Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment and an order of the Superior Court of Los Angeles County, Ct. No. BC331401, Mary Ann Murphy, Judge.
Furutani & Peters and John A. Furutani for Defendant and Appellant.
Bryan Cave, Aaron McKown and Paula L. Zecchini for Plaintiff and Respondent.
JACKSON, J.
INTRODUCTION
Defendant Richard Guido (Guido) appeals from a default judgment entered in favor of plaintiff Associated Receivables Funding, Inc. (Associated). He also appeals from an order granting Associated’s motion for reconsideration of an order granting Guido’s motion to set aside the default judgment. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Associated filed this action on April 5, 2005 against Guido, Suzanne Wood, Salvatore Guido, Jeff Wood, BL Trucking and Bernardino Lopez (collectively, the Guido entities). The causes of action were intentional misrepresentation, breach of trust, intentional interference with prospective economic advantage, fraudulent transfer and unjust enrichment.
Associated alleged that it entered into a financial factoring agreement with Multi Label, a company controlled by the Guido entities, whereby Multi Label’s accounts receivables were assigned to Associated. Associated then purchased the accounts receivables from another entity. Due to the Guido entities’ fraudulent conduct, the accounts receivable Associated purchased were worth less than represented.
Associated alleged that on October 4, 2004, it had obtained a default judgment against the Guido entities in the amount of $2,410,486.70. The Guido entities transferred the funds to multiple shell corporations, preventing Associated from recovering on the judgment. Attached to the complaint in the instant action is a copy of the prior judgment, which was awarded against Multi Label and others. Although Guido was listed in the caption, he was not one of the defendants against whom the judgment was entered.
Guido filed his answer on May 27, 2005. He denied the allegations of the complaint and asserted 27 affirmative defenses. Among these defenses was a claim that he had entered into an agreement with Associated pursuant to which he was dismissed from the prior lawsuit, and the agreement precluded Associated from proceeding against Guido.
Associated served written discovery on Guido, with responses due by September 14, 2005. On September 12, Guido’s counsel, Steven A. Micheli, requested an extension of the time to respond to October 31. Associated’s counsel granted the request.
On September 28, 2005, Attorney Micheli moved to be relieved as counsel based on non-cooperation and nonpayment of fees. The court granted this request on October 19.
Guido failed to respond to Associated’s discovery request. On November 15, 2005, Associated moved for orders to compel discovery and for sanctions.
Guido also failed to appear at a status conference and failed to comply with the court’s order to appear, and an order to show cause was issued. Guido failed to appear at the December 15, 2005 hearing on the order to show cause and the motions to compel discovery. The trial court granted the motions to compel discovery and awarded sanctions. It continued the hearing on the order to show cause.
Guido failed to comply with the December 15 order. On January 6, 2006, Associated moved to strike Guido’s answer as a discovery sanction. Guido failed to respond. Guido also failed to appear at the February 6 hearing on the motion. The court granted Associated’s motion and struck the answer.
On February 8, 2006, Associated filed a request for entry of default. The clerk of the court entered the default as requested.
Associated then filed a request for entry of judgment on June 16, 2009. The court signed and filed the judgment that same day.
On July 1, 2009, Guido filed notice of intent to file four motions to vacate and set aside the default judgment. The bases of these motions would be that under Code of Civil Procedure section 663, the judgment was barred as a matter of law due to the prior judgment, and the judgment was invalid because Associated impermissibly split a cause of action; and under Code of Civil Procedure section 473, Guido was entitled to relief because the judgment was void on its face as being for an amount greater than that requested in the complaint, and the judgment was void because there was no order on file striking Guido’s answer. Guido filed the motions on July 8.
In his supporting declaration, Guido stated that he never received a copy of Attorney Micheli’s request to be relieved as counsel or an email from the attorney confirming Guido’s address. The address to which those and all subsequent papers were sent was Multi Label’s old address, which was not his address. He never received any of the papers.
Associated opposed the motions. At the August 11, 2009 hearing on the motions, the court denied the first three but granted the fourth, based on the absence of an order striking Guido’s answer.
On August 21, 2009, Associated filed a motion for reconsideration under Code of Civil Procedure section 1008. The bases for the motion were that the court and counsel mistakenly believed no order striking Guido’s answer had been filed, but such an order actually had been filed; and Associated had obtained a declaration from Attorney Micheli that the address to which he had sent the request to be relieved of counsel and all other correspondence was the address Guido had given him, and none of the mail sent to that address had been returned. Attorney Micheli also sent a copy of the motion to be relieved as counsel to Guido by email, and it was not returned as undeliverable. Attorney Micheli also declared that he had been on vacation between July 24 and 30, 2009 and was unavailable to provide a declaration during that time period.
Guido opposed the motion for reconsideration on the ground Associated failed to act with due diligence in procuring the new evidence on which the motion was based.
On November 12, 2009, the court granted Associated’s motion for reconsideration and vacated its August 11 order. It acknowledged that Guido’s answer was stricken as a discovery sanction and stated, “[t]hat the Court was misinformed otherwise does not change the substance of the prior motions and orders.”
DISCUSSION
A. Default Judgment
1. Appellate Review
In general, a defendant’s default admits the truth of the allegations in a plaintiff’s complaint and entitles the plaintiff to a judgment for the damages claimed. “Substantively, ‘[t]he judgment by default is said to “confess” the material facts alleged by the plaintiff, i.e., the defendant’s failure to answer has the same effect as an express admission of the matters well pleaded in the complaint.’” (Steven M. Garber & Associates v. Eskandarian (2007) 150 Cal.App.4th 813, 823, italics omitted.)
Therefore, an appeal from a default judgment “brings up for review only such questions as jurisdiction and sufficiency of the pleadings. [Citations.] Because no issue of fact is raised, there can be no review of the sufficiency of the evidence. [Citations.]” (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 361, p. 416.)
The failure of the complaint to state a cause of action is one of the few issues which a defendant in default may raise on appeal from a default judgment. (9 Witkin, Cal. Procedure, supra, Appeal, § 361, p. 416.) Where the allegations of the complaint do not state a cause of action the plaintiff is not entitled to a judgment, even if the defendant is in default. (Taliaferro v. Taliaferro (1959) 171 Cal.App.2d 1, 8-9.)
2. Election of Remedies
Guido contends the complaint failed to state a cause of action “because the primary right—the failure of Multi Label, Inc. to pay [Associated] the advanced funds—had been decided in favor of [Associated] in [the prior litigation] and [Associated] had elected its contract remedy, thereby abandoning the tort remedy which it sought in this litigation against [Guido].”
“The doctrine of election of remedies is but an extension of the general principles of equitable estoppel.” (Roam v. Koop (1974) 41 Cal.App.3d 1035, 1044; accord, City Bank of San Diego v. Ramage (1968) 266 Cal.App.2d 570, 588.) Election of remedies or estoppel is an affirmative defense which must be specially pleaded unless it appears on the face of the complaint. (Roam, supra, at p. 1044; City Bank of San Diego, supra, at p. 588.) The failure to plead it forfeits the issue on appeal. (Hayworth v. City of Oakland (1982) 129 Cal.App.3d 723, 729; Roam, supra, at p. 1044.)
Even though election of remedies or estoppel was not pleaded here, Guido claims that “[t]he failure to state a cause of action was made clear when [Associated] attached a copy of the [prior] judgment... to the complaint in this action.” However, in this case the prior judgment does not demonstrate the failure to state a cause of action.
As noted in City Bank of San Diego v. Ramage, supra, 266 Cal.App.2d 570, “the strict application of the doctrine that recovery may not be had on two inconsistent causes of action has been avoided in situations where the inconsistent remedies have been pursued against different persons. There is in fact no double recovery where the defendant affected has allowed default judgment to be taken against him without requiring the plaintiff to make an election, and the pursuit of another remedy against another person has not worked to the prejudice of the defendant in default.” (Id. at p. 587.) If inconsistent remedies are sought against different parties, and the defendant by his default admits liability on one basis, the defendant has “‘no valid objection to the double judgment.’” (Id. at p. 587, fn. 3.) The only caveat is that there can only be one recovery of the sum owed. (Ibid.; see also Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1159.)
Here, the prior judgment attached to the complaint was not rendered against Guido. Guido’s default admitted his tort liability for the amount allegedly owed to Associated, and the complaint stated that Associated never recovered the amount owed under the prior judgment. The complaint therefore did not fail to state a cause of action based on the election of remedies doctrine, as claimed by Guido. (City Bank of San Diego v. Ramage, supra, 266 Cal.App.2d at p. 587 and fn. 3.)
3. Res Judicata/Collateral Estoppel
Guido also contends this action is barred as a matter of law under the doctrines of res judicata and collateral estoppel. Again, there is no review of this issue on appeal from the default judgment.
The doctrine of res judicata acts to prevent parties from relitigating issues they raised or could have raised in a prior action. (Huley v. Koehler (1990) 218 Cal.App.3d 1150, 1157.) However, res judicata as a defense must be specially pleaded or it is waived. (Id. at p. 1158.) Here, it was not specially pleaded and so it was waived.
It follows that a complaint does not fail to state a cause of action because the claims therein could have been barred by res judicata if an answer had been filed, raising it as an affirmative defense. Res judicata therefore does not provide a basis for overturning a default judgment.
Collateral estoppel need not be specially pleaded as a defense, but its application requires a showing that the issue sought to be decided was litigated and decided in a prior action. (Hulsey v. Koehler, supra, 218 Cal.App.3d at p. 1156.) Guido argues that in the prior litigation, Associated “clearly pursued the same injury and same primary right as in this litigation—the failure to be paid on monies advanced to Multi Label, Inc.” What Guido does not do is point to anything on the face of the complaint, including the attached judgment, which establishes that the issues in the instant litigation were litigated and decided in the prior litigation. In other words, Guido has failed to show that the complaint does not state a cause of action. He thus has failed to show that the default judgment is invalid. (Taliaferro v. Taliaferro, supra, 171 Cal.App.2d at pp. 8-9.)
4. Judicial Estoppel
Judicial estoppel may be applied to prevent a party from taking inconsistent positions in different proceedings. (The Swahn Group, Inc. v. Segal (2010) 183 Cal.App.4th 831, 841.) It “‘“‘is invoked to prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process....’”’” (International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1191; accord, The Swahn Group, Inc., supra, at p. 841.)
Guido argues that “[h]ere, judicial estoppel is necessary to prevent an injustice from occurring. In asserting its tort theory against [Guido], [Associated] is directly contradicting its election [in the prior action to proceed] on its contract theory, and [Associated] cannot have it both ways.”
However, Guido did not raise judicial estoppel below as one of the bases on which the default judgment should be set aside. Consequently, he has forfeited this claim on appeal. (Halev.Morgan (1978) 22 Cal.3d 388, 394; Rutan v. Summit Sports, Inc. (1985) 173 Cal.App.3d 965, 974; see The Swahn Group, Inc. v. Segal, supra, 183 Cal.App.4th at pp. 843-844.)
5. Void Judgment
Guido next contends that the default judgment is void because the court had no involvement in the judgment, and the inconsistent evidence does not support a judgment. The latter portion of his contention is easily resolved. As previously stated, on appeal from a default judgment, we do not review evidence (except in conjunction with a challenge to the award of damages), only the pleadings. (Steven M. Garber & Associates v. Eskandarian, supra, 150 Cal.App.4th at pp. 823-824; 9 Witkin, Cal. Procedure, supra, Appeal, § 361, pp. 416-417.)
At the October 20, 2009 hearing on Associated’s motion for reconsideration of the order granting relief from the default judgment, the court, in reviewing the proceedings thus far, observed: “Okay. You’ve got a court judgment. I wasn’t even involved. Some clerk signed off on a judgment 6/16, by the clerk.”
Guido contends the judgment is void because it was entered by the clerk, not the court, in contravention of the law. As Associated points out, however, the judgment was signed by the court. The court’s subsequent statement as to its recollection of what occurred cannot be used to void the judgment. (In re Marriage of Ditto (1988) 206 Cal.App.3d 643, 646.)
B. Reconsideration of Order Setting Aside Default Judgment
It is Guido’s position that Associated failed to offer any new or different facts in support of its motion for reconsideration. The trial court, “[i]nstead of denying the motion for the failure of new facts, ... ‘granted’ the motion by reconsidering its August 11, 2009 order vacating the default and default judgment sua sponte.” This, Guido claims, was “procedurally improper” and deprived him of his due process right to be heard on the matter.
Code of Civil Procedure section 1008 provides that when an application for an order has been made and the trial court has granted or denied it, a party may apply to the trial court “to reconsider the matter and modify, amend, or revoke the prior order.” (Id., subd. (a).) The application must be “based upon new or different facts, circumstances, or law.” (Ibid.)
Code of Civil Procedure section 1008 notwithstanding, the trial court retains the ability to reconsider its interim rulings on its own motion and to change those rulings at any time prior to entry of judgment. (Darling, Hall & Rae v. Kritt (1999) 75 Cal.App.4th 1148, 1156; Bernstein v. Consolidated American Ins. Co. (1995) 37 Cal.App.4th 763, 774, disapproved on another ground in Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 841, fn. 13; see also Le Francois v. Goel (2005) 35 Cal.4th 1094, 1107.) “Section 1008 is designed to conserve the court’s resources by constraining litigants who would attempt to bring the same motion over and over. On the other hand, these same judicial resources would be wasted if the court could not, on its own motion, review and change its interim rulings.” (Darling, Hall & Rae, supra, at p. 1157.) The only constraint on the court is that it must “exercise ‘due consideration’ before modifying, amending, or revoking its prior orders.” (Ibid.)
It therefore is irrelevant whether the trial court acted in response to the motion for reconsideration or acted sua sponte. “We find this to be a distinction without a difference. Whether the trial judge has an unprovoked flash of understanding in the middle of the night or is prompted to rethink an issue by the stimulus of a motion, ” it is within the judge’s inherent power to correct his or her own rulings. (Remsen v. Lavacot (2001) 87 Cal.App.4th 421, 427, disapproved on another ground in Le Francois v. Goel, supra, 35 Cal.4th at p. 1107, fn. 5.) We find no error in the trial court’s vacating its August 11, 2009 order granting relief from default and default judgment, which was based on the erroneous belief that there was no order striking Guido’s answer.
DISPOSITION
The judgment and order are affirmed. Associated is to recover its costs on appeal.
We concur: PERLUSS, P. J., WOODS, J.