Judge Mark A. Young, Case Number: 23SMCV02521, Date: 2024-12-18 Tentative Ruling

Judge: Mark A. Young, Case: 23SMCV02521, Date: 2024-12-18 Tentative Ruling

Case Number: 23SMCV02521 Hearing Date: December 18, 2024 Dept: M

CASE NAME: Avrech, et al., v. Delta Capital LLC

CASE NO.: 23SMCV02521

MOTION: Motion for Sanctions against Delta Capital LLC

HEARING DATE: 12/18/2024

Legal Standard

Code of Civil Procedure (CCP) section 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.

CCP section 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. at 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.)

In addition to the above requirements, CCP section 128.7(c)(1) requires that a motion for sanctions under CCP section 128.7 be made separately from other motions and that notice of the motion must be served, but not filed with the Court, unless, within 21 days after service of the motion, the challenged paper is not withdrawn. 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

Cross-Defendants Gary Avrech and Cynthia Avrech move for monetary and non-monetary sanctions against Cross-Complainant Delta Capital, including striking the Cross-Complaint (CC) and imposing sanctions against Delta and its counsel of record, Shahrokh Mokhtarzadeh, in the amount of $10,685.00.

The CC asserts causes of action for breach of contract and common counts. The CC alleges that in December 2005, Mr. Abrech signed a lease for the subject premises with the predecessor of Cross-Complainant. (CC ¶7, Ex. A.) The lease required Mr. Avrech to be responsible for maintenance and repairs, and that he would insure against personal injury/property damage. (¶ 9.) In May 2019, Cross-Complainant acquired the subject Property. (¶ 10.) Cross-Defendants signed an estoppel certificate. (Ex. B.)

Since January of 2023, Cross-Defendants made various demands for repairs, “much of which are repairs needed as a result of Cross-Defendants’ own use, misuse, or improper abuse of the subject Premises” and the repairs demanded failed to comply with Cross-Defendants’ obligations to repair the premises. (CC ¶ 11.) The demands were also “over and above regular repair and maintenance.” (¶ 11.) In January 2023, Cross-Defendants reported the property to the City of Los Angeles Housing Dept., which caused the issuance of a notice of and order to comply. (¶ 12.) Cross-Complainants complied with the notice and satisfied the requirements of the City. (¶ 13.) During final inspections, the City noticed an enclosure on the balcony which was built before Cross-Complainants purchased the Property. (¶ 13.) The structure had been built without a permit, and the City issued another order to remove the same. (¶ 13.) Cross-Complainants do not know who built the structure. (¶ 14.) Over Cross-Defendants’ objection, Cross-Complainants complied with the notice and disassembled the structure at the cost of $20,000.00. (¶¶ 15-16.) Cross-Complainants completed further repairs and replacements of various items in the subject Property beyond the items demanded to be changed pursuant to the City’s Orders at the cost of over $35,000.00. (¶ 17.) Cross-Defendants have refused to pay any sums or use their insurance to pay for the damages to the Subject Premises. (¶¶ 18, 24.) Cross-Complainant paid for repairs and maintenance work that should have been paid by Cross-Defendants under the lease, including making $35,000.00 in repairs to the subject Property and attorneys’ fees and costs.

Cross-Defendants fail to demonstrate that the cross-complaint is frivolous within the meaning of section 128.7, since it is not indisputably without merit, either legally or factually.

In essence, the instant motion sounds as a motion for summary judgment, arguing that the court should dismiss the action because evidence (declarations from Mr. Avrech and counsel) demonstrates the cross-complaint is without merit. While Cross-Defendants raise fair issues with the cross-complaint, Cross-Defendants do not show that Cross-Complainants are entitled to none of the damage claimed, including the alleged damage caused by Cross-Defendants’ misuse and abuse of the Property which went beyond regular repair and maintenance. (CC ¶¶ 11-12.) Cross-Defendants cite four admissions wherein Cross-Complainants admit to having no evidence that Cross-Defendants caused the “plumbing leaks,” the “crack in the ceiling of the living room,” the “ceiling of the living room to fall to the floor” or the “dilapidation of the front door.” (See Rochlin Decl., Ex. E [RFA 24, 27-30].) The admissions do not show that Cross-Complainants have no evidence supporting their claims. Read in context with the entire record, Cross-Complainants do not admit that Cross-Defendants did not cause all of the alleged damage.

Instead, the admissions only admit a lack of evidence for discrete items of damage with the property, but do not eliminate the possibility of other categories of damages claimed. Thus, Cross-Defendants’ evidence would not meet the burden on summary judgment or demurrer, let alone demonstrate that the CC is completely without merit.

Accordingly, the motion is DENIED.