Case Number: BC430142    Hearing Date: April 28, 2014    Dept: 34

Moving Party: Defendants Jeffer, Mangels, Butler & Mitchell LLP and John Bowman (“defendants”)

Resp. Party: Plaintiffs Mt. Holyoke Homes, L.P. and Darla Jones (“plaintiffs”)

Defendants’ motion for the imposition of sanctions is DENIED.

BACKGROUND:

Plaintiffs commenced this action on 1/21/10 against defendants for legal malpractice. Plaintiffs had employed defendants to represent plaintiffs in the process of obtaining governmental entitlements and approvals for a property development project. (Compl., ¶ 8.) Plaintiffs allege that defendants were negligent in their representation, which resulted in plaintiffs losing the necessary requirements for developing the property. (Id., ¶¶ 9-12.) Scott Adler was originally a plaintiff in this action, but he dismissed his complaint on 5/6/11.

On 3/4/10, defendants moved to compel the dispute to arbitration. On 5/10/10, the Court, the Hon. Zaven V. Sinanian presiding, granted the petition to compel arbitration and stay the action.

On 4/5/12, plaintiffs moved to vacate the arbitration award. Defendants thereafter moved to confirm the award. The Court, Hon. Michael P. Linfield presiding, heard these petitions on 6/14/12. The Court denied the petition to vacate the award and granted the petition to confirm the award.

On 7/20/12, the Court entered judgment in accordance with the arbitration award. Defendants thereafter moved for attorney’s fees pursuant to Civil Code section 1717. On 9/6/12, the Court granted the motion and awarded defendants attorney’s fees in the amount of $43,762.40.

Plaintiffs filed a notice of appeal on 9/14/12. On 9/24/13, the Court of Appeal issued its ruling, and a remittitur was filed on 1/9/14. The court found that the order compelling arbitration was correct; however, the denial of the petition to vacate the arbitration award was error. (Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1307-1314.) The court reversed the judgment with directions to “vacate the arbitration award and conduct further proceedings consistent with the views expressed in this opinion.” (Id. at p. 1315.) The court noted: “Plaintiffs are entitled to recover their costs on appeal.” (Ibid.)

On 2/14/14, the Court issued an order vacating its orders of 6/14/12 and 9/6/12, and entered an order granting plaintiffs’ petition to vacate the arbitration award.

On 2/13/14, plaintiffs filed a motion for attorney’s fees and costs on appeal. On 4/23/14, their request for attorneys fees on appeal was denied.

ANALYSIS:
Defendants seek sanctions in the amount of $8,245 against plaintiffs and their counsel on the grounds that plaintiffs’ motion for attorney’s fees and costs on appeal and memorandum of costs were presented primarily for an improper purpose and were not warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law. (See Code Civ. Proc., § 128.7(b).)

Under California Code of Civil Procedure section 128.7(c), the Court may award sanctions against a party or party’s attorney who has violated section 128.7(b). Specifically, “[a] sanction imposed for violation of subdivision (b) shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated.” (Code Civ. Proc. § 128.7(d).) The sanction “may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorney’s fees and other expenses incurred as a direct result of the violation.” (Ibid.)

A motion for sanctions under this section shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subdivision (b). Notice of motion shall be served as provided in Section 1010, but shall not be filed with or presented to the court unless, within 21 days after service of the motion, or any other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.

(Code Civ. Proc., § 128.7(c)(1).)

“[U]nder section 128.7, whether an action is frivolous . . . is governed by an objective standard.” (Burkle v. Burkle (2006) 144 Cal.App.4th 387.) “We measure the truthfinding inquiry’s reasonableness under an objective standard, and apply this standard both to attorneys and to their clients.” (Bockrath v. Aldrich Chemical Co., Inc. (1999) 21 Cal.4th 71, 82.)

Defendants argue that plaintiffs’ request for attorney’s fees on appeal had no legal basis. In support of this argument, defendants raise the same arguments presented in their opposition to plaintiff’s motion for attorney’s fees, as well as the portion of their motion to tax costs regarding the attorney’s fees request.

The Court agreed with defendants that plaintiffs are not entitled to attorneys fees on appeal since they have not been determined to be the prevailing party in the underlying case. (See Court’s Order of April 23, 2014.) However, the court does not find that the motion was presented primarily for an improper purpose.

Defendants argue “plaintiffs have already lost their legal malpractice claim once, but were saved from the resulting six–figure attorney’s fees judgment by the Court of Appeal. Plaintiffs have no legitimate reason to expect a different result should they choose to conduct another arbitration and apparently feel that this is their opportunity to induce a nuisance settlement. As such, plaintiffs request for recovery of their attorney fees on appeal violates CCP §128.7(b)(1). Plaintiffs’ gamesmanship should not be tolerated. . . .” (Motion, p, 8:20 – 9:1.)

This court does not have a crystal ball that is as clear as that used by defendant, and will not try to predict which party might succeed if and when this case is re-arbitrated. While the court can understand why defendant would be upset at having their judgment overturned by the Court of Appeal, this court does not find that plaintiffs have engaged in “gamesmanship.”

Further, although it is a closer call, the court can not make the finding that the legal arguments were not warranted by a non-frivolous argument for the extension, modification or reversal of existing law.

Defendants’ motions for sanctions is DENIED.