Judge: Nathan Vu, Case: 2020-01173623, Date: 2022-11-14 Tentative Ruling
Please Note: The hearing on this matter is scheduled for 8:30 A.M.
Motion for Sanctions
Defendants Charles Kingan and Reiko Kingan’s motion for sanctions is DENIED in part and GRANTED in part.
The request for non-monetary sanctions is DENIED as moot and the request for monetary sanctions are GRANTED, in any amount to be determined pursuant to the court’s ruling below.
The hearing on the motion for sanctions is CONTINUED to 02/21/2022 at 8:30 am in Department N15.
Defendants Charles Kingan and Reiko Kingan shall file and serve by 12/16/2022 declaration(s) alleging the amount of attorney’s fees and costs they have incurred since 07/21/2022 and that relate to the demurrer to the SAC. The declarations shall have billing statements for the attorney’s fees and costs attached and shall contain no argument.
Plaintiff Kurt Hughes shall file and serve any opposition papers by 01/20/2022 and Defendants Charles Kingan and Reiko Kingan shall file and serve any reply papers by 02/10/2022. The parties shall serve courtesy copies of their declaration(s), opposition papers, and reply papers by electronic mail no later than 5:00 pm on the due date.
Standard for Sanctions
Under Civil Procedure Code section 128.7, when an attorney or self-represented litigant presents a pleading, motion, or similar paper to the court, the person filing the paper makes an implied “certification” that:
1) It is not being 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 . . . and other legal contentions therein are 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 evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.
(Code Civ. Proc., § 128.7, subd. (b).)
The purpose of Section 128.7 is “to check abuses in the filing of pleadings, petitions, written notices of motions or similar papers.” (Musaelian v. Adams (2009) 45 Cal.4th 512, 514.) Section 128.7 is “modeled, almost word for word, on rule 11 of the Federal Rules of Civil Procedure . . . .” (Laborde v. Aronson (2001) 92 Cal.App.4th 459, 467, disapproved of on other grounds by Musaelian v. Adams, supra, 45 Cal.4th at p. 520.) Thus, the attorney or litigant filing the paper is subject to sanctions for a violation of this certification. (Code Civ. Proc., § 128.7, subd. (c).)
Pursuant to section 128.7, “there are basically three types of submitted papers that warrant sanctions: factually frivolous (not well grounded in fact); legally frivolous (not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law); and papers interposed for an improper purpose.” (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167, citations omitted.)
The trial court applies “an objective standard in making its inquiry concerning the attorney’s or party’s allegedly sanctionable behavior in connection with a motion for sanctions brought under section 128.7.” (Optimal Markets, Inc. v. Salant (2013) 221 Cal.App.4th 912, 921, citations omitted.) A claim is “objectively unreasonable” if any reasonable attorney would agree that it is totally and completely without merit. (Peake v. Underwood (2014) 227 Cal. App. 4th 428, 440.)
Unlike sanctions under section 128.5 that requires a finding of subjective bad faith, “section 128.7 imposes a lower threshold for sanctions . . . that the conduct [merely] be ‘objectively unreasonable.’” (Guillemin v. Stein, supra, 104 Cal.App.4th at p. 167.) Thus, for instance, the trial court’s determination of whether an action is frivolous under section 128.7 is made under an objective standard. (Burkle v. Burkle (2006) 144 Cal.App.4th 387, 401.)
Application
The Kingan Defendants contend that Plaintiff’s Second Amended Complaint (SAC) was submitted for an improper purpose and that the legal contentions it contains are not warranted by existing law.
The First Amended Complaint (FAC) alleged causes of action for conversion, statutory theft, and voidable transfer against the Kingan Defendants. (ROA #49.) The FAC also alleged the existence of the “Last Will And Testament Of Midori Hughes” and the “Midori Hughes Trust.” (FAC, ¶¶ 10-11.) These documents were attached to the FAC as Exhibits A and B, respectively, and purportedly bore the signature of Midori Hughes (Decedent), the mother of Plaintiff and Defendant Reiko Kingan. (FAC, ¶¶ 10-11, Exhs. A-B.) The FAC further alleged that Plaintiff had the right to 1/3 of the net proceeds in Escrow No. 3236-BB or 1/3 of the equity in the Rainbow Court Property because either Plaintiff is a beneficiary of the Trust, or as an heir under the Will. (Id., ¶¶ 24-25.)
On 06/30/2022, the court sustained the Kingan Defendants’ demurrer to the FAC, on the basis that the probate court had exclusive jurisdiction over Plaintiff’s claim that Defendant Reiko Kingan had deviated from the trust provisions when the Kingan Defendants allegedly had interfered with Plaintiff’s rights to possess at least 1/3 of the proceeds from the sale of the Rainbow Court Property. (ROA #158.) This claim formed the basis for all of Plaintiff’s causes of action against the Kingan Defendants in the FAC so that the demurrer was sustained as to all causes of action pled against the Kingan Defendants.
The court’s ruling on the demurrer to the FAC also stated that, “Plaintiff is reminded that leave to amend is limited to the issues addressed in this ruling. Plaintiff must bring a motion for leave to amend if he seeks to add new causes of action.” (ROA #158.)
Plaintiff subsequently filed the SAC on 07/21/2022. The SAC alleges causes of action for statutory theft and voidable transfer against the Kingan Defendants. (ROA #164.) In preparing the SAC, Plaintiff had made few substantive changes to the FAC and Plaintiff’s amendments primarily consisted of removing allegations in the FAC that revealed Plaintiff’s dispute arose from the administration of Midori Hughes Trust and the Last Will and Testament of Midori Hughes. (ROA #242.)
On 10/28/2022, the court sustained the Kingan Defendants’ demurrer to the second cause on the basis of the sham pleading doctrine and granted Plaintiff leave to amend. (ROA #242.) The court also struck the first cause of action, the only other claim asserted against the Kingan Defendants in the SAC. (ROA #242.) The court reasoned that the first cause of action was a wholly new cause of action that had been improperly added to the FAC and the SAC. (Ibid.)
Non-Monetary Sanctions
In light of the court’s rulings on 10/28/2022, the Kingan Defendant’s request to strike and/or dismiss the SAC are moot. In its ruling on the Kingan Defendant’s motion to strike and demurrer, the court already struck or dismissed all claims in the SAC asserted against the Kingan Defendants.
Monetary Sanctions
The court cannot say that, in this case, the filing of the original Complaint and FAC violated Section 128.7. The court sustained demurrers as to the original Complaint on the basis that the allegations were not sufficiently pled and as to the FAC on the basis that the probate court had exclusive jurisdiction. (See ROA #36 & ROA #158.) Plaintiff’s claims may have merit (or they may not) if they are properly plead and brought in the appropriate court.
Thus, it does not follow that the original Complaint or FAC “was filed for an improper purpose or was indisputably without merit, either legally or factually.” (Peake v. Underwood (2014) 227 Cal.App.4th 428, 440; see also Morgan v. Somervell (1940) 40 Cal.App.2d 398, 400 [public policy favors resolution of actions on merits, even if an action was filed in court lacking subject matter jurisdiction].)
However, in filing the SAC and repeating claims that the court had already ruled were not within its jurisdiction, Plaintiff violated the certification of Section 128.7 that the SAC was “warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.” Pleading the second cause of action was objectively unreasonable and no reasonable attorney would have simply repeated claims that the court had already determined to be beyond its jurisdiction.
Further, while the Kingan Defendants need not make a showing of subjective bad faith, such a showing can be made in this case. When preparing the SAC, rather than amending the allegations to show that Plaintiff’s claims were properly before this court, Plaintiff only removed material allegations that showed that Plaintiff’s claims belonged before the probate court. This indicated that Plaintiff understood the court’s prior ruling and was trying to avoid it by sham pleadings rather than proper amendments.
With respect to the motion to strike the first cause of action of the SAC, the court cannot say that it was objectively unreasonable to argue that the statutory civil liability for theft cause of action was a new claim that was improperly added by the Plaintiff. First, Plaintiff added that claim to the FAC, before the court stated its “reminder”. Second, Plaintiff cited to case law that reasonably could be read to support his position.
Thus, the Kingan Defendants are entitled to monetary sanctions for fees and costs expended as a result of the filing of the second cause of action of the SAC. This includes attorney’s fees and costs expended after 07/21/2022 (the date on which the SAC was filed and served) and with respect to the demurrer to the SAC (but not the motion to strike).
However, the Kingan Defendants submitted a declaration that implies that the amount of attorney’s fees and costs requested (in excess of $73,000) includes attorney’s fees and costs incurred prior to 07/21/2022 and that do not relate to the demurrer to the SAC. (See Rankin Decl., ¶¶ 19-25.) Further, the Kingan Defendants fail to attach their counsel’s invoices, making impossible for the court or Plaintiff to determine for how much was expended on any particular matter and whether the attorney’s fees and costs were reasonable.
Therefore, the court will continue this hearing to allow the parties to submit their evidence and argument regarding whether attorney’s fees and costs were expended after 07/21/2022, whether they were expended for the demurrer to the SAC, and whether they were reasonable.
Kingan Defendants shall give notice of this ruling.