Judge Daniel M. Crowley, Case Number: 23STCV174556, Date: 2024-01-24 Tentative Ruling

Defendant Arakelian Enterprises, Inc. dba Athens Services (“Athens”) (“Defendant”) moves for an order of monetary and nonmonetary sanctions against Plaintiff WasteXperts, Inc. (“WasteXperts”) (“Plaintiff”) and its attorney of record, Christopher Frost, and the law firm, Frost LLP, jointly and severally. (Notice of Motion, pg. 1; C.C.P. §128.7.) Defendant requests this Court impose terminating sanctions, monetary sanctions sufficient to reimburse Defendant for all attorneys’ fees and costs incurred as the direct result of the filing of the complaint presently equivalent to $43,418, and any other order this Court deems just. (Notice of Motion, pg. 1.)

On June 15, 2022, Plaintiff filed a complaint in LASC Case No. 22STCV19512, a related case, against Defendant and City of Los Angeles (“City”), which included as the first cause of action the declaratory relief claim asserted again here, as well as four other claims (“Case One”). Defendant filed an anti-SLAPP motion in Case One (“Case One anti-SLAPP motion”), arguing that the anti-SLAPP statute applied to Plaintiff’s declaratory relief cause of action and every other cause of action, and that Plaintiff failed to establish a probability of prevailing on the declaratory relief cause of action or any other cause of action. (10/24/22 Ruling.) The complaint in Case One was struck, and this Court entered judgment in Defendant’s favor and awarded attorneys’ fees. Plaintiff appealed this Court’s ruling on the Case One anti-SLAPP motion, which is pending.

On July 25, 2023, Plaintiff filed the operative complaint in this case (“Case Two”) against Defendant and the City[1] for a single cause of action for declaratory relief. On October 4, 2023, Defendant filed the anti-SLAPP motion in this case (“Case Two anti-SLAPP motion”). On November 16, 2023, this Court granted the Case Two anti-SLAPP motion and directed Defendant to move for an award of attorneys’ fees and costs. (11/16/23 Minute Order.) On December 4, 2023, the Judgment in this case was signed and filed. Plaintiff appealed this Court’s ruling on the Case Two anti-SLAPP motion, which is pending.

Defendant filed the instant motion on October 4, 2023. Plaintiff filed its opposition on January 10, 2024. Defendant filed its reply on January 17, 2024.

An attorney or unrepresented party who presents a pleading, motion or similar paper to the court makes an implied “certification” as to its legal and factual merit; and is subject to sanctions for violation of this certification. (C.C.P. §128.7.) The purpose of the statute is “to check abuses in the filing of pleadings, petitions, written notices of motions or similar papers.” (Musaelian v. Adams (2009) 45 Cal.4th 512, 514.)

By presenting a pleading, petition, motion, or other similar paper to the court, an attorney certifies all of the following:

(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.

A C.C.P. §128.7 motion involves a two-step process. The moving party first serves the sanctions motion on the offending party without filing it. The opposing party then has 21 days to withdraw the improper pleading and avoid sanctions (the so-called “safe harbor” waiting period). At the end of the waiting period, if the pleading is not withdrawn, the moving party may then file the motion. (C.C.P. §128.7(c)(1); Primo Hospitality Group, Inc. v. Haney (2019) 37 Cal.App.5th 165, 173-174; Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 698-699.)

With regard to the first step in a motion for sanctions, Defendant’s motion’s proof of service indicates it complied with the safe harbor waiting period requirement by serving the instant motion on Plaintiff on September 7, 2023, during which time Plaintiff did not withdraw the Complaint. Defendant then filed the instant motion with the Court on October 4, 2023. Defendant’s motion is proper.

Plaintiff’s argument that Defendant’s motion is improper on the basis that Defendant’s notice of motion did not strictly comply with the safe harbor requirements is unavailing. Defendant provided Plaintiff with adequate, written notice of the January 24, 2024, hearing date for the instant motion and the opportunity to withdraw the complaint within the 21-day safe harbor period. Here, Defendant provided notice of the hearing date and location of the hearing on the cover page of the document. The typographic error on the prefiling notice during the safe harbor period, which is at issue, was clarified within the motion itself with the correct date and cannot meaningfully be construed as depriving Plaintiff of sufficient notice of the opportunity to withdraw the complaint within the safe harbor period.

Under §128.7, a court may impose sanctions for filing a pleading, petition, motion, or similar paper if filed for an improper purpose or was indisputably without merit, either legally, or factually. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 168.) A claim is factually frivolous if “not well grounded in fact” and legally frivolous if “not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.” (Peake v. Underwood (2014) 227 Cal.App.4th 428, 442.) A claim is objectively unreasonable if “any reasonable attorney would agree that [it] is totally and completely without merit.” (Id.)

Here, Plaintiff’s Complaint was not objectively unreasonable because it is arguable Plaintiff believed the declaratory relief cause of action in Case Two was substantially different from the declaratory relief cause of action in Case One. In Case One, the declaratory relief claim sought a judicial declaration as to rights and duties of Defendant as well as the City, including rights conferred to the two parties under the Franchise Agreement, to which Plaintiff is not a party. In Case Two, Plaintiff’s cause of action only seeks a declaration as to the rights and duties of only Plaintiff, specifically as to its ability to conduct its business—i.e., operating and providing onsite waste and recycling management services to its customers. (Compare Complaint Case One ¶32 with Complaint Case Two ¶24.)

The instant motion for sanction is also not warranted, given that Defendant already has an adequate remedy to seek reimbursement of its fees and costs pursuant to the anti-SLAPP Statute. (C.C.P. §425.16(c)(1).) C.C.P. §128.7 sanctions are not designed to be punitive in nature, but rather shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated. (See C.C.P. §128.7(d).) Therefore, the Court exercises its discretion to deny the requested sanctions on this motion in light of the upcoming motion for attorneys’ fees, which is a more appropriate method to deter repetition of the conduct demonstrated by Plaintiff in Case Two.

Defendant’s motion for an order awarding non-monetary and monetary sanctions against Plaintiff is denied.

Hon. Daniel M. Crowley

Judge of the Superior Court

[1] Plaintiff and the City stipulated to dismiss the City from this action without prejudice, on the condition that if and when this Court overrules Defendant’s demurrer(s) and denies the instant Case Two anti-SLAPP Motion, the City will be added back to the action and named as a defendant, and the City shall not raise any of the same issues in a responsive pleading that were already litigated and decided in connection with Defendant’s demurrer(s) and/or Case Two anti-SLAPP Motion. (10/10/23 Stipulation.) Therefore, at this juncture, the City has been dismissed and is not a party to this action.