Judge Edward B. Moreton, Jr, Case Number: 24SMCV02941, Date: 2024-12-20 Tentative Ruling

Judge: Edward B. Moreton, Jr, Case: 24SMCV02941, Date: 2024-12-20 Tentative Ruling

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

J.N., a minor by and through their Guardian ad Litem, BRYAN NADLEY, JORDAN NADLEY, AND JAKOB NADLEY,

Plaintiff,

JEFFREY GOLDBERG, et al.,

Defendants.

Case No.: 24SMCV02941

Hearing Date: December 20, 2024

[TENTATIVE] order RE:

DEFENDANT JEFFREY GOLDBERG’S

C.C.P. § 128.7 MOTIN FOR SANCTIONS

IN THE AMOUNT OF $16,095 AGAINST

PLAINTIFFS J.N., BRYAN NADLEY,

JORDAN NADLEY, JAKOB NADLEY

AND THEIR COUNSEL, SAVANNAH

ANDRE AND THE LEGACY LAWYERS

A.P.C.

This case is the latest in a series of disputes between Herbert Goldberg’s heirs. The first of these cases was filed in April 2020. Herbert’s daughter, Jill Goldberg-Nadley, became the successor trustee of Herbert’s Trust just before Herbert died, after he was diagnosed with Alzheimer’s disease and severe dementia.

Defendant Jeff Goldberg filed a petition with the Superior Court of Los Angeles County asking that Jill be removed as the trustee. (Request for Judicial Notice (“RJN”), Exh. A.) Jeff also filed a civil action in the Civil Division of Los Angeles Superior Court for, inter alia, conversion and financial elder abuse. (RJN, Exh. B.)

Jeff claims Jill allegedly misappropriated money from Herbert’s trust, which were only supposed to be used for Herber’s support while he was alive. Jeff claims Jill recklessly spent the trust’s money including using it for gifts to people and causes of Jill’s choosing and recklessly trading stock in Herbert’s portfolio, incurring substantial losses. Jill and Jeff eventually settled their probate and civil cases in October 2022, but this didn’t lead to peace.

A third civil action brought against both Jeff and Jill by their brother, Jason, is still pending in the Superior Court of Orange County. (RJN, Exh. C.) Jill and Jeff each received 50% of the property in Herbert’s Trust, which the Probate Court valued at more than $11 million. Jason was disinherited after he stole $170,000 from Herbert in 2009. In the Orange County case, Jason alleges he entered into an “enforceable agreement” whereby Jeff and Jill agreed to simply ignore the terms of Herbert’s trust and give Jason a 1/3 share of the property in the Trust. (RJN Exh. C.)

This case – brought by Jill’s children – is the fourth legal action regarding the Herbert Goldberg Trust. The Complaint in this action alleges that on September 17, 2014, Herbert created a trust (the “Original Trust Instrument.”) The Original Trust Instrument included bequests -- each in the amount of $250,000 -- to three of Herbert’s grandchildren, Plaintiffs Jakob, Jordyn, and J.N., a minor through her guardian ad litem, Bryan Nadley. On January 29, 2019, Herbert signed a Second Amendment to the Trust. According to Plaintiffs, the Second Amendment – which gave a 50% interest in the property in the Trust to Jeff, and nothing to Plaintiffs - was the product of alleged elder abuse. The Complaint says that Jeff coerced Herbert into signing the Second Amendment before Herbert could read it, and that Herbert didn’t know what he was signing. (Compl., ¶ 57.)

This hearing is on Defendant’s motion for sanctions pursuant to Code Civ. Proc. §128.7. Defendant argues that sanctions are warranted because the Complaint has no factual merit whatsoever and is also barred by the applicable statutes of limitations. Additionally, any claim by J.N., a minor, has been released in the settlement agreement approved by the Superior Court of the County of Los Angeles.

REQUEST FOR JUDICIAL NOTICE

Defendant requests judicial notice of: (1) Petition for Removal and Immediate Suspension of Trustee dated April 15, 2020 in In Re Goldberg Living Trust, dated September 17, 2014, Superior Court of Los Angeles County Case No. 20STPB03236; (2) Complaint dated July 23, 2020 in Jeffrey Goldberg v. Jill Goldberg-Nadley, Superior Court of Los Angeles County Case No. 20STCV2728; (3) Fifth Amended Complaint dated August 21, 2023 in Jason Goldberg v. Jill Goldberg Nadley, Superior Court of Orange County Case No. 30-2021 01236442-CU-CO-CJC; (4) Second Account Current dated September 29, 2021 in In Re Goldberg Living Trust, dated September 17, 2014, Superior Court of Los Angeles County Case No. 20STPB03236, and (5) Order approving compromise and settlement dated April 5, 2023 in In Re Goldberg Living Trust, dated September 17, 2014, Superior Court of Los Angeles County Case No. 20STPB03236. The Court grants the request pursuant to Cal. Evid. Code §§ 452(d) and 453.

Code Civ. Proc. § 128.7¿requires that an attorney (or party in pro per) must sign every “pleading, petition, written notice of motion, or other similar paper” before it is presented to the Court. By signing, that person makes implied certifications that (1) the paper is “not being presented primarily for an improper purpose”; (2) “the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for [changing it]”; (3) the paper’s factual contentions have evidentiary support, or are likely to have it after discovery; and (4) denials of factual contentions are warranted on the evidence or are reasonable based on a lack of information and belief. (Code Civ. Proc., § 128.7(b)( l)-(4).) The certification is only required to be made “to the best of the [signer]’s knowledge, information, and belief, formed after a reasonable inquiry under the circumstances.” (Code Civ. Proc., § 128.7(b).)

The Court may impose sanctions under¿Section 128.7¿against attorneys, law firms, or parties who are responsible for violating those certifications. (Code Civ. Proc., § 128.7(c).) A motion for sanctions under¿Section 128.7¿must be served on the sanctionable party 21 days before it is filed with the Court, so that the party has an opportunity to cure the improper pleading. (Code Civ. Proc., § 128.7(c)(1).) Sanctions under¿Section 128.7¿should be limited to amounts “sufficient to deter repetition of this conduct or comparable conduct by others similarly situated.” (Code Civ. Proc., § 128.7(d).)

The standard for sanctions under¿Section 128.7¿is not one of subjective “bad faith” but rather objective¿unreasonableness. (In re Marriage of Sahafzadeh-Taeb and Taeb (2019) 39 Cal.App.5th 124, 135¿(“This legislative history also makes clear the standard under¿section 128.7¿remains an objective one”);¿SASCO v. Rosendin Elec., Inc. (2012) 207 Cal.App.4th 837, 847, fn.5; In re Marriage of Corona (2009) 172 Cal.App.4th 1205, 1225, fii.7;¿Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.) This is a lower standard than the “subjective bad faith” required under¿Section 128.5. (See¿Guillemin, 104 Cal.App.4th at 167.) A claim is “objectively unreasonable” if “any reasonable attorney would agree that [it] is totally and completely without merit.” (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189;¿Peake v. Underwood (2014) 227 Cal.App.4th 428, 440;¿Guillemin, 104 Cal.App.4th at 168; In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.)

Procedurally Defective

Before reaching the merits of the motion, the Court must first consider Plaintiffs’ threshold argument that the motion is procedurally defective because the motion initially served by Defendant on Plaintiffs failed to include the time and place of the motion hearing. Plaintiffs rely on Galleria Plus, Inc. v. Hanmi Bank (2009) 179 Cal. App.4th 535, 538 which held that a document served stating sanctions motion would be filed “on or after” a specified date (more than 21 days later) did not provide notice of hearing date and thus did not satisfy “safe harbor” requirement. The Court agrees with Defendant that Galleria Plus is outdated.

Galleria Plus was decided in 2009 – almost a decade before the Los Angeles Superior Court adopted its mandatory electronic Court Reservation System (“CRS”). The Court’s e-filing system does not permit motion dates to be reserved more than three days before the motion is actually filed. Therefore, it was not possible to reserve a hearing date when this motion was served pursuant to Code Civ. Proc. § 128.7(c)(1), i.e., 21 calendar days before filing plus an additional sixteen court days, because this is longer than the 3-day period permitted by the CRS system. Accordingly, Galleria Plus does not control.

No Ability to Withdraw

The Opposition next argues that during § 128.7(c)(1)’s safe harbor period, Plaintiffs told Defendant that they intend to amend their Complaint. But by the time Plaintiffs offered to amend, Defendant had already filed his Answer, so Plaintiffs could no longer amend as of right, and Defendant refused to stipulate to allow Plaintiffs to file an amended pleading. (Opposition, pp. 3:26-5:12.) According to Plaintiffs, Defendant’s refusal to stipulate to permit them to file an amended complaint deprived them of the ability to withdraw the challenged pleading and means that Defendant did not comply with the 21 day safe harbor provision. This argument is without merit for several reasons.

First, the defects in the Complaint cannot be cured by amendment. As explained further below, Defendant had nothing to do with the late Herbert Goldberg’s decision to exclude Plaintiffs as beneficiaries of his trust. The evidence is overwhelming that (1) Herbert knew exactly what he was doing when he signed the First Amendment to his trust; and (2) Jeff played absolutely no role in his decision. Therefore Herbert -- not Jeff -- is the sole proximate cause of Plaintiffs’ damages. No amendment can change these facts.

Second, even if it were possible to amend the Complaint to state that Jeff caused Plaintiffs to be excluded as beneficiaries of Herbert’s trust, Plaintiffs bear the burden of showing how this can be done. (LeBrun v. CBS Television Studios, Inc. (2021) 68 Cal.App.5th 199, 212.) A plaintiff must “show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” (Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636.) When the plaintiff does not explain “the nature of a proposed amendment or the manner in which he would amend his complaint,” leave to amend is properly denied. (Schultz v. Steinberg (1960) 182 Cal.App.2d 134, 140-141.)

Plaintiffs have not carried their burden. The Opposition is silent on how defects in the complaint may be cured by amendment. Plaintiffs merely assert they have “sufficient” evidence and they “intend to plead facts and circumstances fully discovered and disclosed in MOVANT’s deposition on November 14, 2023, thereby curing MOVANT’s alleged deficiencies.” This conclusory claim does not come close to carrying Plaintiffs’ burden.

Third, Plaintiffs’ Opposition argues that they offered to amend their complaint during the safe harbor period, but because Defendant refused to stipulate to this, they were unable to withdraw the challenged pleading. (Opposition at 10:12-14.) But Plaintiffs were able to withdraw their complaint by dismissing it. Thus, Plaintiffs’ argument that they could not withdraw the offending pleading is meritless. Alternatively, if Plaintiffs wished to amend their Complaint, they could have filed a motion for leave to amend within the statutory safe harbor period. They chose not to do so.

Fourth, the Opposition argues that Defendant somehow engaged in “bad faith” by filing an answer during the safe harbor period, precluding Plaintiffs from amending their complaint as of right. (Opposition at 3:26-4:7). But the letter from Plaintiffs’ counsel attached as Exhibit A to the Opposition shows this is not true. The § 128.7 motion was served on October 25, 2024. The Answer was filed on November 11, 2024. Plaintiffs did not offer to amend their Complaint until November 15 – after the Answer was filed. (See Opposition, Exh. A, p. 1 (“I advised you during our phone call today [i.e., November 15] that our clients intended to file a First Amended Complaint in this matter, effectively withdrawing the complaint subject to your §128.7 motion. We could have done this under CCP § 472 without a stipulation or leave to amend if your client had not filed his answer already on November 11, 2024.”) (Emphasis added.) Thus, Plaintiffs didn’t give “notice of [their] inten[t] and ability to cure their Complaint” until after the Answer was filed.

The Court turns now to the merits of the motion for sanctions. Defendant argues that the Complaint in this action is factually meritless because depositions taken in the other actions show that (1) Plaintiffs were disinherited by a First Amendment to the Trust, and Defendant had no involvement in that amendment, and (2) Defendant did not pressure Herbert to sign the Second Amendment, which was in fact created as a result of Jill’s urging. The Court agrees.

The central premise of the entire Complaint is that Defendant Jeff committed alleged elder abuse by coercing Herbert to sign the Second Amendment to the Trust; and as a direct and proximate result, Plaintiffs were excluded as beneficiaries of the Trust. (Compl. ¶¶ 7-8). These allegations are contradicted by the evidence.

The First Amendment to the Trust – not the Second – excluded Plaintiffs as beneficiaries. The Original Trust Instrument gave Jill a 50% interest in the trust; the remaining 50% to Jeff and also included bequests -- each in the amount of $250,000 -- to Plaintiffs. (Exh. F to Goldberg Decl.) On July 29, 2018, Herbert makes the First Amendment which omits the $250,000 gifts to his grandchildren and leaves 100% of the Trust property to their mother, Jill. (Exh. G to Goldbert Decl.) The evidence shows Jeff had nothing to do with the First Amendment.

In one of the prior lawsuits, James Keir -- the lawyer who drafted Herbert’s Trust and the First and Second Amendments -- was deposed. Mr. Keir testified that Jeff had absolutely nothing to do with the First Amendment; that Jeff was not present when it was discussed or drafted; and that Herbert asked Mr. Keir to draft the First Amendment and knew exactly what he was doing when he signed the First Amendment. (Exh. H to Hess Decl., Keir Dep., 34:18 – 47:9.) Rather, Jill was present when her father signed the First Amendment, and she urged her father not to sign it because she didn’t want to be the sole beneficiary, but her father signed the amendment anyway. (Exh. H to Hess Decl., Keir Dep., 37:9-19, 72:16-73:9.) The fact that Jeff had nothing to do with the First Amendment is not surprising in the least, because the First Amendment disinherited Jeff and made Jill the sole beneficiary.

The Second Amendment was not the product of undue influence, either. The Second Amendment restored Jeff to the status of a 50% beneficiary of the Trust. Mr. Keir testified that Herbert called him and asked him to prepare the Second Amendment. (Exh. H to Hess Decl., Keir Dep., 57:22-58:6). This squarely contradicts the allegations of the Complaint that Jeff caused the Second Amendment to be prepared. (Id. at ¶¶ 7, 9, 67.) It also contradicts the allegations that Herbert didn’t know what he was signing and that the Second Amendment did not reflect Herbert’s “true intentions.” (Id. ¶¶ 70, 72, 74, 76.) Also, in her deposition in one of the other Goldberg Trust-related cases, Jill – Plaintiffs’ mother -- testified that she urged Herbert to create the Second Amendment. (Exh. I to Hess Decl., Jill Dep., 35:4-22.) This evidence contradicts the Complaint’s many allegations that Jeff pressured Herbert to sign the Second Amendment.

In response to the foregoing evidence, Plaintiffs argue that their filing is not frivolous because the omitted detail of the First Amendment “is curable and OBJECTORS possess evidence sufficient to cure this omission. OBJECTORS claims cannot be characterized as lacking merit because they can be properly pled if leave to amend is granted.” These arguments are entirely conclusory. Plaintiffs do not actually cite to any evidence that contradicts the facts discussed in detail in the moving papers.

Defendant also argues that the Complaint in this action lacks legal support because all are barred by the statute of limitations.

The Complaint claims that the Second Amendment was the product of alleged elder abuse and fraud. The statute of limitations on a claim for financial elder abuse is four (4) years. (Welfare & Inst. Code, § 15657.7.) And a fraud claim is subject to a three-year statute of limitations. (Code Civ. Proc., § 338(d).) The limitations period began to run on the date that the Second Amendment was signed, i.e., January 29, 2019. This case was filed on August 28, 2024 – five years, six months, and 30 days after the alleged elder abuse and fraud occurred.

Therefore, all causes of action by Plaintiffs Jakob Nadley and Jordyn Nadely are barred by the statute of limitations.

The statute cannot be tolled by the doctrine of delayed discovery. The Complaint alleges that Jeff “concealed” the Second Amendment from Jill and Jill’s children. As a result, they did not know about the Second Amendment or the fact that they had been excluded from the Trust. (Compl. ¶ 71.) Once again, the evidence is entirely at odds with the Complaint’s allegations. Jill testified that she knew all about the Second Amendment and urged Herbert to sign it. (Exh. I to Hess Decl., Jill Dep., 36:7-15.) So Jeff in fact did not conceal the Second Amendment.

J.N.’s claims are also barred by a release signed by Jill. The settlement agreement that Jill entered into with Jeff contains a sweeping release and Civil Code § 1542 waiver which includes claims by, inter alia, Jill’s children. Jill agreed to release on behalf of her children, among others, “any interest that either of them may have in the Trust, in any estate ever opened for Herbert, or in any assets in which Herbert owned or held any interest as of his death.” (RJN, Exh. E.)

Under California law, a parent has the authority to release the claims of her minor children. “It is well established that a parent may execute a release on behalf of his or her child.” (Aaris v. Las Virgenes Unified School Dist. (1998) 64 Cal.App.4th 1112, 1120, citing Hohe v. San Diego Unified Sch. Dist. (1990) 224 Cal.App.3d 1559, 1565.) An agreement to settle or compromise a claim made by a minor “is valid only after it has been approved, upon the filing of a petition, by the superior court … .” in the county where the minor resides or the action could have been brought. (Prob. Code, § 3500, subd. (b); Pearson v. Superior Court (2012) 202 Cal.App.4th 1333, 1337.) Here, the Settlement Agreement was approved by the Superior Court. (RJN, Exh. E.) Therefore, all claims by J.N., a minor, against Jeff pertaining to the Trust have been released.

Accordingly, the Complaint is not only factually frivolous, it is also legally meritless, and the Opposition does not even address the statutes of limitations issue.

Subjective Bad Faith

Plaintiffs argue that sanctions should not be awarded because it would chill zealous advocacy. Plaintiffs cite in support to Talavera v. Nevarez (1994) 30 Cal.App. 4th Supp. 1, 5. There, the trial court awarded sanctions against an attorney representing plaintiffs in a traffic accident case for failure to dismiss the action after he received information from defendants’ insurer indicating the accident either did not take place or did not take place as described by plaintiffs. The Court of Appeals reversed the order awarding sanctions because there was no evidence of subjective bad faith, which is required for imposition of sanctions under Code Civ. Proc., § 128.5. The Court concluded that the attorney was not required to accept the insurer’s evidence or conduct his own investigation, particularly given that in arbitration proceedings, plaintiffs had been awarded $ 12,000, and the arbitrator did not question that the accident had occurred. Arguably, this fact assisted appellant in determining that there was a legitimate basis for pushing forward with the lawsuit in the face of respondent's "evidence."

Talavera is inapposite for two reasons. First, the instant motion is brought pursuant to § 128.7, not § 128.5. Section 128.7 does not require a showing of subjective bad faith, only objective bad faith. (In re Marriage of Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 124, 128.) And objective bad faith may be shown where a pleading is legally and factually without merit. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 168 (under section 128.7, a court may impose sanctions if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually).)

In awarding sanctions, the Court starts with the lodestar which is the reasonable hourly rate multiplied by the reasonable time expended. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) The court may then adjust the lodestar, based on various factors, to fix the fee at the fair market value for the legal services provided. (Id.)

A “reasonable” hourly rate is the prevailing rate charged by attorneys of similar skill and experience in the relevant community. (Id.) Here, counsel’s hourly rate is $650. Counsel has been practicing law for more than 25 years since graduating from NYU law school. He boasts an impressive record of victories, including a $33 million judgment in a copyright infringement case. The Court concludes his hourly rate of $650 is reasonable. (EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770, 774 (the court may rely on its own experience in determining whether the hourly rate sought or hours spent in the matter are reasonable).)

The Court also concludes the hours expended is reasonable. Counsel spent approximately twenty hours researching the law, reviewing the evidence, and preparing this motion and the supporting declarations and request for judicial notice. He expects to spend another four hours reviewing the opposition, preparing the reply and attending the hearing. In addition, Defendant will need to file a demurrer to the Complaint. Counsel expects to spend four hours preparing the demurrer; three hours reviewing the opposition and preparing a reply, and another hour at the hearing. In addition, Mr. Goldberg has incurred a first appearance fee of $435.00. The total amount of fees and costs is $19,285.00.