Spahl v.
Filed 5/9/13
Spahl v. Santiago CA2/2
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
TWO
STEVEN SPAHL et
al.,
Plaintiffs and
Appellants,
v.
ARTEMIO SANTIAGO et al.,
Defendants and Respondents.
B236369
(Los Angeles County
Super. Ct. No. LC092701)
APPEAL
from orders of the Superior Court
of
County. Michael A.
Latin, Judge. Affirmed.
Sandor
Carrasco and Sandor Kenneth Carrasco for Plaintiffs and Appellants.
Law
Offices of Santiago Rodnunsky &
Jones, David G. Jones and Tamera S. Fong for Defendants and Respondents.
Plaintiffs
and appellants Steven Spahl and Donny Spahl (collectively, plaintiffs) appeal
the dismissal of their action against defendants and respondents Artemio
Santiago (Santiago) and Santiago, Rodnunsky & Jones (SRJ)
motion for sanctions under Code of Civil Procedure section 128.7.
order imposing $5,515 in sanctions against them. We affirm the sanctions order and the order
dismissing plaintiffs’ action with prejudice.
The parties’ November 2009 settlement agreement
Defendant
Santiago and his law firm, SRJ,
represented plaintiffs for approximately four years in trust litigation
involving the Franz Spahl Inter Vivos
Trust, Los Angeles Superior Court case No. GP011784 (the trust
litigation). Plaintiffs terminated SRJ’s
representation and retained new counsel on April 15, 2009.
At
the time plaintiffs terminated SRJ’s representation, they owed SRJ a
significant amount of unpaid attorney fees, and SRJ filed an arbitration claim
seeking payment of those fees. The
parties eventually settled their dispute and entered into a written
general release, a release of unknown claims under Civil Code section 1542, and
an express waiver of all rights to bring suit against each other as a result of
any claims for actions, omissions, errors, or other acts predating the
settlement agreement. Plaintiffs were
represented by counsel in connection with the settlement, and counsel executed
the settlement agreement as to form. Defendants
thereafter dismissed their arbitration claims.
The instant action
On
February 14, 2011,
plaintiffs filed the instant action against defendants for
intentional and constructive fraud, breach of contract, breach of implied
covenant of good faith and fair dealing, and unjust enrichment in connection
with the trust litigation. Defendants filed a demurrer and motion to
strike plaintiffs’ complaint on various grounds, including that the November 10, 2009 settlement
agreement barred plaintiffs’ claims.
Motion for sanctions and
On
June 13, 2011, defendants
sent plaintiffs a letter enclosing a copy of a proposed motion for sanctions
under section 128.7. Defendants
maintained that plaintiffs’ action had no merit because all of plaintiffs’
claims were barred by the November
10, 2009 settlement agreement.
Defendants stated their intent to file the proposed motion within 21
days unless plaintiffs withdrew their complaint and dismissed the action with
prejudice.
Plaintiffs
did not dismiss their action, and defendants filed the motion for sanctions on July 5, 2011, requesting sanctions in
the amount of $6,245. In addition to
sanctions, defendants requested that the entire action be dismissed with
prejudice.
Plaintiffs
filed a first amended complaint on July
27, 2011. They filed no
opposition to the motion for sanctions.
At the August 1, 2011
hearing on the sanctions motion, the trial court granted the motion. The court noted that defendants had presented
a signed mutual release and that plaintiffs failed to file any substantive
opposition. The trial court awarded
$5,515 in sanctions against plaintiffs and ordered the action dismissed with
prejudice.
Motion for reconsideration and November 8, 2011
On
August 11, 2011, plaintiffs
filed a motion for reconsideration to set aside the dismissal and the order for
sanctions on the ground that they had discovered new facts, in the form of the
testimony of a forensic accountant defendants had retained in the trust
litigation to substantiate the claims asserted in their complaint. Plaintiffs further argued the dismissal and
order for sanctions should be set aside under section 473, subdivision (b)
because they had mistakenly believed that filing a first amended complaint
obviated any need to respond to defendants’ section 128.7 motion.
On
October 5, 2011, the trial
court continued the hearing on plaintiffs’ motion for reconsideration to November 8, 2011. At the same time, the trial court ordered
plaintiffs’ counsel to file a declaration under section 473, subdivision (b) to
support plaintiffs’ allegations of surprise or negligence.
Defendants
opposed the motion for reconsideration, arguing that plaintiffs had presented
no justifiable reason for not speaking with the forensic accountant during the
eight months preceding the August 1,
2011 sanctions hearing and no declaration of excusable neglect by
their counsel. On October 12, 2011, defendants also filed a
separate motion for dismissal of the entire action with prejudice, to be heard
concurrently with plaintiffs’ motion for reconsideration.
Plaintiffs
filed an opposition to the October
12, 2011 motion for dismissal, along with the declaration of their
attorney, Sandor Carrasco, in support of their motion for reconsideration of the
sanctions motion pursuant to section 473, subdivision (b). Carrasco stated in his declaration that he
believed defendants’ sanctions motion was fatally defective because section
128.7 requires a motion for sanctions to be made separately from other motions
or requests and defendants’ July 5,
2011 motion had included a request for dismissal. Carrasco further stated his belief that the
court lacked jurisdiction to dismiss the case based on plaintiffs’ failure to
oppose the section 128.7 motion for sanctions.
Carrasco expressed his belief that relief under section 473, subdivision
(b) was appropriate based on plaintiffs’ surprise or inadvertence because
plaintiffs did not foresee the court granting defendants’ procedurally
defective motion and dismissing the case with prejudice.
On
November 8, 2011, the trial
court denied plaintiffs’ motion for reconsideration, finding that plaintiffs
had failed to submit any attorney declaration of fault or other evidence to
support relief under section 473, subdivision (b). The trial court further found that
defendants’ motion for sanctions and request for dismissal filed on July 5,
2011, had been properly granted as it did not violate section 128.7 by
including a request for dismissal of the entire action with prejudice. The court noted that “[a] dismissal in
addition to monetary sanctions is the natural result of granting of a . . .
section 128.7 motion. The Court would
not grant a motion to strike a frivolous complaint and then proceed to allow
the case to remain active.†The trial
court then granted defendants’ separately filed motion to dismiss the entire
action with prejudice.
The instant appeal
Plaintiffs
filed the instant appeal on September 28, 2011, challenging the trial court’s
August 1, 2011 order imposing sanctions against them in the amount of $5,515
and dismissing the action with prejudice.
I. Section 128.7 sanctions
A. Applicable law and standard
of review
Section 128.7,
subdivision (b) provides that an attorney or unrepresented party who files a
pleading certifies, “that to the best of the person’s knowledge, information,
and belief, formed after an inquiry reasonable under the circumstances,†the
pleading “is not being presented primarily for an improper purpose,†the
claims, defenses and other legal contentions therein are “warranted,†and the
allegations and other factual contentions “have evidentiary support.†(§ 128.7, subd. (b).) A party or attorney who violates these
certification requirements may be sanctioned.
(§ 128.7, subd. (c).)
A
motion for sanctions under section 128.7 must be made separate from other
motions or requests, must describe the specific conduct alleged to violate the
statute, and must be served on the party to be sanctioned at least 21 days
before it is filed with the court. The
sanctions motion may be filed only if the challenged pleading is not withdrawn
or corrected within this 21-day safe harbor period. (Ibid.;
Martorana v. Marlin & Salzman
(2009) 175 Cal.App.4th 685, 698 (
Upon
finding that a violation of section 128.7, subdivision (b) has occurred, a
trial court has discretion to impose sanctions, including monetary sanctions,
for that violation. (
174 Cal.App.4th 408, 422.) We review the
trial court’s decision to impose sanctions under section 128.7 under the abuse
of discretion standard. (
Cal.App.4th 387, 399.)
abuse of discretion
Plaintiffs contend the trial court
abused its discretion by granting the motion for sanctions because no violation
of section 128.7 occurred. There is
substantial evidence to support the finding that plaintiffs violated section
128.7, subdivision (b). Defendants
presented evidence that plaintiffs signed a written settlement agreement in
which they released defendants from all
of the claims asserted in the complaint.
Plaintiffs filed no opposition to the sanctions motion and presented no
evidence to controvert the preclusive effect of the settlement agreement. The trial court’s granting of the motion
accordingly was not an abuse of discretion.
Plaintiffs
claim the sanctions order should be reversed because defendants’ motion for
sanctions did not comply with the strict procedural requirements of section
128.7, subdivision (c) -- specifically, the requirement that a motion for
sanctions “shall be made separately
from other motions or requests.†(§
128.7, subd. (c)(1), italics added.)
Because defendants’ motion for sanctions included a request to dismiss
the action with prejudice, plaintiffs contend the motion was procedurally
defective and should have been denied.
They cite as support for their position In re Marriage of Corona (2009) 172 Cal.App.4th 1205 (
the sanctions order in this case.
The
appellant in Martorana challenged an
award of sanctions under section 128.7 on the ground that the moving party
failed to comply with the 21-day “safe harbor†provisions of the statute and
because the moving party did not comply with the requirement that its request
for sanctions be made separately from other motions, having included the
sanctions request as part of its demurrer to the complaint. (Martorana,
supra, 175 Cal.App.4th at pp. 698-699.)
Failure to comply with the 21-day statutory notice requirement was the
sole basis for the Martorana court’s
reversal of the section 128.7 sanctions award.
The court in Martorana did not
address whether the moving party’s inclusion of the sanctions request in a
demurrer was an independent ground for reversing the sanctions award. (Martorana,
supra, 175 Cal.App.4th at p. 700, fn. 4 [“In light of our conclusion that
the award of sanctions must be reversed for Allstate’s failure to comply with
the notice requirements of section 128.7, subdivision (c)(1), we need not
address Martorana’s other arguments regarding the sanctions order].) Martorana
accordingly does not compel reversal of the sanctions order in this case.
In
Corona, the husband in a marital
dissolution action appealed a sanctions order imposed against him by the family
court after the court granted the wife’s motion to establish support
arrears. Although the motion to establish
arrears included a request for sanctions, the wife did not specify in her
moving papers the statutory basis for her sanctions request, and the family
court did not state the statutory basis for its sanction award. In considering the various statutory bases
upon which the sanctions award might be affirmed, the court in
not a proper basis for doing so because the wife’s motion for sanctions had
been combined with her motion to establish arrears and therefore did not comply
with the statutory requirement that the motion “shall be made separately from
other motions or requests.†(§ 128.7,
subd. (c)(1); Corona, supra, 172
Cal.App.4th at pp. 1224-1225, fn. 7.)
The Corona court ultimately
found an independent basis for affirming the sanctions order under Family Code
section 271. (Id. at p. 1226.) Its
observations regarding section 128.7 are therefore arguably dictum.
Defendants’
inclusion of a request for dismissal in its motion for sanctions did not
contravene any underlying statutory purpose.
The requirement that a sanctions motion be made separately from other
motions or requests “prevents the moving party from simply adding a sanctions
request to every motion or opposition.
[¶] It also prevents the moving
party from seeking sanctions both under [section] 128.7 and some other source
of sanctions power (e.g., sanctions for contempt or violation of court orders)
in the ‘same motion.’†(Rylaarsdam, et
al., Cal. Practice Guide: Civil
Procedure Before Trial (The Rutter Group 2012) ¶ 9:1191, p. 9(III)-24.) Neither of these purposes was frustrated in
the instant case. Defendants’ inclusion
of a request for dismissal in their motion for sanctions under section 128.7
does not preclude us from affirming the sanctions award.
Dismissal
Plaintiffs contend the trial court
lacked authority to dismiss the action under section 128.7 or as a sanction for
misconduct. The trial court did not
invoke any statutory authority when it dismissed plaintiffs’ action. Rather, the record shows the trial court
dismissed plaintiffs’ action under its inherent authority to control
proceedings before it.
Independent
of specific statutory grounds for dismissal, trial courts have an underlying
inherent discretionary power to dismiss actions and claims. (See Rutherford
v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 967 [“courts have
fundamental inherent equity, supervisory, and administrative powers, as well as
inherent power to control litigation before themâ€]; Stephen Slesinger, Inc. v. Walt Disney Co. (2007) 155 Cal.App.4th
736, 758-759 (Slesinger).) A trial court’s exercise of that inherent
power is reviewed under the abuse of discretion standard. (Slesinger,
supra, at p. 765.) Under that
standard, the trial court’s decision may be reversed only “‘for manifest abuse
exceeding the bounds of reason.’†(
The
record here discloses no abuse of discretion.
Defendants presented evidence that all of plaintiffs’ claims were barred
by the written settlement agreement and release entered into by the parties in
November 2009 and that the filing of the complaint was sanctionable under
section 128.7. Plaintiffs offered
nothing in opposition. Given these
circumstances, the dismissal with prejudice of plaintiffs’ action was not a
manifest abuse exceeding the bounds of reason.
III. November 8, 2011 order
Plaintiffs
challenge the trial court’s November 8, 2011 order denying their request for relief from dismissal under section 473,
subdivision (b) and denying their motion for reconsideration. Plaintiffs’ challenge is not cognizable on
appeal because the November 8, 2011 order was not a valid order. The filing of the notice of appeal on
September 28, 2011 terminated the trial court’s subject matter jurisdiction
over the pending requests for relief and reconsideration, and the trial court
had no authority to issue the November 8, 2011 order. (§ 916, subd. (a); Young v. Tri-City Healthcare Dist. (2012) 210 Cal.App.4th 35,
41-42.)
The
order imposing sanctions under section 128.7 is affirmed, as is the order
dismissing the action with prejudice.
Defendants are awarded their costs on appeal.
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS.
_____________________________,
J.
CHAVEZ
We concur:
______________________________, Acting P. J.
ASHMANN-GERST
______________________________, J.*
FERNS
________________________________________________________________________
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California Constitution.
name="_ftn1" title="">[1] Santiago
and SRJ are referred to collectively hereinafter as defendants.
name="_ftn2" title="">[2] All
further statutory references are to the Code of Civil Procedure unless
otherwise indicated.
