Warren v. Warren
192 Cal. Rptr. 3d 693
Cal. Ct. App.2015Background
- Plaintiff Christopher Warren, Jr. sued his parents and their family corporation, Share the Night, Inc. (STN), for breach of oral contract, breach of fiduciary duty, and an accounting after discovering his earnings deposited into STN were largely used by his parents for personal expenses.
- Complaint alleged “hundreds of thousands of dollars” were misused but did not specify a dollar amount. Defendants defaulted for failing to answer; Warren Jr.’s request for default identified $337,186.68 and he submitted a prove-up package (including STN accountant Varshawsky’s declaration and tax schedules).
- Default judgment for $338,096.13 was entered against all defendants on March 8, 2013; writs of execution followed and levies occurred.
- Less than six months later, defendants Warren Sr. and STN moved under Code Civ. Proc. § 473(b) to set aside the default and default judgment, arguing improper service, lack of predefault notice of damages, and excusable neglect.
- The trial court denied the motion without addressing the notice-of-damages issue; the Court of Appeal reviewed whether predefault notice of damages is required in an accounting action and whether an exception applied here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a plaintiff seeking an accounting must give predefault notice of the dollar amount of damages before obtaining a default judgment | Warren Jr.: No statutory or due-process requirement where defendant possesses financial records; accounting actions need not allege a sum | Warren Sr./STN: Due process requires predefault notice of damages because plaintiff knew the amount and defendants lacked access | Generally no; but exception applies — if plaintiff knows damages and defendants lack access to information, plaintiff must give predefault notice; applied here and default set aside |
| Whether the complaint’s vague allegation ("hundreds of thousands") satisfied notice requirements | Warren Jr.: Complaint plus prove-up sufficed; defendants could have determined exposure from corporate records | Defendants: Vague complaint did not give reasonable time or specificity to assess liability before default | Vague complaint insufficient; reasonable predefault notice required under circumstances |
| Whether Cassel (that defendants having records negates need for plaintiff notice) controls | Warren Jr.: Cassel governs because defendants could or should have access to financial info | Defendants: Here Warren Jr. had access to the financial data used to calculate damages while Warren Sr. may have been locked out | Court distinguished Cassel; where plaintiff had superior access to the financial information, Cassel does not apply |
| Whether the default and judgment should be set aside under § 473(b) for lack of notice and related defects | Warren Jr.: No adequate legal basis shown to set aside default | Defendants: Lack of predefault notice and lack of access to records justify relief | Court reversed denial of motion and ordered default and judgment set aside on notice grounds |
Key Cases Cited
- Ely v. Gray, 224 Cal.App.3d 1257 (1990) (holding plaintiff must give predefault notice of damages in actions analogous to wrongful death/personal injury where damages are known only to plaintiff)
- Cassel v. Sullivan, Roche & Johnson, 76 Cal.App.4th 1157 (1999) (accounting action defendant with access to financial records need not receive predefault damage statement from plaintiff)
- Greenup v. Rodman, 42 Cal.3d 822 (1986) (section 580 protects defaulting parties by limiting relief to that demanded in the complaint)
- In re Marriage of Lippel, 51 Cal.3d 1160 (1990) (due process requires proper notice before entering judgment against a defendant)
- Schwab v. Rondel Homes, Inc., 53 Cal.3d 428 (1991) (statement that defendants must receive notice of potential liability a reasonable time before default is entered)