Henry v. Murphy
Filed 3/29/13 Henry v. Murphy CA4/3
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH
APPELLATE DISTRICT
DIVISION
THREE
DONALD L. HENRY,
Plaintiff and Respondent,
v.
TIMOTHY MURPHY,
Defendant and Appellant.
G047108
(Super. Ct. No. 30-2009-00315861)
O P I N I O N
Appeal from a judgment
of the Superior Court
of
County, David T. McEachen, Judge. Affirmed.
William H. Shibley and
Jonathan G. Shibley for Defendant and Appellant.
Richard V. McMillian for
Plaintiff and Respondent.
* * *
Defendant
Timothy Murphy appeals from a default judgment in the sum of approximately
$905,000 in favor of plaintiff Donald L. Henry, claiming the complaint did not
provide sufficient notice of the amount of damages plaintiff was seeking. We disagree and affirm.
FACTS AND PROCEDURAL HISTORY
According to the
complaint, defendant represented to plaintiff he was a principal in defendant
Capital Investors, Inc., a company that loaned money to transportation
companies. He also represented Capital
needed funds to expand and told plaintiff that for any money he loaned Capital,
Capital would pay him interest of 12 percent per annum. The complaint alleged that, based on such
representations, in July 2008 plaintiff entered into a
$250,000 with interest at 12 percent per annum, payable monthly. The loan was collateralized by nine
commercial installment notes with a market value of over $740,000. The loan was due and payable in four years. Four months later plaintiff loaned an
additional $400,000 to Capital on the same terms. Collateral was eight commercial installment
notes valued at $850,000. Plaintiff and
defendant executed a separate contract for this loan. Both contracts provided that if there was
default on an interest payment, repayment of principal could be accelerated.
As alleged in the
complaint, in June 2009 Capital’s interest payment to plaintiff was returned
for insufficient funds. Pursuant to the
terms of the agreements, plaintiff demanded that Capital repay the principal
and pay all unpaid interest; Capital failed to do so.
Plaintiff then filed the
complaint against defendant, among others, for fraud. The prayer sought general and special damages
according to proof, as well as punitive damages and attorney fees. Defendant filed an answer to the complaint.
Subsequently plaintiff
filed a first amended complaint adding new parties; it did not change the cause
of action against defendant. Thereafter
plaintiff filed a second amended complaint; again there were no changes in the
allegations against defendant. Defendant
did not answer either complaint.
Defendant and his wife
filed a chapter 13 bankruptcy petition.
Plaintiff filed an adversary proceeding in the bankruptcy court. He also filed a notice in this action that it
had been stayed pursuant to the automatic stay issued by the bankruptcy
court. The parties entered into a
stipulation, memorialized in an order, giving plaintiff relief from the
automatic stay and allowing him to prosecute the state court action to judgment
against defendant. Plaintiff was
prohibited from enforcing the judgment against defendant but it was to be the
claim against defendant in the bankruptcy action. The order continued, “The plaintiff[,] having
filed an amended complaint in the state court[,] shall take the defendant[’]s
default and the defendant shall not participate in the state court’s
proceedings and shall withdraw[] any responsive pleadings that may have been
filed on behalf of the debtor.â€
For the next 11 months
until the trial date defendant did not withdraw his answer and plaintiff was
unable to take his default. On the day
of trial defendant asked the court to strike his answer. Although he had been subpoenaed to appear,
his lawyer advised the court there was a criminal case pending based on the
same issues. Thus, defendant would not
appear and if called to testify would assert his right not to testify under the
Fifth Amendment of the
States Constitution. The court
struck the answer and plaintiff proved up the case against defendant, obtaining
a judgment for fraud in the sum of slightly more than $905,000.
DISCUSSION
Defendant
argues the judgment is invalid because the complaint did not give him
sufficient notice of the amount plaintiff was seeking. Code of Civil Procedure section 580,
subdivision (a) provides, “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; but in
any other case, the court may grant the plaintiff any relief consistent with
the case made by the complaint and embraced within the issue.â€
“The notice requirement
of section 580 was designed to insure fundamental fairness.†(Becker
v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 494.) “If no specific amount of damages is
demanded, the prayer cannot insure adequate notice of the demands made upon the
defendant. [Citation.] Consequently, a prayer for damages according
to proof passes muster under section 580 only if a specific amount of damages
is alleged in the body of the complaint.
[Citation.]†(
complaint may cure a defective prayer for damagesâ€].)
Here
the prayer seeks damages according to proof.
This by itself is insufficient.
Thus, we must examine whether there are adequate facts pleaded in the
body of the complaint to notify defendant of the amount plaintiff sought to
recover. Plaintiff relies primarily on
the specific allegations in the fraud cause of action. In and of themselves they do not
suffice. These are merely fact
allegations that happen to include dollar amounts but are not specifically
damage claims. (Heidary v. Yadollahi (2002) 99 Cal.App.4th 857, 866 [fact
allegations forming “nucleus†of fraud count insufficient to apprise the
defendant of damages sought].)
But the complaint
contained more specific allegations in other paragraphs. Plaintiff pleaded he loaned defendant the
total sum of $650,000 with interest at 12 percent per annum. He also alleged the loan contracts contained
a provision allowing him to demand repayment of the principal and all interest
due. Further, he alleged that after
defendant defaulted on an interest payment, plaintiff made several demands for
the principal and past due interest, which plaintiff never paid.
Although this is not the
ideal method of pleading, it is sufficient to apprise defendant of the amount
plaintiff sought from him. The complaint
alleges defendant defaulted and plaintiff demanded repayment of principal and
interest due, which defendant did not pay.
The principal is fixed at $650,000 and interest is calculable at 12
percent per annum from the date of default.
The trial court judge confirmed the award was comprised of those two
elements.
In
his reply brief defendant points to boilerplate allegations in the complaint
that the damage amount was currently unknown or not yet ascertained, arguing
that they, along with plaintiff’s failure to allege he had been damaged, “do
not prove†(boldface and capitalization omitted) plaintiff “[suffered] any
money damages.†But plaintiff need not
“prove†damages in the complaint, merely allege them, and he did so
adequately.
Since we decide the case
on the basis set out above, we have no need to, and do not, decide any other
issues raised by the parties.
DISPOSITION
The judgment is
affirmed. Plaintiff is entitled to costs
on appeal.
THOMPSON,
J.
WE CONCUR:
O’LEARY, P. J.
ARONSON, J.
