Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from a judgment and orders of the Superior Court of San Diego County, Super. Ct. No. GIC839456, Linda B. Quinn, Judge.
HUFFMAN, Acting P. J.
Maria Velazquez sued Sharp Coronado Hospital and Healthcare Center and Sharp Healthcare (together, Sharp), after she received medical treatment at its emergency room that she believed was substandard and/or excessively expensive. Her complaint was filed by her attorney and husband, Robert Sainburg (together referred to as appellants; he is effectively a real party in interest here), and after undergoing several amendments, it included allegations of unfair business practices against Sharp as well as medical malpractice. (Bus. & Prof. Code, § 17200, the Unfair Competition Law (UCL).) The filing of the second amended complaint (SAC) was followed by an amended cross-complaint by Sharp (breach of contract) and an amended cross-complaint by Velazquez (unfair business practices, etc.). Major discovery disputes arose and, along with a ruling on demurrer to the SAC and rulings on numerous discovery motions, these disputes eventually resulted in terminating sanctions being ordered, striking appellants' answer to the cross-complaint and dismissing their cross-action. (Code Civ. Proc., § 2023.010 et seq.)
All further statutory references are to the Code of Civil Procedure unless otherwise noted.
This appeal arises out of the trial court's entry of default judgment on the Sharp cross-complaint, after it struck appellants' answer and imposed other sanctions because of those discovery violations. Appellants assert that the court abused its discretion in entering default on the cross-complaint and dismissing their own cross-complaint because (1) the terminating and monetary sanctions were erroneous or too extreme; and (2) appellants did not need to comply with the court's discovery orders because the discovery sought was privileged or irrelevant, or notice was inadequate; and (3) the judgment lacks support in substantial evidence because some payments were made, and the amounts of attorney fees ($18,275) and costs ($2,989.55 to Sharp Hospital and $320 to Sharp Health Care) were excessive in light of the underlying damages for the hospital bill ($672.95, plus interest).
Appellants also challenge the ruling on Sharp's demurrer to their SAC, on the grounds that it amounted to an abuse of discretion for failure to allow them leave to amend to more fully plead declaratory relief.
We have reviewed the record and determine that under all the circumstances, the trial court's order imposing terminating sanctions against appellants, by striking their answer to the Sharp cross-complaint and striking their own cross-complaint, did not represent any abuse of discretion. We construe the order sustaining the demurrer to the SAC without leave to amend as a judgment of dismissal of the SAC, and find no error or abuse of discretion in the dismissal after demurrer. We further determine that the trial court's award of attorney fees and costs is not excessive under all the circumstances demonstrated in the record, and the default judgment for damages on the Sharp amended cross-complaint is supported by substantial evidence, with one exception: The judgment must be affirmed as modified to allow an appropriate credit toward damages for the July 13, 2006 posted payment, as reflected in the default prove-up declarations in the trial and appellate record. We accordingly affirm the judgment as modified, with the trial court to prepare a modified judgment.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Underlying Complaint and Cross-Complaint; Motion To Compel
In January 2004, Velazquez went to the Sharp Coronado emergency room, signed their admission agreement, and complained of arm and wrist pain. She spoke limited English and requested an interpreter, which was not provided, nor was her husband (appellant attorney) allowed in the treatment areas to interpret. The doctor on duty, Dr. Springer, diagnosed a flare-up of rheumatoid arthritis and prescribed Vicodin, which she took. She became nauseated and had to return home to Los Angeles. When the bill for $672.95 services and medication arrived, appellants refused to pay. Later, she was diagnosed and successfully treated elsewhere for carpal tunnel syndrome.
In December 2004, appellants filed their complaint against Dr. Springer and his employer, ECD, the emergency services provider that worked at Sharp. Appellants asserted that she was misdiagnosed and the billings were too high, because she was not insured and did not receive the charges that an insured patient would have received. Unfair business practices were alleged along with medical malpractice. (Bus. & Prof. Code, § 17200 et seq., UCL; Civ. Code, § 1750 et seq., the Consumers Legal Remedy Act (CLRA).) Appellants filed a first amended complaint in January of 2005 that named Sharp as well as Dr. Springer, adding theories of declaratory relief specifically against Sharp. In April 2005, plaintiffs paid $50 toward the bill.
Demurrers were heard and the SAC was filed, including the malpractice and unfair business practices claims, as well as a sixth cause of action for declaratory relief against Sharp. Discovery ensued and appellants were deposed in April 2005. It did not go well, as appellants refused to answer many questions, claiming spousal or attorney-client privilege and invasion of privacy, and tempers flared. Meet and confer efforts failed and Sharp brought a motion to compel further depositions, set for hearing June 24, 2005. (§ 2025.610, subd. (b).) Sharp also demurred to the SAC. Shortly before the hearing, appellants voluntarily dismissed all the causes of action in the SAC against Sharp except for the declaratory relief claim, which merely incorporated the preliminary factual allegations about the January 2004 emergency room visit events as the subject of declaratory relief, but did not incorporate any documents, such as the hospital admission agreement. Instead, the SAC sought "a judicial declaration of the status of the parties' contractual and financial relationship to each other," based upon letters and bills that appellants had received from Sharp.
At one point, counsel for Sharp asked a question about patients' husbands not being allowed to be in the emergency room treatment areas because of fears that any potential spousal abuse might not be disclosed by the patient, and appellant misunderstood that he was directly being accused of spousal abuse, and offered to take the matter "outside." This was somewhat cleared up later in the deposition.
Also in June 2005, shortly before the scheduled discovery motion hearing date, Sharp filed a cross-complaint against appellant, alleging breach of contract and common counts (hospital admission agreement, which contained an attorney fees clause, and the $672.95 bill). At the hearing, the trial court ruled that the pending demurrer to the remaining declaratory relief claim in the SAC should be sustained without leave to amend, because no proper basis for declaratory relief was pled, as appellants appeared to be asserting tort or contract claims instead, such that declaratory relief would not resolve the controversy. The trial court then denied the motion for further deposition, since at that time, it appeared that appellants had dropped all their allegations except declaratory relief, and the demurrer had been sustained, so that no such discovery was necessary at that time.
A controversy then developed after the demurrer ruling about whether any judgment of dismissal of the SAC could be entered, because the Sharp cross-complaint remained pending, and appellants opposed any judgment entry, and no judgment was entered then. Appellants answered the Sharp cross-complaint in July of 2005, raising affirmative defenses that were similar to the allegations in their own second amended complaint (unfair and illegal billing practices).
Appellants now complain there is no formal judgment of dismissal of the SAC, but since they effectively caused this omission, and since there is no doubt about the finality of the demurrer ruling, we may properly construe the order sustaining the demurrer to the only remaining cause of action in the SAC without leave to amend as a judgment of dismissal of the SAC.
B. Appellants' Own Cross-Complaint; Further Motions; Sanctions
In October of 2005, appellants filed their own cross-complaint against Sharp and its collection agency (R.M. Galicia, Inc., dba Progressive Management Systems), which essentially reasserted the claims that had just been dismissed from the SAC (Super. Ct. No. GIC839456UCL unfair business practices, etc.). Appellants sought damages, injunctive relief, disgorgement of profits, and attorney fees, claiming that Sharp was charging more to uninsured patients than insured patients, and its collection practices were overzealous. (15 U.S.C., § 1692k.) Velazquez is characterized as "a disabled, uninsured, uneducated, and unemployed immigrant, [who] was in need of emergency medical care," but who was overcharged for the care provided, and deprived of interpreter services or her husband's assistance at the emergency room. Sharp answered the cross-complaint.
The Sharp entity named in the cross-complaint was its foundation, but that misnomer was corrected by stipulation at a later hearing, that Sharp Healthcare was the appropriate parent entity responsible for hospital operations. Eventually, the collection agency was dismissed as a party. So were the original defendants (Dr. Springer and ECD), who have settled in this case.
In December 2005, the case management conference was held and Sharp obtained leave to amend its cross-complaint. Trial was scheduled for May 2006 and the discovery cutoff was set for April 14, 2006. The court set a motion by Sharp to compel further answers to deposition questions from appellants for hearing in March 2006, because Sharp persuasively argued the filing of their cross-complaint by appellants reopened certain issues and required second depositions. Monetary sanctions were also sought by Sharp, on the grounds that legitimate discovery had been resisted previously on grounds of the marital communication privileges, which should not apply in this case, since allegations were made about the extent of the husband's participation at the emergency room visit, among other things. Sharp specifically argued it was entitled to further answers about basic information regarding appellant Velazquez's citizenship status and social security number, any applications for health insurance, and proof of marriage. Meanwhile, appellants served extensive discovery requests (10 sets) on Sharp, about its agreements with insurers and others on payment policies, among other things. Appellants' attorney filed and served a "notice of unavailability" due to vacation, for several weeks in April, July, and December 2006, and also "April 28, 2006 through September 2, 2006" (possibly meaning August?).
Before the scheduled hearing date in March 2006, the trial court, on an ex parte basis, restricted discovery to a limited civil case status. In April 2006, this court granted a writ to vacate that order because a noticed motion had been required to reclassify the case. (§ 94, subd. (a); Velazquez v. Superior Court (March 17, 2006, D048130).) Sharp then sought to obtain a protective order against the extensive discovery that appellants had propounded, or reclassification of the case, and Sharp obtained a new hearing date for its discovery motion, May 5, 2006. It filed a meet and confer statement describing the disputed areas: prior litigation history, ability to understand English (e.g., the medical discharge instructions), citizenship, communications between husband and wife during the emergency room visit, insurance applications, attorney fees being charged, and the husband's medical training, if any, to assess the services provided. In response, appellants sought sanctions also, on the basis that the requested discovery was unnecessary, oppressive or harassing.
After this court granted appellant's initial petition for writ of mandate to challenge the discovery restrictions imposed by the trial court (D048130), the remittitur was issued and discovery continued, with the case classified as an unlimited civil case. Appellants were awarded costs on the writ and they obtained the sheriff's office's assistance to collect costs from Sharp ($1,665.25).
C. May 5, 2006 Discovery Orders
After briefing and argument on the matter, the trial court issued a minute order granting the Sharp motion to compel, on the grounds it was entitled to pursue discovery because appellants' first amended cross-complaint raised substantive issues concerning the UCL. The court ordered that appellants submit to further deposition within 20 days, or by May 25, 2006. No monetary sanctions were ordered at that time. Sharp was granted a limited protective order requiring appellants to reformulate their written discovery to the limits of a limited civil case, although the action itself was not reclassified. (No challenge to that protective order is argued on appeal.) Sharp sent a meet and confer letter seeking deposition dates. Appellants responded that they would be bringing a second appellate writ to challenge the discovery orders, but they were reserving May 25, 2006 for potential depositions in Los Angeles. Sharp responded that the depositions should take place in San Diego, and hired an interpreter and a videographer for that date. Further communications took place, but no depositions. Appellants later objected to the May 25 deposition date, apparently on the grounds that it was only tentative pending the resolution of the writ petition. The petition was denied May 24, 2006.
Appellants brought their second petition for writ of mandate to challenge the trial court's May 5 discovery rulings. (Velazquez v. Superior Court (May 24, 2006, D048616).) That petition was denied on May 24, 2006. Later, plaintiffs brought another writ of mandate to challenge the trial court's denial of plaintiffs' first of two for-cause challenges to the trial court, Judge Quinn (both stricken as procedurally incorrect and substantively without merit). This court denied that petition in August 2006. (Velazquez v. Superior Court (Aug. 18, 2006, D049133).)
On May 25, 2006 Sharp's attorneys waited for appellants to appear for deposition, which they did not, and then Sharp gave notice of an ex parte hearing to seek sanctions and/or compliance with the May 5 order. On the date of that ex parte hearing, the trial court received a message that appellants opposed the ex parte application, and it granted an order shortening time to set another motion to compel further deposition for June 23, 2006. Also, Sharp meanwhile had set up the depositions for June 13 by sending a "backup deposition notice per Court order." Appellants notified Sharp the day before that they would not attend, and appellants filed opposition to the June 23 motion, seeking $3,000 sanctions for themselves.
In their brief, Sharp contends that appellant imposed unreasonable restrictions upon use of the facsimile machine for notice of ex parte matters, refused to answer telephone messages, and evaded a process server. Appellants respond that Sharp is simply name calling. The record speaks for itself, that appellants are at least equally if not primarily responsible for the difficulties in communication in this case. For example, they have not shown why their "notices of unavailability" should have been controlling in this case. (See Tenderloin Housing Clinic, Inc. v. Sparks (1992) 8 Cal.App.4th 299 [sanctions case discussing factor of known unavailability of opposing counsel when scheduling discovery].)
D. June 23, 2006 Orders, Tentative and Final
The trial court issued a tentative order denying the terminating sanctions without prejudice, but ordering that appellants sit for a deposition in San Diego no later than June 30, 2006. The court found that since new allegations were raised in the first amended cross-complaint by appellants, Sharp had the right to depose them about the new claims and about the emergency room events and understandings. Monetary sanctions were denied at that time. At the hearing of June 23, 2006, Sharp's counsel appeared. Appellant sent a contract counsel, H. L. Young, who represented to the trial court that he was making a general appearance on appellants' behalf. The trial court ordered that the depositions take place June 28, 2006 in San Diego (changing the tentative order somewhat to move the date up two days), and Sharp personally served appearing contract counsel with deposition notices giving the June 28 dates. The tentative order was confirmed and the trial court agreed that it would be appropriate for Mr. Young to notify appellants about the ruling. Mr. Young said he would fax the deposition notices to appellants, and the trial court stated that there should be no more problems with notice of the depositions.
However, appellants did not appear for depositions on June 28, possibly because they had instead been pursuing an effort to disqualify Judge Quinn for cause under section 170.3, subdivision (c). Meanwhile, Sharp's attorney gave notice of another ex parte hearing for July 6, based on the failures to appear for deposition on June 28. Sharp gave such notice to both appellants and to their contract attorney, Mr. Young. Appellant Sainburg had filed a "notice of unavailability" for portions of the months of April, July, and thereafter, including July 3-7.
Sharp's attorney argues that appellant's counsel was unfairly trying to blame or "set up" Mr. Young for the supposed lack of notice, and had accused Mr. Young of contempt of court. Appellants suggest in their reply brief that the trial court might want to reach out and sanction Mr. Young, but this suggestion is on its face completely without support.
On July 5, 2006, the trial court issued an order to strike the disqualification request on several grounds. At the ex parte hearing on July 6, the court issued an order shortening time to hear the motion for terminating sanctions on July 21, 2006. Meanwhile, the case management conference was heard on July 14, 2006, with appellant Sainburg appearing telephonically. Some discovery was discussed but not the deposition problems. Appellants again sought to disqualify Judge Quinn, but the challenge was stricken for lack of admissible factual grounds to demonstrate bias. In his written opposition to the motion to compel, appellant Sainburg stated that his contract counsel, Mr. Young, only told him that the tentative ruling was confirmed on June 23, 2006, but did not tell him about the deposition orders or notices for June 28.
It should be noted that the tentative ruling set a deposition date of June 30, which was changed in the final order to June 28. The record does not include any declarations from Mr. Young about what he did or did not do to give notice to appellants about the June 28 date.
E. Further Hearing on July 21, 2006; Award of Terminating Sanctions
On July 21, 2006, appellant Sainburg appeared by telephone, but when he learned that his second request for disqualification had been stricken on July 19, he declined to participate in any argument about the deposition orders. The trial court granted Sharp's request for terminating sanctions, striking the answer to the Sharp cross-complaint. The trial court further dismissed Velazquez's own cross-complaint against Sharp as a result of appellants' failures to properly respond to discovery. The court awarded Sharp $7,500 monetary sanctions, based on the failures to appear as ordered.
F. Default Entry on Cross-Complaint; Prove up Proceedings;
Notices of Appeal; Writ of Supersedeas
Some time around July 10, 2006, appellants sent a check for $739.62 to Sharp business offices, marked "under protest," to pay the bill. Sharp's attorney filed prove-up declarations on July 25, August 7 and December 12, 2006, stating that he could not confirm whether this check had been presented, although his copy showed a posting date of July 13, but arguing there was nevertheless no basis to consider the matter totally resolved by that payment. He also argued that even if he did not know if the payment had been received, it did not matter since appellants were now in default. Counsel for Sharp stated that of the approximately 200 hours of attorney services spent on the case, approximately 85 hours related to the breach of contract claim or the trial preparation for it, so an award of 85 hours at $215 per hour was sought ($18,275). A motion for attorney fees was also filed.
Using a form default request, on August 7, 2006, counsel for Sharp requested that the clerk enter appellants' default, and this was done. The trial court then signed a default judgment on August 18 that did not fill in any blanks for damages or attorney fees.
Meanwhile, on July 26, appellants filed their first notice of appeal from the July 21 $7,500 sanctions award. Later, on August 29 and on November 17, 2006, they filed other notices of appeal from the August 18 judgment. This court undertook to study the record and sent out a letter notifying counsel that the August 18 judgment was incomplete and that if a proper judgment of dismissal were submitted, the notice of appeal would be construed accordingly.
On January 3, 2007, Sharp submitted to this court a signed trial court judgment that dismissed appellants' first amended cross-complaint and, on Sharp's cross-complaint, awarded it damages of $739.62, attorney fees of $18,275, along with costs of suit ($2,989.55 to Sharp Hospital, as defendant and cross-complainant.) Costs of $320 were awarded separately to Sharp Health Care, as an additional cross-defendant in the dismissed appellant's cross-complaint.
As we will discuss in part III, post, the trial court did not incorporate into the judgment any credit toward damages for the posted check for $739.62, and since Sharp effectively conceded in its attorney declarations that a credit could be appropriate in this respect, the judgment will be affirmed as modified to allow a credit that conforms to the record.
On October 2, 2006, appellants filed a petition for supersedeas, claiming a writ was necessary to prevent Sharp from executing on the default judgment, or from having them arrested for liability on the sanctions award. Earlier, the parties disputed whether the bond that appellants had filed for the $7,500 monetary sanctions award was adequate, but that dispute is no longer active. This court denied the petition for writ of supersedeas, but later ordered that the record be clarified and completed as outlined above regarding the default judgment.
DISCUSSION
We first address the propriety of the terminating sanctions. We then examine the demurrer ruling on the declaratory relief claim in the SAC. Finally, we discuss whether the default judgment is supported by substantial evidence.
I
DISCOVERY SANCTIONS
A. Standard of Review
We review the orders imposing discovery sanctions for abuse of discretion. " ' "The power to impose discovery sanctions is a broad discretion subject to reversal only for arbitrary, capricious, or whimsical action. [Citations.] Only two facts are absolutely prerequisite to imposition of the sanction: (1) there must be a failure to comply . . . and (2) the failure must be wilful [citation]." [Citation.]' [Citation.]" (Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545.) We do not seek to determine whether the trial court should have imposed lesser sanctions, but instead ask whether the court abused its discretion by imposing the sanctions it did. (Collisson & Kaplan v. Hartunian (1994) 21 Cal.App.4th 1611, 1620; Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1245.)
Section 2023.010 provides:
"Misuses of the discovery process include, but are not limited to, the following: [¶] . . . [¶] (d) Failing to respond or to submit to an authorized method of discovery. (e) Making, without substantial justification, an unmeritorious objection to discovery. [¶] (f) Making an evasive response to discovery. [¶] (g) Disobeying a court order to provide discovery. [¶] (h) Making or opposing, unsuccessfully and without substantial justification, a motion to compel or to limit discovery. [¶] (i) Failing to confer in person, by telephone, or by letter with an opposing party or attorney in a reasonable and good faith attempt to resolve informally any dispute concerning discovery, if the section governing a particular discovery motion requires the filing of a declaration stating facts showing that an attempt at informal resolution has been made." (Italics added.)
Section 2023.030 provides in part:
"To the extent authorized by the chapter governing any particular discovery method or any other provision of this title, the court, after notice to any affected party, person, or attorney, and after opportunity for hearing, may impose the following sanctions against anyone engaging in conduct that is a misuse of the discovery process: [¶] . . . [¶] (d) The court may impose a terminating sanction by one of the following orders: [¶] (1) An order striking out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process. [¶] (2) An order staying further proceedings by that party until an order for discovery is obeyed. [¶] (3) An order dismissing the action, or any part of the action, of that party. [¶] (4) An order rendering a judgment by default against that party." (Italics added.)
A court is not required to impose sanctions in a graduated fashion, but may apply "the ultimate sanction" against a party who has persisted in refusing to comply with discovery obligations. (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 793 [interpreting prior but similar versions of discovery statutes].) "[T]he unsuccessful imposition of a lesser sanction is not an absolute prerequisite to the utilization of the ultimate sanction . . . ." (Scherrer v. Plaza Marina Coml. Corp. (1971) 16 Cal.App.3d 520, 524 [interpreting prior but similar versions of discovery statutes].) Nevertheless, it is generally recognized that "terminating sanctions are to be used sparingly, only when the trial court concludes that lesser sanctions would not bring about the compliance of the offending party." (R .S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 496.)
Courts contemplating imposition of a terminating sanction should generally engage in a "balancing process" (McGinty v. Superior Court (1994) 26 Cal.App.4th 204, 214), taking into account the nature of the discovery abuse, whether it was part of a pattern, whether it was " 'willful' and 'without substantial justification' " (Sauer v. Superior Court (1987) 195 Cal.App.3d 213, 224-225), whether lesser sanctions would be effective to produce the discovery sought, the extent of the prejudice to the other party, and whether the sanction would result in a "windfall" to the other party. (McGinty, supra, 26 Cal.App.4th at p. 214; see also Lang v. Hochman, supra, 77 Cal.App.4th at p. 1246 [trial courts impose a terminating sanction after considering the "totality of the circumstances: conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery"].)
B. Analysis
Appellants assert that the trial court abused its discretion in issuing the terminating sanctions in several ways. First, on a procedural note, they argue that inadequate notice was given to them of the June 23 order that the depositions must take place June 28, because their contract counsel did not supply them with adequate notice. They also blame defense counsel for all of the confusion about the various proposed deposition dates, May 25, June 13, June 28, or June 30, such that there could have been no willful disobedience of any court orders on their part, but rather only justifiable conduct or misunderstandings.
Appellants next argue that the proposed discovery was substantively improper, and they appear to believe that they were therefore completely justified in resisting the second depositions on the requested topics, which they contend violated marital communication privileges, attorney-client privilege, or privacy rights. (Evid. Code, §§ 980, 973, 952.)
To analyze these claims, we must consider the entire sequence of events, including the nature of the discovery conduct, whether it was part of a pattern of abuse, and whether it was willful and without substantial justification. To the extent that appellants are arguing lesser sanctions would have been effective to produce the discovery sought, they have failed to provide any evidence that they made any efforts to address any of the areas of disagreement in any meaningful way, to suggest any compromises, or to otherwise comply with the court's orders. For example, they admit they received the tentative ruling of June 23, which ordered that depositions take place June 30, but they do not explain why they did nothing to comply, communicate an alternative plan to opposing counsel, or seek a protective order. (§ 2025.420.) They cannot explain why their contract counsel did not adequately communicate with them the results of the hearing to which they sent him, or why they did not affirmatively seek him out or communicate with him regarding the litigation. Instead, they apparently made a judgment call to pursue an alternative course of seeking to disqualify the trial judge for cause merely because they disagreed with the orders, but that strategy was unsuccessful.
Thus, although appellants appear to contend there is no evidence that any of their conduct was "willful," the evidence amply supports a finding that these actions were willful and without substantial justification. It was not within appellants' power to determine on a unilateral basis that those orders were incorrect or unenforceable, and to simply resist or ignore them, without consequence. Instead, the trial court ordered second depositions on a good cause basis, which was justified by the amendments to the pleadings, and those orders have not been shown to be erroneous. (§ 2025.610, subd. (b).)
Thus, to the extent that appellants argue that discovery was substantively improper regarding the remaining disputed subjects described in the meet and confer statement, those arguments do not address the fact that there were existing orders to supply answers to such questions, that were not effectively challenged, but instead were met with ongoing refusals to comply with the hearing process or the orders. The trial court made a reasonable judgment call, upon noticed motion, that the subject matter of the appellants' first amended cross-complaint (unfair business practices based on treating uninsured persons differently than insured persons, or non-English-speaking persons unfairly) substantially encompassed many if not all of the disputed deposition questions: ability to understand English (e.g., treatment instructions), citizenship, communications between husband and wife at the emergency room about the treatment and transactions, any insurance applications, whether attorney fees were being charged, and the husband's medical training, if any, to assess the value or sufficiency of the services provided. Even if some such evidence would not be admissible at trial, it might have led to admissible evidence, such as loss of earnings or other damage.
It cannot be ignored that appellants' amended cross-complaint characterizes the cross-complainant/plaintiff as "a disabled, uninsured, uneducated, and unemployed immigrant, [who] was in need of emergency medical care," but who was overcharged for the care provided, and was unreasonably deprived of interpreter services or her husband's assistance at the emergency room. She sought to bring the action in a representative capacity under the UCL and the CLRA. We reject appellants' theory that no further discovery from them was necessary, because only Sharp's own hospital records could be at all relevant to the allegations in the UCL/CRLA cross-complaint. Rather, such serious allegations, challenging the manner in which Sharp conducted its business of patient care, could reasonably be interpreted as giving rise to Sharp's right to discovery to investigate those restated allegations, and the discovery orders were not unjustified or impossibly harsh, such that no compliance could have been legitimately achieved.
Moreover, since appellants' cross-complaint raised many of the same issues originally pled in the SAC, as did their answer to the Sharp cross-complaint, there was no indication that appellants were abandoning their substantive claims, which therefore justified Sharp in making some efforts toward preparing a defense. The trial court could reasonably find that Sharp would suffer prejudice if the orders were ignored, in the nature of undue difficulty in preparing its defense to the first amended cross-complaint. The trial court was not required, nor was it even allowed, to give up at that point. Instead, it legitimately followed the case through by giving appellants many opportunities to comply with the deposition notices, and when they did not do so, the court properly exercised its authority under the discovery statutes, and acted within its discretion in doing so.
Finally, in their oral argument request, plaintiffs indicate an intent to rely upon Newland v. Superior Court of Los Angeles (1995) 40 Cal.App.4th 608 (Newland), apparently to assert the court erred in dismissing their cross-complaint based upon their failure to pay monetary sanctions. In Newland, the plaintiff brought a motion to strike defendant Newland's answer because he had not " 'paid the sanctions that were ordered by the Court . . . .' " (Id. at p. 611.) The trial court issued terminating sanctions against the defendant because, due to a misunderstanding, defendants were three days late in paying $750 in discovery sanctions. (Id. at p. 612.) As a result, a judgment for $220,739.10 in damages was entered against the defendant, and the defendant lost the opportunity to have a motion for summary judgment heard. (Id. at pp. 612-613.) The Court of Appeal in Newland reversed, holding that "a terminating sanction issued solely because of a failure to pay a monetary discovery sanction is never justified." (Id. at p. 615.)
Here, however, any reliance on Newland, supra, 40 Cal.App.4th 608,is misplaced, because there was an extensive pattern of discovery abuse on appellants' part, including willful failures to comply with court orders to appear, of which appellants were given repeated notice and of which they reasonably could be deemed to be aware, particularly since one of them is a licensed attorney familiar with the normal progress of civil litigation. These terminating sanctions orders were based upon the entirety of appellants' actions shown by the record, not just their failure to pay monetary sanctions, and the orders represent an appropriate exercise of discretion.
II
DEMURRER TO SAC
A. Standard of Review
For purposes of analyzing the demurrer, the courts will accept as true the facts alleged in the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We give the complaint a reasonable interpretation, reading it as a whole, its parts in their context, to determine whether sufficient facts are stated to constitute a cause of action. (Ibid.) We review the legal sufficiency of the judgment, not the reasoning of the trial court. (D'Amico v. Board of Medical Examiners (1974)11 Cal.3d 1, 19.)
To address the issues presented, we first outline the principles for granting declaratory relief, and then apply them to this factual context as alleged. On demurrer, the court will evaluate whether the factual allegations of the complaint reveal that an actual controversy exists between the parties. (Alameda County Land Use Assn. v. City of Hayward (1995) 38 Cal.App.4th 1716, 1721-1722.) "Sustaining a demurrer when the complaint reveals such a controversy constitutes error. [Citations.] [¶] Before a controversy is ripe for adjudication it ' "must be definite and concrete, touching the legal relations of parties having adverse legal interests. [Citation.] It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." ' [Citations.]" (Ibid.; see also City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79 [" 'The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject' "].)
Under section 1061, "The court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances." This is a discretionary determination, subject to reversal only if that discretion is abused. (Zetterberg v. State Dept. of Public Health (1974) 43 Cal.App.3d 657, 661, 665.)
B. Analysis
The trial court concluded in the ruling on review that appellants had failed to plead a proper basis for declaratory relief, since they appeared to be asserting tort or contract claims instead, and even if granted, the requested declaratory relief would not resolve the controversy. Previously, appellants had dismissed all their substantive unfair business practices claims from the SAC, leaving only the preliminary allegations about the January 2004 emergency room visit as the subject of declaratory relief, and they did not attach any documents to the SAC, such as the hospital admission agreement. The SAC instead sought "a judicial declaration of the status of the parties' contractual and financial relationship to each other," but only based upon various unnamed letters and bills directed to appellants.
Appellants' main objection now is that the trial court did not grant leave to amend. When this demurrer was heard in June 2005, discovery motions were also pending, and the trial court reasonably found that the demurrer ruling rendered the discovery requests moot. A fair conclusion can be drawn that the dismissal of the substantive causes of action was made to avoid any discovery obligations, as well as anticipating the demurrer. At that time, Sharp's own cross-complaint had just been filed, raising breach of contract allegations, and appellants had the opportunity to defend against it. The problem with appellants' argument that leave to amend the SAC should have been granted in June 2005 is that this pleading had already been amended twice, and appellants were apparently treating it as expendable or subject to manipulation, because of the Sharp discovery demands. To the extent that any real and substantial controversy existed about the emergency room visit, the trial court had before it the Sharp cross-complaint (filed June 17, 2005), which raised a contract claim based on the admissions agreement.
Under section 1060, declaratory relief may be sought by a person interested under a written instrument, such as a contract, or by a person "who desires a declaration of his or her rights or duties with respect to another"; such a plaintiff "may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract." Although this statutory language is broad in nature, it does not encompass vague allegations about the status of the parties' contractual and financial relationship to each other, based on letters and bills that were not included in the pleading, such as we have here.
This bare-bones declaratory relief request was made without supporting substantive allegations, seeking a "judicial declaration of the status of the parties' contractual and financial relationship to each other," but in a vacuum, without sufficient allegations in the subject pleading to supply a recognized foundation for the requested relief. Further, there was no reasonable prospect of amendment put forth. It was within the discretion of the trial court to conclude such generalized relief was neither necessary nor proper, and that the SAC failed to state a cognizable claim for declaratory relief. The demurrer was properly sustained without leave to amend.
III
DEFAULT JUDGMENT
A. Standard of Review
Once the terminating sanctions were ordered, the clerk entered appellants' default, and eventually, the default judgment was finalized in January 2007. Appellants may properly seek review of the damages award through a direct appeal from the judgment. (Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1749 [claim of lack of substantial evidence supporting damage award to be made only by motion for new trial or appeal from default judgment, not from appeal of motion to vacate judgment].) In challenging a default judgment on appeal, a party may assert that there is insufficient evidence to support the damages awarded: " '[T]he general rule that the sufficiency of the evidence tendered in a default proceeding cannot be reviewed on an appeal from a default judgment . . . is true as to matters for which no proof is required by virtue of the admission by default of the allegations of the complaint. [Citation.] However, as to damages which, despite default, require proof[,] the general rule does not apply.' " (Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1150.) Thus, damages awarded on a default judgment may be reversed not only where the award is so excessive that it "shocks the conscience" and is the result of "passion [or] prejudice," but also where "the damages awarded are unsupported by sufficient evidence." (Ibid.)
When a ruling is challenged on appeal for lack of substantial evidence, our power begins and ends with a determination of whether there is any substantial evidence, contradicted or uncontradicted, to support the trial court's findings. (Thompson v. Tracor Flight Systems, Inc. (2001) 86 Cal.App.4th 1156, 1166.) We must view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor. (Ibid.) When two or more inferences can reasonably be deduced from the facts, a reviewing court does not substitute its deductions for those of the trial court. (Shapiro v. San Diego City Council (2002) 96 Cal.App.4th 904, 912.)
B. Analysis: Compensatory Damages, Attorney Fees and Costs
1. Introduction and Damages
Currently, Sharp takes the position that the $7,500 monetary sanctions award is not being separately pursued, and it will be applied toward the overall judgment issued by default. This approach is correct, because the January 2007 judgment is the controlling document, and that underlying sanctions award may properly be applied to the attorney fees award in the judgment. This disposes of appellants' argument that the $7,500 award is duplicative of other items in the judgment, and we need not discuss it further.
Appellants assert that there is insufficient evidence to support the default judgment, mainly relying on Richards, Watson & Gershon v. King (1995) 39 Cal.App.4th 1176, 1180, for the proposition that a trial court's failure to exercise its given discretion amounts to an abuse of discretion. Appellants argue that the trial court should not have accepted the calculations in the Sharp attorney's prove-up declarations for the amounts requested, and they also claim entitlement to a credit for amounts previously paid. We discuss the damages component of the judgment first, and then address attorney fees and costs separately.
After appellants' default was ordered July 21, 2006, Sharp/Sharp Health Care submitted three separate sets of applications to prove up the default judgment, filed in July, August and December 2006. Each one includes Sharp's attorney declaration, attaching evidence of the hospital admission agreement and explaining the problematic payment history by appellants. Each declaration acknowledges that appellants paid $50 in April 2005, and then sent a check dated July 10, 2006 for $739.65, notated "under protest," apparently submitted to Sharp's accounting department, which posted it July 13. By using this procedure, appellants effectively bypassed counsel, and counsel's declarations state that he could not verify receipt of those amounts by his clients as of the date of any of his declarations (July 24, August 7 or December 19, 2006). He now argues this must have represented more of appellants' gamesmanship. Thus, the total amount originally requested in the attorney declarations, including damages, attorney fees, and costs, was $22,054.17.
Notwithstanding that argument, each of these declarations also had a fall back position admitting that some credit might be due toward damages. The declarations state that "in the event that the amount properly claimed as credit to Maria Velasquez is an additional $739.62 (for a combined total credit of $789.62 ($739.62 plus a $50 credit submitted in April 2005), then judgment should be entered in the amount of $21,264.55 in favor of Sharp." (If the $320 costs award to Sharp Healthcare is added, then the requested judgment is $21,584.55.) Sharp's attorney does not dispute that there was evidence (canceled checks attached to his declaration) that such amounts had been paid by appellants in April 2005 and early July 2006, and were received and cashed by one of his clients, although not by his litigation office.
This record accordingly supports an interpretation that even though the prove up declarations requested a compensatory damages award of $739.62, they simultaneously acknowledged that that same amount had apparently already been received by one of the clients before the default was entered. The default judgment as entered does not allow any credit for the posted check of July 10/13, 2006, but on this record and under the standards set forth above, it was error for the trial court not to do so, because there is substantial evidence that some credit is due regarding damages (even disregarding any $50 credit submitted in April 2005).
Moreover, when we add up the amounts actually awarded by the January 3, 2007 judgment, we obtain a total amount of $22,324.17. This includes the following components: $739.62 damages; attorney fees of $18,275; and costs of suit, $2,989.55 (Sharp) and $320 (Sharp Health Care). The amount awarded by the judgment ($22,324.17) is larger than the amount proven up ($21,584.55 including costs to both respondents), and no contrary express or implied findings were made to support that choice. We will accordingly affirm the judgment as modified to allow an appropriate credit for the July 10/13, 2006 posted payment by appellants that is reflected in the default prove-up declarations in the trial and appellate record, and the trial court will be directed to prepare a modified judgment.
2. Attorney Fees
Appellants next contend that the attorney fees award of $18,275 must be deemed excessive, in light of the minimal damages proven. In their attorney declarations, Sharp represented that approximately 200 hours of attorney services had been spent on the case, but only about 85 hours were related to the breach of contract cross-complaint claim or the trial preparation for it, so payment for 85 hours at $215 per hour was sought ($18,275). The trial court had first-hand knowledge of all these disputes and legitimately recognized that most of the expenses in litigating the case, the disputed discovery proceedings from June 2005-July 2006, arose out of and were inextricably linked to the allegations of the October 2005 Velasquez cross-complaint, and the July 2005 Velasquez answer to the Sharp cross-complaint which raised numerous affirmative defenses. All those claims were similar to the previous SAC allegations, and all justified substantive investigation.
Because of the nature of their conduct in litigating this particular case, appellants have no basis to claim that local Superior Court rules would indicate that only a $200 fee award would be appropriate on a $739.62 damages award. (Super. Ct. San Diego County, Local Rules, rule 2.5.11 [default attorney fee schedule].) This case was never litigated in the manner of an ordinary default matter, largely due to appellants' complicated substantive allegations in their cross-complaint and answer to the Sharp cross-complaint. It was not until later that the default was entered, due to their uncooperativeness with discovery efforts. Those alternative standards for routine default cases simply do not apply here.
Likewise, appellants are not now in a proper position to discuss each and every attorney fees item and to individually challenge 10 of them on this appeal, as they attempt to do in their opening brief. The trial court did not err or abuse its discretion in awarding attorney fees in the amount requested.
3. Costs
The judgment's awards of costs of suit ($2,989.55 to Sharp Hospital, and $320 to Sharp Health Care) are also attacked on several bases. Appellants argue costs are excessive because (1) the judgment for damages could have been rendered by a court of limited jurisdiction, and costs are discretionary in such a case (§ 1033, subd. (a)); (2) some of the costs do not relate only to the defense by Sharp against the Velazquez cross-complaint (October 2005-July 2006), but instead, arise from earlier periods in the case, such as the litigation about the SAC, or the Sharp cross-complaint, or the answer to it.
We decline to re-examine appellants' laundry list of costs objections, which they are essentially seeking to try here for the first time. With regard to both respondents, those costs are separately supported by an appropriate cost memorandum and appear to have been reasonably incurred as a result of all of appellants' sequential and interrelated activities in this case. The trial court had the discretion to make such awards. (§1033, subd. (a).)
In conclusion, the amount of the default judgment requested and proven up by the declarations, $21,264.55 in favor of cross-complainant Sharp, is separate from the $320 costs to cross-defendant Sharp Healthcare. When those two figures are added together, Sharp's attorney properly requested and proved entitlement to a total judgment of $21,584.55. However, the amount awarded by the trial court ($22,324.17) exceeds the amount requested or supported by the prove up declarations, and this overage is the same as the incorrect award of damages ($739.62). It is appropriate for this court to affirm the default judgment as modified to provide for the allowance of a credit for appellants' July 2006 payment toward the Sharp damages entitlement, consistent with this record.
DISPOSITION
The orders and judgment are affirmed as modified, to allow an appropriate credit for the July 10/13, 2006 posted payment as shown in the default prove-up declarations in the trial and appellate record. Upon return of the remittitur, the trial court is directed to prepare a modified judgment that will reflect such a credit. Costs on appeal to Sharp and Sharp Healthcare.
WE CONCUR: NARES, J., O'ROURKE, J.