Terminating Sanctions Motion Was Not On The Merits, So Voluntarily Dismissal Was Timely For Fee Avoidance Purposes.
Skating on ice. Irving Brokaw, c1908-1916. Library of Congress.
Timing can be everything, as the next case demonstrates.
In Liu v. Trask, Case No. B258112 (2d Dist., Div. 7 Sept. 15, 2016) (unpublished), plaintiff eventually suffered terminating sanctions for prelitigation conduct in furtively reviewing certain attorney-client communications between defendant and its attorneys. However, before the terminating sanctions motion was formally ruled on, plaintiff voluntarily dismissed without prejudice his contract-based claims under an employment agreement with an attorney’s fees clause. However, the lower court vacated the dismissal and determined it was untimely because trial had already “commenced” under the voluntary dismissal statute. It later awarded defendant $250,695.50 in fees and $12,349.25 in costs. Plaintiff appealed the dismissal and fee rulings.
Nice move by plaintiff.
The appellate court determined that trial had not “commenced” for dismissal purposes because the terminating sanctions motion was not on the merits. Once that was determined, the rest was easy: a voluntary dismissal of contract claims, if timely, prevents Civil Code section 1717 fee exposure under the Santisas case. Over $250,000 in fees went away on appeal!
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