Meller & Snyder v. R & T Properties, Inc.

• Citation: 73 Cal.Rptr.2d 740,62 Cal.App.4th 1303
• Decision Date: 07 April 1998
• Docket Number: No. B102700,B102700
• Court: California Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 2600, 98 Daily Journal D.A.R. 3553 MELLER & SNYDER, Plaintiff and Respondent, v. R & T PROPERTIES, INC., Defendant and Appellant.

Page 740

73 Cal.Rptr.2d 740

62 Cal.App.4th 1303, 98 Cal. Daily Op. Serv. 2600,

98 Daily Journal D.A.R. 3553

MELLER & SNYDER, Plaintiff and Respondent, v. R & T PROPERTIES, INC., Defendant and Appellant.

No. B102700.

Court of Appeal, Second District, Division 5, California.

April 7, 1998.

Benjamin D. Brown, Artesia, for Defendant and Appellant.

William C. Snyder, Santa Monica, for Plaintiff and Respondent.

TURNER, Presiding Justice.

I. INTRODUCTION

R & T Properties, Inc. (defendant) appeals from a judgment against it and in favor of Meller & Snyder (plaintiff), a law firm, in a joint debtor proceeding pursuant to Code of Civil Procedure section 989 et seq. The trial court found defendant, a corporation, was jointly liable on a prior judgment against Robert Tieger, an individual. We reverse the judgment. We conclude the trial court erred in failing to resolve the question whether plaintiff properly amended the complaint to substitute R & T Properties, Inc. for a fictitiously named defendant. Further, we conclude defendant is correct in arguing that its due process rights were violated when it was denied the opportunity to contest the merits of the underlying complaint.

II. SUBSTANTIVE AND PROCEDURAL HISTORY

Plaintiff filed a complaint for contract breach and related claims on August 17, 1989, against Mr. Tieger, individually and doing business as (dba) R & T Properties. Also, plaintiff named five fictitiously named defendants designated as "DOES 1 through 5." The complaint alleged: Mr. Tieger, and Does 1 through 5, had entered into an oral agreement pursuant to which plaintiff agreed to render legal services; Mr. Tieger, and Does 1 through 5, agreed to pay plaintiff for services rendered; further, plaintiff had performed its obligations, but had not been paid. Mr. Tieger, "sued herein individually and dba R & T Properties," answered the complaint on September 19, 1989. He generally and specifically denied the complaint's allegations. Also on that date, Mr. Tieger filed a cross-complaint for legal malpractice against plaintiff. The cross-complaint alleged, among other things, that R & T Properties, Inc. had employed plaintiff as its attorney; further, R & T Properties, Inc. had assigned its legal malpractice claim to Mr. Tieger.

A court trial ensued. On December 10, 1992, judgment was entered on the complaint in favor of plaintiff and against "Defendants Robert Tieger, and R & T Properties, Inc., jointly and severally...." (Italics added.) Plaintiff also prevailed on the cross-complaint against it. Seven months later, on July 19, 1993, an ex parte order was entered expunging R & T Properties, Inc., the corporate entity, from the judgment for lack of jurisdiction. The order recited that R & T Properties, Inc. was not a party defendant to the action, the court had no jurisdiction over it, and its inclusion in the judgment was an error. On July 6, 1994, plaintiff filed a form amendment to its complaint pursuant to section 474 naming R & T Properties, Inc. as Doe 1. This was nearly five years after the complaint was filed and one year after R & T Properties, Inc. was removed from the judgment by court order.

The following month, on August 11, 1994, a joint debtor summons was issued to R & T Properties, Inc. The joint debtor summons did not state that R & T Properties, Inc. was being served as an entity sued under a fictitious name. In its answer, defendant generally and specifically denied the allegations of the complaint; the joint debtor summons; the section 474 amendment to the complaint; plaintiff's affidavit in support of the joint debtor proceeding; the judgment; and the obligation on which the judgment was recovered.

The joint debtor proceeding was tried on February 15, 1996. William C. Snyder testified on behalf of the plaintiff law firm, Meller & Snyder. His testimony was as follows. In December 1988, Mr. Tieger sought representation for himself and "his corporation" in "two items of litigation." Plaintiff entered into a retainer agreement "with Mr. Tieger individually and R & T Properties, Inc." The retainer agreement, signed by Mr. Tieger individually, and on behalf of R & T Properties, Inc., was received in evidence. (The complaint, however, alleged an oral agreement.) Plaintiff was retained by Mr. Tieger and R & T Properties, Inc. to represent them in connection with two matters. Plaintiff was retained in connection with a specific performance action brought by James Page against R & T Properties, Inc. Further, the firm was hired in connection with an unlawful detainer action by R & T Properties, Inc. against Mr. Page. R & T Properties, Inc. "was and is the title holder to the real property" at issue in the specific performance and unlawful detainer actions. Plaintiff represented Mr. Tieger and R & T Properties, Inc. in the actions. However, the representation stopped when Mr. Tieger "removed [the law firm] as the attorney for R & T Properties, Inc. ...." Plaintiff never recovered its fees and costs from Mr. Tieger or R & T Properties, Inc.

In the course of the trial, the superior court judge ruled, over defendant's due process objection, that plaintiff's only burden was to establish the judgment, and the proper amount of attorney's fees for services rendered had already been adjudicated. Plaintiff was not required to show, and defendant was not allowed to litigate, what services were in fact rendered or that the amount of attorney's fees charged was a proper sum.

At the conclusion of the trial, defendant made a motion to dismiss the joint debtor proceeding. It argued that at the time the complaint was filed, plaintiff knew the identity of R & T Properties, Inc. and knew that it had a cause of action against the corporation; therefore, defendant could not amend its complaint to name R & T Properties, Inc. as a fictitiously named defendant. The trial court denied the motion to dismiss on the grounds plaintiff's amendment to add a fictitiously named defendant was "not the issue" and had "nothing to do" with the joint debtor proceeding. The court concluded that the issue "of knowing the name of the defendant at the time that [plaintiff] filed [its] lawsuit" was irrelevant.

The trial court found in plaintiff's favor. A judgment holding R & T Properties, Inc. jointly liable with Mr. Tieger was entered on March 6, 1996. This timely appeal followed.

III. DISCUSSION

A. Joint Debtor Proceedings

Proceedings against unserved joint debtors are wholly statutory. (Cooper v. Burch (1903) 140 Cal. 548, 551, 74 P. 37; Tay, Brooks & Backus v. Hawley (1870) 39 Cal. 93, 98; Vincent v. Grayson (1973) 30 Cal.App.3d 899, 906, 910, fn. 7, 106 Cal.Rptr. 733; McRae v. Bates (1961) 196 Cal.App.2d 510, 512-513, 16 Cal.Rptr. 565; Fried v. Municipal Court (1949) 94 Cal.App.2d 376, 378, 210 P.2d 883; Melander v. Western Nat. Bank (1913) 21 Cal.App. 462, 478-479, 132 P. 265.) The procedure is set forth in Code of Civil Procedure sections 989 to 994. ¹ The Supreme Court has held: "The entire method of procedure, including the 'written allegations,' which shall constitute the pleadings, the defenses permitted, the issues to be tried, and the nature of the judgment to be entered, is clearly pointed out and prescribed." (Cooper v. Burch, supra, 140 Cal. at p. 551, 74 P. 37; see Melander v. Western Nat. Bank, supra, 21 Cal.App. at pp. 478-479, 132 P. 265.)

Under sections 989 through 991, a summons may be issued to an unserved joint debtor to show cause why it should not be bound by a judgment recovered against others. Section 989 states: "When a judgment is recovered against one or more of several persons, jointly indebted upon an obligation, by proceeding as provided in Section 410.70, those who were not originally served with the summons, and did not appear in the action, may be summoned to appear before the court in which such judgment is entered to show cause why they should not be bound by the judgment, in the same manner as though they had been originally served with the summons." Section 410.70, to which section 989 refers, provides: "In an action against two or more persons who are jointly, jointly and severally, or severally liable on a contract, the court in which the action is pending has jurisdiction to proceed against such of the defendants as are served as if they were the only defendants."

Sections 990 and 991 provide for the issuance, service, and return of a joint debtor summons accompanied by an affidavit "that the judgment, or some part thereof, remains unsatisfied...." (§ 991.) The summons must specify the amount due on the judgment. (§ 991.) The defendant served with a joint debtor summons may answer as provided in section 992, which states: "Upon such summons, the defendant may answer within the time specified therein, denying the judgment, or setting up any defense which may have arisen subsequently; or he may deny his liability on the obligation upon which the judgment was recovered, by reason of any defense existing at the commencement of the action." ²

Section 993, which explains the role of the pleadings and authorizes amendments, provides: "If the defendant, in his answer, denies the judgment, or sets up any defense which may have arisen subsequently, the summons, with the affidavit annexed, and the answer, constitute the written allegations in the case; if he denies his liability on the obligation upon which the judgment was recovered, a copy of the original complaint and judgment, the summons, with the affidavit annexed, and the answer, constitute such written allegations, subject to the right of the parties to amend their pleadings as in other cases." ³ Section 994, which governs the trial and the verdict, states: "The issues formed may be tried as in other cases; but when the defendant denies, in his answer, any liability on the obligation upon which the judgment was rendered, if a verdict be found against him, it must be for not exceeding the amount remaining unsatisfied on...