Malachowski v. Doheny

Background

Mark Malachowski, an attorney, sued Romona Doheny under California law for allegedly failing to pay for legal services he provided while representing her in another lawsuit. He asserted claims for breach of contract, fraud and deceit, account stated, quantum meruit, and “common counts.” The account statement submitted with his renewed motion showed $85,407.50 in charges, $54,500 in payments, and an unpaid balance of $30,907.50.

Service of process took about 18 months. After unsuccessful personal-service attempts in Florida and Connecticut, the court authorized service by publication and mail. The court later concluded that service by publication was completed properly. Doheny did not respond, and the Clerk entered default. The court had previously denied Malachowski’s first motion for default judgment without prejudice and directed him to address jurisdiction, the legal basis for judgment on each claim, and his requests for damages, fees, and interest.

Jurisdiction and default-judgment analysis

The court concluded that diversity jurisdiction existed. Although the unpaid balance itself was below $75,000, the complaint sought $92,722.50, including claimed treble damages and other relief. The court could not conclude to a legal certainty that the amount in controversy was below the jurisdictional threshold. The court also found specific personal jurisdiction over Doheny because she retained a California attorney to defend a case in the district, entered a representation agreement, and participated in that representation. The claims arose from those California-related activities, and exercising jurisdiction was reasonable.

Applying the factors used to decide whether to enter default judgment, the court found that Malachowski would otherwise lack another means of recourse, that Doheny had not appeared or contested the allegations, and that the circumstances suggested she had evaded service. The court therefore found the factors favored default judgment on the breach-of-contract and account-stated claims, but not on the fraud-and-deceit or quantum-meruit claims. It treated the “common counts” claim as duplicative rather than separately analyzing it.

For breach of contract, the court accepted the well-pleaded allegations as true and found that Malachowski alleged a written agreement, performance of his obligations, Doheny’s failure to pay, and resulting harm. For account stated, the court found that the complaint adequately alleged an agreement concerning the amount due and a promise to pay, even though California law was unsettled on whether that claim could proceed alongside a contract claim. The fraud claim was inadequately supported because most alleged false statements were not pleaded specifically, the allegations of knowledge and intent were conclusory, and the record did not clearly show that Doheny intentionally induced Malachowski to continue working without intending to pay. The court also concluded that quantum meruit could not be recovered separately because it covered the same subject matter as the contract claim.

Relief and recommendation

The court concluded that Malachowski was entitled to $30,907.50 in compensatory damages on the breach-of-contract and account-stated claims. It rejected treble damages because the complaint did not assert a claim under the cited California Penal Code provision and did not plead theft of personal property or the required criminal intent. It rejected attorney’s fees because Malachowski litigated the case himself and cited no other basis for recovering them. It recommended awarding $4,178.31 in costs, consisting of the filing fee, process-server fees, and advertising expenses for the successful publication attempt. It also recommended prejudgment interest at 10 percent per year on $30,907.50 from July 27, 2021, through the date of judgment.

Because Doheny had not consented to a magistrate judge’s jurisdiction, the court ordered reassignment to a district judge. Judge Virginia K. Demarchi recommended that Malachowski’s motion for default judgment be granted in part and denied in part—granted as to the breach-of-contract and account-stated claims and denied as to the remaining claims. The report and recommendation stated that either party could file objections within 14 days after service; the opinion text does not show a later district-judge ruling.