Judge Michael P. Linfield, Case Number: 20STCV45280, Date: 2023-08-15 Tentative Ruling

Judge: Michael P. Linfield, Case: 20STCV45280, Date: 2023-08-15 Tentative Ruling

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Case Number: 20STCV45280 Hearing Date: March 6, 2024 Dept: 34

SUBJECT: Motion to Compel Judgment Debtor’s Responses to First Set of Post-Judgment Special Interrogatories, or to Alternative Permit Such Discovery and Require a Discretionary Bond

Moving Party: Judgment Creditors Honey Science Corporation and PayPal, Inc.

Resp. Party: Judgment Debtor Juan Carlos Morales II

SUBJECT: Motion to Compel Judgment Debtor’s Responses to First Set of Post-Judgment Requests for Production, or to Alternatively Permit Such Requests and Require a Discretionary Bond

Moving Party: Judgment Creditors Honey Science Corporation and PayPal, Inc.

Resp. Party: Judgment Debtor Juan Carlos Morales II

The Post-Judgment SROGs Motion is DENIED.

The Post-Judgment RPDs Motion is DENIED.

Judgment Debtor’s Request for Sanctions is DENIED.

BACKGROUND:

On November 25, 2020, Plaintiff Juan Carlos Morales II filed his Complaint against Defendants Honey Science Corporation and PayPal, Inc. on causes of action that allegedly arose during Plaintiff’s employment.

On January 27, 2021, the Court found related cases 20STCV11118 and 20STCV45280 and designated 20STCV11118 as the lead case.

On February 22, 2021, Defendants filed their Motion to Compel Arbitration and Dismiss or Stay Proceedings.

On June 4, 2021, the Court ordered this case to arbitration and stayed this case pursuant to the Court granting the same relief in 20STCV11118.

On May 4, 2023, the Arbitrator, the Honorable Elizabeth A. White (retired), issued a final award in this matter.

On June 23, 2023, the Court granted Defendants’ Petition to Confirm Contractual Arbitration Award.

On August 15, 2023, the Court granted in part Defendants’ Motion for Attorneys’ Fees, Costs, and Expenses.

On August 24, 2023, the Court entered its Amended Judgment in this matter.

On August 28, 2023, Plaintiff (now “Judgment Debtor”) filed Judicial Council Form APP-002, Notice of Appeal (Unlimited Civil Case).

On February 7, 2024, Defendants (now “Judgment Creditors”) filed: (1) Motion to Compel Judgment Debtor’s Responses to First Set of Post-Judgment Special Interrogatories, or to Alternative Permit Such Discovery and Require a Discretionary Bond (“Post-Judgment SROGs Motion”); and (2) Motion to Compel Judgment Debtor’s Responses to First Set of Post-Judgment Requests for Production, or to Alternatively Permit Such Requests and Require a Discretionary Bond (“Post-Judgment RPDs Motion”). In support of both these motions, Judgment Creditors concurrently filed Declaration of Karin L. Bohmholdt.

On February 22, 2024, Judgment Debtor filed his Opposition, which is to both post-judgment discovery motions. The Opposition includes a Request for Sanctions.

On February 28, 2024, Judgment Creditors filed their Reply, which is in support of both post-judgment discovery motions.

ANALYSIS:

I. Legal Standard

“Except as provided in this section and in subdivision (b) of Section 708.020, the procedure in this article may be used at any time a money judgment is enforceable.” (Code Civ. Proc., § 708.010, subd. (a).)

“The judgment creditor may propound written interrogatories to the judgment debtor, in the manner provided in Chapter 13 (commencing with Section 2030.010) of Title 4 of Part 4, requesting information to aid in enforcement of the money judgment. The judgment debtor shall answer the interrogatories in the manner and within the time provided by Chapter 13 (commencing with Section 2030.010) of Title 4 of Part 4.” (Code Civ. Proc., § 708.020, subd. (a).)

“The judgment creditor may demand that any judgment debtor produce and permit the party making the demand, or someone acting on that party’s behalf, to inspect and to copy a document that is in the possession, custody, or control of the party on whom the demand is made in the manner provided in Chapter 14 (commencing with Section 2031.010) of Title 4 of Part 4, if the demand requests information to aid in enforcement of the money judgment. The judgment debtor shall respond and comply with the demand in the manner and within the time provided by Chapter 14 (commencing with Section 2031.010) of Title 4 of Part 4.” (Code Civ. Proc., § 708.030, subd. (a).)

Interrogatories and inspection demands may not be served pursuant to these sections “within 120 days after the judgment debtor has responded” to discovery requests previously served pursuant to these sections “or within 120 days after the judgment debtor has been examined pursuant to Article 2 (commencing with Section 708.110), and the judgment debtor is not required to respond” to any discovery so served.” (Code Civ. Proc., §§ 708.020, subd. (b); 708.030, subd. (b).)

Interrogatories and inspection demands served pursuant to these sections “may be enforced, to the extent practicable, in the same manner as interrogatories in a civil action.” (Code Civ. Proc., §§ 708.020, subd. (c); 708.030, subd. (c).)

“If enforcement of the judgment is stayed on appeal by the giving of a sufficient undertaking under Chapter 2 (commencing with Section 916) of Title 13, all proceedings under this article are stayed. In any other case where the enforcement of the judgment is stayed, all proceedings under this article are stayed unless the court otherwise expressly orders.” (Code Civ. Proc., § 708.010, subd. (b).)

II. Discussion

A. The Parties’ Arguments

Judgment Creditors move the Court to compel Judgment Debtor serve responses to Judgment Creditors’ post-judgment special interrogatories (“SROGs”) and requests for production of documents (“RPDs”). (Post-Judgment SROGs Motion, p. 12:8–9; Post-Judgment RPDs Motion, p. 12:10–11.)

For both motions, Judgment Creditors argue: (1) that post-judgment discovery is not stayed because Judgment Debtor has not posted a bond; (2) that Judgment Debtor’s objections (that the discovery is overbroad, oppressive, and violate his right to financial privacy) are without merit; (3) that the Court has discretion to permit proceedings despite a stay; and (4) that if the Court concludes that there is no bond required, the Court should order Judgment Debtor to post one anyway. (Post-Judgment SROGs Motion, pp. 8:1, 9:19–20, 11:14, 11:23–24; Post-Judgment RPDs Motion, pp. 8:5, 9:24–25, 11:14, 11:23–24.)

Judgment Debtor disagree, arguing: (1) that the motions should be denied because enforcement of the Judgment is stayed; (2) that the motions should be denied because Judgment Creditors did not file a separate statement; (3) that the motions should be denied because Judgment Creditor did not seek relief from stay prior to propounding the post-judgment discovery; and (4) that the motions should be denied as to the posting of a bond because there is no good cause shown for the relief from the automatic stay arising from the appeal in this case. (Opposition, pp. 3:19–22, 6:1–3, 7:20–22, 8:5–8.)

In their Reply, Judgment Creditors argue: (1) that the Judgment is not stayed because it is not a judgment solely for costs under Chapter 6 of Title 14; (2) that the Court should permit post-judgment discovery or order Judgment Debtor to post a bond, even if the automatic stay applied; and (3) that the motions were not procedurally frivolous and a separate statement was not required. (Reply, pp. 3:4–5, 4:16–17, 5:17–18.)

B. Whether Enforcement of the Judgment is Stayed

1. Whether the Action is Stayed Pursuant to Code of Civil Procedure Section 916

a. Legal Standard

“Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc., § 916, subd. (a).)

“When there is a stay of proceedings other than the enforcement of the judgment, the trial court shall have jurisdiction of proceedings related to the enforcement of the judgment as well as any other matter embraced in the action and not affected by the judgment or order appealed from.” (Code Civ. Proc., § 916, subd. (b).)

b. Discussion

It is undisputed that Judgment Debtor’s appeal has been perfected.

Such perfecting of an appeal stays the proceedings in the trial court “upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or other” — except as provided in Code of Civil Procedure sections 917.1 to 917.9, and as to “any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc., § 916, subd. (a).)

The item appealed is the Court’s Minute Order dated June 23, 2023, which granted then-Defendants’ petition to confirm arbitration award and denied then-Plaintiff’s petition to vacate arbitration award. (See Code Civ. Proc., § 1294, subds. (b)–(c).) This decision is the primary subject of the Amended Judgment entered on August 24, 2023. It is undisputed that the additional attorney’s fees and costs awarded in favor of then-Defendants and against then-Plaintiff on August 15, 2023 (which are included in the Amended Judgment) are affected by the earlier decision from June 23, 2023.

2. Whether Enforcement of the Judgment is Allowed Pursuant to Code of Civil Procedure Section 917.1

a. Legal Standard

“Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following:

“(1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action.

“(2) Costs awarded pursuant to Section 998 which otherwise would not have been awarded as costs pursuant to Section 1033.5.

“(3) Costs awarded pursuant to Section 1141.21 which otherwise would not have been awarded as costs pursuant to Section 1033.5.”

(Code Civ. Proc., § 917.1, subd. (a).)

b. Discussion

Given that the action would otherwise be stayed pursuant to Code of Civil Procedure section 916, the question before the Court is whether enforcement of the judgment is allowed pursuant to Code of Civil Procedure sections 917.1 to 917.9.

The Court first considers Code of Civil Procedure section 917.1.

“Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following:

“(1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action.

“(2) Costs awarded pursuant to Section 998 which otherwise would not have been awarded as costs pursuant to Section 1033.5.

“(3) Costs awarded pursuant to Section 1141.21 which otherwise would not have been awarded as costs pursuant to Section 1033.5.”

(Code Civ. Proc., § 917.1, subd. (a).)

The Amended Judgment states in relevant part:

“IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:

“1. Judgment is entered in favor of Defendants Honey Science Corporation and PayPal, Inc. and against Morales;

“2. The May 4, 2023 Final Award, attached hereto as Attachment 1, is hereby CONFIRMED and is the judgment of this Court;

“3. Pursuant to the Arbitration Award, Defendants are awarded $317,653.83, plus interest at the rate of 10% percent from May 4, 2023, and thereafter at the statutory rate; and

“4. Defendants are awarded $12,617.50, plus interest at the statutory rate.

(Amended Judgment, p. 2:18–25.)

The Amended Judgment involves three forms of relief: (1) confirmation of the Arbitrator’s Final Award; (2) the award of money pursuant to the Final Award (which itself was only an award for attorneys’ fees after summary judgment in favor of then-Defendants and against then-Plaintiff); and (3) the costs (including attorney’s fees as costs) awarded for litigating this matter between the Final Award and the entry of the Amended Judgment.

There is no basis under Code of Civil Procedure section 917.1 for enforcing the confirmation of the Arbitrator’s Final Award.

In addition, it is established in case law that there is also no basis under Code of Civil Procedure section 917.1 for enforcing costs when those costs were awarded pursuant to Code of Civil Procedure sections 1032 and 1033.5. (Code Civ. Proc., § 917.1, subd. (a)(2)–(3); Gallardo v. Specialty Rests. Corp. (2000) 84 Cal.App.4th 463, 466–470 [“(W)e interpret the controlling statute, section 917.1, as requiring an undertaking based only on the amount of the section 998 costs; enforcement of the section 1032 costs is automatically stayed pending appeal under these circumstances.”]

Here, the costs awarded post-Final Award fall under this category. Specifically, the Court awarded these costs (including fees as costs) pursuant to Code of Civil Procedure sections 1032, 1033.5, and 1293.2 (which itself allows costs pursuant to Chapter 6, commencing with Code of Civil Procedure section 1021). (Minute Order dated August 15, 2023 in Case No. 20STCV45280, pp. 3–5 [“The Parties request the (exact) same relief and make the exact same arguments in this case as are made for the same petitions in 20STCV11118, which is related to this case.”]; see also Minute Order dated August 15, 2023 in Case No. 20STCV11118 [the related case], pp. 3–5 [“Thus, pursuant to Code of Civil Procedure sections 1293.2 and 1032, subdivision (b), Defendant is entitled to recover costs.”].)

Thus, as the post-Final Award costs were awarded pursuant to Code of Civil Procedure section 1032 and 1033.5, they cannot be awarded pursuant to Code of Civil Procedure section 917.1.

A similar analysis applies for the primary damages included in the Final Award. This case involved then-Plaintiff’s Complaint; no cross-complaint was filed by then-Defendants. On March 3, 2023, the Arbitrator granted summary disposition in favor of then-Defendants. (Compendium of Exhibits, Exh. RR [“Ruling on Respondents’ Motion for Summary Disposition, filed by JAMS March 3, 2023], Bates No. 1160, filed on June 9, 2023 by then-Defendants in Opposition to then-Plaintiff’s Petition to Vacate Arbitration Award.) On April 27, 2023, pursuant to Section 12 of the Parties’ Settlement Agreement, the Arbitrator awarded $317,653.83 in attorneys’ fees, denied an award of all JAMS Fees, and denied an award of all costs. (Id. at Exh. XX [“Ruling on Respondents’ Motion for Attorneys’ Fees and Costs, filed by JAMS on April 27, 2023”], Bates No. 1552.) On May 4, 2023, the Arbitrator issued her Final Award, of which the only monetary sum was the $317,653.83 in attorneys’ fees. (Id. at Exh. AAA [“Final Corrected Award, filed by JAMS on May 23, 2023”], Bates No. 1563.)

It should be noted that the Arbitrator’s April 27, 2023 grant of attorneys’ fees appears to have occurred under Civil Code section 1717, not Code of Civil Procedure sections 1032 and 1033.5. (Compendium of Exhibits, Exh. XX, Bates Nos. 1550–1551.) Based on the record, it appears that the Arbitrator only considered Civil Code section 1717 (and not Code of Procedure sections 1032 and 1033.5) because then-Defendants’ only requested consideration under that section. (Id. at Exh. TT [“Respondents’ Brief Re Award of Attorneys’ Fees, Costs, and Expenses”], Bates Nos. 1664:24–25, 1166:2–3.)

Are attorneys’ fees awarded pursuant to Civil Code 1717 barred from relief under Code of Civil Procedure section 917.1 in the same way as Code of Civil Procedure sections 1032 and 1033.5?

The answer is “yes.”

Attorneys’ fees awarded pursuant to Civil Code section 1717 are themselves “costs,” not a damage included within the breach of contract. (Civ. Code, § 1717, subd. (a) [“. . . Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the costs of suit.” (Emphasis added.)].)

The reason why costs pursuant to Code of Civil Procedure sections 1032 and 1033.5 are not enforceable pursuant to Code of Civil Procedure section 917.1 is because the Legislature made an explicit distinction between the specific costs in Code of Civil Procedure sections 998 and 1141.21 from all other costs. “Had the Legislature intended that routine costs be included in the amount of the judgment for purposes of securing an undertaking where the only additional award was for section 998 costs, it would have referred in subdivision (d) simply to subdivision (a) as a whole, or to paragraphs (1) and (2) or subdivision (a).” (Gallardo, supra, 84 Cal.App.4th 463, 468.)

The same reasoning applies here. Where the costs in the underlying Final Award of the Arbitrator are actually only routine attorneys’ fees as costs awarded pursuant to Civil Code section 1717, they are not the subject for enforcement pursuant Code of Civil Procedure section 917.1.

Thus, enforcement of the Amended Judgment is not allowed pursuant to Code of Civil Procedure section 917.1.

3. Whether Enforcement of the Judgment is Allowed Pursuant to Code of Civil Procedure Section 917.9

a. Legal Standard

“The perfecting of an appeal shall not stay enforcement of the judgment or order in cases not provided for in Sections 917.1 to 917.8, inclusive, if the trial court, in its discretion, requires an undertaking and the undertaking is not given, in any of the following cases:

“(1) Appellant was found to possess money or other property belonging to respondent.

“(2) Appellant is required to perform an act for respondent’s benefit pursuant to judgment or order under appeal.

“(3) The judgment against appellant is solely for costs awarded to the respondent by the trial court pursuant to Chapter 6 (commencing with Section 1021) of Title 14.”

(Code Civ. Proc., § 917.9, subd. (a).)

b. Discussion

The final question at hand is whether enforcement of the Amended Judgment is allowed pursuant Code of Civil Procedure section 917.9.

The answer is “no.”

As indicated above, there are only three scenarios under Code of Civil Procedure section 917.9 in which the perfecting of an appeal shall not stay enforcement of the judgment or order. The first two scenarios — which involve possession of money or property and the performance of an act, respectively — are clearly not at issue here. (Code Civ. Proc., § 917.9, subd. (a)(1)–(2).)

The third scenario is when “judgment against appellant is solely for costs awarded to the respondent by the trial court pursuant to Chapter 6 (commencing with Section 1021) of Title 14.” (Code Civ. Proc., § 917.9, subd. (a)(3).)

That is not the situation here. Rather, the Court entered Amended Judgment in the amount of: (1) $317,653.83, which was based on attorneys’ fees awarded pursuant to Civil Code section 1717; and (2) $12,617.50, which was based on attorneys’ fees and costs awarded pursuant to Code of Civil Procedure section 1032, 1033.5, and 1293.2.

Had the Court only awarded costs and fees pursuant to Chapter 6 of Title 14 (which explicitly include 1032 and 1033.5, as well as 1293.2 by direct reference), then Code of Civil Procedure section 917.9, subdivision (a)(3) would apply here. But because an award was made solely pursuant to Civil Code section 1717 — which is completely disconnected from Chapter 6 of Title 14 — Code of Civil Procedure section 917.9, subdivision (a)(3) does not apply here.

Thus, enforcement of the Amended Judgment is not allowed pursuant to Code of Civil Procedure section 917.1.

4. The Stay

This matter is stayed pursuant to Code of Civil Procedure section 916, subdivision (a). The Court has not been made aware of any authority by which enforcement of the Amended Judgment is not also stayed pursuant to Code of Civil Procedure section 916, subdivision (a). Because this matter (including enforcement of the Amended Judgment) is stayed pursuant to Code of Civil Procedure section 916, subdivision (a), all proceedings for post-judgment discovery are also stayed. (Code Civ. Proc., § 708.010, subd. (b).)

The Court DENIES the Post-Judgment SROGs Motion.

The Court DENIES the Post-Judgment RPDs Motion.

C. Monetary Sanctions

Judgment Debtor requests monetary sanctions. (Opposition, p. 9:3–7.)

Judgment Creditors did not request monetary sanctions, and they did not address the issue in their Reply.

It is unclear to the Court that monetary sanctions are available for post-judgment discovery motions in the same way that they are available for pre-judgment discovery motions. Specifically, Code of Civil Procedure sections 708.020 and 708.030 does not explicitly discuss monetary sanctions. While they do mention that interrogatories and inspection demands served pursuant to these sections “may be enforced, to the extent practicable, in the same manner” as those interrogatories and inspection demands issued in a civil action, it is not clear that this includes monetary sanctions, which in certain contexts is considered separate from enforcement itself. (Code Civ. Proc., §§ 708.020, subd. (c); 708.030, subd. (c).) Judgment Debtor did not cite any authority for the monetary sanctions, and upon its own review of the case law, the Court could not find any binding authority that considers this issue.

The Court need not definitively resolve this issue at the present time. Even if monetary sanctions were available, under the circumstances here it would be appropriate to award them. Judgment Debtor prevails on what could be termed a statutory technicality; had all the fees been awarded pursuant to Code of Civil Procedure section 1032 instead of Civil Code section 1717, then the result might have been reversed.

The Court DENIES Judgment Debtor’s Request for Sanctions.

III. Conclusion

The Post-Judgment SROGs Motion is DENIED.

The Post-Judgment RPDs Motion is DENIED.

Judgment Debtor’s Request for Sanctions is DENIED.