Judge: Cherol J. Nellon, Case: 21STCV15231, Date: 2024-04-17 Tentative Ruling

Case Number: 21STCV15231    Hearing Date: April 17, 2024    Dept: 14

Shaposhnik v. Select Portfolio

Case Background

 

Plaintiff alleges that Defendants improperly foreclosed on her home.

 

On October 18, 2023, Plaintiff filed her First Amended Complaint for (1) Violation of Civil Code § 2923.5, (2) Violation of Civil Code § 2923.6, (3) Violation of Civil Code § 2923.9, (4) Violation of Civil Code § 2923.10, (5) Unfair Competition, (6) Cancellation of Instruments, (7) Wrongful Foreclosure, (8) Fraud, (9) Declaratory Relief, and (10) Equitable Redemption against Defendants Select Portfolio Servicing, Inc. (“SPS”), US Bank, N.A. as Trustee for WaMu Mortgage Pass-Through Certificates Series 2006-AR11 (“US Bank”), and DOES 1-10.

 

            On January 22, 2024, this court deemed this case related to Case No. 21 STCV 37165, and ordered it transferred here from Department 37.

 

No trial date has yet been set.

 

(1)        Motion for Sanctions

 

            Defendants SPS and US Bank now move this court for orders striking the Complaint and awarding sanctions of $6,454.00 against Plaintiff and her counsel, Mainak D’Attaray, pursuant to Code of Civil Procedure §§ 128.5 and 128.7.

 

Decision

 

            The motion is DENIED.

 

Governing Standard

 

            Code of Civil Procedure § 128.5 provides in relevant part as follows:

 

“(a) A trial court may order a party, the party's attorney, or both, to pay the reasonable expenses, including attorney's fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay…

(b) For purposes of this section:

(1) “Actions or tactics” include, but are not limited to, the making or opposing of motions or the filing and service of a complaint, cross-complaint, answer, or other responsive pleading. The mere filing of a complaint without service thereof on an opposing party does not constitute “actions or tactics” for purposes of this section.

(2) “Frivolous” means totally and completely without merit or for the sole purpose of harassing an opposing party.

…

(f) Sanctions ordered pursuant to this section shall be ordered pursuant to the following conditions and procedures:

(1) If, after notice and a reasonable opportunity to respond, the court issues an order pursuant to subdivision (a), the court may, subject to the conditions stated below, impose an appropriate sanction upon the party, the party's attorneys, or both, for an action or tactic described in subdivision (a). In determining what sanctions, if any, should be ordered, the court shall consider whether a party seeking sanctions has exercised due diligence.

(A) A motion for sanctions under this section shall be made separately from other motions or requests and shall describe the specific alleged action or tactic, made in bad faith, that is frivolous or solely intended to cause unnecessary delay.

(B) If the alleged action or tactic is the making or opposing of a written motion or the filing and service of a complaint, cross-complaint, answer, or other responsive pleading that can be withdrawn or appropriately corrected, a notice of motion shall be served as provided in Section 1010, but shall not be filed with or presented to the court, unless 21 days after service of the motion or any other period as the court may prescribe, the challenged action or tactic is not withdrawn or appropriately corrected.

…

(h) The liability imposed by this section is in addition to any other liability imposed by law for acts or omissions within the purview of this section.”

 

Code of Civil Procedure § 128.7 provides in relevant part:

 

“(a) Every pleading, petition, written notice of motion, or other similar paper shall be signed by at least one attorney of record in the attorney's individual name, or, if the party is not represented by an attorney, shall be signed by the party…

(b) By presenting to the court, whether by signing, filing, submitting, or later advocating, a pleading, petition, written notice of motion, or other similar paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following conditions are met:

(1) It is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

(2) The claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.

(3) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.

(4) The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.

 

(c) If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation…

(1) A motion for sanctions under this section shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subdivision (b). Notice of motion shall be served as provided in Section 1010, but shall not be filed with or presented to the court unless, within 21 days after service of the motion, or any other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.”

 

“A party seeking sanctions must follow a two-step procedure. First, the moving party must serve on the offending party a motion for sanctions. Service of the motion on the offending party begins a [21]–day safe harbor period during which the sanctions motion may not be filed with the court. During the safe harbor period, the offending party may withdraw the improper pleading and thereby avoid sanctions. If the pleading is withdrawn, the motion for sanctions may not be filed with the court. If the pleading is not withdrawn during the safe harbor period, the motion for sanctions may then be filed.” Malovec v. Hamrell (1999) 70 Cal.App.4th 434, 440 (emphasis added); see also Code of Civil Procedure § 128.7(c)(2); Martorana v. Marlin & Stutzman (2009) 175 Cal.App.4th 685, 698-699 (compliance with safe harbor provision is mandatory, even where notice was given by correspondence of counsel).

 

“Under Code of Civil Procedure section 128.7, a court may impose sanctions for filing a pleading if the court concludes the pleading was filed for an improper purpose or was indisputably without merit, either legally or factually. (Guillemin v. Stein (2002) 104 C.A.4th 156, 168.” Peake v. Underwood (2014) 227 Cal.App.4th 428, 440.

 

“A claim is factually frivolous if it is ‘not well grounded in fact’ and it is legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’ (Id. at p. 167.) In either case, to obtain sanctions, the moving party must show the party's conduct in asserting the claim was objectively unreasonable. (Ibid.) A claim is objectively unreasonable if ‘any reasonable attorney would agree that [it] is totally and completely without merit.’ (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650; Guillemin, supra, at p. 168.).” Peake, supra, 227 Cal.App.4th at 440.

 

Discussion

 

            On September 25, 2023, Defendants SPS and US Bank served Plaintiff with the instant motion, as required under Section 128.5(f)(1)(B) and Section 128.7(c)(1). The motion challenges the original Complaint. Service was by email, thus extending the 21 days by two court days. Code of Civil Procedure § 1010.6. That gave Plaintiff until October 18, 2023 to, in the words of both statutes, “withdraw or appropriately correct” the Complaint. See Code of Civil Procedure §§ 128.5(f)(1)(B) and 128.7(c)(1).

 

            On October 18, 2023, Plaintiff filed the First Amended Complaint. Defense nevertheless filed this motion with the court on November 7, 2023. Plaintiff filed no opposition until January 2, 2024, the day before the motion was to be heard by Judge Gail Killefer in Department 37. Judge Killefer continued the hearing, permitting Defense to file a reply, and Plaintiff to file a sur-reply. A few days before the continued hearing date, the case was related to Case No. 21 STCV 37165 and transferred to this department. The motion was then placed on calendar for the instant date.

 

            Plaintiff takes the position that the filing of the First Amended Complaint constituted a “withdrawal” of the original Complaint, and that the motion therefore cannot be filed. Defense takes the position that the First Amended Complaint fails to “appropriately correct” the original Complaint, and that the motion therefore remains valid. Plaintiff is correct.

 

            Both statutes only permit the filing of the motion for sanctions if the challenged pleading is not “withdrawn or appropriately corrected.” The requirement is phrased with the disjunctive “or;” the responding party may do one or the other. Filing a First Amended Complaint is a withdrawal of the original Complaint, which is superseded and becomes a nullity. See State Compensation Ins. Fund v. Superior Court (2010) 184 Cal.App.4th 1124, 1130-31. Since Plaintiff timely withdrew the Complaint, this motion should not have been filed.

 

            Defense relies on Banks v. Hathaway, Perrett, Webster, Powers & Christian (2002) 97 Cal.App.4th 949. In that case the timeline was as follows:

 

“On June 1, 2000, Van Trees served a motion to dismiss the action as frivolous and for monetary sanctions. The motion was based on section 128.7, subdivision (c)(1), which required that Van Trees wait 30 days before filing the motion with the trial court.

 

Van Trees also demurred to the complaint. The hearing on the demurrer was continued at Banks's request and taken off calendar after Banks filed a first amended complaint.

 

Van Trees demurred again and continued the hearing to accommodate Banks. Banks filed no opposition. The trial court sustained the demurrer without leave to amend on September 11, 2000.

 

Van Trees filed and again served the motion for sanctions two days after the ruling on the demurrer. The trial court granted the motion on October 11, 2000, dismissed the complaint, and ordered Bank's attorney, Peter R. diDonato, to pay sanctions in an amount to be determined at a later date.” Id. at 951.

 

However, the issue on appeal was not whether the Plaintiff had withdrawn the original complaint. The issue was the trial court’s subsequent ruling that it lacked jurisdiction to grant a motion for sanctions after it had sustained a demurrer. Id. at 952. The Court of Appeal held that a trial court does not lose jurisdiction to rule on a motion for sanctions until after a judgment or dismissal is actually entered. Id. at 954.

 

            An opinion is not authority for a proposition not considered therein. V Lions Farming, LLC v. County of Kern (2024) 100 Cal.App.5th 412. The Court of Appeal in Banks did not address the issue of whether filing an amended complaint is a withdrawal of the original complaint because that was not the issue presented to them. The issue presented to them was when the court’s jurisdiction terminated. That is not the issue here.

 

Conclusion

 

            Because Plaintiff withdrew the original Complaint before the end of the safe harbor period, the motion challenging that Complaint should not have been filed. The motion is therefore DENIED.

 

(2)        Demurrer

 

            Defendants SPS and US Bank now demur to the entire FAC, on the grounds that there is another action pending, and that the FAC it fails to state sufficient facts to support any cause of action.

 

Decision

 

The demurrer is TAKEN OFF-CALENDAR. The case is STAYED, pending the outcome of Case No. 21 STCV 37165. The court sets a Status Conference for June 14, 2024, at 8:30 am.

 

Discussion

 

            Defense’s first argument on demurrer is that there is another action pending: the related matter Case No. 21 STCV 37165. Defendants were originally parties to that case, but were voluntarily dismissed out of it when, by Plaintiff’s own account, she was unable to put together a timely response to a motion for summary judgment. This case is a re-filing of the claims originally asserted against these defendants in the related case.

 

            The pendency of another action may be grounds for a demurrer under Code of Civil Procedure § 430.10(c). See Leadford v. Leadford (1992) 6 Cal.App.4th 571, 574. If a demurrer is sustained on that ground, the court must enter an interlocutory judgment pursuant to Code of Civil Procedure § 597. However, a demurrer under Code of Civil Procedure § 430.10(c) can only be sustained if the parties to both cases are identical. Since Defendants are no longer parties to the related case, the court cannot sustain the demurrer on that ground.

 

Abatement may still be appropriate where two actions cover the same subject matter, even if the strict requirements of Section 430.10(c) are not fulfilled. See Franklin & Franklin v. 7-Eleven Owners for Fair Franchising (2000) 85 Cal.App.4th 1168, 1175. Plaintiff does not oppose Defense’s request that this action be abated. The related case is nearing trial readiness; it is actually set to be tried a few days from now, on April 22, 2024. Resolution of that case is imminent, and will likely resolve most of the issues presented in this case.

 

            Where an abatement is properly requested, other than the situation where the identical parties have another identical case, the remedy is a stay. County of Santa Clara v. Escobar (2016) 244 Cal.App.4th 555, 565. If the court is to impose a stay, the court cannot rule on the demurrer. It must simply monitor both cases and assure Defendants that they will have a chance to file a new responsive pleading in this case when the other case is resolved and the stay is lifted.

 

Conclusion

 

            Defendants have properly made a plea in abatement by identifying another case which covers the same subject matter as this case, even though the parties are not precisely identical. Plaintiff does not oppose Defendants’ request for an abatement. Therefore, this case is STAYED, pending the outcome of Case No. 21 STCV 37165. The demurrer is TAKEN OFF-CALENDAR.

 

The court sets a Status Conference for June 14, 2024, at 8:30 am.