Judge: Theresa M. Traber, Case: 24STCV14500, Date: 2024-09-10 Tentative Ruling

Case Number: 24STCV14500    Hearing Date: September 10, 2024    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     September 10, 2024               TRIAL DATE: NOT SET

CASE:                         Michael Tootle v. Wedgewood Homes Realty, LLC, et al.

CASE NO.:                 24STCV14500           

MOTION FOR SANCTIONS PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 128.7

MOVING PARTY:               Defendants Wedgewood Homes Realty, LLC, Wedgewood, LLC, and Neighborhood Stabilization, LLC

RESPONDING PARTY(S): Plaintiff Michael Tootle

CASE HISTORY:

·         06/11/24: Complaint filed.

·         06/11/24: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for employment discrimination and wrongful termination. Plaintiff alleges that he was harassed because of his race.

Defendants move for sanctions pursuant to Code of Civil Procedure section 128.7.

TENTATIVE RULING:

Defendants’ Motion for Sanctions is DENIED.

DISCUSSION:

Defendants move for sanctions pursuant to Code of Civil Procedure section 128.7.

Request for Judicial Notice

            Defendants request that the Court take judicial notice of (1) the Complaint in the action Tootle v. Wedgewood Homes Realty, LLC, et al., Nevada Eighth Judicial District Court Case No. A-23-873467C (the “Nevada Action”); (2) Defendants’ Motion to Compel Arbitration in the Nevada Action; (3) Plaintiff’s Opposition to the Motion to Compel Arbitration; (4) Defendants’ Reply in Support of the Motion to Compel Arbitration; (5) the Notice of Entry of Order Granting the Motion to Compel Arbitration; (6) Plaintiff’s Complaint in this action; and (7) Plaintiff’s First Amended Complaint in this action.

            Defendants’ requests are GRANTED pursuant to Evidence Code section 452(d) (court records).

Compliance with the Safe Harbor Provision of Code of Civil Procedure § 128.7(c)(1)

Defendants seek sanctions under Code of Civil Procedure section 128.7. The safe-harbor provision of section 128.7 provides, in relevant part:

A motion for sanctions under this section shall 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.

(Code Civ. Proc. § 128.7(c)(1).)

Defendants complied with this provision by serving Plaintiff with the motion on June 27, 2024. (Declaration of Dean A. Rocco ISO Mot. ¶ 2.) Plaintiff therefore had until July 22, 2024 to withdraw the Complaint. This time was further extended to July 24, 2024, as July 22 and 23 were considered court holidays due to a ransomware attack which disabled the Court’s electronic services. Plaintiff did not withdraw the Complaint, and Defendants filed this motion on July 31, 2024. Thus, Defendants met the requirements of the safe harbor provision.

Analysis

            Defendants seek sanctions on the ground that this action is being presented for an improper purpose and is not warranted by existing law or a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.

Under Code of Civil Procedure section 128.7, if the Court determines that subsection (b) has been violated, it may “impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.” (Code Civ. Proc. § 128.7(c).) Violations of subsection (b) include presenting allegations “primarily for an improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation” or 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.” (Code Civ. Proc. § 128.7(b)(1)-(2).) Sanctions under this section “shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated.” (Code Civ. Proc. § 128.7(d).) The sanction may include, “if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorney’s fees and other expenses incurred as a direct result of the violation.” (Id.)

To obtain sanctions on this ground, the moving party must show the “party’s conduct in asserting the claim was objectively unreasonable,” meaning that “any reasonable attorney would agree that [it] is totally and completely without merit.” (Bucar v. Ahmad (2016) 244 Cal.App.4th 175, 189.) Indeed, even “the fact that a plaintiff fails to provide a sufficient showing to overcome a demurrer or to survive summary judgment is not, in itself, enough to warrant the imposition of sanctions.” (Peake v. Underwood (2014) 227 Cal.App.4th 428, 448.)

            Defendants contend that the conduct of Plaintiff’s counsel in filing this action was objectively unreasonable in light of the history of the Nevada Action. Plaintiff filed a class action complaint in the Eighth Judicial District Court of Nevada on July 5, 2023, alleging that he was discriminated against and ultimately terminated on the basis of his race while employed as a house flipper for Defendants. (RJN Exh. 1.) Plaintiff asserted claims for racial discrimination, hostile work environment harassment, retaliation, wrongful termination, and intentional and negligent infliction of emotional distress. (Id.) Defendants moved to compel arbitration on the basis that Plaintiff had agreed to arbitrate claims arising out his employment and agreed to delegate threshold questions of arbitrability to the arbitrator. (RJN Exh. 2.) The Nevada District Court granted the motion on October 3, 2023, finding that the parties had entered into an arbitration agreement governed by the Federal Arbitration Act, that the threshold questions of enforceability were delegated to the arbitrator, and Plaintiff had failed to demonstrate unconscionability. (RJN Exh. 5.) The Nevada District Court therefore ordered the matter to arbitration and dismissed the Nevada Action without prejudice. (Id.)

            Defendants argue that the Complaint in this action filed June 11, 2024, which alleges substantially identical facts and similar legal claims, was filed for an improper purpose and not warranted by law because the matter had already been ordered to arbitration and dismissed by the Nevada District Court. Defendants assert, without elaboration, that Plaintiff’s Complaint in this action is barred by res judicata, collateral estoppel, and comity. Defendants’ assertions do not establish these contentions. Moreover, the Court is not prepared to find that it is objectively unreasonable to refile an action in Los Angeles, California when, as the undisputed facts establish, the Arbitration Agreement requires the arbitration to take place in Los Angeles and be governed by the California Arbitration Act to the extent the act does not conflict with the Federal Arbitration Act. (Defendants’ RJN Exh. 2 § 2(e); (k).) Applying that language, the parties would be obliged to bring an action in Los Angeles, at minimum, to confirm, correct, or vacate an arbitration award pursuant to Code of Civil Procedure section 1285. The Court also rejects the notion that this filing constitutes an attempt to evade the Nevada District Court’s order, as section 1281.4 of the Code of Civil Procedure expressly permits a party to move to stay an action when arbitration of an issue has been ordered by “a court of competent jurisdiction, whether in this State or not,” and that motion, when made, “shall” be granted. (Code Civ. Proc. § 1281.4.)

            For these reasons, the Court is not persuaded that the filing of the Complaint in this action standing alone is objectively unreasonable.

CONCLUSION:

            Accordingly, Defendants’ Motion for Sanctions is DENIED.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated:  September 10, 2024                           ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.