Kim v. Westmoore Partners, Inc.
| Decision Date | 14 March 2012 |
| Docket Number | No. G044216.,G044216. |
| Citation | 11 Cal. Daily Op. Serv. 14406,201 Cal.App.4th 267,133 Cal.Rptr.3d 774,2011 Daily Journal D.A.R. 17112 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Gil KIM, Plaintiff and Respondent, v. WESTMOORE PARTNERS, INC., et al., Defendants and Appellants. |
OPINION TEXT STARTS HERE
See Cal. Jur. 3d, Appellate Review, § 494; Cal. Civil Practice (Thomson Reuters 2011) Procedure, §§ 35:25, 40:4, 40:15; Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2011) ¶ 9:161 (CACIVAPP Ch. 9-C); 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, §§ 714, 715.
Murphy, Pearson, Bradley & Feeney, San Francisco, Aaron K. McClellan, James F. Monagle and Tanis J. Leuthold for Defendants and Appellants.
Law Offices of Timothy J. Donahue, Irvine, and Timothy J. Donahue; John Park Yasuda, for Plaintiff and Respondent.
We reluctantly return in this case to the question of default judgments with a cautionarytale—well, three actually. The first is a tale for plaintiff's attorneys, who may assume a defendant's default is an unalloyed gift: an opportunity to obtain a big judgment with no significant effort. It is not. Instead, when a defendant fails to timely respond to the complaint, the first thing plaintiff's counsel should do (after offering an extension of time to respond) 1 is review the complaint with care, to ascertain whether it supports the specific judgment the client seeks. If not, a motion to amend is in order. In this case, counsel for plaintiff Gil Kim failed to do that. Instead, he simply asked the court to enter defendants' defaults on the complaint as initially alleged. Unfortunately for Kim, the factual allegations of that complaint do not support any judgment in his favor.
And even when the allegations of a complaint do support the judgment plaintiff seeks, he is not automatically entitled to entry of that judgment by the court, simply because defendant defaulted. Instead, it is incumbent upon plaintiff to prove-up his damages, with actual evidence. It is wholly insufficient to simply declare, as Kim did here, that defendants' breach of one or more promissory notes “caused [him] tremendous financial loss,” and that a judgment of “$5 million against each defendant, for a total of $30 million ... would be a reasonable sum.” That evidence may establish the amount Kim feels entitled to recover, but it fails utterly to demonstrate what he is legally entitled to recover. Kim's failure to offer any significant evidence to support his damage claims precludes any monetary judgment in his favor.
We consequently reverse the default judgment entered in Kim's favor, and remand the case to the trial court with directions to enter judgment in defendants' favor.
The second cautionary tale is for trial courts. And it's not the first time we have told this tale. As we previously explained in Heidary v. Yadollahi (2002) 99 Cal.App.4th 857, 868, 121 Cal.Rptr.2d 695, Unfortunately, the trial court in this case seems not to have done that, and instead simply gave Kim what he asked for—which in this case was $30 million. Even more unfortunately, this trial court is certainly not alone in doing so, even since Heidary was published. (See, e.g., Electronic Funds Solutions, LLC v. Murphy (2005) 134 Cal.App.4th 1161, 36 Cal.Rptr.3d 663 [].) We need to shore this up. The court's role in the process of entering a default judgment is a serious, substantive, and often complicated one, and it must be treated as such.
And third, this case is a cautionary tale for appellate counsel. Those who practice before this court are expected to comport themselves honestly, ethically, professionally and with courtesy toward opposing counsel. The fact a respondent has no obligation to file a brief at all, in no way excuses his counsel's misconduct if he chooses to do so. The conduct of Timothy J. Donahue, Kim's counsel herein, which included seeking an extension of time to file his brief under false pretenses, and then filing a brief which was not just boilerplate, but a virtual copy of a brief for another case—including a boilerplate accusation of misconduct against appellants' counsel and a boilerplate request for sanctions based on a purportedly “frivolous” appeal—will not be countenanced. Donahue's response to this court's notice, informing him that we were contemplating the imposition of sanctions on our own motion, was both truculent and dismissive, going so far as to assert that we must have issued the notice in error. We did not. Nor did we appreciate him responding to our order that he appear to address possible sanctions against him by sending in his stead an attorney who had not been informed sanctions were being considered, and knew nothing about our order. Donahue's conduct on appeal was inappropriate in nearly every respect, and we hereby sanction him in the amount of $10,000.
Gil Kim's unverified complaint, filed March 25, 2009, alleges defendants Matt Jennings and Rob Jennings are “sophisticated businessmen, licensed investment brokers and/or experienced in selling investments to the general public.” It further alleges that “[o]ver the last several years,” the Messrs. Jennings “opened up and formed several companies and businesses,” including Westmoore Partners, Inc., Honolulu Harry's, Inc., Westmoore Capital, Inc., and Temecula Harry's Pacific Grill, each of which is also named as a defendant.
According to the complaint, the two Jenningses
All six defendants were allegedly “jointly involved in, owned and operated a global multi-level marketing business, and ... sought investment money from plaintiff.” Although Kim initially thought defendants were “honest, reputable and forthright,” he learned only “within the last year,” after defendants had “taken” his money, that this was untrue.
Allegedly, defendants initially borrowed only “a little bit of money” from Kim, and promised a substantial return. And in fact, Kim acknowledges that “[i]n the beginning, defendants paid a substantial return,” although he asserts they did so “as bait, to entice [him] to loan more money.” This alleged enticement was apparently effective, as Kim asserts he did loan defendants more money, again relying upon their promise “to repay the loans with a substantial return.”
Defendants then allegedly enticed Kim to once again lend them even more money, “by informing [him] that they really didn't need his money.” Then, in August of 2006, Matt and Rob Jennings, acting on behalf of the other defendants, allegedly promised to make monthly payments, in the amount of $13,020.85, on an office building owned by Kim, in exchange for Kim's investment of $1,250,000. However, according to Kim, defendants “had no intention of repaying the loan.”
Kim attaches to his complaint, and incorporates by reference, seven promissory notes which reflect defendants' alleged indebtedness to him. He asserts that within the last year, defendants have each “acknowledged responsibility to pay on the seven notes, and have promised to pay [him].” However, “defendants have never followed through on [the] promises and the money remains outstanding.”
The first promissory note reflects that on February 28, 2003, Westmoore Partners, Inc., promised to pay Kim $25,000, on the maturity date of March 28, 2003—only 30 days later. Interest payments of $750 per month were due on the 28th of each month, starting on February 28, 2003. It provides that a default occurs if Westmoore Partners fails to pay the principal and interest on the maturity date.
The second promissory note reflects that on May 29, 2003, Westmoore Partners, Inc., promised to pay Kim $25,000, on the maturity date of December 29, 2003—only seven months later. Interest payments of $750 were due on the 29th of each month, “starting February 28, 2003.” 2 It provides that a default occurs if Westmoore Partners fails to pay the principal and interest on the maturity date.
The third promissory note reflects that on June 10, 2003, Honolulu Harry's, Inc., promised to pay Kim $50,000, on the maturity date of August 10, 2003—two months later. Interest payments of $1,500 per month were due on the 10th of each month, starting on July 10, 2003. It provides that a default occurs if Honolulu Harry's, Inc., fails to pay the principal and interest on the maturity date.
The fourth promissory note reflects that on August 6, 2003, Matt Jennings promised to pay Kim $78,750, on or before October 6, 2003—two months later. The note further specifies that the funds are “immediately due and payable” upon sale of a specified piece of real property owned by Matt Jennings. This note does not specify an interest rate, but includes “closing costs” of 5 percent as part of the principal amount due, and provides for interest of 19 percent per annum in the event of default in the payment of...
To continue reading
Request your trial