Additional $60,000 Fee Recovery Against Plaintiffs For Dismissed Tort Claims Also Sustained Based On Breadth Of Fees Clause.
Peake v. Underwood, Case No D061267 (4th Dist., Div. 1 June 25, 2014) (partially published) is a great primer on CCP § 128.7 sanctions, on how to properly present such a sanctions request, and on the rules governing seller’s brokers’ disclosures in a real estate nondisclosure/fraud case.
On the sanctions front (in the published part of the decision), the lower court imposed $60,000 in § 128.7 sanctions on both plaintiffs/their counsel for bringing frivolous contractual/tort claims against sellers and their brokers. The appellate court found no abuse of discretion; after all, the showing below indicated that buyers were provided with photos and reports disclosing problems with the residence’s subflooring, including damage to the subflooring before escrow closing was slated to occur. However, the reviewing court was careful to observe: “In affirming the sanctions order, we do not intend to suggest sanctions should be routinely awarded. Our adversary system requires that attorneys and litigants be provided substantial breathing room to develop and assert factual and legal arguments.” (Slip Opn., p. 3.) Also, plaintiffs had filed an amended pleading including a couple of new claims, with the appellate court agreeing that § 128.7 sanctions motion normally would require an additional safe harbor period request—but finding it would have been futile under the circumstances before it.
The lower court also awarded $60,000 in fees in favor of the defense and against plaintiffs under Civil Code section 1717 based on a voluntarily dismissal of the suit after the defense prevailed on a motion to compel arbitration. Plaintiffs argued Santisas, which the reviewing court agreed did bar any fee exposure on the contract claim. However, different matter on the tort claims: Santisas did not bar; the fees clause was sufficiently broad to encompass tort claims (“arising out” agreement language); and the contract claims were intertwined with the tort counts. So, in the unpublished section of the opinion, this fee award, too, was affirmed—which means the defense will have a chance to recoup costs/fees on appeal for winning yet again.
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