Goya v. P.E.R.U. Enterprises

Citations: 87 Cal. App. 3d 886; 151 Cal. Rptr. 258; 1978 Cal. App. LEXIS 2240Docket: Civ. 53833

Court: California Court of Appeal; December 27, 1978; California; State Appellate Court

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Lydia Goya filed a four-count complaint on July 14, 1974, against P.E.R.U. Enterprises, La Brea Inn, Hollywood Press, and others, alleging unauthorized use of her photograph and conversion, seeking $100,000 in general damages and $1 million in punitive damages. After amending her complaint on October 9, 1974, to include specific defendants, she sought a default judgment on March 4, 1976, due to the lack of responsive pleadings. A default judgment for $18,000 was entered on November 4, 1976, but Goya did not notify the defendants until June 14, 1977. Subsequently, the defendants filed a motion to vacate the default judgment citing lack of actual notice and other legal grounds. The trial court granted this motion on December 9, 1977, citing that the defendants had not received actual notice of the lawsuit due to no fault of their own. Goya appealed, arguing that the defendants failed to prove they did not receive notice and that she was prejudiced by the court's decision. The appellate court affirmed the trial court's ruling, emphasizing that the defendants' affidavits supported the finding of a lack of actual notice, thus allowing them to defend the case on its merits under California Code of Civil Procedure sections 473 and 473.5.

Declarations presented against Picard indicated service at his business on November 13, 1974, and February 16, 1976, by attorney Mr. Rosett, who delivered summons and complaints to Mario Martinez, an assistant to Picard, and subsequently mailed copies to him. The Veras were served at their residence on the same dates. However, supporting declarations claimed that Picard was never personally served, did not receive any lawsuit-related documents, and was unaware of the lawsuit until July 1977, lacking actual notice to defend. Similarly, the Veras did not comprehend the documents, which did not provide them with timely notice to defend individually or on behalf of La Brea Inn.

The trial court accepted these declarations, establishing that service did not result in actual notice in time for the defendants to defend and that their motion to vacate was filed within the timeframe allowed by section 473.5, subdivision (a). Despite the four-month delay from notice of default judgment to filing the motion, the court deemed this reasonable under the specified time limits.

The appellant's argument that the declarations of merits failed to demonstrate a different trial outcome was dismissed, as the proposed answers included denials about the use of the plaintiff's photograph, which the trial court considered. Additionally, Kenneth MacKenzie, manager of La Brea Inn, asserted he did not authorize the photograph's use and was unaware of it until mid-1977. Respondents' counsel acknowledged the Veras’ denials but conceded the issue of unauthorized use of the photograph by Picard, focusing on damages instead. The court found that the defendants adequately demonstrated a good defense.

The court has the discretion to set aside a default and default judgment under Code Civ. Proc. 473.5, subd. c, provided it does so on just terms and allows the party to defend the action. The record shows no abuse of discretion, as the court considered various factors, including the lawsuit's history and any delays affecting the plaintiff's position. Significant unexplained delays occurred over nearly three years: 15 months between the filing of the amended complaint and its service on defendants, eight months between filing for default and entry of judgment, and seven months before the plaintiff notified the defendants of the judgment. Additionally, the summons and amended complaint were served at different times, raising questions about the rationale behind the staggered service. 

The default judgment, amounting to $18,000 for unauthorized use of a photograph, was entered without timely notice to the defendants. The appellant claims prejudice due to the judgment's vacation affecting her employment opportunities and the requirement to dismiss Doe defendants to secure default entry; however, these assertions lack supporting arguments or legal citations. The appellant does not clarify how she would suffer damages from having her case heard on its merits, especially given her own delays in serving the defendants. 

The court noted that the prejudice stemming from dismissing Doe defendants is standard in such cases and does not uniquely disadvantage the appellant. The court emphasized that setting aside the default and judgment does not inherently cause prejudice, as it allows the case to be heard on its merits. The court found no merit in the appellant’s complaint regarding the lack of sanctions against the defendants, interpreting the court's silence on sanctions as a decision not to impose any in allowing the defendants to defend the action. Thus, the appellant did not demonstrate any significant prejudice resulting from the order, aside from being required to proceed to trial.

The trial court found no unfairness in setting aside defaults and a default judgment against the plaintiff, allowing the defendants to defend without imposing conditions or monetary sanctions. The decision was affirmed, with no abuse of discretion identified. A petition for rehearing and a subsequent petition to the Supreme Court were both denied in early 1979. 

Section 473.5 outlines the procedure for a party to set aside a default or default judgment when they did not receive actual notice in time to defend. A motion must be filed within two years of the judgment or 180 days after notice of the judgment. The motion should include an affidavit proving the lack of notice was not due to avoidance or neglect and must propose an answer or pleading to be filed.

In this case, Picard claimed he was unaware of the lawsuit until July 1977, despite receiving a notice of entry of judgment by mail in June 1977. Martinez, who claimed to be an advertising salesman for Picard, denied having received any legal documents. The Veras, also unaware of their status as defendants until July 1977, had limited English proficiency and were not involved in the management of La Brea Inn, which was overseen by MacKenzie. The Veras received some documents but did not understand them, and MacKenzie forgot to respond due to business pressures. 

Furthermore, while Civil Code section 3344, subdivision (a) allows for damages due to unauthorized use of a photograph, there remains a significant question regarding the extent of compensatory and punitive damages owed.