In a complaint filed by Louis Allen Liberty against the National Automobile Safety Council, Inc. (NASC), Liberty alleges that NASC and its officers misappropriated his business concept and intellectual property. The complaint was filed in the San Mateo County Superior Court on April 2016, with subsequent amendments.
Liberty, an attorney, initially collaborated with William Robert Sutton and Larry Maloney to create a business aimed at providing legal representation to buyers defrauded by used car dealers. However, according to Liberty's amended complaint, Sutton and Maloney, along with an attorney from their law firm, allegedly stole Liberty’s business plans and intellectual property in September 2011. They then formed NASC without him. In response to these actions, Liberty filed a lawsuit seeking damages for invasion of privacy, misappropriation of trade secrets under the Uniform Trade Secrets Act (Civ. Code § 3426 et seq.), trespass to chattels, conversion, negligence, and breach of contract.
Liberty faced difficulties serving the defendants as they allegedly disappeared after the filing of the complaint. Eventually, Sutton’s default was entered in 2018 while Maloney and NASC were served in June 2021. After NASC failed to respond to the complaint, Liberty sought a default judgment which was entered on August 19, 2021.
The trial court awarded Liberty nominal damages for invasion of privacy and substantial damages for misappropriation of trade secrets and breach of contract/misappropriation of files. Specifically, he was awarded $169,215 based on the valuation that each stolen case file was worth $3,500 with one-third entitlement per their agreement. However, punitive damages were not granted as they were deemed unproven.
NASC appealed this judgment arguing that it exceeded the jurisdictional limits since Liberty did not specify an amount in his initial complaint—a requirement under Section 580(a) which mandates that relief granted cannot exceed what is demanded in the complaint. The appellate court agreed with NASC's argument citing precedent cases like Airs Aromatics v. CBL Data Recovery Technologies where similar judgments were deemed void for exceeding specified amounts.
Moreover, NASC contended that they lacked capacity to defend themselves due to being a suspended corporation both in Delaware and California at various times during litigation—a point which was initially upheld by the trial court but later contested when NASC revived its corporate status.
Ultimately, the appellate court vacated the default judgment against NASC on grounds that it awarded damages not requested in Liberty’s operative complaint. The case has been remanded back to trial court for further proceedings including potential amendment of complaints or addressing service timeliness issues raised by NASC.
Representing Louis Allen Liberty is [Plaintiff's Lawyer], while [Defendant's Lawyer] represents National Automobile Safety Council Inc., now operating as CarBack.com Inc., following its name change post-suspension period.