134 Cal.App.4th at p. 1074.)
The court distinguished Solv-All v. Superior Court (2005) 131 Cal.App.4th 1003 (Solv-All) because it was based on an attorney’s mistaken belief that the plaintiff did not expect a response to the complaint because the parties were in settlement discussions. (Jerry’s Shell, supra, 134 Cal.App.4th at p. 1074.)
Jerry’s Shell supports the trial court’s decision that a motion for relief from judgment under the mandatory provisions of section 473(b) is improper where the default resulted from deliberate violations of discovery orders. Instead, as the trial court noted, Dromy’s attorneys should have filed a motion for reconsideration of the trial court’s imposition of terminating sanctions under section 1008. Because the motion did not comply with the requirements of section 1008, the court determined that it could not be construed as such. The court did not err in making this decision.
Dromy does not challenge the trial court’s determination that its motion for relief under section 473(b) could not be construed as a motion for reconsideration under section 1008. In fact, Dromy admits that it was “not seeking reconsideration of the trial court’s order granting the terminating sanctions.”
Even if the motion were proper, we would find that no prejudicial error occurred. Contrary to the allegations of Dromy, there is no evidence in the record suggesting that the trial court “dismissed” or “ignored” the affidavit filed by Dromy’s attorney, Cole. Instead, the trial court determined that “the motion is also substantively deficient, which provides another, independent ground for denying same.” Thus, even if the trial court had found Dromy’s motion to be procedurally proper, it would have been denied because the facts simply do not support mandatory relief under section 473(b). As set forth above, ample evidence in the record supports the trial court’s factual determination that Dromy’s failure to respond to discovery was “‘willful, tactical, egregious and inexcusable.’” Such conduct does not provide a basis for relief under section 473(b).
As Erdman repeatedly points out, Dromy had two attorneys, Cole and Simkin. Both attorneys were sanctioned for the abuses that took place during the discovery process. However, unlike Cole, Simkin did not provide a declaration attesting to his own error or the innocence of his client. Under the circumstances, even if the court believed Cole’s declaration, such an omission was sufficient for the court’s finding of substantive deficiency.
3. Mandatory relief was not warranted based on Dromy’s insistence that it was unaware of the discovery dispute
In support of Dromy’s motion for relief from judgment under the mandatory provisions of section 473(b), Ely Dromy, co defendant and president of Dromy International, filed a declaration, which stated:
“I was unaware that Mr. Cole had failed to properly respond to the discovery requests based on the October 11, 200[5] Court order. I was unaware that Plaintiff had filed a Motion to Compel on January 20, 2006 and that Mr. Cole opposed the motion. I was also unaware that [the] Court denied Plaintiff’s Motion on February 23, 2006. I had no knowledge that the Court ordered that all of Defendants’ prior discovery requests were nullities and gave Dromy International and myself until March 27, 2006 to comply with the Court’s October 11, 2005 order. I was also unaware that Mr. Cole failed to comply with the Court’s March 27, 2006 deadline.”
Ely Dromy declared that he was “shocked” when he discovered that terminating sanctions had been entered against Dromy.
Dromy’s insistence that it was innocent of the failures of its lawyers does not provide a basis for reversal of the trial court’s order. First, as discussed above, relief from judgment based on the mandatory provisions of section 473(b), is unavailable where the default is based on a party’s deliberate failures to respond to discovery, as occurred here. (Jerry’s Shell, supra, 134 Cal.App.4th at p. 1074.) Second, the trial court’s factual determination that the actions of Dromy’s lawyers were willful, tactical actions, is supported in the record. Because the trial court determined that the actions of Dromy’s lawyers were not the result of “mistake, inadvertence, surprise, or excusable neglect,” section 473(b) is inapplicable and Dromy’s obliviousness is irrelevant.
In arguing that section 473(b) should apply, Dromy relies heavily on Solv-All, supra, 131 Cal.App.4th 1003. Solv-All involved an action by SMS Supermarket Services against Solv-All and certain individuals for breach of contract and common counts. After the defendants failed to file timely responses to the complaint, SMS filed a request to enter their default. The default was entered, and the petitioners then filed a motion for relief pursuant to both the discretionary and mandatory provisions of section 473(b). (Id. at p. 1006.) In connection with the motion, the petitioners’ attorney filed a declaration stating that because “‘both Parties were in brisk [settlement] negotiations and several deadlines had passed without any Action [sic] by counsel for Plaintiff... in the hopes of settlement, I once again let the deadline to answer pass.’” (Ibid.) The trial court denied the motion. The Court of Appeal reversed, holding that petitioners’ “showing of ‘attorney fault’ was sufficient and that relief was mandatory under the provisions of section [473(b)].” (Solv-All,at p. 1007.)
Solv-All is distinguishable from the matter before us. First, the matter involved the failure to answer a complaint -- an action specifically held to come under the scope of section 473(b)’s mandatory provisions. In contrast, the deliberate failure to respond to discovery has been specifically held not to fall under those same provisions. (Jerry’s Shell, supra, 134 Cal.App.4th at p. 1070.) Further, the Solv-All attorney’s failure to answer the complaint was a result of his “mistaken suppositions” about his opponent’s view of the impending deadline in light of the “brisk” ongoing settlement negotiations. Here, in contrast, the court determined that Dromy’s actions were “‘willful, tactical, egregious and inexcusable.’” Solv-All thus does not convince us that the result in this matter is erroneous.
C. Dromy had sufficient notice of the amount of monetary damages at stake
Dromy’s final argument arises from the court’s decision on Dromy’s motion to vacate the judgment. The trial court granted the motion, reducing the damages awarded to Erdman from $1,363,532.32 to $381,850.05. Dromy argues that the court should have reduced the award to $0.
Dromy relies on Greenup v. Rodman (1986) 42 Cal.3d 822 (Greenup). In Greenup, the court discussed section 580, subdivision (a), which sets forth the maximum relief to be granted to a plaintiff where no answer is filed. The statute states:
“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.”
As the Greenup court explained, the purpose of section 580 is: “[T]o ensure that a defendant who declines to contest an action does not thereby subject himself to open-ended liability. Reasoning that a default judgment that exceeds the demand would effectively deny a fair hearing to the defaulting party, the Courts of Appeal have consistently read the code to mean that a default judgment greater than the amount specifically demanded is void as beyond the court’s jurisdiction. [Citations.]”(Greenup, supra, 42 Cal.3d at p. 826.)
In sum, “the primary purpose of the section is to guarantee defaulting parties adequate notice of the maximum judgment that may be assessed against them.” (Greenup, supra, 42 Cal.3d at p. 826.)
Upon examining the FAC, Dromy argues, the relief sought by Erdman was so vague that Dromy did not have sufficient notice as to what its potential liability was. Thus, Dromy’s due process rights were violated by the court’s entry of damages in any amount.
We disagree. Greenup did not require that a plaintiff set forth a numeric dollar figure. Erdman’s complaint satisfied Greenup by giving Dromy adequate notice of the maximum judgment that might be assessed against it. In his substantive allegations, Erdman quotes directly from the contract between himself and Dromy: “This is to certify our agreement reached between [ELY DROMY] and STEVE ERDMAN regarding an introduction of [ELY DROMY] together with his ASSOCIATES Crescent Heights to a Condominium Project at: Marina Pointe Condominiums. Should [ELY DROMY] and his ASSOCIATES be involved in any situation whether as a joint venture (sic) as Buyers, Investors or any other capacity, STEVE ERDMAN or his ASSIGNEES will receive for said introduction the following: 50% of any fee or any other sort of compensation received by [ELY DROMY] from Crescent Heights for said project.”
In the second cause of action, the FAC alleges, “plaintiff agreed to have defendants act as his agent to collect and distribute the assigned 50%.” In the prayer for relief, the FAC asks for “judgment or order declaring and awarding Plaintiff Erdman one half of the proceeds or anticipated proceeds from the resolution of the litigation.”
The FAC previously describes the litigation as an action between Dromy and “the sellers and buyers” of Marina Pointe.
Dromy does not claim that it was unaware of the specific amount it recovered in its action against the sellers and buyers of the property. The allegations of the complaint made it clear that Erdman was seeking to enforce Dromy’s contractual obligation to pay him 50 percent of the money Dromy received from Crescent Heights. Dromy had in its possession the information required to make this simple calculation. Under the circumstances, Dromy had sufficient notice of its maximum potential exposure.
In contrast, Erdman was unaware of the amount that Dromy received in the litigation. As Erdman alleged: “[Dromy has] refused to account to the Plaintiff regarding the monies received by [Dromy],... which are subject to the written agreement executed by [Dromy] and the Plaintiff and relied upon by the Plaintiff to his detriment....”
A more detailed analysis of the allegations of the complaint, and Dromy’s maximum exposure, is undertaken in our discussion of Erdman’s cross-appeal. (Section II, infra.)
Dromy points out an apparent conflict between Becker v. S.P.V. Constr. Co., (1980) 27 Cal.3d 489 (Becker), and Cassel v. Sullivan, Roche & Johnson (1999) 76 Cal.App.4th 1157 (Cassel), relied upon by Erdman. The Becker court held that the complaint must inform the defendant of both the “type and the amount of relief sought.” In an action for an accounting on a former partner’s partnership interest, the Cassel court held “the complaint need only specify the type of relief requested, and not the specific dollar amount sought.” (Cassel, supra, at pp. 1163-1164.) Relying on In re Marriage of Lippel (1990) 51 Cal.3d 1160 (Lippel), and In re Marriage of Andresen (1994) 28 Cal.App.4th 873, both of which involved default judgments obtained in marital dissolution actions, the Cassel court found this result appropriate where the defendants are “in possession of the essential information necessary to calculate their potential exposure.” (Cassel, at p. 1164.) The Cassel court’s holding that the complaint need only specify the type of relief requested, and not the amount of relief requested, contradicts Becker. However, we need not resolve this conflict. The simple, one-step calculation set forth in Erdman’s complaint gave Dromy adequate notice of both the type and amount of relief sought. Thus, the more stringent standard set forth in Becker was satisfied.
Specifically, the Becker court stated: “[T]he language of section 580 does not distinguish between the type and the amount of relief sought. The plain meaning of the prohibition against relief ‘exceed[ing]’ that demanded in the complaint encompasses both of these considerations.” (Becker, supra, 27 Cal.3d at pp. 493-494.)
Dromy also relies heavily on Finney v. Gomez (2003) 111 Cal.App.4th 527 (Finney), in which the court declined to expand the rule set forth in Cassel to an action for partition to divide a tenancy in common. (Finney, at p. 541.) Finney is distinguishable from the matter before us. There, the defendant had moved out of state and had ceased to fulfill his financial obligations on certain real property. Those obligations continued to accrue during the course of the litigation, since property expenses such as taxes, maintenance, repairs and utility costs were ongoing. (Id. at p. 610.) Thus, in contrast to the matter before us, the plaintiff’s request for reimbursement of half his expenses targeted an elusive, ever changing number. Also, significantly, the plaintiff in Finney had greater knowledge of the damages owed him under the parties’ agreement to divide the expenses of the home, since the plaintiff was the only one paying the expenses at issue. Thus, Finney did not involve a situation where, as here, the defendant possessed all the information necessary to easily determine its maximum exposure.
Ely v. Gray (1990) 224 Cal.App.3d 1257 (Ely), also conflicts with Cassel. Ely involved a plaintiff who brought an action against the defendant for dissolution of partnerships and accounting. After the defendant’s default, the court discussed the difficulties facing a plaintiff who obtains a default judgment on an action for an accounting. Noting the decision in Greenup, the Ely court admitted that such a plaintiff may be caught “in a bind.” However, in order to satisfy the due process requirement of notice to a defaulting defendant, the Ely court suggested two alternatives: first, the plaintiff might “include in the complaint or prayer for relief an estimate of the amount due him, be willing to be bound by that amount, and receive a default judgment limited to that amount” (Ely, supra, at p. 1262), or he might specify an amount “before entry of the judgment since plaintiff offered proof to the court of the amount due.” (Id. at p. 1263.)
The Cassel court specifically declined to follow Ely in light of Lippel. (Cassel, supra, 76 Cal.App.4th at p. 1163.)
The alternatives set forth in Ely were not necessary in this matter. Erdman was not seeking vague damages resulting from the dissolution of partnerships. Thus, he was not required to set forth a speculative number in order to protect his interest in the event of default. Instead, his claim was simple and precise: “50% of any fee or any other sort of compensation received by [Ely Dromy] from Crescent Heights for said project.” Dromy’s claim that this specific language did not give Dromy sufficient notice of its maximum exposure is rejected.
Dromy’s insistence that Erdman provide a numeric dollar figure in his prayer for relief is particularly disingenuous in light of Dromy’s own actions in refusing to provide Erdman with essential discovery and refusing to provide an accounting. We find that, under the circumstances of this case, the notice requirement set forth in Greenup was satisfied.
II. Cross-appeal
In his cross-appeal, Erdman focuses on the propriety of the trial court’s original judgment, and argues that the reduction of the award from $1,363,532.32 to $381,850.05, based on Dromy’s motion to vacate, was erroneous. Erdman argues that Cassel supports his position. Erdman further argues that Dromy had actual notice that Erdman was seeking 50 percent of Dromy’s total recovery from its litigation against Channel Gateway and Crescent Heights; that Dromy’s default acted as an admission of all allegations in the complaint; and that the trial court erred in reading the complaint in the most restrictive fashion rather than relying upon the prayer to determine the appropriate recovery.
A court has the authority to hear a motion to set aside a default judgment on the grounds that the damages awarded are excessive as a matter of law. (Don v. Cruz (1982) 131 Cal.App.3d 695, 699.) Therefore, Erdman’s suggestion that Dromy did not have standing to file the motion is rejected. Erdman also cites Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294 (Sporn) for the proposition that Dromy lacks standing to complain of evidence submitted at the prove-up hearing. In Sporn, the defendant filed a motion to set aside default and default judgment under section 473 on the ground that counsel had not had notice of a case management conference and the scheduled default prove-up. (Sporn, supra, at pp. 1298-1299.) The Court of Appeal concluded that the defendant was not entitled to notice of the proceedings after default was entered, and that a defaulted defendant lacks standing to complain of extraneous evidence admitted at the prove-up hearing. (Id. at pp. 1301-1303.) No issues regarding evidence admitted at the prove-up hearing, or proper service of notice after entry of default, are before us in this appeal. Sporn does not suggest that a motion to vacate a default judgment on the ground of excessive damages is improper under the circumstances of this case.
A. Standard of review and applicable law
A trial court’s grant of a motion to vacate a judgment on the ground of excessive damages is generally reviewed for abuse of discretion. (Thompson v. John Strona & Sons (1970) 5 Cal.App.3d 705, 708-709.) However, to the extent that Erdman’s arguments focus on the trial court’s interpretation of the FAC, our review is de novo. (California Golf, L.L.C v. Cooper (2008) 163 Cal.App.4th 1053, 1063-1064.)
“The relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint.” (§ 580, subd. (a).) This rule applies where a default judgment is entered as a sanction for willful and deliberate refusal to obey discovery orders. (Greenup, supra, 42 Cal.3d at p. 824 [“in all default judgments the demand sets a ceiling on recovery”].) The rule guarantees defaulting parties “adequate notice of the maximum judgment that may be assessed against them.” (Id. at p. 826.) We therefore must first analyze the FAC to determine the maximum liability of which it gives notice.
In determining the maximum potential liability of the defendant, we may consider “[t]he allegations of the complaint herein combined with the demand contained in the prayer.” (Thorson v. Western Dev. Corp. (1967) 251 Cal.App.2d 206, 213.) Where a complaint contains “inconsistent counts,” we must “ascertain ‘the true basis of defendant’s liability even though the defendant has defaulted and thereby “technically” confessed to the truth of the allegations contained in each cause of action.’ [Citation.]” (Ibid.)
B. The FAC
The substantive allegations of the FAC begin by setting forth the initial oral agreement between Erdman and Ely Dromy: “The Plaintiff and the Defendants orally agreed that the Plaintiff would be paid 50% of the monies received by the Defendants.” However, the FAC then sets forth the “terms of said agreement,” as memorialized in writing. The written agreement, Erdman alleged, required that Erdman receive “50% of any fee or any other sort of compensation received by [Ely Dromy] from Crescent Heights for said project.” (Italics added.) Thereafter the plaintiff, “in accordance with his agreement with the Defendants,” encouraged and arranged a meeting regarding the real estate transaction “for which the Defendants would pay the Plaintiff the fee of 50% of the monies or benefits received by the Defendants....”
Despite the vague reference to “monies or benefits received by the Defendants,” we agree with the trial court’s conclusion that this vague language is limited by the express terms of the written agreement between Erdman and Ely Dromy. Erdman’s action, which was premised on a breach of the very contract quoted on the second page of the FAC, could not logically have demanded more than was required under the terms of the contract. At no time does the FAC provide a specific demand for 50 percent of the money received by Dromy from both Crescent Heights and Channel Gateway. Instead, all vague references to Erdman’s share of the money are consistent with the limiting language found in the direct quote from the agreement at issue. For example, the FAC later states: “Plaintiff is informed and believes that a portion or all of the monies or benefits owed to the Defendants has been received but that the Defendants... refuse to pay the Plaintiff his share of the monies or benefits received....” (Italics added.)
In the second cause of action for constructive trust, the FAC alleges:
“19. In reliance upon the agreements of defendants as here-in-above alleged plaintiff agreed to have defendants act as his agent to collect and distribute the assigned 50% of the total recovery.
“20. Plaintiff is informed and believes that the Defendants now refuse to remit the 50% of the proceeds, or any other amount, and refuse to render an accounting to demonstrate the precise amount to which plaintiff is entitled under the agreements.
“21. Defendants hold or will soon hold the 50% proceeds as constructive trustees for the benefit of plaintiff.”
These allegations relate to “the assigned 50% of the total recovery.” (Italics added.) Having read the terms of the contract set forth in the first paragraph of the FAC’s substantive allegations, the most reasonable interpretation of this language is that Erdman’s assigned 50 percent was 50 percent of the proceeds received from Crescent Heights.
Finally, in the prayer for relief, the FAC asks for “judgment or order declaring and awarding Plaintiff Erdman one half of the proceeds or anticipated proceeds from the resolution of the litigation.” Again, this language, standing alone, is not specifically limited to the recovery obtained from Crescent Heights. However, read in connection with the allegations of the FAC as a whole, including the allegations regarding the terms of the agreement between the parties, we conclude that the maximum liability of which the FAC gives notice is “50% of any fee or any other sort of compensation received by [Ely Dromy] from Crescent Heights for said project.”
C. The case law cited by Erdman does not dictate that a reinstatement of the original judgment is required in this matter
Erdman relies heavily on Cassel. In Cassel, plaintiff sued his former law partners and the partnership itself for an accounting and valuation of the plaintiff’s interest in the partnership on the date of his withdrawal. Plaintiff obtained a default against the partnership, proved his damages and received a default judgment. The default judgment was then set aside because the plaintiff had not served a statement of damages on the partnership. (Cassel, supra, 76 Cal.App.4that pp. 1158-1159.) In setting aside the first judgment, the trial court determined that Cassel’s complaint did not give the defendants adequate notice of the amount of damages that he sought. Thus, the trial court followed prior case law which required that “a plaintiff in an accounting action must give the defendant notice of the amount he seeks prior to the entry of the defendant’s default.” (Id. at p. 1161.) After the plaintiff served a statement of damages on the defendants, a second “prove-up” hearing was held, in which the partnership fully participated. This second hearing resulted in the entry of a second judgment against the partnership for the same amount as the original vacated default judgment. (Id. at p. 1159.)
The Court of Appeal reversed the trial court’s order setting aside the judgment and ordered reinstatement of the first default judgment. The Court of Appeal concluded that the default and initial default judgment “were entirely proper without the necessity of service of a statement of damages on the defaulting defendant. Thus, the trial court erred in setting aside the first default judgment.” (Cassel, supra, 76 Cal.App.4th at p. 1159.)
The Court of Appeal’s reversal was based on its determination that the complaint in that matter gave adequate notice to the defendants of the amount of damages at stake in the action. The case is not helpful to our interpretation of the complaint filed in this matter, or to a determination of the maximum liability permissible on that complaint given the notice requirements set forth in Greenup, supra, 42 Cal.3d 822, and section 580, subdivision (a). Thus, Cassel does not dictate a reinstatement of the initial judgment in this matter.
People ex rel. Lockyer v. Brar (2005) 134 Cal.App.4th 659 (Brar), and Electronic Funds Solutions, et al. v. Murphy (2005) 134 Cal.App.4th 1161 (Electronic Funds), also involved determinations of the maximum amount of a defendant’s potential liability given the specific complaints at issue in those cases. In Electronic Funds, the complaint sought declaratory and injunctive relief, along with damages “‘in an amount in excess of $50,000 and according to proof.’” (Electronic Funds, supra, at p. 1168.) The Court of Appeal determined that “[b]ecause the complaint here is wholly ineffective under section 580 to support a default judgment in excess of $50,000, compensatory damages must be limited to that amount. [Citation.]” (Id. at p. 1174.) In Brar, the complaint sought “‘an amount not less than $1,000,000,’” but also sought statutory penalties of $2,500 per violation of the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) for approximately 500 violations. Under these circumstances, the defendant had sufficient notice of the $1,787,500 judgment entered against it. (Brar, supra, at p. 668.)
These cases do not suggest that a different interpretation of the FAC in this matter is required. They do suggest that, in each case, the maximum potential liability of the defendant must be determined based on a careful reading of the complaint. In this matter, the trial court properly concluded that the maximum liability of which Dromy had notice was “50% of any fee or any other sort of compensation received by [Ely Dromy] from Crescent Heights for said project.”
DISPOSITION
The judgment is affirmed. Each party is to bear their own costs of appeal.
We concur: DOI TODD, Acting P. J. ASHMANN-GERST, J.