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Walter v. Kia Motors America, Inc.

Court of Appeals of California, Second District, Division Three.
Nov 6, 2003
No. B155492 (Cal. Ct. App. Nov. 6, 2003)

Opinion

B155492.

11-6-2003

RANDY WALTER, Plaintiff and Appellant, v. KIA MOTORS AMERICA, INC., etc., et al., Defendants and Respondents.

Thomas A. Turner, Jr. for Plaintiff and Appellant. No appearance for Defendant and Respondent MBC AdCom.


Plaintiff and appellant Randy Walter (Walter) sued defendant MBC AdCom alleging MBC AdCom used his photograph without his knowledge and consent. MBC AdCom defaulted. The trial court denied Walters request for default judgment against MBC AdCom and entered an order dismissing MBC AdCom. Walter appeals from the order of dismissal. MBC AdCom has not appeared. We reverse with directions.

FACTUAL AND PROCEDURAL BACKGROUND

1. Facts.

In 1994, Walter was vacationing in San Francisco. His picture was taken by a member of an advertising team from MBC AdCom, a Korean corporation and advertising agency from Seoul, Korea. MBC AdCom had been commissioned by Kia Motors to film a commercial for Kia Sephia automobiles. Walter was completely unaware that his picture had been taken.

Walter states that Kia Motors Corporation is a Korean corporation and the parent company of Kia Motors America, Inc. Both entities apparently appeared in the proceedings below. For simplicity, we address both entities collectively as Kia Motors.

Subsequently, the photograph was used in print advertisements. The advertisements depict Walter walking down a street, glancing over his shoulder. Walter is looking toward a Kia Sephia automobile. The Golden Gate bridge is in the background. The following words appear in the advertisement, above the vehicle: "Its not just a beauty that makes me turn to look at The New Sephia! It seduces me no less."

The picture was used six times from January to August 1995 in advertisements for Kia Sephia automobiles. These were seen in California.

Walter states that the picture appeared in at least 22 magazine and newspaper advertisements for Kia Sephia automobiles from January 1995 through January 1996. To support this statement, Walter points to an "exhibit list" apparently prepared by Walter. It lists a number of articles. There is no document in the appellate record providing a foundation for the exhibit list. Without the proper authentication and foundation, the exhibit list does not constitute evidence proving that the advertisement was used 22 times.
The only evidence in the appellate record shows that the advertisement containing Walters image appeared in the monthly in-flight Korean Airlines magazine,Morning Calm, from January through May 1995, and in the August 1995, edition of Fortune magazine.

2. Procedure.

a. Preliminary procedures and MBC AdComs default.

On December 22, 1995, Walter filed suit in the Los Angeles Superior Court. Kia Motors and Does 1 through 10 were named as defendants. Among other causes of action, the complaint stated causes of action for statutory invasion of privacy pursuant to Civil Code section 3344 and conversion.

The statutory cause of action for invasion of privacy (Civ. Code, § 3344) stated that "as a direct and proximate result of the uses, publications and other acts as alleged herein [Walter] has been damaged pursuant to §3344 of the Civil Code in an amount unknown at this time, but [Walter] is informed and believes and thereupon alleges that such amount is at least three million dollars ($3,000,000.00)." With regard to this cause of action, Walter prayed for "damages and other relief . . . in an amount of $3,000,000.00[.]" With regard to Walters cause of action for conversion, Walter prayed for $30,000,000 in damages.

Thereafter, MBC AdCom was added as a Doe defendant.

MBC AdCom was served in Korea on July 23, 1996, by certified or registered mail, return receipt requested.

On January 14, 1997, Walter filed a request for entry of default. The request for entry of default had been served on MBC AdCom by mail on December 18, 1996. With regard to the amount of judgment requested, Walter asked for $30,000,000 pursuant to the "[d]emand of complaint" and $109,491.14 for costs attributed to attorney fees pursuant to Civil Code section 3344.

The proof of service attached to the request for entry of default stated that the following documents were attached thereto: (1) request for default; (2) concise summary of case in preparation for default judgment; (3) declaration of Randy Walter; (4) declaration of Dae-Il Seo in "`response to plaintiffs special interrogatories, set number two [Nos. 6-15]"; (5) declaration of Thomas A. Turner, Jr. in support of attorneys fees, attachment; (6) declaration of Richard L. Pazdernik, Jr. in support of attorneys fees, attachment; (7) judgment by court after default; (8) memorandum of costs (summary); (9) request for court judgment; and (10) military affidavit. Item number 6, the declaration of Richard L. Pazdernik, Jr. is not in the appellate record.

On January 14, 1997, default was entered against MBC AdCom.

b. The stipulation between Kia Motors and Walter.

Apparently, Kia Motors and Walter stipulated that a referee could make certain factual determinations regarding profits. Prior to trial, Kia Motors brought a motion in limine to confirm the referees determinations. Kia Motors represented that the referee, Justice Jack Goertzen, retired, had made the following factual determinations: (1) The Sephia profit for January through May 1995 — $0; (2) The Sephia profit for 1995 — $0; (3) Kia Motors profit for January through May 1995 — $0; and (4) Kia Motors profits for 1995 — $14,870,182." In this pleading, Kia Motors took the position that the advertisement using Walters likeness was solely directed at the Sephia automobile and thus, any profits should be allocated to that vehicle, for the months in which it was published.

c. The supplement to request for judgment after default.

On July 11, 2001, Walter served MBC AdCom by registered mail, return receipt requested international, a supplement to request for judgment after default as against Doe 2 defendant MBC AdCom.

The proof of service attached to the supplement to request for default judgment stated that the following documents were served on July 11, 2001: (1) supplement to request for judgment after default as against Doe 2 defendant MBC AdCom on the subject of damages; (2) declaration of Thomas A. Turner, Jr. in support of attorneys fees, exhibits; (3) declaration of Richard L. Pazdernik, Jr. in support of attorneys fees, exhibits; (4) Kia Motors Financial Statements for the years ending December 31, 1994 and 1995 with independent auditor report; (5) judgment by court by default; and (6) request for dismissal (all remaining defendants). Items number 4, 5, and 6 (the Kia Motors financial statement, the judgment by court, and the dismissal request) are not contained in the appellate record.

In the supplement to request for judgment after default, Walter based his request for damages upon Civil Code section 3344. This statute details how damages are to be calculated when a persons photograph is misappropriated. One measure of damages is based upon the profits "attributable to the use" of the image as calculated by "gross revenue attributable to such use."

Walter argued as follows:

(1) Kia Motors was dismissed pursuant to a settlement. Kia Motors and MBC AdCom were joint tortfeasors and jointly and severally liable.

(2) The profits made by the tortfeasors were the profits made by Kia Motors on the sale of automobiles.

(3) Pursuant to Civil Code section 3344, Walter had to prove gross revenue and MBC AdCom had to prove deductible expenses. As a defaulting party, MBC AdCom had not presented any evidence relating to deductible expenses.

(4) The relevant year was 1995 as the unauthorized photograph was used in that year. Walter had presented to Justice Goertzen, retired, proof of Kia Motors gross revenue for the year 1995. The audited statement presented to Justice Goertzen showed Kia Motors gross revenue for 1995 to 1996 to be $7,368,567,470.

(5) The advertisement was used from January 1995 through January 1996, in twenty-three issues of six different newspapers and magazines.

(6) A proportion of the gross revenues could be attributed to the advertisement that incorporated Walters likeness. Kia Motors spent $58,290,155 for the advertising year of 1995.

(7) The cost of placing the advertisements was $120,000. $120,000 was 0.00206 of $58,290,155.

(8) The portion of the total gross revenue allocated to the offending advertisement was $14,737,135.

(9) Kia Motors financial statements showed expenses from three sources: [1] costs of sales; [2] selling, general and administrative expenses; and [3] taxes. The "costs of sales presumably includes or is the equivalent of costs of goods . . . which is . . . $US 6,202,834,124.35." Selling, general and administrative expenses was not a legally deductible expense. Taxes were not to be considered deductible expenses. Thus, the only allowable deductible expense was the cost of goods. (10) Pursuant to the declarations submitted by attorneys Turner and Pazdernik, and the attachments thereto, Walter had incurred a total of $436,706 in attorney fees and $ 48,987.46 in costs and expenses.

(11) The "[f]inal Calculation (per C.C. §3344(a))"of the requested damages was:

"$US 7,368,567,470.00 Gross Revenue [-] 6,202,834,124.35 Deductible Expense ________________ 1,165,733,345.65 Total profits accountable under C.C. §3344(a) X (0.002) Proportion attributable to illegal use by Defs. ________________ $US 2,331,466.69 Damages by profits, under C.C. §3344(a) [+] 485,093.46 Attorneys fees, per C.C. §3344(a) . . . ________________ $US 2,816,560.15 Amount of damages [-] 237,500.00 Set-Off, paid by Settling Defendants ________________ $US 2,579,060.15 Amount of proper Judgment" (Fn. omitted.)

d. The trial courts ruling and dismissal of MBC AdCom.

On November 1, 2001, the trial court ruled that Walter had not met his burden of proof and was not entitled to a default judgment against MBC AdCom. The trial court provided three reasons for its ruling:

Walter represents that a hearing was held on November 1, 2001. The record on appeal does not include a reporters transcript and Walter does not suggest evidence was taken at the hearing.

1. Walter has requested a percentage of Kia Motors profits to "be allocated as damages to be paid by MBC AdCom. However, while [Walter] provides evidence of Kias gross profits during the applicable time period, [Walter] does not provide any evidentiary support for his allegation that those gross revenues were `attributable to the [unauthorized] use of [Walters] image in the advertisement, as required by Civil Code § 3344. [Walter] merely calculates what percentage of Kias total advertising costs in the applicable time frame were spent on the subject advertisement, and then concludes that the same percentage of revenues is attributable to the subject advertisement. However, this calculation relies on many assumptions. For example, the assumption that all revenues are attributable to some advertisement; that the amount of money spent by Kia on a certain advertisement is directly proportionate to the amount of profits it will receive from that advertisement; that any profits attributable to the subject advertisement are due to [Walters] image in the subject advertisement and not to other factors such as name recognition or the product itself. From [Walters] prove-up papers it appears that [Walter] simply decided that this would be a `fair way to calculate the gross revenues attributable to the unauthorized use of [Walters] image, but [Walter] provides no evidentiary support for this conclusion or any of the implied assumptions."

2. There were due process problems because Walter had not served a separate statement of damages or provided adequate notice of the amount of damages sought. (Code Civ. Proc., §§ 580, 425.11.)

3. With regard to attorney fees, Walter failed to comply with Los Angeles Superior Court Rule 3.2 and the attorney fees were primarily incurred by pursuing Kia Motors and not MBC AdCom.

The trial court entered an order denying default judgment against MBC AdCom and dismissing the case as to that defendant.

Walter appealed.

On June 30, 2003, we filed an opinion affirming the trial court. On that same day, Walter filed two letters, with attachments. These letters demonstrated that valuable documents were omitted from the appellate record. On our own motion, and in the interests of justice, we granted rehearing. We took judicial notice of the documents recently submitted. We accepted as proven those facts for which there was evidentiary support. Statements and arguments made in pleadings did not constitute evidence. (Code Civ. Proc., §§ 585, subd. (d), 2009; Cal. Rules of Court, rule 388.)

After consideration of the newly submitted documents, we reverse with directions.

DISCUSSION

Walter contends the trial courts order must be reversed. This contention is persuasive.

1. Default judgments.

In rendering a default judgment, courts "shall hear the evidence offered by the plaintiff, and shall render judgment in his or her favor for such sum . . . as appears by such evidence to be just." (Code Civ. Proc., § 585, subd. (b).) Plaintiffs must prove their right to relief by introducing sufficient evidence to support their claims. If such evidence is not produced, the trial court may refuse to grant default judgment or the amount requested, even though the defendant is in default and is not present to contest the evidence. (Taliaferro v. Hoogs (1963) 219 Cal.App.2d 559, 560.)

Plaintiffs who have requested default judgment may appeal. (Johnson v. Stanhiser, supra, 72 Cal.App.4th at p. 361.)

2. The trial court erred in denying Walters request for judgment pursuant to Civil Code section 3344.

Walter contends that the trial court erroneously applied Civil Code section 3344. Walters argument is partially persuasive.

Civil Code section 3344 deals with the misappropriation of a persons likeness. Section 3344 reads in pertinent part: "(a) Any person who knowingly uses anothers . . . photograph, or likeness, in any manner . . . for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such persons prior consent, . . . shall be liable for any damages sustained by the person . . . injured as a result thereof. In addition, in any action brought under this section, the person who violated the section shall be liable to the injured party . . . in an amount equal to the greater of seven hundred fifty dollars ($750) or the actual damages suffered by him or her as a result of the unauthorized use, and any profits from the unauthorized use that are attributable to the use and are not taken into account in computing the actual damages. In establishing such profits, the injured party or parties are required to present proof only of the gross revenue attributable to such use, and the person who violated this section is required to prove his or her deductible expenses. Punitive damages may also be awarded to the injured party or parties. The prevailing party in any action under this section shall also be entitled to attorneys fees and costs. . . . [¶] . . . [¶] (g) The remedies provided for in this section are cumulative and shall be in addition to any others provided for by law." (Italics and underlining added.)

a. Walters request for requested $2,579,060.15 in damages against MBC AdCom was unsubstantiated and speculative.

Walter states on appeal that his request for default judgment was based upon his supplement to request for judgment after default. This document requested $2,579,060.15 in damages against MBC AdCom. In this pleading, Walter stated that "MBC AdCom was commissioned by Kia Motors Corporation to go to San Francisco to shoot a commercial for Kia automobiles[]" and "[a]n MBC AdCom employee . . . put together a one-page, four color advertisement which included the picture of . . . Walter." Further, according to Walter, he had adduced "before the Referee (Justice Jack Goertzen) the `Kia Motors Corporation Financial Statements for the Years Ended December 31, 1995 and 1994 with Independent Auditors Report, verified by the audit of Chong-Un Accounting Corporation dated February 9, 1996. [¶] The audited statement shows gross revenue of 5,688,541,037,000 Won for the year 1995. At the close of 1995, the Korean won was trading against the United States dollar at 772 won to each U.S. dollar. This gross revenue equates to US $7,368,567,470."

Based upon the statements quoted above, Walter makes certain factual assertions on appeal to support his plea for damages. For example, Walter states that he has shown that the gross revenues for 1995 were $7,368,567,470. However, Walter has not cited any evidence to support this, or many other factual statements that are vital to his argument. Citing to the pleading below is not a citation to "evidence." (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 178, fn. 4; Cal. Rules of Court, rule 14(a)(C).) Walter has not met his burden on appeal to support his factual assertions with evidence. (Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1003 & 1003-1004, fn. 2.) Thus, Walter has not shown he is entitled to $2,579,060.15 in damages against MBC AdCom.

Additionally, the claim that he is entitled to $2,579,060.15 in damages against MBC AdCom, is based upon speculation and conjecture. For example, Walter provides no expert declarations attesting to the appropriate methodology to calculate profits or gross revenues attributed to the unauthorized use of Walters image. Walter may not simply assume that a percentage of Kia Motors advertising budget spent during 1995 can be used to calculate the percentage of revenues attributable to the subject advertisement.

On appeal, Walter makes the following argument to support his assertion that there was evidence of revenues attributable to the use of Walters likeness: The trial court failed to consider that Walters likeness was used in successive advertisements over an extended period of time. Advertisements are run for one legitimate purpose, to increase revenues through selling product or services. Although advertisements might be used to increase exposure or awareness of a brand, advertisers only use advertisements when they are effective. The fact that this advertisement was run for 13 months shows that it was a "substantial factor in producing at least some revenue for Kia Motors." The amount of damages can be calculated by taking the cost of running the advertisements that had wrongfully used his likeness and "calculat[ing] this amount as a fraction or decimal of the total costs of Kia Motors advertising during the same time period. That amount is 0.002 . . . . The [trial] court criticized Walter . . . for not showing with precision what profits (or revenues) are attributable to specified advertising. . . . [¶] But, it is not Walters burden to show such apportionment. Rather, it is the wrongdoer that is to be burdened with these as often as not impossible showings. . . . [¶] . . . [¶] [I]t is the burden of MBC AdCom [to show] which of the profits are not attributable to MBC AdComs wrongdoing. [¶] Even so, a proportioning is not indicated where plaintiffs image is a substantial factor in the ad itself. . . . [Given the prominence of Walters image in the advertisements here,] Walters image is a substantial factor, a proximate cause, if you will, of revenues resulting from that unauthorized ad."

This argument ignores Walters burden. Civil Code section 3344 requires the injured party to "present proof . . . of gross revenue attributable to such use . . . ." Walter cannot simply decide how to calculate this sum. To ascertain the gross revenue attributable to the use of Walters image, Walter was required to submit admissible evidence, expert or otherwise. (Cal. Rules of Court, rule 388(a); Code Civ. Proc., § 585, subd. (d).)

Further, Walters adaptation of the "substantial factor" test is misplaced. Even if the advertisement produced some revenues for Kia Motors and it was a "substantial factor" in producing some revenue for Kia Motors, this would merely establish a causal connection. It does not establish the amount of damages.

b. Walter is entitled to $750 per use of the photograph, and reasonable attorney fees and costs.

Walter argues that, at a minimum, he is entitled to $750 for each of the distinct unauthorized use of his image, and attorney fees and costs. This argument is persuasive.

This argument is based upon that part of Civil Code section 3344, subdivision (a) stating that "the person who violated the section shall be liable to the injured party . . . in an amount equal to the greater of seven hundred fifty dollars . . . or the actual damages suffered . . . . The prevailing party in any action under this section shall also be entitled to attorneys fees and costs."

The evidence showed that the advertisement containing Walters photograph was used six times from January to August 1995. (See footnote 2.) Thus, according to Civil Code section 3344, Walter would be entitled to $4,500 ($750 x 6). As the prevailing party, Walter would also be entitled to attorney fees and costs. Therefore, the trial court erred in not awarding Walter judgment against MBC AdCom in the sum of $4,500, plus attorney fees and costs. However, Walter is not automatically entitled to all attorney fees and costs expanded. Rather, like other such awards, Walter must demonstrate that the fees and costs were reasonably incurred. On remand, the trial court must hold further proceedings in which, in the exercise of its discretion, it shall determine the amount of reasonable attorney fees and costs.

The trial court erred in not granting judgment to Walter against MBC AdCom in the amount of $4,500, plus reasonable attorney fees and costs.

3. The trial court erred in concluding that Walters complaint was insufficient to put MBC AdCom on notice of the damages sought.

Walter contends the trial court erred in concluding that MBC AdCom had not been provided with adequate notice of the amount of damages sought. This contention is persuasive.

Due process requires that before a default judgment can be entered against a defendant, the defendant is entitled to notice of the nature and amount of damages being sought. Normally, this notice is provided by the complaints prayer, however, the allegations in the complaint can suffice. (Code Civ. Proc., §§ 580, subd. (a), 425.11; Schwab v. Rondel Homes, Inc. (1991) 53 Cal.3d 428, 435.) Even in situations in which a separate statement pursuant to Code of Civil Procedure section 425.11 is required, the failure to do so does not automatically preclude a default judgment. The "failure to give notice under Code of Civil Procedure section 425.11 is not fatal if the allegations in the complaint give sufficient notice to defendants of the damages sought." (Cummings Medical Corp. v. Occupational Medical Corp. (1992) 10 Cal.App.4th 1291, 1297.)

Here, the body of the complaint and the complaints prayer requested damages in the sum of $3,000,000. Further, the supplemental request sought damages in the sum of $2,579,060.15. These documents satisfied the due process requirements of putting MBC AdCom on notice that the maximum sought was $2,579,060.15.

The trial court erred in concluding there was a lack of due process.

4. The trial court erred in concluding that the failure to comply with Los Angeles Superior Court Rule 3.2 precluded Walters request for attorney fees.

Walter contends that the trial court erred in concluding that Los Angeles Superior Court Rule 3.2 precluded Walters request for attorney fees. This contention is persuasive.

Los Angeles Superior Court Rule 3.2 is titled "attorneys fees." Subdivision (a) specifies the amount of attorney fees to be awarded in cases involving a contract provision or note, in either default and contested cases, according to the amount of the judgment. Subdivisions (b), (c), and (e) of Rule 3.2 relate to cases involving mortgage or trust deed, foreclosure of assessment or bond lien, and services benefitting a minor. Subdivision (d) of Rule 3.2 states that if a party is seeking fees "in addition to the foregoing schedule," an itemized statement of services rendered is required.

Los Angeles Superior Court Local Rule 3.2 reads:
"Rule 3.2 Attorneys Fees.
"(a) Contract Provision or Note. When a promissory note or contract provides for the recovery of (or a statute authorizes the clerk to enter) a reasonable attorney fee, the following schedule shall (unless otherwise determined by the court) be applied to the amount of the new judgment exclusive of costs:
"Default case:
"$0.01 to $1,000, 15% with a minimum of $75.00;
"$1,000.01 to $10,000, $150 plus 6% of the excess over $1,000;
"$10,000.01 to $50,000, $690 plus 3% of the excess over $10,000;
"$50,000.01 to $100,000, $1890 plus 2% of the excess over $50,000;
"Over $100,000, $2,890 plus 1% of the excess over $100,000.
"Contested case (unless otherwise determined by the court):
"$0.01 to $1,000, 15% with a minimum of $100;
"$1,000.01 to $10,000, $150 plus 8% of the excess over $1,000;
"$10,000.01 to $50,000, $870 plus 6% of the excess over $10,000;
"$50,000.01 to $100,000, $3,270 plus 4% of the excess over $50,000;
"Over $100,000, $5,270 plus 2% of the excess over $100,000.
"(b) Mortgage or Trust Deed. When a mortgage or trust deed is foreclosed which provides for the recovery of a reasonable attorney fee, the applicable fee in (a) above shall be increased by 10%.
"(c) Foreclosure of Assessment or Bond Lien. When the lien of a street or other assessment or of a bond issued for the cost of a public improvement is foreclosed, the fee shall be computed as provided in 3.2(a) above of this rule, except that the minimum shall be $75.00 where only one assessment or bond is being foreclosed in the action, and $20.00 additional for the second and each additional assessment or bond.
"(d) Itemization as to Extraordinary Services. Any application for a fee in addition to a foregoing schedule because of extraordinary services shall be accompanied by an itemized statement of the services rendered or to be rendered.
"(e) Services Benefitting a Minor. No attorneys fee for services rendered on behalf of a minor shall be allowed in any action or a contract therefor approved except upon application in open court after notice to his/her guardian and to each of his/her parents and, if the minor is over 14 years of age, to the minor also."

Pointing to subdivision (a) of Rule 3.2, the trial court rejected Walters request for attorney fees. The trial court stated that because the fee request exceeded that specified, a declaration of extraordinary services was required. However, because this case did not involve a contract dispute, Rule 3.2 subdivision (a) was not applicable. To the extent the trial court rejected Walters request for attorney fees because most expenditures were incurred by Walter in pursuing Kia Motors and not MBC AdCom, this fact will be relevant upon remand when the trial court exercises its discretion in determining the amount of reasonable attorney fees and costs.

DISPOSITION

The order is reversed with directions to the trial court to enter a default judgment against MBC AdCom in the sum of $4,500, plus reasonable attorney fees and costs. The trial court is also directed to conduct further proceedings to ascertain the amount of attorney fees and costs to be awarded to Walter. Walter is to bear his own costs on appeal.

We concur: CROSKEY, Acting P.J. and KITCHING, J.


Summaries of

Walter v. Kia Motors America, Inc.

Court of Appeals of California, Second District, Division Three.
Nov 6, 2003
No. B155492 (Cal. Ct. App. Nov. 6, 2003)
Case details for

Walter v. Kia Motors America, Inc.

Case Details

Full title:RANDY WALTER, Plaintiff and Appellant, v. KIA MOTORS AMERICA, INC., etc.…

Court:Court of Appeals of California, Second District, Division Three.

Date published: Nov 6, 2003

Citations

No. B155492 (Cal. Ct. App. Nov. 6, 2003)