Employer Gets No Relief From $1.6 Million Default Judgment

Kramer v. Traditional Escrow, Inc., 56 Cal. App. 5th 13 (2020)

Michelle Kramer filed this wage and hour lawsuit against her employer and its alleged alter ego. A few months after defendants answered the initial complaint, their counsel withdrew, and defendants subsequently chose not to participate in the case. In violation of the California Rules of Court, defendants changed their mailing address without giving notice to plaintiff or the trial court. Despite the fact that the only specific sum of money identified in the initial complaint was an unpaid commission amount of $20,000, a default judgment was eventually entered against defendants in the amount of $1.6 million. The trial court set aside the default based upon "extrinsic fraud or mistake," but the Court of Appeal reversed, holding that defendants' lack of diligence precludes the application of equitable relief in the form of a set aside of the default judgment.