Roland MITCHELL, Plaintiff and Appellant, v. W. ATLEE BURPEE CO., Defendant and Respondent.
Appellant Roland Mitchell (herein appellant) appeals from an order of July 7, 1982, denying his request for offsets to costs on appeal and fixing attorneys' fees and costs on appeal.
Appellant on September 21, 1975, filed an action against respondent W. Atlee Burpee Co. (herein respondent). On motion of respondent in the trial court, the matter was dismissed under Code of Civil Procedure section 583, subdivision (b) 1 for failure to bring the matter to trial within five years. Appellant appealed that ruling and in case 2 Civil 62171, filed February 18, 1982, we affirmed the trial court.
In addition, our opinion provided, “The appeal is frivolous. On remand, the trial court shall allow to defendant, in addition to the normal costs on appeal, such amount as it may find will reasonably compensate it for the services of his counsel on this appeal.”
Appellant filed a petition for hearing before the Supreme Court. On April 14, 1982, the Supreme Court denied the petition for hearing.
Thereafter, on May 19, 1982, counsel for respondent filed in the trial court a memorandum of costs on appeal, claiming $6,254.72 in costs. This amount included attorneys' fees of $4,320 to appellate counsel and $900 to trial counsel who assisted on the appeal.
Appellant challenged the costs and fees by filing a motion in the trial court denominated, “Notice of Requirement of Offsets to Defendant's Claim of Costs and Costs on Appeal: Objections to Costs Claimed By Defendant and Respondent; and Notice of Motion to Tax Costs.”
Appellant challenged the amount of costs and fees. Additionally, appellant sought to have offset against whatever amount was awarded by the court as costs and fees the amount appellant claimed was due him under the original complaint filed September 21, 1975, and the first amended complaint filed January 5, 1976.
On July 7, 1982, the trial court denied the motion for offset, denied the motion to tax costs and determined that the attorneys' fees on appeal were reasonable.
On this appeal, appellant raises two points. He contends that the trial court erred in refusing to consider as an offset against fees and costs the amounts claimed in the underlying complaint; he argues that any award of attorneys' fees is void because our order in 2 Civil 62171 (awarding attorneys' fees to respondent for the frivolous appeal) was, itself, void.
IEffect of In re Marriage of Flaherty
After our decision in 2 Civil 62171 became final, our Supreme Court decided In re Marriage of Flaherty (1982) 31 Cal.3d 637, 183 Cal.Rptr. 508, 646 P.2d 179, in an opinion dated June 17, 1982. Appellant argues that Flaherty renders void the portion of our decision calling for an award of attorneys' fees to respondent on that appeal.
At stake in Flaherty was the question whether an appellate court could summarily punish appellate counsel for pursuing a frivolous appeal. The court held: “Due process, fundamental fairness and the integrity of our judicial system all require that counsel be permitted to pursue their clients' interests with the confidence that they will not be singled out at random for sanctions. In proper cases, the imposition of penalties for prosecuting a frivolous appeal may be fair and may serve the useful purpose of deterring similar conduct. However, such sanctions should be imposed rarely and only if the mandates of procedural due process are obeyed. [¶] ․ [¶] Due process is a flexible concept, and must be tailored to the requirements of each particular situation. ‘The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.’ (Endler v. Schutzbank, , 68 Cal.2d  at p. 170 [65 Cal.Rptr. 297, 436 P.2d 297], quoting Cafeteria Workers v. McElroy (1961) 367 U.S. 886, 895 [81 S.Ct. 1743, 6 L.Ed.2d 1230, 1236].) However, the rudiments of fair play include notice, an opportunity to respond, and a hearing. (See Endler, supra, 68 Cal.2d at pp. 172, 180, 65 Cal.Rptr. 297, 436 P.2d 297.) The appellate courts should exercise their statutory power to impose sanctions only after scrupulously observing the due process mandates set forth herein. Penalties for prosecuting frivolous appeals should not be imposed without giving fair warning, affording the attorney an opportunity to respond to the charge, and holding a hearing. Further, when imposing sanctions, the court should provide the attorney with a written statement of the reasons for the penalty. (Cf. Code Civ.Proc., § 128.5, requiring notice, an opportunity to be heard, and a written order reciting ‘in detail’ the circumstances justifying the sanction.)” (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 654, 183 Cal.Rptr. 508, 646 P.2d 179.)
Flaherty, however, has no application to the case before us. Our opinion in 2 Civil 62171 did not direct that any sanction be imposed against the attorneys for appellant in that earlier proceeding. We simply provided that the costs on appeal under California Rules of Court, rule 26(a) 2 include respondent's reasonable attorneys' fees on that appeal.
Our order awarding attorneys' fees as costs as against appellant was not affected by Flaherty. We see no reason to extend Flaherty to the summary award of attorneys' fees as costs under rule 26(a).
Effect of Section 583, Subdivision (b) Dismissal on the Underlying Claim of Appellant
Appellant argues that although his suit (filed for wage claims) cannot be pursued because of the bar of section 583, subdivision (b), he can still make use of his underlying claim for money, giving rise to the suit, in order to offset that against whatever costs on appeal are claimed by, and allowed to, respondent.
For failure on the part of appellant to prosecute the matter, the judgment against appellant and in favor of respondent was entered in the trial court and was affirmed in 2 Civil 62171. It is true that such a judgment does not have res judicata effect on the underlying claim of appellant because it is not a judgment on the merits. (Bell v. Solomons (1912) 162 Cal. 105, 121 P. 377; Gonsalves v. Bank of America, (1940) 16 Cal.2d 169, 172–173, 105 P.2d 118.)
Regardless of whether there exists any res judicata effect on the money claim asserted by appellant, that unliquidated claim cannot be asserted as an offset against costs in the action which was dismissed for failure to prosecute. The unliquidated claim is just that at this point. It is a claim by appellant for a sum.
The judgment in favor of respondent for costs on appeal, on the other hand, is incident to the judgment in the original action and incident to the unsuccessful (and frivolous) appeal from that judgment. There is no reason in logic to permit appellant's wage claim, which, owing to appellant's delay in prosecuting his case, has never been litigated on the merits, to be used in any way as an offset against an award in the same action for costs.
Section 431.70, relied on by appellant, is not germane.3 Appellant does not seek to offset his claim in an action commenced by respondent. Indeed, insofar as the record before us reveals, respondent has never commenced an action against appellant.
Respondent seeks sanctions on this appeal and urges that we find this appeal to be frivolous. In our view, this appeal is neither frivolous nor taken solely for the purpose of delay.
The judgment is affirmed.
I concur in that portion of the opinion discussed under II and III above. I respectfully dissent from that portion of the opinion which withholds from appellant the due process procedures accorded to attorneys by In re Marriage of Flaherty, supra, 31 Cal.3d 637, 183 Cal.Rptr. 508, 646 P.2d 179.
The majority's conclusion establishes one standard for attorneys who are accused of making frivolous appeals and an entirely different standard where clients of those same attorneys are similarly accused.
The majority holds that since the sanction for the alleged frivolous appeal herein was imposed on appellant and not on his attorney, the due process considerations of In re Marriage of Flaherty, supra, 31 Cal.3d 637, 183 Cal.Rptr. 508, 646 P.2d 179, have no application to this case.
The majority states: “We simply provided that the costs on appeal under California Rules of Court, rule 26, subdivision (a), include respondent's reasonable attorneys' fees on that appeal.”
Rule 26 is entitled “Costs on Appeal.” Subdivision (c) specifically delineates what items are recoverable as costs; sanctions or penalties are not among these items. Subdivision (a), however, does provide for “penalties.” It states: “Where the appeal is frivolous or taken solely for the purpose of delay ․ the reviewing court may impose upon offending attorneys or parties such penalties, including the withholding or imposing of costs, as the circumstances of the case and the discouragement of like conduct in the future may require.” (Emphasis added.)
Here, the penalty was imposed on the appellant, and not on his counsel. Nothing in the record reveals who was responsible for the initiation and prosecution of the appeal. It could have been the attorney urging the client, or the client urging the attorney. We will never know, since the due process rights accorded to the attorney under Flaherty, are denied to the client-appellant here.
The majority state, “Flaherty has no application to the case before us” since Flaherty dealt with appellate court sanctions against attorneys and did not discuss sanctions against clients. Flaherty considered the factual context of attorney sanctions because the case involved sanctions against attorneys. However, the language of Flaherty, and the principles involved do not limit themselves to attorneys alone, but are applicable to anyone suffering the summary imposition of sanctions by appellate courts.
In Flaherty, the Supreme Court, after considering the problem faced by an attorney who wishes to fully represent his client, but who does not wish to have his professional reputation damaged by the imposition of sanctions for a frivolous appeal, turned to the question of due process (31 Cal.3d 637, 651, 183 Cal.Rptr. 508, 646 P.2d 179). The court stated:
“Due process requires that certain basic procedural protections be afforded before the state deprives an individual of property. [Citations.] ․ Appellant complains that in this case his attorney was fined $500 without notice of the possibility of a fine or any opportunity to respond to the Court of Appeal's charges. He asserts ․ ‘Due process requires notice and hearing before a person's property may be forfeited.’ [Citation.]
“This claim has merit. Fundamental constitutional mandates require that the basic protections of due process be followed before an attorney is fined for prosecuting a frivolous appeal․
“Constitutional due process principles are offended by the summary imposition of sanctions by the appellate courts․” (Id., at p. 652, 183 Cal.Rptr. 508, 646 P.2d 179.)
“The unguided discretion to impose fines currently vested in the Courts of Appeal raises the same concerns as the unlimited trial court power addressed in Bauguess. [Bauguess v. Paine (1978) 22 Cal.3d 626, 150 Cal.Rptr. 461, 586 P.2d 942 (attorney sanctions).] Without procedural protections, there is no control over the fairness of the process or the result․” (Id., at p. 653, 150 Cal.Rptr. 461, 586 P.2d 942.)
“Due process is a flexible concept, and must be tailored to the requirements of each particular situation. ‘ “The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.” ’ [Citations.] However, the rudiments of fair play include notice, an opportunity to respond, and a hearing. [Citation.] The appellate courts should exercise their statutory power to impose sanctions only after scrupulously observing the due process mandates set forth herein. Penalties for prosecuting frivolous appeals should not be imposed without giving fair warning, affording the attorney an opportunity to respond to the charge, and holding a hearing. Further, when imposing sanctions, the court should provide the attorney with a written statement of the reasons for the penalty. (Cf. Code Civ.Proc., § 128.5, requiring notice, an opportunity to be heard, and a written order reciting ‘in detail’ the circumstances justifying the sanction.)” (Id., at p. 654, 183 Cal.Rptr. 508, 646 P.2d 179.) 1
The Supreme Court in Flaherty stressed the impact of summarily imposed sanctions on an attorney's reputation and income. “A public attack on an attorney's integrity and motives could seriously impair his or her ability to obtain employment and work effectively within the judicial system.” (Id. at p. 652, 183 Cal.Rptr. 508, 646 P.2d 179.) A client, whether a professional person dependent on his or her reputation for his or her livelihood, a corporation which has spent years of effort to gain recognition of its responsible position in the community, or an ordinary business person who depends on community goodwill for his or her commercial future, would be similarly damaged by a public attack in the form of sanctions. The same basic reasons given by the Supreme Court in support of an attorney's due process rights, apply equally to a client who wishes to have his day in the appellate courts.
To allow the imposition of sanctions against a client, without any due process safeguards, and without knowing whether or not the client is responsible in any way for the frivolous appeal, violates the rudiments of fair play. This violation is particularly apparent when contrasted with the full panoply of due process procedures accorded an attorney in the identical situation.
I would grant a due process hearing to the appellant.
1. All references are to the Code of Civil Procedure, unless otherwise indicated.
2. California Rules of Court, rule 26(a) provides, in part, “Where the appeal is frivolous or taken solely for the purpose of delay ․ the reviewing court may impose upon offending attorneys or parties such penalties ․ as the circumstances of the case and the discouragement of like conduct in the future may require.” There is no question that a reviewing court has such power. (See Beckstead v. International Industries, Inc. (1982) 127 Cal.App.3d 927, 934, fn. 4, 179 Cal.Rptr. 767.)
3. That section provides in part, “Where cross-demands for money have existed between persons at any point in time when neither demand was barred by the statute of limitations, and an action is thereafter commenced by one such person, the other person may assert in his answer the defense of payment in that the two demands are compensated so far as they equal each other, notwithstanding that an independent action asserting his claim would at the time of filing his answer be barred by the statute of limitations.”
1. Code of Civil Procedure section 128.5 provides for sanctions by the trial court against a party or the party's attorney, or both. The person to be sanctioned, whether party or attorney, must be given notice and an opportunity to be heard. Any order imposing sanctions must be in writing and must recite in detail the conduct or circumstances justifying the order.
AMERIAN, Associate Justice.
KINGSLEY, Acting P.J., concurs.