Court of Appeal Reverses $15,611.50 in 128.7 Sanctions Because “Safe Harbor” Papers Were Not Identical to Filed 128.7 Motion Papers.
In a lengthy but informative unpublished opinion, the Fourth District, Division One affirmed and reversed some sanctions components assessed against a plaintiff who was defensed through demurrer and summary judgment law-and-motion proceedings in his investment fraud lawsuit. The decision has some valuable pointers on the right way to set up Code of Civil Procedure section 128.7 motions with proper pre-motion “safe harbor” papers.
Burgos v. Wheeler, Case No. D051299 (4th Dist., Div. 1 Feb. 6, 2009) (unpublished) involved a losing plaintiff who was assessed with sanctions totaling $24,447.50 on four occasions during the course of the litigation. Three sanctions components were affirmed on appeal, but one component—the largest monetary sanction—was reversed.
The first lesson that emanates from this decision involves the liminal issue of appealability—did plaintiff file its notices of appeal timely so that the reviewing court had jurisdiction to entertain the claims of error? Plaintiff got by defense motions to dismiss the appeal because defendants mailed “Notices of Ruling” rather than “Notices of Entry.” Clear case law indicates that the normal 60 day appeal period is not triggered unless the clerk or litigant mails a “notice of entry of judgment/appealable order,” with a “notice of ruling” not sufficing to start the running of shorter appeal deadlines. (See, e.g., Sadler v. Turner, 186 Cal.App.3d 245, 248 (1986); Sunset Millennium Associates, LLC v. Le Songe, LLC, 138 Cal.App.4th 256, 260 (2006); 20th Century Ins. Co. v. Superior Court, 28 Cal.App.4th 666, 671-672 (1994); see also Alan v. American Honda Motor Co., Inc., 40 Cal.4th 894, 903-904 (2007) [same result with court clerk mailed document].) The Burgos panel observed “[w]e discern no reason why Alan’s interpretation of [California Rules of Court] rule 8.104(a)(1)’s language should not apply to identical language in rule 8.104(a)(2) regarding the required ‘Notice of Entry’ served by a party (instead of mailed by a court clerk).” (Slip Opn., at p. 9.) This meant that plaintiff had 180 days after issuance of the sanctions orders to appeal, so that his appeals were timely. (Lesson #1–So, if you want to trigger the shorter appeal periods, make sure you send out a “Notice of Entry”.)
The second lesson is that lower courts have broad discretion in granting a venue change as well as awarding reasonable fees and costs to the successful party in a venue transfer motion proceeding. On the first point, the appellate panel found that the venue change motion can be made after the 30-day complaint response deadline expires, especially if no response is filed or no default is taken. (Lyons v. Brunswick-Balke etc. Co., 20 Cal.2d 579, 582-584 (1942).) With respect to fees and costs to the winning party, Code of Civil Procedure section 396b expressly authorizes such “sanctions,” with the appellate panel in Burgos sustaining an award of $1,140 in fees and expenses to defendants in successfully moving the action from Los Angeles to San Diego.
(Lesson #2—If you want to argue venue transfer waiver, make sure the opposite side has answered or you obtained a quick entry of default.)
The third lesson is an important one for litigants deciding to move for Code of Civil Procedure section 128.7 sanctions (which are warranted where a pleading was filed or an action prosecuted for an improper purpose, or was frivolous in nature, or not supported by factual evidence after a reasonable time to investigate/obtain discovery). That lesson is that the 128.7 paperwork provided to the sanctions target in the 21-day “safe harbor” period must be the same paperwork ultimately filed with the court when moving for 128.7 sanctions. In fact, the Burgos determined the papers must be identical to pass muster. (See Hart v. Avetoom, 95 Cal.App.4th 410, 414-415 (2002); Cromwell v. Cummings, 65 Cal.App.4th Supp. 10, 15 (1998).) Because the defendants in Burgos filed different memoranda and declarations, the $15,611.50 in 128.7 sanctions against plaintiff was reversed on appeal. (Lesson #3—If you are going to seek 128.7 sanctions, rigorously comply with the “identical paperwork” rule followed in Hart, Cromwell, and the unpublished Burgos decision.)
The fourth lesson is that sanctions will be affirmed for failing to comply with important local rules such as mandatory attendance at scheduled, court-ordered settlement conferences. In Burgos, neither plaintiff nor his attorney attended a MSC, with the trial court imposing $1,000 in sanctions upon them. The trial court did not, however, specify the statute or authority upon which sanctions were based. That did not make a difference under the circumstances. The appellate panel found that Code of Civil Procedure section 575.2 permits a trial court to impose monetary sanctions against a a party or his/her attorney for noncompliance with local court rules (such as attendance at MSCs). (See Rietveld v. Rosebud Storage Partners, 121 Cal.App.4th 250, 257 (2004).) Thus, there was a basis for the $1,000 sanctions. (Lesson #4—Do not shirk compliance with local rules; trial and appellate courts expect compliance with them because they lead to proper case management and ultimate resolution in an overwhelming number of cases.)