Judge: H. Jay Ford, III, Case: 24SMCV00980, Date: 2024-10-17 Tentative Ruling

Case Number: 24SMCV00980    Hearing Date: October 17, 2024    Dept: O

Case Name:  Overland & Overland, et al., v. Kouyoumjian

SUBJECT:                 MOTION FOR SANCTIONS

MOVING PARTY:   Plaintiffs/Cross-Defendants Law Offices of Overland & Overland, Mark E. Overland, Courtney Overland

RESP. PARTY:         Defendant/Cross-Complainant Kevork Kouyoumjian

TENTATIVE RULING

Cross-Defendants Law Offices of Overland & Overland, Mark E. Overland, Courtney Overlands’ (collectively “Overland”) Motion for Sanctions Pursuant to CCP § 128.7 as to Defendant/Cross-Complainant Kevork Kouyoumjian (“Kouyoumjian’) is DENIED.

Overland’s motion “is made on the grounds that the cross-complaint is frivolous per C.C.P. §128.7(b)(2) and not supported by existing law and filed in violation of Bus. & Prof. Code § 6068(c) (It is the duty of an attorney to “maintain those actions, proceedings, or defenses only as appear to him or her legal or just….” (Motion for Sanctions, filed 7-1-2024 pg. 2.)

Overland argues: “Counsel for Cross-Complainant clearly violated the statutory mandate of Bus. & Prof. Code § 6068(c) by failing to consider applicable law from the California Supreme Court, prior to filing the Cross-Complaint. Further, counsel for Cross-Complainant maintained this lawsuit even after counsel for Cross-Defendants advised him of existing California Supreme Court authority that precluded the Cross-Complaint in this case. See Declaration of Douglas G. Gray at ¶ 4.  Specifically, Mr. Gray informed counsel for Kouyoumjian of Wiley v. County of San Diego (1998), 19 Cal.4th 532; Coscia v. McKenna and Cuneo (2001), 25 Cal.4th 1194; and Bird, Marella, Boxer & Wolpert v. Superior Court (2003), 106 Cal.App.4th 419. To date, Cross-Complainant’s counsel has not substantively responded to this authority.” (Motion, pg.3)   

Oddly, in his sparse memorandum, Mr. Gray does not discuss the three cases he referred to opposing counsel or otherwise explain why he believes the holding of these cases establish the cross-complaint is frivolous. In his declaration, Mr. Gray recites his efforts to “meet and confer” regarding his anticipated demurrer motion for sanctions explaining “(a) Cross-Complainant failed to state causes of action in that Kouyoumjian failed to allege and could not prove that he was actually innocent and (b) Kouyoumjian failed to allege and could not prove that there had been a postconviction proceeding which exonerated him.” (Gray decl. ¶3.)  Mr. Gray also submits email correspondence with Kouyoumjian’s counsel. Instead of responding to the defects in the cross-complaint, Kouyoumjian’s counsel responded with a retort that Overland’s complaint should be dismissed because Overland did not give the Kouyoumjian notice of his right to non-binding arbitration. Still unable to persuade Kouyoumjian’s counsel to consider the defect of the cross-complaint, Mr. Gray attempted to conclude the meet and confer effort and reiterated his intent to file the demurrer and pursue this motion of sanctions. To that, the named partner representing Kouyoumjian, Shawn Shaffie, sharply responded “You want to move for sanctions after what we keep explaining? THEN DO IT. You already have Matthew's email response to you. Proceed at your own peril.” (Gray Decl. Ex 3.)

Having been unable to persuade Kouyoumjian’s counsel to withdraw the cross-complaint, and believing a response was due, Overland filed the demurrer to the complaint. The same day, May 31, 2024, Overland served its motion for sanctions on Kouyoumjian’s counsel starting the 21 day safe harbor for Kouyoumjian to avoid possible sanctions by withdrawing the cross-complaint for malpractice or seeking other relief. The 21 days expired on June 23, 2024.  On July 1, 2024 Kouyoumjian filed his motion for sanctions.

Instead of withdrawing the cross-complaint, or seeking other relief, on October 1, 2024, the same day the opposition to the demurrer was due, Kouyoumjian filed his first amended complaint adding new claims for breach of contract in addition to the two malpractice claims. In an effort to cure the admitted failure to allege Kouyoumjian’s prior convictions had been exonerated, Kouyoumjian now alleges:

“40. Kev has retained counsel for the purposes of obtaining exoneration in both the Van Nuys Criminal Matter and the Airport Criminal Matter. These exoneration efforts are ongoing and are a condition precedent to pursuing the first and second causes of action contained herein. Cross-Defendant’s position is that this action should be stayed pending resolution of his contest of the criminal convictions.”

            The law is clear. To prevail on his claim for legal malpractice, Kouyoumjian must plead and prove his actual innocence. Before he can do so he “must obtain postconviction relief in the form of a final disposition of the underlying criminal case—for example, by acquittal after retrial, reversal on appeal with directions to dismiss the charges, reversal followed by the People's refusal to continue the prosecution, or a grant of habeas corpus relief—as a prerequisite to proving actual innocence in a malpractice action against former criminal defense counsel.” (Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194, 1205) A demurrer to such a complaint that fails to allege factual innocence and exoneration of prior convictions must be sustained. (Id. at 1211; See, Wilkinson v. Zelen 167 Cal.App.4^th 37. 49 (“[A] plaintiff in a legal malpractice action based on an attorney's handling of a criminal action may not prevail unless he or she is factually innocent and exonerated of criminal liability. Wilkinson [complaint] fails on both levels and the demurrer was properly sustained.”).

            The law is less clear Kouyoumjian’s failure to allege actual innocence and exoneration of his prior convictions means his claim for malpractice is frivolous.  Nor is it clear his defective complaint must be dismissed with prejudice. To the contrary, the Supreme Court in Coscia concluded “the requirement of postconviction relief, as a prerequisite to proving legal malpractice arising out of a criminal proceeding, need not result in a technical forfeiture of legitimate malpractice claims.... Although such an action is subject to demurrer or summary judgment while a plaintiff's conviction remains intact, the court should stay the malpractice action during the period in which such a plaintiff timely and diligently pursues postconviction remedies.” (Coscia, supra, at 1207, 1210-1211; Khodayari v. Mashburn (2011) 200 Cal.App.4^th 1184, 1197. (The judgment is affirmed insofar as the demurrer was sustained. It is reversed insofar as leave to amend was denied. The case is remanded to the trial court with a direction to stay the action during the period within which appellant diligently pursues postconviction remedies.”)); Cf. Wilkinson v. Zelen, supra 167 Cal.App.4^th at 49 (“In light of the undisputed facts that are properly before the court by way of judicial notice, Wilkinson cannot in good faith plead exoneration of all transactionally related criminal charges and the demurrer was properly sustained.”)

            Under the circumstances of the case, the Court is not persuaded that the filing of Kouyoumjian’s cross-complaint was frivolous under CCP 128.7. Sanctions under Section 128.7 should only be utilized in “the rare and exceptional case where the action is clearly frivolous, legally unreasonable or without legal foundation, or brought for an improper purpose.” (Kumar v. Ramsey (2021) 71 Cal.App.5th 1110, 1121. In its motion, Overland did not show, by judicial notice or otherwise, that Kouyoumjian cannot, as a matter of law, prove his actual innocence or obtain the exoneration of his convictions. Overland’s motion for sanctions, therefore, is denied.