Opinion
F073300
05-10-2018
JUDY L. VEDROS, et al., Plaintiffs and Respondents, v. CONSUMER SERVICES OF WALNUT CREEK, INC., et al., Defendants and Appellants.
William E. Gilg for Defendants and Appellants. Gianelli & Associates and Sarah J. Birmingham for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 661303)
OPINION
APPEAL from a judgment of the Superior Court of Stanislaus County. Roger M. Beauchesne, Judge. William E. Gilg for Defendants and Appellants. Gianelli & Associates and Sarah J. Birmingham for Plaintiffs and Respondents.
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Consumer Services of Walnut Creek, Inc. (Consumer Services) and Michan Evonc (Evonc) (collectively appellants) appeal from a default judgment entered after the trial court (1) denied their motion for protective orders, (2) granted terminating sanctions striking their answer and entering their default as a result of their failure to submit to a deposition and produce documents, and (3) denied their motions for reconsideration of both orders.
Appellants contend the trial court abused its discretion when it granted the motion for terminating sanctions and denied their motions for protective orders and reconsideration. They also contend the compensatory and punitive damages awarded are not supported by substantial evidence. Finding no merit in appellants' arguments, we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Pleadings
This lawsuit began in January 2011, when Judy Vedros filed suit, in propria persona, against appellants for breach of contract and fraud. During the course of the proceedings, Robert Vedros was added as a plaintiff and the Vedroses retained an attorney to represent them, Sonya A. Bouma. In May 2014, the Vedroses, through Bouma, filed the operative verified fourth amended complaint, which alleged eight causes of action against appellants: breach of contract; breach of contract for failure to perform; breach of the implied covenant of good faith and fair dealing; unjust enrichment; violation of the Mortgage Foreclosure Consultants Act (MFCA), Civil Code section 2945, et seq.; fraud/misrepresentation; negligent hiring, retention and supervision; and vicarious liability.
The fourth amended complaint alleges the Vedroses entered into an oral agreement with appellants in March 2009, by which appellants "agreed to initiate and finalize a bankruptcy for [the Vedroses] as well as perform a loan modification to prevent the foreclosure of [their] residence[,]" in exchange for the payment of $5,525. The complaint further alleges: appellants told the Vedroses the bankruptcy would be finalized in 30 days or less, at which time appellants would commence the loan modification; appellants instructed them to stop paying the mortgage in order to facilitate the loan modification; while the Vedroses paid appellants, appellants "performed no service or essentially a worthless service"; and in reliance on appellants' promises, the Vedroses took no other action and eventually were forced to hire a "legitimate licensed professional" to try to prevent the loss of their home.
The complaint sought the following compensatory damages: (1) $393,489 for the loss of the Vedroses' home; (2) the $5,525 the Vedroses paid pursuant to the contract; (3) the $4,000 paid to a third party to perform the work appellants failed to perform; (4) $25,320 in lost earnings; and (5) $14,700 in additional expenses. In addition, the complaint prays for punitive damages and attorney fees on the claims for violation of the MFCA, fraud and misrepresentation, and vicarious liability, and punitive damages on the negligent hiring, supervision, or retention claim.
Appellants filed an answer to the fourth amended complaint in November 2014, in which they denied most of the allegations and raised 38 affirmative defenses.
II. Discovery History
The Vedroses first sought to depose Consumer Services in April 2012, when they served Consumer Services with a notice to take its deposition in Modesto on May 3, 2012. The notice set forth the matters on which the examination was requested and stated that Consumer Services was required to designate and produce those of its officers, directors, or managing agents most qualified to testify on its behalf as to those matters. The notice also directed Consumer Services to produce 14 categories of documents at the deposition. Consumer Services designated Evonc, its Chief Executive Officer (CEO), as the person most knowledgeable with respect to the items set forth in the deposition notice.
The Vedroses agreed to continue the deposition to May 17, 2012 at Consumer Services's request, due to a calendaring conflict. On May 15, 2012, Consumer Services sought to reschedule the deposition, claiming that Evonc could not attend because he was unable to travel due to a medical condition. To accommodate the request, the Vedroses rescheduled the deposition for June 12, 2012, in Danville, California, and served a notice of the continued deposition on Consumer Services.
The day before the deposition, Bouma agreed to a short continuance at the request of appellants' attorney, Loura Erickson, who said she would be bringing a motion to be relieved as Consumer Services's attorney of record. When Bouma's attempts to reschedule the deposition were unsuccessful and she did not receive Erickson's motion to be relieved, Bouma served Consumer Services with a notice of the continued deposition to be held in Modesto on August 7, 2012. Although Bouma confirmed with Erickson's assistant that Erickson had received the notice of deposition and appellants had been notified, neither Consumer Services nor Erickson appeared at the deposition, and Consumer Services failed to produce the documents specified in the deposition notice. Consumer Services did not seek a protective order or stay of the deposition.
On August 30, 2012, the Vedroses filed a motion to compel Consumer Services's deposition and the document production, as well as a motion to amend their complaint, which were scheduled to be heard on September 26, 2012. At that hearing, the trial court granted the Vedroses' request to file a second amended complaint, but continued the motion to compel to October 11, 2012, to allow Consumer Services the opportunity to seek new counsel, since Erickson was withdrawing. When Consumer Services failed to appear at the October 11, 2012 hearing, the trial court issued an order to show cause, which was dismissed after the Vedroses served their second amended complaint.
A default judgment was entered on June 19, 2013, because appellants failed to respond to the second amended complaint. In September 2013, appellants, who had been representing themselves since Erickson's withdrawal, retained a new attorney, William E. Gilg. The next month, the default judgment was set aside. With the trial court's permission, the Vedroses filed a third amended complaint in January 2014. In May 2014, after the trial court partially sustained appellants' demurrer to the third amended complaint with leave to amend, the Vedroses filed their fourth amended complaint. Appellants, however, failed to respond to the complaint and a default judgment was entered on July 31, 2014, which was thereafter set aside under the mandatory provisions of Code of Civil Procedure section 473, subdivision (b).
Undesignated statutory references are to the Code of Civil Procedure.
The Vedroses attempted to reschedule Consumer Services's deposition. On January 12, 2015, they served Consumer Services with a notice of deposition to be held in Modesto on February 12. The notice included the same matters for examination as the earlier notices, but now requested the production of 19 categories of documents.
Subsequent references to dates are to dates in 2015 unless otherwise noted.
On February 6, Bouma's office received a voicemail from Gilg asking to reschedule the deposition due to Evonc's health and his inability to travel. Gilg stated that Evonc had a doctor's appointment scheduled for February 12. On February 9, Gilg served the Vedroses with an objection indicating Evonc was unable to travel. The next day, Bouma wrote Gilg and stated that given the prior history of the case and difficulty scheduling Evonc's deposition, she was willing to reschedule the deposition to an alternate location if she was provided with a physician's letter confirming Evonc's inability to travel. Bouma and Gilg spoke and agreed to continue the deposition to March 5, with the location to be determined once Bouma received the physician's letter.
Appellants, however, did not provide the physician's letter. Accordingly, Bouma served an amended notice of deposition with production of documents on Consumer Services on February 24, which set the deposition in Modesto for March 5. On February 26, Bouma received a voicemail from Gilg's assistant stating that Evonc could not travel and he would provide a physician's note to that effect. In addition, Evonc wanted to cancel the deposition because he was going to have knee replacement surgery and was on medication. Bouma spoke with Gilg's assistant the following day and asked when Evonc would be undergoing surgery; Bouma was told the information would be in the forthcoming physician's note.
Bouma received another objection to the deposition on March 2, stating Evonc would not attend the deposition due to health reasons, since he was going to have a knee replacement. Bouma responded with a letter to Gilg, in which she stated she had not received any information regarding Evonc's inability to travel or the scheduling of his surgery. Neither Consumer Services nor Gilg appeared for the deposition on March 5, and Consumer Services failed to produce the documents requested in the notice.
A. Motion to Compel
On April 9, the Vedroses filed a motion to compel Consumer Services to attend the deposition and produce the documents identified in the deposition notice. They also sought a monetary sanction. The Vedroses asserted that appellants' conduct was an abuse of the discovery process as Consumer Services was avoiding the deposition due to Evonc's alleged illness, just as in 2012, yet it failed to produce a physician's letter that showed the claimed illness prevented Evonc from traveling to or attending a deposition. Hearing on the motion was set for May 6. Appellants filed their opposition to the motion on April 29. The Vedroses objected to appellants' opposition as untimely and urged the trial court to exercise its discretion to disregard the late-filed opposition.
After hearing oral argument at the May 6 hearing, the trial court decided to consider the motion unopposed in light of the fact that appellants' opposition was filed and served only four court days before the hearing. The trial court granted the motion in part and denied it in part. It ordered Consumer Services, through its previously designated person most knowledgeable, Evonc, to attend and testify at a deposition, and to produce the documents set forth in the deposition notice for inspection, no later than 30 days from the date the order was served on Consumer Services's counsel. The trial court denied the request for sanctions, as the motion was unopposed.
B. Motion for Protective Orders
On June 15, appellants filed a motion for protective orders, to be heard on July 30, by which they sought: (1) to postpone Evonc's deposition, which was scheduled for the following day, until Evonc had medical clearance from his doctors to attend; (2) an order that certain documents requested in the deposition notice not be produced; and (3) to stay the deposition pending a hearing on the motion.
Gilg declared that after the trial court ordered Evonc to attend the deposition, appellants were served with a notice that the deposition would take place on June 5. Gilg conferred with Bouma, and they agreed to a new date of June 16. Gilg said he repeatedly informed Bouma that Evonc had a severe medical condition, as he was having double knee replacement surgeries in the near future, and of his recent car accident that aggravated his condition. Gilg said he also told Bouma that Evonc was in constant pain and was under doctor's advice not to travel, and he could not give his "best testimony," because he was taking heavy-duty pain medication. Despite this, Bouma demanded the deposition be held within the court-ordered 30-day period. Gilg agreed to the June 16 date, as he also wanted to comply with the court's order, and the Vedroses served an amended notice of deposition for June 16.
Late in the day on June 11, Evonc told Gilg he could not attend the deposition because of his pain, discomfort, and "fogged mind due to the pain medication," as well his doctor's recommendation that he not attend the deposition, work, or travel. Gilg left a detailed voicemail for Bouma on June 12 as to why Evonc could not attend, and personally served a meet and confer letter on Bouma, along with a formal objection to the deposition notice and demand for documents. Gilg told Bouma that he intended to file "the appropriate motion" regarding these issues on June 15.
In an accompanying declaration, Evonc stated he was 68 years old, and during the last two years he had suffered from a "variety of serious medical ailments," including diabetes, gout, osteoarthritis of his knees and feet, hypertension, and recurrent sinus infections. Evonc declared that he had been afflicted with severe episodes of disabling pain in his feet and knees that prevented him from going to work and attending to other important matters, such as this lawsuit. Evonc attached a "Work Status Report" from his doctor, Dr. Daniel M. Sonnier, which stated that he had been placed off work from June 3 through June 25, and he had been evaluated and deemed able to return to work at full capacity on June 26. Evonc said he intended to be evaluated further before June 26 to determine if he could return to work or take part in work-related activities.
Evonc had been advised he needed knee replacement surgery on both knees "very soon." Evonc said he had been prescribed "heavy duty pain medication which clouds my mind so I cannot calculate well, remember details well, respond to business inquiries or work inquiries well. In short, I'm a basket case at present." In addition, Evonc said he was involved in a car accident on May 30 which aggravated his knee conditions. Evonc listed the medications he had been taking from the beginning of 2013 to the present, and stated he was in the process of acquiring medical documentation to substantiate their use and the effect of his medications on his ability to testify, which he would file with the court. According to Evonc, the medications had serious side effects and he found it "exceedingly difficult to concentrate" or to make it to his office to take care of business. Evonc claimed he was incapable of dealing with anything other than his immediate physical needs. Evonc asked the court to postpone his deposition until he was medically cleared to attend and his mind was clear enough to give his best testimony.
In bringing the motion for protective orders, appellants invited the court to consider all the papers previously filed with the court, which included their late-filed objections to the motion to compel Evonc's deposition. In those objections filed with the court on April 29, appellants asserted that Evonc could not attend the scheduled deposition because he was under the care of a doctor having suffered a mild heart attack. Despite promises to Bouma, no doctor's letter confirming that claim was provided to Bouma or the court. Indeed, Evonc's declaration filed less than two months later makes no mention of a heart attack or treatment for heart problems.
Appellants argued they had shown good cause to postpone the deposition due to Evonc's medical conditions and the pain medication he was taking, which rendered "his mental faculties to be, shall we say, less than harmonized[,]" and kept him "in 'loo loo' land." Appellants asserted it would be legal malpractice to allow Evonc to testify in this state, as the deposition testimony would be "fodder for impeachment" should he testify differently once his mind became lucid. Appellants asserted the motion was not a disguised motion for reconsideration of the court's previous order, as the trial court did not consider their opposition and the order was impliedly without prejudice to their right to move for a protective order regarding the production of some of the requested documents. Appellants also argued a protective order should issue excepting from production 12 categories of documents.
C. Opposition to Motion for Protective Orders
The Vedroses opposed the motion for protective orders on the following grounds: (1) Consumer Services was a suspended corporation and therefore could not defend in the present lawsuit; (2) the motion was an untimely motion for reconsideration; and (3) appellants failed to meet their burden of establishing good cause. The Vedroses asked the trial court to strike the motion on the first two grounds and to take judicial notice of June 30 and July 3 business entity details from the California Secretary of State showing Consumer Services was a suspended corporation. On the merits, they argued Consumer Services had not established good cause for the protective orders, as it had not submitted any medical documentation to show Evonc was unable to participate in, or travel to, the deposition, and had not provided a factual basis to establish good cause to limit the document request.
Appellants filed a reply on July 28. They admitted they filed the reply papers late, which Gilg said was due to Consumer Services's suspended status, which Evonc was going to remove on July 27. An "additional medical record" was attached to Gilg's declaration which he said showed Evonc was scheduled to have surgery on his right shoulder on August 6, with a total left knee replacement surgery to occur three to four months later. The medical record is a one-page, unsigned, printed "After Visit Summary" for a July 23 appointment, which contains some pre-operative instructions for a "Shoulder Arthroscopy W Open Repair Rotator Cuff (Right)" scheduled for August 6, and a handwritten note that states, "left knee reschedule from Aug 4, 2015 surgery - 3 to 4 months."
In their points and authorities, appellants argued the suspension of Consumer Services's corporate status rendered the Vedroses' opposition to the motion for protective orders moot, as the suspension prohibited it from participating in the litigation, including discovery proceedings. Moreover, while the parties were not aware of the suspension at the time, Consumer Services was prohibited from taking part in the June 16 deposition.
D. Motion for Terminating Sanctions
On July 2, the Vedroses filed a motion asking for terminating sanctions for appellants' failure to obey the trial court's order compelling Evonc's testimony and the production of documents. The Vedroses requested that appellants' answer be stricken and a default entered or, in the alternative, the trial court impose issue or evidence sanctions. The motion was to be heard on the same day as the motion for protective orders.
Bouma declared that on May 21, she served Gilg with the notice setting Evonc's deposition as Consumer Services's "person most knowledgeable," for June 5 in Modesto. On June 3, Bouma received a voicemail from Gilg stating he had a mandatory appearance in Oakland on June 5. Bouma agreed to reschedule the deposition to the following week, but Gilg said Evonc could not attend that week. Bouma and Gilg agreed to hold the deposition on June 16, and Bouma sent Gilg a confirming letter and amended notice of deposition.
On June 12, Bouma received a voicemail from Gilg stating Evonc would not attend the June 16 deposition nor produce the documents set forth in the deposition notice. Bouma and Gilg attended a case management conference on June 15, and Gilg later served Bouma with the motion for protective orders. Although Bouma appeared for the June 16 deposition, neither Evonc nor Gilg did. Moreover, Consumer Services failed to produce for inspections the documents listed in the deposition notice. On July 1, Bouma discovered, when researching Consumer Services, that according to the California Secretary of State's website as updated June 30, Consumer Services's corporate status had been suspended.
The Vedroses argued the trial court had authority to issue a terminating sanction, as appellants willfully violated the trial court's order when they failed to appear at the June 16 deposition and produce documents, which was a misuse of the discovery process. They contended the motion for protective orders also was an abuse of the discovery process, as it was nothing more than an untimely motion for reconsideration that Consumer Services could not bring due to its status as a suspended corporation. The Vedroses contended no lesser sanction would be appropriate or effective, as excluding evidence or issues would be futile since they would be forced to go to trial with incomplete or nonexistent evidence.
E. Opposition to Motion for Terminating Sanctions
In opposition to the motion for terminating sanctions, appellants argued they did not misuse the discovery process. They asserted that except for the failure to appear at the August 7, 2012 deposition, they communicated with the Vedroses through their respective attorneys to schedule the deposition and promptly informed Bouma when Evonc's health prevented him from attending. Appellants claimed they timely and properly asserted meritorious objections to the March 5 and June 16 depositions based on Evonc's health. As for disobeying a court order, while it was true the court ordered Evonc to attend the deposition, once it was determined his health prevented his attendance, he promptly moved for a protective order. Finally, appellants asserted a terminating sanction should not be made lightly and lesser sanctions should be imposed first.
Appellants contended they should not be sanctioned based on Consumer Services's suspended status, as Gilg was unaware of the suspension and Evonc was unaware of its implications, and they were not participating in litigation activities of their own volition, but instead were responding to the Vedroses' deposition demand. Appellants pointed out that if they had attended the deposition they would have been in violation of Corporations Code section 2205 and Revenue and Taxation Code section 23301, and "would have been in more trouble than it is in right now." Thus, the corporate suspension was actually a "perfect legal excuse" for not attending Evonc's deposition and not being subjected to a terminating sanction. Appellants argued Bouma should be sanctioned monetarily for moving for a terminating sanction without substantial justification.
Evonc declared he never willfully failed or refused to appear at any deposition, and never intended to misuse the discovery process. Instead, he was not able to attend the depositions because of his health and his inability to provide his "best testimony" due to the medications he was taking for his various ailments, which made it difficult to concentrate. Evonc's doctors told him he was scheduled for surgery on his right shoulder between August 4 and 10, and he needed a total left knee replacement six to eight weeks later. In addition, his right knee needed to be totally replaced and the surgery was to take place about four months after the left knee replacement. After these surgeries, it would be decided whether he needed surgery on his left shoulder, which was injured in the car accident. Evonc's doctors had advised him he would be "out of commission" for eight months to a year, during which time he would be forced to take pain medication.
Evonc asserted appellants' prior responses to written discovery in January 2012 showed that they never willfully refused to comply with any discovery request in the action. Evonc was aware that the Secretary of State had temporarily suspended Consumer Services for non-payment of taxes, but he did not tell Gilg of this because he was not aware of its implications. Evonc said he would remedy the problem by paying the taxes. Evonc was willing to participate in alternative discovery procedures in lieu of his personal attendance at a deposition.
Attached to Evonc's declaration were 15 pages of various medical documents, including appointment confirmations for June 25, July 14, and August 20; a report of an MRI of the right shoulder; a June 25 "Work Status Report" that stated Evonc was placed on modified activity at work and home from June 25 through August 1, which included no squatting, kneeling, knee bending, climbing stairs, or reaching above his right shoulder, and that he was unable to sit or stand for more than 15 minutes at a time; a July 2 visit summary that lists a "shoulder arthroscopy, rotator cuff repair," and future appointments for a physical therapy class on July 14, pre-op on July 16, and an office visit on August 20; and a "Pre-Op Checklist" that shows a surgery date of August 4 for a left total knee replacement.
In his accompanying declaration, Gilg denied being aware that the California Secretary of State had suspended Consumer Services due to nonpayment of taxes until he was served with the motion for terminating sanctions.
F. Hearing on the Motions
At the July 30 hearing on both motions, the trial court first addressed the motion for protective orders. When Gilg stated he had produced some medical documentation regarding Evonc's health problems, the trial court read from the tentative ruling - that the medical information provided to support the motion, i.e. a pro forma work status report, did not support a claim that Evonc was unable to attend the deposition, as it did not consider any accommodations that might allow him to attend, and thus was insufficient to establish the need for a protective order. Gilg responded that was the medical documentation provided to him. The trial court asked whether he told Evonc he needed a doctor's letter or note, as there were times when the court needs this information, and stated that under the circumstances, this seemed like a continuing delay tactic in the case.
Gilg said he did not know the corporation was suspended and he did not inquire about it because he had not received any information that such an inquiry was necessary. Gilg explained that he filed the reply late because Evonc told him he was going to take care of the corporate suspension. Bouma added that the corporation was still suspended as of July 28, a fact of which the trial court took judicial notice. Gilg added that if Evonc was taking pain medication, it likely would affect his memory and ability to recall. The trial court responded there was not enough information to reach that conclusion, and while it had been repeatedly represented to the court that Evonc could not attend the deposition, the only support for that was a work status report. The trial court then confirmed its tentative ruling denying the motion for protective orders.
The trial court next addressed the motion for terminating sanctions. Bouma argued the circumstances of the case had shown time and again the abuse of the discovery process and Evonc's complete disregard of the trial court's prior order to attend. Gilg argued a terminating sanction was a drastic remedy, noting that there was no trial date and no prior discovery sanctions had been issued. Gilg offered to submit to an alternative form of discovery, such as written deposition questions, and given the multiple surgeries Evonc was facing, a terminating sanction was unwarranted. Bouma responded that a lesser sanction was unnecessary when a party blatantly violates a court order. Bouma asserted that Evonc used a medical excuse for not attending his deposition in 2012, and he did not attend even though the deposition was scheduled to occur closer to his home. Moreover, she tried three different times to schedule the deposition before bringing the motion to compel, and the same arguments were raised that Evonc could not travel and was injured.
The trial court did not understand why there was no signed document, note, or letter from a physician, which told the court "very much about the situation." The trial court stated this was "one of the worst examples of abuse of the discovery process that I have ever seen in - going on my 25 years on the bench." The trial court confirmed the tentative ruling granting the motion.
In its written order, filed on August 14, the trial court stated it denied the motion for protective order because (1) Consumer Services was a suspended corporation that was unable to petition the court for any relief, and as long as it remained suspended, the court-ordered deposition of Evonc in his capacity as Consumer Services's person most knowledgeable could not go forward; and (2) the motion was not supported by good cause and could be construed as a late motion for reconsideration of the May 6 order. The trial court awarded Bouma $1,050 in sanctions. The trial court granted the motion for terminating sanctions, stating that appellants had "repeatedly ignored the Court's discovery orders[,]" and this behavior " 'threaten(s) the integrity of the judicial process.' " The trial court struck appellants' answer to the fourth amended complaint and granted the Vedroses' request for entry of default. Appellants' default was entered on August 14.
G. Prove-Up Hearing
On August 27, the Vedroses filed Robert's and Judy's declarations, as well as Bouma's declaration, and lodged exhibits, in support of their request for a default judgment. A prove-up hearing was set for September 10. The Vedroses submitted evidence in support of their claim for the following compensatory damages, as alleged in the fourth amended complaint: (1) $443,034, comprised of $393,489 for the loss of the house, $5,525 paid on the contract, $4,000 paid to third parties, $33,320 in lost earnings, and $6,700 in additional expenses; (2) $239,854.54 in interest; (3) $2,495.35 in costs; and (4) $32,975 in attorney fees. In addition, the Vedroses had served a statement of punitive damages on appellants in May 2014, which stated the Vedroses reserved the right to seek $1,329,102 in punitive damages.
On September 21, the trial court filed a minute order, entitled "Deferred Decision on Default Prove-Up Hearing." The order stated that before the September 10 prove-up hearing commenced, Bouma informed the trial court that Gilg had filed motions for reconsideration of the court's rulings on the motions for protective order and terminating sanctions, and court and counsel discussed whether the hearing should proceed in view of these motions, which were to be heard on October 8. The Vedroses decided to proceed with the prove-up hearing and Bouma cited a case that the court would lose jurisdiction to rule on the reconsideration motions if judgment were entered before the hearing on the motions. The court proceeded to hear the prove-up hearing and took the matter under submission on September 10. The court, however, decided on its own motion to take the matter out of submission as of September 18, in order to hear and rule on the motions for reconsideration. The order stated that depending on the court's rulings on the reconsideration motions, particularly the motion for terminating sanctions, "the matter may proceed to judgment post the prove-up hearing or may be re-calendared on the active, civil calendar."
Although the register of actions shows a minute order was filed on September 10, as well as an exhibit list, neither the order nor the exhibit list are in the clerk's transcript, as appellants did not designate them for inclusion. Moreover, appellants did not request the reporter's transcript of the September 10 hearing.
H. Motions for Reconsideration
On September 4, appellants filed two separate motions for reconsideration of the orders denying their motion for protective orders and granting the Vedroses' motion for terminating sanctions.
Both motions were based on the same "new or different facts and circumstances," namely that Evonc was medically unable to attend his deposition from June to February 2016, as shown by a declaration from one of his doctors and a letter from another doctor. In addition, "more detailed medical records" were attached establishing Evonc's medical problems. Appellants claimed they were unable to present this medical documentation with their moving papers because of Evonc's medical condition and the fact that obtaining a letter and declaration from his doctors was "exceedingly difficult considering said doctors' hectic schedules." Appellants also argued that while the trial court granted terminating sanctions as to both Consumer Services and Evonc, only Consumer Services should be subject to terminating sanctions as it was the only party purportedly guilty of discovery abuse.
In his declaration, Evonc stated he was recovering from the August 6 surgery on his right shoulder and he may need surgery on his left shoulder before double knee replacement surgery. In addition, he was having back problems that caused him intense pain and he was scheduled to have an epidural in seven to ten days. Evonc explained it was very difficult to get medical letters from doctors, particularly surgeons, to establish his inability to attend court-related functions, such as depositions. Evonc claimed he had repeatedly asked his doctors for letters and declarations, but they were very busy people and he was unable to provide sufficient medical information to the court previously because he was in constant pain and his mind was "in a constant clouded state due to pain medication."
Appellants submitted a declaration from Dr. Benedict Buenviaje, who said that Evonc had been his patient since April 2015. Dr. Buenviaje told Evonc to avoid sitting in the same position for more than 15 minutes, or standing for more than 15 minutes, as Evonc had a spinal disorder that caused him intense pain and discomfort. Dr. Buenviaje further stated that Evonc was scheduled for left knee replacement surgery in the near future, to be followed by a right knee replacement, and had already had right shoulder surgery. Evonc had been prescribed "heavy-duty pain medication," including hydrocodone, Percocet, and Relefen, to combat his knee and back pain, as well as pain from his shoulder surgery, the side of effects of which would subject any patient who took them to confusion and drowsiness. For these reasons, Dr. Buenviaje advised Evonc he was not able to attend any court-related activities, including depositions or in-court testimony. Dr. Buenviaje said Evonc had been unable to do so since June and would not be able to do so for the foreseeable future due to the pending surgeries. Appellants also submitted a "Visit Verification - Orthopedics," signed by Dr. Joanne Youngeun Kim, which stated that Evonc "will be unable to participate in court or depositions from 8/6/15 to 2/6/16[,]" and 39 pages of medical records.
The Vedroses opposed both motions. They asserted appellants may be precluded from seeking the requested relief, as they had not submitted a certificate of revivor of Consumer Services's corporate status. Moreover, they had not submitted admissible evidence of new or different facts, circumstances or law to bring the reconsideration motions.
In reply, Evonc declared that he submitted an application for certificate of revivor to the California Secretary of State on August 9, and Consumer Services had since been reinstated to active corporate status.
At the October 8 hearing, the trial court decided to reserve ruling on the motions for reconsideration to give the parties the opportunity to brief the issue of whether it was legally permissible for the court to grant a terminating sanction against both an entity and an individual, where the individual was the person most knowledgable for the entity, and both the entity and the individual are named defendants. On the evidence submitted in support of the motions, the trial court commented that it was "like pulling teeth" to get information on Evonc's medical condition and ultimately the information provided was "a day late and a dollar short." Appellants had not presented a declaration with details of the number of attempts made to obtain the information; instead, they just stated the doctor was busy. The trial court wanted to know how Dr. Kim determined Evonc could not be deposed until February 2016, noting that was not "vetted carefully enough" given that the five-year time limit for bringing the action to trial was due to expire in January 2016. Gilg recognized the problem and stated appellants were willing to immediately work with the Vedroses on alternative modes of discovery.
In appellants' supplemental brief on the issue of the propriety of imposing terminating sanctions on Evonc, Gilg stated appellants were willing to agree to extend the time the Vedroses had to bring the matter to trial should the court lift the terminating sanctions. On December 8, appellants also filed a notice in which they claimed the Vedroses had committed intrinsic fraud in the June 2013 and August 2014 default prove-up hearings, which appellants claimed could be repeated should the court deny reconsideration of the order granting terminating sanctions and again issue a money judgment. Appellants asserted the Vedroses failed to disclose they obtained a loan modification soon after their contract with Consumer Services ended, which suspended foreclosure proceedings. Appellants claimed this showed the Vedroses had not suffered any damages as a result of Consumer Services's omissions, as it was only after the Vedroses failed to make the modified payments that foreclosure proceedings resumed. Appellants also asserted the Vedroses lied when they averred they were forced to short sell their home. Appellants asked the court to consider the intrinsic fraud when making any default money judgment against them and to adjust any punitive damages awarded accordingly.
At the December 10 continued hearing, the trial court asked Gilg how the notice of intrinsic fraud fit into his motions for reconsideration. Gilg told the trial court it did not and he did not know how to proceed; he felt it was his and his client's duty to notify the court because otherwise appellants had no remedy. Bouma objected to the new filing and to the trial court considering it. Bouma pointed out that a default was filed on August 15, and therefore appellants were prevented from participating other than to set aside the default, and asked the trial court to strike the pleading. The trial court denied the motion to strike, but noted the information was filed late and it did not, in the court's view, rise to the level of requiring, or even suggesting, that it should set aside the default and grant the motions for reconsideration. As for the motions for reconsideration, the court confirmed its tentative ruling denying them. The court found that terminating sanctions applied to both Consumer Services and Evonc.
On December 23, the trial court filed its written order denying the motions and entered a default judgment against appellants, which awarded $443,034 in damages, $239,656.56 in prejudgment interest, $33,975 in attorney fees, $2,495.35 in costs, and $1,329,102 in punitive damages.
DISCUSSION
I. Motion for Protective Orders
In their opening brief, appellants argue that the trial court abused its discretion in denying their motion for protective orders. Although they appear to concede that the trial court properly denied their motion based on Consumer Services's suspended corporate status, they clearly do not concede the propriety of the trial court's finding that they failed to show good cause for granting the motion and issuing protective orders. It is undisputed that appellants filed and argued the motion despite Consumer Services's suspended corporate status. As a suspended corporation, Consumer Services was not entitled to act in defense of the litigation and the trial court properly denied the motion on that ground. Although the court was entitled to deny the motion for that reason alone, it nevertheless retained jurisdiction to hear and rule on the additional grounds raised by respondents in opposition to that motion.
A corporation that has been suspended for failure to pay its taxes lacks capacity during the period of suspension to prosecute or defend a lawsuit. (Rev. & Tax. Code, § 23301, subd. (a); Traub Co. v. Coffee Break Service, Inc. (1967) 66 Cal.2d 368, 370 (Traub); Benton v. County of Napa (1991) 226 Cal.App.3d 1485, 1490-1491.) Lack of capacity is not a jurisdictional defect and is waived if not properly raised. (Center for Self-Improvement and Community Development v. Lennar Corp.(2009) 173 Cal.App.4th 1543, 1553 (Center for Self-Improvement).) "[T]he suspended status of corporate powers at the time of filing of action by a corporation does not affect the jurisdiction of the court to proceed," nor does a suspension after suit commences but before rendition of judgment deprive the court of jurisdiction or render the judgment void. (Traub, supra, 66 Cal.2d at p. 371.)
The purpose of the prohibition is to pressure the delinquent corporation to pay its taxes. (Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972) 8 Cal.3d 369, 371 (Peacock Hill); Traub, supra, 66 Cal.2d at p. 371.) Once the corporation pays the taxes and penalties owed and obtains reinstatement, its capacity to participate in the litigation is restored and the corporation may continue in the litigation, even to the extent of validating otherwise previously improper proceedings. (Rev. & Tax. Code, § 23305.) Subsequent corporate revivor retroactively validates actions in the court of litigation, including making and opposing of motions and engaging in discovery. (Center for Self-Improvement, supra, 173 Cal.App.4th at p. 1553; Diverco Constructors, Inc. v. Wilstein (1970) 4 Cal.App.3d 6, 12.)
Here, despite the corporation's suspended status, appellants' attorney submitted the motion for protective orders and reply, and argued the motion, without providing adequate medical documentation to support Evonc's claim that he could not attend his deposition due to his health and medications. The Vedroses opposed the motion, both on the merits and on the ground that Consumer Services's corporate powers were suspended. The trial court retained jurisdiction to consider the motion and did not deny it based solely on Consumer Services's suspended status. Instead, the trial court found that appellants had failed to demonstrate good cause for the issuance of the requested protective orders. The trial court denied appellants' requests that Evonc's deposition be postponed indefinitely and they be excused from producing documents as previously ordered. Appellants appeal from the August 14 order, contending the trial court abused its discretion in denying those requests on that ground.
We begin with a summary of appellants' failures to comply with informal and formal requests for discovery precipitating the trial court's August 14 order. In early 2012, shortly after litigation began, the Vedroses noticed Evonc's deposition. Following a series of postponements granted at appellants' request, Evonc failed to appear for that deposition. Although Evonc claimed to have medical conditions which made it difficult for him to attend, no medical documentation was provided to support those claims and appellants sought no stay of that deposition or other protective orders.
After two years of further delays, during which appellants failed to make timely responses to amended pleadings resulting in the entry of default judgments and subsequent proceedings to set aside those judgments, the Vedroses, in January 2015, again noticed Evonc's deposition and requested production of documents.
After another series of postponements granted at appellants' request, Evonc again failed to appear for deposition as scheduled and no documents were produced. Although he continued to allege medical conditions, including a heart attack, which made it impossible for him to attend, he failed to provide promised medical documentation to support those allegations and sought no stay or other protective orders. Following that second failure to appear, the Vedroses again filed a motion to compel Evonc's deposition, which was heard on May 7. At the hearing, the trial court ordered Evonc to appear for deposition within 30 days and ordered appellants to produce documents as requested.
Consistent with the trial court's order, the Vedroses noticed the taking of Evonc's deposition, which was postponed until June 16 at appellants' request. On the day before the scheduled deposition, appellants' counsel filed the motion for protective orders. Although no temporary stay was granted, neither Evonc nor counsel appeared for the scheduled deposition and no documents were produced.
Against that backdrop, on July 30 the trial court heard appellants' motion requesting protective orders, including requests that Evonc's deposition be postponed indefinitely and the failure to produce documents be excused. Appellants argued that Evonc could not attend the deposition because of his severe medical condition, his doctor's advice not to travel, and the effects of pain medications which he believed prevented him from giving his "best testimony." Appellants offered medical documentation from a physician who had apparently treated Evonc following a car accident in late May, but that documentation offered little support for Evonc's claim that he could not sit for deposition and no support for his claim that he was taking medications which might affect his testimony. Moreover, appellants offered no support for Evonc's previous claims that he was unable to travel and attend a deposition because of scheduled knee replacement surgery and having suffered a heart attack.
In their motion, appellants also objected to the request for production of documents as previously ordered. They offered no explanation for their failure to make those objections during the more than three years that production of those documents had been pending and offered no excuse for their failure to produce documents as to which they offered no objection.
In denying the motion for protective orders, the trial court concluded that Evonc's claim that he was medically unable to attend the deposition was not supported by credible evidence and appeared to be a continuation of previous delay tactics. In particular, the court noted Evonc's failure to offer any medical evidence supporting his claim that he was taking medications which affected his memory and recall.
Acknowledging the appropriate standard of review, appellants argue the trial court abused its discretion in denying their request for protective orders. Under that deferential standard, the question on appeal is not whether other inferences might have been drawn from the evidence presented or other conclusions reached. Rather, the question is whether the trial court's exercise of its discretion was so arbitrary, capricious or patently absurd as to result in a manifest miscarriage of justice. (Scott v. C.R. Bard, Inc. (2014) 231 Cal.App.4th 763, 783.) An appellate court, reviewing the trial court's exercise of that discretion, must adopt the trial court's factual findings if substantial evidence supports them. (Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 430; People v. Fairbank (1997) 16 Cal.4th 1223, 1254.)
We find there was substantial evidence supporting the trial court's finding that Evonc's claims were not credible. The trial court clearly was skeptical of Evonc's uncorroborated claims and was looking for medical documentation to corroborate them. Given Evonc's history of offering inconsistent statements concerning his medical condition and his many failures to provide promised corroborating medical evidence, the trial court was entitled to be skeptical.
Nothing in the medical documentation relating to the nature and extent of Evonc's injuries stemming from a car accident in late May compelled a finding that Evonc could not have attended his June 16 deposition or that his deposition should be postponed indefinitely. Nor does the medical documentation submitted support the conclusion that appellants could not have complied with the order to produce documents. Moreover, as the trial court particularly noted, nothing in that documentation supported Evonc's uncorroborated allegation that he was taking medication which "clouded his mind" and prevented him from giving lucid testimony.
We conclude that the trial court's order denying appellant's motion for protective orders was supported by substantial evidence. Appellants have failed to demonstrate that the court abused its discretion in making that order.
II. Motion for Reconsideration of Request for Protective Orders
Following the court's order denying their request for protective orders, appellants brought a motion for reconsideration of that order. They now appeal from the trial court's decision denying their motion and contend the court abused its discretion in denying their renewed request for protective orders.
Under section 1008, subdivision (a), a party affected by a court's order may seek reconsideration of the order based on "new or different facts, circumstances, or law." "The party seeking reconsideration must provide not just new evidence or different facts, but a satisfactory explanation for the failure to produce it at an earlier time." (Glade v. Glade (1995) 38 Cal.App.4th 1441, 1457 (Glade).) We review the trial court's ruling for reconsideration under the abuse of discretion standard. (Farmers Insurance Exchange v. Superior Court (2013) 218 Cal.App.4th 96, 106.)
In support of their motion for reconsideration, appellants submitted additional evidence, including a declaration from Dr. Benedict Buenviaje, as well as an additional declaration from Evonc. In Dr. Buenviaje's September 3 declaration, he states that Evonc has been his patient since April 2015 and opines that Evonc has been unable to attend "any court-related activities" since June and will continue to be unable to do so for the foreseeable future. In his own declaration, Evonc states he has been in "constant pain," and his mind "in a constant clouded state" by reason of pain medication, "for all of 2015." He asserts that, by reason of that disability and because "doctors are very busy people," he has, until now, been unable to provide medical documentation to corroborate that disability.
In denying the motion for reconsideration, the trial court found that appellants "failed to submit 'new or different facts' which could not have been submitted at the [previous] hearing." We find sufficient facts to support the trial court's conclusion that appellants, exercising reasonable diligence, could have submitted the additional evidence at the July 30 hearing. Evonc's long history of failures to attend depositions and to provide promised medical documentation date back to 2012. That history demonstrates that Evonc reasonably should have known that he needed to provide medical documentation supporting his claimed disabilities long before the July 30 hearing. His explanations for failing to provide it earlier are not persuasive.
Although Evonc claimed his condition impeded his ability to obtain medical documentation earlier, the trial court had good reason to be skeptical of that claim. This new declaration, alleging that he was disabled for "all of 2015" is inconsistent with Dr. Buenviaje's declaration and inconsistent with previous representations made to the court and Bouma. In his new declaration, Evonc offered no corroboration of his "repeated efforts" to obtain medical documentation and no explanation for how he was able to obtain that documentation in September, but not earlier. Again, there was substantial evidence supporting the trial court's finding that Evonc was not credible.
Appellants argue they were excused from submitting medical documentation at the July 30 hearing because Consumer Services was, at that time, a suspended corporation. As noted previously, appellants brought the motion for protective orders and argued its merits, despite that suspension. When Consumer Services obtained the certificate of revivor, its acts of filing and arguing the motion were validated. Those actions having been validated, the suspension provides no legal excuse for appellants' failure to exercise reasonable diligence in producing the medical documentation. Moreover, both Evonc and Gilg claimed they were unaware of the suspension's impact on their motion for protective orders until respondents filed and served the motion requesting terminating sanctions. There is no evidence in the record to support the conclusion that Consumer Services's suspension affected appellants' duty and ability to exercise reasonable diligence in preparing for and bringing the motion for protective orders.
In sum, we find the trial court did not abuse its discretion in denying the motion for reconsideration of its previous order.
III. The Motion for Terminating Sanctions
Appellants contend the trial court abused its discretion in issuing terminating sanctions against them because their non-compliance was not "willful" and the court should have considered a lesser sanction.
A. Standard of Review
A court, after notice and opportunity for a hearing, may impose sanctions for "misuse of the discovery process[,]" which includes "[f]ailing to respond or to submit to an authorized method of discovery[,]" and "[d]isobeying a court order to provide discovery." (§§ 2023.030, 2023.010, subds. (d) & (g).) Available sanctions include a terminating sanction in the form of orders striking the pleadings or rendering a default judgment against the offending party. (§ 2023.030, subd. (d)(1), (4).) Section 2025.450, subdivision (h) specifically authorizes a trial court to impose a terminating sanction under section 2023.030 if a party "fails to obey an order compelling attendance, testimony, and production" at a deposition.
We review the trial court's imposition of discovery sanctions for abuse of discretion. " ' "The power to impose discovery sanctions is a broad discretion subject to reversal only for arbitrary, capricious, or whimsical action. [Citations.] Only two facts are absolutely prerequisite to imposition of the sanction: (1) there must be a failure to comply . . . and (2) the failure must be willful [citation]." ' " (Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545 (Vallbona).) Willfulness in this context means a "conscious or intentional failure to act, as distinguished from accidental or involuntary noncompliance. . . . " (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 787-788 (Deyo), superseded by statute on another point as stated in Guzman v. General Motors (1984) 154 Cal.App.3d 438, 444.) "Lack of diligence may be deemed willful in the sense that the party understood his obligation, had the ability to comply, and failed to comply. [Citation.] A willful failure does not necessarily include a wrongful intention to disobey discovery rules." (Deyo, supra, 84 Cal.App.3d at p. 787.)
The propriety of terminating sanctions is determined by the totality of the circumstances, including the willfulness of the improper acts, the detriment to the propounding party, and the number of formal and informal attempts to obtain the discovery. (Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1244-1247 (Lang).) While a decision to order terminating sanctions should not be made lightly, "where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction." (Mileikowsky v. Tenet Healthsystem (2005) 128 Cal.App.4th 262, 279-280.) Under this standard, trial courts have properly imposed terminating sanctions when parties have willfully disobeyed one or more discovery orders. (Lang, supra, 77 Cal.App.4th at pp. 1244-1247 [discussing cases].) "The question before us ' "is not whether the trial court should have imposed a lesser sanction; rather, the question is whether the trial court abused its discretion by imposing the sanction it chose." ' " (Liberty Mutual Fire Insurance Company v. LcL Administrators, Inc. (2008) 163 Cal.App.4th 1093, 1105 (Liberty Mutual).)
"When the trial court's exercise of discretion relies on factual determinations, we examine the record for substantial evidence to support them. [Citations.] In this regard, 'the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination [of the trier of fact] . . . . ' " (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 390-391.) These principles encompass a review of a trial court's finding of willfulness. (Id. at p. 391.)
B. Willfulness
Appellants argue both that the trial court failed to make an express finding of willfulness and there was insufficient evidence to support an implied finding.
We reject appellants' assertion that the trial court was required to make an express finding of willfulness, as there is no requirement that its order actually use the word "willful." The case appellants rely on for their assertion that an express finding is required, Midwife v. Bernal (1988) 203 Cal.App.3d 57, 63 (Midwife), was decided under former section 2034 (repealed by Stats. 1986, ch. 1334, § 1, eff. July 1, 1987), which explicitly required a party's failure to comply with discovery requests be willful before the trial court could strike pleadings, enter a default, or enter a dismissal. In contrast, the Civil Discovery Act (§ 2016.010 et seq.) does not require a finding of willful failure to comply with discovery before terminating sanctions may be imposed, although courts continue to hold that willfulness is a prerequisite for the imposition of non-monetary sanctions. (Biles v. Exxon Mobile Corp. (2004) 124 Cal.App.4th 1315, 1327; Vallbona, supra, 43 Cal.App.4th at p. 1545.) Since the statute does not specifically require a finding of willfulness, an express finding is not required. Instead, we may imply the finding if substantial evidence supports it. (See In re Marriage of Aninger (1990) 220 Cal.App.3d 230, 238.)
For example, sections 2023.010 and 2023.030 do not state that the court must find a party acted willfully before imposing a terminating sanction; instead, the court may order sanctions for "misuse of the discovery process," which includes failing to respond to an authorized method of discovery or disobeying a court order to provide discovery. (§§ 2023.010, subds. (d) & (g); 2023.030, subd. (d).)
Here, there is substantial evidence to support the trial court's implied finding that appellants willfully disobeyed the order requiring Evonc to submit to a deposition as Consumer Services's person most knowledgeable. Through four years of litigation, appellants repeatedly caused delays in the process. When the Vedroses first tried to depose Consumer Services in 2012, Evonc claimed he was unable to travel due to a medical condition and failed to appear for his deposition. The Vedroses filed a motion to compel, which was continued to allow appellants to obtain new counsel and ultimately dismissed when the Vedroses filed a second amended complaint. Appellants, however, did not retain new counsel until nearly a year later. While representing themselves, appellants' default was taken when they failed to answer the second amended complaint and a default judgment was entered, which was set aside when appellants retained Gilg. Thereafter, appellants failed to respond to the fourth amended complaint and their default was taken; the resulting default judgment was set aside based on the mandatory provision of section 473, subdivision (b).
After the Vedroses again noticed Consumer Services's deposition in January 2015, appellants continued to claim Evonc's health prevented him from traveling and submitting to a deposition. Appellants, however, failed to produce a doctor's letter to support the claim, despite Bouma's repeated requests for a letter and Gilg's assurances that a letter was forthcoming. The trial court granted the Vedroses' motion to compel and ordered Consumer Services, through Evonc as its person most knowledgeable, to submit to a deposition and produce the documents within 30 days. In violation of this order, appellants failed to appear for the deposition or produce documents, again claiming Evonc's health and medication use prevented him from appearing and being deposed, but they never produced any documentation to support this claim. This pattern of abuse of the discovery process indicates appellants' failure to comply was intentional, rather than accidental or involuntary.
Appellants argue the record does not support a finding of willfulness because (1) Gilg did not ignore the deposition notice, but instead informed Bouma that Evonc could not attend due to his health, personally served a meet and confer letter and objections to the deposition notice, told the trial court and Bouma at the case management conference that Evonc's health prevented him from attending, and brought a motion for protective order; and (2) Consumer Services was a suspended corporation on the day of the scheduled deposition, and therefore it was prohibited by law from participating in the litigation, including attending the deposition.
As to the first point, for reasons already discussed, the trial court could reasonably conclude Evonc's health did not prevent him from attending the deposition and that the motion for protective orders was a tactic to further delay discovery. Independent of Evonc's failure to attend the deposition, appellants also failed to produce any of the documents ordered by the court.
As for appellants' extensive argument that the suspension of Consumer Services's corporate status precluded a finding of willfulness because by submitting to a deposition, appellants could have been subjected to sanctions for misuse of the discovery process and criminal liability under Revenue and Taxation Code section 19719, subdivision (a), we disagree. While it may be true, as appellants argue, that Consumer Services may have been subject to criminal and other penalties for attending the deposition while suspended, they admit they did not refuse to attend by reason of that suspension and were unaware of any such penalties on the date set for that deposition.
Revenue and Taxation Code section 19719, subdivision (a) provides, in relevant part: "Any person who attempts or purports to exercise the powers, rights, and privileges of a corporation that has been suspended pursuant to Section 23301 . . . is punishable by a fine of not less than two hundred fifty dollars ($250) and not exceeding one thousand dollars ($1,000), or by imprisonment not exceeding one year, or both fine and imprisonment."
Moreover, refusal to attend the deposition for that reason would not protect appellants from the consequences of that refusal. A suspended corporation is not protected against a judgment by default resulting from its failure to answer within the time allowed, even though it might, by virtue of that suspension, be prohibited from filing that answer. (Grell v. Laci La Beau Corp. (1999) 73 Cal.App.4th 1300, 1306.) Entry of a default, in those circumstances, results in presumptive concession of the truth of the allegations against the suspended corporation. Similarly, the failure of a suspended corporation to comply with a lawful discovery order may result in a presumptive concession that the defense of its lawsuit lacks merit. (Hammond Packing Co. v. Arkansas (1909) 212 U.S. 322, 350-352 (Hammond); see also Karlsson v. Ford Motor Co. (2006) 140 Cal.App.4th 1202, 1218-1219 (Karlsson); Unger v. Los Angeles Transit Lines (1960) 180 Cal.App.2d 172, 187 (Unger).) In either circumstance, the suspended corporation is not relieved of the consequences of its own failure to act. In our view, appellants cannot use Consumer Services's failure to pay its taxes as an excuse to defy a lawful court order and to shield itself from the consequences of that defiance.
Appellants contend the trial court's order compelling Consumer Services's deposition was invalid because the trial court did not have jurisdiction to issue the order due to Consumer Services's suspended corporate status. As we have already explained, however, lack of capacity is not a jurisdictional defect and the trial court had jurisdiction to proceed despite the corporate suspension. (Center for Self-Improvement, supra, 173 Cal.App.4th at pp. 1552-1553.)
Appellants simply have not met their burden of showing that their failure to appear at the deposition was not willful. (Deyo, supra, 84 Cal.App.3d at p. 788.) Rather, the evidence, viewed in the light most favorable to the Vedroses, is sufficient to support a finding that appellants willfully disobeyed a court order compelling Evonc's deposition and production of documents.
C. Due Process and Lesser Sanctions
Appellants claim the trial court abused its discretion in ordering terminating sanctions because the orders were designed solely to punish them and the trial court failed to consider lesser sanctions.
Due process considerations require that " '[t]he sanctions the court may impose are such as are suitable and necessary to enable the party seeking discovery to obtain the objects of the discovery he seeks but the court may not impose sanctions which are designed not to accomplish the objects of the discovery but to impose punishment.' " (Petersen v. City of Vallejo (1968) 259 Cal.App.2d 757, 782.) Thus, terminating sanctions based on the failure to pay monetary sanctions has been held to violate a party's due process rights. (See, e.g., Midwife, supra, 203 Cal.App.3d at p. 65; Newland v. Superior Court (1995) 40 Cal.App.4th 608, 613 (Newland).) Terminating sanctions for refusing to produce evidence material to the case, however, do not violate due process, as the persistent refusal to comply with discovery requests is equated with a concession of the lack of merit to that party's defense in the lawsuit. (Hammond, supra, 212 U.S. at pp. 350-352; see also Karlsson, supra, 140 Cal.App.4th at pp. 1218-1219; Unger, supra, 180 Cal.App.2d at p. 187.) For reasons discussed earlier, Consumer Services's suspended status does not affect that concession.
Appellants rely on a number of cases that reversed the imposition of terminating sanctions because the sanctions were not designed to accomplish discovery, but to impose punishment. (See, e.g., Caryl Richards, Inc. v. Superior Court (1961) 188 Cal.App.2d 300, 304 [abuse of discretion to impose terminating sanctions when based on defendant's failure to respond adequately after being ordered to do so]; Midwife, supra, 203 Cal.App.3d at pp. 63-65 [terminating sanctions based solely on plaintiff's failure to pay monetary sanction was purely punitive and so an abuse of discretion]; Motown Record Corp. v. Superior Court (1984) 155 Cal.App.3d 482, 490 [compelled waiver of privilege was abuse of discretion when plaintiffs were one day late in providing further explanation for asserting privilege, which could only be waived pursuant to Evidence Code section 912]; Thomas v. Luong (1986) 187 Cal.App.3d 76, 81-82 (Thomas) [terminating sanctions for failing to answer interrogatories or appear at deposition "substantially exceeded what was reasonably required to protect the plaintiff" where defendant had already answered earlier interrogatories and had offered to stipulate to liability]; Newland, supra, 40 Cal.App.4th at p. 613 [noncompliance with monetary sanction, by itself, cannot justify terminating sanctions].)
Those cases are distinguishable from the present case for two important reasons: (1) appellants' discovery abuses included not only a single failure to comply with a lawful discovery order, but a long history of abuses resulting in delays affecting respondents' fundamental right to prepare their case in a timely fashion; and (2) no lesser sanction was likely to ensure appellants' compliance. Where, as here, appellants' willful failure to provide meaningful discovery affects the entire case and threatens the integrity of the judicial process, as the trial court found, that court properly acts within its considerable discretion in ordering terminating sanctions.
Pointing to the court's comments at the July 30 hearing, appellants contend the trial court abused its discretion in not imposing lesser sanctions because of its hostility to appellants. During argument on appellants' request for protective orders, the trial court "wondered aloud" why appellants failed to submit a signed letter from a doctor corroborating Evonc's claimed disabilities. Later, during argument on the motion for terminating sanctions, the trial court asked appellants' counsel to explain appellants' continual delays in filing documents. At the conclusion of the hearing, the trial court summarized the history of appellants' abuses of the discovery process, noting appellants' nearly complete failure to provide discovery in the year since the second default judgment was set aside. Appellants characterize these inquiries and comments as angry, hostile, and inappropriate.
The trial court's comment about Evonc's failure to provide evidence corroborating his medical condition was reasonable given his long history of failing to provide medical corroboration as promised. Likewise, the trial court's inquiry about continual delays reasonably allowed appellants an opportunity to explain what appeared to be delaying tactics. Given appellants' repeated failures to timely file pleadings, that inquiry was neither inappropriate nor improper.
Appellant's self-serving opinions of the court's motivation and demeanor are inconsistent with the record. The following excerpt from the transcript of the hearing on the motion for terminating sanctions is illustrative.
The Court: I don't willy-nilly come to court in the morning and say, now, what case can I dismiss that's a drastic remedy just to be spiteful, or meanspirited, or whatever. That's not what drives me.
Mr. Gilg: I'm not implying that.
The Court: I try to do what's right every single day I come here. I'm telling you right now, in this case, this is one of the worst examples of abuse of the discovery process that I have ever seen in - going on my 25 years on the bench. The matter stand submitted?
Mr. Gilg: Again, Your Honor, if I could just briefly? I'm certainly - I know the Court's trying to do what's right ....
Appellants complain that terminating sanctions were not warranted for their violation of only one discovery order, and instead the trial court should have considered imposing lesser sanctions, citing Lopez v. Watchtower Bible and Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566 (Lopez). The totality of the circumstances supports a conclusion that the trial court did not abuse its discretion. While terminating sanctions are a "drastic penalty" that are to "be used sparingly" (Lopez, supra, 246 Cal.App.4th at p. 604), a court "is not required to have infinite patience . . . " when a party repeatedly fails to respond to discovery and comply with court orders compelling discovery. (Jerry's Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th 1058, 1069.) Here, appellants failed to submit to a deposition in 2012, purportedly due to Evonc's health issues, and again in 2015 for the same reason. In the interim, two default judgments were entered and set aside due to failures to respond to the Vedroses' complaints. After the Vedroses noticed appellants' deposition in January 2015, Bouma attempted to accommodate Evonc's alleged health issues, but Gilg never produced the medical documentation to substantiate Evonc's need for accommodation. This forced the Vedroses to bring a motion to compel, which was granted. Appellants, however, refused to submit to a deposition, again based on Evonc's alleged health issues, yet they did not produce medical documentation to substantiate Evonc's limitations. "A party who is unwilling to, or whose counsel is incapable of, performing the obligations of litigation with diligence should not be surprised when the right to proceed is lost." (Ibid.)
Contrary to appellants' assertion, there is no rule that the trial court may only order progressive sanctions, or that it must discuss lesser sanctions before imposing greater ones. (Lang, supra, 77 Cal.App.4th at pp. 1245-1246; Do It Urself Moving & Storage, Inc. v. Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27, 36-37, superseded by statute on another ground as set out in Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 582-583.) Rather, the trial court must tailor sanctions to fit the discovery abuse with the intent to "protect the legitimate interests of the party harmed by the failure to provide discovery." (Thomas, supra, 187 Cal.App.3d at p. 81.) Moreover, the question before us " ' "is not whether the trial court should have imposed a lesser sanction; rather, the question is whether the trial court abused its discretion by imposing the sanction it chose." ' " (Liberty Mutual, supra, 163 Cal.App.4th at pp. 1105-1106.)
Lopez does not support appellants' assertion that the trial court must state on the record or in its order that it considered lesser sanctions. In Lopez, the appellate court concluded the trial court erred in ordering terminating sanctions because there was no evidence lesser sanctions would have failed to obtain the defendant's compliance and other sanctions could have effectively remedied the discovery violation. (Lopez, supra, 246 Cal.App.4th at p. 606.) While the appellate court noted the trial court made a "conclusory observation in its written order" that it had considered imposing lesser sanctions and there was nothing to suggest the trial court made a meaningful effort to determine whether alternatives would be effective, the appellate court's holding was based on its conclusion the trial court's finding that there was no effective alternate sanction was premature and unsupported. (Ibid.) In contrast here, the record supports the conclusion that lesser sanctions would not have obtained appellants' compliance.
Terminating sanctions are completely appropriate when the trial court concludes lesser sanctions would not bring about the offending party's compliance. (R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 496.) Here, appellants have not shown that any lesser sanctions would have brought about their compliance. The trial court was not required to allow appellants to continue their stalling tactics indefinitely. (Liberty Mutual, supra, 163 Cal.App.4th at p. 1106.) No abuse of discretion is shown.
IV. Motion for Reconsideration of Order Imposing Terminating Sanctions
Appellants make a cursory argument regarding the propriety of the trial court's denial of their motion for reconsideration of the order imposing terminating sanctions. Appellants offered the same evidence in support of both motions seeking reconsideration of the court's orders stemming from the July 30 hearing. We reject appellants' contention that the trial court abused its discretion in denying this motion for the same reasons we reject their assertion that the court abused its discretion in denying the companion motion - appellants failed to provide a satisfactory explanation for their failure to produce the newly submitted evidence at the July 30 hearing. (Glade, supra, 38 Cal.App.4th at p. 1457.)
As we previously explained, there are sufficient facts to support the trial court's conclusion that this "new" evidence could have, with the exercise of reasonable diligence, been submitted earlier. In that "new" evidence, appellants claim that Evonc was unable to attend a deposition or participate in other court-related activities for the foreseeable future, and certainly not before February 2016. Respondents noted the five-year limit for bringing an action to trial would expire in January 2016, subjecting their case to dismissal pursuant to section 583.360.
Appellants contend the trial court abused its discretion in denying their motion, arguing their offer to waive the five-year limitation cured any harm resulting from their delay. We reject that contention, noting that there was substantial evidence supporting the trial court's finding that appellants' misuse of the discovery process had prejudiced respondents' ability to prosecute their action in a timely manner. The purpose of that five-year limitation is to " 'promote the trial of cases before evidence is lost, destroyed, or the memory of witnesses becomes dimmed.' " (Moran v. Superior Court (1983) 35 Cal.3d 229, 237, quoting General Motors Corp. v. Superior Court (1966) 65 Cal.2d 88.) That purpose is not served simply by an offer of a waiver of the right to seek a dismissal. Moreover, the prejudice resulting from a long delay is not cured by such a waiver, where that prejudice has already occurred.
Accordingly, we find no abuse of discretion.
V. Damages
Appellants also contend that the amount of compensatory damages was excessive and unsupported by the evidence, and it was improper to award punitive damages because no evidence of their financial condition was presented.
Contrary to the Vedroses' assertion, appellants are entitled to challenge the sufficiency of the evidence to support the default judgment. (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 288 (Kim).) " '[T]he general rule that the sufficiency of the evidence tendered in a default proceeding cannot be reviewed on an appeal from a default judgment . . . is true as to matters for which no proof is required by virtue of the admission by default of the allegations of the complaint. [Citation.] However, as to damages which, despite default, require proof[,] the general rule does not apply.' " (Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1150.) Thus, an appellate court will reverse damages awarded on a default judgment not only when the award is so excessive that it "shocks the conscience" and is the result of "passion [or] prejudice," but also when "the damages awarded are unsupported by sufficient evidence." (Ibid.)
A plaintiff in a default judgment proceeding must prove he or she is entitled to the damages he or she claims by submitting evidence that establishes a prima facie case for those damages. (Harbour Vista, LLC v. HSBC Mortg. Services Inc. (2011) 201 Cal.App.4th 1496, 1503, fn. 6; Kim, supra, 201 Cal.App.4th at p. 288.) A prove-up hearing may include live testimony or, in the trial court's discretion, affidavits or declarations setting forth "with particularity" the facts that are "within the personal knowledge" of the declarant. (§ 585, subd. (d).)
Here, the Vedroses submitted declarations and lodged exhibits in support of the damages they claimed. A prove-up hearing was held on September 10, but neither the reporter's transcript nor the minute order of the hearing are in the appellate record, as appellants did not designate them for inclusion. Although the trial court awarded the Vedroses the damages they claimed in their declarations, without the reporter's transcript or minute order, we cannot tell whether the hearing proceeded solely on the declarations or additional evidence was produced, or the basis for the trial court's damages award. Therefore, it is impossible to review appellants' claim that that there was insufficient evidence to support the compensatory and punitive damages awarded.
On this ground alone, we reject appellants' contentions, since they have failed to affirmatively show error. (Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575 [party challenging judgment has burden to show reversible error]; accord, Gee v. American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412, 1416 [if record is inadequate for meaningful review, appellant defaults and the trial court's decision is affirmed]; Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 865 [it is appellant's duty to present adequate record from which prejudicial error is shown]; Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295-1296 [failure to provide an adequate record on an issue requires that the issue be resolved against appellant].)
Since we cannot review appellants' contentions regarding damages, we deny as irrelevant appellants' request that we take judicial notice of "certified copies of officially recorded documents" on the Vedroses' property, the majority of which were not presented below. Moreover, absent exceptional circumstances we, as the appellate court, do not make findings of fact. (In re Zeth S. (2003) 31 Cal.4th 396, 405.) No such exceptional circumstances exist here.
DISPOSITION
The judgment is affirmed. The Vedroses are awarded their costs on appeal.
/s/_________
ELLISON, J. WE CONCUR: /s/_________
PEÑA, ACTING P.J. /s/_________
SMITH, J.
Retired judge of the Fresno Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.