Undoing Default Judgments
By Limor Lehavi
Default judgments can be appealed for failure to state a cause of action and excessive damages. That is the holding of a recent opinion written by Justice Bedsworth for the California Court of Appeal, Fourth Appellate District, in which the court overturned a default judgment, and entered judgment for the defendants instead. (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267.)
The complaint was filed by a creditor for payment on promissory notes. The creditor attached seven promissory notes to the complaint. The creditor also alleged that the debtors complied with the loan obligations until approximately one year before the complaint was filed. Six of the notes had maturity dates that were much earlier, and the creditor did not allege any extensions had been given. The seventh note required payment only when the business had cash available, and the complaint did not allege that cash was available. Although the complaint failed to state a cause of action, the court entered a default judgment for $30 million.
But the default judgment would not stand.
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