Opinion
NOT TO BE PUBLISHED.
Appeal from an order of the Superior Court of Orange County No. 06D004299 Linda Lancet Miller, Judge.
The Law Office of Roland Ho and Roland Y. Ho for Appellant.
No appearance for Respondent Ana Maria Tang.
Carl Fabian for Respondent David Tang.
OPINION
FYBEL, J.
Introduction
Roland Y. Ho, an attorney, appeals from an order imposing monetary sanctions against him and his client pursuant to Code of Civil Procedure section 128.7 (section 128.7). Although we conclude Ho engaged in conduct sanctionable under section 128.7, we reverse the order imposing sanctions because the party seeking sanctions did not submit admissible and timely served evidence supporting the amount of fees and costs sought as monetary sanctions.
Ho represented Ana Maria Tang (Wife) in a marital dissolution proceeding against David Tang (Husband). While the dissolution action was pending, Ho, on behalf of Wife, filed a separate civil lawsuit for breach of fiduciary duty against Husband pursuant to Family Code section 1101. The family court granted Husband’s motion for sanctions under section 128.7 against Ho and Wife for bringing the breach of fiduciary duty lawsuit as a separate civil suit while the dissolution action was pending. The family court imposed monetary sanctions totaling $20,500.
We conclude Ho engaged in sanctionable conduct under section 128.7, subdivision (c). Family Code section 1101, subdivision (f) requires a claim for breach of fiduciary duty under that section be brought “in conjunction with” a pending marital dissolution proceeding. Neither existing law nor a nonfrivolous argument for its extension, modification, or reversal permits a claim for breach of fiduciary duty under Family Code section 1101 to be filed as a separate civil action when a marital dissolution action is pending.
The evidence does not, however, support the monetary sanctions imposed because Husband failed to submit admissible and timely served evidence supporting the amount of fees and costs sought as monetary sanctions. Of the three declarations Husband submitted to support the amount of sanctions, the first did not identify the work performed and the corresponding amount of fees for which sanctions were being sought. The other two declarations were not properly executed and were untimely filed and served. We therefore reverse.
Background and Procedural History
In May 2006, Wife petitioned for dissolution of her marriage to Husband. In October 2007, Wife, represented by Ho, filed a separate civil lawsuit against Husband for breach of fiduciary duty and eight other causes of action including fraud, negligent misrepresentation, and breach of contract.
A few days after the civil complaint was served on Husband, his counsel wrote a letter to Ho, stating the family court had exclusive jurisdiction over the civil lawsuit and demanding he dismiss the complaint with prejudice.
On November 14, 2007, Ho filed a first amended complaint for breach of fiduciary duty under Family Code sections 721, subdivision (b), 1100, subdivision (e), and 2012, subdivision (a)(1). The other causes of action in the original complaint were withdrawn. Two days later, Ho filed a notice of related case in the civil lawsuit notifying the court of the pending marital dissolution proceeding.
In December 2007, Husband demurred to the first amended complaint and served Wife and Ho with a proposed motion for sanctions against both of them under section 128.7, as required by the safe harbor provision of section 128.7, subdivision (c)(1). The demurrer asserted the family court had jurisdiction over the claims asserted in the first amended complaint. Ho’s opposition to the demurrer argued that under Family Code section 1101 the civil court had jurisdiction over the civil lawsuit independent of the family court. On Wife’s behalf, Ho also filed a request to dismiss the declaratory relief cause of action.
In a minute order, the civil court sustained Husband’s demurrer without leave to amend on the ground of another action pending and dismissed the first amended complaint without prejudice. Although Husband was not yet seeking sanctions and had never filed the sanctions motion, the court denied “[a]ll requests for sanctions” without prejudice based on improper notice. The minute order states, “[s]anctions may be addressed in Family Law Court.” A signed judgment of dismissal, from which an appeal could have been taken, has not been entered.
We invited the parties to submit supplemental briefing and, if necessary, supplemental appendices addressing, among other things, whether a written and signed judgment of dismissal had been entered. In response, Husband filed a letter brief acknowledging a judgment of dismissal had not been entered. Also in response to our invitation for supplemental briefing, Husband submitted a proposed judgment of dismissal to the trial court that sustained the demurrer.
In June 2008, Husband filed his motion for sanctions in the family court. In opposition, Wife and Ho argued the civil court had jurisdiction over the dismissed first amended complaint under Family Code section 1101.
At the hearing on the sanctions motion in August 2008, the family court imposed monetary sanctions totaling $20,500 jointly and severally against Wife and Ho. In a formal order, the court found: “[Wife]’s contentions regarding the proper forum for her action to litigate issues stemming from a pending family law matter are frivolous, have caused unnecessary delay, greatly increased the costs of litigation, and were not warranted under existing law and [Husband] is entitled to recover his legal expense related to defending the civil action. The court further finds that the primary basis of this sanctions claim is a violation of California Code of Civil Procedure section 128.7(b)(2), legal contentions not warranted in that form by existing law. However,... these unwarranted legal contentions were also brought to cause unreasonable and unnecessary delay and needless increase in the costs of litigation, as defined in Code of Civil Procedure section[] 128.7(b)(1).” (Original boldface and italics.)
Ho timely appealed from the sanctions order. Wife did not appeal.
Discussion
I.
Section 128.7 and Standard of Review
Section 128.7, subdivision (b) provides that by presenting a paper or pleading to the court, an attorney or unrepresented party certifies to the best of the person’s knowledge, information, and belief, formed after reasonable inquiry, that certain conditions have been met. Those conditions include, “[the pleading was] not... presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost or litigation” (§ 128.7, subd. (b)(1)), and “[t]he claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law” (§ 128.7, subd. (b)(2)). The court may impose sanctions against an attorney if, after notice and a reasonable opportunity to respond, the court determines any of the conditions in section 128.7, subdivision (b) were not met. (§ 128.7, subd. (c).)
We review the family court’s award of sanctions under an abuse of discretion standard. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.) But “[t]o the extent that we are called upon to interpret the statutes relied on by the trial court to impose sanctions, we apply a de novo standard of review.” (In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1479.)
At the outset, we address Husband’s argument that resolution of the separate action for breach of fiduciary duty collaterally estopped Ho from defending the merit of his decision to file a separate lawsuit. Among the requirements for collateral estoppel is a final judgment on the merits in the previous suit. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 910.) A written and signed order of dismissal under Code of Civil Procedure sections 581, subdivision (f)(1) and 581d has not been entered in the breach of fiduciary duty action. In his supplemental brief, Husband acknowledges the lack of a signed order of dismissal and concedes his “argument regarding collateral estoppel would not apply.”
We agree with Husband the lack of a final judgment in the separate breach of fiduciary duty action did not prevent the family court from granting the motion for sanctions under section 128.7. A final judgment is not required to seek sanctions based on an order sustaining a demurrer without leave to amend. To the contrary, “an order sustaining a demurrer without leave to amend does not bar a motion for section 128.7 sanctions unless the order is reduced to a judgment before the sanctions motion is served and filed.” (Banks v. Hathaway, Perrett, Webster, Powers & Chrisman (2002) 97 Cal.App.4th 949, 954, italics added.) In addition, the record shows the family court independently concluded that filing a separate action for breach of fiduciary duty was sanctionable.
II.
The Trial Court Did Not Abuse Its Discretion by Imposing Sanctions Under Section 128.7, Subdivision (b)(2)
The family court imposed sanctions against Ho based on his filing (on Wife’s behalf) of an independent civil lawsuit for breach of fiduciary duty under Family Code section 1101, subdivision (a) and declaratory relief. Family Code section 1101, subdivision (a) states in relevant part, “[a] spouse has a claim against the other spouse for any breach of the fiduciary duty that results in impairment to the claimant spouse’s present undivided one half interest in the community estate.” In essence, section 1101, subdivision (a) gives a spouse a claim against the other spouse for any breach of fiduciary duty resulting in impairment to the claimant spouse’s present interest in the community property. (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2009) [¶] 8:612, p. 8 158 (rev. #1, 2008).)
Subdivision (f) of Family Code section 1101 states: “Any action may be brought under this section without filing an action for dissolution of marriage, legal separation, or nullity, or may be brought in conjunction with the action or upon the death of a spouse.” (Italics added.) Subdivision (f) of section 1101 permits a spouse to sue the other spouse for breach of fiduciary duty in one of three ways: (1) without filing an action for dissolution, legal separation, or nullity; (2) “in conjunction with” an action for dissolution, legal separation, or nullity; or (3) on the death of a spouse. (See Hogoboom & King, Cal. Practice Guide: Family Law, supra, [¶] 8:613, p. 9 158.)
Thus, when a dissolution petition has already been filed, a claim for breach of fiduciary duty under Family Code section 1101 must be brought in conjunction with that dissolution proceeding. The word “conjunction” is defined as “the act or an instance of conjoining: the state of being conjoined: COMBINATION.” (Merriam Webster’s Collegiate Dict. (11th ed. 2004) p. 263.) The word “conjoin” is defined to mean “to join together (as separate entities) for a common purpose.” (Ibid.) The dictionary definition of conjunction and any commonly understood meaning of the word thus would lead a reasonable lawyer to conclude the section 1101, subdivision (a) claim must be asserted together or in combination with a pending dissolution action—not as a separate civil lawsuit.
Family Code section 2010 defines the scope of jurisdiction of a family court in a jurisdiction proceeding. It states the court has jurisdiction to “inquire into and render any judgment and make orders that are appropriate concerning” (1) the status of the marriage, (2) custody of minor children, (3) child support, (4) spousal support, (5) the settlement of the parties’ property rights, and (6) the award of attorney fees and costs. (Fam. Code, § 2010, subds. (a) (f).)
Rule 5.104 of the California Rules of Court, part of the Family and Juvenile Rules, states: “Neither party to the proceeding may assert against the other party or any other person any cause of action or claim for relief other than for the relief provided in these rules, Family Code sections 17400, 17402, and 17404, or other sections of the Family Code.” (Italics added.) Rule 5.104 means a spouse may not assert any claim for relief, such as a tort claim, in a dissolution proceeding except for a claim created by the Family Code. Family Code section 1101, subdivision (a) creates such a statutory breach of fiduciary duty claim that may be asserted in the dissolution proceeding.
Once a marital dissolution proceeding is commenced in the family court, no other department of the superior court may entertain proceedings that might adversely affect the family court’s power to decide issues over which the family court has jurisdiction. (Askew v. Askew (1994) 22 Cal.App.4th 942, 961 962; In re Marriage of Schenck (1991) 228 Cal.App.3d 1474, 1483 1484; see Hogoboom & King, Cal. Practice Guide: Family Law, supra, [¶] 3:23, p. 3 15.) Accordingly, once a marital dissolution action commences, a claim for breach of fiduciary duty under Family Code section 1101, subdivision (a) must be asserted in the dissolution proceeding, and no other department of the superior court may entertain it.
Ho argues he could not file Wife’s breach of fiduciary duty lawsuit in the family court because its jurisdiction is “limited.” (Sosnick v. Sosnick (1999) 71 Cal.App.4th 1335, 1339.) “Given finite family law jurisdiction, a tort action claiming damages cannot be joined with or pleaded in a dissolution proceeding.” (Ibid.) “Other causes of action and claims for relief may not be brought before the family court by the petition or response and, if alleged, will be stricken upon noticed motion or the court’s own motion. [Citations.] [¶]... Thus, parties to a dissolution or other status proceeding may neither join nor plead as part of the action tort claims for damages or rescission....” (Hogoboom & King, Cal. Practice Guide: Family Law, supra, [¶][¶] 3:284 to 3:285, p. 3 102 (rev. #1, 2009); see In re Marriage of McNeill (1984) 160 Cal.App.3d 548, 556, disapproved on another ground in In re Marriage of Fabian (1986) 41 Cal.3d 440, 451, fn. 13 [“Husband’s civil action, insofar as it claimed damages, could not have been joined with the dissolution action nor could those causes of action have been pleaded as part of the dissolution”].)
Neither the Family Code nor the California Rules of Court prohibit consolidation of an independent civil action raising issues of law or fact in common with a pending dissolution action. Courts have encouraged consolidation because “[t]his allows issues which could not be raised in the dissolution action nevertheless to be heard concurrently.” (In re Marriage of McNeill, supra, 160 Cal.App.3d at p. 557.)
Those authorities dealt with common law tort claims. In this case, Wife asserted a statutory breach of fiduciary duty claim under Family Code section 1101, subdivision (a). There is no question the family court has jurisdiction over such statutory breach of fiduciary duty claims.
Reasonable inquiry would have revealed to Ho established statutory law requiring him to file the breach of fiduciary claim under Family Code section 1101 in the pending marital dissolution action. The family court did not abuse its discretion in concluding Ho violated section 128.7, subdivision (b) by submitting the complaint for breach of fiduciary duty as a separate civil action and imposing sanctions against him
III.
The Evidence Did Not Support the Monetary Sanctions Imposed
Ho argues substantial evidence did not support the amount of sanctions imposed. We agree.
Imposition of monetary sanctions under section 128.7 is not automatic on a finding of sanctionable conduct. Section 128.7, subdivision (d) gives the trial court discretion in selecting the appropriate sanction, and “[a] sanction imposed for violation of subdivision (b) shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated.” The sanction may be “directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorney’s fees and other expenses incurred as a direct result of the violation.” (§ 128.7, subd. (d).)
To recover monetary sanctions under section 128.7, it is incumbent on the moving party to file and serve in a timely fashion admissible evidence supporting the amount of sanctions being sought. Husband failed to do so.
Husband’s attorney submitted three declarations setting forth the amount requested in monetary sanctions. The first declaration was served on Ho on December 27, 2007 along with the proposed sanctions motion in compliance with the safe harbor provision of section 128.7, subdivision (c)(1). The first declaration did not describe the work performed for which sanctions would be sought. Instead, the first declaration provided a general estimate that attorney fees would exceed $7,000. The declaration included a statement that after the hearing on the demurrer, Husband’s attorney would file a supplemental declaration containing a statement of current attorney fees and costs. The first declaration was properly executed under penalty of perjury.
The second declaration was filed on February 1, 2008 in the breach of fiduciary duty action, after the court in that case sustained the demurrer to the breach of fiduciary duty complaint and six months before the hearing on the sanctions motion. The second declaration specifically described the work performed and set forth the amount of attorney fees incurred in connection with the demurrer to the breach of fiduciary duty complaint, and included documentation to support the amount of fees sought as sanctions. The second declaration was not executed under penalty of perjury but was signed by Husband’s attorney in the manner of a pleading or motion rather than a declaration. The appellant’s appendix does not include a proof of service for the second declaration.
The third declaration specifically described the work performed and the amount of attorney fees incurred in connection with the motion for sanctions and included documentation supporting the amount of fees sought. The third declaration bears a proof of service showing it was served on July 31, 2008, the day before the hearing on the sanctions motion. This declaration too was not executed under penalty of perjury but was signed by Husband’s attorney in the manner of a pleading or motion.
The motion for sanctions was filed in the family court on June 26, 2008 and was set to be heard on August 1. The motion was the same as that previously served on Ho in compliance with the safe harbor provision and included only the first declaration. With the motion, Husband did not submit any evidence specifically describing the work performed and attorney fees incurred for which sanctions were being sought. In opposition to the motion for sanctions, Ho argued, among other things, the motion did not include a declaration of counsel.
Ho argues in his reply brief the second declaration bore no proof of service and was never served. “Points raised in the reply brief for the first time will not be considered, unless good cause is shown for failure to present them before.” (Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3.) However, the lack of a proof of service for the second declaration was a matter of concern that prompted us to invite the parties to submit supplemental letter briefs addressing whether the second declaration was ever served.
In the written order granting sanctions (prepared by Husband’s counsel), the family court found that Husband “did timely serve notice of the costs incurred as fees as a direct result of [Wife]’s offending pleading, both in February 2008 at the hearing on demurrer and again in July 2008 before this hearing on [Husband]’s sanctions motion.” These findings nonetheless are subject to the substantial evidence rule. (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2009) [¶] 8:43, p. 8 20 (rev. #1, 2009) [substantial evidence rule applies to trial court’s resolution of any disputed fact question, at trial or otherwise].)
In his supplemental letter brief, Ho maintained the position he had never been served with the second declaration. Husband argued in his supplemental letter brief the second declaration was personally served on Ho in court on February 1, 2008, though Husband acknowledged no proof of service was prepared at that time. On January 7, 2010, after we issued our request for supplemental briefing, Husband’s trial attorney executed and filed in the civil court a proof of personal service declaring the second declaration was personally served on Ho on February 1, 2008. Husband submitted a supplemental respondent’s appendix that included a copy of the January 7, 2010 proof of service.
The January 7, 2010 proof of service constitutes new evidence because it was created long after the sanctions order was entered and the notice of appeal was filed. (See In re Zeth S. (2003) 31 Cal.4th 396, 405 [“‘an appeal reviews the correctness of a judgment as of the time of its rendition, upon a record of matters which were before the trial court for its consideration’”].) Husband did not bring a motion for us to take additional evidence pursuant to California Rules of Court, rule 8.252(c), and, therefore, we decline to consider the January 7, 2010 proof of personal service.
Accordingly, the record, as it stands, does not include a proof of service for the second declaration. In addition, Husband filed the second declaration in the civil court case, not the family court case in which the sanctions motion was heard.
The record, construed in the light most favorable to the sanctions order, nonetheless supports the conclusion that Ho received a copy of the second declaration before the hearing on the sanctions motion. It appears a copy of the second declaration was attached to the third declaration because it states, “[a] copy of the Declaration of Thomas F. Kamph filed February 1, 2008 [the second declaration] is attached and incorporated with Exhibit ‘A.’” In his supplemental letter brief, Ho acknowledged the second declaration was attached as an exhibit to the third declaration.
Ho has asserted he was not served with the third declaration until after the hearing on the sanctions motion. The record includes a proof of service showing the third declaration was filed and personally served on Ho on July 31, 2008. At the hearing on the motion, Ho asserted, “we were never served with the declaration detailing the time and service.” The family court responded, “I have a declaration of service, sir.” The court must have been referring to the proof of service for the third declaration inasmuch as Husband has acknowledged a proof of service was not prepared for the second declaration until January 2010.
But the third declaration, with the second declaration attached as an exhibit, was not served until the day before the hearing on the sanctions motion. Such service was untimely. Reply papers in support of a motion must be filed and served not later than five court days before the hearing on the motion. (Code Civ. Proc., § 1005, subd. (b).) Because the second declaration had been prepared as early as February 2008, it could and should have been filed and served at the same time as the moving papers or soon thereafter.
Husband has offered no justification for the delay in serving the second declaration and submitting it to the family court. It is true the moving papers ultimately filed with the court as the sanctions motion must be the same as the papers served on the opposing party under the safe harbor provision of section 128.7, subdivision (c). (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 827.) Compliance with the safe harbor provision is a prerequisite for imposition of sanctions and does not necessarily entitle the moving party to recover monetary sanctions. To recover monetary sanctions, the moving party must submit admissible evidence supporting the amount of sanctions sought. The safe harbor provision of section 128.7, subdivision (c)(1) does not prohibit the moving party from submitting such evidence at the same time as the moving papers, or, at the very least, at the time of filing and service of the reply papers.
Ho was not required to request a continuance of the hearing on the sanctions motion to be able to have sufficient time to respond to these late filed and late served declarations. The family court should have declined to consider them. Besides, a request for a continuance likely would have been futile. When Ho protested he had not been served with the attorney declaration, the family court asserted it had a proof of service.
Although Ho has not specifically argued prejudice, the prejudice he suffered from the court’s consideration of the declarations appears affirmatively from our review of the record. In his opposition to the motion for sanctions, Ho argued the motion was not supported by attorney declarations describing the work performed. The late served declarations formed the evidentiary basis for the amount of sanctions imposed against Ho, yet he was not accorded sufficient time before the hearing to critique and respond to the declarations.
As Ho argues, the second and third declarations were defective because they were not signed under penalty of perjury. (Code Civ. Proc, § 2015.5 [declarations must be signed under penalty of perjury].) Defects in the execution of a declaration must be raised in the trial court or they are waived on appeal. (Rodrigues v. Superior Court (2005) 127 Cal.App.4th 1027, 1033, fn. 6; Robinson v. Grossman (1997) 57 Cal.App.4th 634, 648 649.) Ho’s failure to object on the ground of defective execution was excusable because the third declaration and a copy of the second declaration were not served on Ho and submitted to the family court until the day before the hearing on the motion for sanctions.
Of the three declarations, only the first was properly executed, and timely served and filed in the family court when it ruled on the motion for sanctions. The first declaration could not serve as evidentiary support for an award of monetary sanctions because it failed to describe the work performed and identify the attorney fees incurred for which sanctions were being sought. Consequently, Husband failed to present evidentiary support for an award of monetary sanctions. (Cf. In re Marriage of Niklas (1989) 211 Cal.App.3d 28, 38 [“the evidence must be sufficient to support a finding that the amount of [discovery] sanctions... reflects the amount spent or incurred... in an attempt to obtain compliance with discovery”].) As the evidence did not support the sanctions awarded, the order awarding monetary sanctions must be reversed.
IV.
Request for Sanctions on Appeal
Husband requests sanctions against Ho pursuant to California Rules of Court, rule 8.276 and In re Marriage of Flaherty (1982) 31 Cal.3d 637 on the ground the appeal is frivolous. Ho has filed opposition to the motion, and we granted his application to file a supplemental declaration. The appeal was not frivolous because we are reversing the sanctions award. Husband’s request for sanctions on appeal is denied.
Disposition
The order granting Husband’s motion for sanctions under section 128.7 is reversed. In the interest of justice, no party may recover costs incurred on appeal.
WE CONCUR: RYLAARSDAM, ACTING P. J.MOORE, J.