Airs Aromatics, LLC v. CBL Data Recovery Techs., Inc.
233 Cal. Rptr. 3d 656
Cal. Ct. App. 5th2018Background
- Airs Aromatics sued CBL Data Recovery (CBL) for breach of contract; complaint alleged damages “to be proven at trial” and estimated to exceed $25,000 (no specific dollar claim).
- CBL answered, engaged in discovery, and later stipulated to withdraw its answer so Airs could obtain default.
- Airs submitted a Request for Court Judgment and evidence seeking roughly $3,016,800; the trial court entered default judgment for $3,016,802.90 in November 2012.
- CBL moved in 2017 under Code Civ. Proc. § 473(d) to set aside the default judgment, arguing the judgment was void because it exceeded the damages demanded in the complaint (citing §§ 580(a), 585(c)).
- The trial court denied the motion, finding CBL had adequate notice of the amount sought; CBL appealed.
- The appellate court reversed, holding the default judgment was void for exceeding the amount formally demanded and vacated the judgment, remanding to permit either a reduced prove-up (up to $25,000) or amendment of the complaint.
Issues
| Issue | Plaintiff's Argument (Airs) | Defendant's Argument (CBL) | Held |
|---|---|---|---|
| Whether a default judgment awarding damages greater than the amount demanded in the complaint is void or merely voidable | Judgment is valid/voidable because defendant had actual notice and the court had jurisdiction over parties and subject matter | Judgment is void under §580(a) and §585(c) because complaint gave no specific damage amount beyond $25,000 threshold | Void: a default judgment exceeding the complaint’s demand is void for lack of jurisdiction; reversal required |
| Whether a defendant’s actual or constructive notice (participation in discovery, settlement demand, prove-up attendance) cures the §580 formal-notice requirement | Formal notice not required if defendant had adequate actual notice | Formal notice is required; actual notice insufficient to satisfy §580 | Actual/constructive notice does not satisfy §580; formal pleading of amount required |
| Whether court may deny a motion to set aside a void default judgment on equitable grounds | Trial court may exercise discretion to leave a void judgment intact based on estoppel/waiver/fraud | Void judgments may always be vacated; §473(d) allows setting aside void judgments; precedent treats §580 violations as subject to collateral attack | No discretion to uphold a default judgment void under §580; the trial court’s reliance on equitable factors was erroneous |
| Appropriate remedy when default judgment exceeds complaint demand | Leave judgment in place or reduce only as equitable | Vacate judgment and permit either reduction to complaint’s stated ceiling or allow plaintiff to amend complaint and re-serve | Vacate default judgment and remand; trial court may allow a new prove-up limited to $25,000 or permit amendment and new pleadings/answering rights |
Key Cases Cited
- Greenup v. Rodman, 42 Cal.3d 822 (void where default judgment exceeded amount alleged in complaint)
- Becker v. S.P.V. Constr. Co., 27 Cal.3d 489 (strict application of §580; default judgment exceeded pleaded ceiling)
- In re Marriage of Lippel, 51 Cal.3d 1160 (§580 strictly construed; plaintiff cannot receive more relief than pleaded)
- Dhawan v. Biring, 241 Cal.App.4th 963 (default judgment exceeding demand is void and subject to collateral attack)
- Stein v. York, 181 Cal.App.4th 320 (actual participation and notice do not satisfy §580 formal-notice requirement)
- Electronic Funds Solutions, LLC v. Murphy, 134 Cal.App.4th 1161 (same: formal notice required; default judgments violating §580 are void)
- Burtnett v. King, 33 Cal.2d 805 (default judgment exceeding demand renders judgment void for lack of jurisdiction)
- Falahati v. Kondo, 127 Cal.App.4th 823 (default judgment void if it exceeds amount demanded)
- Van Sickle v. Gilbert, 196 Cal.App.4th 1495 (trial court may either reduce default judgment to pleaded amount or vacate default to permit amendment)