Who needs to know about this case: Lawyers who want to take and enforce default judgments; trial judges who are asked to rule on default prove- ups
Why it’s important: The Court wrote a primer for lawyers and trial judges on mistakes that are commonly made, and how to avoid them. For details of corporation and business law, hire a business law attorney.
Synopsis: Plaintiff Kim loaned money to Westmoore Partners and its principals, and brought suit on several promissory notes. The complaint pleads several causes of action, including breach of contract, negligent misrepresentation, professional negligence, conversion, and unfair business practices. The only amount of damages sought in the complaint was for defendants’ failure to pay $13,020 per month, starting in 2008, which was alleged to have created a debt in excess of $78,000. When Kim served defendants with the complaint, however, he also served a formal statement of damages, claiming he had suffered “property damage” of $500,000; “unpaid fees” of $ 1.5 million; and loan payments of $2 million. He reserved the right to seek punitive damages of $5 million against each defendant.
Defendants did not respond to the complaint, and Kim obtained entry of their defaults. After two unsuccessful attempts to obtain a default judgment, Kim obtained one on the third attempt. Kim’s application provided the court with the six statements of damages he served on defendants along with the complaint. Although each of those statements of damages set forth claims totaling $9 million, including punitive damages, Kim requested a judgment of only $5 million against each defendant, “for a total of $30 million.” Kim made no effort to correlate that amount to any particular claim or promissory note, or even to explain the extent to which it represented compensatory and punitive damages.
Instead, Kim’s declaration simply stated that “consistent with the statement of damages, each defendant owes me at least $5 million.” He goes on to explain that a judgment of $5 million against each defendant, for a total of $30 million, “would not be an excessive sum. It would be a reasonable sum, if they ever paid it. It would compensate me for some of the devastation caused by these defendants.”