Opinion
A164343
10-23-2023
BRENDAN GOLDRICK, Plaintiff and Respondent, v. CACHETTE CAPITAL MANAGEMENT, LLC, et al., Defendants and Appellants.
NOT TO BE PUBLISHED
Alameda County Case No. RG19024620
PETROU, J.
Plaintiff Brendan Goldrick obtained a default judgment against defendant Desiree Cachette (Cachette) and two business entities she owns (collectively, defendants). Defendants contend that entry of a default judgment was improper because (1) plaintiff failed to effect proper service of process, (2) defendants did not have actual notice of the action, and (3) California lacks personal jurisdiction over defendants. Defendants also take issue with aspects of the default judgment, arguing, among other things, that the judgment was void because the damages awarded exceed the maximum amount demanded in the complaint.
We conclude that defendants forfeited their arguments regarding service when they failed to raise them below and that their remaining arguments lack merit. We therefore affirm the default judgment and award plaintiff his attorney's fees and costs on appeal.
Factual and Procedural Background
In preparing the following discussion of the factual background, we found defendants' opening brief of little use. "In every appeal, 'the appellant has the duty to fairly summarize all of the facts in the light most favorable to the judgment.'" (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 739.) Further," '[t]he rule is well established that . . . an appellant who contends that some particular finding is not supported is required to set forth in his brief a summary of the material evidence upon that issue.'" (In re Marriage of Fink (1979) 25 Cal.3d 877, 887.) Defendants' opening brief, in contrast, disregards much of the pertinent evidence submitted by plaintiff in favor of an account based largely on Cachette's evidentiary submissions, thereby creating a deceptive impression of the factual record. Although we do not exercise our discretion to find a waiver of defendants' legal claims (see ibid), we note defendants' failure to fulfill their duty to provide a balanced summary of the evidence.
The First Amended Complaint for Damages, Restitution, and Specific Performance (complaint) alleges that plaintiff worked for several months for Cachette Capital Management (CCM), an investment company owned and managed by Cachette, but was never paid for his work. The complaint asserts sixteen causes of action, including breach of contract, wrongful termination, and violation of several Labor Code provisions relating to the payment of wages.
CCM is an investment business that raises capital and invests in venture capital funds. CCM does not appear to be a single legal entity but instead consists of several separate entities owned and managed by Cachette. Plaintiff met Cachette at a San Francisco Bay Area party in April 2018, when she explained her business and expressed an interest in hiring him. After further conversations and an interview by another CCM employee, plaintiff was offered a job. In June, at a dinner in San Francisco, Cachette proposed specific terms of compensation, and plaintiff accepted her offer.
Several other CCM entities were also joined as defendants in this action, but the trial court held that it lacked personal jurisdiction over them. Because these entities are not parties to the judgment and plaintiff has not appealed their dismissal, we do not discuss them further.
Cachette assigned plaintiff to work from the recently opened Oakland office of Cachette Capital Management, LLC (CCM CA), an entity incorporated in California. The office was listed on CCM's website as its United States office. A private office within the suite was set aside for Cachette's use. Plaintiff spent most of his working time in the Oakland office, although he traveled to Europe twice and New York once during his employment. Cachette resided in Europe, but she and plaintiff were in daily electronic communication and would typically speak by phone "at least once a week." Cachette not only assigned plaintiff tasks but also oversaw him in their performance. At Cachette's direction, plaintiff established a bank account for CCM CA, but the account was never funded. When, early in plaintiff's employment, Cachette told him CCM "temporarily lacked liquidity," he volunteered to use his personal funds to cover CCM's business expenses, including office rent. Plaintiff ultimately incurred over $60,000 in such expenses, which Cachette failed to reimburse.
During more than four months of work for CCM, plaintiff was never paid. His relationship with Cachette began to deteriorate when he requested payment of the salary he had been promised and reimbursement of the business expenses he had paid. After a series of angry texts, Cachette terminated his employment.
Plaintiff's counsel first contacted Cachette with respect to his claims in January 2019, and their settlement communications extended into June. During this time, counsel provided Cachette with a draft complaint and mailed a copy of a private attorney general (PAGA) notice to the New York office of defendant Cachette Capital Management, LLC (CCM NY), a CCM entity incorporated in New York that shares a name with CCM CA. The response to the PAGA notice filed by Cachette and CCM with the Labor Workforce Development Agency claimed that plaintiff was an independent contractor, not an employee.
In June 2019, counsel told Cachette by email that plaintiff would be filing the complaint and asked where CCM could be served. While accusing counsel of conducting" 'an empty shakedown,'" Cachette responded that CCM could be served at its New York office and she could be served at an address in Amsterdam. Counsel thereafter mailed service documents and a notice and acknowledgment of receipt to CCM CA and CCM NY at the New York address and to Cachette at the Amsterdam address. The notices and acknowledgement of receipt were never returned. Counsel also mailed an amended PAGA notice to Cachette at an address in The Hague that was listed as CCM's Europe office on the CCM website, but that notice was eventually returned with the notation" 'refused.' "
In August, plaintiff's counsel informed Cachette by email that plaintiff had attempted service by mail at the addresses she provided and asked Cachette to return the notices and acknowledgment of service. Cachette did not respond. Counsel tried another, similar email in September. Cachette did not respond to this email until several months later.
Soon thereafter, plaintiff's counsel engaged a firm, GGN, to effect personal service of process on CCM CA, CCM NY, and Cachette in the Netherlands under the Hague Convention. A Dutch bailiff served copies of the service documents on the two CCM entities and Cachette by placing them in the mailbox at an Amsterdam residential address. Although the address was different from the Dutch address originally provided by Cachette, GGN assured plaintiff's counsel that the address had been listed in the Dutch population register as Cachette's address since August 2018. GGN stated that such service conformed to Dutch law. On the basis of this service, counsel filed a proof of service in October 2019, and, in November, requested entry of a default against Cachette, CCM CA, CCM NY, and three other CCM entities. A copy of the request for default was mailed to defendants at Cachette's Dutch registry address.
In February 2020, Cachette responded to counsel's August 2019 email requesting return of the notices and acknowledgment of service, claiming, without explanation, that service had been "faulty." The email did not state that Cachette did not receive the documents, nor did it inform counsel, as Cachette later claimed, that she was living in Switzerland. The email continued, "I've always been clear on where to serve me so if you would like to do so I am more than happy to provide the best way to reach me. I will be much more attentive than I have in the past." The next day, Cachette sent counsel another email attaching a copy of an apparently fabricated document purportedly sent by a person at the "Santa Ana Call Center" of the state "Department of Labor." The document, which is unsigned and bears no letterhead, related the state's "understanding" that plaintiff's relationship with CCM was "at-will and as a contractor basis."
In July 2020, Cachette filed a motion to set aside the entry of default or, alternatively, to quash the service of summons. The motion was premised on (1) lack of actual notice of the action, (2) lack of valid service, and (3) lack of personal jurisdiction. In the declaration supporting her motion, Cachette averred that she was a managing member of CCM NY, which has its global headquarters in Amsterdam. Since 2017, she had been "an official resident" of the European Union, initially in the Netherlands and, since May 2018, in Switzerland. Cachette stated that she has never resided in California and was present in California "less than 20 days a year in any given year, if at all." Further, she owns neither real nor personal property in California, is "not a party to any contract with any person or entity" in the state, and does not employ any persons here. Cachette does, however, maintain a non-resident membership in San Francisco's St. Francis Yacht Club.
The motion was filed solely on behalf of Cachette. The various CCM entities filed a similar motion the following month, relying on the same arguments and evidence.
Cachette declared that her contacts with plaintiff were "mostly" through email, but the pair did have in-person meetings in Europe and the United States. She had met with plaintiff in this country "no more than six times," in both New York and California. She stated that plaintiff "set up and ran the California office," but she had located the office and signed the lease, and CCM NY paid the rent. CCM CA closed the California office in November 2018. The entity no longer has business operations in the state and is "now inactive."
Cachette acknowledged that she gave plaintiff's counsel "details where I could be served . . . at my New York or Amsterdam offices" in June 2019. Cachette noted that the court's records revealed that plaintiff had attempted to serve her by mail at the Amsterdam office address in July 2019, but she claimed not to have received the mailing, explaining that the Amsterdam address she provided "is an office building where mail is sorted and left in tenants' business suites." In September 2019, Cachette exchanged emails with plaintiff's counsel, confirming that she had not been served. Cachette "later learned" that plaintiff thereafter attempted personal service at a residential address in Amsterdam different from the address Cachette had provided. Cachette was in Switzerland at the time and never received the documents, although she acknowledged that they could have been "left with household staff at the Amsterdam residence." Because she did not receive the complaint through these attempts at service, Cachette stated, she "did not have actual notice of the lawsuit soon enough to file a timely response." She claimed to have learned "that a lawsuit had been filed against me in late November 2019," around the time plaintiff requested entry of default.
In a responsive submission, plaintiff provided evidence of an entry on Cachette's Facebook page from April 2020, which stated that Cachette had obtained a" '[s]econdary residence'" in Switzerland in May 2018. Although Cachette said on Facebook that she was spending more time in Zurich than Amsterdam, she noted that "my primary [residence] is considered Netherlands in case Immigration calls!"
In December 2020, the parties stipulated to the taking of limited discovery by plaintiff and supplemental briefing by both parties. The parties thereafter submitted supplemental briefs addressing defendants' motions, and plaintiff's counsel submitted a supplemental declaration authenticating a series of exhibits. Among the exhibits were the lease for the Oakland office, executed by Cachette on behalf of CCM NY, an email from Cachette to CCM staff stating that "CCM's global headquarters are now located at" the Oakland office, several requests for taxpayer identification numbers by CCM entities, all using the Oakland office as an address, and emails between Cachette and plaintiff regarding CCM operations.
The trial court denied defendants' motions in a thorough written order. With respect to defendants' motion to set aside the default for lack of actual notice, the court found that Cachette had actual notice of the lawsuit prior to entry of the default on the basis of (1) plaintiff's counsel's email to Cachette requesting return of the notice and acknowledgment of service, (2) plaintiff's personal service of process on the registered agent of other CCM entities, and (3) Cachette's frequent communications with plaintiff's counsel prior to filing of the action, which included a copy of the draft complaint. If she indeed lacked notice, the court concluded, Cachette had failed, given these facts, to demonstrate that her ignorance "was not the result of her efforts to avoid service of process or inexcusable neglect both with respect to herself and as agent for service of process of CCM." As the court observed, although Cachette provided addresses to plaintiff's counsel at which service could be made, she "now claims she was rarely present and could not receive mail" at those addresses. For these reasons, the court rejected as not credible Cachette's claim not to have received actual notice.
With respect to the motion to set aside default on the basis of defective service, the court noted that defendants did not argue that service was ineffective under Dutch or California law, "notwithstanding the Hague Convention." It rejected as irrelevant defendants' arguments that the address at which the second attempt at service was made was different from the address provided by Cachette to plaintiff's counsel and that Cachette claimed never to have received the served documents.
The Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, generally referred to as the Hague Convention, governs service of process in foreign countries. Its text is printed in 28 United States Code Annotated (2021 ed.), following Federal Rules of Civil Procedure, rule 4. Failure to comply with the Hague Convention's requirements when serving process abroad renders service void. (Floveyor Internat., Ltd. v. Superior Court (1997) 59 Cal.App.4th 789, 794 (Floveyor).)
On the issue of personal jurisdiction, the court found "little merit" to defendants' arguments, finding that Cachette, CCM NY, and CCM CA all engaged in purposeful conduct with respect to California and that the lawsuit arises out of that conduct. As the court observed, the CCM entity that leased the Oakland office was necessarily CCM NY because CCM CA had yet to file its Article of Organization at the time of signing. Cachette's email to staff subsequently stated that the Oakland office would be CCM's "global headquarters," and the various CCM entities, including CCM NY and CCM CA, filed federal forms claiming California residency. Cachette and CCM NY hired plaintiff to work for them in California, and Cachette was physically present in California when she sent him a text message terminating his employment.
Upon plaintiff's application, the trial court entered a default judgment against defendants, jointly and severally, awarding plaintiff $174,436 in damages and civil penalties, $202,777 in attorney's fees and costs, and $50,239 in prejudgment interest. In addition, defendants were ordered to pay the Labor and Workforce Development Agency $13,575 in penalties and $3,645 in prejudgment interest.
Discussion
I. Governing Law
A trial court has discretion under Code of Civil Procedure section 473, subdivision (d), to set aside an entry of default or a subsequent judgment, but "this discretion may be exercised only after the party seeking relief has shown that there is a proper ground for relief, and that the party has raised that ground in a procedurally proper manner, within any applicable time limits." (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 495.) We review a trial court's decision declining to vacate a judgment under section 473 for abuse of discretion. (In re Marriage of Connolly (1979) 23 Cal.3d 590, 597-598.)
All statutory references are to the Code of Civil Procedure unless otherwise indicated.
II. Service of Process
Defendants first argue the judgment should be set aside because service of process was improper. (See OC Interior Services, LLC v. Nationstar Mortgage, LLC (2017) 7 Cal.App.5th 1318, 1330-1331 ["' "a default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void"' "].) Defendants raise three arguments: (1) service failed to comply with the Hague Convention because plaintiff did not file a proof of service in the form required by Article 6 of the Convention, (2) the declaration in support of the Dutch bailiff's service does not demonstrate compliance with Dutch law because it does not state that the bailiff was unable to effect personal service, and (3) the summons served on defendants did not provide the notice required by section 412.30. Plaintiff argues that defendants forfeited these arguments when they did not raise them in the trial court. We agree.
As noted above, the trial court's order denying the motion to vacate the judgment expressly recognized that defendants did not argue that plaintiff's service did not comply with Dutch or California law, which requires compliance with the Hague Convention. The court's observation is confirmed by the appellate record. Cachette's memoranda in support of her motion to quash and vacate entry of default argued only (1) she did not have actual notice of the lawsuit, (2) her lack of notice was not the result of avoidance or inexcusable neglect, and (3) she lacked the contacts necessary to support personal jurisdiction in California. There was no mention of Dutch law, the Hague Convention, or section 412.30. The separate motion of the Cachette entities to quash and/or vacate similarly made no mention of these issues.
" ' "[A]s a general rule, 'issues not raised in the trial court cannot be raised for the first time on appeal.'" '" (Sweeney v. California Regional Water Quality Control Bd. (2021) 61 Cal.App.5th 1093, 1142.)"' "Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider. [Citation.] In our adversarial system, each party has the obligation to raise any issue or infirmity that might subject the ensuing judgment to attack . . . ." '" (Martine v. Heavenly Valley Limited Partnership (2018) 27 Cal.App.5th 715, 728.)" '[T]he purpose of this general rule is to give the trial court and parties an opportunity to correct an error that could be corrected by some means short of an opposite outcome in the trial court.'" (Duran v. Obesity Research Institute, LLC (2016) 1 Cal.App.5th 635, 645 (Duran).) As an exception to this general rule, an appellate court "has the discretion to consider a theory presented for the first time on appeal when that theory involves only a legal question determinable from the uncontroverted facts and those facts could not have been altered by the presentation of additional evidence." (County of Kern v. T.C.E.F., Inc. (2016) 246 Cal.App.4th 301, 326.)
The first argument raised by defendants simply lacks merit, regardless of whether it was forfeited. Relying on Floveyor, supra, 59 Cal.App.4th 789, defendants contend the Dutch bailiff's proof of service does not conform to the model required when service occurs under Article 6 of the Hague Convention. Under that article, service is effected by an official governmental body, designated the nation's "Central Authority." (Id. at p. 795.) But Article 6 is not the exclusive means for effecting service of process under the Convention. (See Whyenlee Industries Ltd. v. Superior Court (2019) 33 Cal.App.5th 364, 368 [" 'Submitting a request to a central authority is not, however, the only method of service approved by the Convention' "].) The proof of service requirement in Article 6 does not apply to service under Article 10, which permits process to be effected "through a 'competent person[] of the State of destination,' such as an authorized process server." (Id. at p. 369.) By employing the Dutch bailiff to effect service, rather than the Central Authority of the Netherlands, plaintiff elected to proceed under Article 10. He was not bound by the proof of service requirements applicable to service under Article 6.
The remaining two arguments raised by defendants regarding invalidity of service are precisely the type of contentions that should have been raised first in the trial court. Both concern the manner in which service of process was made; had they been raised in the trial court, both could have been altered or resolved by the presentation of additional evidence regarding service.
The first argument is that the Dutch bailiffs proof of service failed to demonstrate that, under Dutch law, he was entitled to leave the service documents in the mailbox, rather than with an individual at the residence. According to defendants, two provisions of the Dutch Code of Civil Procedure are relevant here. Article 46 sets a general standard for personal service at a residence, requiring documents to be left either with the person to be served, a family member, or another person at the residence. Article 47, however, allows process to be left in a sealed envelope at the residence if the process server is "unable" to make the personal service required by Article 46. The translated portion of the Dutch bailiffs proof of service states that the documents were placed in Cachette's mailbox "according to the Dutch law, article 47." Defendants argue that this fails to demonstrate compliance because it does not state circumstances justifying the bailiff in proceeding under Article 47. Whether circumstances existed that justified the bailiffs manner of service was an issue of fact. Had defendants raised this issue below, plaintiff could have presented further information to the court regarding those circumstances. Indeed, further information might not have been necessary; as plaintiff points out, only a portion of the bailiffs declaration in the proof of service was translated into English, and the untranslated portion may well contain facts supporting the conclusion that service satisfied Article 47. This is just the type of claimed error by the trial court that could have been corrected if raised below, and it was forfeited when defendants failed to raise it. (Duran, supra, 1 Cal.App.5th at p. 645.)
The only evidence provided by defendants of the nature of Dutch law is an unpublished Connecticut appellate decision from 2011. For purposes of our decision, we assume, without holding, that Dutch law is as defendants contend.
Defendants' third argument is that the summons did not comply with section 412.30, which, in these circumstances, required the summons to contain a notice that Cachette was served both in her personal capacity and on behalf of the CCM entities. Because a copy of the summons was not filed with the Dutch proof of service, however, there is no evidence in the record of the content of the summons. Had defendants raised this issue below, the question of the summons' compliance with section 412.30 could have been resolved simply by the submission of a copy. Again, this is the type of claimed error that must be raised in the trial court to avoid forfeiture.
Defendants also argue service was improper because Cachette's name is misspelled "Chacette" in the English translation of the Dutch proof of service form. The original Dutch proof of service, however, contains the proper spelling. In any event, defendants cite no law suggesting that an obvious misspelling renders a proof of service invalid.
Defendants argue they are entitled to raise these issues for the first time on appeal because challenges to a void judgment can be made at any time. (E.g., National Diversified Services, Inc. v. Bernstein (1985) 168 Cal.App.3d 410, 414, 417 (National Diversified).) That rule, which is intended to ensure that a party has a fair opportunity to contest the jurisdictional prerequisites for a judgment, refers to the timeliness of a challenge. (E.g., Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 492493 ["To determine the propriety of the defendants' motion to vacate the default judgment, this court must look to the rules which govern collateral attacks on judgments since the defendants' motion was not timely under section 473"]; Janssen v. Luu (1997) 57 Cal.App.4th 272, 274, fn. 2 ["We summarily reject Janssen's contention that the motion to vacate was untimely. Luu's claim that the judgment is void may be raised at any time"].) It is not intended to create an exception to the ordinary rule that parties must present issues to the trial court to preserve them for appeal. Here, defendants had a full and fair opportunity in the trial court to raise any jurisdictional objections to the entry of default and the subsequent judgment. They are not entitled to a remand to raise additional fact-based arguments that they overlooked, or simply chose not to raise, at that time.
Defendants also attempt to frame these issues as questions of law, citing the rule that a judgment that is void "on its face" - meaning the invalidity of the judgment is apparent from the "judgment roll," which includes the proof of service and summons - must be vacated. (E.g., Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1440; see section 670, subd. (a) [defining judgment roll].) The judgment roll in this case, however, does not demonstrate that plaintiff's judgment is invalid. With respect to the argument that service did not comply with Dutch law, the proof of service states the bailiff's service was made pursuant to Article 47, and there is nothing in the record to suggest that the bailiff was not entitled to invoke this provision. Necessarily, defendants' contention is not that the invalidity of service is apparent from the judgment roll, but that the judgment roll fails to contain evidence demonstrating that service was valid. This is, of course, a different proposition. Because the failure to file a valid proof of service does not alone render a judgment void (National Diversified, supra, 168 Cal.App.3d at p. 416), defendants' argument required further evidence, and it was forfeited when they did not raise it in the trial court. The same is true of defendants' argument under section 412.30. Because the docket does not contain a copy of the summons served by the Dutch bailiff, the judgment roll does not demonstrate that the summons failed to comply with section 412.30. It simply fails to demonstrate that it did comply. Again, resolving the issue of proper service will require further evidence. Because defendants failed to raise compliance with section 412.30 in the trial court, when the factual issue could be addressed and resolved, they forfeited the argument.
III. Actual Notice
Under section 473.5, a trial court may vacate an entry of default if "service of a summons has not resulted in actual notice to a party in time to defend the action" and the lack of notice "was not caused by [the defendant's] avoidance of service or inexcusable neglect." (§ 473.5, subs. (a), (c).)
As noted, the trial court found Cachette had actual notice of the lawsuit and that, if she did not have actual notice, she failed to demonstrate that the lack of notice was not caused by her own avoidance of service or neglect. We review these factual conclusions for substantial evidence. (Falahati v. Kondo (2005) 127 Cal.App.4th 823, 828.)
The trial court's conclusions are fully supported by the evidentiary record. Plaintiff's counsel sent a draft of the complaint to Cachette prior to its filing. Counsel then informed Cachette of plaintiff's intent to file suit, obtained addresses in New York and Amsterdam from Cachette specifically for the purpose of effecting service, and mailed service copies of the summons and complaint to the addresses provided by Cachette. When Cachette failed to return the notices and acknowledgment of service, counsel confirmed with Cachette by email that service had been made and requested return of the notices. Although Cachette received the email, she did not, at the time, deny receiving the documents. Counsel thereafter caused copies of the summons and complaint to be placed in the mailbox of Cachette's home in Amsterdam. Regardless of whether Cachette was in Amsterdam at the time the documents arrived at either location, the inference is strong that, in the ordinary course, she would have received them; they were left at her office and her house. Further, although Cachette's declarations asserted that she did not receive the summons and complaint despite these attempts at service, the declarations failed to provide plausible explanations to rebut the inference of receipt. The evidence therefore provided ample support for the trial court's conclusion that Cachette either received actual notice or failed to demonstrate that the lack of notice was not due to her own conduct.
Defendants quibble with the conclusions drawn by the trial court, but their arguments fail to recognize our limited scope of review. In conducting a substantial evidence review, "[w]e do not revisit credibility findings, or . . . reweight the evidence." (Rojas v. HSBC Card Services, Inc. (2023) 93 Cal.App.5th 860, 889.) Defendants, for example, argue there is no evidence that Cachette had actual knowledge of the lawsuit prior to the November 2019 date on which an answer was due, but their argument is based solely on Cachette's claim not to have received the service documents. Notwithstanding this claim, which the trial court found not credible, there is considerable evidence to support such knowledge. Cachette had been provided a copy of the draft complaint, and copies of the service documents were mailed to two addresses she supplied for the purpose of service and also left in a mailbox at her home. Further, plaintiff's counsel alerted Cachette by email to the filing of the lawsuit and the mailing of the service documents. In the face of this evidence, the trial court was not required to accept Cachette's claim that she did not receive those copies; further, the court was entitled to conclude that if Cachette, in fact, did not receive the copies, the failure was a result of her own efforts to avoid service. Defendants' other arguments similarly ignore both our standard of review and sizable chunks of the evidence.
Defendants rely heavily on Olvera v. Olvera (1991) 232 Cal.App.3d 32 (Olvera), in arguing the trial court erred, but Olvera bears little resemblance to our circumstances. First and foremost, service of summons in Olvera was by publication; there was no evidence, as here, that the plaintiff discussed the case with the defendant, forwarded a copy of the complaint prior to filing suit, and subsequently confirmed its filing, let alone evidence that the summons and complaint were mailed or left at two different locations associated with the defendant. (Id. at p. 35.) As the Olvera court noted, the defendant might, at most, have learned of the possible existence of a lawsuit through receipt of a copy of a lis pendens. (Id. at p. 40.) Particularly given this distinction, Olvera casts no doubt on the trial court's ruling.
Defendants build their argument around Olvera's statement that the governing law could be interpreted to hold that actual knowledge of a lawsuit is irrelevant unless the knowledge was acquired from service of the summons. (Id. at p. 40.) Contrary to defendants' assumption, however, the court did not accept or apply this interpretation of the law. (See Id. at p. 41.) As a later court explained, "Olvera held actual knowledge from a source other than service of summons does not preclude a defendant from seeking relief under section 473.5. It did not hold such knowledge requires the trial court to grant relief under all circumstances." (Ellard v. Conway (2001) 94 Cal.App.4th 540, 548.) In any event, application of that interpretation would not require a different result here as the trial court found, based on substantial evidence, that Cachette either (1) had actual knowledge based on receipt of the summons and complaint or (2) had purposefully avoided such receipt. Either holding would defeat a motion to vacate under section 473.5, subdivisions (a) and (c).
IV. Personal Jurisdiction
Defendants contend the trial court erred in finding that Cachette and CCM NY are subject to specific personal jurisdiction in California. We find no error.
Our Supreme Court explained the concept of specific personal jurisdiction in Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054 (Snowney):" 'The exercise of jurisdiction over a nonresident defendant comports with [the state and federal] Constitutions "if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate' "traditional notions of fair play and substantial justice." '"' [Citations.] [¶] . . . To do so, the minimum contacts test asks 'whether the "quality and nature" of the defendant's activity is such that it is "reasonable" and "fair" to require him to conduct his defense in that State.' . . .
"Under the minimum contacts test, '[p]ersonal jurisdiction may be either general or specific.' [Citation.] . . . 'When determining whether specific jurisdiction exists, courts consider the" 'relationship among the defendant, the forum, and the litigation.'" [Citations.] A court may exercise specific jurisdiction over a nonresident defendant only if: (1) "the defendant has purposefully availed himself or herself of forum benefits" [citation]; (2) "the 'controversy is related to or "arises out of" [the] defendant's contacts with the forum'" [citation]; and (3)" 'the assertion of personal jurisdiction would comport with "fair play and substantial justice." '" '
" 'When a defendant moves to quash service of process' for lack of specific jurisdiction, 'the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction.' [Citation.] 'If the plaintiff meets this initial burden, then the defendant has the burden of demonstrating "that the exercise of jurisdiction would be unreasonable."' [Citation.] Where, as here,' "no conflict in the evidence exists . . . the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record." '" (Snowney, supra, 35 Cal.4th at pp. 1061-1062.)
The critical test," 'purposeful availment,'" is present when" 'a nonresident defendant" 'purposefully direct[s]' [its] activities at residents of the forum" [citation]," 'purposefully derive[s] benefit' from" its activities in the forum [citation], "create[s] a 'substantial connection' with the forum" [citation]," 'deliberately' has engaged in significant activities within" the forum [citation], or "has created 'continuing obligations' between [itself] and residents of the forum."' [Citation.] '" 'The purposeful availment inquiry . . . focuses on the defendant's intentionality. [Citation.] This prong is only satisfied when the defendant purposefully and voluntarily directs his activities toward the forum so that he should expect, by virtue of the benefit he receives, to be subject to the court's jurisdiction based on' his contacts with the forum.'" '" (Preciado v. Freightliner Custom Chassis Corp. (2023) 87 Cal.App.5th 964, 978.)
The trial court rightly held that defendants' respective contacts with California were sufficient to support specific jurisdiction over this lawsuit. As the trial court concluded, based on substantial evidence, Cachette engaged in purposeful conduct directed at California when she voluntarily executed a lease for the Oakland office on behalf of her company, CCM NY, raised the issue of employment with plaintiff and subsequently hired him during meetings in California, engaged in frequent communication with plaintiff to direct his California activities, and was present in California when she sent a text message terminating his employment. This controversy could not be more directly related to these voluntary contacts with the state. Establishing a business in California, hiring an employee, and directing his work in California was sufficient to establish personal jurisdiction in a lawsuit brought by the employee to recover compensation for this work. Similarly, Cachette used CCM NY to establish the Oakland office, pay its rent, and hire plaintiff, and CCM NY claimed in forms filed with the federal government to be resident here. Again, this conduct was sufficient to support personal jurisdiction over the entity in a lawsuit brought in connection with the employee's employment.
In arguing to the contrary, Cachette and CCM NY rely on Stanley Consultants, Inc. v. Superior Court (1978) 77 Cal.App.3d 444, but that case is easily distinguished as the only resemblance to the case before us is that Stanley was also a suit for breach of an employment contract. The defendant was an Iowa corporation seeking to hire a person to work for the nation of Antigua. It has no business presence in California. Plaintiff was apparently contacted while residing in California, but he was interviewed and hired in Iowa. He thereafter worked in Antigua for two years, returned to Iowa, and was assigned to duties requiring work in Liberia and Barbados. He did not return to California until two months after the lawsuit was filed. (Id. at pp. 446-447.) As the court concluded, the defendant's only relation to California was the hiring of a person who "previously had been a resident in this state." (Id. at p. 449.) Not surprisingly, the court found specific and general jurisdiction lacking. In distinct contrast to the circumstances in Stanley, Cachette and CCM NY set up a business in California, hired a person in California to run the business, and directed his activities. Because the lawsuit is based on claims arising from that work, defendants are subject to personal jurisdiction here.
V. The Judgment
As noted, the trial court entered judgment for plaintiff in the amount of $427,451, consisting of $174,436 in damages and civil penalties, $202,777 in attorney's fees and costs, and $50,239 in prejudgment interest. Defendants contend the judgment must be vacated because (1) the damages and penalties exceed the amount sought in the complaint, (2) Cachette is ordered jointly and severally liable for the entire amount of the judgment, despite plaintiff's request that she be held personally liable for only three of the complaint's causes of action, and (3) the trial court erred in awarding compensation for the work of plaintiff's counsel's support staff.
Plaintiff's brief states that the trial court awarded judgment for $188,011 in damages and penalties. That figure includes the penalties that defendants were directed to pay to the Labor and Workforce Development Agency.
Maximum Relief Sought
Defendants first contend the relief awarded in the judgment exceeded the maximum relief sought in the complaint.
A default judgment that exceeds the amount "specifically demanded" in the complaint is void as beyond the court's jurisdiction. (Greenup v. Rodman (1986) 42 Cal.3d 822, 826.) The "primary purpose" of this rule "is to guarantee defaulting parties adequate notice of the maximum judgment that may be assessed against them." (Ibid.) As explained in Sass v. Cohen (2019) 32 Cal.App.5th 1032, affd. (2020) 10 Cal.5th 861 (Sass), "[i]f and only if a defendant receives advance notice of the type and amount of relief sought can he make a 'fair and informed' decision whether to fight the pending case . . . or to forgo that fight (and, in so doing, accept a judgment against him up to, but not exceeding, that relief in an amount fixed by the trial court)." (Id. at p. 1041.) Although this rule applies to damages and penalties, the complaint need not specify amounts sought for prejudgment interest or attorney's fees and costs. (Id. at p. 1040.)
"[C]ourts must look to the prayer of the complaint or to 'allegations in the body of the complaint of the damages sought' to determine whether a defendant has been informed of the 'maximum liability' he or she will face for choosing to default." (People ex rel. Lockyer v. Brar (2005) 134 Cal.App.4th 659, 667 (Brar); Sass, supra, 32 Cal.App.5th at p. 1041 [maximum amount must be ascertainable from the four corners of the complaint, without regard to the defendant's actual or constructive knowledge].)
Two principles expanding on this rule are relevant here. First, when a plaintiff seeks civil penalties, the plaintiff need not specify the maximum penalties sought if that amount can be determined from application of the statutory provision governing the penalties to information contained in the complaint. (Brar at p. 668.) In Brar, the complaint sought civil penalties against the plaintiff in an amount" 'no less than' $1 million," which was less than the judgment's award of nearly $2 million. (Id. at p. 666.) The court nonetheless affirmed the award as within the maximum amount demanded because the governing statute provided for a penalty of $2500 per violation and the complaint alleged 1500 violations. This, the court concluded, the complaint "gave fair warning of an exposure of at least $ 2,500 times 1500, which is $3.75 million, which is more than the $1,785,000 in the default judgment." (Id. at p. 668.) Second, when a complaint alleges separate items of compensatory damages, the maximum amount demanded is not determined on an item-by-item basis, comparing the complaint's amount demanded for each item to the judgment's award for that item, but on an aggregate basis, comparing the sum of the amounts sought for individual items with the total amount of damages awarded in the judgment. (Sass, at pp. 1044.) As Sass explained, using the aggregate demand is appropriate because (1) a defendant deciding whether to defend a lawsuit must determine its monetary exposure by "add[ing] up the various, nonduplicative items of damages demanded; the grand total is the price of default," (2) using the aggregate demand avoids penalizing a plaintiff for pleading damages with greater specificity, and (3) using the total amount is consistent with the relevant statutory language, which refers to the "relief' or "amount" demanded. (Id. at pp. 1044-1045.)
Pursuant to California Rules of Court, Rule 8.1115, subdivision (e)(2), a published Court of Appeal case granted review by our Supreme Court "is citable and has binding and precedential effect" after the Supreme Court's decision "except to the extent it is inconsistent with the decision of the Supreme Court or is disapproved by that court." The Supreme Court's review and affirmance of Sass was limited to a ruling regarding the treatment of requests for an accounting, an issue not presented here. (Sass v. Cohen (2020) 10 Cal.5th 861, 863-864.) The Sass court's ruling on item-by-item consideration is therefore entitled to precedential effect.
Although the prayer of the complaint merely lists the types of relief sought, without specifying monetary amounts, the body of the complaint contains more specific information. The general allegations note that in 2018 plaintiff sent an email to certain CCM employees stating that he was owed $62,210 in unreimbursed business expenses, $40,000 in unpaid wages, and $382 in reimbursement for Cachette's personal expenses. Because the complaint states plaintiffs annual salary of $120,000 and his dates of employment, it is possible to calculate the precise amount of wages owed, $47,562. Various causes of action also specify statutory penalties sought: 30 days' wages in the Second Cause of Action, equivalent to $13,846, $4,000 in the Third Cause of Action, "up to $10,000" in the Sixth Cause of Action, and the unpaid minimum wage, or $9,314, in the Seventh Cause of Action. Finally, the Tenth Cause of Action seeks the penalties allowed by, among other provisions, Labor Code sections 210, equivalent to $11,500, and 226.8.
Plaintiff also sought compensation for wages lost during the period of unemployment following his wrongful termination, but no maximum demand for wages lost can be calculated from the complaint because it contains no information about the duration of his period of unemployment.
This is plaintiff's annual salary divided by 260 workdays per year, times 30 days.
This consists of $1,500 for eight missed pay periods, plus 25% of the withheld amount of $40,000. (Lab. Code, § 210, subd. (a).)
Labor Code section 226.8 makes it unlawful to willfully misclassify a person as an independent contractor (Lab. Code, § 226.8, subd. (a)(1)) and to charge a person so misclassified or make deductions from their compensation "for any purpose, including for goods, materials, space rental, services, government licenses, repairs, equipment maintenance, or fines arising from the individual's employment" (Lab. Code, § 226.8, subd. (a)(2)). A maximum penalty of $15,000 may be imposed for each violation. (Lab. Code, § 226.8, subd. (b).) Plaintiff contends the complaint states one violation of subdivision (a)(1), reflected in Cachette's claim to the Labor Workforce Development Agency that he was an independent contractor, and five violations of subdivision (a)(2), based on Cachette's requiring plaintiff to charge business expenses on an American Express account, refusing to reimburse him for payments for rent, office supplies, and travel, and contending he was not entitled to wages for holidays and vacation. Although it might be possible to derive these violations from the evidence before the trial court, the complaint does not contain sufficient information about the unreimbursed expenses to support five separate violations. We do agree, however, that the allegations describe one violation of subdivision (a)(1) and three violations of subdivision (a)(2), the latter for refusing to reimburse business expenses, failing to pay wages owed, and contending plaintiff was ineligible for holiday and vacation pay. The consequent maximum permitted penalty is $60,000.
The sum of the foregoing amounts is $218,814, well in excess of the $174,436 in damages and penalties awarded in the judgment. The judgment was therefore less than the maximum demand contained within the complaint.
Defendants argue that certain of these amounts should be reduced because plaintiff ultimately sought less than the maximum penalties derived from the complaint. The maximum demand, however, is calculated based on the complaint. (Sass, supra, 32 Cal.App.5th at p. 1041.) That plaintiff ultimately sought or received less does not affect the maximum demanded.
Defendants also argue that Brar, supra, 134 Cal.App.4th 659, is inapplicable because plaintiff merely cited the statutes under which he would seek penalties, rather than stating a specific penalties amount sought under them. Brar does not, however, require that the complaint demand a specific amount of penalties, so long as a maximum amount can be calculated on the basis of information in the complaint. The complaint in Brar does not appear to have contained a specific demand for penalties; it merely sought penalties under a specified statutory provision and provided information from which the number of violations could be determined. It was the court, not the complaint, that multiplied the maximum penalty per violation times the number of alleged violations to determine the maximum demand. (Id. at p. 668.) Plaintiffs complaint similarly contained information that allowed Cachette to calculate her exposure to the various statutory penalties in the manner described above.
Defendants also argue that the Supreme Court's opinion in Sass v. Cohen (2020) 10 Cal.5th 861, somehow limits the precedents discussed above. The Supreme Court's opinion, however, did not purport to rule on any issue other than "whether a court may award monetary damages in a default judgment to a plaintiff who seeks an accounting when the complaint does not demand a specific amount of monetary damages but instead asserts a proportional interest in specified property." (Id. at pp. 863-864.) Because plaintiff did not seek an accounting, that issue is not presented here, and the Supreme Court's opinion did not otherwise purport to alter the law discussed above.
Cachette's Personal Liability
Defendants contend the judgment is void because it imposes personal liability on Cachette for all amounts awarded. They argue she should have been held personally liable only for awards under the second, seventh, and eighth causes of action. In addition, they argue plaintiffs should have been required to allocate attorney's fees and costs among the various causes of action to permit liability to be imposed on Cachette only for the fees and costs associated with those causes of action.
Defendants' claim is based on plaintiff's request for the imposition of personal liability on Cachette only for the second, seventh, and eighth causes of action in his memorandum of points and authorities in support of the request for a judgment. But the memorandum did not, as defendants claim, concede that Cachette was personally liable only on those causes of action. On the contrary, the complaint alleges that Cachette is liable in her personal capacity for all causes of action except the First, Fifth, and Thirteenth. Because the relief sought in the various causes of action overlaps, the maximum damages and penalties demanded in the complaint in connection with the causes of action for which Cachette was alleged to be personally liable exceeds the amount awarded against her. The judgment was not void for this reason.
We also reject the claim that plaintiff should have allocated attorney's fees and costs among the causes of action. Because the merits of the individual causes of action were never litigated, plaintiff's counsel's work was attributable equally to all causes of action. Attorney's fees need not be allocated among causes of action where, as here, litigation on the claims is "inextricably intertwined." (Cruz v. Fusion Buffett, Inc. (2020) 57 Cal.App.5th 221, 235.)
Counsel's Support Staff
Defendants contend the trial court abused its discretion by including compensation for work performed by counsel's legal assistants and law clerks in the attorney's fees award.
An attorney's fees award should include compensation for the work of legal assistants when the "prevailing practice . . . is to bill separately for paralegal service time at a reasonable market value rate" - in other words, when the cost of paralegal work is not included as overhead in the rates charged for attorney work. (Guinn v. Dotson (1994) 23 Cal.App.4th 262, 269.) Under those circumstances, "[a]n award of attorney fees which does not compensate for paralegal service time would not fully compensate the attorney." (Ibid.; see similarly Roe v. Halbig (2018) 29 Cal.App.5th 286, 312 ["paralegal fees may be awarded as attorney fees if the trial court deems it appropriate"]; Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 96.)
Defendants do not contest the general availability of compensation for paralegal work, but they contend such compensation is available only if the prevailing party "demonstrates that the fees for such work is not included in the overhead component of the attorney's hourly rate, and that the rate charged is the fair market rate for similar services in the area." The cases do not, however, impose such a hard and fast rule.
We review a trial court's award of attorney's fees for abuse of discretion. (Valenti v. City of San Diego (2023) 94 Cal.App.5th 218, 231.) The declaration submitted by plaintiff's counsel in support of the application for fees states the firm's legal assistants and law clerks bill their time separately by the hour, includes detailed records showing the time billed by each staff member, and states the hourly rates for these staffers were found reasonable by another court as recently as November 2020. We find no abuse of discretion in the trial court's inference from this information that compensation for legal assistants and law clerks was not included as overhead in the hourly rate charged by the attorneys and that the rates charged for these staff persons were reasonable.
Disposition
The judgment of the trial court is affirmed. Plaintiff is awarded his attorney's fees and costs on appeal as the prevailing party. (Labor Code, § 218.5, subd. (a); Morcos v. Board of Retirement (1990) 51 Cal.3d 924, 927928 [attorney's fees authorized by statute include attorney's fees on appeal].)
WE CONCUR: Fujisaki, Acting P.J. Rodriguez, J.