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Grappo v. McMills

California Court of Appeals, First District, Second Division

May 23, 2017

DONALD T. GRAPPO, Plaintiff and Appellant,
v.
HEATHER McMILLS et al., Defendants and Respondents.

         Superior Court Alameda County No. RG13702180 Hon. Ronni B. MacLaren Judge

          Law Office of Kathleen Aberegg, Kathleen Aberegg, for Plaintiff and Appellant.

          Hartog, Baer & Hand, Ryan J. Szczepanik, for Defendants and Respondents.

          RICHMAN, ACTING P.J.

         Representing himself, appellant Donald T. Grappo filed a complaint purporting to allege 10 causes of action. Seven of the causes of action were set forth in one paragraph, the other three ranging from two paragraphs to five-a complaint, we note, that as framed could not have withstood a demurrer. Grappo had the complaint served on Kenneth McKean, a man named in the caption but not identified in the complaint-and who from all indications had no relationship with Grappo. Six months after such service-and without warning to anyone-Grappo filed a request for default against McKean and his firm (McKean & McMills), seeking a default judgment for $9, 982, 308.83, with a claimed itemization of damages referring to numbers nowhere found in the complaint. The clerk entered the default on July 1, 2014, but the court refused to enter judgment, entering an order listing seven specific reasons why.

         On November 23, 2014 McKean died, a death of which Grappo was aware. Two weeks later, Grappo filed another request for default and court judgment, a request “not mailed” to anyone because McKean was “now deceased.” This request sought a judgment in the amount of $12, 012, 818.88, once again with numbers found nowhere in the complaint. This time, however, Grappo filled in the declaration portion in the request referring to “$60, 000, ” an amount in the prayer for the claimed value of personal property referred to in the eighth cause of action “belonging to some of the heirs of the Michael A. Grappo 2003 Trust.” Apparently based on that, the court entered judgment for Grappo and against McKean and McKean & McMills for $60, 000 plus costs of $750.

         Respondent Aubrey Cambra, the trustee of McKean's trust, learned of the default judgment when a creditor's claim was made in McKean's estate, and filed a motion to vacate and set aside the default judgment. Grappo, now represented by counsel, opposed the motion asserting, however falsely, that at “the time of the entry of judgment [Grappo] was unaware” McKean had died. The trustee filed a reply, and the matter came on for hearing before the same trial court which had entered the judgment. Following a lengthy hearing, the trial court entered a comprehensive order vacating the judgment as to McKean.

         Grappo appeals from that order, an appeal we reject as the trial court was right. And we publish the opinion, to remind trial courts that however burdened they be, they must vigilantly attend to their duty in connection with the default process, “ ‘to act as gatekeeper, ensuring that only the appropriate claims get through.' ” (Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 691 (Fasuyi); Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 272-273 (Kim).) Grappo's claim here should not have gotten through, the default judgment never entered in the first place.

         THE PROCEEDINGS BELOW

         On November 8, 2013, “[s]elf [r]epresented” Grappo filed a complaint. The complaint names five defendants, two entities and three individuals, not one of which or whom is described or identified. Indeed, Grappo does not even identify himself, or describe any claimed connection or relationship with any of the defendants, his complaint beginning as follows: “COMES NOW the Plaintiff, Donald T. Grappo and says that: on or about April 28, 2009 and continuing through the year 2012, Defendants, and each of them did willfully and with malice aforethought misappropriate funds belonging to the Michael A. Grappo 2003 Trust.”

         We digress momentarily from a description of the complaint to note that Grappo cannot be a proper plaintiff as to claims held by a trust. The proper plaintiff is the trustee. (Code Civ. Proc., § 369, subd. (a) [1]; O'Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1062.) In short, the complaint as pled shows that Grappo has no standing. It also shows that no cause of action is properly pled.

         The complaint states on the front page that it is for “fraud, breach of fiduciary duty, gross negligence, misappropriation of funds.” However, the complaint itself purports to allege many more causes of action, 10 to be exact, the first seven of which are each alleged in one paragraph. The complaint refers to only four amounts of money: a claimed abstract of judgment held by another Grappo in the amount of $3, 477, 259.08 (set forth in the third cause of action), and three small amounts leading to a $1, 000 per month claimed overpayment causing the Michael A. Grappo 2003 Trust to lose money. The latter references are in the first paragraph of the eighth cause of action, for “gross negligence and defalcation, ” which also includes this second paragraph: “9. Defendant McKean further removed or authorized the removal of items of personal property belonging to some of the heirs of the Michael A. Grappo 2003 Trust without prior notification to said property owners and without ever notifying said property owners of the disposal of these items of personal property which were being stored at the Piedmont property site.”

         The prayer of the complaint sought this:

         “2. All excessive attorney's fees returned to the heirs of the Michael A. Grappo 2003 Trust;

         “3. All excessive Trustees fees charged the Trust by Trustees returned to the heirs of the Michael A. Grappo 2003 Trust;

         “4. Punitive damages for loss of revenue to the trust determined and said amounts be returned to the heirs of the Michael A. Grappo 2003 Trust;

         “5. Punitive damages for failed [sic] to renew Abstract of Judgment in the sum of $3, 477, 259.08 plus interest thereon;

         “6. The sum of $60, 000.00 which is the value of property removed from the Piedmont property site and disposed of without notification to the owner of said property.”

         On December 30, 2013, McKean was served at his home in Piedmont.

         On June 30, 2014, Grappo filed a request for entry of default against McKean and McKean & McMills, LP. Item 2 in the request, “Judgment to be entered, ” read as follows:

“2.

Judgment to be entered.


Amount

Credits acknowledged


Balance

“a. Demand of complaint….. $ $ $ 0.00
“b. Statement of damages




“(1) Special………………... $ 9,981.558.83 $ $ 9,981,558.83
“(2) General……………….. $ $ $ 0.00
“c. Interest…………………. $
$ $ 0.00
“d. Costs (see reverse)……... $ 750.00 $ $ 750.00
“e. Attorney fees…………… $ $ $
0.00
“f. TOTALS……………….. $ 9,982,308.83 $ 0.00 $ 9,982,308.83”

(Fn. and bold type omitted.)

         Item 6, the declaration of mailing required under Code of Civil Procedure section 587, represented that the request was served on two law firms and on “Ken McKean, McKean & McMills LP, 28 Lorita Ave, Piedmont, CA 94611.” Interestingly, one of the law firms, Cooper, White & Cooper, LLP, had on April 18, 2014 substituted in as counsel for Heather McMills, apparently the other principal of McKean & McMills.

         On July 1, the clerk entered the default. However, the court entered an order denying the request for default judgment, indicating that it was “NOT ENTERED” for the following reasons, listing seven.

         On November 23, McKean died, a death that obviously became known to Grappo. Two weeks later, on December 8, Grappo filed another request for default[2] and court judgment. Item 2 of this request read as follows:

“2.

Judgment to be entered.

Amount

Credits acknowledged

Balance

“a.

Demand of complaint…..

$

2, 000, 000.00

$ -0-

$

2, 000, 000.00

“b.

Statement of damages

“(1)

Special………………...

$

3, 477, 259.08

$ -0-

$

3, 477, 259.08

“(2)

General………………..

$

$

$

“c.

Interest………………….

$

6, 504, 309.80

$ -0-

$

6, 504, 309.80

“d.

Costs (see reverse)……...

$

750.00

$ -0-

$

750.00

“e.

Attorney fees……………

$

30, 500.00

$ -0-

$

30, 500.00

“f.

TOTALS………………..

$

12, 012, 818.88

$ -0-

$

12, 012, 818.88

         “g. Daily damages were demanded in complaint at the rate of $ 10% per annum per day beginning (date): 11/08/2000.” (Fn. and bold type omitted.)

         In item 6, the declaration of mailing, Grappo checked the box that a copy of the request was “not mailed to the following defendants, ” going on to state that “Defendant Ken McKean and Ken McKean as owner of McKean & McMills, LP, is now deceased and could not be served.” No service was made on McMills, apparently the other “owner” of “McKean & McMills” who was still alive-indeed, as noted, represented by counsel.

         Grappo also filed a five-paragraph declaration in the request, which declaration read in its substantive entirety as follows:

         “A complaint was filed in the above entitled matter on November 6, 2013. This Plaintiff affirms that the value of property which was removed without notice from the garage at the Piedmont Avenue property belonging to Declarant Donald T. Grappo is approximately $60, 000.00. This Declarant cannot provide receipts for any of said property in that any and all information in connection with said property was also stored at the Piedmont Avenue property and was destroyed along with the property itself.

         “I attach a copy of an email sent to me from attorney Brittain Habegger on March 21, 2011 which states in pertinent part ‘... It is my understanding that having given you and other family members several years to collect from the garage those things...'

         “At no time was there ever a notification given to me, or to the best of my knowledge, information and belief to any of my family members that Trustee McKean intended to remove and destroy any of my property stored in the Piedmont property garage.”

         No prove-up hearing was held. Rather, on December 22, the trial court filed a “Judgment Default” that Grappo recover from defendants Ken McKean and McKean & McMills, LP $60, 000 plus costs of $750.00.

         The clerk served notice of entry of judgment on Grappo. No service was made, or apparently even attempted, on McKean & McMills or McKean or McMills as individuals.

         On February 17, 2015, Grappo sent a letter to the trial court that read in its entirety as follows:

         “This letter is addressing the $10 Million dollar figure cited in my request for judgment. I thank the court for issuing the $60, 750.00 judgment which reimburses me for the items of personal property stored at the Piedmont property. However, Mr. McKean committed so many egregious errors while acting as trustee of my father's trust, that it boggles the mind. I would appreciate you reviewing my request for judgment and considering issuing me a judgment connected with this missteps [sic] while trustee of the Michael A. Grappo 2004 Trust at your earliest opportunity.

         “It has come to my attention that Mr. Ken McKean has passed away. He has property valued in the millions and I will have to file a creditor's claim soon in his estate if I am going to be able to collect some or all of the monies owed to me and my siblings as a result of his misdeeds.

         “Thank you for your kind consideration.”

         Aubrey Cambra, trustee of the Kenneth A. McKean Trust, learned of the default judgment when Grappo filed a creditor's claim in McKean's estate. On November 4, 2015, Cambra filed a motion to vacate the default judgment and enter a different judgment. The motion references section 663; the memorandum of points and authorities refers to section 663 and also to section 473.5.

         Grappo, now represented by counsel, filed opposition. Exclusive of exhibits, his substantive opposition was all of three pages, with two arguments: (1) that the motion was untimely; and (2) even if timely, it “must be denied on the merits, because there was no prejudice to Defendant McKean or Cambra.”

         Cambra filed a reply, and the motion came on for hearing before the same trial court that had entered the default judgment. The court heard extensive argument, lasting almost an hour. Among other things, Grappo's counsel argued there was no prejudice, that there was “nothing that could have been done” as McKean had defaulted. The court interrupted: “Well, motion to vacate the default.” To which Grappo's attorney responded, “Right.”

         Following the hearing, the trial court entered its order granting the motion, vacating the judgment against McKean. The order was a comprehensive nine paragraphs, the first five of which detailed the procedural history leading to the setting before the court. The next three paragraphs set forth the bases for the court's ruling, as follows:

         “Trustee contends that Plaintiff should have substituted Kenneth McKean's personal representative in this action and litigated against that personal representative in obtaining a judgment, as required by Code of Civil Procedure section 377.41.

         “When a defendant in a pending action dies, the action may be prosecuted against the decedent's personal representative. Pursuant to Code of Civil Procedure section 377.41, the court shall allow a pending action that does not abate to be continued against the decedent's personal representative or, to the extent provided by statute, against the decedent's successor in interest. As a general proposition, judgment cannot be entered for or against a decedent, nor against the personal representative of the decedent's estate, until the representative has been made a party by substitution, and a judgment entered against the decedent prior to substitution of a personal representative or successor-in-interest is subject to general attack. (Sacks v. FSR Brokerage, Inc. (1992) 7 Cal.App.4th 950, 956-957 [(Sacks)].) However, the judgment is not void, and it will be set aside only upon a showing of prejudice. (Id. at p. 957.)

         “Trustee has made a sufficient showing to vacate the judgment against Defendant Ken McKean. It is undisputed that Plaintiff has filed a creditor's claim against the McKean Trust in Case No. RP15-765907 based on the Default Judgment in this action, and has filed another civil lawsuit against Trustee in Case No. RG15-779986, also based on the Default Judgment against Defendant Ken McKean. Trustee has established that she was not given notice of the existence of the default or the application for default judgment, and thus had no opportunity to seek relief from the default before Default Judgment was entered against Defendant Ken McKean. The prejudice to the Trust is clear, and Trustee has made a sufficient showing that the judgment against Defendant Ken McKean is void. (Code Civ. Proc., sec. 473(d).)”

         Grappo filed a timely appeal from the order.

         DISCUSSION

         I. The Trial Court Order Was Correct

         A. Governing Principles: Defaults and Default Judgments

         The law concerning section 473 relief was set forth by the Supreme Court in Elston v. City of Turlock (1985) 38 Cal.3d 227, 233: “A motion seeking such relief lies within the sound discretion of the trial court, and the trial court's decision will not be overturned absent an abuse of discretion. [Citations.] However, the trial court's discretion is not unlimited and must be ‘ “exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.” ' [Citations.] [¶] Section 473 is often applied liberally where the party in default moves promptly to seek relief, and the party opposing the motion will not suffer prejudice if relief is granted. [Citations.] In such situations ‘very slight evidence will be required to justify a court in setting aside the default.' [Citations.] [¶] Moreover, because the law strongly favors trial and disposition on the merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default [citations].” (Accord, Shamblin v. Brattain (1988) 44 Cal.3d 474, 478 [“very slight evidence is required to justify a trial court's order setting aside a default”].)

         A ruling setting aside a default or default judgment is reviewed under the abuse of discretion standard, and an appellate court will reverse only upon “ ‘ “a clear case of abuse” ' ” and “ ‘ “a miscarriage of justice.” ' ” (Blank v. Kirwan (1985) 39 Cal.3d 311, 331; Denham v. Superior Court (1970) 2 Cal.3d 557, 566.) In short, as one court of appeal recently described it, Grappo has a “ ‘daunting task.' ” (Dreamweaver Andalusians, LLC v. Prudential Ins. Co. of America (2015) 234 Cal.App.4th 1168, 1171.)

         B. Governing Principles: Appellate Review

         The most fundamental principle of appellate review is that “A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness.” (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133; accord, Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140.) And, of course, we will uphold the decision of the trial court if it is correct on any ground. (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 769.)

         In light of those principles and presumptions, the burden is on Grappo to demonstrate error-and also “prejudice arising from” that error. (Gould v. Corinthian Colleges, Inc. (2011) 192 Cal.App.4th 1176, 1181.) He has done neither.

         C. Introduction to the Analysis

         Grappo's opening brief is not a model of appellate advocacy. The brief sets out what occurred below in a fashion favorable to him, the loser, rather than in support of the trial court's decision, which is bad enough. Worse, both of Grappo's briefs continue the assertion his counsel made below, that Grappo did not have “knowledge of... McKean's death on December 8, 2014, when the Request to Enter Default Judgment was filed.” As noted, this is flatly false, as shown by ...


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