PACIFIC SOFTWARE SERVICES INC v. ARCHER (1996)

Following a series of mishaps and delays, the trial court dismissed plaintiff Pacific Software Services, Inc.'s (Pacific) complaint for legal malpractice against defendant Thomas S. Archer.   Pacific appeals contending the court abused its discretion in both failing to impose less drastic sanctions and in dismissing Pacific's cause of action even though the rule violations were attributable solely to Pacific's counsel.   We shall reverse the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Because timing is at the heart of this case, we provide a detailed chronology.   Attorney Archer and one of his employees, Cohune, represented Pacific in a trade secrets case.   On July 6, 1992, Pacific filed a complaint in El Dorado County Superior Court alleging legal malpractice and breach of fiduciary duty against Archer and Cohune in their handling of the case.¹  Pacific contended Cohune recklessly urged Pacific to pursue the litigation, and failed to advise Pacific about settlement offers.

The first status conference was held on November 9, 1992, in South Lake Tahoe.   Pacific's attorney Steven Rood, located in Oakland, arranged for representation by the member of a South Lake Tahoe firm, James Hales.   Hales requested a continuance to December 16, 1992, which the court granted.   On December 16, 1992, Hales again requested another continuance and the status conference was continued to January 20, 1993.

At the January 20, 1993, status conference the court ordered service on all parties by February 22, 1993;  at that time, Archer had not yet been served.   The court set a discovery cut-off date of October 15, 1993, with trial to begin on November 30, 1993.

Pacific filed an ex parte application for a transfer of the action to Placer County Superior Court on February 24, 1993.   The El Dorado court ordered the action transferred.   Placer County received the action on March 25, 1993, and notified Hales of the transfer.

The Placer Court set a first case management conference for October 12, 1993, and notified Hales.   Pacific contends its Oakland attorney, Rood, was unaware of either the transfer of the case to Placer, or the scheduled case management conference.

Counsel for Pacific failed to appear at the October 12, 1993, conference, nor had the company served Archer with the summons and complaint.   The court imposed a $100 sanction against Pacific and issued an order to show cause why the case should not be dismissed.   The court specified five grounds for dismissal:  “(1) Defendants/cross-defendants not timely served;  (2) No proof of service filed;  (3) The case not at-issue;  (4) Counsel failed to appear at First Case Management Conference;  and (5) No Case Management Conference Questionnaire filed.”

Hales requested a hearing on the sanctions order.   Hales, in a letter to the court, dated October 27, 1993, stated he received notification of the case management conference but because the proof of service was not attached, he assumed Rood had also been served.   Hales characterized Rood as “primary counsel” for Pacific and requested that the order for sanctions be dissolved.   The court denied the request, and ordered both Hales and Rood to appear at a hearing regarding the monetary sanctions on November 19, 1993.

The hearing on the Order to Show Cause Re Dismissal was scheduled for November 1, 1993.   At the hearing, a local attorney, Briner, appeared on Pacific's behalf.   A case management conference was scheduled for December 13, 1993.   The record is silent regarding any decision concerning dismissal, but notes a supplemental case management questionnaire is due.

On December 7, 1993, Pacific finally served Archer with the summons and complaint.   However, Pacific did not serve Archer with notice of the case management conference, a blank copy of the case management questionnaire, or a copy of the description of the civil case management system, as required by the local rules.

At the case management conference of December 13, 1993, Briner again represented Pacific.   The court again noted a supplemental case management questionnaire was due.   The case management conference was continued to January 10, 1994.

Meanwhile, the scheduled November 19, 1993, hearing on monetary sanctions was continued to January 7, 1994.   Counsel failed to appear at the January 7, 1994, hearing and the matter was dropped from the calendar pending the next scheduled court hearing.   The next scheduled court hearing was the case management conference on January 10, 1994.   At that hearing, the court issued an order to show cause why the case should not be dismissed.²

Archer filed a motion to dismiss on January 10, 1994.   In support of the motion to dismiss, Archer noted the following violations by Pacific:  (1) failure to serve the complaint within sixty days of filing (El Dorado Superior Court Rule 20 and Placer County Superior Court Rule 20.7.6);  (2) failure to comply with the El Dorado County Court order requiring service by February 22, 1993;  (3) continuing failure to serve summons and complaint despite imposition of monetary sanctions on October 12, 1993;  (4) continuing failure to serve summons and complaint despite issuance of order to show cause re dismissal;  (5) failure to request an extension of time to serve complaint (Placer County Rule 20.7.6);  (6) failure to appear at Case Management Conference (Placer County Rule 20.7.7);  (7) failure to insure case was at issue at the time of the case management conference (Placer County Rule 20.7.7);  (8) failure to timely file case management conference questionnaire (Placer County Rule 20.7.8) ³ ;  (9) failure to timely file at-issue memorandum (Placer County Rule 20.7.8);  (10) failure to file case management conference supplemental questionnaire per court orders of November 1, 1993, and December 13, 1993;  (11) failure to serve defendant with a copy of the Notice of First Case Management Conference, a blank copy of the Case Management Conference questionnaire, at-issue memorandum, and a copy of the description of the Civil Case Management System when Pacific served Archer with the summons and complaint (Placer County Rule 20.7.6);  and (12) failure to take steps necessary to prosecute the action within the time periods set forth in the local Delay Reduction Rules (Placer County Rule 20.7.2).

Pacific opposed the motion.   The court granted the motion finding:  “In spite of the rules of both this Court and the El Dorado County Court requiring service on all defendants within 60 days of filing, plaintiff did not serve any defendants until 8 1/212 months after the complaint was filed.⁴  This failure to serve was in spite of several orders of both courts to do so.   The proffered excuse, settlement negotiations, is no excuse at all.   Settlement negotiations and service of summons have never been mutually exclusive and certainly are not in the fast track era.   Although plaintiff argues that the court's notices were not directed to the attorney of record, the court file reflects that at the time each notice was served, they were served on the most recently appearing attorney for plaintiff, James Hales.   Mr. Hales was at the very least an associated attorney for plaintiff, and therefore due process requirements for a notice to the party were met.   The Court finds that dismissal is warranted because prior violations by the plaintiff of court orders for service and to appear at properly noticed hearings have been ignored.”

The court's own Order to Show Cause re Dismissal was dropped.   Following entry of judgment, Pacific filed a timely notice of appeal.

DISCUSSION

I.

Pacific contends the court abused its discretion in invoking Government Code section 68608 to dismiss its action.   According to Pacific, less drastic sanctions were never imposed, and there was no evidence less drastic measures would have been ineffective.

 The Trial Court Delay Reduction Act gives trial courts the power to resolve matters before them as expeditiously as possible, recognizing that delay both reduces the chance that justice will be accomplished and often imposes severe emotional and financial hardship on the litigants.  (Moyal v. Lanphear (1989) 208 Cal.App.3d 491, 497, 256 Cal.Rptr. 296.)  “The management of the trial court's delay reduction program is an area within the court's discretion and will not be disturbed unless it appears that the exercise of that discretion was a clear abuse or a miscarriage of justice.   Guiding the disposition of this issue are two competing policies:  (1) the reduction of delay in litigation and the expeditious and timely resolution of cases, and (2) the resolution of cases on their merits rather than dismissal on procedural grounds.”  (Youngworth v. Stark (1991) 232 Cal.App.3d 395, 401, 283 Cal.Rptr. 668, citations omitted.)

Government Code section 68608 subdivision (b), part of the Trial Court Delay Reduction Act, states:  “Judges shall have all the powers to impose sanctions authorized by law, including the power to dismiss actions or strike pleadings, if it appears that less severe sanctions would not be effective after taking into account the effect of previous sanctions or previous lack of compliance in the case.   Judges are encouraged to impose sanctions to achieve the purposes of this article.”

 In the present case, Pacific disregarded the local fast track rules in two jurisdictions.   On July 6, 1992, Pacific filed its complaint in El Dorado County Superior Court.   El Dorado County Superior Court Rule 20.6 states:  “Within 60 days of filing, the Complaint shall be served and a proof of service filed with the Superior Court.”   Six months later the El Dorado Superior Court ordered Pacific to serve all parties by February 22, 1993.   Pacific failed to do so.

Instead, on February 24, 1993, Pacific filed an ex parte application to transfer the case to Placer County Superior Court.   The case was transferred on March 25, 1993.   Under Placer County Superior Court Rules, Rule 20.7.6(a), a plaintiff must serve a complaint accompanied by notice of the first case management conference within sixty days of filing the complaint.⁵  Pacific failed to serve Archer until December 7, 1993.   After Pacific failed to appear at the case management conference, the Placer court imposed a $100 sanction against Pacific and issued an order to show cause why the case should not be dismissed.

Although Pacific insists the trial court ordered dismissal as the first and only sanction, the record reveals the El Dorado and Placer superior courts employed several enforcement strategies in an effort to bring Pacific into compliance with local rules.   Pacific ignored both the threat of monetary sanctions and a court order, instead waiting seventeen months to serve its complaint.   Pacific assumes since it never actually paid the monetary sanctions, no sanctions were imposed.   We find this reasoning specious.   The court signed an order sanctioning Pacific $100.   Whether or not the court collected $100 is immaterial;  the court issued monetary sanctions to bring Pacific into compliance.   Pacific failed to serve the complaint, and the court resorted to the ultimate sanction of dismissal.

Nor do we find Pacific's refusal to comply with the El Dorado and Placer court orders was inadvertent or excusable.   Pacific contends it disregarded the El Dorado court order to serve the complaint by February 22, 1993, because the parties were embroiled in settlement negotiations.   In support Pacific cites Hilburger v. Madsen (1986) 177 Cal.App.3d 45, 222 Cal.Rptr. 713.

In Hilburger, the appellate court reversed an order of dismissal under Code of Civil Procedure former section 583, subdivision (a).   The court found defendant's insurance carrier was fully informed of the potential suit at an early date, had investigated the allegations and participated in settlement negotiations.   The court found the involvement of the insurance carrier and the early notice of an intent to sue negated any claimed prejudice to the defendant.  (Id. at p. 50, 222 Cal.Rptr. 713.)

Pacific makes no such claim in the present case.   Instead, Pacific points to a March 15, 1993, letter from Archer's attorney requesting an update on the case and discussing settlement in the underlying trade secrets case.   This letter is dated approximately two months after the court ordered Pacific to serve all parties.   The “settlement negotiations” do not refer to negotiations between Pacific and Archer, but between Pacific and the defendants in the trade secrets case.   As the Placer court noted:  “Settlement negotiations and service of summons have never been mutually exclusive and certainly are not in the fast track era.”

Pacific also argues its failure to attend the October 12, 1993, case management conference was inadvertent.   According to Pacific, their Oakland attorney Rood had no notice of the transfer of the case to Placer County and received no notice of the case management conference.   However, Rood requested the transfer to Placer County through the Lake Tahoe attorney Hales, and Placer County notified Hales of the case management conference.   Whatever gap in communication occurred between Rood and Hales cannot be blamed on the Placer County Superior Court.   We hesitate to characterize such miscommunication as “inadvertence.”

Both Pacific and Archer cite Intel Corp. v. USAIR, Inc. (1991) 228 Cal.App.3d 1559, 279 Cal.Rptr. 569 as supportive of their respective positions.   In Intel the trial court dismissed a plaintiff's complaint for failure to comply with the local fast track rules.   The superior court previously issued an order to show cause following plaintiff's failure to file an at-issue memorandum within 140 days of filing the action.   Plaintiff responded, stating it had learned of 42 additional complaints arising out of the same plane crash shortly after filing the complaint, and had contacted counsel for the other plaintiffs and had been advised of on-going settlement negotiations.   Plaintiff also anticipated settlement of its action and requested a 60 day-continuance.  (Id. at p. 1561, 279 Cal.Rptr. 569.)   The trial court sanctioned plaintiff's counsel $300 for failure to request an extension for filing the at-issue memorandum.   The order to show cause was continued for three months, for confirmation that an at-issue memorandum had finally been filed.   Plaintiff's counsel failed to file the at-issue memorandum, failed to pay the sanctions and failed to appear at the subsequent hearing.   The court dismissed the action for failure to comply with its orders.  (Id. at p. 1561, 279 Cal.Rptr. 569.)

The appellate court affirmed the dismissal.   The court found plaintiff violated several local rules and court orders and failed to pay the $300 sanction within 30 days as ordered.   Since the earlier sanction did not secure plaintiff's compliance, and defendants suffered prejudice as a result of plaintiff's actions, the court did not abuse its discretion in dismissing the action.  (Id. at pp. 1566–1568, 279 Cal.Rptr. 569.)

We find the facts of the present case similar to those of Intel.   Here, Pacific, despite a court order, failed to serve its complaint in compliance with the local court rules of two jurisdictions.   Even after the court imposed monetary sanctions, Pacific failed to respond for almost two months.   During this period, Pacific failed to file the supplemental case management questionnaire as the court had requested.   When Pacific finally served the complaint, it still failed to follow Placer County Superior Court Rules, neglecting to serve copies of the Notice of First Case Management Conference, a blank copy of the case management conference questionnaire and a copy of the description of the Civil Case Management System.   Given these circumstances and the standard of review by which we are guided, we cannot say the trial court abused its discretion.

II.

The trial court dismissed Pacific's complaint after considering the grounds for dismissal outlined in Government Code section 68608, subdivision (b).   The court made no inquiry as to the culpability of Pacific's counsel, as required under Code of Civil Procedure section 575.2.   Pacific argues Code of Civil Procedure section 575.2 is controlling;  the trial court abused its discretion in dismissing the complaint because all rule violations were attributable to counsel.

Code of Civil Procedure section 575.2, subdivision (b) reads as follows:  “It is the intent of the Legislature that if a failure to comply with [local] rules is the responsibility of counsel and not of the party, any penalty shall be imposed on counsel and shall not adversely affect the party's cause of action or defense thereto.”   Pacific's position that section 575.2, subdivision (b) applies to violation of local fast track rules governed by Government Code section 68600, et seq. runs counter to Intel Corp. v. USAIR, Inc., supra, 228 Cal.App.3d 1559, 279 Cal.Rptr. 569.

As explained in the Intel opinion, section 575.2, subdivision (b) conflicts with Government Code section 68609, subdivision (d) (now section 68606, subdivision (b)), in that section 575.2 “disapproves any penalty which adversely affects a party's case when the fault is that of counsel,” while section 68609 does not.   The Intel court concluded section 68609, subdivision (d), controls as a later enacted and specific statute governing trial court delay reduction and prevails over the earlier enacted provisions of Code of Civil Procedure section 575.2, subdivision (b) dealing generally with the adoption of local rules.   According to Intel, the failure of the legislature to repeat in Government Code section 68609 the restriction provision found in Code of Civil Procedure section 575.2 indicates the restriction was not intended to apply to sanctions imposed under section 68609.  (Intel, supra, 228 Cal.App.3d at p. 1565, 279 Cal.Rptr. 569.)

Pacific urges us to follow Moyal v. Lanphear, supra, 208 Cal.App.3d 491, 256 Cal.Rptr. 296.   In Moyal, the trial court dismissed a plaintiff's complaint and levied monetary sanctions against plaintiff's attorney for noncompliance with local fast track rules.   The appellate court reversed, finding no adequate notice to the client or showing that the client was responsible for the attorney's noncompliance.  Moyal held that “[Code of Civil Procedure] sections 575.1, 575.2, 177.5, and California Rules of Court, rule 227, together with Government Code section 68609(d), provide a comprehensive statewide scheme of regulation of fast track matters, which attempts to balance the need for expeditious processing of civil matters with the rights of individual litigants.”  (Moyal, supra, 208 Cal.App.3d at p. 500, 256 Cal.Rptr. 296.)

The Moyal court concluded “[t]he loss of a party's cause of action is a greater hardship than an attorney's loss of money through imposition of sanctions and accordingly requires more accurate and complete notice.   The drastic measure of dismissal should only be used where there is a clear showing that the client is the cause of counsel's failure to comply with local fast track rules, e.g., where the client will not cooperate or supply necessary material to his or her attorney or where no other reasonable sanction will produce compliance with the rules and orders of the court.”  (Id. at p. 503, 256 Cal.Rptr. 296.) ⁶

Though Intel cites Moyal, the two cases cannot be reconciled;  Moyal states section 575.2 applies to dismissals under Government Code section 68608;  Intel states Government Code section 68608 stands alone, superseding section 575.2.   Several courts have noted, but not resolved, the apparent contradiction.  (See Marriage v. Keener (1994) 26 Cal.App.4th 186, 194, 31 Cal.Rptr.2d 511;  Estate of Meeker (1993) 13 Cal.App.4th 1099, 1105, fn. 5, 16 Cal.Rptr.2d 825;  Youngworth v. Stark (1991) 232 Cal.App.3d 395, 404–405, 283 Cal.Rptr. 668.)   Our interpretation of the statutory scheme here at issue comports more closely with the views expressed in Moyal.

 In interpreting a statutory scheme, we are guided by well-settled, general principles of statutory construction.   The interpretation and application of a statutory scheme to an undisputed question of fact presents a question of law which we determine independently on appeal.  (Rudd v. California Casualty Gen. Ins. Co. (1990) 219 Cal.App.3d 948, 951, 268 Cal.Rptr. 624.)   Our function is to determine the Legislative intent so as to effectuate the purpose of the law.   To determine this intent we turn first to the words of the statute itself, ascribing to the words employed by the Legislature their usual and ordinary meaning.   We may neither insert language which has been omitted, nor overlook language which has been inserted.  (Viking Ins. Co. v. State Farm Mut. Auto. Ins. (1993) 17 Cal.App.4th 540, 546, 21 Cal.Rptr.2d 590.)

 When the language of a statute is clear, we will not interpret away that clarity in favor of an ambiguity which does not exist.  (Craft v. State Farm Mut. Auto. Ins. Co. (1993) 14 Cal.App.4th 1284, 1291, 18 Cal.Rptr.2d 293.)   Legislation should be construed so as to harmonize its various elements without destroying either its language or underlying spirit.   When possible, potentially conflicting provisions should be reconciled in order to carry out the overriding legislative purpose as ascertained from a close reading of the entire act.   A construction which makes sense of an apparent inconsistency is preferable to an interpretation which renders statutory language useless or meaningless.  (Viking Ins. Co., supra, 17 Cal.App.4th at p. 546, 21 Cal.Rptr.2d 590.)   The principle of striving for harmony between disparate parts applies even though the two provisions are in separate codes.  (O'Brien v. Dudenhoeffer (1993) 16 Cal.App.4th 327, 332, 19 Cal.Rptr.2d 826.)

Government Code section 68608, subdivision (b) begins “Judges shall have all the powers to impose sanctions authorized by law, including the power to strike pleadings, if it appears that less severe sanctions would not be effective ․”   By its clear, unambiguous language section 68608 reaffirms judicial power to impose sanctions already “authorized by law.”   In this universe of pre-existing powers resides Code of Civil Procedure section 575.2, permitting dismissal if there is a clear showing the failure to comply was not the fault of counsel.  Government Code section 68608 incorporates prior sanction powers;  the statute does not repeal, replace or limit these pre-existing powers.   Nor does Government Code section 68608 create a new overriding sanction power which supersedes pre-existing statutes which authorize and delineate the trial court's power to sanction.

 The court in Intel, supra, 228 Cal.App.3d at p. 1565, 279 Cal.Rptr. 569, found the two statutes in conflict.   According to Intel, the two statutes impose conflicting requirements on trial courts prior to dismissal.   The court in Intel reasoned that since Government Code section 68608 is the more specific and later enacted statute, it should control over the more general Code of Civil Procedure section 575.2, subdivision (b).  (Intel, supra, 228 Cal.App.3d at p. 1565, 279 Cal.Rptr. 569.)   We find no such conflict:  Code of Civil Procedure section 575.2 allows dismissal absent attorney culpability;  Government Code section 68608 subdivision (b) acknowledges and reaffirms previous powers to dismiss and adds the requirement that courts consider the effectiveness of less drastic sanctions.   Where Intel found discord, we find harmony.   Taken together the two statutes provide a comprehensive scheme of regulation of fast track matters in an attempt to “balance the need for expeditious processing of civil matters with the rights of individual litigants.”  (Moyal, supra, 208 Cal.App.3d at p. 500, 256 Cal.Rptr. 296.)

 The court in Intel also found it significant that the “restrictive” provision in Code of Civil Procedure section 575.2, subdivision (b) is not repeated in the later enacted Government Code provision.   According to Intel, “[t]he inference is that the restriction was not intended to apply to orders issued under the Government Code provision.”  (Intel, supra, 228 Cal.App.3d at p. 1565, 279 Cal.Rptr. 569.)   Again, we disagree.   As we have noted, “the repeal or abrogation of statutes by implication is disfavored, as is any construction which would render related statutes a nullity.”   (Peltier v. McCloud River R.R. Co. (1995) 34 Cal.App.4th 1809, 1821–1822, 41 Cal.Rptr.2d 182.)   The concept of implied repeal is operative only when two statutes are so irreconcilable and inconsistent that the two cannot be harmonized.   The courts are bound if possible to maintain the integrity of both statutory provisions if the two can stand together.  (Mundy v. Superior Court (1995) 31 Cal.App.4th 1396, 1403, 37 Cal.Rptr.2d 568.)   Here, we find no such irreconcilable difference between the statutes, and therefore no repeal by implication.

 In the present case, the trial court dismissed Pacific's complaint without conducting any inquiry into counsel's role in Pacific's failure to comply.   In State of California ex rel. Public Works Bd. v. Bragg (1986) 183 Cal.App.3d 1018, 228 Cal.Rptr. 576, the court outlined the procedure to be followed to implement sanctions under Code of Civil Procedure section 575.2, subdivision (b).   The Bragg court stated:  “Unfortunately the section is silent as to its implementation.   After due consideration, we conclude the only possible way of ensuring the section is carried out is to require the court on its own motion to effect section 575.2 subdivision (b), if the negligent counsel does not so move.  ․ We conclude section 575.2, subdivision (b), requires more than mere permissive court action;  it compels court action to guarantee protection of an innocent party.”  (Id. at pp. 1028–1029, 228 Cal.Rptr. 576, emphasis in original.)   The court concluded:  “[W]e believe section 575.2 subdivision (b) implicitly calls for a fact-finding hearing to ascertain culpability, following which the trial court should determine the appropriate action to be taken.”  (Ibid.;   see also Colombo v. Colombo (1987) 197 Cal.App.3d 572, 579–580, 242 Cal.Rptr. 100.)

We find the trial court erred in failing to consider counsel's culpability as required under Code of Civil Procedure section 575.2, subdivision (b) prior to dismissing Pacific's complaint.   Therefore, we reverse the judgment.   The trial court shall consider the role of Pacific's attorney in failing to comply with local fast track rules prior to any dismissal under Government Code section 68608, subdivision (b).

DISPOSITION

The judgment is reversed and the case is remanded for proceedings not inconsistent with the views expressed herein.   Pacific shall recover costs on appeal.

FOOTNOTES

1.   Cohune later filed for bankruptcy and was dismissed from the case.

2.   The hearing on monetary sanctions was continued pending the Order to Show Cause Re Dismissal.   According to the parties, the hearing on monetary sanctions was dropped from the calendar upon dismissal of the complaint.

3.   Rule 20.7.8 states:  “At least ten calendar days before the scheduled First Case Management Conference, each party shall file with the Court and serve on all other parties a completed Case Management Conference Questionnaire and At Issue Memorandum.”

4.   Pacific filed its complaint in El Dorado Superior Court on July 6, 1992. the complaint was transferred from El Dorado to Placer County Superior Court on March 23, 1993.   Pacific served Archer on December 7, 1993.   Service occurred 8 1/2 months after transfer and 17 months after the filing of the original complaint.

5.   Under Rule 20.7.6(e), the court may, upon a showing of good cause, extend the time to serve a complaint.

6.   In Cooks v. Superior Court (1990) 224 Cal.App.3d 723, 274 Cal.Rptr. 113, the trial court denied a defendant's demand for a jury trial due to defense counsel's failure to submit proposed jury instructions within the period required by local fast track rules.   The appellate court issued a writ of mandate directing the trial court to vacate its order striking defendant's jury request.   The court relied on Moyal, supra, 208 Cal.App.3d 491, 256 Cal.Rptr. 296, and held that Code of Civil Procedure section 575.2 applied to fast track actions and precluded denial of a defendant's constitutional right to a jury trial based solely on counsel's failure to comply with local fast track rules.Intel and Cooks were decided by the same division of the Court of Appeal.   In Intel the court noted the decision in Cooks and stated “Nothing in that opinion should be understood to contradict the holding we reach in this case.”  (Intel, supra, 228 Cal.App.3d at p. 1566, fn. 6, 279 Cal.Rptr. 569.)

RAYE, Associate Justice.

BLEASE, Acting P.J., and DAVIS, J., concur.