Filed 9/30/19 Valle v. Vu CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

JASON VALLE,

Plaintiff and Respondent,

v.

MAI VU,

Defendant and Appellant.

G056202

(Super. Ct. No. 30-2016-00831234)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Peter J. Wilson, Judge. Affirmed. Motion for Sanctions. Granted in part.

Law Offices of Richard Lara and Richard L. Lara for Defendant and Appellant.

Law Office of Randy K. Vogel and Randy K. Vogel for Plaintiff and Respondent.

* * *

I. INTRODUCTION

Mai Vu appeals from a judgment against her and in favor of Jason Valle for breach of contact. Vu contends the evidence at trial does not support a finding of causation. The matter was tried to the court, and no reporter’s transcript was prepared. The facts presented in the parties’ statement of undisputed facts, the trial court’s statement of decision, and the trial exhibit included in the appellant’s appendix fully support the trial court’s finding that Vu’s breach of a settlement agreement was the proximate cause of Valle’s damages. We affirm the judgment.

Valle has filed a motion for sanctions against Vu and her counsel for bringing a frivolous appeal and for unreasonable violations of the California Rules of Court. Vu has filed opposition to the motion for sanctions. We conclude the motion should be granted on the grounds the appeal is partially frivolous and Vu and her counsel committed unreasonable violations of the California Rules of Court. Based on the evidence submitted by Valle and his counsel, we order sanctions in the amount of $6,445.25 against Vu and her appellate counsel jointly and severally.

II. FACTS

Because a reporter’s transcript was not prepared, the facts are taken from stipulated facts submitted by the parties before trial, the trial court’s statement of decision, and trial exhibit 1, which is the only exhibit included in the appellant’s appendix.

In late 2008 or early 2009, Valle and Vu formed a business partnership for the purpose of providing financial advice and selling investments. The partnership ended in early 2015.

Both Valle and Vu are registered with LPL Financial, LLC (LPL), a securities brokerage. LPL oversaw transactions made by Valle and Vu to their respective clients. LPL managed the distribution of commissions generated by transactions in accordance with a formula provided by Valle and Vu. Valle and Vu often would split commissions and provide LPL with “split codes” for dividing commissions between them.

Valle claimed that LPL had distributed to Vu commissions that were rightfully due to him. Vu claimed that LPL had distributed to Valle commissions that were rightfully due to her. In March 2015, Valle sued Vu in a case entitled Valle v. Vu, Orange County Superior Court Case No. 30 20 15 00779943 (the 2015 Lawsuit), in which Valle alleged Vu had received commissions rightfully belonging to him. One month later, Valle and Vu agreed to settle the 2015 Lawsuit. They entered into a written settlement agreement (the 2015 Settlement Agreement) which included a mutual release of all “[c]laims, demands, liens, agreements, contracts, covenants, actions, suits, causes of action, allegations, controversies, debts, costs, expenses, damages, judgments, orders, and liabilities of whatever kind or nature . . . whether known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed or which do exist or may exist” at the time Valle and Vu settled the 2015 Lawsuit. The 2015 Settlement Agreement included a waiver of Civil Code section 1542. The 2015 Settlement Agreement is trial exhibit 1.

Before entering into the 2015 Settlement Agreement, Valle and Vu had instructed LPL to split 50/50 between them all commissions generated by their transactions in connection with investment providers Morningstar and Allianz. Valle and Vu agreed that a few clients, typically family members, would not be subject to the partnership split. At the end of each year, Valle and Vu reconciled everything they had received from LPL to ensure a 50/50 split consistent with their partnership. As necessary, either Valle or Vu would write a check to the other to achieve this 50/50 distribution, based on the Internal Revenue Service form 1099’s each of them received from LPL.

In 2013 and 2014, LPL applied the wrong formula to commissions generated by Valle and Vu for investments placed with Morningstar and Allianz. LPL’s mistake resulted in Vu receiving $26,679 less in commissions, and Valle receiving more in commissions in the same amount, for the years 2013 and 2014 for transactions with Morningstar and Allianz than would have been distributed under a 50/50 split.

In June 2015, Vu told LPL about the mistake and asked LPL to correct it. Vu did not make suggestions to LPL about what it should do to correct the mistake. Vu realized at the time that LPL might pay her the corrected commissions.

On its own, without request by Vu, LPL charged back $26,679.72 in commissions to Valle. Vu received $26,679.72 from LPL.

III. PROCEDURAL HISTORY

In this matter, Valle sued Vu for breach of the 2015 Settlement Agreement, interference with contractual relations, and unfair competition. The case was tried to the court on those causes of action. The court prepared a thorough statement of decision even though one was not requested. The court found that Vu had breached the 2015 Settlement Agreement and ruled in favor of Valle on his breach of contract cause of action. The court ruled in favor of Vu on Valle’s causes of action for interference with contractual relations and unfair competition.

The trial court awarded Valle $26,679.72 in damages, with prejudgment interest, for breach of contract. Judgment was entered in Valle’s favor for that amount. Vu appealed from the judgment. She did not file an appellant’s reply brief.

IV. VIOLATIONS OF CALIFORNIA RULES OF COURT,
RULE 8.204(A)(1)(C)

Valle correctly asserts that throughout the appellant’s brief Vu makes assertions of fact and purports to relate events and evidence at trial for which Vu does not provide citations to the record. California Rules of Court, rule 8.204(a)(1)(C) states an appellate brief must “[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears.” Rule 8.204(a)(1)(C) requires accurate record references. (See American Indian Model Schools v. Oakland Unified School Dist. (2014) 227 Cal.App.4th 258, 284 [“This rule requires exact page references”].) We may decline to consider factual assertions that do not comply with this rule. (Rybolt v. Riley (2018) 20 Cal.App.5th 864, 868; Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 195; Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 989 990.) We decline to consider those passages from the appellant’s brief that are not supported by a citation to the record or for which the record citation does not support the fact asserted. Those passages are:

1. Page 9, second full paragraph, second through sixth sentences, beginning with “Both parties maintained” and ending at the end of that paragraph on page 10.

2. Page 10, first full paragraph, second line, the phrase “as she had a duty to do.”

3. Page 16, first full paragraph, the third sentence, which begins with “The settlement was signed.”

4. Page 18, second full paragraph, the phrase, “During pretrial, the Plaintiff acknowledged that he had a windfall.”

5. Page 19, second full paragraph, the third sentence, which begins with “The parties also testified.”

6. Page 19, final paragraph, which begins with “However, at trial” and ending on page 20 with “uncontroverted facts.”

7. Page 20, first full paragraph, which begins with “Surely by the time of trial.”

8. Page 20, second full paragraph, second sentence, which begins with “The Ruling also ignores.”

9. Page 21, first full paragraph, which begins with “Defendant even went so far.”

10. Page 22, first full paragraph beginning at the second sentence, which begins, “Even if the trial court.”

11. Page 22, the second full paragraph, which begins with “Plaintiff had an opportunity.”

12. Page 23, the second, third, fourth, and fifth sentences of the first full paragraph, which begins with “The trial court’s analysis.”

Without record citations, these assertions are essentially a stream of consciousness and nothing more.

V. DISCUSSION

A. There Was Sufficient Evidence of Causation.

Vu does not challenge the trial court’s finding that she breached the 2015 Settlement Agreement. The breach was Vu’s conduct in requesting adjustments and recovering additional commissions from LPL. Vu’s right to recover those commissions already had been settled by means of the 2015 Settlement Agreement, by which Vu had released Valle. Instead, Vu challenges the judgment on the ground Valle failed to prove the element of proximately caused damages. She argues there was “conclusive evidence” that LPL, and not anything she said or did, caused Valle to incur damages.

Damages resulting from the breach are an essential element of a cause of action for breach of contract. (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1352.) In a breach of contract case, causation of damages means the damages were proximately caused by the defendant’s breach. (Ibid.) The test for causation in a breach of contract case is whether the breach was a substantial factor in causing the damage. (Id. at p. 1353; Haley v. Casa Del Rey Homeowners Assn. (2007) 153 Cal.App.4th 863, 871.)

Substantial evidence supports a finding that Vu’s breach of the 2015 Settlement Agreement was a substantial factor in causing Valle’s damages. The trial court found that when Vu asked LPL to correct its mistake in calculating commissions, “it was entirely objectively foreseeable that if LPL made a correction to pay [Vu] more, it would charge that amount back against [Valle].” The court also found that Vu had testified that she realized when she approached LPL that it might charge the commission back against Valle. The court found, based on Vu’s testimony and the stipulated facts, that Vu requested LPL to correct the mistake in splitting and distributing commissions “in order to have the corrected commissions paid to her by LPL.” Vu’s conduct in requesting that LPL correct the mistake, with the knowledge and goal of having the commissions paid to her, was a substantial factor in causing Valle’s damages.

Vu contends she could not have caused Valle’s damages because, had she not notified LPL about the mistake, LPL “would very likely have found and corrected the mistake on its own.” Vu cites to nothing in the record to support this contention, and there is nothing in the record to show that she presented this contention to the trial court. The parties submitted a joint list of controverted issues, each of which the trial court addressed in the statement of decision, but none of those issues asked the court to determine whether LPL would have found and corrected the mistake without being notified by Vu. The evidence, as set forth in the stipulated facts, does not compel a finding that LPL would have learned of and corrected the mistake notwithstanding anything Vu did.

Vu asserts the trial court’s foreseeability finding is “flawed” because when she contacted LPL, “she had no way of knowing what LPL had paid [Valle] on the Morningstar and Allianz business.” A reasonable inference from the undisputed facts is Vu did know the disputed commissions were connected with Morningstar and Allianz transactions. The undisputed facts were that in 2013 and 2014, LPL made a mistake in calculating commissions for investments placed with Morningstar and Allianz with the result that Vu received $26,679 less in commissions. In 2015, Vu told LPL about its mistake and asked that it be corrected.

B. Vu Forfeited Her Claim of Mutual Mistake.

Vu argues the release in the 2015 Settlement Agreement is unenforceable based on mutual mistake. Vu forfeited the issue of mutual mistake by not raising it in the trial court. (Mammoth Lakes Land Acqusition, LLC v. Town of Mammoth Lakes (2010) 191 Cal.App.4th 435, 468.) In closing argument at trial, Vu argued unilateral mistake but did not argue mutual mistake. The trial court found that Vu failed to assert mistake, whether unilateral or mutual, as an affirmative defense in her answer. Vu does not attempt to show this finding is incorrect. Vu therefore forfeited the defense of mutual mistake. (Department of Finance v. City of Merced (2019) 33 Cal.App.5th 286, 294 [“‘a party who fails to plead affirmative defenses waives them’”]; Quantification Settlement Agreement Cases (2011) 201 Cal.App.4th 758, 813 [same].)

C. Vu Released Any Claims Based on the Reconciliations.

Vu argues there was overwhelming evidence the annual reconciliations between her and Valle did not make her whole and, as a consequence, she was entitled to seek adjustments from LPL. In the 2015 Lawsuit, Valle and Vu litigated their dispute over distribution of commissions. They settled and, as part of the 2015 Settlement Agreement, released each other from any all claims, of whatever kind or nature, and whether known or unknown. Thus, Vu released Valle of any claims she might have had against him based on reconciliations of commissions or any entitlement to reconciliations from him.

Having released Valle of any claims arising out of distributions of commissions, Vu was contractually barred from challenging the reconciliations and seeking adjustments in payment of commissions. Vu breached the 2015 Settlement Agreement by thereafter seeking adjustments from LPL. The trial court found: “By requesting the LPL make the adjustments for monies earned by her and [Valle] before the date of the settlement, knowing that LPL might charge those amounts back against [Valle], [Vu] breached the settlement. That she made the demand of LPL, rather than of [Valle], is of no moment; [Vu] was asserting a claim which she had released in the settlement, with an actual appreciation at the time it could cause [Valle] financial harm in like amount.” The court found that Valle and Vu “voluntarily gave up claims” arising out of mistakes in distributing commissions when they entered into the 2015 Settlement Agreement. We agree.

VI. VALLE’S MOTION FOR SANCTIONS ON APPEAL

Valle filed a motion for imposition of sanctions against Vu and her appellate counsel pursuant to Code of Civil Procedure section 907 and California Rules of Court, rule 8.276. Valle seeks sanctions on two grounds: (1) Vu’s appeal was frivolous and taken for an improper purpose; (2) Vu’s brief includes unreasonable violations of the California Rules of Court. Valle seeks sanctions in the amount of $13,445. We issued an order pursuant to California Rules of Court, rule 8.276(c) notifying the parties we are considering granting the motion and inviting Vu and her counsel to submit opposition. Vu filed opposition, and Valle submitted a reply to the opposition.

Code of Civil Procedure section 907 authorizes the Court of Appeal to impose damages when an appeal is “frivolous or taken solely for delay.” California Rules of Court, rule 8.276 authorizes the Court of Appeal, on motion of a party or its own motion, to impose sanctions against a party or an attorney for “[t]aking a frivolous appeal or appealing solely to cause delay” or for “[c]ommitting any unreasonable violations of these rules.” (Cal. Rules of Court, rule 8.276(a)(1) & (4).)

An appeal is considered frivolous when “it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit.” (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.) The total lack of merit of an appeal can be seen as evidence the appeal was taken solely for delay. (Id. at p. 649.)

Two of the three arguments raised by Vu are frivolous. No reasonable attorney would assert a claim of mutual mistake on appeal when that argument was not presented to the trial court and the trial court expressly found mistake had not been raised as an affirmative defense. No reasonable attorney would argue the annual reconciliations did not make Vu whole and gave her a right seek adjustments in commissions because in the 2015 Settlement Agreement Vu had released any and all claims against Valle arising out of payment of commissions. The dispute over commissions was the subject of the 2015 Lawsuit, and resolving 2015 Lawsuit was the very purpose of the 2015 Settlement Agreement and its release provisions. Most of Vu’s factual assertions in support of that argument are without citations to the record. Those rule violations support our conclusion that this portion of the appeal is frivolous. (Pierotti v. Torian (2000) 81 Cal.App.4th 17, 33.) In their opposition to the motion for sanctions, Vu and her counsel do not address whether the mutual mistake claim and the claim based on the reconciliations are frivolous.

What saves this appeal, just barely, from being completely without merit is the argument that Vu’s breach of the 2015 Settlement Agreement was not the proximate cause of Valle’s damages. That argument is without merit but is not so egregiously lacking in merit as to warrant sanctions.

Sanctions for a partially frivolous appeal are appropriate if the frivolous claims and arguments are a “significant” and “material part” of the appeal. (Maple Properties v. Harris (1984) 158 Cal.App.3d 997, 1010 (italics omitted); see Pollock v. University of Southern California (2003) 112 Cal.App.4th 1416, 1432; Bach v. McNelis (1989) 207 Cal.App.3d 852, 875 876.) Vu’s mutual mistake claim and her claim the reconciliations did not make her whole, which together take up eight pages of the appellant’s brief, are both substantial and material. Valle incurred attorney fees in responding to those claims.

Sanctions also are warranted for unreasonable violations of the rules of court. “We may impose monetary sanctions for ‘“any unreasonable infraction of the rules governing appeals . . . as the circumstances of the case and the discouragement of like conduct in the future may require.”’” (Pierotti v. Torian, supra, 81 Cal.App.4th at p. 29.) We have identified in section IV the many instances in which Vu violated California Rules of Court, rule 8.204(a)(1)(C) by failing to provide a citation to the record or by providing a record citation which does not support the fact asserted. No reporter’s transcript was prepared and the appellant’s appendix is not comprehensive; the facts are limited to the undisputed facts, the trial court’s statement of decision, and the 2015 Settlement Agreement, which is the only trial exhibit included in the appendix. Nevertheless, Vu refers continually in her brief to matters outside of this limited record.

After Vu filed the appellant’s opening brief, and before bringing the motion for sanctions, Valle’s counsel sent a letter to Vu’s counsel claiming the appeal was frivolous, notifying him of the many rule violations in the appellant’s brief, and advising him that Valle intended to bring a motion for sanctions. Vu’s counsel did not respond.

Neither Vu nor her counsel has ever offered any justification, or even so much as acknowledged, these rule violations. In their opposition to the motion for sanctions, Vu and her counsel cursorily, and inaccurately, argue Vu’s appellate brief “supports her arguments with citations to facts present in the record” and she “has not added any outside facts.”

We therefore grant Valle’s motion for sanctions on the grounds of partially frivolous appeal and unreasonable violations of the California Rules of Court. In setting the amount of sanctions, courts may consider the amount of the respondent’s appellate attorney fees, the amount of the judgment against the appellant, the degree of objective frivolousness and delay, and the need to discourage like conduct in the future. (J.B.B. Investment Partners, Ltd. v. Fair (2019) 37 Cal.App.5th 1, 19; Keitel v. Heubel (2002) 103 Cal.App.4th 324, 342.) In support of the motion for sanctions, Valle’s counsel, Randy K. Vogel, submitted a declaration stating he had billed his client $13,445 in attorney fees in connection with Vu’s appeal and for work performed in connection with the motion for sanctions. Valle’s counsel described how he tried to avoid bringing the motion for sanctions by first sending a letter to Vu’s counsel setting forth the grounds and reasons for seeking sanctions. Valle’s counsel pointed out that the amount of the judgment against Vu was barely within the unlimited jurisdiction of the superior court. (Code Civ. Proc., §§ 85, 88 [demand of $25,000 or more establishes unlimited civil jurisdiction].) There is a great need to discourage appellate litigants from making frivolous arguments and failing to provide complete and accurate citations to the record.

We invited Valle’s counsel (Vogel) to file evidence to identify and substantiate the amount of attorney fees incurred in connection with those parts of the appeal that we have deemed to be frivolous. In response, Vogel submitted his declaration with copies of client invoices. Vu and her appellate counsel were given 10 days to respond to evidence filed by Vogel but they filed nothing. We have considered the Vogel’s declaration and the invoices and conclude $6,445.25 is an appropriate amount of sanctions to discourage future misconduct and to compensate Valle. (See Pierotti v. Torian, supra, 81 Cal.App.4th at p. 33 [sanctions for frivolous appeal imposed to deter and to compensate].) Our calculations are set forth in the Addendum to this opinion.

We believe that for sanctions to be meaningful they must be imposed against the litigant and counsel. Therefore, sanctions are imposed jointly and severally against Vu and her counsel, Law Offices of Richard Lara and Richard L. Lara, in the amount of $6,445.25 to be paid to Valle within 15 days of the issuance of the remittitur. This opinion constitutes a written statement of our reasons for imposing sanctions. (See J.B.B. Investment Partners, Ltd v. Fair, supra, 37 Cal.App.5th at p. 20.)

VII. DISPOSITION

The judgment is affirmed. Respondent to recover costs on appeal.

Respondent’s motion for imposition of monetary sanctions is granted on the grounds of partially frivolous appeal and unreasonable violations of the California Rules of Court. Appellant and her counsel, Law Offices of Richard Lara and Richard L. Lara, are ordered to pay, jointly and severally, sanctions to Valle jointly with his counsel, Law Office of Randy K. Vogel and Randy K. Vogel, in the amount of $6,445.25 within 15 days of the issuance of the remittitur. The clerk of this court is directed to forward a copy of this opinion to the State Bar of California upon the issuance of the remittitur. (Bus. & Prof. Code, §§ 6086.7, subds. (a)(3), (c), 6068, subd. (o)(3); Cal. Code Jud. Ethics, canon

 

3(D)(2).) This opinion shall serve as notice to counsel that the matter of the sanctions imposed has been referred to the State Bar. (Bus. & Prof. Code, § 6086.7, subd. (b).)

FYBEL, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

GOETHALS, J.

 

ADDENDUM

In his declaration executed on August 20, 2019, Vogel identified various entries on the client invoices by date and provided an estimate of the percentage of the work performed on a particular date that was related to the issues which we deem frivolous. We accept the percentages provided as reasonable. However, for work performed on some dates, Vogel did not give a numerical percentage. For work performed on September 19 and 25, 2018, he declared the “majority” of the entries was for work in connection with a sanctionable issue or section of the appellant’s brief. We conclude a reasonable allocation is 50 percent of the time identified plus one tenth of one hour for the work performed on those dates. For work performed on September 20, 2018, Vogel declared “the majority [i]f not all” of the entry was for work in connection with a sanctionable issue or section of the appellant’s brief. We conclude a reasonable allocation is 75 percent of the time identified for the work performed on that date. For work performed September 27, 2018, he declared a “portion” of time concerned work in connection with a sanctionable issue or section of the appellant’s brief. We conclude a reasonable allocation is 25 percent of the time identified for the work performed on that date.

In addition, the invoices submitted with Vogel’s declaration show that $2,835 (8.1 hours at $350 per hour) were billed for work in connection with the motion for sanctions. We conclude Valle should be permitted to recover 75 percent of that amount, which is $2,126.25. Although the amount of sanctions we are awarding is less than 75 percent of the amount sought, much of work on the sanctions motion would have to have been done regardless of the amount sought; in other words, they were fixed costs in bringing a motion for sanctions. We also believe it is appropriate to impose sanctions in the amount of 75 percent of the cost to bring the sanctions motion because Vogel went to the effort to avoid bringing the motion by first sending a letter to Vu’s counsel setting forth the grounds and reasons for seeking sanctions.

Our calculations are as follows:

Date Hours on Invoice % Allowed Hours Allowed Hourly Billing Rate Total
9-12-18 3.4 50% 1.7 $350 $595.00
9-17-18 2.6 40% 1.04 $350 $364.00
9-19-18 4.4 50% + .1 2.3 $350 $805.00
9-20-18 3.5 75% 2.625 $350 $918.75
9-25-18 3.8 50% + .1 2.0 $350 $700.00
9-27-18 4.1 25% 1.025 $350 $358.75
10-3-18 1.4 50% .7 $350 $245.00
10-11-18 1.9 50% .95 $350 $332.50
$4,319.00
Motion for

Sanctions $2,126.25
TOTAL $6,445.25