Opinion
A148771
10-24-2017
NYNA ARMSTRONG, Respondent, v. THOMAS E. DALY, Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. D15-05048)
After the trial court entered an order dismissing a petition for dissolution of marriage on the ground that there was no valid marriage, appellant Thomas E. Daly (Daly) moved for monetary sanctions against the petitioner's attorney on the ground that the petition was filed against him in bad faith under Code of Civil Procedure section 128.5. The trial court denied the request for sanctions without ever reaching the merits on the grounds that it lacked authority to consider the motion, that the safe harbor provision of another section of the Code of Civil Procedure had not been complied with, and that it would have been more appropriate and efficient to have filed the motion earlier. Daly contends this was error, and asks us to remand to the trial court to consider the merits of the motion. We agree.
All further statutory references are to the Code of Civil Procedure.
BACKGROUND
Lawsuits Between the Parties
By both of their accounts, appellant Daly and respondent Nyna Armstrong (Armstrong) first became involved in a relationship in 1996. By 2015, their relationship had devolved into litigation in two counties, in three separate actions. On May 4, 2015, Armstrong filed a complaint for damages and division of property against Daly in San Francisco Superior Court styled a " 'Marvin' Claim." Daly filed an unlawful detainer action against Armstrong in Contra Costa County on May 6, 2015, alleging that the relationship between the two had experienced a "breakdown" in early 2015, that he asked her to vacate the Contra Costa residence at issue, and served her a 60-day notice of termination of tenancy on March 4, 2015. In August, the "Marvin" action was transferred to Contra Costa County. On October 9, 2015, Armstrong filed a verified petition for dissolution of marriage in Contra Costa County, alleging that she and Daly were actually married, and listing the date of marriage as March 30, 2005.
Marvin v. Marvin (1976) 18 Cal.3d 660.
After a Court Trial, Armstrong's Petition for Dissolution of Marriage is Dismissed
The judge in the family court assigned to the dissolution petition (Honorable Leslie Landau) granted Daly's motion for a bifurcated trial on the issue of whether the parties were married. The court heard testimony from Armstrong and from Daly, and ruled from the bench that the petition was dismissed, with the court determining that "in fact, there never was any marriage between [Armstrong] and [Daly]." Armstrong's theory was that the parties were "married within the meaning of the common law marriage" on account of their brief sojourns to South Carolina, and that this marriage was entitled to full faith and credit as a marriage in California. Judge Landau's comprehensive ruling stated in part: "Here [Armstrong's] efforts to establish a common law marriage failed several times over. First, there was, obviously, no formal agreement to be married when they went to South Carolina in 2005 or, for that matter in 2007. [Armstrong's] own actions prove that. She filed a Marvin . . . action here in California earlier this year, obviously not believing even then that she was married in South Carolina in 2005 or 2007. [¶] She never filed a joint tax return with [Daly]. She did not own title to any property as husband and wife with [Daly]. And she didn't discover that she could even claim she was married until this year, and, apparently, according to counsel, she first thought it was 2005 and then she decided no, really it was 2007. [¶] Well, it sort of doesn't matter when she learned from counsel that she could claim it because having discovered it after she filed the Marvin action simply proves she never believed at the time in 2005 or 2007 that they were, in fact, common law married.
"Second, there was no cohabitation coupled with a social acceptance as a married couple over a long period of time. The parties were in South Carolina over a matter of days. There was minimal social contact. Certainly, no community that would recognize them as a married couple is as contemplated by the South Carolina authorities."
The trial court, apparently referring to testimony about an incident in South Carolina in 2007, expressed her views on Armstrong's credibility: ". . . I, frankly, have a little difficulty believing that [Armstrong] has a specific recollection of the conversation and the forms filled out in 2007 in South Carolina where she didn't even remember initially that there was a South Carolina hospital visit when talking about the South Carolina issue and she didn't remember what the diagnosis was or what was prescribed. I mean, that is what you would expect people to remember and pay attention to, not a random conversation about marriage that nobody knew, until eight years later, had any independent significance. So I have some doubts about her memory. [¶] But even crediting that, I just don't think that filling out a form for the expediency of being able to visit or do whatever in the hospital really converts this into marriage under South Carolina law."
The order went on at length, thoroughly discussing the evidence and the law, most of which is not relevant to the narrow issue before us in this appeal. The trial court reiterated that Armstrong "didn't believe she was married until September of this year" and ordered Armstrong's petition for dissolution of a "claimed marriage" to Daly dismissed.
The written order was filed February 25, 2016. Daly's counsel filed and served a Notice of Entry of Order or Judgment on March 3, 2016.
Although we do not have a reporter's transcript from the bifurcated trial in the dissolution proceeding, the written order dismissing the petition appears to be a verbatim statement of the court's ruling from the bench.
Daly Moves for Sanctions Against Armstrong's Attorney
On March 29, 2016, Daly filed a motion for $23,352.68 in monetary sanctions against Robert DeVries, Armstrong's counsel, under section 128.5. These were Daly's reasonable costs and attorney's fees incurred as a result of DeVries's bad faith conduct in presenting a "frivolous" petition for dissolution of marriage for the "sole purpose of delay," all part of his alleged "bad-faith conduct with respect to a scheme to indefinitely delay the trial of a then pending unlawful detainer action so that his client could remain, rent free, in a multimillion dollar Orinda home owned by Daly."
Daly's motion, supported by the declaration of his counsel and a request for judicial notice, outlined the history of the litigation between the parties, including attorney DeVries's role in filing Armstrong's petition for dissolution for marriage only months after he had filed a "Marvin" claim on her behalf. Daly contrasted Armstrong's declaration in the "Marvin" action (prepared by DeVries) which stated, "This action is a 'Marvin' action, arising out of my 19-year non-marital partner relationship with defendant Thomas E. Daly," with the allegations of marriage in the petition for dissolution. Daly wrote:
"DeVries attempted to explain the contradiction between the allegations of the Petition for Dissolution, and the statement in Armstrong's declaration, in a subsequent memorandum wherein he stated, 'It was not until recently that, in consultation with counsel, Ms. Armstrong realized that she and Mr. Daly were in fact considered married under the common law marriage rules in effect in South Carolina at a time when they were in South Carolina.'
"Thus, it is DeVries who, after consulting with Armstrong, determined that the parties formed a common-law marriage while they were in South Carolina even though Armstrong never before believed that she had ever been married in South Carolina."
Daly also recited that Armstrong's trial brief (prepared by DeVries) identified only three " 'short periods' " that supported the claim of a consummated common-law marriage, all while Armstrong and Daly vacationed together aboard Daly's yacht while it was docked in South Carolina waters: " 'March 30, 2005 - April 1, 2005 [3 days] April 5, 2005 - April 11, 2015 [7 days]; January 25, 2007 - February 4, 2007 [11 days].' "
DeVries opposed the sanctions motion on two grounds: the petition for dissolution was not frivolous or solely intended to cause delay, and it failed to comply with the "safe harbor" provision of section 128.7, which DeVries argues was required by the language of section 128.5. "Safe harbor" refers to the provision in section 128.7, which provides that a party seeking sanctions must first give notice of and serve a sanctions motion but not file or present the motion to the court unless, within 21 days after service of the motion, the challenged "paper, claim, defense, contention, allegation, or denial" is withdrawn or corrected. (§ 128.7, subd. (c)(1).)
The trial court heard argument on the motion for sanctions and denied it on three specified grounds, without reaching the merits. First, the trial court raised the issue that it was not "100 percent clear" that the court had the "power to address" the sanctions motion, because the case had been dismissed on February 25 and there was "no action still pending" before the court. Second, even if the court had authority, it believed the safe harbor provision of section 128.7 should have been complied with, despite the fact that the motion was made under section 128.5 Third, even if the safe harbor provision wasn't required "as a matter of law," the trial court thought "it would have been appropriate as a matter of best practices and efficiency for the Court and avoiding the very harm that the sanctions are designed to punish to have filed this at the time the litigation was before the Court. So for all those reasons, I'm going to deny the request." The order, filed June 8, 2016, simply states that the motion for sanctions was denied.
The order simply denies the motion without a statement of reasons. The trial court set forth its reasons in the motions hearing transcript, as described above.
Daly's counsel urged that the court did have authority to hear the motion and offered to brief it, but the court declined the request.
To the extent the trial court stated its reasons, they are from the oral ruling at the motions hearing, as we describe in the text.
This appeal was timely filed.
DISCUSSION
On appeal, Daly contends that the court erred as a matter of law in not reaching the merits of his motion. We agree.
The Trial Court Had Authority to Hear the Motion
The trial court questioned whether there was a bar to filing a section 128.5 motion after judgment. Respondent did not argue this point in the trial court, and on appeal does not attempt to defend it.
There is no bar. (See Day v. Collingwood (2006) 144 Cal.App.4th 1116, 1125 [recognizing trial court has jurisdiction to consider sanctions motion after judgment is entered]; Shelton v Rancho Mortgage & Investment Corp. (2002) 94 Cal.App.4th 1337, 1345 [reviewing post judgment order denying party's request for sanctions under section 128.5].)
Section 128.5 Does Not Incorporate a Safe Harbor Provision
After the trial court denied the motion for sanctions, the court in San Diegans for Open Government v. City of San Diego (2016) 247 Cal.App.4th 1306 (San Diegans) addressed the very issue the trial court here was grappling with: does section 128.5, as it was written at the time of San Diegans and the sanctions motion in this case, incorporate the safe harbor provisions of section 128.7? San Diegans concluded it does not, and we agree with its result.
As we will discuss below in footnote 9, section 128.5 has since been amended, effective August 7, 2017. In this section of the opinion, all references to section 128.5 are pre-amendment.
San Diegans began with an overview of the history of the two sanctions statutes: "In 1981, the Legislature enacted former section 128.5 to provide statutory authority for an award of sanctions. (Clark v. Optical Coating Laboratory, Inc. (2008) 165 Cal.App.4th 150, 164.) Former section 128.5 applied only to complaints filed, or proceedings initiated, on or before December 31, 1994. (Olmstead v. Arthur J. Gallaher & Co. (2004) 32 Cal.4th 804, 819.) In 1994, the Legislature essentially suspended former section 128.5 when it enacted section 128.7, which provided statutory authorization for sanctions in actions filed on or after January 1, 1995. (§ 128.7, subd. (i); Olmstead, at p. 816.) Section 128.7 is much narrower and applies solely to misconduct in the filing or advocacy of groundless claims made in signed pleadings and other papers. (§ 128.7, subd. (b).) Section 128.7 also imposes a lower threshold for sanctions as the movant need not show subjective bad faith, but instead show the challenged conduct was ' " 'objectively unreasonable.' " ' (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.)" (San Diegans, supra, 247 Cal.App.4th at pp. 1313-1314.)
As the San Diegans court described, in 2014, the Legislature proposed "revising and reviving former section 128.5 'to provide an additional tool by which courts may potentially sanction bad faith actions or tactics.' " (247 Cal.App.4th at p. 1314 [citing legislative history].)
In San Diegans, as here, defendants sought sanctions under section 128.5. Subdivision (f) states that "[a]ny sanctions imposed pursuant to this section shall be imposed consistently with the standards, conditions, and procedures set forth in subdivisions (c), (d) and (h) of Section 128.7" And as in this appeal, the issue arose whether a party seeking sanctions under section 128.5 must first comply with section 128.7's safe harbor provision.
Only the significance of subdivision (c) of section 128.7 is at issue in this appeal. We note that subdivision (h) states that a motion for sanctions brought for an improper purpose can itself be the basis for a motion for sanctions. Subdivision (d) provides that sanctions imposed under this section shall be "limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated," and goes on to authorize an order directing payment to the moving party of reasonable attorney's fees and other expenses.
Section 128.7, subdivision (c) provides sanctions may be awarded against attorneys, law firms, or parties. Subdivision (c)(1) describes the two-step procedure for a section 128.7 sanctions motion, the first step of which is commonly known as the "safe harbor" provision. First, the moving party serves the motion, but does not file it or present it to the court for 21 days after service of the motion, thereby giving the alleged offending party the opportunity to withdraw or correct the "challenged paper, claim, defense, contention, allegation or denial." (§ 128.7, subdivision (c)(1).) Only if the moving party's sought after relief is not voluntarily addressed, is the motion for sanctions filed and argued to the court. Subdivision (c)(2) also permits a court on its own motion to impose sanctions; it must first "enter an order describing the specific conduct that appears to violate subdivision (b) and directing an attorney, law firm, or party to show cause why it has not violated subdivision (b), unless within 21 days of service of the order to show cause, the challenged paper, claim, defense, contention, allegation or denial is withdrawn or appropriately corrected."
The court in San Diegans wrote, "We are not persuaded by [plaintiff's] contention that a party seeking sanctions under section 128.5 must comply with the safe harbor waiting period in section 128.7, subdivision (c)(1). [Plaintiff's] argument requires us to interpret the language of section 128.5. Section 128.5, subdivision (f), requires sanctions be 'imposed consistently with the standards, conditions, and procedures set forth in subdivisions (c), (d), and (h) of Section 128.7.' (Italics added.) The plain language of the statute specifies sanctions are to be imposed consistently with section 128.7, subdivision (c), pertaining to who can be sanctioned and whether the party seeking sanctions exercised due diligence. The Legislature did not specify motions under section 128.5 needed to be imposed consistent with the safe harbor provisions of section 128.7, subdivision (c)(1) and (c)(2).
"To the extent section 128.5 can be considered ambiguous regarding adoption of the safe harbor provisions of section 128.7, subdivision (c)(1) and (c)(2), our review of the legislative history reveals no mention of the section 128.7 safe harbor waiting period. It is inconceivable the Legislature intended to incorporate by reference a prerequisite filing requirement without mentioning the requirement. Finally, section 128.7 is limited to misconduct in the filing or advocacy of groundless claims made in signed pleadings and other papers. (§ 128.7, subd. (b).) The purpose of the safe harbor waiting period contained in section 128.7 is to allow a party to 'avoid sanctions by withdrawing or otherwise appropriately correcting the offending paper, claim, defense, contention, allegation, or denial.' (Barnes v. Department of Corrections (1999) 74 Cal.App.4th 126, 132.) Section 128.5 is not limited to misconduct made in signed pleadings and other papers. (§ 128.5, subd. (a).) As a practical matter, requiring a party to comply with the safe harbor waiting period of section 128.7 before filing a sanctions motion under section 128.5 makes little sense as the waiting period cannot be used to 'withdraw[] or appropriately correct[]' past bad-faith actions or tactics. (§ 128.7, subd. (c)(1).)
"We conclude a party filing a sanctions motion under section 128.5 does not need to comply with the safe harbor waiting period described in section 128.7, subdivision (c)(1)." (San Diegans, supra, 247 Cal.App.4th at pp. 1316-1317.)
On appeal, Armstrong urges that San Diegans is incorrectly decided. She contends that although section 128.5 does not explicitly apply the safe harbor position, the Legislature's silence means that it intended to incorporate it. Acknowledging that the legislative counsel's digest for the bill is silent on the safe harbor provision, Armstrong posits that this must mean that existing law would not "be changed to allow the imposition of sanctions without following a safe harbor procedure for the first time in 20 years."
We are persuaded that the San Diegans court was correct in concluding that the safe harbor provision of section 128.7 is not incorporated in section 128.5, and that the trial court, without the benefit of San Diegans, erred in concluding otherwise.
We note that section 128.5 was amended, effective August 7, 2017. (Stats. 2017, ch. 169, § 1.). Among other things, the new section 128.5 deletes former subdivision (f)'s references to "standards, procedures and conditions set forth in subdivisions (c), (d) and (h) of section 128.7," in favor of stating explicitly when the 21-day "safe harbor" provision applies. As the Legislative Counsel's Digest states, "Existing law requires that any sanctions imposed . . . be imposed consistently with the standards, conditions, and procedures set forth in specified provisions relating to sanctions. [¶] This bill would delete that requirement and would instead impose various conditions and procedures on the sanctions ordered, as specified." (Legis. Counsel's Dig., Assem. Bill No. 984 (2017-2018 Reg. Sess.).) The Assembly Bill provides that the new act takes effect immediately, "[i]n order to avoid further confusion or inconsistent decisions among courts regarding the application of Section 128.5 of the Code of Civil Procedure . . . including, among other things, the standards, conditions, and procedures that must be applied . . . ." (Stats. 2017, ch. 169, § 3.) Of course, the new notice and safe harbor requirements in newly enacted section 128.5, subdivision (f) are not applicable to this appeal, since Armstrong gave notice when the old version of the statute was in effect.
The Court's Third Stated Ground About "Best Practices" Was Not a Basis to Deny the Motion and the Court Has Yet to Rule on the Merits
The last issue to consider is the import of the court's comments that "it would have been appropriate as a matter of best practices and efficiency" for Daly to have filed the motion earlier.
On appeal, Armstrong argues that these comments by the trial court indicated that, independent of the court's conclusion that the safe harbor provision applied and Daly had not complied with it, and the court's view that it had no authority to hear the motion, it was actually exercising its discretion and determining that sanctions were not warranted.
To make this point, Armstrong quotes from statements by the court at the motions hearing, but out of context. The first passage Armstrong quotes neglects to state that the court's statement is all in response to Daly's counsel's offer at the hearing that he would be "happy to" brief the issue of whether the court has authority to adjudicate a request as to a case that has been dismissed, an offer that the court declines. In response to the offer for further briefing, the court starts by stating, "Well, I don't want to increase the costs here for additional briefing." (Italics added.) Armstrong omits this statement, and quotes only the sentences afterward, which amplify the first sentence (the court does not want additional briefing): "I'll note that the volume of briefing on this issue is at least the size and volume of briefing on the marriage issue, and I find myself wondering—this really [sic] the parties' issue not yours—how much this motion cost the parties to bring, and if they had just devoted the money that they spent for litigating the marriage issue and now litigating this fees issue, if they had just agreed to give that money, instead of putting it in your pockets to put it in their pockets, this case would have been done, and I gather there are equal amounts of paper flying and fees incurred in the other case, and I—so that's kind of a long way around saying I don't want any further fees on this issue if I can possibly help it because it seems like the litigation is consuming the resources that the parties could just pay to each other and be done with it." This is not a determination on the merits of the sanctions motion.
The other passage Armstrong recites further underscores our view that the court's third ground for denying the motion was not an exercise of judicial discretion to deny the motion; if anything it suggests a restatement of the first two grounds for the ruling, this time in terms of "efficiency." Or, worst case for Armstrong, some of the quoted language suggests that the court believed the sanctions motion had merit ("I do think that if there was a trail here to a win, it was a really, really narrow trail, and I'm not sure there really was one, frankly. I don't think there was anything to this petition.")
The language quoted by Armstrong is as follows: "Had this Motion been filed at the time that the response was filed or at the time that the motion to bifurcate and the status of marriage issue was put before the Court, I could have ruled then, and it would have been much more efficient. The petitioner could have seen the light and decided it was not worth risking sanctions and stopped the proceedings and that's the whole purpose is to stop. [¶] The whole purpose of the sanctions is not to punish the other side, but to give everyone—at least give an opportunity to say: Hey this is not appropriate. Drop it. And I might have entertained that motion because I do think that if there was a trail to a win it was a really, really narrow trail, and I'm not sure there was one, frankly. I don't think there was anything to this petition. I'm not going to go so far now because I'm not ruling as to say it was frivolous, but I might well have found that, but [attorney interruption] but at this point, months after the decision to be seeking sanctions requiring the Court to go back and review all the facts, all the law to determine whether at the time I would have found it frivolous is an inefficient use of court resources." The court then listed its three reasons for ruling, as described above. --------
Daly contends that the trial court's third reason amounted to requiring him to file the motion prior to the dismissal of the petition for dissolution of marriage, which he argues was an abuse of discretion. Daly points out that in his response to the petition for dissolution, he specifically stated that section 128.5 sanctions should be imposed against DeVries, and that the grounds would be set forth in a separate motion. Daly contends that at the time he responded to the motion, he had "no idea on what basis for the claim for a March 30, 2005 marriage was made upon." Daly explains that the procedural posture and machinations in this and the related litigation meant as a practical matter that the sanctions motion could not be heard before the bifurcated trial on the motion for sanctions. Further, Daly cites authority supporting the award of sanctions when the motion was made even after a jury verdict. (See Sherman v. Kenetic Concepts, Inc. (1998) 67 Cal.App.4th 1152.) Armstrong does not address this case, nor does she contend on appeal that the sanctions motion was untimely; her view is simply that the trial court had "reasons independent of her interpretation of the statute sufficient to exercise [its] discretion to not award sanctions."
We conclude, considering the hearing transcript in its entirety, that the trial court has not yet ruled on the merits of the sanctions motion. Although we express no views on the merits, Daly is entitled to have the trial court consider his motion on the merits, and we remand to the trial court so it can exercise its discretion in the first instance.
DISPOSITION
The order denying sanctions is reversed, and the matter is remanded to the trial court for further proceedings consistent with this opinion. Costs on appeal are awarded to Daly.
/s/_________
Miller, J. We concur: /s/_________
Kline, P.J. /s/_________
Stewart, J.