Salvador v. Live At Home Care Connection, Inc.

Background

William G. Salvador sued Mylah G. Spears, Live At Home Care Connection, Inc. (LAHCC), and Care Connection Transport, Inc. (CCT). He asserted two claims for conversion, which is the wrongful taking or withholding of property. Salvador alleged that he invested $5,000 in LAHCC and $1,500 in CCT, and lent $10,000 to LAHCC and $11,000 to CCT. He alleged that Spears withdrew money for personal use, converted a handicapped-accessible van for her own use, and dissolved the businesses without consulting him. He sought damages, punitive damages, and litigation costs.

Spears filed an unsigned answer after the court allowed Salvador to amend his complaint. The court later struck that answer and directed the clerk to enter default against all defendants because the defendants repeatedly failed to participate in the case, and the corporate defendants did not appear through lawyers as required by the court’s local rule. The clerk entered default on February 16, 2021.

Default Judgment

A default judgment is a judgment entered when a defendant fails to defend the case. The court considered whether it had authority over the dispute and the defendants, and it applied the seven factors used to decide whether default judgment is appropriate. The court found that Salvador would otherwise have no recourse, that his complaint adequately stated conversion claims, that the defendants’ failure to participate did not appear excusable, and that the relevant factors favored entering default judgment.

The court concluded that Salvador had alleged sufficient facts for conversion under California law. Those facts included his ownership or right to possession of the money and property, the defendants’ wrongful conduct, and resulting damages. Because default had been entered, the court treated the complaint’s adequately pleaded factual allegations as true, except for the amount of damages, which Salvador still had to prove.

Damages

Federal Rule of Civil Procedure 54(c) limited the judgment to the kind and amount of relief requested in the complaint. The court awarded $5,000 for Salvador’s LAHCC stock interest, $1,500 for his CCT stock interest, $9,483.65 for money lent to LAHCC, and $9,949.96 for money lent to CCT. The court found that the CCT amount could not exceed the $11,000 alleged in the complaint and that Salvador had proved $9,949.96.

The court disallowed amounts for postage, utilities, travel, time spent working, and lost income because some were not requested in the complaint or were not adequately supported. It also disallowed $175,000 in alleged goodwill damages because Salvador did not provide evidence that the businesses had customers or that their goodwill had been destroyed. The court declined to award punitive damages because the complaint’s allegations merely repeated statutory terms such as malice and fraud without factual support.

The court awarded Salvador $400 in filing fees and $450 for service of process, totaling $850 in costs.

Ruling

Judge Edward J. Davila granted Salvador’s application for default judgment in part. The court awarded $25,933.61 in general damages plus $850 in costs, for a total of $26,783.61, and entered judgment accordingly.