PRIME STAFF INC VS PARTNERSHIP STAFFING SOLUTIONS LLC

Tentative Rulings

Case Number: ****5436    Hearing Date: January 13, 2020    Dept: 51

Defendant's motion to amend cross complaint is granted.

Case Number: ****5436    Hearing Date: December 21, 2020    Dept: 51

Prime Staff, Inc. v. Partnership Staffing Solutions, LLC, ****5436

Ruling re: default judgment.

Cross-Complainant’s request for default judgment came on for hearing on November 16, 2020. At that time, this Court informed counsel for the Cross-Complainant that there was insufficient information regarding the defendants’ resources to properly determine punitive damages. When this Court stated that it appeared that all other damages sought appeared to be appropriate, counsel withdrew the punitive damages request. The Court informed counsel that it would further review the documents in support of the default judgment and let her know if there were any other issues that would need to be addressed and then continued the matter to December 21, 2020. Upon that review, it appears that this Court does not have jurisdiction to issue a judgment of more than $800,000 for the following reasons:

The First Amended Cross-Complaint ("FACC") states in its prayer for relief that it seeks "actual damages in excess of $800,000" and "actual damages that continue to accrue to be proven at trial" along with prejudgment interests, and other costs and fees.  The actual damage requested in the default judgment exceeds that amount for a total of $1,044,000.59 which includes $851,621.67 for workers' compensation insurance premiums paid to Cross-Defendant, IRS and EDD penalties and fees and costs for workers' compensation claims and $192,378.92 for "administrative fees."

After filing the FACC, the Cross-Complainant did serve a Statement of Damages under CCP 425.115 to give notice that it seeks "$192,378.92" for administrative fees in addition to the actual damages of "$800,000" as requested in the FACC. However, the Statement of Damages under CCP 425.115 does not cure the defective prayer because it is only used to preserve the right to seek punitive damages, not actual damages, and, even if it could be used for such purpose, "[s]tatement of damages are used only in personal injury and wrongful death.... [Citation.] In all other cases, when recovering damages in a default judgment, the plaintiff is limited to the damages specified in the complaint. [Citations.]" Levine v. Smith (2006) 145 Cal.App.4th 1131, 1136–1137; Sole Energy Co. v. Hodges (2005) 128 Cal.App.4th 199, 206, fn. 4.

In Electronic Funds Solutions, LLC v. Murphy (2005) 134 Cal.App.4th 1161, the trial court struck the defendant's answer in an action for misappropriation of trade secrets. The complaint sought damages “ ‘in an amount in excess of $50,000 and according to proof.’ ” Id., at p. 1168. Plaintiff filed a statement of damages (; 425.11) before a default judgment was entered against defendant for $24,040,272 damages. The Court of Appeal held CCP 580 limited the trial court's jurisdiction and that the default judgment could not exceed the amount demanded in the complaint. “[C]ourts have subjected section 580 to a ‘strict construction.’ [Citation.] Strictly construed, serving a statement of damages cannot satisfy section 580 in an action not involving personal injury or wrongful death.” Id., at p. 1176.

Upon review of the FACC, the Court could not find any language referencing the administrative fees, and even if those fees were requested as part of the actual damages, “in excess of” a specified dollar amount “and according to proof” limits the amount of the award in a default judgment to that dollar amount. Janssen v Luu (1997) 57 Cal.App.4th 272, 279; Behm v Clear View Technols. (2015) 241 Cal.App.4th 1, 16 (“In excess of” a specified dollar amount limits the amount of the award in a default judgment to “no more than” that dollar amount.) Therefore, the Court is limited in its jurisdiction by CCP 580 to enter a default judgment of which the compensatory damage does not exceed the amount demanded in the FACC. In the event Cross-Complainant still wishes to obtain the additional damages, it must revise the amount for the compensatory damage and prejudgment interest and resubmit the default judgment accordingly. 

Further, the Cross-Complainant asks for attorney fees but only submits a declaration that states it "has incurred $139,945.05 in legal fees and costs to pursue its claims" without any proof or breakdown of the fees. On the other hand, the FACC and the Cross-Complainant's additional declarations state that the request is based upon the terms of the parties' agreement that provides for recovery of reasonable attorney fees. In such case, the Local Rule 3.214(a) applies and the Court orders the Cross-Complainant to revise and reduce the amount in accordance with the rule and the new compensatory damage.

Clerk to give notice

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Dennis J. Landin, Judge of the Superior Court