Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County No. RIC411895, Dallas Holmes, Judge.
Fingal, Fahrney & Clark and Christopher R. Clark for Plaintiff and Appellant.
The Prospero Law Firm, Raymond C. Prospero; The Puccio Law Firm, and Domenic Puccio II, for Defendant and Respondent.
OPINION
McKINSTER, J.
Plaintiff and appellant Michael Price appeals after the trial court granted the motion of defendant and respondent Vernon Gingrich to set aside the judgment as to an award of punitive damages. Plaintiff contends that the trial court erred in setting aside the punitive damages award, as the motion was untimely and failed to demonstrate a proper ground for relief. We reverse.
FACTS AND PROCEDURAL HISTORY
Plaintiff had $500,000 he wished to invest. He knew defendant Vernon Gingrich, who had been a family friend for many years. Plaintiff’s father had worked at an automobile dealership and Gingrich was the sales manager. Gingrich introduced plaintiff to defendant Michael Creech, approximately six to nine months before the transaction at issue actually took place. The purpose of the meeting was to discuss making a short-term loan to Creech.
Gingrich told plaintiff that he had already lent money to Creech for some time; Gingrich was getting a good return on his money, and recommended it as a good investment.
Eventually, discussions got around to a specific transaction: Plaintiff would lend Creech $500,000 to complete the purchase of a Ferrari Enzo automobile. Creech already had a buyer. Creech would repay the loan, from the sale of the Ferrari, about two weeks later. Creech and Gingrich represented that the Ferrari was being shipped to the United States, and that they already had a doctor ready to buy the car. Plaintiff asked for some specifics on the car, the year and the vehicle identification number (VIN); Gingrich provided a VIN for the vehicle to plaintiff.
On December 16, 2003, plaintiff and Creech executed a promissory note, stating that plaintiff would lend $500,000 to Creech and his business, defendant Inland Empire Auto Brokers (Inland Empire); the note provided that Creech and Inland Empire would repay the full amount 14 days later.
Plaintiff issued a check to Creech dated December 15, 2003; the check was negotiated on December 16, 2003, the date of the loan. Plaintiff never received repayment of his money, either 14 days later or at any other time. Creech and Inland Empire paid neither principal nor interest.
Creech did not use plaintiff’s check to purchase a Ferrari. The day that plaintiff told Gingrich he had the check for Creech, Gingrich stopped by plaintiff’s office to pick up both it and the signed promissory note. Gingrich immediately took the check to Creech, and they went to the Wells Fargo Bank together. There, Creech negotiated the check, rather than depositing it into Inland Empire’s account, which was with a different bank. On the spot, Creech purchased several cashier’s checks made out to other persons and entities.
After the due date on the note, Creech made many promises of payment. Gingrich also made oral representations to plaintiff that he would give plaintiff property that Gingrich owned in Arkansas, “that he himself would also make sure the loan was good.” Like Creech, Gingrich never paid anything to plaintiff or gave plaintiff anything to satisfy the loan: “[T]he only thing [Gingrich has] done is move out of state.”
Larry Eller, a half-owner of Inland Empire, gave deposition testimony and records showing that Inland Empire did not purchase any vehicles in December 2003 or January 2004, it had never purchased a Ferrari of any kind, specifically had never purchased a Ferrari Enzo, and had never contracted to purchase any Ferrari as a part of its business.
Eller testified that he and Creech were also each half-owners of a limited liability company, Executive Wholesale, LLC (Executive). Executive was also in the business of buying and selling cars. Eller and Creech formed Inland Empire in November 2003; Inland Empire made no car purchases in December 2003 or January 2004, because it did not receive its dealer’s license until February 2004.
It turned out that Gingrich himself had lent money to Creech (and Executive) on an ongoing basis since 2001. All the notes were payable on demand in 30 days. Creech might have paid Gingrich some small amounts of interest, but had never repaid any principal on any of the loans. The total amount of money Gingrich had lent was $625,000. In May 2002, Creech and Eller, on behalf of Executive, signed a new promissory note to Gingrich for the full $625,000. The note was secured by a deed of trust on Creech’s home, and payable on demand. Creech promised not to further encumber the property with any additional loans. The $625,000 deed of trust in favor of Gingrich was not recorded until October 2003, well over one year later, at or after the time that Gingrich had introduced plaintiff to Creech.
Plaintiff filed an action against Creech and Inland Empire on May 10, 2004. The complaint alleged causes of action for breach of the promissory note, fraud and deceit, negligent misrepresentation, and conversion.
On September 20, 2004, plaintiff filed an amendment naming Gingrich as Doe 3. (Plaintiff also apparently added Executive and Eller in place of Doe defendants.) Gingrich filed an answer to the complaint. Counsel who prepared Gingrich’s answer later asked to be relieved for nonpayment; this motion was granted. Gingrich did not apparently retain other counsel independently. None of the defendants appeared at the time of trial, and the matter was tried to the court.
The trial court entered a judgment in plaintiff’s favor, against Creech, Eller, Inland Empire, Executive, and Gingrich. The court awarded plaintiff $500,000 plus interest as compensatory damages, $500,000 as punitive damages, and $6,751.26 in costs. The judgment was made jointly and severally as to all defendants. Notice of entry of judgment was sent to all defendants on May 19, 2006.
In April 2007, nearly 11 months after notice of the entry of judgment, Gingrich filed an ex parte motion to set aside the judgment. The court denied the ex parte motion, without prejudice. Gingrich then, on June 15, 2007, over a year after the original judgment, filed a noticed motion to set aside the judgment. Gingrich complained that he had not appeared at trial because he relied on the assurances of codefendant Creech that (1) Creech would take care of the obligation to plaintiff, and (2) Creech’s counsel would represent Gingrich’s interests, as well as his own. Gingrich argued that the judgment was improper because there was no evidence to establish his liability, and because there was no evidence concerning Gingrich’s financial condition upon which to base an award of punitive damages.
The court tentatively ruled that it would deny the motion to set aside the judgment in its entirety; but because, in its view, plaintiff had not contradicted the allegation of Gingrich’s moving papers that there had been no evidence as to Gingrich’s financial condition, it would strike the punitive damages award as to Gingrich. Plaintiff asked leave to file a supplemental brief showing the evidence of Gingrich’s financial condition which had been presented at trial. The court allowed the filing of the supplemental brief. Plaintiff duly filed a supplemental brief, but the court ruled in accordance with its tentative decision, holding that the original trial court did not have jurisdiction to award punitive damages against Gingrich in the absence of evidence of Gingrich’s financial condition.
Plaintiff appeals.
ANALYSIS
I. Standard of Review
The parties each agree that the question decided below—whether the court at trial had jurisdiction to award punitive damages—is reviewed de novo. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.)
Citing Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888-889, Gingrich also argues that it is a question of law, to be reviewed de novo, whether the lower court “retains limited equitable jurisdiction to entertain a [m]otion seeking equitable relief from a [j]udgment void on it[]s face.”
Also citing Crocker National Bank v. City and County of San Francisco, supra, 49 Cal.3d 881, 888-889, plaintiff argues that the question on appeal is whether the judge who heard the motion, who was different from the judge who had originally tried the case, “had the jurisdiction to set aside alleged non-jurisdictional errors in the [j]udgment a year after the [j]udgment had become final. Consequently, the determination of Judge Holmes’ jurisdiction to issue the [o]rder appealed from is reviewed de novo.”
As to each of these instances or arguments, we conduct an independent review.
II. The Court Erred in Striking the Punitive Damages Award
A. Gingrich’s Motion Under Code of Civil Procedure Section 473 Was Untimely and Stated No Proper Grounds for Relief
The thrust of Gingrich’s motion was a claim of extrinsic fraud, that Gingrich had relied on Creech’s representations that Creech would pay all legal fees and costs, and that Gingrich had “nothing to worry about.” Creech assured Gingrich that Gingrich would be “represented and protected” at trial. Gingrich therefore did not take steps to retain new counsel after his trial counsel was relieved. Gingrich believed Creech’s assertion promises that Creech would pay plaintiff, settle the case, and pay for all legal costs.
After the judgment had been entered, Gingrich relied on representations of plaintiff’s counsel that plaintiff would not seek to execute the judgment against Gingrich. For that reason, Gingrich did not move to set aside the judgment under Code of Civil Procedure section 473.
After the six-month deadline had passed for a motion under Code of Civil Procedure section 473, plaintiff’s counsel then did start enforcement proceedings against Gingrich’s Arkansas property. That is, in late December 2006, Gingrich received notice of enforcement proceedings from an Arkansas attorney, and then “began to realize” that plaintiff was seeking to enforce the judgment.
Even so, Gingrich did not file his ex parte motion for relief until April 2007, and did not file his noticed motion until June 2007.
The court below did not find any extrinsic fraud, or any reasonable explanation for Gingrich’s delay in filing his motions to set aside the judgment. There was no mistake, inadvertence, surprise or excusable neglect. Gingrich was not diligent in pursuing his motion. It therefore denied the motion, as to all matters except the punitive damages award.
The court correctly ascertained that there was no extrinsic fraud, and no equitable ground for granting the motion past the six-month time limit. The only ground upon which the court made an exception for the punitive damages award, however, was the thesis that the punitive damages award was “void on its face.” This contention cannot be sustained.
B. The Punitive Damages Award Was Not Void on Its Face
“A judgment is void on its face if the court which rendered the judgment lacked personal or subject matter jurisdiction or exceeded its jurisdiction in granting relief which the court had no power to grant. [Citations.]” (County of Ventura v. Tillett (1982) 133 Cal.App.3d 105, 110, disapproved on another ground in County of Los Angeles v. Soto (1984) 35 Cal.3d 483, 492, fn. 4.) “ ‘A judgment or order is said to be void on its face when the invalidity is apparent upon an inspection of the judgment-roll.’ ” (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1441.)
The judgment roll, in a civil case in which judgment was rendered after a trial, consists, in relevant part, of: “the pleadings, . . . the statement of decision of the court, . . . and a copy of any order . . . relating to a change of parties, and a copy of the judgment . . . .” (Code Civ. Proc., § 670, subd. (b).)
Here, the relevant documents reveal no facial invalidity with respect to the judgment. The trial court’s order striking the punitive damages was based on the view that the trial court was “without jurisdiction” to award punitive damages in the absence of evidence of the defendant’s wealth or financial condition. While it is true that the plaintiff is required to introduce evidence of the defendant’s financial condition, as a matter of substantive law in California, in order to support an award of punitive damages (Adams v. Murakami (1991) 54 Cal.3d 105, 119, 123), appeal and review of the propriety of an award of punitive damages assesses the sufficiency of the evidence to support the award. (See Baxter v. Peterson (2007) 150 Cal.App.4th 673, 679; Kelly v. Haag (2006) 145 Cal.App.4th 910, 916.)
The sufficiency of the evidence to support an award, even as a matter of substantive law, requires review beyond the face of the judgment roll. If Gingrich wished to attack the punitive damages award for insufficiency of the evidence, he could have done so directly, either by motion to vacate the judgment, motion for a new trial, or by a direct appeal. He did none of these things. He cannot now collaterally attack the award absent demonstration of a void judgment; the gist of his complaint about the punitive damages award—insufficiency of the evidence—makes no such demonstration, as it looks beyond the judgment roll.
As plaintiff states, a motion to set aside a void judgment under Code of Civil Procedure section 473, subdivision (d), may be brought at any time, but a judgment is void as a matter of law only where (1) subject matter jurisdiction is lacking (In re Marriage of Jensen (2003) 114 Cal.App.4th 587, 593), (2) personal jurisdiction is lacking (Dill v. Berquist Construction Co., supra, 24 Cal.App.4th 1426, 1439), (3) there was no actual or constructive notice of the proceedings (Lovato v. Santa Fe Internat. Corp. (1984) 151 Cal.App.3d 549, 553), (4) there was no proper service of summons (Ellard v. Conway (2001) 94 Cal.App.4th 540, 544), (5) default was not properly entered (Code Civ. Proc., § 585), or (6) a default judgment exceeds the amount demanded in the pleading (Code Civ. Proc., § 580, subd. (a)). None of these grounds was present here.
As a collateral attack on a judgment “void on its face,” Gingrich failed to demonstrate any facial invalidity of the punitive damages award.
C. Plaintiff Produced Evidence of Gingrich’s Ability to Pay
The essential question in determining a punitive damages award is whether the amount of the award substantially serves the societal interest in punishing the wrongdoer and deterring similar misconduct. In answering the question, courts consider (1) the reprehensibility of the defendant’s conduct, (2) the relationship between the punitive damage award and the harm done, and (3) the amount of the punitive damage award in proportion to the defendant’s wealth. (Adams v. Murakami, supra, 54 Cal.3d 105, 110; Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928-929.)
Evidence of the defendant’s financial condition is required, in order to provide meaningful review: “Without such evidence, a reviewing court can only speculate as to whether the award is appropriate or excessive.” (Adams v. Murakami, supra, 54 Cal.3d 105, 112.) In this case, nothing on the face of the award itself is unreasonable; a single-digit, one-to-one ratio of punitive damages to compensatory damages does not facially violate due process. (See State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 419-427 [123 S.Ct. 1513, 155 L.Ed.2d 585].)
Otherwise, review shows that plaintiff did present evidence at trial of Gingrich’s financial ability to pay.
Plaintiff presented documentary evidence and testimony that Gingrich held a note for $625,000, secured by a deed of trust against Creech’s home, and that the home had a value sufficient to satisfy that obligation. In addition, Gingrich had told plaintiff that he could give plaintiff a second deed of trust on his house in California, and at one point also offered to sell his real property in Arkansas to satisfy the debt. Gingrich’s deposition testimony indicated that he had other investments besides lending money to Creech and Inland Empire.
Plaintiff had also proffered evidence, in the trial brief presented to the trier of fact, to establish that each of the defendants was the alter ego of the others. The automobile business made $2.7 million of deposits into its bank accounts in 2004, but sold slightly less than $1 million in cars. As plaintiff had argued at trial, and as the trial court found, all the defendants were operating a Ponzi scheme, using funds obtained from one party to pay off funds promised to others, while allowing them to skim off large sums for themselves. Gingrich’s personal involvement was manifest: He had personally participated in the business, lending large sums over a long period. He secured his own obligation with a deed of trust at the same time as he induced plaintiff to lend additional moneys to Creech. He personally picked up plaintiff’s check and even went to the bank with Creech to cash it.
The evidence before the court at the time of trial was sufficient to show that defendant Gingrich had sufficient unencumbered wealth to pay an award of punitive damages.
D. No Reversal Is Required in the Absence of a Miscarriage of Justice
Plaintiff pointed out in the opening brief that, in his moving papers, Gingrich averred that his own net worth at the time of trial was in the neighborhood of $1.8 million. While Gingrich correctly observes that this particular item of evidence was not before the trial court at the time the punitive damages were awarded, this admitted fact undermines his ability to meet the constitutional requirement, that a judgment will not be reversed except upon a showing of a miscarriage of justice. (Cal. Const., art. VI, § 13.) Gingrich cannot have been prejudiced by plaintiff’s failure to adduce specific evidence of Gingrich’s ability to pay punitive damages, if Gingrich himself admits he had such ability.
DISPOSITION
For the reasons stated, the order striking the award of punitive damages as to Gingrich is reversed. The trial court is directed to enter a new order denying in its entirety Gingrich’s motion to set aside the judgment.
We concur: HOLLENHORST, Acting P. J., RICHLI, J.