Opinion
NOT TO BE PUBLISHED
San Francisco County Super. Ct. No. CUD-06-618097
Bruiniers, J.
Appellant Jorge Vidrio is a landlord who brought an unlawful detainer action against respondents, his commercial tenants. Respondents vacated the premises and the landlord’s attorney withdrew as counsel. Vidrio was later served by mail with a cross-complaint and with a subsequent statement of damages, and when Vidrio failed to answer, his default was entered. A default judgment, including an award of punitive damages, was entered against him.
More than a year later, Vidrio sought to set aside the default judgment and to defend the action. The tenants moved for an assignment of rents to enforce the judgment. The court denied the motion to set aside the judgment and granted the motion for assignment of rents. We affirm.
I. Background
Jorge Vidrio owns a building at 3032–3034 24th Street in San Francisco (the Property), consisting of two residential units and one commercial unit. On November 10, 2005, he leased the commercial unit (the Premises) to respondents Sofia G. Larson and Victor M. Hernandez, individually and doing business as All Star Insurance Agency-SF (Tenants), for a term of two years.
On May 3, 2006, Vidrio initiated this action by filing an unlawful detainer complaint against Tenants, alleging that they were past due on their rent and that he had served them with a three-day notice to pay or vacate the Premises. On May 10, Tenants answered the complaint. They did not dispute that they owed $2,800 in rent at the time Vidrio’s three-day notice was served. However, they asserted several affirmative defenses, including: breach of contract (failure to deliver the rented space on time and/or in a usable condition); breach of the covenant of quiet enjoyment (constant harassment leading to a restraining order against Vidrio); retaliation (for obtaining a restraining order and filing a complaint with the Department of Building Inspection); and constructive eviction (based on the poor condition of the Premises). Tenants also alleged that Vidrio failed to comply with a three-day notice period provided in their lease before filing the complaint.
Tenants attached a copy of a temporary restraining order they had obtained against Vidrio on April 9, 2006. The restraining order was issued based on Hernandez’s declaration that Vidrio had harassed him on a daily basis, verbally threatened him, and interfered with Tenants’ business by standing in the front door to the Premises. Tenants later produced evidence that the request for the temporary restraining order was personally served on Vidrio on April 5, that the superior court issued a two-year restraining order on April 19, and that the two-year restraining order was personally served on Vidrio by San Francisco police officers on April 28.
As reflected in the register of actions, the case was initially set for trial on June 5, 2006, but was later removed from the trial calendar since Tenants had vacated the Premises and “possession is no longer at issue.” On July 28 and September 8, Vidrio filed case management statements. On September 22, the case was assigned to arbitration. On October 5, Vidrio’s attorney moved for leave to withdraw on the ground that Vidrio had not paid for his legal services and there had been a breakdown in the attorney-client relationship. The declaration in support of the motion stated that within the previous 30 days the attorney had confirmed, both by telephone and by conversation, that Vidrio’s address was 3032 24th Street, San Francisco (one of the residential units on the Property). On November 1, the motion to withdraw was granted. The attorney served Vidrio with notice of entry of the order relieving him as counsel by mailing a copy of the order to 3032 24th Street. The notice advised Vidrio that he was required to keep the court and the other parties to the action apprised of his current address.
After his attorney’s withdrawal, Vidrio did not participate in the litigation. A panel of arbitrators was assigned on December 4, 2006, and an arbitrator was appointed December 15, 2006. On March 27, 2007, Tenants moved for an order to establish discovery admissions and for monetary sanctions. Vidrio filed no opposition. On April 17, 2007, Vidrio failed to appear at a hearing to show cause why the previously ordered arbitration had not been completed. He was sanctioned $250, and a further order to show cause hearing was set for September 25, 2007. On April 24, 2007, Tenants’ motion to establish admissions was granted. Vidrio was sanctioned in the amount of $527.50. On August 1, 2007, Tenants recorded an abstract of judgment on the Property for the sanctions order.
On December 3, 2007, the arbitrator heard and denied Vidrio’s unlawful detainer claim and awarded costs to Tenants. The arbitrator served the arbitration award on Vidrio by mailing a copy to 3032 24th Street. The trial court entered the arbitration award as a judgment on January 10, 2008.
The register of actions reflects that a notice of entry of judgment was sent by the court on January 10, 2008, but no copy is included in the record provided to us.
Tenants’ Cross-Complaint and Default Judgment
On August 24, 2007, the trial court granted Tenants’ uncontested motion for leave to file a cross-complaint, which they then filed August 30. They sought general, special and punitive damages according to proof. Tenants served Vidrio with the cross-complaint by mailing a copy to 3032 24th Street. Vidrio did not answer the cross-complaint. On October 4, Vidrio’s default was entered. Tenants also filed a Statement of Damages, claiming compensatory damages of $600,000 and punitive damages of $250,000. Tenants had served Vidrio, by mail to 3032 24th Street, the Statement of Damages on August 29, 2007, and the Request for Entry of Default on October 2, 2007.
Tenants alleged that when they first attempted to move into the Premises, which they leased beginning in November 2005, they discovered that a family was living there and they incurred a three-week delay and unanticipated expenses while the family moved out before they could move in. Vidrio never completed alterations to the premises that he had promised, and he never arranged for mail service at the premises as he had promised. On February 6, 2006, a large sewage backup caused damage to Tenants’ property, but Vidrio denied any responsibility. A city building inspector came to the premises and identified several plumbing code violations. Vidrio sent a plumber to the premises to make repairs, and the plumber told Tenants he had warned Vidrio about the problems 10 years earlier. Plumbing repairs were performed on the grand opening day of Tenants’ business. On April 4, 2006, the building inspector determined that none of the plumbing code violations had been corrected. When the inspector told Vidrio he had to remedy the violations, Vidrio became agitated and he ordered Tenants to vacate the Premises, pay late rent, and turn over the keys. On April 5, 2006, Tenants served Vidrio with papers regarding their request for a restraining order. On April 6, 2006, Vidrio posted the three-day notice to vacate the Premises. On April 7, 2006, Tenants paid their back rent. On April 28, 2006, the building inspector’s supervisor came to the Premises to investigate Vidrio’s false claim that Tenants were not allowing him to make plumbing repairs. On May 4, 2006, the city plumbing commissioner sent Vidrio to abatement. On May 5, 2006, Tenants were served with an eviction notice. Tenants vacated the Premises on May 26, 2006. Tenants asserted causes of action for breach of contract, retaliatory eviction, negligence, constructive eviction, defamation, and fraud.
On April 29, 2008, the trial court held a default prove-up hearing on the cross-complaint. Tenants’ attorney made an oral offer of proof as to Vidrio’s liability, and Hernandez and Larson personally confirmed the accuracy of the statement. Tenants requested $87,037.71 in economic damages, for which they provided detailed supporting documentation. Tenants also requested $100,000 in emotional distress damages, and $100,000 in punitive damages. Finally, Tenants claimed $9,403.48 in contractual attorney fees and statutory costs. The court granted judgment in favor of Tenants for $213,939.60, consisting of $87,037.71 in economic damages, $16,537.16 in prejudgment interest, $9,403.48 in attorney fees, $961.25 in costs, and $100,000 in punitive damages. Vidrio was served with notice of entry of judgment by mail at 3032 24th Street. On April 30, Tenants recorded an abstract of the judgment on the Property.
“At the time [Tenants] entered into the lease, [Vidrio] failed to disclose a number of material defects of which he had knowledge. Including the fact that there were a number of repairs and build outs there [that] were done without permits and the fact that the plumbing system was completely non-functional. [¶] After moving in, [Tenants] determined that that was the case. They had disputes with the Landlord with regard to that and ultimately ended up moving out.”
The economic damages consisted of: $19,600 in rent that Vidrio obtained by fraud for the use of Premises that were not worth that amount; $10,190.88 in costs of moving into the Premises; $7,855.34 in materials and $6,720 in labor for tenant improvements to the Premises; $2,449.77 in costs of moving out of the Premises; $2,695.82 in damages to computers caused by the plumbing problems; $2,420 in advertising for the grand opening of the business at Tenants’ new location; $5,913.01 in moving-in expenses at the new location; $3,833.89 in materials and $15,360 in labor for tenant improvements at the new location; and $10,000 in lost income for the two months they were closed.
In support of the emotional distress damages, Tenants’ attorney cited Vidrio’s vehement and vicious comments and negative references he provided to landlords after Tenants had moved out, which caused them to relocate far from the Premises and ultimately contributed to the failure of the business in November 2007. Larson and Hernandez had to pawn their vehicle to come up with money for living expenses and to open a new business. As a consequence, Larson suffered from frequent stress-induced migraine headaches and both Larson and Hernandez had trouble sleeping.
The punitive damages claim was “based upon the value of the building in terms of the wealth of the individual and it’s based upon the fraud, the intentional failure to disclose the plumbing issues and the fact that much of the building was done without permit, which interfered with their ability to get permit[s] to do the work they needed to do. [¶] Had Mr. Vidrio disclosed the true condition of the property they never would have made the investment and gone into that property.” Counsel represented that the Property was worth between $1.2 and $1.5 million and had no liens on it other than Tenants’ lien from the sanction order.
The court explained that it awarded punitive damages because “I do think that there was malice and oppression and fraud involved in this case, ” and also indicated that it took Tenants’ emotional distress into account in setting the punitive damages award.
Tenants’ Collection Efforts
On July 1, 2008, Tenants obtained an order for Vidrio to appear at a debtor’s examination on July 30, 2008. On July 11, 2008, Tenants filed a proof of service averring that Vidrio had been personally served with the order on July 2, 2008. Vidrio did not appear for the examination and the court issued a body attachment for his arrest. The clerk of the court mailed a letter to Vidrio at 3032 24th Street, advising him of the warrant, and warning him that if he failed to appear for a continuance of the debtors examination on August 21, 2008, he would be subject to arrest on the warrant. Vidrio again failed to appear on August 21, 2008. The warrant of attachment was ultimately issued On May 5, 2009. The Sheriff’s office left a warrant courtesy notice at the Premises. Vidrio then appeared in court on May 15, 2009, and was ordered to appear on May 28, 2009, for a debtors examination.
Motion to Quash Service of the Order of Examination
On May 28, 2009, a new attorney substituted as counsel for Vidrio and filed a motion to quash service of the order of examination. The examination was continued to June 25. In support of the motion to quash, Vidrio declared under penalty of perjury that “[o]n July 2, 2008, I was not at the Property when the Application and Order to Appear for Examination was allegedly served on me.”
In opposition to the motion to quash, Hernandez, Larson and Fallas (their designated process server) each filed sworn declarations averring to the following facts. Because Hernandez and Larson knew their attorney had filed a lien against the Property, they would drive by the Property whenever they were in San Francisco. Sometime in late June 2008, they noticed a “For Lease” sign on the window that listed a phone number they recognized as Vidrio’s. Hernandez informed his attorney, who obtained an order for a debtor’s examination that Tenants could serve on Vidrio. A friend of Hernandez called the number on the “For Lease” sign and arranged for Vidrio to show him the Premises on July 2, 2008, at approximately 2:00 p.m. Fallas, Hernandez and Larson arrived at the appointed time and both Hernandez and Larson confirmed for Fallas that the person inside the Premises was Vidrio. Fallas then personally served Vidrio with the Order for Examination and a Civil Subpoena.
After Tenants’ declarations were filed, Vidrio withdrew his motion to quash. Vidrio continued to maintain, however, that he had not been personally served with the order on July 2, 2008, and he specifically denied the account of Tenants and their process server.
Motion for Assignment of Rents and Motion to Set Aside Default
On June 17, 2009, Tenants filed a motion for an order assigning Vidrio’s interest in the rents he received from the Property to satisfy the judgment. Vidrio opposed the motion.
Vidrio also moved to set aside the default judgment and for leave to defend against the cross-complaint. In support of this motion, Vidrio’s made several averments. Vidrio averred that English was his second language and that he did not speak it fluently or understand it completely. When Tenants vacated the Premises in May 2006, he went to the office of Tenants’ attorney, and received the keys and a receipt. Tenants’ attorney told him “that the complaints and everything were over. At least that is what [he] understood from the conversation.” In July 2006, Vidrio’s attorney confirmed that Vidrio’s legal fees had been paid in full. Vidrio understood that his attorney was going to “remove the restraining order in exchange for the final payment he requested, ” and that the legal case was over. He produced a copy of a note handwritten on plain paper signed by his attorney and dated July 26, 2006, that stated, “Vidrio, Jorge v. Victor Hernandez – All accounts any any [sic] charges from Law Offices of James M. Millar are paid in full.” Vidrio claimed that he did not receive any mail from his attorney advising him that the attorney was withdrawing from the case, and that he first learned of the motion to withdraw in May 2009.
He stated that there had been a fire in a residential unit in the Property on December 25, 2006, that had rendered the building uninhabitable and forced the commercial tenant to close his business for several months. To corroborate this statement, he produced an incident report by the San Francisco Fire Department and pictures of fire damage. Following the fire, he and his family moved out of the Property and relocated to Daly City, where they lived with relatives. He did not set up mail forwarding or file a change of address with the post office. He never received a copy of the cross-complaint. Vidrio’s wife filed a similar declaration. Vidrio averred that he did not learn that this case was still pending until May 2009, when the sheriff’s office left a warrant courtesy notice at the Premises and the commercial tenant’s contractor brought it to Vidrio’s attention. Upon receiving the notice, Vidrio immediately contacted an attorney, who investigated the case and informed him of the default judgment and the order to appear for an examination.
In a later declaration, Vidrio explained that the Property does not have mail boxes. Instead, “the mail is dropped on the steps behind the iron-bar gate, ” and he produced photographs to corroborate this statement. He explained that instead of arranging for his mail to be forwarded, he contacted specific businesses with his new Daly City address and he produced copies of mail he and his wife had received from the Department of Motor Vehicles, the Internal Revenue Service, Allstate Insurance, MetLife Insurance, and the Social Security Administration at a Daly City address. He arranged for his mortgage notices to be sent to his wife’s work address. Vidrio stated, “I do not have credit cards and most of [the] other mail I receive is junk mail, therefore I did not request mail forwarding from the post office.” He did not know what happened to the mail that was sent by Tenants’ attorney and the clerk of the court.
In response to Vidrio’s motion to set aside the default judgment and opposition to assignment of rents, Tenants’ attorney averred that at the time Tenants vacated the Premises, Tenants’ attorney had an agreement with Vidrio’s attorney that Vidrio would file an amended complaint and Tenants would file a cross-complaint in response. That agreement was reflected in a July 28, 2006 court order continuing a case management conference “for Plaintiff to file Amended Complaint and Defendants to file Cross-Complaint.” Vidrio never filed the amended complaint and his attorney ultimately withdrew from the case. Tenants’ attorney denied that he ever had a conversation with Vidrio about the case outside the presence of Vidrio’s counsel. He mailed Vidrio numerous documents by mail at the 24th Street address and none had been returned to his office by the postal service.
Tenants’ attorney further averred that Vidrio testified at the debtor’s examination that he had an open insurance claim for the fire damage to the Property. The examination was continuing and he had not yet testified about whether he was receiving insurance payments in lieu of lost rent. Tenants’ attorney had obtained a copy of Vidrio’s rental agreement with his current commercial tenant, which provided that rent was reduced to $1,600 per month only for July and August 2009, and the rent would increase to $3,000 per month beginning in September. Moreover, the written lease, executed July 30, 2008, directed that all notices under the lease be sent to Vidrio at 3032 24th Street.
On July 29, 2009, the trial court held a hearing on Vidrio’s motion to set aside the default judgment. The court commented, “[T]he reason that the defendant is in the position he’s in is he didn’t follow the directions in the order that relieved his prior counsel or take commonsense [sic] steps to make sure that mail in an ongoing case would get to him if in fact it didn’t.” The court denied the motion, ruling that the statutory motion was untimely and Vidrio had not made an adequate showing to justify vacating the judgment on the basis of equity.
On July 31, 2009, the court granted Tenants’ motion for assignment of rent payments from the Property until the judgment in the case was satisfied. Vidrio appeals from both orders.
II. Discussion
1. Motion for Assignment of Rents
Vidrio has forfeited his appellate challenge to the order assigning rents. Although Vidrio’s notice of appeal states that he appeals from the order granting Tenants’ motion to assign rents, Tenants correctly point out that Vidrio raised no substantive argument about this order in his opening brief. Vidrio draws our attention to a statement in his opening brief about the appealability of the order, and he contends some of the arguments he made regarding the denial of his motion to set aside the default judgment are also relevant to the court’s ruling on the motion to assign rents. However, it is an appellant’s duty to plainly set forth each of his arguments “under a separate heading or subheading summarizing the point, and support each point by argument and, if possible, by citation of authority.” (Cal. Rules of Court, rule 8.204(a)(1)(B).) Vidrio utterly failed to do so in his opening brief and he did not even attempt to remedy the situation in his reply brief. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784–785 [“[w]hen an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived”].)
B. Motion to Set Aside Default and Default Judgment
As in the trial court, Vidrio here asserts four grounds for setting aside the default and default judgment: (1) Code of Civil Procedure section 473, subdivision (b) (section 473(b)); (2) section 473.5; (3) equity; and (4) his due process right to formal notice of his potential liability under the cross-complaint before a default judgment may be entered. We conclude none of these arguments has merit and affirm the trial court’s order denying the motion.
Vidrio moved to set aside the default judgment “and for leave to defend the action, ” and he attached a proposed answer to the motion. Therefore, he necessarily also moved to set aside the default.
All statutory references are to the Code of Civil Procedure unless otherwise indicated.
Section 473(b) provides, in relevant part: “The 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. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” Because Vidrio did not move to set aside the default judgment within six months of entry of his default (October 4, 2007) or the default judgment taken (April 29, 2008), it is patently obvious that relief was unavailable under this statute. Although Vidrio cites section 473(b) and discusses the standard of review for denial of a motion brought under that section, he never advances a theory of why the statute has application to his motion. We construe his silence as a concession that relief was unavailable under this section.
Section 473.5, subdivision (a) provides, “When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.” The motion must be accompanied by “an affidavit showing under oath that the party’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect.” (§ 473.5, subd. (b).) “[S]ection 473.5 reflects the understanding that if any form of service of summons does not result in actual knowledge, fundamental fairness may require that a subsequent default be set aside.” (Olvera v. Olvera (1991) 232 Cal.App.3d 32, 40.) We review the denial of a motion to set aside a default judgment under section 473.5 for abuse of discretion. (Id. at p. 41; Ellard v. Conway (2001) 94 Cal.App.4th 540, 547.)
Vidrio fails to demonstrate his entitlement to relief under this statute. It is undisputed that Vidrio failed to bring his motion to set aside the default within 180 days of the time that he was served by mail at his address of record with notice of entry of the default judgment (April 30, 2008). Although he denies receipt, there was conflicting evidence presented as to Vidrio’s actual knowledge of the continued proceedings, and the existence of Tenant’s cross-complaint against him. But here, there was no statutory requirement in the first instance for service of summons on the cross-complaint at all. Vidrio initiated this action by filing an unlawful detainer complaint against Tenants. Having thereby appeared in the action, Vidrio could thereafter properly be served with the cross-complaint by mail at his address of record. (§§ 428.60, 1010; cf. § 1014 [describing what constitutes appearance by a defendant]; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2010) ¶ 6:571 at p. 6-148 (rev. #1 2008).)
We discuss below the issue of whether personal service of the cross-complaint and/or the statement of damages in the manner of service of a summons and complaint was required as a matter of due process is discussed below. We conclude it was not.
Substantial evidence in the record supports the trial court’s determination that Vidrio’s failure to answer the cross-complaint resulted from at minimum his own inexcusable neglect, if not his willful indifference. Vidrio’s declaration that Tenants’ attorney informed him in about May 2006, that the case was “over” was directly contradicted by Tenants’ attorney’s declaration to the contrary. Vidrio’s declaration that his attorney accepted final payment in July 2006, and that Vidrio understood that at that time the case was “over” is contradicted by the fact that the attorney continued to file papers in the action on Vidrio’s behalf through September 2006, and the attorney’s declaration in the motion to withdraw as counsel that Vidrio was not paying his legal fees in October 2006, and that there had been a breakdown in the attorney-client relationship.
The evidence undermines Vidrio’s claim that he had reasonable grounds to conclude the case was over. Vidrio expressly acknowledges in his own declaration that he was living at the Property until the December 25, 2006 fire-and that mail was being delivered to the Property. His assertion that he never received notice that his attorney was withdrawing from the case and had no notice, until May 2009, that the case was still pending is contradicted by evidence that numerous documents related to the case were mailed to the Property, both by the court and by his counsel, during the period he admits living at the Property, well before the fire-including the motion to withdraw and notice of entry of the order granting that motion, the December 4 assignment of an arbitration panel, the December 15 appointment of an arbitrator, and the December 15 order to show cause. The trial court acted well within its discretion in resolving these conflicts in the evidence against Vidrio. On this evidence, the court could have found that Vidrio had actual knowledge that the case was ongoing as of December 2006, but chose to ignore that fact.
The court was free to resolve these evidentiary conflicts and credibility questions on the written record without holding an evidentiary hearing. (§ 2009; Cal. Rules of Court, rule 3.1306(a).)
Moreover, regardless of whether Vidrio had actual knowledge, this evidence supports the court’s finding that Vidrio acted irresponsibly in not taking steps to ensure that he would receive notice of any subsequent developments in the case. Although Vidrio claimed a limited command of English and implied a lack of business sophistication, he did not contend that language difficulties prevented him from comprehending the import of documents that he denied receiving, and evidence was presented that Vidrio executed legal documents in English and that he regularly retained counsel to assist him in his business affairs.
The evidence also supports the conclusion that Vidrio likely received actual notice of the ongoing litigation following the December 25, 2006 fire. Tenants’ attorney averred that he mailed legal documents to 3032 24th Street throughout this period, and court records demonstrate that the clerk of the court did so as well. Vidrio’s own evidence demonstrates that mail was actually delivered to the Property, albeit by dropping it behind a metal gate rather than depositing it in a mail receptacle. The court could have well found that Vidrio frequented the Property, even if he did not live there at the time, because he arranged for repairs to the Property and he entered into commercial leases for the Premises during this period. While it is certainly possible under these circumstances that some of the legal mail never reached Vidrio, it stretches credulity to believe that none of it reached him and the court could reasonably believe that at least some of the mail did reach him. The court’s comments at the hearing on the motion suggest that it found Vidrio’s assertion that he received none of the multiple notices to be at least questionable. Further, the evidence strongly supports a finding that Vidrio received personal service of the order of examination on July 2, 2008, despite his sworn denials, raising further questions as to Vidrio’s credibility in denying receipt of the mailings. Any notice of ongoing proceedings, either as a result of service by mail, or through personal service of an order of examination, should have alerted Vidrio to the necessity of contacting the court or his attorney to determine the status of the case. Had he done so, he would have had ample opportunity to either answer the cross-complaint or to timely move to set aside the default or default judgment. The court properly concluded his failure to do so was inexcusable neglect.
In sum, the trial court did not abuse its discretion by denying the motion for relief under section 437.5.
3. Equitable Relief
After the expiration of the six-month period in which a defendant can obtain relief under section 473(b), a trial court may still vacate the judgment on equitable grounds. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981 (Rappleyea).) “When a default judgment has been obtained, equitable relief may be given only in exceptional circumstances. ‘[W]hen relief under section 473 is available, there is a strong public policy in favor of granting relief and allowing the requesting party his or her day in court. Beyond this period there is a strong public policy in favor of the finality of judgments and only in exceptional circumstances should relief be granted.’ [Citations.]” (Id. at pp. 981–982, italics omitted.) “One ground for equitable relief is extrinsic mistake-a term broadly applied when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits” (id. at p. 981), such as “when a mistaken belief of one party prevented proper notice of the action.” (Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147.) “ ‘To set aside a judgment based upon extrinsic mistake one must satisfy three elements. First, the defaulted party must demonstrate that it has a meritorious case. Second[], the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Last[], the moving party must demonstrate diligence in seeking to set aside the default once... discovered.’ [Citation.]” (Rappleyea, at p. 982, text alterations in Rappleyea.) A trial court’s order denying a motion to vacate a default judgment on equitable grounds is reviewed for abuse of discretion. (Id. at p. 981.)
The trial court did not abuse its discretion in denying Vidrio relief on equitable grounds. First, the trial court could have concluded on the evidence presented that Vidrio failed to establish that any extrinsic mistake caused the default judgment to be entered. Vidrio argues that he was prevented from answering the cross-complaint by the December 2006 fire at the Property, which forced him to relocate from the Property, making him unaware that the litigation was ongoing. As we have noted, however, there was substantial evidence from which the trial court could have reasonably inferred that Vidrio did have actual notice of the ongoing litigation both before and after the December 2006 fire. Therefore, the court could reasonably conclude that there was no extrinsic mistake that caused Vidrio’s default.
Second, the trial court, in finding that Vidrio failed to take common sense steps to ensure he would remain apprised of developments in the litigation, implicitly found that Vidrio did not articulate a satisfactory excuse for not presenting a defense to the cross-complaint. For the reasons already stated, the court’s finding is supported by substantial evidence. Finally, the court easily have found on this record that Vidrio did not act with due diligence. As noted, it would appear highly unlikely that Vidrio received none of the mail that was delivered to the Property relating to the action (including mail sent by Tenants’ attorney, the clerk of the court, and the Recorder’s office) before the courtesy notice of the body attachment warrant was delivered by the sheriff in May 2009, and Vidrio apparently recognized that he faced arrest if did not respond to the court. Despite Vidrio’s claim to the contrary, the court certainly could have found, based on the declarations of Hernandez, Larson and Farrar, that Vidrio was in fact personally served with the order of examination in July 2008. Because Vidrio made no effort to reappear in the action, at least as of July 2008, to answer the cross-complaint, or to set aside the default or default judgment until May 2009, the court could have denied the motion based on lack of diligence.
4. Due Process Right to Notice
Vidrio’s final challenge to the court’s refusal to set aside the default and default judgment is that due process principles render the default and default judgment void because he did not have formal notice of both the claims against him and the potential liability he faced under those claims.
The Supreme Court has addressed this general subject in decisions strictly enforcing the requirement in section 580 that in default situations the “relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint.” (Greenup v. Rodman (1986) 42 Cal.3d 822, 826 (Greenup); see also Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 493–494 (Becker).) “The primary purpose of this section is to insure that defendants in cases which involve a default judgment have adequate notice of the judgments that may be taken against them. [Citation.]” (Becker, at p. 493.) Section 580 and other statutes governing default judgments, including statutes that require service in certain circumstances of a statement of damages cases, “aim to ensure that a defendant who declines to contest an action does not thereby subject himself to open-ended liability.... [¶]... [T]he primary purpose of the section is to guarantee defaulting parties adequate notice of the maximum judgment that may be assessed against them.” (Greenup, at p. 826.)
In Becker, the Court held that a default judgment for $26,457.50 and $2,500 in attorney fees was void as beyond the court’s jurisdiction where the complaint had only prayed for compensatory damages “ ‘in excess of $20,000’ ” and did not mention attorney fees. (Becker, supra, 27 Cal.3d at pp. 492, 494–495.) In Greenup, the Court extended this rule to a situation where a defendant answered the complaint but the answer was subsequently stricken as a discovery sanction. (Greenup, supra, 42 Cal.3d at pp. 827–828.) The Court explained that “due process requires notice to defendants, whether they default by inaction or by willful obstruction, of the potential consequences of a refusal to pursue their defense. Such notice enables a defendant his right to choose-at any point before trial, even after discovery has begun-between (1) giving up his right to defend in exchange for the certainty that he cannot be held liable for more than a known amount, and (2) exercising his right to defend at the cost of exposing himself to greater liability. To this end, ... ‘The rules governing default judgment provide the safeguards which ensure that defendant’s choice is a fair and informed one.’ [Citation.]” (Id. at p. 829.)
In Greenup, the Court noted with apparent approval that “since Becker, the Courts of Appeal have insisted that due process requires formal notice of potential liability; actual notice may not substitute for service of an amended complaint. (E.g., Engebretson & Co. v. Harrison (1981) 125 Cal.App.3d 436, 443 [(Engebretson)].)” (Greenup, supra, 42 Cal.3d at p. 826.) In Engebretson, the plaintiff had personally served the defendant with summons and the complaint, which alleged damages “ ‘in excess of $5,000, ’ ” and served the subsequent statement of damages only by mail. (Engebretson, at p. 438.) Thereafter, the plaintiff obtained entry of default and a default judgment. (Ibid.) The court of appeal held that default could not be entered unless the defendant received formal notice of its potential liability, i.e., the statement of damages, in the manner required for service of a summons: “When a complaint is served, the defendant faces the decision to contest the action (perhaps seeking to negotiate a settlement at the same time) or to remain aloof and risk the entry of default. If the defendant fails to appear in the action after valid service of process, it is reasonable to assume the latter course has been chosen. Thereafter, if the complaint is amended in a way which would materially affect the defendant’s decision not to contest the action [i.e., by way of a statement of damages], this new circumstance should be brought home to the defendant with the same force as the notification of the original action. If the amended complaint is merely served by mail, the defendant may assume the papers thus received only catalog the procedural steps taken by the plaintiff to obtain a default judgment on the original complaint and the defendant may fail to examine them with the care they deserve. Also, of course, documents sent by ordinary mail may go astray.... Service of the amended complaint in the manner provided for service of summons is much more likely to result in actual notice to the defendant that something has occurred requiring reassessment of the decision not to contest the action.” (Id. at pp. 442–444.) Several other courts have reached similar results. (See Plotitsa v. Superior Court (1983) 140 Cal.App.3d 755, 759–761; Twine v. Compton Supermarket (1986) 179 Cal.App.3d 514, 516, fn. 1, 517; Lopez v. Fancelli (1990) 221 Cal.App.3d 1305, 1308, 1310–1312; Parish v. Peters (1991) 1 Cal.App.4th 202, 205, 209–210; Schwab v. Southern California Gas Co. (2004) 114 Cal.App.4th 1308, 1320; contra Candelaria v. Avitia (1990) 219 Cal.App.3d 1436 .) “[A]ctual notice is insufficient.” (Schwab v. Southern California Gas Co., at p. 1321.)
Vidrio argues that these cases dictate that the default and default judgment here must be set aside because he was not personally served with either the cross-complaint or the statement of damages in order to give him the required formal notice of his potential liability. None of these cited cases, however, involved defendants (or cross-defendants) who had already appeared in the action and were thereby already subject to the personal jurisdiction of the court.
Although he denies receipt, Vidrio does not deny that both the cross-complaint and in particular the statement of damages, were served by mail in the manner provided by statute. Section 425.11, which applies to cross-complaints as well as to complaints, provides in pertinent part that if a party has not appeared in action, the damages statement “shall be served in the same manner as a summons.” (§ 425.11, subd. (d)(1).) However, where a party has appeared in the action, “the statement shall be served upon the party’s attorney, or upon the party if the party has appeared without an attorney, in the manner provided for service of a summons or in the manner provided by Chapter 5 (commencing with Section 1010) of Title 14 of Part 2.” (§ 425.11, subd. (d)(2).) Service by mail is expressly authorized in such circumstances. (See §§ 1011–1012.)
“(a) As used in this section: [¶] (1) ‘Complaint’ includes a cross-complaint. [¶] (2) ‘Plaintiff’ includes a cross-complainant. [¶] (3) ‘Defendant’ includes a cross-defendant. [¶] (b) When a complaint is filed in an action to recover damages for personal injury or wrongful death, the defendant may at any time request a statement setting forth the nature and amount of damages being sought. The request shall be served upon the plaintiff, who shall serve a responsive statement as to the damages within 15 days. In the event that a response is not served, the defendant, on notice to the plaintiff, may petition the court in which the action is pending to order the plaintiff to serve a responsive statement. [¶] (c) If no request is made for the statement referred to in subdivision (b), the plaintiff shall serve the statement on the defendant before a default may be taken. [¶] (d) The statement referred to in subdivision (b) shall be served in the following manner: [¶] (1) If a party has not appeared in the action, the statement shall be served in the same manner as a summons. [¶] (2) If a party has appeared in the action, the statement shall be served upon the party’s attorney, or upon the party if the party has appeared without an attorney, in the manner provided for service of a summons or in the manner provided by Chapter 5 (commencing with Section 1010) of Title 14 of Part 2. [¶] (e) The statement referred to in subdivision (b) may be combined with the statement described in Section 425.115.” (§ 425.11.)
To our knowledge, no court has extended the Engebretson rationale to a party who has already appeared in an action, and we decline Vidrio’s invitation to be the first. This court has in fact expressly declined to extend Engebretson to parties who have entered appearances in an action but later allowed the matter to go to default. (Beeman v. Burling (1990) 216 Cal.App.3d 1586, 1593–1594 (Beeman).) The Beeman court distinguished Engebretson and held that in such circumstances, service by mail of a statement of damages was sufficient to support a subsequent judgment. (Id. at p. 1594.) We agree. To hold otherwise would require that any cross-complaint, as well as any material amendment to the operative pleadings, be personally served on a party who has already appeared in the action, even if a party is represented by counsel, contrary to the express statutory provisions of section 425.11.
Having himself initiated the action, we see no policy justification for requiring personal service of subsequent pleadings on Vidrio, and find no deprivation of due process in circumstances where an appearing party fails to keep himself apprised of the status of the litigation through his own inexcusable neglect.
3 Punitive Damages
Finally, Vidrio argues that the punitive damages award in the default judgment was excessive. This claim is within the scope of our review of the order denying Vidrio’s motion to set aside the default judgment, but we find this claim to be an impermissible collateral attack on an otherwise final judgment, and reject it.
Tenants gave required notice of their intent to seek punitive damages. (See §§ 425.11, subd. (e), 425.115.)
Vidrio did not appeal from the default judgment itself, and the time within which he could have appealed from that judgment had long expired by the time he again actively participated in this action. A default judgment is not reviewable on an appeal from an order denying the appellant’s motion to set aside the judgment. (English v. IKON Business Solutions, Inc. (2001) 94 Cal.App.4th 130, 135–136.) Vidrio cited no authority permitting collateral attack on a default judgment on the ground of excessive damages where the damages do not exceed those permitted under section 580. (Cf. Becker, supra, 27 Cal.3d 489, 493–495 [collateral attack on default judgment proper on grounds of lack of jurisdiction, such as when judgment awarded damages in violation of § 580].)
Because we find that we lack jurisdiction to consider Vidrio’s challenge to the punitive damage award, we do not undertake the otherwise required de novo assessment of the propriety of the award. (See State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408; Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1171.)
Vidrio cites Nicholson v. Rose (1980) 106 Cal.App.3d 457 (Nicholson) as authority for the proposition that default judgments awarding punitive damages are looked upon with disfavor and may be reversed on appeal even though the trial court is not shown to have abused its discretion in denying relief from default. In Nicholson, the defendants had appealed not only from an order denying their motion to set aside the default judgment but also from the judgment itself. (Id. at p. 459.) Therefore, the court had jurisdiction to directly review the punitive damages award in that case. We do not. We are also are not persuaded by Nicholson’s reasoning. In Nicholson, the court reversed the punitive damages award even though it concluded the award was supported by substantial evidence. (Id. at pp. 462–463.) Also, despite holding that the trial court did not abuse its discretion in denying the motion to set aside the default judgment (id. at p. 461), the court cited the discourtesy of plaintiff’s counsel in failing to contact defense counsel to alert him to the impending default as an additional reason to reverse the judgment (id. at p. 463). The court justified its reversal of the judgment “in spite of the force of the foregoing legal reasoning” (i.e., that the award of punitive damages was supported by substantial evidence and the denial of the motion to set aside the judgment was not an abuse of discretion) by stating that “default judgments, especially those in which punitive damages are awarded, are looked upon with disfavor. (Slusher v. Durrer (1977) 69 Cal.App.3d 747, 753 [(Slusher)].)” (Id. at p. 462–463.) While in Slusher the default judgment under review did include a punitive damages award (id. at p. 750), Slusher does not hold or state that default judgments in which punitive damages are awarded are looked upon with special disfavor. The cited reference in Slusher merely states that “the policy of the law is to have every case tried on its merits and that policy views with disfavor a party who, regardless of the merits, attempts to take advantage of the mistake, inadvertence, or neglect of his adversary. [Citation.]” (Slusher, at p. 753.)
In this case we see no evidence that Tenants attempted to “take advantage” of mistake, inadvertence or neglect by Vidrio. Tenants and their counsel in fact made persistent efforts to advise Vidrio of the claims against him and the consequences he faced. We find no support for the broad statement in Nicholson that appellate review of default judgments is any more or less stringent where punitive damages are awarded. We do not agree that the policy favoring resolution of disputes on the merits supports reversal of a default judgment that is supported by substantial evidence simply because the judgment also includes a punitive damages award. In any event, where more than six months have passed since entry of a default judgment (as is the case here, but not in Nicholson), the policy favoring hearings on the merits is largely superseded by the policy favoring finality of judgments. (Rappleyea, supra, 8 Cal.4th at pp. 981–982.)
III. Disposition
We affirm the trial court’s July 29, 2009 order denying Vidrio’s motion to set aside the default judgment and its July 31, 2009 order assigning rents. Vidrio shall pay Tenants’ costs on appeal.
We concur: Simons, Acting P. J., Needham, J.