This Article discusses the ins and outs of obtaining a Default Judgment, as well as, the two key procedural events in a default proceeding: (1) the entry of default; and (2) the default judgment. The process for obtaining the Entry of Default was discussed in the preceding article.
This Article continues the discussion of Default proceedings, as discussed in my prior article regarding the Entry of Default. As you read this Article, keep in mind the key differences between the entry of default and the default judgment.
The entry of default cuts off a Defendant’s right to answer or respond to the complaint and requires a Defendant to move the court before taking any other action. A Defendant cannot take further steps in the cause affecting a Plaintiff’s right of action until a motion to set aside the Default has been granted.
If a Plaintiff obtains a default judgment, the court awards the Plaintiff the relief requested in the complaint and conclusively establishes the truth of material allegations in the complaint.
Therefore, a Plaintiff is unable to obtain the requested relief in the complaint solely on the basis of the court entering default. A Default Judgment must be entered by either the clerk or the court, in order for a Plaintiff to obtain the relief requested in the complaint. Keep in mind, the relief requested in the complaint is only obtained if the complaint does in fact request relief.
After the Defendant’s Default has been entered, Plaintiff is entitled to the Entry of Default Judgment as a matter of right. In some cases, the court clerk is empowered to enter Default Judgment directly – without court approval (typically, collection cases for fixed amounts). In all other cases, Plaintiff is required to “prove up” the Default to the court in order to obtain Default Judgment.
It is important to note the difference between the aforementioned entry of Default Judgment and Default Judgment as a discovery sanction. Even though the Defendant has appeared in the action, the court has power to strike Defendant's answer and render a Default Judgment as the ultimate sanction for refusal to obey discovery orders. CCP § 2023.030(d)(4).
Despite a Plaintiff generally being entitled to the Entry of Default Judgment as a matter of right, there are rules that bar the entry of Default Judgment against certain Defendants.
The first rule applies to Defendants in military service. By federal law, no Default Judgment may be taken against persons in military service, unless special procedural requirements are met. 50 USC § 3931- Servicemembers Civil Relief Act. Because of this, a declaration of nonmilitary status is required before a Default Judgment may be granted.
The next rule applies to involuntary Plaintiffs. If a person aligned in interest with Plaintiff refuses to join in the lawsuit, he or she may be sued as a Defendant therein (the reason being stated in the complaint). See CCP § 382. However, in Watkins v. Nutting, the California Court of Appeal held that a Default Judgment cannot be taken against such a Defendant because his or her interest is really that of a Plaintiff. (1941) 17 C2d 490, 498-499.
Additionally, Entry of Default on a cross-complaint may be entered only if: (1) the court may properly award a separate judgment on the cross-complaint; and (2) the court finds a separate judgment would not substantially delay the final disposition of the action. CCP § 585.
Another rule applies to “Doe” Defendants. No Default or Default Judgment may be entered against someone served as a “Doe” unless the following additional requirements are met: (1) the summons served must bear the special notice required by CCP § 474; (2) the proof of service must state the fictitious names under which the Defendant was served and that the summons bore the requisite notice; and (3) Plaintiff must amend the complaint to show the Defendant’s true name prior to Default Judgment being entered (failure to amend to does not prevent a Plaintiff from Entering Default of Defendant).
With regard to the second requirement pertaining to “Doe” Defendants, this is a mandatory requirement. In Pelayo v. J.J. Lee Management Co., Inc., the California Court of Appeal held that if this mandatory requirement is not complied with, the Default and Default Judgment must be set aside even if the summons itself was endorsed properly. (2009) 174 CA4th 484, 496.
Lastly, it is important to note the discussion in the preceding article discussing Plaintiff’s relief on Entry of Default Judgment being limited to an actual amount set forth by a Plaintiff, e.g., in the complaint.
Pursuant to the Code of Civil Procedure § 585(a), the court clerk may enter Default Judgment only on cases arising on contract or judgment for recovery of money or damages.
However, there are restrictions on the court clerk’s authority to enter Default Judgment, including: (1) in cases with multiple causes of action, the court clerk may enter Judgment only on those causes that are of the type on which the clerk may enter Judgment; and (2) in cases with multiple Defendants, clerk may not enter Default Judgment when one or more, but not all, of Defendants have defaulted.
The court clerk may enter judgment for the following: (1) restitution of premises in unlawful detainer actions; (2) costs against Defendant or Defendants, or against one or more of the Defendants; (3) interest allowed by law or in accordance with the terms of the contract; (4) the principal amount demanded in the complaint, CCP § 425.11 statement of damages, or the CCP § 425.115 statement reserving the right to punitive damages, or a lesser amount if credit has been acknowledged by the Plaintiff.
The court clerk may also enter judgment for attorneys’ fees if the: (1) contract provides for attorneys’ fees; or (2) action is one in which Plaintiff is statutorily entitled to attorneys’ fees. Plaintiff may object to the schedule of attorneys’’ fees adopted by local court rules or if no schedule of fees has been adopted, and request the court fix the attorneys’ fees.
Plaintiff is required to “prove up” the Default – present evidence to the judge – to obtain a Default Judgment in any case other than those in which the court clerk’s Default Judgment is allowed. In sum, a Default Judgment is required by the court in the following kinds of cases: (1) cases not “arising upon contract or judgment”; (2) “contract or judgment” cases where the relief sought is not a fixed or determinable amount of money or damages; and (3) cases in which Defendant was served by publication. CCP § 585(b)(c).
A court judgment is also required where plaintiff seeks “reasonable” attorney fees, and there is either no court-approved schedule of fees in effect, or plaintiff wants more than the scheduled fee.
If Default Judgment is required to be entered by the court, it is important to note the vast amount of work involved in preparing a case for default “prove-up.” That time and effort will be wasted if the court later grants relief from Default, and a motion for such relief is likely where Defendant is represented by counsel.
Therefore, it would be prudent to ask Defendant's counsel whether he or she intends to file a CCP § 473 motion before preparing for the default hearing. In Beeman v. Burling, the California Court of Appeal held that if Defense counsel delays taking steps to have the Default set aside even after receiving your inquiry, the court may take that into account in deciding whether to grant relief. (1990) 216 CA3d 1586, 1602-1603.
In Martin v. General Finance Co., the California Court of Appeal held that a Default Judgment is treated as a judgment “on the merits” and res judicata as to the claim involved. (1966) 239 CA2d 438, 443. Therefore, Defendant is not permitted to relitigate his or her liability on the claim. Id.
In English v. English, the California Court of Appeal held that a Default Judgment collaterally estops the Defendant from raising issues in a later lawsuit that were necessarily adjudicated against Defendant in the earlier action. (1937) 9 C2d 805, 810. However, the collateral estoppel is limited to material issues well pleaded in the complaint in the former action. It does not apply to immaterial allegations or issues not raised in the pleadings. Burtnett v. King (1949) 33 C2d 805, 810.
Due to the exhaustive discussion situation in which a Defendant is able to seek relief from Default and Default Judgments, only the bare minimum grounds for relief are noted in this section.
Pursuant to the Code of Civil Procedure § 473(b), Defendant may seek relief from Default and Default Judgments on the following grounds: (1) mistake (law and fact); (2) excusable inadvertence; (3) surprise; and (4) excusable neglect. The standard of a reasonably prudent person is applicable in determining whether Defendant has sufficient grounds for relief from Default and Default Judgments.
Once again, keep in mind that this Article and the preceding article regarding Default and Default Judgments only discussed the most common issues that arise. Obtaining the entry of Default and/or Default Judgment is extremely complex and further research should be conducted, in addition to the information provided in this Article and the preceding article.
This Article discusses the ins and outs of the Entry of Default, as well as, the two key procedural events in a default proceeding: (1) the entry of default; and (2) the default judgment. The process for obtaining a Default Judgment will be discussed in a subsequent article.
The entry of default cuts off a Defendant’s right to answer or respond to the complaint and requires a Defendant to move the court before taking any other action. A Defendant cannot take further steps in the cause affecting a Plaintiff’s right of action until a motion to set aside the Default has been granted.
If a Plaintiff obtains a default judgment, the court awards the Plaintiff the relief requested in the complaint and conclusively establishes the truth of material allegations in the complaint.
Therefore, a Plaintiff is unable to obtain the requested relief in the complaint solely on the basis of the court entering default.
A Plaintiff can utilize the Entry of Default and a Default Judgment in two instances.
The first instance is when a Defendant fails to timely answer or respond to a complaint or an amended complaint. However, there are two exceptions to keep in mind: (1) this instance only applies to certain types of “actions” which are set forth in CCP §§ 307-1062.20; and (2) this instance does not apply where there is a specific statute that bars the Entry of Default. This first instance is further discussed in the section titled “What are the Grounds for Entry of Default?”
Additionally, the Entry of Default and a Default Judgment can be used as a sanction for misuse of the discovery process or delay in prosecuting a case. CCP § 2023.030; Gov. Code § 68608(b).
A Plaintiff does not obtain an Entry of Default without taking affirmative steps, e.g., filing and serving an application for Entry of Default. CCP § 585; Cal. Rules of Ct., Rule 3.1800(a). A Plaintiff must use the Judicial Council Form CIV-100 or the Judicial Council Form CIV-105 if the cause of action is subject to the Fair Debt Buying Practices Act.
The court clerk has the duty to Enter Default. However, the clerk has no authority to Enter Default if there is a question concerning the sufficiency of the pleading, e.g., the complaint. If the court clerk refuses to Enter Default, a Plaintiff may petition for a writ of mandate.
It is important to always pay attention to statutes utilizing “must” or “may.” For example, the court clerk must Enter Default if a Plaintiff files a proof of service by publication and a Defendant’s time for answering has expired.
Additionally, a Plaintiff must keep in mind that they must promptly move to take Default according to the local court rules, e.g., Los Angeles Super. Ct. Rules, Rule 7.7(a)(4).
The grounds for Entry of Default include the following: (1) the Defendant fails to answer; (2) the Defendant fails to amend their answer; and (3) the Defendant completely fails to respond.
A Plaintiff can Enter Default based on the first ground when the Defendant fails to answer: (1) the complaint; (2) the amended complaint; (3) after the court denies a motion to strike; (4) after the court strikes a portion or portions of the complaint; (5) after the court denies a motion to quash or stay; and (6) after the court overrules a demurrer.
The second ground may be utilized when the Defendant fails to amend his/her answer: (1) after the court sustains a demurrer to his/her answer; and (2) after the court strikes his/her answer with leave to amend.
Lastly, a Plaintiff can Enter Default if the Defendant completely fails to respond: (1) after the court acts on a motion to transfer; and (2) to the court’s motion to dismiss for Plaintiff’s failure to properly serve a Defendant under CCP § 583.250.
Interestingly, if a Defendant files an untimely pleading prior to a Plaintiff Entering Default, the Plaintiff is considered to have granted additional time for the Defendant to respond. Goddard v. Pollock (1974) 37 CA3d 137, 141. If this occurs, the Plaintiff should immediately file a motion to strike the Defendant’s untimely pleading. If granted, the Plaintiff should then request the Entry of Default. Id.
An often-overlooked prerequisite to the Entry of Default is a Plaintiff’s compliance with the due process requirements of notifying a Defendant of the amount of potential damages and giving the Defendant an opportunity to Defend.
In a Default proceeding, a Plaintiff is limited to recovery of the amount of damages demanded in the complaint. Surprisingly, a Plaintiff’s response to the Defendant’s request for a statement of damages does not substitute for stating the amount of damages sought within the complaint.
It is also important to note that if there is no amount of damages specified in a limited civil case, any and all judgments are void in their entirety.
If punitive damages are sought, a Plaintiff must serve a statement of punitive damages within a reasonable time before the Entry of Default against the Defendant if the Motion for Default includes a request for punitive damages. CCP § 425.115(f). This statement simply preserves a Plaintiff’s right to seek punitive damages. If and when the Defendant appears in the action, Plaintiff will not be limited to the amount sought in the statement of punitive damages.
Lastly, there are two types of cases which a Plaintiff must serve a statement of damages before Default may be taken. This requirement is for personal injury or wrongful death actions. Any judgment entered in one of these actions without a statement of damages is void.
It is important to note that when a statement of damages or punitive damages is required, it is prudent of a Plaintiff to serve the Defendant at the same time he/she is served with the complaint. If this is done, as soon as the deadline to respond expires, Default can be entered.
Upon the failure of the Defendant to answer the complaint within the time allowed by law, and upon the Entry of Default, in the absence of fraud, the right of the Defendant to participate in the litigation is terminated. Forbes v. Cameron Petroleums, Inc. (1978) 83 Cal.App.3d 257, 262. Any subsequent filing of an answer or demurrer on the Defendant’s part is void, unless the Default has been set aside by the court. Id. at 263.
In addition to the termination of the Defendant’s right to participate in the litigation, the truth of all material allegations within the complaint are deemed admitted and the Defendant is no longer entitled to service of papers involved in the litigation.
It is critical that the Defendant be aware of his/her deadline to respond to the complaint, because a Plaintiff does not have a duty to provide the Defendant with notice of any Default hearing. A Plaintiff could completely pull the rug out from under the Defendant.
The Entry of Default may be waived by a joint stipulation between all parties to waive or set aside the Default. CCP §§ 585, 586. Additionally, the California Court of Appeal held that the Entry of Default may be waived if a Plaintiff amends the complaint after the Entry of Default, the amendment is substantive, and the amended complaint is personally served on the Defendant. Jackson v. Bank of Am. (1986) 188 CA3d 375, 387-389. If this situation occurs, the Defendant then has the right to answer or demur to the new amendment.
However, keep in mind that a Plaintiff’s failure to obtain Judgment on the Default (as discussed in a subsequent article) does not automatically waive Default.
Once again, keep in mind that this Article only discussed the ins and outs of obtaining an Entry of Default. As stated in the opening section of this Article, obtaining a Default Judgment is an entirely distinct procedure, and therefore, will be discussed in a subsequent article.
As stated in our previous legal guides, a party has several options to choose from in responding to a pleading. One of these responses is filing a motion for judgment on the pleadings.
Similar to a demurrer, a motion for judgment on the pleadings is also a means of testing the pleadings based on matters that appear on the face of those pleadings. This means that a court ruling on a motion for judgment on the pleadings may not consider any extrinsic evidence other than matters subject to judicial notice or those that appear on the face of the pleadings. Motions for judgment on the pleadings are governed by C.C.P. § 438.
However, keep in mind, a motion for judgment on the pleadings is not necessarily a response to a pleading because it is requesting the court to enter judgment solely based on the matters stated in those pleadings. This is one of many points that distinguish a motion for judgment on the pleadings from a demurrer.
Despite demurrers and motions for judgment on the pleadings having similarities, a motion for judgment on the pleadings does not have as many grounds available for challenging the sufficiency of the pleadings. Because of this, a party may waive several valuable objections if not presented by a demurrer.
A party may wait to raise an objection that is applicable under a demurrer and a motion for judgment on the pleadings, e.g., the pleading fails to state facts sufficient to state a cause of action or defense. However, this would require the party to litigate on a defective complaint, and all of the uncertainties associated with that cause of action, including the difficulty of having an unclear pleading as the basis for any later motion for summary judgment and/or any other dispositive motions.
It is important to keep in mind that a party who files a demurrer on grounds that are objected to and overruled, may not then file a motion for judgment on the pleadings on the same grounds. However, this rule does not apply if there has been some material change in the law since the ruling on the demurrer. See C.C.P. § 438(g).
Depending on whether you are a Plaintiff or a Defendant, there are very limited grounds in which a party may file a motion for judgment on the pleadings.
When you are moving as a Plaintiff in a lawsuit, you may only file a motion for judgment on the pleadings if the complaint states facts sufficient to constitute a cause of action against the Defendant and the Defendant’s answer does not state facts sufficient to constitute a defense to the complaint. See C.C.P. § 438(c)(1)(A).
When you are moving as a Defendant in a lawsuit, you may file a motion for judgment on the pleadings if the complaint fails to state facts sufficient to constitute a cause of action and/or the court has no jurisdiction of the subject of the cause of action against the Defendant. See C.C.P. § 438(c)(1)(B).
Whether a party is a Plaintiff or a Defendant, they may move for a motion for judgment on the pleadings after the time to demur a complaint or answer has expired. See C.C.P. § 438(f)(1)(2).
However, a motion for judgment on the pleadings may not be brought after a pretrial conference order has been entered pursuant to C.C.P. § 575 or within thirty (30) days of the date the action is initially set for trial, whichever is later. See C.C.P. § 438(e). Despite this limitation, a court has the authority to disregard this rule. Id.
Prior to filing and serving a motion for judgment on the pleadings, there is a duty on behalf of the moving party to meet and confer at least five (5) days before the date a motion for judgment on the pleadings is filed, unless the motion for judgment on the pleadings falls within one of the several exceptions in C.C.P. § 439(d).
If the moving party is unable to meet and confer, they may file a declaration stating under penalty of perjury that a good faith attempt has been made to meet and confer. This declaration must explain why the parties could not meet and confer. By filing this declaration, an automatic thirty (30) day extension of time to file a motion for judgment on the pleadings must be granted by the court. During this period of extension, the moving party may not be subject to default.
Similar to most motions filed with the court, any further extensions of time must be obtained by a court order upon a showing of good cause. See C.C.P. § 439(a)(2).
It is also important to note that while C.C.P. § 438 does not expressly require a notice motion to be brought, in several sections, the C.C.P. refers to a motion for judgment on the pleadings being a noticed motion. Therefore, a motion for judgment on the pleadings likely requires a noticed motion to be brought.
It is extremely useful for a party to file a motion for judgment on the pleadings when the party does not have the time/resources to file a well drafted demurrer and/or the time to file a demurrer has passed.
When new counsel is substituted in, a motion for judgment on the pleadings is extremely useful to rectify former counsel’s failure to file a demurrer to pleadings that failed to state facts sufficient to constitute a cause of action. This can be looked at as a fall back plan.
Once again, keep in mind that this guide is not exhaustive of all of the considerations to be taken into account prior to filing a motion for judgment on the pleadings. However, this guide should break down the complex reality and intricacies of when a motion for judgment on the pleadings should be filed.
As stated in our previous legal guides, when a Plaintiff files a complaint, there are several different responses you can file, based on the circumstances. One of these responses is filing a demurrer. Demurrers are also applicable to other pleadings, aside from the complaint, e.g., answer.
A demurrer is utilized to challenge a defect in the pleadings that can be resolved as a matter of law – most commonly the legal sufficiency of the factual allegations in the complaint, e.g., the complaint does not state facts sufficient to constitute a cause of action. See C.C.P. § 430.10(e). Demurrers challenge only the pleadings and not the evidence, therefore, a demurrer is only available when a defect appears on the face of the pleading or the defect can be judicially noticed. Hahn v. Mirda (1stDist.2007) 147 Cal.App.4th 740, 747. However, courts can consider exhibits attached to complaints. PGA W. Residential Ass’n v. Hulven Int’l (4thDist.2017) 14 Cal.App.5th 156, 168.
Although the allegations on the face of a challenged pleading are generally taken as true, a demurrer can allege or deny facts by reference to judicial notice. Questions of fact may be resolved on demurrer only when there is only one legitimate inference to be drawn from the allegations of the complaint. TracFone Wireless, Inc. v. Cnty. of L.A. (2008) 163 CA4th 1359, 1368.
Additionally, if the defect does not appear on the face of the pleading, you should consider raising the issue in the answer or a motion for summary judgment.
Pursuant to the Code of Civil Procedure, a demurrer can be used to challenge an entire pleading, e.g., a complaint, a cross-complaint, a complaint in intervention, an answer, or an answer in intervention. C.C.P. § 387(f).
Additionally, a demurrer can be used to challenge a particular cause of action or defense in a pleading. C.C.P. § 430.50. However, if directed at a particular cause of action, the demurrer must dispose of the entire cause of action; it cannot be used to challenge part of a cause of action or a particular damage or remedy. See Kong v. City of Hawaiian Gardens Redev. Agency (2d Dist.2002) 108 Cal.App.4th 1028, 1047. For instance, punitive damages allegations are not subject to a demurrer, this is a remedy. See Grieves v. Superior Ct. (4th Dist.1984) 157 Cal.App.3d 159, 163.
If only part of a cause of action is defective, a party should file a motion to strike instead of a demurrer. Caliber Bodyworks, Inc. v. Superior Ct. (2d Dist.2005) 134 Cal.App.4th 365, 385.
A motion to strike is filed in connection with a demurrer when it is necessary to strike a portion of a cause of action. A motion to strike is the only pleading that allows an attack on a part of a cause of action, or particular language contained in the pleading. See C.C.P. §§ 435-437. Demurrers, motions for judgment on the pleadings, and motions for summary judgment, all require the disposition of an entire cause of action in order to be granted. See C.C.P. §§ 430.50, 437(c)(a), (f), 438(c)(2). Thus, a motion to strike is typically filed with a demurrer when the moving party wishes to eliminate a claim for damages. For example, it may be used for emotional distress damages that are not recoverable in a legal malpractice action, scurrilous or inflammatory allegations, or language supporting a claim for punitive damages when a demurrer is filed on the basis that punitives are not recoverable. However, when it is necessary to only eliminate a claim for damages, a motion to strike is filed by itself, e.g., there is no need to file a motion to strike in conjunction with a demurrer.
Attorneys primarily use demurrers to object to actions based on parties without the capacity to sue, improper parties, redundant litigation, improper subject matter jurisdiction, and poorly drafted complaints, e.g., uncertain, confusing, and/or ambiguous pleadings.
However, demurrers for uncertainty are disfavored. Moreover, demurrers that are interposed to resolve ambiguities as to the nature of Plaintiff’s case are likewise not well received. Too often, demurrers have been interposed unnecessarily. Because amendments to pleadings are liberally granted, the frequent use of the demurrer serves only to assist the plaintiff in how to better plead his or her case. It is always best to preserve by way of affirmative defense those matters that need to be preserved and then proceed with a judgment on the pleadings at a time wherein prejudice would occur if leave to amend was requested by the Plaintiff.
Although “general” and “special” demurrers do not appear in the statutes governing demurrers, they are commonly used by the courts and attorneys. One exception is in the statute governing limited civil cases. See C.C.P. § 92 (special demurrers are not allowed in limited civil cases). However, special demurrers are applicable in small claims actions, unlawful detainer actions, forcible entry actions, and forcible detainer actions. See C.C.P. § 91(b).
A general demurrer challenges a complaint on the ground that the pleading fails to state facts sufficient to constitute a cause of action. See C.C.P. § 430.10(e). Similarly, it challenges an answer on the ground that the answer does not state facts sufficient to constitute a defense See C.C.P. § 430.20(a).
A special demurrer challenges a pleading based on one of the other grounds that are enumerated by statute, and do not fall within a general demurrer. See C.C.P. §§ 430.10, 430.20.
A general demurrer is typically filed in response to a complaint in the following scenarios: (1) the court lacks subject matter jurisdiction; (2) the facts pleaded in the complaint do not state a cause of action; and (3) declaratory relief is not necessary or proper at the time under all the circumstances. Further, a general demurrer can be filed in response to an answer based on the grounds that the answer does not state facts sufficient to constitute a defense, e.g., am answer containing a defense that is barred by the statute of limitations or laches.
The court may lack subject matter jurisdiction over a cause of action for any of the following reasons:
A pleading may not state facts sufficient to constitute a cause of action in the following situations:
Additionally, in a declaratory relief action, the Defendant has grounds to file a general demurrer if declaratory relief is not necessary or proper at the time under all of the circumstances. For example, a demurrer should be sustained if a declaratory relief action is brought to review administrative decisions.
A special demurrer is typically filed in response to a complaint in the following scenarios: (1) there is no capacity to sue; (2) there is another pending action between the same parties on the same issues; (3) there is nonjoinder or misjoinder of parties; (4) the complaint is uncertain, ambiguous, or unintelligible; (5) the type of contract subject to the cause of action is not specified; and (6) no certificate of merit was filed.
Further, a special demurrer can be filed in response to an answer in the following scenarios: (1) the answer is uncertain, ambiguous, or unintelligible; and (2) the answer does not specify the type of contract subject to the cause of action is not specified.
A demurrer to a complaint must be filed and served within thirty (30) days after service of the pleading. See C.C.P. § 430.40(a). Despite this time limitation, the court has discretion to consider an untimely demurrer. See Jackson v. Doe (1st Dist.2011) 192 Cal.App.4th 742, 749.
However, a demurrer to an answer must be filed and served within ten (10) days after service of the answer, unless the court orders otherwise. See C.C.P. § 471.5(b).
Prior to filing and serving a demurrer, there is a duty on behalf of the demurring party to meet and confer – in person or by telephone – at least five (5) days before the responsive pleading is due. See C.C.P. § 430.41(h). If the demurring party is unable to meet and confer prior to this deadline, he or she can file a declaration with the court and obtain an automatic thirty (30) day extension. See C.C.P. § 430.41(a)(2). Additionally, the court may grant further extensions if the demurring party shows good cause. Id.
Once a demurrer has been filed, the party who filed the demurrer has made a general appearance in the action. See C.C.P. § 1014. Therefore, if certain challenges are waived based on the party making a general appearance, it is critical to preserve those challenges by including them within the demurrer. See C.C.P. § 418.10(e).
Additionally, once a demurrer is filed, the Defendant prevents the Plaintiff from taking a default judgment while the demurrer is pending. See C.C.P. § 585.
Once again, keep in mind that this guide is not exhaustive of all of the considerations to be taken into account prior to filing a demurrer in response to a pleading. However, this guide should break down the complex reality of when a demurrer should generally be filed in response to a pleading.
This guide discusses several considerations which should be taken once an attorney’s client is served with a summons and complaint. It is important to note that this guide is also applicable to any person without an attorney.
As stated in our guide Tips for Filing a Complaint, prior to retention, the attorney must conduct his or her own initial investigation. This may include determining: (1) the costs and risks of representing the potential client; (2) whether there is a conflict of interest; (3) whether your potential client is credible; (4) whether your potential client was represented by a prior attorney; and (5) a fee arrangement between yourself and your potential client.
Once the attorney receives a copy of the complaint from the client, it is critical to thoroughly review the complaint. While reviewing the complaint, the attorney should consider the following:
Following a thorough review of the complaint, the attorney can begin drafting an answer to the complaint. The following steps should be taken by the attorney when answering the complaint:
Following the attorney drafting the answer to the complaint, he or she must file and serve the answer on all parties in the action. This is generally done within thirty (30) days after receiving the summons and complaint.
Additionally, to obtain further information quickly, the attorney should immediately initiate discovery proceedings. As a Defendant in the action, discovery may be commenced at any time after service of the complaint or the Defendant appearing in the action. However, certain timing restrictions apply to the Plaintiff initiating discovery immediately following the initiation of the action.
Similar to our previous guides, it is important to keep in mind that the guide above is not exhaustive of all the considerations to be taken into account when responding to the Plaintiff’s complaint.
This guide discusses several considerations which should be taken once an attorney decides to take on a new case and file a Complaint. It is important to note that this guide is also applicable to any person without an attorney.
Once it has been determined that an attorney is going to take a case on, he or she must investigate potential Defendants. The first step is self-explanatory, e.g., identify the potential Defendants. Next, it is important to determine whether any of the potential Defendants are judgment proof. In simpler terms, if you prevail on the causes of action, will you recover monetary damages. Lastly, if the potential Defendant is an entity, does the entity have the capacity to be sued?
Similar to the investigation conducted when determining whether to take a case, further investigation must be conducted prior to filing the Complaint.
The attorney must review and analyze documents and/or discussions which pertain to the cause of action being alleged. These documents and/or discussions may include some of the following: (1) written statements made by the parties to others; (2) photographs which may portray the underlying facts of your causes of action; and (3) any correspondence, written or oral, between the parties.
Additionally, prior to filing the Complaint, an attorney may want to conduct witness interviews. In these interviews, this is a chance for an attorney to verify his client’s portrayal of the facts, as well as, make a determination as to whether the witness would make a good trial witness, e.g., credibility.
Gathering public information is also extremely valuable at this time, due to the mere fact that the potential Defendants may be unaware that the Complaint is going to be filed against them. For example, an attorney may look on google, social media sites, and/or gather publicly available documents. Once the Complaint is filed, the potential Defendants attorney may recommend they make their social media presence inaccessible.
Additionally, if the causes of action cannot be presently brought, an attorney should engage in discovery, take steps to perpetrate testimony, and/or preserve evidence. One example of this is when a young child has a Traumatic Brain Injury. At the time of the injury, an attorney may "jump the gun" and file the Complaint. However, there has been an insufficient amount of time that has passed for an attorney to actually realize the extent of his or her client's potential injuries. This makes it critical to preserve all evidence at this time, e.g., the car seat which the young child was sitting in may be evidence which is preserved in this scenario.
Although overlooked, the attorney should review proposed jury instructions for the causes of action which are alleged in the Complaint. This allows the attorney a chance to perform minimal legal research to determine what proof will be needed to prevail on the causes of action within the Complaint.
The attorney should also consider the burdens of proof and persuasion for each cause of action, as well as, potential affirmative defenses which the Defendant may raise in their Answer.
Although claim requirements will not always be an issue, it is critical for the attorney to determine if there are any requirements that must be met prior to filing the Complaint. The following claims commonly have requirements that the attorney must comply with prior to filing the Complaint: (1) claims against the government; (2) claims against a decedent’s estate; and (3) insurance claims.
At this time, the attorney may also encounter administrative remedies which need to be exhausted prior to filing the Complaint, e.g., administrative remedies are often encountered in employment cases.
The attorney will also need to determine which forum to file the Complaint in. This is often overlooked but remains a critical issue because some states and/or counties continuously give higher monetary verdicts, while others don’t.
The following must be kept in mind: (1) should the Complaint be filed in state or federal court; (2) which county or federal district should the Complaint be filed; and (3) which courthouse should the Complaint be filed in.
If the Complaint is filed in a California state court, is the Complaint going to be filed in a limited jurisdiction or unlimited jurisdiction? For instance, in a limited jurisdiction court, the attorney may be required to follow different discovery rules and there is a limit on the potential monetary recovery of $25,000.00.
Prior to filing the Complaint, the attorney must also identify and consider whether there are any related cases and/or causes of action. If so, the attorney may be required to consolidate related cases and/or sever causes of action.
While the case is pending, the attorney has a continuing duty to identify and consider any related cases and/or causes of action.
Once the attorney has considered all of the aforementioned potential issues, he or she must draft the Complaint. A sufficient amount of time should be taken in drafting the Complaint, filing the signed Complaint without adequate investigation of the underlying facts and law may result in sanctions against the attorney. C.C.P. § 128.7(a).
Once the attorney begins drafting the Complaint, he or she must also fill out a civil case cover sheet and the summons.
This is not to be considered an exhaustive list of potential issues that need to be considered, however, below are some important considerations that often times arise in civil cases.
First, if the attorney is filing a Complaint with causes of action for professional negligence against an architect, engineer, or land surveyor; a certificate of merit must be included. C.C.P. § 411.35.
Additionally, the attorney may need to determine whether a temporary restraining order and/or a preliminary injunction should be requested to protect the status quo. For instance, if the cause of action is for breach of contract to purchase a unique property and the Defendant is selling the property to another buyer the next day, a temporary restraining order and/or a preliminary injunction should be requested to protect the status quo. The attorney can request for a temporary restraining order and/or a preliminary injunction by simply filing the request with the Complaint or anytime thereafter. C.C.P. § 527(c); Cal. Rules Ct, Rule 3.1150(b).
Similarly, a writ of attachment should be requested in certain scenarios to secure recovery, e.g., a court order to seize property in order to satisfy a judgment by the court. The attorney can request for a writ of attachment by simply filing the request with the Complaint or anytime thereafter. C.C.P. §§ 483.010–483.020, 484.010, 484.020, 484.030, 485.210.
If the cause of action concerns real property, the attorney may also consider filing a notice of pendency of action in the county recorder’s office where property is situated in order to give notice that there is a lawsuit concerning title to that real property. Similarly, to the aforementioned requests, a lis pendens can also be requested within the Complaint or anytime after. C.C.P. § 405.20.
Once again, keep in mind that the guide above is not exhaustive of all of the considerations to be taken into account prior to filing a Complaint. However, once adequate investigation has taken place, it is time to file the: (1) civil case cover sheet; (2) summons; and (3) Complaint.
If you own a business, it is important to protect yourself, and the business from liability. It is incumbent upon a business owner to determine the best entity to be used in conducting their business. If your business has been sued, you should contact a Civil Litigation Attorney as soon as possible.
Generally, the most important decision for an attorney and client – who owns a business – is to determine what entity to use in conducting the business. An attorney should inform their client of the possible alternatives of entities, and which entity is the best fit for the client’s business practice.
Some of the most prevalent entities include:
As of 2018, LLCs are the most used entity in California. See California Secretary of State. However, that does not mean that the business owners using them are achieving the full potential of the benefits that they could achieve with another entity.
Limited liability is often misunderstood. Generally, limited liability means that a creditor cannot obtain a judgment against a business owner's personal assets, e.g., only the business related assets within the entity are subject to liability.
For example, assume XYZ, Inc., a toothpaste company, has $300,000 in business assets and has two shareholders - inferring XYZ is incorporated - whom each have a personal net worth of $1,000,000. If XYZ is later sued for a personal injury caused by the toothpaste, the shareholders generally cannot have a judgment enforced against them, outside of the assets within XYZ, Inc., e.g., $300,000.
However, there are many exceptions to this general rule, which will be discussed in this article regarding LLCs, and articles to follow regarding other business entities.
An LLC is by far the top used entity of choice in organizing a new business; however, the question still remains, is it correct for your business practices?
When deciding whether an LLC is a good fit for your business, it is important to think about the three primary reasons an LLC is used. These include: (1) limited liability; (2) no entity tax level; and (3) flexibility. Each are discussed in turn.
An LLC’s members and managers do not have liability for the LLC’s debts and obligations. This is true even if the members actively participate in the management of the LLC. However, there is an often-overlooked problem with the above statement, e.g., veil piercing.
Veil Piercing is a legal fiction that holds shareholders liability for a Corporations debt. This veil is lifted by weighing several factors, which include: (1) the existence of injustice, or fraud; (2) failure to maintain separate identities from the Corporation, e.g., Alter Ego; (3) failure to capitalize the Corporation to pay its debts; (4) failure to following Corporate formalities, e.g., taking minutes; and (5) etc. It is important to note that these factors apply to Corporations, and are not determinative, as this is an equitable remedy, a court may pierce an LLC Veil with other factors.
Nowhere in the California Limited Liability Statute does it state that there is LLC Veil Piercing, which is something that is accounted for in the California Corporations Statute. However, there is a section that discusses “Alter Ego” liability, meaning the members are using the LLC as their “Alter Ego,” in lieu of their business practice. This does not mean that a California court would not apply the same Corporation standards to an LLC.
For instance, several state courts which were silent on the LLC Veil Piercing within their statute, have ruled that an LLC’s Veil may still be pierced. This trend began with the Wyoming Supreme Court ruling that because there was no evidence of legislative intend to preclude application of the common law veil piercing to the LLC context, the court held that the LLC Veil could be pierced. See generally Kaycee Land & Livestock v. Flahive, 46 P.3d 323 (Wyo. 2002).
Due to the fact that Wyoming is the state that created the LLC entity, it is not surprising if all state courts follow in line with the holding in Kaycee Land. Therefore, it is important that attorneys note this to their clients and keep them informed that this entity does not provide absolute limited liability.
No Entity Tax Level
An LLC is not required to pay Federal Income tax; however, taxes are paid at the member level. Despite this, California still makes sure to make money by imposing an annual franchise tax of $800.00 on LLCs and a statutory fee on the LLC’s total annual income from California sources up to a maximum fee of $11,790.00.
Lastly, an LLC allows its members to have broad flexibility to tailor the governance and economic arrangements of the business entity, as the members see fit, through the LLC’s Operating Agreement.
As indicated, just because LLCs are popular, this does not mean that they are appropriate in every instance, e.g., the Corporate form still remains very popular in the State of California. Some of these drawbacks include: (1) expense; (2) not appropriate for publicly-traded companies; and (3) not available to most professionals.
Incorporation can be pretty straightforward and can be done with a simple capital structure that is not costly. However, an LLC requires an Operating Agreement with numerous members, and can become extremely complex and expensive to draft and administer.
Not Appropriate for Publicly-Traded Companies
Generally, startup companies rely heavily on stock options to incentivize employees; however, an LLC has many difficulties in transferring the member’s interests. Thus, it is more difficult to grant comparable equity to award and LLC’s employees.
Not Available to Most Professionals
Despite all of the benefits discussed, some professions do not allow LLCs to be utilized in conducting said profession. These professions include accountants, architects, lawyers, physicians, dentists, and engineers. See Corp. Code, § 17701.04.
In the situations where LLCs are not available for professionals, a Limited Liability Partnership is usually created.
Notwithstanding the limitations discussed above, the LLC – so long as it is an available entity to conduct your business, usually remains the preferred form for conducting business. Nevertheless, an owner of a business should be sure that their counsel is not assuming an LLC is the optimal form for all of their business ventures and should weigh the alternative corporate forms against an LLC
This summary discusses numerous consideration attorneys should make in determining whether to take a new case. Often times an attorney may taken on a case without all of the facts relating to the claim. There are few things worse than learning adverse facts after making your general appearance.
Prior to accepting a new case, it is incumbent upon an attorney to have a client meeting to learn the facts of the case. It is important to keep in mind that everything you were told is filtered through the perceptions of your potential client, as this is the person most invested in the potential lawsuit. You can and should conduct your own independent investigation of the alleged facts to verify what your potential client has told you.
Once you have had a client meeting, you can begin your independent investigation. This investigation is intended to obtain facts that supports your potential client's causes of action, determine whether there is an opportunity to settle the case prior to filing a lawsuit, gather information that you believe opposing counsel will consider beneficial to his case, etc.
This investigation is not limited to the alleged facts your potential client has told you. It is in the potential client's best interest to obtain witness interviews, gather documents, obtain information about your potential client and Defendant's history, conduct legal research, etc.
This investigation is the chance for you to be sure that the evidence and law supports your potential client's allegations. Once again, conducting a thorough and diligent investigation protects both the potential client and yourself.
Often times, an attorney will not develop a theory of a potential case prior to accepting representation. This is the core of your potential client's case, you should not wait. You will need to present this theory over and over, both in presuit correspondence, pleadings, and at trial.
In determining the theory of the case, make sure to keep track of ideas as they come to you. Theories of a case can be viewed in several different ways. What really happened? Why did it happen? What is the basis for the claim of injury?
Knowing the theory of the case prior to accepting representation will save you time. As the case progresses and it will also give you an idea of what facts you need to gather to prove this theory.
You should immediately begin analyzing each fact and/or document in the context of your potential client's position(s), claim(s), and goal(s).
The question becomes whether your potential client's case is winnable? If not, are there facts that will be obtained as the case progresses that will make it winnable?
Always keep in mind that when a potential client comes to you for representation, they are often angry and will only see their point of view. They believe they have been wronged. It may be difficult to obtain information that is unbiased to determine whether to accept representation. You may need to shift the focus of the suit and/or abandon particular claim(s) or theorie(s). Worst case scenario, you learn that the suit or defense should not be pursued at all, at which point you have saved yourself and your potential client time and money by not accepting representation.
As a final step to determine whether you should accept representation, you must always consider the cost of achieving the end result. Many attorneys forget about this aspect prior to accepting representation and the potential client ends up obtaining new counsel.
This amount should include the cost of gathering documents, interviewing witnesses, and proving the facts that will need to be proved to permit recovery. You can ask yourself, will the anticipated outcome justify your expense?
Additionally, always include your potential client in this evaluation. If they do not understand the cost of reaching the anticipated outcome, you will likely have trouble receiving payment from your potential client.