Behm v. Clear View Technologies
241 Cal. App. 4th 1
Cal. Ct. App.2015Background
- Pamela Behm invested about $200,000 in Clear View Technologies (CVT) alleging fraud: CVT promised a profitable product (BarMaster) that proved nonviable. Behm sued for compensatory damages “of no less than $200,000” and other relief.
- CVT repeatedly failed to comply with discovery orders; Behm moved for terminating sanctions. The court issued a tentative ruling granting terminating sanctions and later entered default against CVT, striking its answer.
- Behm served a Civil Code § 425.115 statement reserving the right to seek $1 million in punitive damages after the court issued/adopted the tentative ruling but before the written order was filed.
- Using the default, Behm obtained a default judgment for $1,264,668.83 (including $924,000 punitive damages); CVT later moved to vacate the default and judgment under CCP § 473(b) and for insufficiency of notice under § 425.115(f).
- The trial court vacated the default judgment because (1) the punitive and compensatory awards exceeded amounts adequately noticed in the pleadings/notice, violating due process, but (2) denied CVT mandatory relief from default under § 473(b) after finding the former attorney’s affidavit not credible.
- Both parties appealed; the Court of Appeal affirmed the trial court: default judgment vacated for insufficient notice of damages and damages exceeding pleaded amount; denial of mandatory relief under § 473(b) upheld based on credibility findings.
Issues
| Issue | Plaintiff's Argument (Behm) | Defendant's Argument (CVT) | Held |
|---|---|---|---|
| Was Behm’s § 425.115 punitive-damages notice timely so that entry of default and award of punitive damages comported with due process? | Notice is timely if served any time before entry of default; no specific timing requirement in statute. | Notice was served too late (after tentative ruling/adoption) depriving CVT of reasonable time to appraise exposure and oppose terminating sanctions. | Notice was untimely as a matter of due process; vacatur of punitive-damage award appropriate. |
| Did the default judgment award compensatory damages in excess of the amount pleaded (violating § 580(a))? | The complaint’s prayer for “no less than $200,000” permitted the awarded compensatory damages. | The default judgment ($308,000 compensatory) exceeded what was fairly pleaded; defendant lacked notice of emotional-distress and lost-wage amounts. | Award exceeded pleaded amount; vacatur of default judgment proper for this independent reason. |
| Should CVT receive mandatory relief from default under CCP § 473(b) based on former counsel’s affidavit of fault? | N/A (Behm opposes). | Yi’s affidavit shows his mistake/negligence caused the default; relief is mandatory if affidavit is timely and in proper form. | Trial court did not err in denying § 473(b) relief; appellate court defers to credibility finding that Yi’s affidavit was not credible. |
| If judgment is vacated for insufficient notice, must the underlying default also be set aside? | N/A (Behm proposed reducing/limiting judgment). | Because notice rules protect against entry of default, the appropriate remedy is to vacate the default itself and allow amendment/renotice. | Not required here: court properly vacated only the default judgment and left default in place because the complaint did specify $200,000 compensatory; remedy to reduce/permit new default judgment was within court’s discretion. |
Key Cases Cited
- Elston v. City of Turlock, 38 Cal.3d 227 (discretion in relief from default; law favors resolution on merits)
- Van Sickle v. Gilbert, 196 Cal.App.4th 1495 (due-process requirement for notice of damages before default; remedy discussion whether to vacate default)
- Greenup v. Rodman, 42 Cal.3d 822 (default judgment cannot exceed damages demanded; notice requirement for relief sought)
- Matera v. McLeod, 145 Cal.App.4th 44 (two-day notice before default was insufficient; reasonable notice required for punitive damages)
- Electronic Funds Solutions, LLC v. Murphy, 134 Cal.App.4th 1161 (serving punitive-damages notice concurrently with motion for terminating sanctions can be timely)
- Schwab v. Rondel Homes, Inc., 53 Cal.3d 428 (due process requires reasonable time before default for defendant to know potential liability)
- Julius Schifaugh IV Consulting Servs., Inc. v. Avaris Capital, Inc., 164 Cal.App.4th 1393 (option to accept reduced judgment or amend complaint when judgment exceeds pleaded relief)
- Ostling v. Loring, 27 Cal.App.4th 1731 (general rule: vacating judgment for excess damages ordinarily leads to modification to the maximum allowed by complaint)