Judge Jon R. Takasugi, Case 21STCV28024 2023-05-19 Tentative Ruling

The Court grants the maximum penalty of $900 against Mr. Todd directly. Moreover, given that the Court intends to vacate the entry of terminating sanctions, the Court now awards the alternative monetary sanction of $2,810.00 previously sought against Niko Home Builders in that motion.

On 7/29/2021, Plaintiff Niko Home Builders, Inc. (NHB) filed suit against Charles Leatherbury, an individual and co-Trustee of Leatherbury Family Trust (10/30/01), Ann L. Leatherbury, an individual and co-Trustee of Leatherbury Family Trust (10/30/01), and the Leatherbury Family Trust under Declaration of Trust Dates October 30, 2021, alleging: (1) foreclosure of mechanic’s lien; (2) breach of contract; (3) common count for work, labor, and services-agreed price; (4) common count for work, labor, and services-reasonable value; and (5) account stated.

On 10/8/2021, Cross-Complainant Charles Leatherbury, an individual and co-Trustee of Leatherbury Family Trust (10/30/01) filed a cross-complaint against Paolo A. Schiappa aka Paul Schiappa, Niko Home Builders, Inc., and Suretec Insurance Company, alleging: (1) assault and battery; and (2) negligence.

Now, NHB moves for reconsideration of the Court’s 4/27/2023 minute order, and relief from dismissal pursuant to CCP section 473(b).

As a preliminary matter, the Court agrees that the minute order language extending the dismissal of NHB’s Complaint to all Defendants, as opposed to just the moving party Charles E. Leatherbury, was in error. The ruling granting terminating sanctions was limited to Charles E. Leatherbury as to the original Complaint only.

In light of this, the Court limits its analysis to the remaining the issue raised by NHB, i.e., whether or not NHB can be relieved from terminating sanctions against Charles E. Leatherbury, based on counsel’s admission of error.

NHB seeks reconsideration of the Court’s ruling, and also argues that relief from dismissal under CCP section 473(b) is warranted for the following reasons:

- NHB’s counsel, Matthew P. Todd, admits that any delays or failure to litigate have been the result of his conduct, not NHB’s.

- NHB’s counsel has served verified discovery responses on Leatherbury. While Leatherbury contends that the responses to the Requests for Production (RFP) were not verified, counsel contends that this is essentially a “swearing contest’ between counsel.

- NHB has submitted a copy of the disputes RFP responses which shows a trace, nearly imperceptible signature. See NHB’s 5/2/2023 Opp. to Leatherbury’s Ex Parte App.)

- NHB has since remitted payment for the outstanding sanctions awards. (See NHB’s 5/2/2023 Opp. to Leatherbury’s Ex Parte App.)

After review, the Court finds relief to warranted under CCP section 473(b). Given this conclusion, the Court does not take up the question of whether or not relief would be warranted under CCP section 1008.

Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.

Here, there is no dispute that NHB has engaged in abuses of the discovery process against Leatherbury. These abuses include:

- A failure to comply with the Court order granting Defendants’ motions and directing NHB to provide responses to outstanding discovery within 45 days.

- A continued failure to provide outstanding discovery by the time that the 8/25/2022 terminating sanctions motion was heard.

- A failure to transmit clearly visible verifications for outstanding discovery.

However, the evidence strongly indicates that these abuses have been the result of NHB’s counsel’s conduct, not NHB’s own conduct.

For example, Leatherbury contended that the verification on the RFPs was not visible. A review of the contested RFP responses show a nearly imperceptible signature, suggesting that the issue was not with a failure or refusal to sign from NHB, but an issue with the transmission process. NHB’s counsel, Matthew Todd, could have easily resolved this issue by either checking the responses upon first sending, or by re-sending the documents when it became clear that the signature was difficult to discern. Similarly, the overall lack of responsiveness and engagement by NHB was not NHB’s fault, but rather counsel’s fault. Mr. Todd concedes this, admitting that, he has struggled with “health-related issues, business-related difficulties, the death of [his] mother in May, and the handling of the calendar for Todd & Associates which typically receives a formal appointed time each week on Thursday for what is ideally a thorough review and update.” (Todd Decl., 4.) Moreover, Todd admits that “(a) at no time has the Plaintiff been at fault for any delays in getting discovery responses to counsel for the singular Defendant who propounded discovery requests, and (b) at all times my office had primary and sole responsibility to see to it that our office calendar accurately and adequately reflected the status of discovery matters and court/litigation deadlines.” (Todd Decl., ¶ 4.)

As such, the Court is faced with competing rights and interests. There is no doubt that litigation of this matter has been unreasonably delayed by NHB, and that Leatherbury’s right to efficiently litigate this matter has been impacted. However, as it currently stands, NHB has now provided all outstanding discovery responses[1], and has issued outstanding sanctions payments.[2] What is more, the evidence is clear that the prejudice wrought by NHB has been the sole result of NHB’s counsel’s conduct. The Court must agree that NHB would be grossly prejudiced if it was denied the ability to pursue its claims through no fault of its own.

In light of Mr. Todd’s declaration admitting that the dismissal was the result of his own negligence and mistakes, and given that NHB is current on its discovery obligations, the Court finds the conditions for relief under CCP section 473b to be met.

Based on the foregoing, NHB’s motion for relief is granted. However, CCP section 473, subdivision (c) allows the court to impose just conditions in setting aside a dismissal. The Court grants the maximum penalty of $900 against Mr. Todd directly. Moreover, the Court finds additional relief to be appropriate. (CCP § 473, subd. (c)(1)(C).) Given that the Court intends to vacate the entry of terminating sanctions, the Court now awards the monetary sanctions of $2,810.00 previously sought against NHB and Mr. Todd, jointly and severally, in Leatherbury’s motion.

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org. If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If all parties to a motion submit, the court will adopt this tentative as the final order. If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.

Due to Covid-19, the court is strongly discouraging in-person appearances. Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk. The court encourages the parties wishing to argue to appear via L.A. Court Connect. For more information, please contact the court clerk at (213) 633-0517. Your understanding during these difficult times is appreciated.

[1] Leatherbury refutes this in opposition. However, Leatherbury does not respond to the contention that the previous RFPs were in fact verified, but that the signature was very difficult to discern. Moreover, NHB has since provided another round of verification. A contention that these discovery responses are substantively deficient would not, on its own, warrant terminating sanctions. Rather, that would be appropriately addressed through a motion to compel further.

[2] The Court agrees that a failure to pay sanctions is not itself a grounds for granting terminating sanctions. The Court’s mention of sanctions payments in the ruling was merely to emphasize the point that lesser forms of sanction had no impact on the underlying abuses.