Marriage of Freitas

Filed 6/25/08 Marriage of Freitas CA5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIFTH APPELLATE DISTRICT

APPEAL from an order of the Superior Court of Merced County. Gerald W. Corman, Commissioner.

Allen, Proietti & Fagalde, Susan L. Albertoni and Kimberly G. Flores for Appellant.

Law Offices of Bernard N. Wolf and Bernard N. Wolf; McCormick, Barstow, Sheppard, Wayte & Carruth and Kenneth C. Cochrane for Respondent.

In this marital dissolution action, appellant, Johnnie T. Freitas (Husband), challenges the trial courts order awarding $75,000 in sanctions to respondent, Duane Diane Freitas (Wife), pursuant to Family Code section 271 and/or as discovery sanctions. The trial court concluded that Husband had failed to timely comply with numerous court orders and had the ability to pay these sanctions. Husband argues that the trial court abused its discretion because Wife failed to first move to compel further responses to the allegedly inadequate discovery responses. Husband further contends that the trial courts basis for awarding sanctions is not supported by the record.

As discussed below, a motion to compel was not a prerequisite to the trial courts award of monetary sanctions. A litigant may be subject to sanctions for violating a court order. The trial court ordered Husband to respond to Wifes discovery request and Husband did not timely comply. Further, the trial courts award is supported by substantial evidence. Accordingly, the order will be affirmed.

BACKGROUND

In July 2002, Wife filed a petition to dissolve her 33-year marriage to Husband. During the marriage the family business, Freitas Auto Wreckers, was the parties primary source of income. From the business profits, the parties were able to invest extensively in real estate and personal property. When the petition was filed, the real estate was estimated to be worth approximately $3 million.

The parties have an adult son, Rodney Freitas, and Husband has an adult son from a prior marriage, Terry Freitas. Terry and Rodney Freitas were given control of Freitas Auto Wreckers before Husband and Wife separated.

On October 8, 2002, the parties appeared before the trial court. The parties agreed that the court would supervise the litigation on a case management basis. (Fam. Code,  2450 et seq.) The parties further stipulated that:

1. Husband would provide an accounting to Wife for all rental income and expenses for the period from June 16, 2002, to October 31, 2002, and pay Wife one-half of the net rental income received during this period forthwith.

2. Husband would provide an accounting to Wife for $80,000 that he had previously transferred from a joint account to an account in his name alone.

3. The parties houseboat would be repaired within a reasonable period of time, returned to the lake, and sold. Husband was to oversee this repair and transportation and be reimbursed for his time and efforts at $20 per hour.

4. Husband would forthwith contact Mr. Bob Trindade to inspect the cattle owned by the parties, estimate the weight of the cattle and the present value thereof based on present market prices.

Between October 2002 and September 2006, multiple case management conferences were held. Following each conference, the trial court filed its findings and orders directing the parties to accomplish various tasks. However, Husbands compliance with these orders was sporadic.

The October 2002 orders.

The October 2002 orders outlined above were not complied with for several years, if at all. In November, 2003, Wife moved to enforce prior orders, including the accountings and cattle appraisal. Husband was ordered to arrange to have the cattle appraised immediately. Nevertheless, the value of the cattle was not determined until April 2004. The matter was finally resolved in May 2004. Further, complete and verified accountings were never provided. Husband admits that the accountings presented were unsophisticated and, as to the $80,000, incomplete. Regarding the houseboat, when Husband had not complied with the order as of April 2004, Wife moved to modify the order. In May 2004, the trial court ordered Husband to purchase the houseboat from Wife on or before December 31, 2004. Husband failed to make the payment and was ordered to do so by January 31, 2005.

Wifes demand for production of documents.

In August 2003, Wife served a demand for identification and production of documents on Husband. This demand included requests for records regarding income, expense reimbursements, retirement plans, employment, taxes, obligations, credit cards, bank accounts, securities, financial statements, personal property inventories, real property transactions, insurance policies, and Freitas Auto Wreckers.

On December 15, 2003, the trial court ordered Husband to comply with Wifes discovery requests by January 15, 2004. Husband was to provide full and complete written responses under penalty of perjury. Although Husband did provide responses, they were incomplete, unorganized, and unverified.

On January 20, 2004, the trial court ordered Husband to produce the requested documents. Husband was given the option of presenting the documents at Wifes counsels office for copying or making the copies himself and delivering them to Wifes counsel.

On February 23, 2004, the trial court ordered the original documents produced by Husband to be returned in their entirety to Wifes counsels office for review and copying. The copying was to be completed by March 13. Wife was also directed to prepare and serve a statement of issues in contention with regard to any noncompliance with the ordered document production.

In April 2004, Wife filed such a statement of issues titling it statement of demand for identification and production of documents and responses in contention for respondents response to demand for identification and production of documents -- set one. Wife informed the court that

Any documents produced by [Husband] were produced through Freitas Auto Wreckers, one of the parties business entities. No effort was made by [Husband] whatsoever to catalog or in any way identify what documents were being produced in response to what demand, or to differentiate between his personal records and those of Freitas Auto Wreckers. Although [Wifes] Demand contained 45 separate demands for various categories of documents with multiple sub requests, the documents provided by [Husband] in February 2004 are responsive to only 19 of the respective demands, and are not wholly responsive to any one demand.

In August 2004, Wife filed a second statement of issues in contention. Wife noted that Husband had failed to verify his amended response to the discovery demand and had not fully complied with this basic discovery request for a year. Wife also outlined the specific deficiencies in Husbands responses.

On September 29, 2004, the trial court ordered Husband to produce various documents specified by Wife as missing from Husbands discovery responses. Husband was ordered to verify those responses and also provide verifications for each of his prior responses. The court stated that if Husband failed to comply on or before October 20, 2004, he would be assessed a $2,500 sanction.

On January 5, 2005, the court found that Husband had not complied with the September 29, 2004, discovery order and imposed $5,000 in sanctions. The court ordered Husband to provide the verifications and declarations required by the September 29 order forthwith.

On March 2, 2005, the trial court again ordered Husband to provide the required verification to his previous responses to Wifes document demand. Husband did so on April 1, 2005.

Order allowing inspection and photographing of property.

On October 14, 2003, the trial court granted Wifes motion to inspect and photograph property at Husbands residence on that day. However, Husband refused Wife and her counsel entry and threatened to get his gun and shoot them if they did not leave.

Wifes motion for sanctions.

In September 2006, Wife filed a notice of motion seeking $100,000 in attorney fees and sanctions. Wife stated that she had incurred $133,000 in attorney fees and believed that at least 75 percent of these fees were attributable to Husbands refusal to obey court orders and comply with discovery.

The trial court concluded that Husband had failed to comply with the specific requirements and certainly the intent of the discovery laws. The court specifically found that Husband had failed to: timely and fully comply with Wifes demand for production of documents; comply with the courts order to allow inspection and photographing of property; comply with the orders to provide accountings; comply with the order to inspect and appraise cattle; and repair the parties houseboat. The court further determined that Husband had evidenced a pattern in not only the above-mentioned problems of non-compliance with court orders attempting to get the within matter resolved or ready for trial, but in other actions as well. The court concluded that Husbands pattern of flip-flopping positions on various issues, such as the sale of the cattle and houseboat and the rental of one of the properties, indicated an overall effort to frustrate the economical resolution of the proceeding. The court further noted that Husband had frustrated progress in the case by unduly delaying the retaining of the expert to value the business, failing to provide statements of issues and contentions with regard to vehicle and furniture issues, and changing positions with respect to the sale of the Oregon property.

The court found the fees incurred by Wife were reasonable under the circumstances but that, even if Husband had cooperated in completing discovery, some of the fees would have been incurred. The court further determined that, because Husband would be receiving properties from the dissolution with equity in the hundreds of thousands of dollars if not over a million, he had the ability to pay fees and sanctions. Accordingly, the court ordered Husband to pay Wifes attorney $75,000 in attorney fees & costs and attorney fees as sanctions per Family Code Section 271 and Code of Civil Procedure Sections 2023.010 - 040, 2031.320 and 2034.250 (boldface omitted) with credit for the $5,000 in attorney fees as sanctions previously ordered and paid. The court also imposed evidentiary sanctions.

DISCUSSION

Husband contends the trial court abused its discretion in ordering sanctions against him. According to Husband, he fully complied with each and every discovery request. Husband further argues that the trial court was without jurisdiction to award discovery sanctions because Wife did not file a motion to compel further responses to her demand for production of documents.

Misuse of the discovery process may result in the imposition of a variety of sanctions such as payment of costs and evidence preclusion. (Karlsson v. Ford Motor Co. (2006) 140 Cal.App.4th 1202, 1214.) Such misuse includes failing to respond or submit to authorized discovery, providing evasive discovery responses, and disobeying a court order to provide discovery. (Ibid.)

A trial court has broad discretionary powers to enforce its discovery orders and may impose suitable sanctions. (In re Marriage of Michaely (2007) 150 Cal.App.4th 802, 809.) Accordingly, a sanctions award is subject to reversal only for arbitrary, capricious, or whimsical action. (Ibid.) Moreover, the trial courts order is presumed correct and all intendments and presumptions are indulged in to support the order on matters to which the record is silent. It is the appellants burden to affirmatively demonstrate error and, where the evidence is in conflict, the appellate court will not disturb the trial courts findings. (Do It Urself Moving & Storage, Inc. v. Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27, 35.)

Similarly, an award of attorney fees and costs in the nature of a sanction under Family Code section 271 is reviewed under the abuse of discretion standard. (In re Marriage of Burgard (1999) 72 Cal.App.4th 74, 82.) Thus, such an order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order . (Ibid.)

1. A motion to compel was not a prerequisite to the sanctions award.

Code of Civil Procedure section 2031.310, subdivision (a), provides that a party demanding an inspection of documents may move for an order compelling further response to the demand if compliance with the demand is incomplete. If a party fails to obey an order compelling further response, the court may impose sanctions. (Code Civ. Proc.,  2031.310, subd. (e).) Here, because Wife did not serve and file a document entitled motion to compel, Husband contends the trial court did not have jurisdiction to award discovery sanctions.

However, disobeying any court order to provide discovery constitutes a misuse of discovery for which the court may impose sanctions. (Code Civ. Proc.,  2023.010 and 2023.030; Miranda v. 21st Century Ins. Co. (2004) 117 Cal.App.4th 913, 928.) When a motion to compel is filed, a party is seeking court involvement in the discovery process, i.e., an order compelling the responding party to provide discovery. If the responding party complies with the discovery demand in the first instance, such a court order is not necessary.

As noted above, the parties stipulated that the case would proceed under a case management plan. In the course of this case management, the trial court issued numerous orders compelling Husband to comply with Wifes demand for inspection of documents. Thus, court orders to provide discovery existed without a formal motion to compel. When Husband disobeyed these orders, he misused the discovery process and thus was subject to sanctions under Code of Civil Procedure section 2023.010.

Moreover, a procedure paralleling a motion to compel was implemented by the court. Pursuant to court order, Wife filed and served a statement of issues that detailed the inadequacies in Husbands discovery response. Thus, it served the purpose of a motion to compel. When the court again ordered Husband to provide further responses based on this procedure, Husband did not object to the manner in which this order was procured. Accordingly, Husband waived any claim of procedural errors on Wifes part. (In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 501.) Husband then proceeded to disobey these orders as well, again subjecting himself to sanctions.

In Mileikowski v. Tenant Healthsystem (2005) 128 Cal.App.4th 262, the court was faced with an analogous situation. There, an order requiring the appellant to respond to the specific discovery requests did not exist. However, the parties had entered into a stipulation that respondents could file a motion for sanctions if they did not receive appellants supplemental discovery responses by a certain date. Under these circumstances, the court held that a formal order compelling discovery was not required. Rather, the stipulation was tantamount to the requisite order. (128 Cal.App.4th at pp. 278-279.)

In sum, a formal order to compel was not required. Rather, by disobeying court orders, no matter how procured, Husband subjected himself to sanctions.

2. The record supports the trial courts finding that Husband misused discovery.

Husband contends that he complied with Wifes demand for production of documents. He states that he produced the documents, i.e., in boxes delivered to Wifes attorneys office, as they were kept in the ordinary course of business. In other words, the courts finding that Husband failed to timely and fully comply with Wifes demand for production of documents is not supported by substantial evidence.

The record, however, belies Husbands claim. As outlined above, beginning in December 2003, Husband failed to obey multiple court orders compelling him to comply with Wifes demand for production. Although Husband claims he complied, the trial court found otherwise, a finding that is supported by the evidence. For example, Husband did not identify the documents as being in response to a particular demand as he was ordered to do and responded to less than half of the demands. Further, despite numerous orders to do so, Husband did not even verify his responses until April 2005. Wife consistently sought court orders compelling Husbands compliance and accordingly incurred significant additional attorney fees.

Sanctions in the amount of $5,000 were imposed against Husband in January 2005 for his failure to produce documents and verify his discovery responses. Husband contends that imposing $75,000 in sanctions for the same conduct in 2007 was an abuse of discretion.

However, as discussed below, the $75,000 was not limited to the failure to obey orders pertaining to Wifes demand for production. Rather, the court found that Husband had evidenced a pattern of noncompliance with court orders and conduct designed to frustrate progress in the case. (Fam. Code,  271.) Further, the court granted Husband a credit against the $75,000 for the sanctions already paid. Accordingly, the trial courts award was not an abuse of discretion in this regard.

3. The record supports the trial courts finding that Husband acted to frustrate settlement.

The trial court alternatively justified the award of attorney fees under Family Code section 271.This section provides the trial court with authority to order the opposing party to pay attorney fees and costs in the nature of a sanction when the conduct of each party or attorney frustrates the policy of the law to promote settlement of litigation. (In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1477.) The statute advances the policy of the law to promote settlement and to encourage cooperation which will reduce the cost of litigation. (In re Marriage of Petropoulos (2001) 91 Cal.App.4th 161, 177.) A family law litigant who flouts that policy by engaging in conduct that increases litigation costs is subject to the imposition of attorney fees and costs as a sanction. (Ibid.)

Husband argues there is no evidence that he acted to frustrate settlement of the litigation and thus the trial court abused its discretion in making an award under Family Code section 271. To support his position, Husband attempts to reargue the facts and make excuses for his dilatory conduct.

However, the recitation of the facts above confirms the trial courts contrary conclusion. For example, not only did the court have to order Husband to comply with the October 2002 stipulations multiple times, but that compliance took several years. Further, threatening to shoot Wife and her attorney when they appeared for the inspection on the day ordered by the court certainly did not promote settlement and cooperation.

Husband further contends that the amount of attorney fees awarded is unreasonable and that no evidence was presented to substantiate those fees. However, Husband did not object to the amount of fees sought or the lack of evidence substantiating those fees below. Thus, Husband has waived this challenge to the amount of fees awarded to Wife. (In re Marriage of Feldman, supra, 153 Cal.App.4th at pp. 1495-1496.) Moreover, under the circumstances of this case, it cannot be said that no reasonable trial court would have awarded Wife $75,000 in attorney fees as sanctions.

Finally, Husband argues that the trial court incorrectly failed to consider his financial condition in imposing the sanctions. Again, the record does not support this argument. Rather, the trial court considered the value of the marital property and concluded that Husband will receive property with equity in the hundreds of thousands if not over a million dollars.

4. Husbands request for sanctions.

Husband contends that Wife unnecessarily caused the entire trial court record to be included in the clerks transcript and has requested sanctions for this transgression, i.e., the inclusion of matter not reasonably material to the appeals determination. However, Husbands request is procedurally improper. A party seeking sanctions on appeal must file a separate motion for sanctions that complies with the requirements of California Rules of Court, rule 8.276. Husband failed to file a separate sanctions motion and therefore is not entitled to be heard on the subject. (Kajima Engineering and Construction, Inc. v. Pacific Bell (2002) 103 Cal.App.4th 1397, 1402.) Accordingly, the request for sanctions is denied.

DISPOSITION

The order is affirmed. Costs on appeal are awarded to respondent.

_________________________

Levy, Acting P.J.

WE CONCUR:

_______________________________

Cornell, J.

_______________________________

Kane, J.

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