Judge: Helen Zukin, Case: 20SMCV00147, Date: 2022-12-12 Tentative Ruling
Case Number: 20SMCV00147 Hearing Date: December 12, 2022 Dept: 207
Background
Plaintiff Annelee Smith-Winbush (“Plaintiff”) brings this
action against Defendants Robert Johnson, Lisa Johnson, Preston Walker (“Defendant”)
and Novus Content, LLC (“Novus”), alleging Defendants failed to repay a loan
made by Plaintiff to Walker and Johnson intended to be used in the operation of
their company, Novus. The operative complaint in this action is the First Amended
Complaint (”FAC”), filed on January 12, 2021, asserting causes of
action against all Defendants for: (1) financial elder abuse
in violation of Welfare & Institutions Code §§ 15600, et seq.; (2) breach
of contract; (3) unjust enrichment; (4) conversion; (5) intentional infliction
of emotional distress; and (6) negligent infliction of emotional distress,
though the Court notes these causes of action have been narrowed as a result of
demurrers and motions for judgment on the pleadings filed by the Defendants.
Defendant brings a motion for sanctions under Code Civ.
Proc. § 128.7, arguing the allegations asserted against him in Plaintiff’s FAC
are frivolous. Plaintiff opposes Defendant’s motion.
Legal Standard
Code Civ. Proc. § 128.7 states that
a court may impose sanctions on a party or attorney that presents a pleading, petition,
motion, or other similar papers in the following circumstances:
(1) the document is 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 not 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 no evidentiary support;
(4)
the denials of factual contentions are
not warranted on the evidence.
Code Civ. Proc. § 128.7 permits the
Court to impose monetary sanctions on an attorney or an unrepresented party that
violates any one of these requirements. (Eichenbaum v. Alon (2003) 106 Cal
App 4th 967, 976.) In addition, section 128.7 does not require a finding of subjective
bad faith; instead, it requires only that the Court find that the conduct be objectively
unreasonable. (In re Marriage of Reese & Guy (1999) 73 Cal. App.
4th 1214, 1221.)
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. (Bucur v. Ahmad
(2016) 244 Cal.App.4th 175, 189–190.) A claim is factually frivolous if it is “not
well grounded in fact” and 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.” (Ibid.) 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.” (Ibid.) However, “section
128.7 sanctions should be ‘made with restraint’ [Citation], and are not mandatory
even if a claim is frivolous.” (Peake v. Underwood (2014) 227 Cal.App.4th
428, 448.)
The Legislature enacted section 128.7
based on rule 11 of the Federal Rules of Civil Procedure (28 U.S.C.), as amended
in 1993 (rule 11). (Musaelian v. Adams (2009) 45 Cal.4th 512, 518, fn. 2.)
As a result, federal case law construing rule 11 is persuasive authority on the
meaning of section 128.7. (Guillemin v. Stein (2002) 104 Cal.App.4th 156,
168.) Under rule 11, even though an action may not be frivolous when it is filed,
it may become so if later-acquired evidence refutes the findings of a prefiling
investigation and the attorney continues to file papers supporting the client’s
claims. (Childs v. State Farm Mut. Auto. Ins. Co. (5th Cir.1994) 29 F.3d
1018, 1025.) As a result, a plaintiff’s attorney cannot “just cling tenaciously
to the investigation he had done at the outset of the litigation and bury his head
in the sand.” (Ibid.) This requires an attorney to conduct a reasonable inquiry
to determine if his or her client’s claim was well-grounded in fact and to take
into account the adverse party’s evidence. (Ibid.)
Code Civ. Proc. § 128.7(c)(1) requires
that a motion for sanctions under section 128.7 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.” This 21-day time period is known as a “safe harbor” period and its purpose
is to permit an offending party to avoid sanctions by withdrawing the improper pleading
during the safe harbor period. (Li v. Majestic Industry Hills LLC (2009)
177 Cal. App. 4th 585, 591.) This permits a party to withdraw a questionable pleading
without penalty, thus saving the court and the parties time and money litigating
the pleading as well as the sanctions request. (Ibid.)
Analysis
1. Timeliness
of Plaintiff’s Opposition
Defendant argues under Code Civ. Proc. § 1005(b)
Plaintiff’s opposition had to be filed no later than October 12 as the hearing
on this motion was originally set for October 25. Plaintiff filed her
opposition on October 13. The Court agrees Plaintiff’s opposition was untimely.
California Rules of Court, rule 3.1300(d) provides “No paper may be
rejected for filing on the ground that it was untimely submitted for filing. If
the court, in its discretion, refuses to consider a late filed paper, the
minutes or order must so indicate.” Defendant does not claim he suffered any
prejudice as a result of the untimeliness of Plaintiff’s filing. The Court
notes Defendant filed a reply responding to the substance of Plaintiff’s
opposition and did not move for an extension of their time to reply. Indeed,
the same day Plaintiff’s opposition was filed, Defendant filed a notice
rescheduling the hearing date on this motion from October 25 to December 1 and
subsequently filed a reply in support of his motion on November 23. As a
result, rather than having four court days to prepare and file a reply as
contemplated by Code Civ. Proc. § 1005(b), Defendant had a month to do so. On
such facts, the Court finds no basis to conclude Defendant was in any way
prejudiced by the late filing and the Court in its discretion will consider the
arguments raised by Plaintiff’s opposition.
2. Safe Harbor Provision
Plaintiff asserts Defendant’s motion is
procedurally defective as Defendant failed to comply with the safe harbor
provision of Code Civ. Proc. § 128.7(c)(1). As set forth above, section
128.7(c)(1) requires a moving party to serve a copy of the motion on the
opposing party 21 days before filing the motion. Plaintiff argues Defendant did
not do so and instead filed and served the motion simultaneously without
providing any advance notice to Plaintiff. Defendant does not dispute this but
argues section 128.7(c)(1) was satisfied because Plaintiff had more than 21
days to draft her opposition to the motion and thus could have dismissed him
from this action before filing an opposition. Defendant further claims his
failure to comply with the requirements of section 128.7(c)(1) is
“inconsequential” because it would have been frivolous to provide Plaintiff
with the 21-day safe harbor period contemplated by the statute. Defendant offers
no authority for these assertions and the Court finds Defendant’s arguments run
contrary to established caselaw.
“[T]he party seeking sanctions must serve the motion on the
opposing party without filing or presenting it to the court.” (Nutrition Distribution, LLC v. Southern SARMs, Inc.
(2018) 20 Cal.App.5th 117, 124.) “[T]he failure to comply with section 128.7’s safe
harbor provisions precludes an award of sanctions.” (Martorana v. Marlin
& Saltzman (2009) 175 Cal.App.4th 685, 700.) “Adequate notice prior to the
imposition of sanctions is not only mandated by statute, but also by the due process
clauses of the state and federal Constitutions. [Citation.] The notice requirements
of section 128.7, subdivision (c)(1) were therefore mandatory, and neither the parties
nor the trial court in this matter were permitted to disregard them.” (Id.;
see also Malovec v. Hamrell (1999) 70 Cal.App.4th 434, 441-442.)
“Because compliance with the safe harbor is
a prerequisite to recovering sanctions, the burden is appropriately placed on the
party seeking the sanctions to ensure the full safe harbor is provided.” (Li
v. Majestic Industry Hills LLC (2009) 177 Cal.App.4th 585, 594.) It is
reversible error for a Court to grant sanctions pursuant to section 128.7 where
the moving party has not complied with the safe harbor requirements of section
128.7. (Martorana, supra, 175 Cal.App.4th at 700 [“In sum, it is clear that
Allstate did not satisfy the safe harbor requirements of section 128.7, subdivision
(c)(1) in seeking monetary sanctions against Martorana and his counsel. Because
the failure to comply with section 128.7’s safe harbor provisions precludes an award
of sanctions, the trial court’s order awarding sanctions to Allstate must be reversed”].)
“Further, no California statutory language or legislative committee reports
support the proposition that a trial judge has the authority to disregard the
safe harbor requirement.” (Goodstone v. Southwest Airlines
Co. (1998) 63 Cal.App.4th 406, 424.)
Accordingly, the Court rejects Defendant’s
arguments that his failure to strictly comply with the requirements of section
128.7(c)(1) is “insignificant.” It is uncontested that Defendant did not serve
his motion on Plaintiff 21 days before filing it with the Court. Defendant thus
failed to comply with section 128.7(c)(1). As compliance with section 128.7(c)(1)
is a prerequisite to recovering sanctions under section 128.7, his motion for
sanctions is DENIED and the Court need not rule on the merits of Defendant’s
motion.
Conclusion
Defendant’s motion for sanctions pursuant to Code Civ. Proc.
§ 128.7 is DENIED.