MALIBU BAY ESTATES LTD v. IMPERIAL SAVINGS LOAN ASSOCIATION 100 (1987)

Appeal from an order imposing sanctions on an attorney pursuant to Code of Civil Procedure section 128.5.¹  We affirm and remand.

Malibu Bay Estates Limited (Malibu) instituted an action against Imperial Savings and Loan Association (Imperial) for the latter's alleged failure to fulfill a commitment to lend money to Malibu.   The first amended complaint purported to plead causes of action for “breach of contract, tortious and bad faith denial of existence of contract, fraud, promissory estoppel, and unfair competition.”

Imperial filed a demurrer, motion to strike and request for judicial notice.   The demurrer was accompanied by, inter alia, a 55–page memorandum of points and authorities.   Attorney Michael Angel represented Imperial.

The trial court denied the request to take judicial notice and took no action on the motion to strike.   It sustained the demurrer to the cause of action for unfair competition but overruled the demurrer as to the remaining four causes of action.

Subsequently, Malibu filed a second amended complaint which contained the same four previously mentioned causes of action.   The “amendment” was simply to delete the cause of action for unfair competition to which the demurrer had been sustained.

At this point, Imperial filed a demurrer to the four causes of action as to which a demurrer had previously been overruled. Imperial also refiled its previous motion to strike.   In conjunction with these actions Imperial again filed several lengthy documents.

The trial court overruled the second demurrer, denied the motion to strike and suggested that Malibu file a motion to impose sanctions.   Malibu did so and its motion proposed that sanctions be imposed on Imperial.

At the hearing on the motion for sanctions, Mr. Angel presented a declaration concerning his decision to refile the demurrer.   The matter was fully argued.   The trial court ruled that the conduct of Imperial's counsel, Mr. Angel, was frivolous and solely for the purpose of delay.   It ordered Mr. Angel to pay $750 in sanctions.   That amount was calculated to reimburse Malibu for attorney's fees in connection with opposing the second demurrer.

 The order is appealable.   Although not specifically mentioned in Code of Civil Procedure section 904.1, it is a final order on a collateral matter directing the payment of money and thus is tantamount to a final judgment.  (Wisniewski v. Clary (1975) 46 Cal.App.3d 499, 502, 120 Cal.Rptr. 176.)   Further, the fact that the notice of appeal purported to be filed by Imperial rather than counsel is of no significance. (Ellis v. Roshei Corp. (1983) 143 Cal.App.3d 642, 645, fn. 3, 192 Cal.Rptr. 57.)

 By the same token, counsel may not now complain that the original motion for sanctions named Imperial as the target for those sanctions.   It is clear that the action which was the subject of the sanctions was taken by counsel who had opportunity to be heard and to argue why sanctions were not appropriate.   Counsel has not suggested just what he would have done differently had he been advised in advance that he and not his client would be the one sanctioned. He was afforded due process.

The sole issue before us is whether the trial court abused its discretion in imposing sanctions, or said another way, whether the trial court's action was authorized by the spirit and purpose of Code of Civil Procedure section 128.5.  (Luke v. Baldwin-United Corp. (1985) 167 Cal.App.3d 664, 668, 213 Cal.Rptr. 654.)

 Given the case load under which our trial courts currently labor, it goes without saying that unnecessary delay in processing that case load must be discouraged.   A necessary adjunct of that truism is that the trial judges who are on the “firing line” must have the authority to control their courts and the litigants.  Code of Civil Procedure section 128.5 was aimed at strengthening the authority of the trial court in dealing with purposeful delay.  (Luke v. Baldwin-United Corp., supra, 167 Cal.App.3d at pp. 667–668, 213 Cal.Rptr. 654; Ellis v. Roshei Corp., supra, 143 Cal.App.3d at p. 648, 192 Cal.Rptr. 57.)

 Mr. Angel defends his actions in this case by contending that since the complaint was “amended,” it was technically permissible to redemur, and in any event, he presented different arguments and authority which were not presented in support of the first demurrer.

This latter contention cuts two ways. The trial court viewed the refiling of the demurrer as simply an untimely and improper attempt to obtain a reconsideration of the previous ruling.   Mr. Angel's contention that he in fact presented new material tends to bear out the trial court's perception.

In any event, Mr. Angel has not provided us with any explanation of why this “new” authority and argument was not presented in connection with the original demurrer. It appears that both the authority cited and the legal argument based thereon could have been presented at the time of the original demurrer.

Assuming arguendo that an amended complaint can legally be the subject of a demurrer based on grounds previously urged, it has been stated:  “․ technically correct procedures, pleadings or processes may not insulate [attorneys] from the sanction power of the court under section 128.5 if the court finds the other factors present, i.e., that the procedures employed are not utilized in good faith, are frivolous or cause unnecessary delay.”   (Ellis v. Roshei Corp., supra, 143 Cal.App.3d at p. 649, 192 Cal.Rptr. 57;  also see Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 231 Cal.Rptr. 355.)

Here the bottom line is that, as a practical matter, the complaint was not amended other than to delete one cause of action; the remaining causes of action were totally unchanged.

It seems clear to us that the trial court correctly identified the second demurrer as an attempt to obtain a reconsideration of the previous ruling.   Obviously, it was a delaying tactic.   Defense counsel apparently launched a “paper war” designed to frustrate plaintiff in moving its case forward.   There was no abuse of discretion in the trial court finding that the conduct of counsel was “totally and completely without merit” and “for the sole purpose of harassing an opposing party.”

 We now turn to the issue of sanctions for taking this appeal.   As noted, the trial court's sanction in ordering the payment of $750 was designed to compensate Malibu for attorney's fees expended in opposing what has been determined to be a frivolous procedural maneuver.

By perfecting an appeal to this court, Mr. Angel has now forced Malibu to expend additional sums for attorney's fees, and has required this court to devote considerable time in disposing of that appeal.   Unless Mr. Angel can also be made to pay Malibu's attorney's fees for this appeal, the practical result of taking the appeal is to nullify the effect of the trial court's order.

We have recently detected an increasing number of appeals of this type, where, as here, the sanctions imposed are of relatively small amounts of money.   It seems anomalous that where an attorney is threatened with incarceration under a contempt citation, his or her only remedy is by way of an extraordinary writ.   Yet where monetary sanctions are imposed, a full blown appeal is permitted.   This imposes an unnecessary burden on the appellate courts.

It also appears to be anomalous that on an unsuccessful appeal from an order imposing sanctions for frivolous, bad faith conduct, the opposing party cannot recover attorney's fees expended on opposing the appeal unless the appellate court is able to conclude that the appeal was also frivolous and in bad faith.  (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 183 Cal.Rptr. 508, 646 P.2d 179.)

The court in In re Marriage of Flaherty, supra, held that an appeal was frivolous only where it was taken “for an improper motive—to harass the respondent or delay the affect 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.”  (Id. at p. 650, 183 Cal.Rptr. 508, 646 P.2d 179.)

Here, once the sanction was imposed by the trial court, Mr. Angel's motive became one of simply trying to clear himself of the sanction—not necessarily an improper motive—and under the present state of the law we cannot say that no reasonable attorney could conclude that the appeal had arguable merit.

The fact remains, however, that while we are unable to impose sanctions for the taking of the appeal, the costs imposed on Malibu by the appeal are a direct result and attributable to the conduct for which the trial court was authorized to impose sanctions.

The real solution to this recurring problem would seem to be for the Legislature to specify that orders such as these are nonappealable and require the sanctioned party to proceed by way of extraordinary writ.   Under that procedure, the opposing party would not be compelled, in the first instance, to respond and the appellate court could summarily dispose of non-meritorious petitions without the need for a written opinion.

In the interim, we feel compelled to fashion a remedy based on the trial court's authority under Code of Civil Procedure section 128.5.   We, therefore, affirm the order but remand the matter to the trial court for reconsideration of the amount of the sanctions and to recalculate the amount in light of the additional burden which has been imposed on Malibu.   Respondents to recover costs on appeal.

FOOTNOTES

1.   Code of Civil Procedure section 128.5 provides:“(a) Every trial court may order a party, the party's attorney, or both to pay any reasonable expenses, including attorney's fees, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.   This section also applies to judicial arbitration proceedings under Chapter 2.5 (commencing with Section 1141.10) of Title 3 of Part 3.“(b) For purposes of this section:“(1) ‘Actions or tactics' include, but are not limited to, the making or opposing of motions or the filing and service of a complaint or cross-complaint.   The mere filing of a complaint without service thereof on an opposing party does not constitute ‘actions or tactics' for purposes of this section.“(2) ‘Frivolous' means (A) totally and completely without merit or (B) for the sole purpose of harassing an opposing party.“(c) Expenses pursuant to this section shall not be imposed except on notice contained in a party's moving or responding papers;  or the court's own motion, after notice and opportunity to be heard.   An order imposing expenses shall be in writing and shall recite in detail the conduct or circumstances justifying the order.“(d) The liability imposed by this section is in addition to any other liability imposed by law for acts or omissions within the purview of this section.”

COMPTON, Associate Justice.

ROTH, P.J., and GATES, J., concur.