Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 07CC03259. Charles Margines, Judge.
David Fink, in pro. per., for Plaintiff and Appellant.
Krane & Smith, Marc Smith and Konrad L. Trope for Defendants and Respondents.
OPINION
FYBEL, J.
INTRODUCTION
Plaintiff David Fink filed a complaint for breach of contract and fraud against defendants Moses Shemtov, Mary Shemtov, S&E Stone, Inc., and Amota Properties, LLC. After default was entered against Moses Shemtov, Mary Shemtov, and S&E Stone, Inc. (defendants), Fink requested that default judgment be entered. The trial court entered default judgment against Moses Shemtov as to Fink’s breach of contract claim, but otherwise entered judgment in favor of defendants.
After Fink filed a notice of appeal from the court’s judgment, the trial court vacated the default judgment on the ground Fink failed to notify defendants’ counsel that he was requesting the default. Fink’s challenges to the trial court’s handling of the default judgment prove-up hearing and the amount awarded in the default judgment entered against Moses Shemtov on the breach of contract claim are therefore moot. The only remaining issue before us is the judgment entered in defendants’ favor.
We reverse. As discussed post, at this stage in the litigation and because our record does not show Fink was provided notice that judgment might be entered in defendants’ favor, the trial court should not have entered judgment in defendants’ favor.
BACKGROUND
In February 2007, Fink filed a complaint containing claims for breach of contract and fraud against Moses Shemtov, his wife Mary Shemtov, S&E Stone, Inc., and Amota Properties, LLC. The complaint alleged that in 2005, Stone Center Corporation (Stone Center), located in Santa Ana, extended to Moses Shemtov instant credit to purchase merchandise, in exchange for Shemtov’s agreement to complete and return Stone Center’s credit contract. The complaint further alleged Shemtov neither returned the completed credit contract nor paid for the merchandise. The complaint alleged Stone Center assigned its claim to Fink.
Moses Shemtov filed a motion to transfer the action from Orange County Superior Court to Los Angeles County Superior Court, which was granted by the trial court. In April 2008, in an unpublished opinion, we granted Fink’s petition for writ of mandate and directed the trial court to vacate its order granting the motion to transfer the matter and issue an order denying that motion. (Fink v. Superior Court (Apr. 25, 2008, G039302).)
In July 2008, Fink filed a motion to compel and admit discovery he had propounded on Moses Shemtov. In August 2008, at Fink’s request, the court clerk entered the default of Moses Shemtov, Mary Shemtov, and S&E Stone, Inc. The trial court declined to rule on Fink’s motion to compel and admit discovery because Moses Shemtov was in default.
In October 2008, the trial court entered default judgment against Moses Shemtov as to Fink’s breach of contract claim, awarding Fink $81,236.70 in “principal” and $25,016.45 in “statutory interest” for a total judgment of $106,253.15. The judgment stated the court declined to award additional interest in the amount of 2.5 percent per month on the ground it was “impermissibly punitive.” The same judgment provided that it was entered in favor of all defendants as to Fink’s fraud claim on the ground there was no evidence of fraud on their part. Judgment was also entered in favor of Mary Shemtov and in favor of S&E Stone, Inc., on the ground the complaint alleged S&E Stone, Inc., was merely the fictitious business name for Moses Shemtov and thus was not a separate party. Defendants filed a motion seeking to vacate and set aside the default judgment.
Fink appealed from the court’s October 2008 judgment. In March 2009, on our own motion, we remanded the matter to the trial court for the limited purpose of conducting the hearing and issuing a ruling on defendants’ motion to vacate and set aside the default judgment. In August 2009, the trial court granted the motion to vacate and set aside the default judgment on the ground that although Fink knew Moses Shemtov was represented by counsel and continued to propound discovery, Fink failed to inform Moses Shemtov’s counsel about his efforts to have default entered against defendants before the default was entered.
The trial court also issued an order to show cause as to whether the lawsuit should be dismissed with prejudice on the ground Fink was not the real party in interest in that he made statements in his opposition to the motion to vacate the default judgment, suggesting he “is not truly the assignee of the creditor but is representing the interests of Stone Center as an unlicensed attorney.” In January 2010, the trial court stated in a minute order: “With respect to the [order to show cause] re: dismissal, the court is concerned that this issue is embraced within, or affected by, the orders which are on appeal [citation]. Thus, the court intends to continue the hearing to a date following the anticipated resolution of the appeals.”
In September 2009, this court issued the following order: “Pursuant to this court’s order of March 26, 2009, the superior court has now returned to this court a copy of its minute order of August 27, 2009, in which it granted respondents’ motion to vacate and set aside the default judgment. [¶] The parties are invited to file short letter briefs no later than September 14, 2009, addressing whether the appeal is, in light of the superior court’s ruling, moot and whether the appeal therefore should be dismissed on the court’s own motion for want of jurisdiction.” Following this order, Fink filed a letter brief and defendants filed their respondents’ brief.
In October 2009, this court denied Fink’s application for a prefiling order permitting him to file a notice of appeal to challenge the trial court’s order granting the motion to vacate and set aside the default judgment. The order stated in relevant part: “The court has read and considered the application and the grounds to be raised in the appeal. Fink has not met his burden to show the litigation has merit. The court is very familiar with the facts of this case having read and reviewed several applications for pre-filing orders from Fink, and it does not appear there is any meritorious ground for relief. Nor has he met his burden to show the appeal has not been filed for the purposes of harassment or delay. Accordingly, the pre-filing application is DENIED.”
DISCUSSION
I.
Fink’s Challenges to the Trial Court’s Handling of the Default Judgment Prove-up Hearing and Its Refusal to Award More Interest on Damages From Fink’s Breach of Contract Claim Are Moot.
Fink argues on appeal that the trial court erred by refusing to award in the default judgment “additional interest” in the amount of 2.5 percent per month on the amount of contractual damages awarded against Moses Shemtov on the ground it was impermissibly punitive. Fink contends the court erred by giving their counsel notice of the default judgment prove-up hearing and permitting defendants’ counsel to speak at all during that hearing. (See Lopez v. Fancelli (1990) 221 Cal.App.3d 1305, 1309-1310 [trial court may enter a default judgment against a defendant only if the plaintiff has precisely followed certain procedures ensuring the defendant has received sufficient notice of the pending action to make an informed choice as to whether to defend or ignore the plaintiff’s claims]; Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 691 [the judge must act as a “‘gatekeeper’” to ensure that the rules pertaining to defaults and default judgments are precisely followed because there is no opposing party in a default judgment situation].) Fink also contends the trial court did not provide him sufficient opportunity to present evidence in support of the default judgment and should have asked him to provide further evidence if the court believed that more evidence was needed.
As discussed ante, in August 2009, the trial court vacated and set aside the default judgment that had been entered against Moses Shemtov, on the following grounds: “It is undisputed that, at all relevant times, plaintiff knew that defendant Moses Shemtov was represented by counsel; that plaintiff failed to contact counsel prior to entry of default, and that plaintiff continued to propound discovery without mention of a default. [¶] ‘If plaintiff’s counsel knows the identity of the lawyer representing defendant, he or she owes an ethical obligation to warn before requesting entry of defendant’s default. Failure to do so is a professional discourtesy to opposing counsel that will not be condoned by the courts: “The quiet speed of plaintiff’s attorney in seeking a default judgment without the knowledge of defendants’ counsel is not to be commended.” [Citations.]’ [Citation.]... ‘[I]n the absence of a prior warning of default, courts are inclined to grant [Code of Civil Procedure] § 473[, subdivision] (b) motions to set aside defaults’ [citation]. [¶] In making this ruling, the court is mindful of the strong policy in California of having judicial disputes resolved on their merits. The court further finds that a denial of the motion would result in an injustice to defendant and notes that plaintiff has not demonstrated any prejudice were this motion to be granted.”
Fink’s challenges to the default judgment are moot because it was vacated and set aside on a ground unrelated to Fink’s arguments. We therefore do not further discuss them.
II.
The Trial Court Did Not Err by Concluding the Complaint Did Not State a Cause of Action Against Mary Shemtov.
Fink contends the complaint stated a prima facie case against Mary Shemtov under Family Code section 910 because she was married to Moses Shemtov and because the subject contract was “personally binding upon the signor, his or her heirs, personal representatives and successors.”
Even if the trial court had entered a default judgment against Mary Shemtov, it would have been vacated and set aside as discussed ante. Although Fink’s argument on this issue appears to be moot, we briefly address the complaint’s failure to state a claim against Mary Shemtov because this issue is likely to reappear in this litigation.
The complaint does not allege Mary Shemtov entered into or breached any contract or engaged in fraud. Fink’s cause of action against Mary Shemtov under Family Code section 910 is simply based on her marriage to Moses Shemtov at the time of the wrongful acts alleged in the complaint. But such factual allegations alone do not give rise to a cause of action.
Family Code section 910, subdivision (a) provides: “Except as otherwise expressly provided by statute, the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.”
In 11601 Wilshire Associates v. Grebow (1998) 64 Cal.App.4th 453, 454-455, the plaintiff lessor sued the wife of the guarantor of a lease, based solely on her husband’s obligations as a guarantor. The plaintiff contended the wife was liable for the husband’s personal guarantee under Family Code section 910 because that statute provided the wife was responsible for her husband’s obligations to the extent of their community property. (11601 Wilshire Associates v. Grebow, supra, at p. 455.) The appellate court affirmed summary judgment in favor of the wife on the ground there was no cause of action in California based on community property liability under section 910. (11601 Wilshire Associates v. Grebow, supra, at p. 457.) The court noted the plaintiff had sued the wife not because she was personally liable on the guarantee, “but to facilitate its postjudgment recovery of money damages should it succeed on its claim” against the husband. (Id. at p. 455.) The appellate court relied on Reynolds and Reynolds v. Universal Forms, Labels (C.D.Cal. 1997) 965 F.Supp. 1392, 1397, in which the court held: “Where both spouses are named in litigation, and where one spouse is included solely in the capacity as a community representative, that spouse has no personal liability, that spouse’s separate property cannot be reached for the type of debt alleged, and such spouse does not desire to participate in the litigation, there appears to be no legitimate advantage to plaintiff in forcing the unwilling spouse to participate in the litigation.”
As the complaint stated no claim against Mary Shemtov, the trial court properly declined Fink’s request to enter a default judgment against her. (Falahati v. Kondo (2005) 127 Cal.App.4th 823, 829 [“It is well established a default judgment cannot properly be based on a complaint which fails to state a cause of action against the party defaulted because... ‘[a] defendant who fails to answer admits only facts that are well pleaded’”].)
The trial court, however, took the next step and entered judgment in favor of Mary Shemtov who was in default at the time. The record does not show Fink was provided notice about this consequence. It may be Mary Shemtov will soon be properly dismissed as a defendant in this case by way of a demurrer, motion for judgment on the pleadings, or motion for summary judgment. But it was premature at this stage of the litigation to enter judgment in her favor at the default judgment prove-up hearing.
III.
The Complaint Alleged S&E Stone, Inc., Is a California Corporation.
Fink contends the complaint stated a prima facie case against S&E Stone, Inc., and thus judgment in its favor was erroneous. The court entered judgment in favor of S&E Stone, Inc. because “pursuant to the Complaint (at Para. 12), S&E Stone is a DBA of Moses Shemtov.”
In Pinkerton’s, Inc. v. Superior Court (1996) 49 Cal.App.4th 1342, 1348, the appellate court stated “[t]he designation of ‘DBA’ or ‘doing business as’” indicates operation under a fictitious business name. “Use of a fictitious business name does not create a separate legal entity.” (Ibid.; see Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2009) ¶ 6:73, p. 6-21 (rev. #1, 2008) [“A sole proprietor should be sued in his individual name; the business name can be disregarded”].)
Here, the complaint alleged “S&E” was a fictitious business name for Moses Shemtov. The complaint, however, also alleged that “S&E Stone, Inc.” (doing business as Marble Express) was a California corporation owned by Moses Shemtov; thus, it was a separate entity as opposed to a mere fictitious business name. It does not matter that the court declined to enter default judgment against S&E Stone, Inc., on the basis that it was merely a fictitious business name for Moses Shemtov because, as discussed ante, the default judgment was vacated due to Fink’s failure to provide defendants’ counsel notice. For the same reasons discussed, ante, with regard to Mary Shemtov, we reverse the portion of entry of judgment in favor of S&E Stone, Inc., because the record does not support such an action at this time.
IV.
Judgment As to Fink’s Fraud Claim
The judgment stated in part: “Judgment is for all defendants, against plaintiff, on his fraud cause of action. The Court finds that there is no evidence of fraud on their part.” Fink argues he had proved a prima facie case of fraud against Moses Shemtov.
We do not need to decide whether the evidence before the trial court established a prima facie case of fraud against any of defendants because, even if the court had included liability for fraud in the default judgment, as discussed ante, the default judgment was vacated and set aside on the ground Fink failed to warn defendants’ counsel before requesting the entry of the default. For the same reasons discussed, ante, in connection with judgment having been entered in favor of Mary Shemtov and S&E Stone, Inc., we reverse the judgment entered in favor of defendants on the fraud claim.
DISPOSITION
The judgment is reversed because (1) appellate issues related to the now-vacated and set aside default judgment that had been entered against Moses Shemtov are moot; and (2) judgment should not have been entered in favor of Mary Shemtov, S&E Stone, Inc., and Moses Shemtov because Fink did not receive sufficient notice thereof. Fink shall recover costs on appeal.
WE CONCUR: SILLS, P.J., IKOLA, J.