Sixth District Affirms Fee Award Against Joined Parties.
In our posts of July 7, 8, 17, and 23, 2008, we explored the attorney’s fees sanction codified in Family Code section 271. The next case involves an interesting twist: fee sanction awards against joined, nonspouse parties to a dissolution case.
In re Marriage of Mary and Frank Murguia, Case No. H031048 (6th Dist. Aug. 4, 2008) (unpublished) involved a convoluted, horribly tangled procedural history where two unrelated persons, investment advisors to former husband and wife, were joined in a dissolution action as parties. They were alleged to have misdirected, misadvised, and misled the former spouses on certain investments or were added to account for where certain investment money had been steered. What followed were incredulous denials of being served, despite numerous appearances, and litigious conduct of an unproductive nature—filing of two separate motions to set aside a judgment which were not prosecuted and taken off calendar and the failure to comply with multiple court orders to respond to discovery as well as attend hearings. Also, there was some indicia of fraud in that joined parties’ attorney filed and recorded a satisfaction of judgment despite assurances that this would not be done until former spouses were paid by one or both of the joined parties under a settlement agreement to compromise the earlier judgment. Joined parties made no attempt to settle the matter, but chose instead to file numerous motions and dishonor court orders. Finally, the lower court had enough, denying motions to set aside the earlier default judgment and ordering each joined party to pay $10,000 attorney’s fees to husband’s attorney and $10,000 attorney’s fees to wife’s attorney pursuant to Family Code section 271.
On appeal, the fee awards were affirmed in entirely.
Although joined parties claimed husband and wife had to bear their own fees under the American attorney fee rule, the Sixth District disagreed, because section 271 is a statutory provision that allows a fee award where conduct of each party or attorney “furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys.” The appellate court observed that trial courts have authority to award fees against joined parties in marital dissolution proceedings, citing In re Marriage of Siller, 187 Cal.App.3d 36, 43 (1986) and In re Marriage of Jovel, 49 Cal.App.4th 575, 585-590 (1996).
Joined parties then argued it was unfair to “switch” the attorney fee burden from two married people to a third party in a dissolution action. No, the Court of Appeal said—joined parties were assessed with fees, as sanctions, based on their conduct rather than the spouses’ needs for money. (This is consistent with the facial language of section 271, which indicates the requesting party does not need to demonstrate financial need for the sanctions award at all.)
BLOG OBSERVATION—The interesting aspect about this decision, aside from the fact it involves joined, nonspouse parties, is there was no discussion of the responding parties’ income, assets or liabilities that normally must be considered in assessing a section 271 sanctions award. It well could be that the Court of Appeal is saying that these considerations are nongermane when dealing with nonspouse parties such as the joined investment advisers. Equally possible, the joined parties were requested to attend hearings and produce documents, maybe failing to produce documents about their income, assets and liabilities, in which case the trial court may have assessed sanctions because joined parties made it impossible to evaluate these financial considerations. Future published cases will have to develop whether financial considerations come into play when considering imposition of section 271 sanctions against nonspouse parties joined into dissolution actions.