Marriage of Eustice (2015)

In Marriage of Eustice (2015), the Fourth District, Division Two, Court of Appeal addressed an issue of first impression (i.e., one never before decided by an appellate court in California):  whether a default judgment is void for lack of notice where the petition for dissolution of marriage requests the family court determine the parties respective property rights but then does not list any property.  Rather than listing assets and debts, the petition simply states that the parties will stipulate to division of assets and debts, and, if this does not occur, the petitioner will amend the petition.  

Husband, whose default was taken, argued the judgment was void because it exceeded the relief his (now former) wife requested in the petition.  He also contended that the family court judicial officer abused his discretion in striking his response to the petition for dissolution of marriage which led to husband’s default.  Before husband’s response was stricken, each party had served to the other a preliminary Declaration of Disclosure.  

At the initial hearing on wife’s request for support and injunctive orders, the family court judge ordered husband to provide and accounting and monthly copies of the Ameritrade account statements reflecting withdrawals for expenses of the parties’ minor child at UCLA after September 1, 2009.  The order also froze the Ameritrade account (no funds be withdrawn from the account) except to pay their son’s expenses at UCLA.  A year and a half later, husband still had not complied with the order to account for the UCLA expenses, so wife filed a request for a Family Code section 271 sanction, after having repeatedly requested husband provide the documents.  The parties then stipulated that husband would provide the documents, and the sanction request was not heard.  

Another year passed by.  Wife filed another request for among other things, a Family Code section 271 sanction because husband refused to provide more than a year of bank statements (through the previous summer) or any accounting, and because he withdrew substantial funds from the Ameritrade account without showing the disposition of those funds in violation of the court’s orders.  

In the interim, wife had requested discovery, and had attended three hearings seeking court orders for production of the Ameritrade statements for husband’s refusal to produce them.  So, she finally filed a motion to strike the response and enter default judgment under Code Civ. Pro. sections 2023.010(g) and 2023.030 for disobeying the court’s order to provide discovery and for misusing the discovery process. 

On June 18, 2012, the family court judge ordered stricken husband’s response.  On December 11, 2012, wife served husband with a final Declaration of Disclosure and a request to enter default. A default was entered against husband in December, 2012, and wife’s default prove-up hearing took place on January 14, 2013.

In July, 2013, husband filed a request to set aside the default based on wife’s failure to list in her petition all of the community property to be disposed of in the default judgment, making the judgment void because it exceed the scope of the petition.  Wife’s responsive pleading stated that the default had been entered and therefore husband had no standing unless the court set aside the default.

On October 28, 2013, the family court judge heard husband’s motion to set aside the default.  Wife’s attorney objected to the judge hearing the motion on the ground that the default had been entered in December, 2012, and thus the motion had been untimely filed more than six months later and left him no standing to bring it.

Supported by case law, husband’s attorney argued that under Code Civ. Pro. section 580, the trial court had no jurisdiction over the property disposed of in the default judgment, and therefore exceeded its jurisdiction.

Wife’s attorney replied that the cases cited by husband’s attorney were appeals from default judgments, not defaults, whereas in this case a judgment had not been entered.  There was only an entry of a default.  Wife’s attorney also argued the cases were factually distinguishable, husband had listed in his response all the property that he wanted adjudicated, and that the parties had exchanged preliminary Declarations of Disclosure.

The family court ordered wife’s attorney to submit a proposed judgment based on the allegations in the petition and declarations served on husband.  The judge indicated that husband’s remedy would be to appeal the judgment as opposed to seeking a set aside of the default.   The request to set aside the default was apparently denied.   

On February 14, 2014, judgment was entered.  Twelve days later, husband filed a notice of appeal of the judgment.

Relevant family law

Generally, for notice purposes, a default judgment cannot dispose of property which has not been listed in the petition or an attached property declaration.  

“It is a fundamental concept of due process that a judgment against a defendant cannot be entered unless he was given proper notice and an opportunity to defend. . . . California satisfies these due process requirements in default cases through [Code Civ. Pro.] section 580.”  (Marriage of Lippel (1990).  “The relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint, . . .”  (Code Civ. Pro. sec. 580.)  “‘[T]he primary purpose of the section is to guarantee defaulting parties adequate notice of the maximum judgment that may be assessed against them'”  (Stein v. New York (2010), quoting Greenup v. Rodman (1986)) and was “‘designed to ensure fundamental fairness.” (Stein, quoting Becker v. S.P.V. Construction Co. (1980)).  “Constructive notice of potential liability does not satisfy section 580.”  (Stein v. New York (2010).)

“Reviewing courts generally do not take judicial notice of evidence not presented to the trial court [here, deeds to the two properties].  Rather, normally ‘when reviewing the correctness of a trial court’s judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered.’ [Citation.]  No exceptional circumstances exist that would justify deviating from that rule, either by taking judicial notice or exercising the power to take evidence under Code of Civil Procedure section 909.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.)

The limitation on default judgments under section 580 applies to marital dissolution proceedings.  That section “requires that a default judgment in a dissolution action which is greater than the amount specifically demanded in the petition be considered void as beyond the court’s jurisdiction. . . . [Citations.]”  (Marriage of Wells (1988).)

The appellate court distinguished Stein because it was a malpractice action (which did not specify damages in the complaint) and not a dissolution matter, and in Stein default was taken for failure to file an answer to the complaint.  Here, Husband filed his response to wife’s petition, but it was stricken for failure to comply with discovery.  Additionally, husband and wife exchanged preliminary declarations of disclosure, listing the property subject to disposition, and the petition provided notice of the type of relief requested.

The complaint or petition is not necessarily the sole statement of relief that forms the boundaries of relief granted in a default judgment.  Section 580 specifies two other plaintiff-generated documents which limit certain default judgments: a section 425.115 statement of damages in personal injury and wrongful death actions, and written notice of the exact amount of punitive damages plaintiff seeks, as required by section 425.115.  A petitioner’s list of assets and debts in a property declaration, and a preliminary Declaration of Disclosure fulfill the same notice function in a marital dissolution as do a statement of damages and punitive damages notice, provided the declarations are served on the respondent prior to entry of default.  Family Code section 2103 indicates that a preliminary Declaration of Disclosure serves the purpose of putting the parties on notice of the property at issue in a marital dissolution action.

Although a preliminary Declaration of Disclosure must be served by the petitioner, the petitioner is not required to serve a final Declaration of disclosure to the respondent in a default judgment if the petitioner waives the final Declaration of Disclosure.   (Family Code section 2110.)

The appellate court went on to state that the Family Law Act abolished the traditional complaint and directed the Judicial Council to create a substitute for the traditional complaint.  (Marriage of Andresen (1994).)  The standard form requires that the type of relief requested by indicated and informs and puts the respondent on notice of what specific relief is or is not sought.  (Id.)  “[D]ue process is satisfied and sufficient notice is given for section 580 purposes in marital dissolution actions by the petitioner’s act of checking the boxes and inserting the information called for on the standard form dissolution petition which correspond or relate to the allegations made and the relief sought by the petitioner.  The [Marriage of Lippel (1990)] opinion does not suggest that any greater specificity is required.”  (Id.)

Further, the appellate court stated that checking the “Other” box is not the same as checking the boxes for division of community property.  In Marriage of Kahn (2013), this same appellate court set aside a default judgment as void for failure to list in the petition the assets and debts disposed of by default judgment.  The petitioner in Kahn simply checked the “other” box and stated:  “relief for [respondent’s] breach of fiduciary duty pursuant to Family Code sections 1100 et seq.”  The respondent was entitled to know the “specific nature” of the breach and “amount” of the “[O]ther” relief sought before defaulting.

As to the striking of the response, the appellate court made quick work of the issue quoting Parker v. Wolters Kluwer U.S., Inc. (2007)[citation]: “‘A decision to impose the ultimate sanction- a judgment in the opposing party’s favor-should not be taken lightly. ‘But 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.'”

Conclusion

The appellate court concluded that the default judgment was valid and enforceable because husband generally appeared by filing his response listing assets and debts subject to disposition, and he received notice of the assets disposed of in the default judgment because wife served him with two preliminary Declarations of Disclosure.  Further, any deficiency in notice to him was waived by husband’s response to the petition and his preliminary Declaration of Disclosure, both of which listed the property disposed of in the default judgment.’

Finally, the striking of the response did not constitute an excessive sanction.

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