Opinion
D070544
12-06-2017
RICHARD J. MARAZITI, Plaintiff and Appellant, v. BETH A. ATUATASI, Defendant, Cross-defendant and Respondent; IDAHO MOUNTAIN DEVELOPMENT LLC, et al., Cross-complainants and Appellants; WEBB & CAREY, APC, Objector and Appellant.
Webb & Carey, and Patrick D. Webb for Plaintiff and Appellant Richard J. Maraziti, Cross-complainants and Appellants Idaho Mountain Development LLC et al., and Objector and Appellant Webb & Carey, APC. Klinedinst, Heather L. Rosing and Sarah H. Lanham for Defendant, Cross-defendant and Respondent Beth A. Atuatasi.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2013-00048200-CU-PN-CTL) APPEAL from a judgment and order of the Superior Court of San Diego County, Judith F. Hayes, Judge. Affirmed. Webb & Carey, and Patrick D. Webb for Plaintiff and Appellant Richard J. Maraziti, Cross-complainants and Appellants Idaho Mountain Development LLC et al., and Objector and Appellant Webb & Carey, APC. Klinedinst, Heather L. Rosing and Sarah H. Lanham for Defendant, Cross-defendant and Respondent Beth A. Atuatasi.
I
INTRODUCTION
A
Idaho Mountain Development, LLC and Signature Log Homes, LLC (the LLCs) appeal from a summary judgment in favor of Beth A. Atuatasi on the LLCs' operative third amended cross-complaint (cross-complaint) for legal malpractice and breach of fiduciary duty. The superior court determined Atuatasi was entitled to summary judgment because the LLCs' cross-complaint was time-barred and because the LLCs could not establish Atuatasi's alleged actions caused them harm. The LLCs contend their cross-complaint is not time-barred because it relates back to the original complaint timely filed by their member and manager, Richard J. Maraziti, which included derivative claims on their behalf. They further contend there are triable issues of material fact as to causation.
We need not decide the latter contention as we conclude the relation-back doctrine does not apply to the LCCs' cross-complaint. We, therefore, affirm the judgment.
B
Maraziti and his and the LLCs' counsel, Webb & Carey, APC (Webb & Carey), separately appeal an order imposing a $22,239 monetary sanction against them for disobeying and counseling the disobedience of four discovery orders (underlying discovery orders). They contend we must reverse the sanction order because the underlying discovery orders were wrongly decided. Webb & Carey further contends we must reverse the sanction order as to Webb & Carey because the court did not make any findings indicating Webb & Carey engaged in any conduct warranting a sanction.
We conclude the sanction order may not be collaterally challenged on the ground the underlying discovery orders were wrongly decided, and Maraziti and Webb & Carey have not established an exception to this rule. We further conclude Webb & Carey had the burden of proving it did not counsel disobedience of the underlying discovery orders and Webb & Carey has not shown it met this burden. Consequently, we affirm the order.
II
The LLCs' Appeal
A
BACKGROUND
Atuatasi represented Maraziti and the LLCs in a legal malpractice action against their former attorney and the attorney's law firm (the underlying action). In the underlying action, Maraziti and the LLCs claimed Maraziti was disabled from head injuries and had difficulty concentrating, problem-solving, and understanding and processing information. Maraziti and the LLCs further claimed their former attorney and the attorney's law firm took advantage of Maraziti's disability and violated professional ethics rules by entering into unfair business transactions with Maraziti and the LLCs and obtaining pecuniary interests adverse to them without fully apprising them of the risks or providing disclosures required by professional ethics rules. Following a jury trial on some claims and a bench trial on other claims, the court entered a judgment against Maraziti and the LLCs.
At the time, Atuatasi worked part time for the Law Offices of Andrew H. Griffin III.
Maraziti then filed a timely complaint against Atuatasi for legal malpractice and related claims on behalf of himself and derivatively on behalf of the LLCs, whom he named as nominal defendants and real parties in interest. Maraziti claimed he and the LLCs lost the underlying action in part because Atuatasi failed to procure and designate certain expert witnesses. Approximately 11 months after Maraziti filed his original complaint, the LLCs answered Maraziti's complaint and filed a cross-complaint against Atuatasi for legal malpractice and breach of fiduciary duty, after which point Maraziti pursued his complaint solely on behalf of himself. For reasons discussed in part III, post, Maraziti subsequently dismissed his complaint without prejudice as to Atuatasi.
Although both Griffin and his law office were named as defendants in Maraziti's complaint and as cross-defendants in the LLCs' cross-complaint, neither Griffin nor his law office is a party to this appeal.
Atuatasi filed a motion for summary judgment on the LLCs' cross-complaint, arguing the LLCs' complaint was time-barred and the LLCs could not prove the elements of causation or damages. The court agreed with both arguments and granted the motion. The court later entered a judgment for Atuatasi and dismissed the LLCs' cross-complaint against her with prejudice.
B
DISCUSSION
1
" 'A defendant moving for summary judgment has the burden of showing that a cause of action lacks merit because one or more elements of the cause of action cannot be established or there is a complete defense to that cause of action.' [Citation.] The expiration of the applicable statute of limitations is one such complete defense." (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 965.) " 'If a defendant's moving papers make a prima facie showing that justifies a judgment in its favor, the burden of production shifts to the plaintiff to make a prima facie showing of the existence of a triable issue of material fact.' " (Ibid.)
"We independently review the granting of summary judgment to ascertain whether there is a triable issue of material fact justifying reinstatement of the action. [Citation.] The trial court's ruling to grant a summary judgment should be upheld only if no triable issue as to any material fact exists, and the moving party is entitled to judgment as a matter of law." (Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 520.)
2
"An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first." (Code Civ. Proc., § 340.6, subd. (a).) This statute of limitations "applies to an action for malpractice as well as breach of fiduciary duty arising out of the performance of an attorney's professional duties ...." (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1121.) The limitations period is tolled in certain instances, including during the time "[t]he plaintiff has not sustained actual injury" and during the time "[t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred." (Code Civ. Proc., § 340.6, subd. (a)(1)(2).)
In this case, the LLCs do not dispute the limitations period for the LLCs' cross-complaint against Atuatasi commenced by no later than August 2012, more than a year before the LLCs filed their cross-complaint. Nonetheless, the LLCs contend their cross-complaint is not time-barred because, under the relation-back doctrine, the statute of limitations was suspended by the timely filing of Maraziti's original complaint, which was partly a derivative action on the LLCs behalf.
3
"As a general rule, the filing of a complaint tolls the statute of limitations applicable to a cross-complaint so long as the cross-complaint is related to the original complaint and its causes of action were not barred when the original complaint was filed. (Trindade v. Superior Court (1973) 29 Cal.App.3d 857, 860 [(Trindade)].) 'Such a cross-complaint need only be subject-matter related to the plaintiff's complaint—i.e., arise out of the same occurrence ... —to relate back to the date of filing the complaint for statute of limitations purposes.' (Sidney v. Superior Court (1988) 198 Cal.App.3d 710, 714[].) ' "The principle underlying the rule that a statute of limitations is suspended by the filing of the original complaint is that the plaintiff has thereby waived the claim and permitted the defendant to make all proper defenses to the cause of action pleaded." ' (Trindade, at pp. 859-860, quoting Western etc. Co. v. Tuolumne etc. Corp. (1944) 63 Cal.App.2d 21, 31 (Western Pipe).)" (California-American Water Co. v. Marina Coast Water Dist. (2016) 2 Cal.App.5th 748, 763, italics added and omitted; accord, Boyer v. Jensen (2005) 129 Cal.App.4th 62, 70; Luna Records Corp. v. Alvarado (1991) 232 Cal.App.3d 1023, 1027.)
However, the rule does not apply to the LLCs' cross-complaint against Atuatasi because Atuatasi was never a plaintiff or a cross-complainant in this case. Before the LLCs filed their cross-complaint, Atuatasi's only role in this case was as a defendant. After the LLCs filed their cross-complaint, Atuatasi's role expanded to include being a cross-defendant. But, simply being a defendant or a cross-defendant in a lawsuit is not an act constituting a waiver of any defenses, including a statute of limitations defense. (California-American Water Co. v. Marina Coast Water Dist., supra, 2 Cal.App.5th at p. 763; Boyer v. Jensen, supra, 129 Cal.App.4th at p. 70; Luna Records Corp. v. Alvarado, supra, 232 Cal.App.3d at p. 1027; Trindade, supra, 29 Cal.App.3d at pp. 859; Western Pipe, supra, 63 Cal.App.2d at p. 31.) Absent application of the relation-back doctrine, we conclude the LLCs' cross-complaint was time-barred as to Atuatasi.
The LLCs' citation to and reliance on former Corporations Code section 17501, now Corporations Code section 17709.02, is misplaced. While this code section may have authorized Maraziti to file his original complaint as a derivative action in the LLCs' stead, this code section does not discuss the application of the relation-back doctrine to a derivative action. More importantly, it does not discuss, much less mandate, the application of the relation-back doctrine to the LLCs separately filed cross-complaint and the LLCs have not identified nor have we located any authority that does so mandate.
For different policy reasons, there are circumstances in which the relation-back doctrine applies to pleading amendments adding or substituting plaintiffs. (See Code Civ. Proc., § 473; Pasadena Hospital Assn., Ltd. v. Superior Court (1988) 204 Cal.App.3d 1031, 1035-1036.) However, as the LLCs were not added or substituted as plaintiffs in Maraziti's complaint, we have no occasion to address whether those circumstances are present in this case.
III
Maraziti's and Webb & Carey's Appeal
A
BACKGROUND
1
The underlying action was premised in part on allegations Maraziti's known mental condition prevented him, and the LLCs through him, from fully understanding the business transactions he entered into with his former attorney. Maraziti's complaint and the LLCs' cross-complaint are premised in part on allegations the LLCs lost the underlying action because Atuatasi failed to designate Maraziti's psychologist as an expert witness to support Maraziti's claims about his mental condition.
Consistent with these premises, Maraziti and the LLCs designated Maraziti's psychologist as an expert witness in this case. The designation indicated the psychologist was expected to offer expert opinions as to "Maraziti's past and current mental, emotional and psychological condition; his emotional and psychological diagnosis and prognosis; the nature and extent of his mental and personality defects, disorders and/or deficiencies caused by brain trauma; his behavioral, personality, emotional and mental reactions to stimuli causing stress, mental incapacity, personality changes, cognitive disability and anxiety." The designation also indicated the psychologist was expected to offer expert opinions regarding Maraziti's mental and emotional condition and deficiencies at the time of the transactions which were the subject of the underlying action.
Atuatasi filed a motion to compel an independent medical examination of Maraziti, arguing the examination was necessary because the expert designation placed Maraziti's past and current mental condition at issue. The court granted the motion and ordered Maraziti to appear for the examination within 30 days. The court found there was good cause for the examination because Maraziti claimed to lack the cognitive ability to enter the transactions at issue in the underlying action and Maraziti intended to offer expert testimony on this point in the pending action.
Two days before the hearing on the motion, Maraziti and the LLCs amended their expert designation to exclude Maraziti's current mental condition from the scope of the psychologist's anticipated trial testimony. However, the court declined to consider the amended expert designation because it was untimely.
Maraziti and the LLCs challenged the court's order by petitioning this court for a writ of mandate. We summarily denied the petition. (Maraziti v. Superior Court (Dec. 4, 2015, D069330).)
Maraziti and the LLCs then de-designated the psychologist as an expert, but later indicated they still intended to call the psychologist as a percipient witness in his role as Maraziti's treating psychologist. Based on the expert's de-designation, Maraziti filed a motion for reconsideration of the court's order compelling an independent medical examination. The court denied the motion for reconsideration and again ordered Maraziti to appear for the examination. The court found there remained good cause for the examination because of the nature of the alleged malpractice and Maraziti's expressed intent to call the psychologist as an expert witness.
Maraziti's and LLCs' counsel subsequently informed Atuatasi's counsel (defense counsel) that Maraziti would not be appearing for the examination and he instead planned to dismiss his operative complaint against Atuatasi. Defense counsel indicated Maraziti would still need to appear for the examination unless the LLCs also dismissed their operative cross-complaint against Atuatasi. Although defense counsel did not respond to this point, Maraziti dismissed his operative complaint against Atuatasi.
2
In addition to seeking an independent medical examination, Atuatasi served Maraziti with production demands seeking documents "related to Maraziti's mental health records, psychological treatment, diagnoses, cognitive condition, and emotional mental reactions to stimuli for three time periods ... ." Maraziti objected to compliance with some of the demands and agreed to comply with others, but did not do so. Atuatasi filed a motion to compel further responses to the production demands. The court granted the motion and ordered Maraziti to produce his mental health records.
3
After Maraziti and the LLCs designated their appraisal and standard of care expert witnesses, Atuatasi served the experts with deposition subpoenas for the production of business records (document subpoenas). Defense counsel instructed the experts not to comply with the document subpoenas and filed a motion for a protective order, arguing the subpoenas were improper in multiple respects. Atuatasi opposed the motion for a protective order and filed motions to compel compliance with the document subpoenas, arguing the document subpoenas were a proper discovery method and the information sought was necessary to the preparation of her defense. The court denied the motion for a protective order and granted the motions to compel compliance with the document subpoenas.
4
After Maraziti and the LLCs failed to comply or fully comply with the above discovery orders, Atuatasi filed a motion requesting terminating and monetary sanctions against them and their attorney. The court denied the request for a terminating sanction, but imposed a $22,239 monetary sanction against Maraziti and his counsel Webb & Carey.
Nonetheless, by then, the court concluded only Maraziti's past mental condition remained at issue and the court stayed its prior orders requiring Maraziti to submit to an independent medical examination.
B
DISCUSSION
1
A court may sanction anyone engaging in conduct that is a misuse of the discovery process to the extent authorized by the Civil Discovery Act (Code Civ. Proc., § 2016.010 et seq.) after notice to the affected party, person, or attorney and an opportunity for a hearing. (Code Civ. Proc., § 2023.030.) Failing to respond or submit to an authorized discovery method and disobeying a court order to provide discovery are misuses of the discovery process. (Code Civ. Proc., § 2023.010, subds. (d), (g).)
Among the available sanctions for misuse of the discovery process, "[t]he court may impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney's fees, incurred by anyone as a result of the conduct." (Code Civ. Proc., § 2023.030, subd. (a).) The court may also impose a monetary sanction on a party who fails to submit to a required independent medical examination. (Code Civ. Proc., § 2032.410.) "If a monetary sanction is authorized by any provision of [the Civil Discovery Act], the court shall impose that sanction unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust." (Code Civ. Proc., § 2023.030, subd. (a).)
We review an order imposing a monetary discovery sanction for abuse of discretion. (Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 401.) In conducting our review, "[w]e resolve all evidentiary conflicts most favorably to the trial court's ruling [citation], and we will reverse only if the trial court's action was ' " 'arbitrary, capricious, or whimsical.' " ' " (Ibid.; accord, Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 878 (Ellis).)
2
Maraziti and Webb & Carey contend the trial court abused its discretion in awarding monetary sanctions against them because the discovery orders upon which the court based the sanctions were wrongly decided. However, "a party may not defend against enforcement of a court order by contending merely that the order is legally erroneous." (Wanke, Industrial, Commercial, Residential, Inc. v. Keck (2012) 209 Cal.App.4th 1151, 1172, citing In re Marriage of Niklas (1989) 211 Cal.App.3d 28, 35-36; accord, Ellis, supra, 218 Cal.app.4th at p. 880.) The duty to obey a court order is not dependent on the correctness of the order and a party may not ignore an order with which the party disagrees. Instead, the party's remedy is to challenge the order in the court of appeal. (Espinoza v. Classic Pizza, Inc. (2003) 114 Cal.App.4th 968, 975-976.)
The LLCs appealed the order compelling compliance with the document subpoenas and one of the orders compelling Maraziti to submit to an independent medical examination. The opening brief disputes the correctness of these orders and the other underlying discovery order. However, the opening brief only requests reversal of the sanction order. It does not request reversal of the underlying discovery orders. We, therefore, address the underlying discovery orders only to the extent necessary to address the sanction order.
While there is an exception to this rule for an order void because it was in excess of the court's jurisdiction or was unconstitutional (see In re Marriage of Niklas, supra, 211 Cal.App.3d at p. 35-36), Maraziti and Webb & Carey have not established the exception applies here. They have not established the orders were in excess of the court's jurisdiction because the record shows the court had personal jurisdiction over Maraziti and the LCCs, the court had jurisdiction over the subject matter of the orders, and Atuatasi had made a prima facie case for the relief embodied in the orders. (See Signal Oil & Gas Co. v. Ashland Oil & Refining Co. (1958) 49 Cal.2d 764, 775-776.)
Additionally, Maraziti and Webb & Carey have not established the orders were unconstitutional. The only order for which they raise a direct constitutional claim is the order requiring compliance with the document subpoenas. Specifically, they claim this order violated due process principles because Atuatasi's motions to compel compliance were served on the experts by mail instead of by personal service, as they contend was required by rule 3.1346 of the California Rules of Court (rule 3.1346). However, on its face, rule 3.1346 appears to apply only to nonparties who have been deposed and not to nonparties who have only been asked to produce documents. Even if rule 3.1346 did apply, the service defect was waived by the failure to show any resulting prejudice. (See Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1289.) Indeed, the record shows the defect did not prevent Maraziti and the LLCs from opposing the motions to compel compliance or appearing at the hearing on the motions and arguing their positions. It also did not prevent defense counsel from filing and arguing a motion for a protective order on behalf of the experts, which was heard at the same time as the motions to compel.
Rule 3.1346 provides, "A written notice and all moving papers supporting a motion ... to compel production of a document ... from a nonparty deponent must be personally served on the nonparty deponent unless the nonparty deponent agrees to accept service by mail or electronic service at an address or electronic service address specified in the deposition record."
Maraziti and Webb & Carey also raise an indirect constitutional claim to the orders requiring Maraziti to submit to an independent medical examination. They argue that, because the court wrongly decided Maraziti's mental condition was at issue and remained at issue after he dismissed his individual action against Atuatasi, the court's orders requiring discovery of his mental condition violated his constitutional right of privacy. This argument lacks persuasive force because it ignores the chief factual premise of the underlying action and the requirements for proving legal malpractice claims. The chief factual premise of the underlying action was that Maraziti's and the LLCs' former attorney took advantage of Maraziti's known mental condition to induce Maraziti and the LLCs to enter unfair business transactions. For the LLCs to prove their legal malpractice action against Atuatasi, the LLCs had to prove this factual premise because they had to prove they would have prevailed in the underlying action but for Atuatasi's professional negligence. (Kemper v. County of San Diego (2015) 242 Cal.App.4th 1075, 1089-1090.) Thus, the court correctly concluded Maraziti's mental condition remained at issue in the LLCs' action against Atuatasi, notwithstanding Maraziti's dismissal of his individual action against Atuatasi.
3
Webb & Carey separately contends the court abused its discretion in sanctioning Webb & Carey because the court did not find Webb & Carey had acted in bad faith, filed frivolous papers, misused the discovery process, acted in concert with Maraziti's failure to comply with the court's discovery order, or behaved other than as a zealous advocate. However, Code of Civil Procedure section 2023.030, subdivision (a), permits a court to sanction an attorney who has advised conduct that is a misuse of the discovery process. The attorney has the burden of proving the attorney did not advise such conduct. (Corns v. Miller (1986) 181 Cal.App.3d 195, 200-201). As Webb & Carey does not cite to any evidence establishing it did not advise Maraziti and the LLCs to disobey the court's discovery orders, Webb & Carey has not established the court abused its discretion in sanctioning Webb & Carey.
4
Finally, Maraziti's dismissal of his individual complaint against Atuatasi before the hearing on the sanctions motion did not preclude the court from sanctioning him for the discovery violations. Atuatasi propounded the discovery both in her capacity as a defendant in Maraziti's action and as a cross-defendant in the LLC's cross-action. Because the same nucleus of facts underlay both actions, the discovery sought by Atuatasi remained necessary for the preparation of her defense in the cross-action. At all relevant times Maraziti was either the majority or the sole member and manager of the LLCs and he acted on their behalf as well as his own. Under such circumstances, sanctioning Maraziti, rather than the LLCs, was procedurally permissible. (See R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 496.)
IV
DISPOSITION
The judgment against the LLCs and the order imposing monetary sanctions against Maraziti and Webb & Carey are affirmed. Atuatasi is awarded her appeal costs.
MCCONNELL, P. J. WE CONCUR: BENKE, J. IRION, J.