128.5 Sanctions Went Away Because It Did Not Apply To The Action Datewise, While RFA “Sanctions” Were No Abuse Of Discretion Even Though Substantial In Nature.
First of all, we hope all of our readers are safe—this pandemic has presented unprecedented, bizarre consequences, but hope you are well. We are happy to report that the California appellate courts are doing a good job staying in business, which also means we get to post on the decisions which emanate from our busy California appellate courts. So, let’s go to it on the one unpublished decision on April 28, 2020 dealing with fee issues. Co-contributor Mike also wants to thank his paralegal, Shanna Strader, for her great work in making sure posts are timely made—not to mention that she writes some of them!
In Estate of Khatri, Case No. A150546 (1st Dist., Div. 3 Apr. 28, 2020) (unpublished), two brothers were involved in a long-running dispute over the divisions of family assets, primarily six commercial properties after their mother died. Mother left all of the assets to one son, which triggered a brother-against-brother fight which featured undue influence allegations by the brother left out. Ultimately, ousted brother lost after a 16-day bench trial. Winning brother then sought fees under two regimes—CCP § 128.5 (sanctions) and CCP § 2033.420 (costs-of-proof sanctions for denying discovery requests for admissions without substantial justification). The probate court was persuaded by winning brother’s submissions, giving him full relief as follows: (1) 128.5 motion -- $1,497,680.75 in attorney’s fees and $346,874.19 in costs; and (2) 2033.420 motion -- $865,559.25 in fees and $138,621.55 in costs. As you can predict, losing brother appealed.
The result on appeal? A split verdict, but probably not the one desired by the losing brother/appellant.
Initially, the good news for appealing brother. He was able to get the 128.5 sanctions reversed as a matter of law. The reason was that these sanctions only applied to actions filed (not pending) after January 1, 2015, the effective date of § 128.5 after some legislative “sunsets,” such that it simply did not apply to the case—all as clarified through 2017 amendments which were only declaratory of the result reached by the appellate court here.
But now the bad news. The appellate court found that the lower court did not abuse its discretion in awarding the costs-of-proof sanctions totaling over $1 million. Losing brother did not meet his burden in showing that any good faith/substantial justification exceptions applied to his denials on critical undue influence requests for admissions—all the more so given his lack of medical proof to show there was undue influence. So, substantial fees/costs affirmed on appeal.
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