CALIFORNIA ATTORNEY'S FEES

CCP § 128.7 Sanctions: $20,500 Family Law Sanctions Award Reversed For Failure To Support With Admissible Evidence In Timely Fashion

Fourth District, Division 3 Finds The Only Timely-Filed Declaration Was Devoid In Setting Forth The Attorney Work Performed Or Credible Fee Total to Support the Award.

     The next case teaches that, after service of the CCP § 128.7 “safe harbor” motion, if you then file the motion after noncompliance by the putatively sanctionable party/attorney, you must present admissible proof of the work actually performed and of the corresponding amount of fees for which sanctions are being sought.

     Marriage of Tang, Case No. G040994 (4^th Dist., Div. 3 Mar. 19, 2010) (unpublished) involved a situation where wife and her attorney were sanctioned for filing an independent civil action for breach of fiduciary duty when the law was clear that the action needed to be filed with the family law dissolution court. The family law judge sanctioned them $20,500 under Code of Civil Procedure section 128.7. Though there was no doubt that the conduct was sanctionable, an inadequacy of proof submitted by husband in support of the sanctions request necessitated a reversal of the award, ruled the Fourth District, Division 3 (in a 3-0 decision authored by Justice Fybel).

     To recover monetary sanctions, a moving party must submit admissible evidence in support of the amount of sanctions sought. The safe harbor provision of section 128.7(c)(1) does not prohibit the moving party from submitting such evidence at the same time as the moving papers or, at the very least, at the time of filing and service of reply papers. However, husband’s attorney, who submitted three declarations, filed the last two declarations in untimely fashion and without critical “penalty of perjury” language, even though the declarations were sufficiently detailed as far as supporting the amount of sanctions.

     Because the second and third declarations had to be disregarded, that brought Justice Fybel and his colleagues to see if the first declaration could underpin the sanctions award. It could not. Reason? The first declaration, though signed under penalty of perjury, failed to describe the work performed and to identify the attorney’s fees incurred for which sanctions were being sought. So, a lack of proof doomed the sanctions award, with both parties ordered to bear their own costs on appeal.

     For information on new and original Tang, click here.

Sanctions: CCP Section 128.7 Sanctions Of $20,468.06 Affirmed On Appeal

 

Fourth District, Division 2 Finds Summary Judgment Grant Did Not Divest Trial Court of Jurisdiction to Rule on Previously Served 128.7 Sanctions Motion.

     The next case reminds all litigators that some client control becomes necessary when a plaintiff contradicts the main theory of his/her complaint at a deposition. Sanctions frequently will result unless the complaint is withdrawn after a 128.7 “safe harbor” motion is served.

     In Umberger v. Mount Baldy Ski Resort, Case No. E048337 (4^th Dist., Div. 2 Mar. 18, 2010) (unpublished), plaintiff undermined the slope accident theory espoused in her complaint at a deposition, with her litigation attorney refusing to dismiss the complaint under a threat that ski resort would seek sanctions. Ski resort moved for summary judgment and, while the motion was pending for hearing, served (but did not file) the 128.7 sanctions under the “safe harbor” requirements. Only then did plaintiff’s attorney wake up, offering to dismiss the complaint for a cost waiver, an offer rejected by ski resort because of the summary judgment costs it had incurred.

     (BLOG OBSERVATION—Plaintiff’s counsel could have still withdrawn the complaint, but might have faced a routine cost bill—which would have been less painful than what occurred.) Plaintiff’s attorney failed to file any summary judgment opposition and had another attorney appear to argue at the SJ hearing, which all resulted in a granting of the motion. Then, Mount Baldy filed its 128.7 motion on a complaint false allegations theory, winning $20,468.06 against plaintiff’s attorney.

     Attorney’s appeal was unsuccessful. Defense counsel did serve the 128.7 “safe harbor” motion in timely fashion, serving it by mail but allowing 28 days for a response before filing the motion. Attorney primarily argued that the sanctions motion was moot after the summary judgment grant, but the appellate panel found that this was not a voluntary dismissal (the aim of the 128.7 “safe harbor” procedure in the first place) and that the trial court was not divested of jurisdiction to hear the sanctions motion. (Day v. Collingwood, 144 Cal.App.4^th 1116, 1126-1129 (2006).) The trial court also did not abuse its discretion in awarding sanctions, because plaintiff’s deposition testimony showed she stepped outside the delineated slope boundaries and assumed the risk of what happened next (collision with a tree resulting in facial injuries). Also, attorney’s failure to dismiss before ski resort ran up significant litigation expenses showed the sanctions was a proper penalty.

     BLOG UNDERVIEW—Successful defense counsel was none other than Joseph P. Collins, one of co-contributors Marc and Mike’s colleagues at Adorno Yoss Alvarado & Smith, who had the assistance of Mikel Glavinovich. Congratulations, Joe and Mikel, for following the proper 128.7 procedure and the appellate triumph.

In The News . . . . Update: $20,000 Sanctions Against Ms. Taitz Affirmed By Eleventh Circuit Court of Appeals.

     In our October 19, 2009 post, we reported on the $20,000 sanctions award imposed against Orly Taitz by U.S. District Judge Clay D. Land in one of the “birther” cases. We can now report that the Eleventh Circuit Court of Appeals affirmed the sanctions order, finding the arguments on appeal to be “unpersuasive” in nature in a short two-page decision.

Sanctions: CCP Section 128.7(b)(3) Sanctions Not Justified Against Represented Party Having No Responsibility For Sanctionable Conduct

 

128.7 Sanctions Sustained Against Attorney Failing to Properly Appeal.

     The next sanctions case has a couple of valuable lessons. It is MJB Development Group v. Diamond Escrow, Case No. D053158 (4^th Dist., Div. 1 Feb. 10, 2010) (unpublished).

Lesson #1—a sanctioned attorney must appeal the sanctions award. Although attorney’s client also appealed, this did not confer jurisdiction on the Court of Appeal to consider attorney’s challenge to the $10,000 award under CCP § 128.7. (Laborde v. Aronson, 92 Cal.App.4^th 459, 465 (2001), disapproved on another ground in Musaelian v. Adams, 45 Cal.4^th 512 (2009).)

     Lesson #2—unless responsible for a violation, a represented party cannot be sanctioned for violations of section 128.7(b)(3) [making allegations or other factual contentions lacking evidentiary support]. (Laborde, supra, 92 Cal.App.4^th at 466.) Because the record was devoid of evidence showing the party was responsible for a 128.7(b)(3) violation, the sanctions order against client had to be reversed. Laborde also establishes that a represented party cannot be sanctioned under section 128.7(b)(2).

Discovery Sanctions: $76,906.80 In Fees And Forensic Expert Expenses Awarded Jointly Against Ex-Employee And New Employer In Laptop Spoliation Case

Delaware Decision Shows How Substantial E-Discovery Monetary Sanctions Can Be Imposed In Failure to Preserve Evidence Case.

     Because California just recently passed e-discovery statutes, we continue to monitor cases of interest in fee and expense awards in computer spoliation cases. Here is one out of Delaware.

     In Beard Research, Inc. v. Kates (Kates II), 2009 Del. Ch. LEXIS 170 (Del. Ch. Oct. 1, 2009), an ex-employee and his new employers were held jointly responsible for spoliation of possible evidence on the employee’s laptop. Both were ordered to pay $76,906.80 to plaintiffs after they partially won a successful motion for sanctions, broken down as $56,546 in attorney’s fees and $20,360.80 in forensic expert expenses. This was based on a “failure to preserve” theory, after plaintiffs had repeatedly asked for production and the ex-employee reformatted and then replaced his laptop hard drive.

     Plaintiffs had asked for a total of $104,340.80, but the court made reductions based on finding that (1) only 2 of 4 lawyers needed to be involved in the battle, and (2) plaintiffs received a narrower sanction (an adverse inference sanction) than the original broader request (necessitating a 30% reduction off the original request).

    Spoliation.  Etymology: Middle English, from Anglo-French spoliacion, Latin spoliation-, spoliatio, from spoliare to plunder — more at spoil.

Family Law: Fee Sanctions Award Of $75,000 Affirmed On Appeal

Appellate Court Found No Abuse of Discretion, With Failure to Provide Transcript of Fee Motion Sealing Amount of the Award.

     In Marriage of Nair, Case No. C059661 (3d Dist. Dec. 29, 2009) (unpublished), the Third District found that the family law court did not abuse its discretion by awarding attorney's fees of $75,000 to wife and against husband under Family Code section 271. This provision is in the nature of sanctions, attempting to curtail efforts that prolong litigation and thwart resolution in the family law area of practice. According to the appellate court, the record showed that father attempted to thwart reunification efforts between the older son and mother, father countenanced his son's obstinate behavior, father resisted prior rulings where the court "preimposed" sanctions in the event father was noncompliant, and father filed an unsubstantiated claim of sexual abuse and harassment by the boys' maternal grandfather. As to his challenge to the amount (claiming that he could not pay), father waived this argument by failing to supply a reporter's transcript of hearings—with the appellate court presuming that the unreported trial testimony would demonstrate the absence of error. (In re Estate of Fain, 75 Cal.App.4^th 973, 992 (1999).)

Marc And Mike’s Top Twenty Decisions For 2009

Part 1 of 2: First Ten Grouping—Nos. 11-20.

     As noted in an earlier post, we have accumulated our “top 20” attorney’s fees decisions, recognizing that we limit the list to published decisions and that the order reflects nothing about the importance of the decision. Rather, we try to survey decisions of interest in different areas of the substantive law based on all the decisions we have examined during 2009. Without further ado, here we go.

     YEARLY ROUNDUP

20. Crawford v. Astrue, 2009 WL 3617989 (9^th Cir. Nov. 4, 2009) (en banc)

Majority Author: Circuit Judge Fletcher; Concurring/Dissenting Author:

Circuit Judge Clifton; Dissenting Author: Circuit Judge Ben

     Attorneys representing Social Security disability insurance claimants are presumptively entitled to fee awards under their contingency arrangements; majority reversed magistrate reductions of awards to only 6.68-11.61% of past-due benefits award.

(See our November 5, 2009 post on this decision.)

19. Krug v. Maschmeier, 172 Cal.App.4^th 796 (lst Dist., Div. 4 Mar. 25, 2009)

Author: Presiding Justice Ruvolo

     Prevailing defendants in civil harassment actions can recover discretionary attorney’s fees even if the underlying action was not frivolous or was not brought in bad faith.

(See our March 25, 2009 post on this decision.)

18. Garcia v. Santana, 174 Cal.App.4^th 464 (2d Dist., Div. 7 May 28, 2009)

Majority Author: Justice Zelon; Concurring Author: Justice Woods;

Dissenting Author: Justice Jackson

     Financial condition of indigent litigant is a factor to consider in assessing fees to a prevailing party in a Davis-Stirling Act action.

(See our May 28, 2009 post on this decision.)

17. In re SNTL Corp., 571 F.3d 826 (9^th Cir. June 23, 2009)

Per Curiam Opinion

     Unsecured creditor’s request for postpetition-incurred contractual/statutory fees, arising from prepetition claim, is allowable.

(See our June 23, 2009 post on this decision.)

16. Biltmore Associates, LLC v. Twin City Fire Ins. Co., 572 F.3d 663 (9^th Cir.

July 10, 2009)

Author: Justice Kleinfield

     Attorney’s fees, if other than sanctions or if not awarded for trustee wrongdoing, can only be awarded against trustee in a representative capacity.

(See our July 10, 2009 post on this decision.)

15. Center For Biological Diversity v. Marina Point Development Co., 566 F.3d

794 (9^th Cir. May 14, 2009) (second amendment)

Majority Author: Circuit Judge Fernandez; Concurring Author: Circuit

Judge Rymer; Dissenting Author: Justice Kleinfield

     Attorney’s fees were properly awarded under the Endangered Species Act even though underlying controversy was moot; court will not review the merits determination, if moot, for purposes of testing the fees award; concurring opinion suggests that the U.S. Supreme Court may want to review the issue.

(See our March 28, 2009 post on this decision.)

14. Alan T.S., Jr. v. Superior Court, 172 Cal.App.4^th 238 (4^th Dist., Div. 3 Mar.

18, 2009)

Author: Presiding Justice Sills

     Interesting discussion of problems that plague the family law court system, made in the course of reversing awards for failure to consider the relevant “need” factors under Family Code sections 2030 and 2032.

(See our March 21, 2009 post on this decision.)

13. Ramon v. County of Santa Clara, 173 Cal.App.4^th 915 (6^th Dist. May 4, 2009)

Author: Acting Presiding Justice Mihara

     Plaintiff’s amicus curiae work in related action was proper basis for additional fee award under California Code of Civil Procedure section 1021.5 (the private attorney general statute).

(See our May 4, 2009 post on this decision.)

12. Law Offices of Andrew L. Ellis v. Yang, 178 Cal.App.4^th 869 (2d Dist., Div. 3

Oct. 27, 2009)

Author: Justice Aldrich

     Trial courts have discretion to award or deny anti-SLAPP attorney’s fees to defendants in cases where plaintiffs dismiss their actions without prejudice.

(See our October 28, 2009 post on this decision.)

11. Galleria Plus, Inc. v. Hanmi Bank, 2009 WL 3859491 (2d Dist., Div. 4

Nov. 19, 2009)

Author: Presiding Justice Epstein

     Code of Civil Procedure section 128.7 sanctions cannot be granted unless a prior, unfiled “safe harbor” motion has set a definitive hearing date in the motion sent to the opponent.

(See our November 20, 2009 post on this decision.)

Our next top 10 will follow shortly before the New Year. Happy Holidays to everyone.

Probate: A Two-Fer From The Fourth District, Division Two

 

Court of Appeal Examines Various Provisions on Awarding Probate Fees and on Having Trust Pay the Fee Awards.

     In two somewhat companion cases, the Fourth District, Division 2 has done a nice job of examining various Probate Code statutes relating to the award of attorney’s fees and where they should be paid from.

     The factual and procedural backdrop for these decisions was an ongoing dispute between stepmother, the trustee of the father’s trusts, and her stepchildren. Stepmother was eventually removed as trustee, taking many actions for her benefit but also having to defend accountings that were beneficial for the trusts. Eventually, the lower court ordered payment of $120,000 in fees/costs to stepchildren and $40,401 in fees/costs to stepmother, payable from the trust income. In a separate hearing, the lower court awarded stepmother only $5,000 in attorney’s fees (out of a requested $66,112.50) for responding to numerous accounting objections and dealing with trust administration issues. Stepmother appealed the probate court’s orders directing payment of fees from the trust income and limiting her recovery of fees to $5,000 in case #1.

     The first order was affirmed and second reversed in case #1, Raskov v. Raskov, Case No. E044285 (4^th Dist., Div. 2 Dec. 21, 2009) (unpublished). Because stepmother’s mismanagement of a trust for the L.A. property created the need for stepchildren’s trustee removal steps, Probate Code sections 16370 and 16421—provisions allowing payment of expenses of income in certain circumstances and with a view to achieving

equity—trumped Probate Code section 16371—which provides that trust-protective activities are usually paid from trust principal. In essence, stepmother was charged with having to pay fees from trust income, an adequate remedy that did not justify the double damage penalty set forth in Probate Code section 859 (a request denied by the probate court). That brought the appellate court to the second order awarding only $5,000 in fees. This one was reversed and remanded because the panel felt that stepmother had taken some trust administration activities that did not justify limiting fees only to accounting objections. (Prob. Code, sec. 15684(a).) The matter had to be remanded, although the reviewing court did agree that stepmother’s $66,112.50 request was excessive and more specificity was required in the submitted billing entries.

     Case #2, Raskov v. Raskov, Case No. E042666 (4^th Dist., Div. 2 Dec. 21, 2009) (unpublished) involved an appeal by stepson after the probate court sanctioned him $18,000 under Code of Civil Procedure section 128.7 in bringing a frivolous double damages penalty section 859 motion (most of the money representing fee recoupment to stepmother). Stepson appealed, but was unsuccessful. Stepson only asked for 859 damages in a subsequent motion after the probate court indicated that it was not going to award them anyway in the main proceeding. In effect, the lower court believed that stepson was trying to cause severe distress to his stepmother and should have appealed thee earlier 859 denial ruling. The sanctions ruling was not an abuse of discretion.

Sanctions: Less Drastic Sanctions Than Evidentiary And Issue Sanctions Are In Order For Failing To Produce Computer Embedded Information During Trial

Fourth District, Division 3 Reverses Sanctions, Ordering Reimbursement of Trial And Additional Discovery Costs.

     As indicated on prior posts on e-discovery, litigators must be attuned to both pretrial, trial, and post-appeal sanctions that can be awarded against parties failing to produce computer embedded information. Here is one where the offending party got a break, but not much of one—especially if we are right about the fees and costs that must be paid for a 10 week-plus trial and additional discovery ordered as the proper sanctions.

     The case is Jneid v. TriPole Corp., Case No. G039500 (4^th Dist., Div. 3 Dec. 17, 2009) (unpublished), emanating out of our own local Fourth District, Division 3.

     There, purchaser of a computer firm’s assets was hit with a multi-million jury verdict in favor of the asset seller and certain employees for not making certain payments as a result of the buy-out. Ten weeks into the jury trial, seller produced 17,000 pages of computer embedded documents that were within the ambit of prior discovery activities. Purchaser was granted its request for issue and evidentiary sanctions by which seller could not use the tardily produced documents at trial, buyer could use them without any authentication, and seller was precluded from arguing that buy-out milestones were not reached—sanctions that the appellate court later characterized as akin to a directed verdict against seller.

     On appeal, the Fourth District, Division 3, in a 3-0 decision authored by Justice Rylaarsdam, reversed.

     The appellate panel found that the ultimate disclosure of the documents militated against the “directed verdict” sanction, with even the parties agreeing that payment of the costs of the completed trial (on a mistrial basis) plus costs associated with additional discovery resulting from the late production were less drastic sanctions that accomplished their punitive goals. We bloggers would surmise that this result might get the case settled, because assessment of even these less draconian sanctions—costs for a long jury trial and additional discovery—is going to be a heavy financial burden for the selling parties to meet.

Discovery Sanctions: $25,607.03 In Sanctions Affirmed Where Attorney Interposed Too Many Deposition Objections

Fourth District, Division 1 Did Vacate “Future Deposition” Sanctions.

     The next post is a very pragmatic one for litigators involved in discovery battles. Cutting to the chase, an attorney was hit with substantial fees (sanctions) for interposing over 300 objections during the course of some depositions. The Fourth District, Division 1 affirmed, although they did “throw out” $10,000 in future anticipated deposition costs, because the pertinent discovery statutes only encompassed “incurred” expenses.

     In Hallam v. Johnson (Butler), Case No. D054852 (4^th Dist., Div. 1 Dec. 15, 2009) (unpublished), a discovery referee recommended that an attorney should be sanctioned $35,607.03 in fees and costs (out of a requested $100,307.53, which was voluntarily reduced from an initial request of $112,243.52) for interposing meritless objections—over 300—at some depositions. Attorney appealed, and most of the award was sustained.

     Attorney initially argued that “defending” a deposition was not equivalent to “employing” a discovery method for sanction purposes under the Discovery Act. Wrong, said the appellate panel, analogizing to the reasoning of Pueblo v. Superior Court, 158 Cal.App.4^th 1242, 1248 (2008), which involved a supplemental discovery response dispute.

     Attorney then argued that the discovery referee/trial court erred in specifying the specific discovery statute utilized as a basis for the sanctions award. Wrong again, said the Court of Appeal, citing to Ghanooni v. Super Shuttle, 20 Cal.App.4^th 256, 261 (1993)—no such requirement exists in the discovery sanctions context.

     Attorney next complained that the sanctions motion was untimely because it occurred past the date for a timely motion to compel. Wrong yet again, because a discovery sanctions motion can be brought later. (London v. Dri-Honing Corp., 117 Cal.App.4^th 999, 1001 (2004).)

     However, Attorney did get a reprieve because the appellate court reversed the $10,000 component of the discovery sanctions award for future deposition costs, finding that Code of Civil Procedure section 2023.030 only authorizes recoupment of sanctions for incurred expenses.

     End result: appellate court reduced the sanctions award by $10,000, meaning that Attorney was still out $25,607.03 in sanctions. Moral of the story: Be careful how (and how often) you object during depositions!

Discovery Sanctions: Sanctions Against Litigants’ Attorneys Reversed Where Evidence Showed Client Was Responsible For Sanctionable Conduct

Second District, Division 2 Reverses $3,387.50 Sanctions Award Against Attorneys.

     Under various discovery statutes, the trial court has discretion to award discovery sanctions jointly and severally against losing litigant and/or their attorneys. However, attorneys have another defense in their quiver—the “my client made me do it” defense.

     The Court of Appeal is Manzanares v. Bertolino (Marcus, Watanabe, Snyder & Dave, LLP), Case No. B211652 (2d Dist., Div. 2 Nov. 24, 2009) (unpublished) reversed a $3,387.50 discovery sanction awarded against attorneys as well as their clients. Reason: under Ghanooni v. Super Shuttle, 20 Cal.App.4^th 256, 261 (1993), an attorney can avoid sanctions if he advised the client to not engage in the conduct resulting in the sanctions but the client persisted (making client solely responsible for the sanctionable conduct). Attorneys on appeal were successful, because they did submit evidence in the trial court—unrebutted evidence—demonstrating client was solely responsible.

     BLOG UNDERVIEW—Attorneys need to be careful on using this discovery sanctions “defense,” because it likely implicates privileged conversations and may create a conflict in interest with the client that may want to be avoided, depending on the circumstances of course.

Sanctions: CCP Section 128.7 Sanctions Are Not Proper Unless The Unfiled Motion Has A Definitive Motion Hearing Date Set

Second District, Division 4 Reverses Sanctions Award For Failure to Meet Technical Requirements.

     Here is one for all of you practitioners desiring to set up a CCP section 128.7 sanctions motion, correctly we might add.

     Defendant served plaintiff with a notice of motion for sanctions in the amount of $7,022.50 under CCP section 128.7, indicating the motion would not be filed for the safe harbor period but with no definitive motion hearing date (the notice said the motion would come on for hearing “on AAA at BBB”). After expiration of the safe harbor period, defendant did file the sanctions motion, which was granted in the amount of $7,022.50 against defendant’s attorneys. Attorneys (as objectors) appealed.

     They won.

     Reason? Presiding Justice Epstein, on behalf of a 3-0 panel of the Second District, Division 4 in Galleria Plus, Inc. v. Hanmi Bank (David D. Kim & Associates), Case No. B213099 (2d Dist., Div. 4 Nov. 19, 2009) (certified for publication), held that section 128.7 incorporates CCP section 1010 which, in turn, requires that the unfiled section 128.7 motion must specify when the motion would be made. The failure to specify a time for hearing was the fatal defect, requiring reversal of the sanctions order. So, make sure you put a firm motion date in the unfiled motion if you want to have a chance for success when bringing a 128.7 motion.

Trial Discovery Sanctions: Second District, Division 1 Reverses Third-Party Subpoena Monetary Sanctions Based On Lack Of Statutory Basis

 

Appellate Panel Does Not Condone Sanctioned Conduct, But Found No Discovery Law Basis To Sustain the Award.

     As we have indicated before, attorney’s fees awards—whether mundane or imposed as a sanctions—must either have a contractual or statutory basis, depending on the type of award. The next case illustrates, even though the discovery conduct was found distasteful in nature, the lack of a statutory basis doomed affirmance of the sanctions award.

     Yaffe v. Mendelsohn (Krane & Smith), Case No. B209926 (2d Dist., Div. 1 Nov. 17, 2009) (unpublished) involved a trial court award of $6,000 in monetary sanctions against plaintiff’s attorneys in connection with a third-party trial subpoena to a certain accountant. Briefly summarized, plaintiff’s counsel sought to subpoena for trial sensitive financial information without serving any privacy on the impacted consumers (third parties not being sued). Although accountant’s attorney served objections to the subpoena, plaintiff’s attorney threatened to issue a bench warrant if the accountant did not appear at trial. In fact, accountant did go to trial but asserted that income tax statements were privileged. The trial court ruled the trial subpoena invalid without notice to the impacted third-party consumers, with plaintiff’s counsel excusing the accountant after she had sat around trial for 4 hours. The third parties then filed a sanctions motion against plaintiff’s attorneys to recoup $8,702.50 in fees and costs, with the trial court awarding them $6,000 in sanctions.

     Although strongly disapproving of the action of certain of plaintiff’s counsel, the appellate court reversed. The main reason was that it could not locate any statutory basis to justify imposition of the sanctions against plaintiff’s attorneys. Code of Civil Procedure sections 1985-1987 only allowed for sanctions where a party successfully brought or opposed a discovery motion, something that was not done in this particular matter. Because no motion to compel or to quash was filed, the court did not have the inherent power to impose sanctions unless authorized by statute. Although suggesting that contempt might have a proper punishment, the trial court did not engage in the proper due process safeguards to sustain the sanctions order under this rubric.

Trial Discovery Sanctions:  Prisoner kneeling on chains, thumbs, supporting arms.

Moukden, China.  Library of Congress.  c1906.

Discovery Sanctions: $3,587.00 Deposition Sustained Because It Is Collateral And Not Independently Appealable Until Later

 

Sixth District Provides a Good Lesson in Properly Timing Appeal of Discovery Sanctions Under $5,000.

     This next unpublished case, in a 3-0 unpublished decision from the Sixth District, is a good reminder on when the appeal of smaller discovery sanctions orders—under $5,000—is properly made.

     In Stough v. Klure, Case No. H034000 (6^th Dist. Oct. 26, 2009) (unpublished), defendant/appellant was sanctioned a total of $3,587 for refusing to submit to questioning under oath at a deposition (a sanctions imposed in late February 2009 arising from a mid-January 2008 deposition). Four days prior to the sanctions order, the trial court denied defendant’s summary judgment motion. Unhappy about the sanctions, defendant appealed.

Discovery Sanctions: Monetary And Terminating Sanctions Affirmed For Repeated Discovery Disputes

Fourth District, Division 3 Finds Sanctions Were No Abuse of Discretion.

     The next case is one in which the Fourth District, Division 3 affirmed monetary and terminating sanctions against either plaintiff’s attorney or plaintiff based on failure to respond to requests or failing to be candid in electronic discovery matters. This shows how one needs to be diligent in discovery, responding once extensions have expired and investigating issues relating to e-discovery—and being candid to opposing counsel and the court in the process.

     Most of the monetary sanctions in Estrada v. Delhi Community Center, Case No. G040405 (Oct. 20, 2009) (unpublished) were sustained against plaintiff’s attorney Jim Toledano. Outside of the merits, he never appealed the sanctions assessed only against him as an attorney, but only appealed through plaintiff. However, plaintiff did not have standing to challenge sanctions against Mr. Toledano, who had a distinct right to appeal the sanctions orders. (Lachkar v. Lachkar, 182 Cal.App.3d 641, 645 n.1 (1986); 20^th Century Ins. Co. v. Choong, 79 Cal.App.4^th 1274, 1277 (2000); Calhoun v. Vallejo City Unified School Dist., 20 Cal.App.4^th 39, 42 (1993).) However, the monetary sanctions were justified on the merits, where the circumstances showed either (1) Mr. Toledano only provided responses on the eve of a motion to compel hearing after indicating that he was too busy or attending to his father’s estate, or (2) Mr. Toledano refused to produce certain photographs without showing the refusal was justified.

     With respect to terminating sanctions, plaintiff’s installation of a new operating system that damaged existing data was found to be prejudicial when her attorney was alerted by defense counsel that plaintiff’s home computer would be sought long before installation of the new operating system that did result in some data alteration. Spoliation of evidence only needs some showing that the documents were potentially relevant to the litigation, as the e-documents were to plaintiff’s emotional distress claims. (Leon v. IDX Systems Corp., 464 F.3d 951, 959 (9^th Cir. 2006).) [BLOG OBSERVATION—This shows the wisdom of sending a “duty to preserve” warning to the other side in cases involving e-discovery.]

In The News . . . . Orly Taitz Of Mission Viejo Sanctioned $20,000 By Georgia Federal District Judge Under Federal Rules of Civil Procedure, Rule 11

District Judge Clay D. Land Issues Sanction in 43-Page Opinion.

Mission Viejo attorney/dentist Orly Taitz—who heads the "birther" movement (trying to oust President Obama from the presidency based on the allegation that he did failed to produce a satisfactory birth certificate)—has been in the news frequently for her filing of federal court actions on the "birther" issue. She now is in the news based on a sanctions order assessed against her by U.S. District Judge Clay D. Land of the Middle District of Georgia.

District Judge Land found that certain of her actions in Rhodes v. Macdonald, Case No. 4: 09-CV-106 (CDL) (M.D.Ga.) were sanctionable under Federal Rules of Civil Procedure, rule 11. He imposed sanctions of $20,000 on Ms. Taitz, payable to the Georgia district court clerk. The opinion does have a scholarly review of Rule 11 and the sua sponte authority that it gives to district judges to impose sanctions under the right circumstances.

A full copy of the District Judge Land's opinion can be found at an October 14, 2009 post of the Mountain Sage Blog. For more details on this sanctions order and Ms. Taitz's efforts before U.S. District Judge David O. Carter in the local Santa Ana federal court on the "birther" issue, see Martin Wisckol's article "Court fines 'birther' $20,000" in the October 19, 2009 edition of The Orange County Register.

BONUS.  From Slate.com, August 3, 2009, The Explainer: 

Obama is not the first to face these allegations. President Chester Arthur endured years of unsubstantiated rumors that he was born on the wrong side of the Vermont-Canada border. Some opponents questioned Herbert Hoover's eligibility as well. Hoover met the Constitutional requirement of having been a resident within the United States for 14 years, but those years were not consecutive, and the Founding Fathers weren't clear on whether the distinction matters. Neither case made it to court.

CCP Section 128.7 Sanctions: Failure To Give Full Safe Harbor Compliance Period Required Reversal Of Sanctions

Second District, Division 7 Overturns Sanctions Where Merits Hearing Was Heard 19 Days Into 21-Day Safe Harbor Period.

     Here is a good one for all of you Code of Civil Procedure section 128.7 fans!

     The lesson from Li v. Majestic Industry Hills, LLC, Case No. B208404 (2d Dist., Div. 7 Sept. 8, 2009) (certified for partial publication) is intuitive, but a great reminder … make sure you—as the litigant requesting sanctions under section 128.7--give your opponent the full 21-day safe harbor withdrawal period. If you don’t, you will risk reversal of the sanctions order. That is exactly what happened in Li.

     There, a party requesting sanctions under section 128.7 ostensibly won. After all, it beat back a motion to vacate and then won the 128.7 sanctions motion, garnering sanctions of $9,750 jointly and severally against the loser and his lawyers. However, there was a problem, and the problem required reversal of the sanctions order.

     The motion to vacate was granted 19 days into the 21-day safe harbor withdrawal period of section 128.7. Sound like a technicality? Hardly.

     The appellate court determined that the full safe harbor period must be given to the 128.7 responding party before sanctions were warranted. Even though the party responding to the sanctions picked the motion to vacate date, the party seeking sanctions had a responsibility to make sure that the opponent had the full 21 days without regard to when the merits motion was heard.

     The solution? The Rutter Group treatise on pretrial civil procedure had the answer: the party requesting sanctions could ask for a continuance of the 128.7 motion or ask the court to shorten time to file its 128.7 motion (effectively reducing the safe harbor period). Also, analogous federal cases under F.R.Civ. P., rule 11 also supported the result, buttressing the reversal of the sanctions award.

CCP Section 177.5 Sanctions: They Do Apply In Criminal Proceedings

 

Third District Rejects Other Challenges to $1,000 Sanctions Award.

     Code of Civil Procedure section 177.5 provides that a judicial officer has discretion to impose reasonable monetary sanctions, not to exceed $1.500, payable to the court for any violation of a lawful court order by a witness, party, or party’s attorney if the violation is done without good cause or substantial justification (although the sanction does not apply to advocacy of counsel before the court). This sanctions provision was in play and showcased in the next case we examine.

     Virata v. Superior Court, Case No. C060521 (3d Dist. Aug. 19, 2009) (unpublished) involved a criminal attorney who was sanctioned under section 177.5 for violating a court order when she presented evidence that the trial judge had excluded under Evidence Code section 352. The facts are ugly. The judge had earlier chastised the same attorney for disobeying another court order before imposing the sanction on the same attorney who admitted she may have “misspoken” in addressing the court and had “diarrhea of the mouth.” She persisted in trying to get a prior incident into evidence, eventually getting replaced as counsel and being sanctioned $1,000.

     Attorney sought mandate, raising a host of errors. None of them succeeded.

     She primarily argued that section 177.5 did not apply to criminal proceedings. That lost, because there was abundant authority to the contrary. (People v. Tabb, 228 Cal.App.3d 1300, 1307-1310 (1991).)

     The appellate panel especially did not like attorney’s argument that section 177.5 should not apply to criminal in limine orders because, in her experience, such orders are commonly and frequently violated by criminal practitioners. Aside from finding that this argument was “astonishing,” the Court of Appeal noted that “[i]f it is true that some attorneys routinely violate in limine orders in criminal cases, this is a reason to apply, not brush off, section 177.5” (Slip Opn., pp. 7-8 n.3.)

E-Discovery Monetary Sanctions: Recent Maryland Federal Court Decision Nicely Summarizes Circumstances Justifying Monetary Cost/Fee Awards For Spoliation

Case Also Addresses Other E-Discovery Issues of Interest.

     Although we usually review only California decisions, a recent federal decision has a nice summary of the most typical situations justifying imposition of costs or attorney’s fees in instances where there was spoliation of potential evidence during the discovery phase of a case or after the litigant was on notice that the potential evidence should be preserved. Because California just enacted discovery amendments relating to electronic discovery, the next case is a good one to discuss with respect to the circumstances that normally will give rise to costs and fees as spoliation “sanctions.”

     U.S. Magistrate Judge Paul W. Grimm, in Goodman v. Praxair Services, Inc., __ F.Supp.2d __, 2009 WL 1955805 (D.Md. July 7, 2009), listed these situations as the typical ones when courts will grant an award of costs or attorney’s fees when ruling on a spoliation motion:

• First, courts will award legal fees in favor of the moving party as a less drastic alternative to dismissal or an adverse jury instruction;
• Second, courts will grant discovery costs to the moving party if additional discovery must be performed after a finding that evidence was spoliated;
• Third, in addition to a spoliation sanction, a court will award a prevailing litigant the litigant’s reasonable expenses incurred in making the motion (including attorney’s fees); and
• Fourth, in addition to a spoliation sanction, a court will award a prevailing litigant the reasonable costs associated with the motion plus any investigatory costs into the spoliator’s conduct. (Id. at *22.)

     Goodman also discussed these issues of importance in the electronic discovery area: (1) factors to be assessed in determining the timeliness of a spoliation motion; (2) whether the defense had a duty to preserve documents in the possession of third party consultants; (3) events that trigger the duty to preserve material evidence during a dispute; (4) delineation of “key players” and “control” for purposes of determining preservation of evidence duties; and (5) the different states of mind that demonstrate culpability for a spoliation determination, along with how those states of mind impact the severity of the sanction to be imposed by the federal judge.

CCP Section 128.7 Sanctions: Make Sure You Pursue Them In A Separately Noticed Motion At A Different Hearing Date

First District, Division 3 Reiterates Requirement in Unpublished Decision.

     In Harpel v. Spina, Case No. A123315 (1^st Dist., Div. 3 Aug. 14, 2009) (unpublished), defendants requested and were awarded sanctions under Code of Civil Procedure section 128.7 when defendants asked for them in a 128.7 motion that was joined for hearing with their demurrer and motion for judgment on the pleadings. This was a no-no. The First District, Division 3 reversed the $1,700 sanctions award. The reason? Sections 128.7(c)(1) requires that a sanctions motion “shall be made separately from other motions ….” The trial court cannot circumvent this strict procedural requirement (In re Marriage of Corona, 172 Cal.App.4^th 1205, 1225 n. 7 (2009)), with it being improper to have the sanctions motion joined with the other motions for consideration. Make sure you make a separate motion and make sure you set it for a separate hearing apart from the hearing of the underlying predicate motions.

Discovery Sanctions: Appearing And Arguing The Merits Forfeits Challenge To Inadequate Notice

 

First District, Division 5 Affirms Discovery Sanctions Award Against Husband and Husband’s Attorney.

     In In re Marriage of Moses and MacCallum, Case No. A121057 (1^st Dist., Div. 5 Aug. 13, 2009) (unpublished), the appellate court affirmed joint sanctions of $2,000 assessed against husband and his attorney in a dissolution proceeding involving discovery abuses related to a deposition notice sent to wife when the dissolution was effectively concluded, with husband and his attorney giving conflicting reasons for its relevance. Although affirming the result, the decision does have an important reminder to litigants challenging a decision based on inadequate notice. Husband/his attorney claimed that the sanctions order was erroneous based on inadequate notice although attorney appeared and argued the merits, not asking for a continuance or demonstrating prejudice. The Court of Appeal, in sustaining the order, pointed out that husband/his attorney forfeited the inadequate notice argument by appearing and arguing the merits of the motion without asking for a continuance. (Carlton v. Quint, 77 Cal.App.4^th 690.) So, if you are going to challenge notice, make sure that you request a continuance and don’t argue the merits to avoid the grim consequences of the waiver confronted by the appellants in the dissolution matter.

Sanctions: Fourth District, Division One, Reverses Sanctions Imposed on Attorney Totaling $3,587.50 for Alleged Ex Parte Contact with Represented Party

A Violation of the Rules of Professional Conduct is Not the Same as a Violation of a Court Order.

     We suspect considerations of professional honor and shame played a more important part than did the amount of the monetary sanctions involved in the next case, Conservatorship of Bibiana Becerra, Case No. D053519 (4th Dist., Div. 1, July 28, 2009) (certified for publication). 

     Objector and appellant, attorney Linda Paquette, who represented a party in the action, appealed court orders requiring her to pay $1,000 sanctions to the clerk of the court, and pay $2,587.50 for attorney fees to the conservatee's court appointed attorney  ("CAA").  Ms. Paquette apparently went sideways with the trial court after she allegedly spoke ex parte with the brain injured conservatee, who was represented by counsel.  The CAA and the probate judge viewed the ex parte communication as a violation of the Rules of Professional Conduct, .

     Orders to show cause were duly (not!) issued by the probate court to put the appellant on notice that imposition of sanctions was being considered under Cal. Code of Civ. Proc. sections 177.5 and 575.2, and eventually attorneys fees and sanctions orders were confirmed by the probate court.  However, sections 177.5 and 575.2 each, "requires a knowing violation of a valid order of the court without good cause or substantial justification."   Winikow v. Superior Court, 82 Cal.App.4th 719, 726 (2000).  Here, however, the alleged violation was of the Rules of Professional Conduct -- and this published opinion reminds us that a Rule of Professional Conduct is not the same as a court order.  In short, a hook upon which to hang the sanctions award (and the sanctioned attorney) was missing.

     In addition, lack of clarity in the orders presented a problem with notice and due process.

     Conclusion:  "Due to the probate court's lack of compliance with the legal standards and purposes authorized by sections 177.5 and 575.2, the orders are legally erroneous, unsupported by the record, and a prejudicial abuse of discretion."   Justice Huffman authored the 3-0 opinion.  

Sanctions and Family Law: First District, Division Two Upholds Sanctions in the Amount of $15,030 Against Attorney Representing Mother in Custody Dispute

State Bar's Decision that Discipline Was Not Warranted Does Not Move Court to Overturn Sanctions Award.

     The genesis of the next case was a heart-rending child custody dispute that could be a made-for-television movie.  Unfortunately, it was real life rather than entertainment.  Robinson v. Charlton A., A104663 (1st Dist., Div. 2, July 27, 2009) (unpublished).

     Petitioner Robinson had been mother's attorney in the custody dispute.  Respondent Charlton A. was the father.  The parents fought over custody arrangements and the location of the school their daughter would attend.  A licensed psychologist reported to the court that both parents were excellent parents.  But the working relationship between the parents deteriorated badly when the mother stopped paying expenses on a condominium the father owned, the father moved to evict her, and eventually, the mother fled with her child, resulting in the mother's sentencing to 90 days in county jail after a nolo contendere plea to parental kidnapping.  What a mess.

Tort of Another and Equitable Indemnity Claims to Fees Founder

Second District, Division Seven Affirms Denial of Motions for Attorney's Fees and Sanctions

     We have written from time to time about tort of another and section 1021.6 as bases for attorney's fees.  Justice Perluss, author of a 3-0 opinion, has written a conveniently concise primer on the subjects.  State Farm Mutual Automobile Ins. Co. v. Martinez, Case No. B205248 (2nd Dist. Div. 7, July 27, 2009) (unpublished).

     Mr. Martinez, dba Manny's Transmissions, rebuilt a transmission for a truck used by Prime Building to haul construction materials.  The truck caught fire and was a total loss.  State Farm stepped into the shoes of Prime Building, its insured, and filed a subrogation claim against Mr. Martinez.

     Mr. Martinez did not believe he was responsible for the fire, and asked State Farm to preserve the evidence.  Eventually, State Farm did not wish to pay the storage costs, and the the truck was dismantled and the parts sold for salvage value.  Additionally, records relating to the claim were lost.  At this point, it did not look so good for State Farm, but be patient, dear reader, and read on.

E-Discovery: Georgia Federal Court Orders Defendant To Reimburse Plaintiff $1,022,700 In Attorney's Fees And Costs As Discovery Sanction

District Court Opts for Sanctions Rather Than Entering Astronomical Default Judgment.

     This one certainly caught our eye and illustrates how e-discovery sanction can involve steep reimbursement of significant attorney's fees and costs.

     In Kipperman v. Onex Corp. (Kipperman II), 2009 U.S. Dist. LEXIS 44457 (N.D. Ga. May 26, 2009), a district judge found that defendants had engaged in a "textbook case of discovery abuse" by stonewalling its production of "hot" emails and leading the plaintiffs to believe that they were not relevant. Hardly the case, with the defense unilateral decisions being nixed by the district judge after finding that many of the emails "certainly are hot."

     The district judge then addressed the nature of the sanction to be imposed on the defense for discovery abuse. If he had struck the defendants' answer, it would have resulted in one of the largest default judgments in a case presenting novel issues. Instead of doing this, the district judge opted to order defendants to reimburse plaintiffs $1,022,700 in attorney's fees and costs as a discovery sanction. This lesser sanction was imposed because the defense did eventually produce the documents and supplemental discovery follow-up could cure any prejudice.

                              "Broadaxe".  From Wikipedia article.

Discovery Sanctions: Fifth District Reverses $1,190 Sanctions Award Against Plaintiff When Trial Court Granted Reconsideration On Tardy Expert Witness Augmentation

Fifth District Found That Absence of Sanctions Request in Motion for Reconsideration Meant the Award Violated Due Process.

     Frequently, we have discussed sanctions awards that are vacated because they do not comply with due process. Here is another one, occurring in connection with a successful defense reconsideration motion regarding a tardy expert witness augmentation.

     In Vargas v. Bakersfield Ranch Market, Case No. F055788 (5^th Dist. July 6, 2009) (unpublished), plaintiff moved to augment her expert witness designation to name a new expert. Defendant opposed the motion and requested sanctions in its opposition, with the trial court granting the motion and denying the sanctions request. Because of scheduling issues that prevented the newly designated expert from being available for a deposition before the deadline set forth in the augmentation order, the defendant moved for reconsideration (but made no request for sanctions). The lower court granted the reconsideration motion, striking the augmented expert designation and imposed sanctions of $1,190 against plaintiff and her counsel. (The $1,190 apparently was an award of attorney's fees to defense counsel.) Plaintiff moved for reconsideration of the sanctions award, which was denied. Plaintiff appealed, claiming the award was made without notice, in violation of due process.

     The Fifth District, in a 3-0 opinion authored by Justice Hill, agreed.

                                  Lack of Due Process

CCP Section 128.7 Sanctions: Obey The Safe Harbor Provisions Or Be Precluded!

 

Second District, Division 7 Requires Compliance By the Numbers.

     Martorana v. Marlin & Saltzman, Case No. B209863 (2d Dist., Div. 7 July 1, 2009) (certified for publication) involved a plaintiff wage/hour class member that brought an independent action against defendant Allstate and class counsel alleging negligence in the claim filing process. Allstate's and class counsel's demurrers were sustained without leave to amend, with the trial court also awarding Code of Civil Procedure section 128.7 sanctions of $4,800 against plaintiff based on a request for sanctions contained in Allstate's demurrer papers.

     The 128.7 sanctions order was reversed.

     Allstate did not satisfy the requirement that the 128.7 sanctions request be made within 21 days before filing a separate motion to recover the sanctions. Instead, Allstate included it in the demurrer to the original complaint, which was not compliant with section 128.7's requirement that the motion be made separately from other motions and not filed with the court. Allstate's main counterargument was that it sent a prior attorney letter about sanctions, which sufficed to diffuse any prejudice. "Get outta here" said the Court of Appeal; a letter stating an intent to seek sanctions does not comply with section 128.7. (Slip Opn., at p. 15.)

Safe Harbor Electric Dam.  c.1920-1950.  Theodor Horydczak,    photographer.  Library of Congress.

Receivership Fees: Court Of Appeal Affirms $96,000 Fee Request For Receiver And His Counsel, Assessing Against Parties To The Litigation And Modifying Judgment So That Bankrupt Party’s Principal Bore A Proportionate Share

Fourth District, Division 1 Sanctions Party and His Counsel for Not Notifying It About a Bankruptcy Case with Automatic Stay Implications.

     The next case is not that remarkable for affirming a $96,000 award of fees to a receiver and his counsel, but reminds us that the trial court can equitably divide the fees against parties other than the receivership estate and that counsel must notify courts about bankruptcy proceedings replete with automatic stay implications.

     In Neuman v. Baker, Case Nos. D052102/D052796 (4^th Dist., Div. 1 June 30, 2009) (unpublished), the appellate court was reviewing a trial court’s decision to assess receivership fees and costs against an intervenor business and intervenor’s principal Mr. Leisher (even though the lower court equitably ordered that the award be borne equally by all the parties). The problem on appeal is that intervenor and its principal never notified the Court of Appeal that intervenor had been in bankruptcy for quite some time.

Discovery Sanctions: $2,265 Sanctions For Nonparty’s Failure to Appear At Discovery “Records and Appearance” Deposition Affirmed On Appeal

First District, Division 3 Resolves Conflict Between CCP sections 1987.5 and 2020.510(b).

     A percipient nonparty witness was served with a deposition subpoena commanding him to give testimony and produce documents during the discovery process. However, the subpoena had no affidavit or declaration of good cause. Nonparty banked on the invalidity of the subpoena because Code of Civil Procedure section 1987.5 says that such a deposition subpoena is not valid unless a copy of the affidavit upon which the subpoena is based happens to be attached to the deposition notice. The lower court disagreed, sanctioning nonparty $2,265 for failure to appear at the scheduled deposition. Nonparty did not like the result (obviously), and appealed.

     The First District, Division 3, in Terry v. SLICO, Case No. A123310 (1^st Dist., Div. 3 June 25, 2009) (certified for publication), affirmed the sanctions order.

Discovery Sanctions: $6,477.86 Fee Award Against Attorney For Failure To Attend Deposition Sustained On Appeal

 

Second District, Division 8 Rejects Challenges to Fee Award.

     In Barba v. Anderson-Mota, Case No. B206213 (2d Dist., Div. 8 June 24, 2009) (unpublished), plaintiff's attorney was two hours late in attending a noticed deposition of his client, after leaving a message he would be an hour late and then being inaccessible for any follow-up conversations. Although plaintiff showed up, defense counsel terminated the deposition after an hour, causing inconvenience for attorneys representing other parties who also showed up for the deposition. Defense counsel asked for a voluntary reimbursement of $1,700 to cover some of his time and hard costs such as the court reporter and Spanish language interpreter, threatening a sanctions motion if this was not paid. No response. The trial court awarded combined sanctions of $6,477.86 against plaintiff's attorney, divided among four set of inconvenienced counsel.

     Plaintiff's attorney appealed, and did not fare well.

     The trial court did not abuse its discretion in sanctioning the attorney because "defense counsel was not obligated to wait around under [the] circumstances and continue to bill time to their clients."

     Aggrieved attorney argued a written statement of decision was required, but that contention was rejected when it came to discovery sanctions. (See California Shellfish, Inc. v. United Shellfish Co., 56 Cal.App.4^th 16, 25-26 (1997).)

     Sanctions are also appropriate on the motion of other parties attending the deposition, Code Civ. Proc., § 2025.450(c)(2), with formal or informal joinders in the motion adequately preserving the issue and avoiding unnecessary duplication.

     Moving party's request for voluntary compensation adequately satisfied the meet and confer requirement.

     So, in the end, plaintiff's attorney had to absorb the sanctions, with the defendants also winning their appellate costs for prevailing on appeal.

Family Law Awards: Duplicative Civil Proceeding To Family Law Matter Does Not Necessarily Justify Family Code Section 271 Sanctions

Fourth District, Division 2 Upholds No Sanctions Award in Unpublished Opinion.

     In our category “Family Law Awards,” we have surveyed many past decisions awarding fees against family law litigants based on Family Code section 271, which allows an award of fees as a sanction against a litigant that frustrates settlement, increases the cost of litigation, or is uncooperative in the family law case. Sometimes, section 271 has resulted in sanctions where a litigant brings a civil court action that duplicates proceedings taking place in family law court. (See, e.g., Burkle v. Burkle, 144 Cal.App.4^th 387, 401 (2006).) However, awards under section 271 are fact intensive. The next case we review affirmed a trial court’s decision to not award section 271 sanctions in a duplicative proceeding context.

     Marriage of Wanless, Case No. E044784 (4^th Dist., Div. 2 June 10, 2009) (unpublished) involved a wife challenge to a husband’s signing of a trust deed without her consent in family law court and subsequently bringing a complaint in intervention in an ongoing civil action against husband for emotional distress arising from the same trust deed events. Husband brought an appellate writ petition that resulted in the Court of Appeal agreeing that his demurrer to the civil action should have been sustained, awarding him writ costs but not attorney’s fees. Husband moved to recover $37,040.82 in fees for defending against the civil action and pursuing the writ. The family court denied the request (mainly predicated on section 271), finding wife’s action was not frivolous, sanctions would create an unreasonable financial burden on wife, and the emotional distress claim did not impede settlement when viewed in light of 18 prior family law motions filed by husband (only one of which was successful). Husband still wanted his fees, and appealed.

Family Law: Another Two-Fer …. And Reversals At That!

L.A. Local Rule Had to Yield to Family Code Allowing for Oral Fee Request.

     In Sadegh v. Nikjeh, Case No. B201036 (2d Dist., Div. 2 May 6, 2009) (unpublished), a family law judge denied an oral request for a temporary “needs” attorney’s fees award under Family Code section 2031 because L.A. County Superior Court Local Rule 1.10 required a written declaration to accompany a fee request above $1,000 subject to limiting the evidence that could be considered in the fee proceeding. The Second District, Division 2 reversed, determining that an oral fee motion is authorized under section 2031 and that the local rule requiring a written declaration was invalid in light of the statutory provision to the contrary. (Elkins v. Superior Court, 41 Cal.4^th 1337, 1351 (2007).) Besides that, in a footnote, the appellate court also indicated that it did not perceive a conflict—a written declaration was not mandated, but only limited the evidentiary submissions before the lower court. However, it did proceed to indicate that the statute allowing an oral motion controlled over a local rule requiring a written declaration.

Nonstatutory Sanctions Order Awarding Fees—A Contempt Finding—Violated Due Process.

     Marriage of Murray, Case No. B206890 (2d Dist., Div. 4 May 6, 2009) (unpublished) involved a situation where a wife’s attorney was assessed with attorney’s fees as a contempt sanction even though no statutory section was specified, such as Family Code section 290 [contempt statute]. This was found to be a due process violation, because Bauguess v. Paine, 22 Cal.3d 626 (1978) required a statutory basis to use fee awards as sanctions. Because wife’s attorney was not given proper notice or specification of the statutory grounds for a contempt finding, the sanctions order was defective and was reversed on appeal.

Private Arbitration Sanctions: Second Circuit Finds Inherent Authority Under FAA To Sanction Attorneys for Losing Party In Arbitration Proceedings

Ninth Circuit Apparently Agrees, Also.

     We would like to thank Hon. Lawrence C. Waddington (Ret.), former Los Angeles County Superior Court judge who is now a neutral with JAMS, for contributing an April 21, 2009 post on enBanc, the Los Angeles County Bar Association’s blog, about a recent Second Circuit decision that has fee implications.

     In ReliaStar Life Ins. Co. of N.Y. v. EMC National Life Co., 2009 WL 941173 (2d Cir. 2009), the Second Circuit Court of Appeals held that the Federal Arbitration Act (FAA) allows an arbitrator to assess attorney’s fees as a sanctions for the bad faith conduct of attorneys for the losing party in a contractual arbitration proceeding. Apparently, the Ninth Circuit agreed in a much earlier decision. See Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056 (9^th Cir. 1991).

     We thank Judge Waddington for his post.

     BLOG OBSERVATION—Co-contributor Mike recalls that Judge Waddington, while on the bench, helped him settle a couple of cases pending in Los Angeles County Superior Court, West District (Santa Monica).

ADA: Reversal Of Lawsuit Based On Lack Of Standing Requires Vacating Of Monetary Sanctions

Ninth Circuit Reverses District Court’s Sanctions Order.

     In an American with Disabilities Act (ADA) case, a district judge dismissed a lawsuit based on plaintiff’s lack of standing and imposed monetary sanctions against plaintiff and his counsel for bringing a frivolous case. The Ninth Circuit reversed the standing determination, which also meant that the sanctions order “went away.”

     Because the Ninth Circuit had subsequently found standing in a similar situation, Doran v. 7-Eleven, 524 F.3d 1034, 1041 (9^th Cir. 2008), reversal was required in this case before it, where the summary judgment motion was decided before issuance of Doran.

     The reversals came in Wilson v. Kayo Oil Company, Case Nos. 07-56765 & 08-55444 (9^th Cir. Apr. 24, 2009) (published per curiam opinion).

Family Law: Wife Was Not Entitled To Attorney’s Fees Award Under Family Code Section 2030

First District, Division 3 Affirms Fee Denial; Wife Also Hit With $4,000 in Sanctions Under Section 271.

     Ex-wife was married over 18 years to a successful attorney, who was apparently generous in both support payments and settlement equalizations in dissolution proceedings—at least according to the Court of Appeal. There were substantial assets to divide, and wife was deemed capable to earning $65,000-$75,000 a year (although not working since 2002). The trial court found ex-wife’s job search was inadequate. Ex-husband also may have “overpaid” support payments, with wife receiving assets having substantial equity. Wife then sought attorney’s fees and costs of $34,343 under Family Code section 2030, the “needs” based fee-shifting provision in family law proceedings. Husband sought attorney’s fees and costs of $23,932 under sections 2030 and 271 (the latter being a sanctions-based fee provision based on a litigant’s uncooperative, cost-driving-up actions). Trial court denied both parties’ fees/costs requests, but did assess $4,000 against wife as a section 271 sanction. Wife appealed the refusal to award her fees and costs, but did not challenge the $4,000 in sanctions.

     On appeal, the First District, Division 3 affirmed the denial of fees to ex-wife under section 2030 in Marriage of Baylocq and Wilberding, Case No. A121732 (1^st Dist., Div. 3 Apr. 17, 2009) (unpublished).

Sanctions: $1,857.50 Sanctions Against Insurer Vacated As Unauthorized Under Statute Or Court Rule

 

Second District, Division 7 Reverses Award in Published Decision.

     For years, insurance carriers have raised due process concerns to their participation in mediation and mandatory settlement conferences, although more and more court rules require their participation in these processes. However, the next case illustrates that carriers are not subject to “bad faith” settlement negotiation sanctions in the absence of an explicit court rule authorizing same—which was missing in the situation before the appellate court. Also, even with such a rule, the case raises doubts that a carrier can be penalized for bad faith settlement sanctions in any event.

     In Vidrio v. Hernandez, Case No. B207391 (2d Dist., Div. 7 Apr. 13, 2009) (certified for publication), the Second District, Division 7 reversed a $1,857.50 monetary sanctions imposed against an insurer because of a trial court’s belief that it had failed to negotiate in good faith at a mandatory settlement conference, despite the fact that the carrier attended the conference, met all procedural MSC requirements, but only offered a pittance of what the lower court apparently felt was fair.

CCP Section 128.7: Client Cannot Appeal Or Seek Writ Review Of Sanctions Assessed Solely Against Client’s Attorney

Client Is Not Aggrieved or Does Not Have Beneficial Interest for Purposes of Seeking Review of Attorney Sanctions Order.

     Attorneys get socked with a $12,504 sanctions order under Code of Civil Procedure section 128.7 in construction defect litigation. Their client then appeals or seeks writ review of the adverse order. Result? Client has no real skin in the game, so that attorneys should have appealed or sought writ review themselves (as objectors).

     This was the ruling of the Fourth District, Division 1 in Government Employers Ins. Co. v. Tower Glass, Inc., Case Nos. D051649 & D051846 (4^th Dist., Div. 1 Mar. 26, 2009) (unpublished).

    

Fee Awards Under 28 U.S.C. Section 1927: Seventh Circuit Holds That Attorney’s Wealth Or Ability To Pay Is An Irrelevant Consideration

Federal Court of Appeals Prefers Bright-line Rule; Also Reaffirms that Ability to Pay Is a Relevant Factor in Assessing Rule 11 Sanctions.

     Although we usually stick to California cases, we discuss a colorfully written decision by the Seventh Circuit on wealth/ability to pay as a factor to be considered when assessing attorney’s fees as sanctions under 28 U.S.C. section 1927 or Fed. R. Civ. P. 11.

     The decision is Shales v. General Chauffeurs et al. Local Union No. 330 (Banks), Case No. 07-3342 (7^th Cir. Feb. 27, 2009), authored by Chief Judge Easterbrook on behalf of a 3-0 panel.

Richard Westall (English painter, 1765-1836).  Sword of   Damocles.

Terminating Sanctions And Substantial Default Judgment Reversed Because Of Failure To Show Willfulness

Sixth District Vacates $730,466.10 Default Judgment and Reinstates Defendant’s Answer.

     The next case is a good example of the POOF! principle. Plaintiff obtained a $730,466.10 default judgment against defendant, set up by the trial court’s grant of terminating sanctions for failure to respond to discovery requests. The only problem is that the record did not show willfulness in failing to comply with discovery requests. You know what the result was—POOF!

Reneging House Seller Hit With Adverse $226,577.74 For Losing Specific Performance and Unlawful Detainer Actions

Court of Appeal Affirms Substantial Fee Award, But Reverses CCP Section 128.7 Sanctions.

     As our Mission Statement warns, attorney’s fees can make or break a litigant given the high costs of taking a case to verdict or decision. The next litigant learned this message all too well, when a substantial fee award was affirmed on appeal after he refused to sell a house after lengthy negotiations with buyers who did not give up on obtaining the residence.