Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC384547, Mary Ann Murphy, Judge.
John Z. Shafai, for Plaintiff and Appellant.
No appearance, for Defendants and Respondents.
EPSTEIN, P.J.
Appellant Apex Industrial Inc., a consumer electronics distributor, sued respondents Conquest Marketing Group, Inc. (Conquest), El Dorado Furniture Corp. and El Dorado Corp. (El Dorado), On Target and Target Sound (On Target), John Miller, and Sripadma Vepa for torts arising out of sale of goods to On Target and El Dorado for which appellant was never paid. Respondents failed to answer appellant’s complaint and defaults were entered against all of them. Appellant requested an entry of default judgment, but was denied. On appeal from the order of denial, it argues the court erred in requiring appellant to present proof of respondents’ liability beyond the defaults themselves. We agree, reverse, and remand with instructions to conduct a hearing on proof of damages.
FACTUAL AND PROCEDURAL SUMMARY
Appellant purchases consumer electronics from overseas manufacturers and markets and distributes the products to retailers in the United States. Appellant alleged that it contracted with Conquest to market, promote, and sell its goods. It further alleged that Conquest introduced appellant to On Target and El Dorado as potential purchasers. Appellant proceeded to process orders and sell and ship goods to On Target and El Dorado. Conquest initiated the sales on behalf of On Target and El Dorado by submitting a purchase order to appellant. Appellant alleged that it shipped $1,277,716.29 and $985,085.00 in goods to El Dorado and On Target, respectively, but was not paid by either party. It also alleged that Larry Metz and respondent John Miller were officers, directors, managers, or principals of Conquest and El Dorado, respectively.
On January 31, 2008, appellant sued On Target, El Dorado, and Miller for conversion. Appellant also brought suit against Conquest and Metz for breach of contract, breach of fiduciary duty, and intentional interference with prospective economic advantage, alleging that they knew or reasonably should have known that El Dorado and On Target were neither legitimate nor viable businesses and that they failed to disclose this fact to appellant. It also sued Conquest, Metz, and two of its former employees, Miranda Suen and respondent Vepa, for fraudulent concealment and negligent misrepresentation, alleging that Suen and Vepa falsely altered appellant’s accounting records to reflect payments by On Target and El Dorado. In total, appellant brought 10 causes of action against Metz, Suen, appellant’s former attorneys, 100 unnamed Doe defendants, and respondents. It sought $2 million in compensatory damages from Metz, Suen, and respondents, and $217,032.20 from its attorneys and one Doe defendant. It also sought punitive damages from all defendants. Appellant settled with Metz, Suen, and its former attorneys, none of whom is a party to this appeal.
Respondents failed to answer appellant’s complaint and defaults were duly entered on appellant’s application. Appellant then filed a request for an entry of default judgment against all respondents, seeking $2 million in damages and $790 in costs. In support of its request, appellant submitted the declaration of its corporate counsel, Jerry Huang, who effectively repeated the allegations in appellant’s complaint. Huang also submitted documents evidencing the amount of damages sought. The trial court denied the request for a default judgment and dismissed the action as to all respondents. This timely appeal followed. Respondents did not file briefs on appeal.
DISCUSSION
Appellant argues the court erred in denying the request for default judgment based on its failure to prove liability against respondents. We agree.
Under Code of Civil Procedure section 585, subdivision (a), a court may enter default judgment in specified circumstances against a defendant who has been served with plaintiff’s complaint but has failed to answer. The amount of damages awarded to a plaintiff prevailing on default judgment is limited to the amount alleged in the complaint or the statement of damages. (Code Civ. Proc., §580; see also Yeung v. Soos (2004) 119 Cal.App.4th 576, 582; see also Jackson v. Bank of America (1986) 188 Cal.App.3d 375, 387 [“‘A default admits the material allegations of the complaint, and no more... the relief given to the plaintiff cannot exceed that which the law awards as legal conclusion from the facts alleged.”’].
A default judgment cannot be based on a complaint that fails to state a cause of action against the defaulting party. (Falahati v. Kondo (2005) 127 Cal.App.4th 823, 829.) By defaulting, the defendant is deemed to admit all material allegations of the complaint that are well pleaded. (Molen v. Friedman (1998) 64 Cal.App.4th 1149, 1156; see also Code Civ. Proc., §431.20 [“Every material allegation of the complaint... not controverted by the answer, shall, for the purposes of the action, be taken as true.”]; see also Bristol Convalescent Hospital v. Stone (1968) 258 Cal.App.2d 848, 859 [defaulting defendant admits absolute verity of all allegations of complaint giving rise to liability].) Thus, in an ordinary action of this character, the plaintiff need not prove liability of a defaulting defendant. By contrast, the plaintiff must prove the amount of damages before an actual entry of default judgment. (See Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1745; see also Uva v. Evans (1978) 83 Cal.App.3d 356, 364.) In determining whether the plaintiff is entitled to an award of damages after the defendant has defaulted, the plaintiff is only required to present evidence establishing a prima facie case for damages. (Johnson v. Stanhiser (1999) 72 Cal.App.4th 357, 361-362.) The trial court must hear the evidence offered by the plaintiff and render judgment “‘in [its] favor for such sum, not exceeding the amount stated in the complaint, or for such relief, not exceeding that demanded in the complaint, as appears from the evidence to be just. [Citations.]’” (Id. at p. 362.)
Here, the trial court did not take issue with the damages, and appellant seeks the amount of damages stated in its request for default judgment and alleged in the complaint. Nor did the court question the sufficiency of appellant’s pleading. Rather, the court held: “The request for default judgment is denied for the following reasons: The declaration of Jerry [Huang] is conclusory.... [H]e does not provide evidentiary support for his contention that the Conquest defendants knew or should have reasonably [known] that [appellant’s] accounting documents were being charged.... He does not provide any... evidentiary support for the statement that El Dorado and Target were alter egos of each other.” The court also found that Huang did not provide evidence to support the allegation that Metz or Miller were officers, directors, managers, or principals of Conquest and El Dorado, respectively. Finally, the court concluded that Huang’s declaration “does not provide any evidentiary support establishing any personal liability as to the individual defendants.” Thus, the court rested its holding solely on appellant’s failure to provide evidence of respondents’ liability, and as stated above, appellant is not required to do so in order to obtain a judgment against defaulting respondents.
DISPOSITION
The order denying the request for default judgment and dismissing the action as to all respondents is reversed, and the case is remanded with instructions to conduct a hearing on proof of damages. Appellant to have its costs on appeal.
We concur: WILLHITE, J., SUZUKAWA, J.