Opinion
NOT TO BE PUBLISHED
Contra Costa County Super. Ct. No. C0-700839
Richman, J.
Plaintiff Delta Pools and Patios, Inc. (Delta) filed a request for default against defendants Karima Quraishi, Munir Quraishi, and Nissar Quraishi (when referred to collectively, the Quraishis). The Quraishis’ motion for relief from the default was denied, following which Delta obtained a default judgment awarding it $42,582.50 in compensatory damages, $2,640 in prejudgment interest, $14,325.90 in attorney’s fees, and $618 in costs.
The Quraishis appeal, contending that it was error for the court to deny their motion for relief from the default. They also contend that the judgment awarded Delta more than prayed for in the complaint and improperly awarded attorney’s fees. We conclude that the trial court did not abuse its discretion in denying the motion for relief. We also conclude, however, that the judgment awarded an excessive amount of damages (as Delta concedes) and erroneously awarded attorney’s fees. We thus modify the judgment to reduce the amount of compensatory damages and eliminate the award of attorney’s fees, and, as modified, affirm the judgment.
BACKGROUND
This dispute arises out of a May 2006 contract by which Delta was to install a swimming pool in the backyard of a home in San Ramon owned by Munir and Karima Quraishi. The contract price was $114,975, to be paid in five installments. The last work on the property was apparently on November 28, 2006. According to defendants’ brief, by January 2007, the Quraishis had paid Delta $83,989.50. On February 22, 2007, Delta recorded a mechanic’s lien on the property in the amount of $30,985.50. The mechanic’s lien states that three individuals were “the person[s] by whom [Delta] was employed or to whom [Delta] furnished the labor, services, equipment or materials”: Nissar Quraishi, Munir Quraishi, and Karima Quraishi.
As discussed in detail below, there were significant communications between the parties about possible resolution of the matter, the details of which are not before us. Suffice to say that the matter did not resolve, and on April 19, 2007 Delta filed a complaint, followed by a first amended complaint on May 14, 2007. It named the Quraishis as defendants, and set forth six causes of action, for breach of contract, foreclosure of mechanic’s lien, account stated, open book account, services rendered, and quantum meruit. The amount of damages alleged in five of the six causes of action (all but foreclosure of the lien) was $30,985.50. This was also the amount sought in the prayer.
In passing the Quraishis note that the contract had an arbitration provision, and believed that “any dispute would go to arbitration.” We fail to see how that avails the Quraishis, as the law essentially says that when a plaintiff “bypasses an arbitration agreement,” one option given to a defendant is “to treat the act as a waiver and essentially adopt that waiver by itself electing to ‘submit the matter to the jurisdiction of the court.’ ” (Kalai v. Gray (2003) 109 Cal.App.4th 768, 773 [explaining the effect of Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 899-900].)
Service was effected on May 25, 2007, apparently after other efforts at resolution failed. Further negotiations apparently ensued, again to no avail. And no responsive pleading was filed. On July 20, 2007, Delta filed a request for entry of default.
On August 24, 2007, the Quraishis filed a motion to set aside default and vacate default judgment. The motion was accompanied by four declarations, those of each of the three Quraishis and that of attorney Spencer Smith, to which was attached a proposed answer.
The declarations of Karima and Munir Quraishi were identical, with six short paragraphs. Both testified that they were originally from Afghanistan and “have trouble understanding the English language [and are] unacquainted with American legal procedure and judicial proceedings.” They stated that their son Nissar handled the business transaction with Delta and the construction of the pool in their backyard. And they stated they were “unfamiliar with the terms of the contract in which Delta Pools was too [sic] construct a pool on [their] property”; that they were “under the understanding that if a dispute arose between the parties [they] were not going to sue each other”; and that when they “received a copy of the complaint in this case [they] thought it was a notice to settle [their] dispute out of court. [They] did not know [they] had to respond to the complaint.”
Nissar Quraishi’s declaration stated in its entirety as follows:
“1. I handled the business transaction with Delta Pools and the construction of a pool in my parents’ backyard.
“2. I am familiar with the terms of the contract in which Delta Pools was too [sic] construct a pool on my parents’ property.
“3. I was under the understanding that if a dispute arose between the parties we were going to settle our differences through alternative dispute resolution. In fact the contract states that all disputes arising from the contract will be resolved through arbitration.
“4. When I received a copy of the complaint in this case I thought it was a notice from arbitration to settle our dispute out of court. I did not know I had to respond to the complaint.
“5. After receiving the complaint I was involved in serious settlement negotiations with the defendant. [sic]
“6. I did not know I had to respond to the complaint until I turned the documents over to my attorney in late July.”
Attorney Smith’s declaration stated that he “first became aware that a complaint was [filed] on July 31, 2007 when my clients handed me what they believed to be arbitration documents”; and that he “first became aware that a default judgment [sic] had been entered against the Defendants on August 6, 2007 when I attempted to file an answer in this case.” Attorney Smith then stated that defendants have several defenses; that the contract with Delta calls for arbitration; and finally that “Defendants will also bring a counterclaim for negligence and fraud in relation to [Delta’s] unethical business practices.”
The proposed pleading attached to Mr. Smith’s declaration did not contain a counterclaim.
On September 17, 2007, Delta filed its opposition to the motion. It included a memorandum of points and authorities and three declarations, those of Joe Ruiz, Vice President of Delta, and attorneys Alex Friedland and Manuel Rivas. The Rivas declaration testified solely about the time spent on Delta’s behalf and sheds no light on what occurred. Not so the declaration of Ruiz or Friedland, which paint a far different picture from that of the Quraishis’ moving papers. Specifically:
Ruiz’s declaration stated that he received a call from Attorney Smith during the first week of May 2007, in which Smith identified himself as the attorney for the Quraishis, and said “that he wanted to discuss Delta Pools’ lien and pending lawsuit.” In Ruiz’s words, “Mr. Smith told me in said conversation that if I dealt with him quickly he could resolve the subject lawsuit out of court quickly, or he could drag out Delta Pools’ case for two years. In said conversation, Mr. Smith also asked me to provide him with a breakdown of Delta Pools’ costs associated with the mechanic’s lien; and which I did, via an email, on June 1, 2007.”
Ruiz further testified that between June 1 and June 7, 2007, he had “numerous telephone conversations with Mr. Smith regarding settlement. In several of these conversations, Mr. Smith stated Delta Pools needed to accept defendant’s settlement offer because if the offer was not accepted, defendants would sue Delta Pools. Whenever Mr. Smith made such assertions, I would tell him to contact Delta Pools’ lawyers and I would end the conversation. However, each time this occurred, Mr. Smith would call me back to state that everything was on track and that defendants were putting together a cashier’s check.”
On June 8, 2007, Ruiz sent an email to Mr. Smith in which he made a settlement demand, and the next week, “Mr. Smith asked me to meet with him and Nissar Quraishi at the Quraishi residence whereat I would receive a cashier’s check for the amount demanded. When I met with Mr. Smith and Nissar Quraishi as agreed, they refused to give me the cashier’s check unless I accepted their new terms. At this meeting, Mr. Smith told me that I needed to accept their new offer because the time for the defendants to respond to the lawsuit was running out and defendants would sue me if I did not accept this new offer. I left the meeting and told them to contact my lawyers.”
On June 27, 2007, Ruiz received from Mr. Smith a proposed “Confidential Settlement Agreement,” which included escrow instructions, which Ruiz forwarded to Attorney Friedland. And on July 5, 2007, he forwarded a copy of the proposed agreement with modifications. Then, according to Ruiz, he spoke with Mr. Smith, “over the next few days,” in the course of which “Mr. Smith stated that the revised agreement ‘looked good’ and he would get back to me.” Then, in their last conversation, “Ms. [sic] Smith conveyed that Mr. Nissar Quraishi was unable to respond due to a death in the family. Mr. Smith’s last words to me were that: a) I was a stand up guy; b) I had done everything reasonably possible; and c) that if I did not hear from him by the default deadline, he would advise me to continue with the lawsuit.” Ruiz never heard from Mr. Smith again.
Attorney Friedland’s declaration embellishes the background further. He first testified that he wrote the Quraishis on March 20, 2007, advising them that he was the attorney for Delta and that he would file a lawsuit (including a cause of action for foreclosure of mechanic’s lien) against them within seven days unless they paid Delta the balance of $30,985.00. A copy of the letter was attached to Friedland’s declaration. The declaration then went on to describe how he received no response, and thus filed the lawsuit, though he did not serve it. Before he did, Friedland “received a call from Spencer F. Smith, Esq. who identified himself as counsel for defendants. We discussed the merits of the case and then I advised him that a lawsuit was filed against defendants, but that it had not yet been served. In reply, Mr. Smith told me to have defendants served, and that he would then contact me.” Friedland did serve the complaint, but he “never heard directly from Mr. Smith again. However, after defendants were served, . . . [Friedland] did learn from the principal of Delta Pools, Mr. Joe Ruiz, that Mr. Smith had contacted him to discuss settlement and had engaged in several such conversations with Mr. Ruiz.” Friedland testified he “was shocked to hear that counsel would directly contact a represented Plaintiff. [And he] advised [his] client that he should not talk to Mr. Spencer [sic], but apparently they continued to discuss settling the case. Mr. Ruiz advised me that Mr. Spencer [sic] knew the summons and first amended complaint had been filed/served, but he had hoped to resolve the matter directly with the plaintiff.”
Settlement negotiations eventually broke down, and “[s]ince the time to respond had long passed, the default of defendants was taken and entered on July 20, 2007.”
On September 24, 2007, the Quraishis filed a brief reply. Interestingly, there was no declaration from anyone, not any of the Quraishis, not Attorney Smith, taking issue with any of the facts set forth in the declarations of Ruiz and Attorney Friedland.
The motion came on for hearing on October 19, 2007, before the Honorable Thomas Maddock. Judge Maddock had issued a tentative ruling against the Quraishis who had called to contest. Judge Maddock heard extensive argument from counsel, at the conclusion of which he ruled that the “tentative ruling is my final ruling. The motion to set aside is denied.” A formal order was filed that day.
The motion was originally set for hearing on September 28, 2007, but the Quraishis apparently would not stipulate to it being heard by a judge pro tem.
On November 29, 2007, the matter came on for a prove-up hearing, again before Judge Maddock, who was presented with “oral and documentary evidence.” Based on that, Judge Maddock entered judgment as follows:
“It is ordered, adjudged and decreed that plaintiff Delta . . . have judgment against defendants [sic] Nissar Quraishi, and that plaintiff Delta . . . recover from defendants [sic] Nissar Quraishi, the following:
1. Compensatory damages in the amount of $42,582.50;
2. Pre-judgment interest on the above sum in the amount of $2,640 (from and after April 19, 2007); ($12/day for 220 days)
3. Attorney’s fees in the amount of $14,325.90; and
4. Statutory costs in the amount of $618.00.
Grant [sic] total (i.e. items number 1 through 4): $60,166.40
5. That the plaintiff has a lien on the hereinafter described real property owned by defendants, Munir Quraishi and Karima Quraishi for $30,980.50.”
On February 13, 2008, the Quraishis filed a notice of appeal.
ANALYSIS
A. The Trial Court Did Not Abuse Its Discretion in Denying Relief Under Code of Civil Procedure Section 473, Subdivision (b)
Code of Civil Procedure section 473, subdivision (b) (section 473) states that a court “may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” This part of section 473 is recognized as invoking the trial court’s discretion, and the judgment of the trial court “ ‘shall not be disturbed on appeal absent a clear showing of abuse.’ ” (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 254, 257.)
It is true, as the Quraishis assert, that a trial court order denying relief under section 473 is “scrutinized more carefully than an order permitting trial on the merits.” (H.D. Arnaiz, Ltd. v. County of San Joaquin (2002) 96 Cal.App.4th 1357, 1368.) “Because the law favors disposing of cases on their merits, ‘any doubts in applying section 473 must be resolved in favor of the party seeking relief from default [citations]. Therefore, a trial court order denying relief is scrutinized more carefully than an order permitting trial on the merits.’ ” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980, quoting Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.) In Witkin’s typically succinct statement of the rule, the remedial relief offered by section 473 is “highly favored and is liberally applied.” (8 Witkin, Cal. Procedure, Attack on Judgment in Trial Court (5th ed. 2008) § 144, pp. 736-737 and numerous cases there collected.)
That said, it is also the rule that to obtain discretionary relief under section 473, the moving party must show the requisite mistake, inadvertence, or excusable neglect. (Bonzer v. City of Huntington Park (1993) 20 Cal.App.4th 1474, 1478, citing Iott v. Franklin (1988) 206 Cal.App.3d 521, 526-527.) And Division Three of this court has distilled the rules applicable to our review, in In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 118, in the context of a refusal to set aside a dissolution judgment: “The standard for appellate review of an order denying a motion to set aside under section 473 is quite limited. A ruling on such a motion rests within the sound discretion of the trial court, and will not be disturbed on appeal in the absence of a clear showing of abuse of discretion, resulting in injury sufficiently grave as to amount to a manifest miscarriage of justice. Where a trial court has discretionary power to decide an issue, an appellate court is not authorized to substitute its judgment of the correct result for the decision of the trial court. [Citations.] ‘ “ ‘The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court.’ ”[Citations.]’ [Citation.] The burden is on the complaining party to establish abuse of discretion, and the showing on appeal is insufficient if it presents a state of facts which simply affords an opportunity for a difference of opinion.”
Various definitions and principles describing the abuse of discretion standard of review have been stated and repeated in numerous cases, such as in Blank v. Kirwan (1985) 39 Cal.3d 311, 331, that we will set aside a trial court ruling only upon a showing of “ ‘ “a clear case of abuse” ’ ” and “ ‘ “a miscarriage of justice.” ’ ” As to what is required to show such abuse, it has been said that a trial court abuses its discretion only when its ruling “ ‘ “fall[s] ‘outside the bounds of reason.’ ” ’ [Citation.]” (People v. Benavides (2005) 35 Cal.4th 69, 88; accord, Denham v. Superior Court (1970) 2 Cal.3d 557, 566 [abuse of discretion requires a showing that the trial court “ ‘exceed[ed] the bounds of reason, all of the circumstances before it being considered’ ”].) More colorfully, it has been said that discretion is abused only when the trial court’s ruling is arbitrary, whimsical, or capricious. (People v. Linkenauger (1995) 32 Cal.App.4th 1603, 1614; People v. Branch (2001) 91 Cal.App.4th 274, 282; see People v. Giminez (1975) 14 Cal.3d 68, 72 [“ ‘capricious disposition or whimsical thinking’ ”].)
We would be hard pressed to apply those adjectives to Judge Maddock here. The Quraishis have shown no such abuse of discretion here. Not by a long shot.
As Judge Maddock’s order noted, the Quraishis “have failed to show excusable neglect. [The Quraishis] do not dispute that they were represented by counsel long before their default was entered, and the due date was actually discussed at a meeting with defendant Nissar Quraishi and his counsel present.” This, of course, was true, according to Ruiz’s declaration. The evidence also revealed that Nissar Quraishi understood English and that he “handled the business transaction with Delta Pools and the construction of a pool in [his] parents’ backyard. Moreover, Nissar was “familiar with the terms of the contract.” And perhaps most important, he received a copy of the complaint, and that after receiving the complaint, he “was involved in serious settlement negotiations.” Finally, Nissar admits that, despite knowing that these were some kind of legal documents involved with the dispute, he did not bother to turn those documents over to his attorney until July, long after service was effected. In sum, at best Nissar’s declaration shows that he neglected to turn over to his attorney important legal papers that by his own admission he knew commenced some kind of proceeding connected with his and his parents’ dispute with Delta. This is inexcusable neglect.
Finally, we note that the Quraishis have not demonstrated any miscarriage of justice. Their threats to sue were, as noted, not put to paper (see fn. 2 ante). And it appears beyond question that the Quraishis acknowledged that they owed Delta, given all the settlement discussions as testified to by Ruiz, not to mention Nissar himself.
As Witkin puts it, citing numerous cases, “If inexcusable neglect is clear, an order denying discretionary relief will be affirmed. [Citations.]” (8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 190, p. 790.) This is another such case.
The Quraishis alternatively claim that the trial court erred in “finding that [the Quraishis’] attorney was negligent and not granting [the Quraishis’] motion . . . under the mandatory provisions of section 473(b).” Such contention is out of order: the Quraishis’ motion did not seek relief on that basis, nor did their attorney submit an affidavit of fault.
Code of Civil Procedure section 1010 requires that a notice of motion state “the grounds upon which it will be made.” And California Rules of Court, rule 3.1110(a) requires a notice of motion to state in its opening paragraph “the nature of the order being sought and the grounds for issuance of the order.” The purpose of these requirements is to “sufficiently define the issues for the information and attention of the adverse party and the court.” (Hernandez v. National Dairy Products (1954) 126 Cal.App.2d 490, 493.)
Luri v. Greenwald (2003) 107 Cal.App.4th 1119 is dispositive. There, the trial court granted defendant’s motion for summary judgment in the setting where plaintiff’s attorney failed to submit any papers in opposition, or even show up at the hearing. Plaintiff moved to set aside the judgment, relying solely on the discretionary provisions of section 473, in support of which plaintiff’s attorney filed a declaration which explained why he failed to submit opposition papers. The trial court denied the motion. On appeal, plaintiff argued that because her attorney’s declaration indicated that he was at fault, the court should have granted relief under the mandatory provisions of section 473. (Id. at p. 1122-1125.) The court of appeal rejected the argument: “Specification of issues is no less necessary when a motion invokes section 473 than when a motion is made pursuant to any other statute. We discern no basis in law or policy to conclude that section 473 motions, unlike all other motions, should be exempt from these provisions of law. Nor do we identify any legal grounds to impose a duty upon trial courts to evaluate, sua sponte, alternative bases for relief other than those asserted by the moving party—a duty that would be unique to motions under section 473. We therefore decline to hold that in evaluating motions made under section 473, the trial court must consider grounds for relief not raised or sought by the moving party.” (Id. at p. 1125.) Luri is a fortiori applicable here.
The attorney in Luri at least submitted an affidavit indicating that he had done something wrong that caused the client to suffer damage. No such affidavit was ever submitted by Mr. Smith here. Indeed, the only indication that he may have had something to do with the Quraishis’ default came from the declarations submitted by Delta in opposition to the motion. In short, section 473, subdivision (b) provides strict requirements for invoking the mandatory attorney fault provisions, requiring “an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect,” in order to vacate a default and default judgment. (§ 473, subd. (b).) (Italics added.) No mandatory relief was available. (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610 [“Absent a straightforward admission of fault” by the attorney, relief is not available under the mandatory provisions of section 473, subd. (b)].)
B. The Compensatory Damages Were Excessive
As described above, the first amended complaint alleged $30,980.50 in damages, plus interest. The prayer sought the same. Code of Civil Procedure section 580 provides that the relief “granted to the plaintiff . . . cannot exceed that demanded in the complaint.” That relief was $30,985.50. Despite that, the judgment awarded Delta $42,582.50 in compensatory damages, an amount, it bears noting, unexplained in the record. But whatever its basis, it cannot stand, as Delta appropriately concedes. In the words of Delta’s own brief, “[t]he Quraishis are correct that the $42,582.50 in compensatory damages must be reduced to the $30,985.50 demanded in the complaint.” We will order the judgment modified accordingly, to include a recalculation of interest.
C. The Judgment Improperly Awarded Attorney’s Fees
The contract for the swimming pool was five pages of text, plus exhibits. It is on the letterhead “Delta Pools & Patios.” As noted above, at page 4 is a section entitled “ARBITRATION,” whose last sentence says this: “Both parties agree that the non-prevailing party of any arbitration shall pay all reasonable costs associated with said arbitration including attorney’s fees.”
Delta did not proceed to arbitration. Nevertheless, the complaint sought attorney’s fees in five of its six causes of action. The prayer also asked for attorney’s fees which the default judgment awarded.
The Quraishis’ opening brief attacks this award, in a brief paragraph, without argument heading, that provides in its entirety as follows: “Respondent set forth in his complaint a prayer for attorney’s fees pursuant to the contract entered into by the parties. Under section 580, the trial court exceeded its authority when it granted such relief, because the contract does not allow such relief. The contract only allows attorney’s fees if the matter is arbitrated. Therefore, if the court denied appellants’ appeal the case should be remanded to the trial court with directions to modify the judgment by striking the award of damages in excess of $30,980.50 and any attorney’s fees.”
Never focusing on the language of the contract, Delta asserts that the Quraishis waived this issue because they “fail to support it with any authority, or any citations to the record.” We do not understand the latter claim. And while it is true that the Quraishis do not cite any case authority, they do cite Code of Civil Procedure section 580 and assert that “under section 580, the trial court exceeded its authority when it granted [attorney’s fees] because the contract does not allow such relief. The contract only allows attorney’s fees if the matter is arbitrated.” Which is true.
While the issue could perhaps have been better argued, whether to deem an issue waived for inadequate argument is a question for our discretion. (See Eisenberg, Horvitz, & Wiener, Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2008) § 9:21, p. 9-6.) We will not exercise that discretion here, not when the result would be to allow Delta to recover something that its own contract does not allow. The attorney’s fee sentence is straightforward: the losing party “of any arbitration shall pay all costs associated with said arbitration, including attorney’s fees.” (Italics added.) It is perhaps enough to note that the Quraishis did not lose “any arbitration,” nor were the fees incurred in “said arbitration.” As a leading attorney’s fees treatise puts it, “[t]he parties may . . . limit entitlement to fees in selected proceedings.” (Pearl, Cal. Attorney Fee Awards (2d ed. 2008) § 6.1, p. 167, citing Kalai v. Gray, supra, 109 Cal.App.4th 768.) That is what Delta’s contract did here. It was not entitled to any more.
DISPOSITION
The order denying the relief from default is affirmed. The judgment shall be modified by reducing the amount of compensatory damages to $30,985.50, recalculating the amount of interest in light of that reduction, and eliminating the award of attorney’s fees. In all other respects the judgment is affirmed. Each side shall bear its own costs on appeal.
We concur: Kline, P.J., Lambden, J.
Moreover, the Quraishis’ brief notes that they “were served with the summons and complaint, and the summons clearly indicated that a party has 30 calendar days to file a response.”