2015-00177454-CU-OR

Praetorian Guard, Inc. vs. Richard Uhri

Nature of Proceeding: Motion to Set Aside Order Granting Issue, Evidence and Terminating

Filed By: Finelli, Stephanie J.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

Plaintiff Praetorian Guard, Inc.’s (PGI) motion to set aside issue and evidence sanctions is CONDITIONALLY GRANTED as follows:

The parties’ requests for judicial notice are GRANTED.

On its own motion, the court takes judicial notice of the docket in this case between 4/03/17, when Matthew Pearson (Pearson) substituted in as counsel for PGI, and 12/18/17, when he substituted out. The court also takes judicial notice of the papers filed in support of and in opposition to the three motions for judgment of the pleadings set for hearing on 3/16/18.

In this case, PGI alleges it made infrastructure improvements to a subdivision and, pursuant to a recorded instrument, is entitled to reimbursement from property owners. The operative third amended complaint (TAC) contains causes of action for declaratory relief, contribution, breach of contract, and indemnity/unjust enrichment.

Two of the defending property owners are Raden Li (Li) and Richard Urhi (Urhi). In June and August of 2017, respectively, these defendants obtained orders compelling PGI to serve further responses to discovery. Neither motion to compel was opposed. PGI failed to comply with the discovery orders, and the same defendants moved for sanctions. Again the motions were unopposed. Hence, in November 2017, the court entered an order imposing issue and monetary sanctions based on Uhri’s discovery. In December 2017, the court entered a separate order granting issue, evidence and monetary sanctions based on Li’s discovery. The issue and evidence sanctions are extensive and effectively bar PGI from proving its case. Shortly after the issue and evidence sanctions were imposed, several defendants in the case moved for judgment on the pleadings. (These motions were continued to 3/16/18 so the court could consider the instant motion for relief.)

Pearson was PGI’s legal counsel when the motions to compel and motions for sanctions were filed and heard. During this period, he occasionally informed PGI that the case was “going fine” but provided no information about any discovery disputes or motions. (See Ambroselli Decl., ¶¶ 4, 5.) He also conferred with Li’s and Urhi’s counsel a few times by email. He obtained extensions on further responses and promised to forward additional discovery. However, he never procured or forwarded such discovery. He took no additional action to protect PGI’s interests before he substituted out of the case. While the substitution was underway, Pearson admitted he had neglected the case and was slow in providing the file to PGI’s current counsel. Although he initially indicated he would sign an affidavit of fault, he never did.

In January 2018, PGI filed this motion to set aside the issue and evidence sanctions. PGI cites CCP § 473(b) as a basis for relief. PGI argues the sanctions are due to Pearson’s neglect. In the alternative, it argues the sanctions should be attributed to its own mistake, inadvertence, surprise or excusable neglect. PGI essentially argues that

Pearson did not apprise it of the need to supplement discovery responses or respond to discovery motions. PGI tenders supplemental responses with its moving papers. Several defendants oppose.

To the extent PGI requests mandatory relief under § 473(b), the request must be denied. There is no affidavit from Pearson attesting to his fault. Absent such evidence, mandatory relief is not available. (See CCP § 473(b) [“[T]he court shall, whenever an application for relief is…accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate [enumerated adverse orders and judgments]”].) Furthermore, mandatory relief is only available to set aside defaults, default judgments and dismissals. (See Noceti v. Whorton (App. 3 Dist. 2014) 224 Cal.App.4th 1062, 1065-1066.) Discretionary relief under § 473(b) is available to set aside other orders, but mandatory relief is not.

Turning to PGI’s alternative request for discretionary relief, the court concludes the evidence does not support a conclusion that PGI made any mistake or other excusable error resulting in the sanctions imposed. PGI’s conclusory assertion that the motion is somehow due to its own fault lacks merit.

The evidence does support a conclusion that Pearson’s neglect was the cause for entry of sanctions. Both the Ambroselli Declaration and the Finelli Declaration submitted with the moving parties detail Pearson’s repeated failures to oppose discovery motions or inform PGI that further discovery responses were required. However, Pearson’s conduct was not excusable.

“A party who seeks relief under section 473 on the basis of mistake or inadvertence of counsel must demonstrate that such mistake, inadvertence, or general neglect was excusable because the negligence of the attorney is imputed to his client and may not be offered by the latter as a basis for relief.” [Citation.] In determining whether the attorney’s mistake or inadvertence was excusable, ‘the court inquires whether “a reasonably prudent person under the same or similar circumstances” might have made the same error.’ ” [Citation.] In other words, the discretionary relief provision of section 473 only permits relief from attorney error “fairly imputable to the client, i.e., mistakes anyone could have made.” [Citation.] “Conduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not therefore excusable. To hold otherwise would be to eliminate the express statutory requirement of excusability and effectively eviscerate the concept of attorney malpractice.”

(Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258.) “A party cannot justly be permitted to seek relief under section 473(b) from sanctions imposed for deliberate failure to respond to discovery or oppose discovery motions.” (Jerry’s Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th 1058, 1074.) Moreover, even if Pearson unintentionally failed to oppose the discovery motions or communicate with PGI, there is no evidence establishing a reasonable excuse, i.e., an error a reasonably prudent person would make under similar circumstances. (See Huh v. Wang (2007) 158 Cal.App.4th 1406, 1423-1424.) Absent an authority on point, the court rejects PGI’s suggestion that its decision to retain Pearson in the first place was an excusable mistake warranting discretionary relief.

As the parties recognize, however, an attorney’s otherwise inexcusable neglect can support discretionary relief if the attorney effectively abandoned the representation. (See, e.g., Fleming v. Gallegos (1994) 23 Cal.App.4th 68, 72-74 [where attorney “does nothing” and thereby engages in “inexcusable and extreme” neglect, and where client is “relatively free” from negligence, relief is appropriate].) Despite Pearson’s false promises to defense counsel that discovery responses were forthcoming, and despite his false assurances to PGI that the case was “going fine,” Pearson did no substantive work on the case during the period in question. The court finds that he abandoned the representation. Given this, and given that PGI was free from fault, discretionary relief is granted.

In reaching this conclusion, the court is aware that the decision to grant relief due to an attorney’s abandonment is informed by equitable considerations:

What constitutes “abandonment” of the client depends on the facts in the particular action. Even where abandonment is shown, however, the courts also consider equitable factors in deciding whether the dismissal of an action should be set aside. These factors include the client’s own conduct in pursuing and following up the case [citation], whether the defendant would be prejudiced by allowing the case to proceed [citation] and whether the dismissal was discretionary or mandatory [citation]. The courts must also balance the public policy favoring a trial on the merits against the public policies favoring finality of judgments and disfavoring unreasonable delays in litigation [citation]) and the policy an innocent client should not have to suffer from its attorney’s gross negligence against the policy a grossly incompetent attorney should not be relieved from the consequences of his or her incompetence.

(Seacall Dev. v. Santa Monica Rent Control Bd. (1999) 73 Cal.App.4th 201, 205.) Several defendants have submitted declarations in which they assert ongoing litigation will cause stress and expense. They protest further delay in the case, which has been pending since 2015. One of the declarants also asserts that the litigation makes it difficult for her to sell her home. (Kwong Decl., ¶ 9.) She does not assert, however, that she has specific plans to place the home on the market.

Despite the defendants’ genuine concerns, the equities do not undermine a grant of discretionary relief. Once PGI discovered Pearson’s misconduct, it sought new counsel and filed this motion promptly. Furthermore, Li and Urhi did not propound the discovery giving rise to the imposition of sanctions until 2017. Hence, it is not as though they and the other defendants have been unable to develop their defenses. Nor has a trial date been set. The potential for prejudice and other equitable considerations do not warrant an outright denial of the motion.

On the other hand, the defendants’ requests that an order in PGI’s favor be conditioned on the award of fees and costs incurred is well-taken. (See CCP § 473(b) [court may grant relief “upon any terms that may be just”]; Shapiro v. Clark (2008) 164 Cal.App.4th 1128, 1147 [conditions imposed must be “reasonably proportionate to the other party’s prejudice or expense”].) Defendants filed their motions for judgment on the pleadings in reliance the sanctions orders. Fees reasonably incurred to bring those motions should be borne by PGI, which is a better position to seek reimbursement from Pearson–its counsel of choice–than the defendants. PGI should likewise be required to reimburse defendants for fees reasonably incurred to oppose

the instant motion.

The court imposes a monetary sanction against PGI and in favor of Defendants Fredonia Price, Lillian Kwong, Paranapal Singh and Maninderpal Singh for fees and costs in the amount of $3,810 (15 hrs @ reasonable rate of $250/hr + $60 filing fee). (See Choudhary Decl., ¶ 10.) No additional fees are imposed in favor of these defendants.

The request of Defendants Li and Lai Wong for fees in the amount of $3,042.50 (7.7 hrs @ reasonable rate of $325/hr + 1.8 hrs @ reasonable rate of $300/hr) is GRANTED as well. (See Seto Decl., ¶ 8.)

PGI is directed to pay these sanctions no later than 3/12/18. This order setting aside the orders for issue and evidence sanctions is CONDITIONED upon such payment. If PGI fails to present full payment by close of business on the deadline, then this entire order will become a nullity, and rulings on defendants’ motions for judgment on the pleadings will reflect as much. (If PGI requires additional time to pay the sanctions, then its counsel shall to request oral argument on that issue and, after conferring with other counsel in the case, request a new deadline for payment and a new date for hearing on the motions for judgment on the pleadings.) If PGI pays the sanctions timely, then the defendants may wish to consider withdrawing the motions for judgment on the pleadings. Regardless, no later than 3/13/18, PGI’s counsel shall file and serve a declaration advising whether PGI has paid the sanctions and, therefore, whether the conditions upon this order have been met.

Uhri’s request for fees and costs in the amount of $35,571 is DENIED without prejudice. Uhri seeks fees and costs associated with motions other than his motion for judgment on the pleadings and the current motion. The court will not award fees or costs incurred to bring such other motions. In fact, the court has already considered requests for monetary sanctions (and granted some–see orders of 11/08/17 and 12/12/17) further to those other motions. The fact that PGI might not have paid previously imposed monetary sanctions does alter the analysis; Uhri can enforce a formal order awarding monetary sanctions as he would a money judgment.

Finally, the court is aware of the defendants’ assertions that the amended discovery responses PGI served with this motion remain deficient in various respects. Assuming defendants are correct, that fact does not alter the outcome of this motion. PGI has done enough to obtain relief from the issue and evidence sanctions, and the parties can continue to litigate their discovery disputes pursuant to the Code of Civil Procedure.

Disposition

The motion to set aside the portion of the 11/08/17 and 12/12/17 orders imposing issue and evidence sanctions is granted on condition that PGI pay the awarded monetary sanctions by close of business on 3/12/18.

Nothing in this ruling relieves PGI of the obligation to pay a previously imposed monetary sanction, including monetary sanctions imposed on 11/08/17 or 12/12/17.