Moofly Productions v. Favila ( 2018 )

Filed 6/1/18; pub. order 6/22/18 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
MOOFLY PRODUCTIONS, LLC, B282084
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC516308)
v.
SANDRA C. FAVILA et al.,
Defendants and Respondents;
NINA M. RILEY,
Appellant.
APPEAL from an order of the Superior Court of Los Angeles
County, Barbara M. Scheper, Judge. Reversed.
Law Offices of Nina M. Riley, Nina M. Riley; Walton &
Walton, and L. Richard Walton for Plaintiff and Appellant Moofly
Productions, LLC.
Law Offices of Nina M. Riley and Nina M. Riley for Appellant
Nina M. Riley.
James K. Cameron & Associates and James K. Cameron
for Defendants and Respondents Sandra C. Favila, Estate of
Richard C. Corrales, and Motion Graphix, Inc.
This appeal requires us to consider the procedures a trial
court must follow in imposing sanctions for violations of Code of
Civil Procedure section 1008.1 That section, which establishes the
rules for filing motions for reconsideration, provides that a court
may impose sanctions for violations “as allowed by [s]ection 128.7.”
(§ 1008, subd. (d).) May a trial court sanction a party for violating
section 1008 without allowing the party the benefit of a 21-day
safe harbor to withdraw the offending motion, as is required by
section 128.7, subdivision (c)? Our answer to that question is no.
Because plaintiff and appellant Moofly Productions, LLC (Moofly)
did not receive the required 21-day notice to withdraw its motion
for reconsideration and avoid sanctions, the sanctions award
against Moofly and Moofly’s attorney, Nina M. Riley (Riley),2 must
be reversed.
FACTS AND PROCEEDINGS BELOW
This case was originally filed in 2013 as a limited jurisdiction
matter, and at various stages has been removed to federal court and
remanded to the trial court in general jurisdiction. Because this
appeal concerns only the question of an award of sanctions against
Moofly and Riley, we describe only those facts and proceedings
relevant to the issue at hand.
On November 10, 2016, the trial court granted a motion by
defendants and respondents Sandra Favila, the Estate of Richard
Corrales, and Motion Graphix, Inc. (collectively defendants) for
1 Unless otherwise specified, subsequent statutory references
are to the Code of Civil Procedure.
2 Because the trial court ordered Riley as well as Moofly
to pay the sanctions, Riley herself is a party to this appeal.
Except where necessary to distinguish between them, we refer to
appellants collectively as Moofly.
2
terminating sanctions on Moofly’s claims against defendants.3
The court found that Moofly had abused the discovery process
by failing to respond to discovery requests and disobeying court
orders to provide discovery (see § 2023.010, subds. (d) & (g)), and
had displayed “utter disregard for the court as well as court
procedures.”
Moofly does not appeal from these terminating sanctions.
Rather, Moofly challenges the monetary sanctions imposed for
filing a motion dated November 23, 2016, in an unsuccessful
attempt to obtain a reversal of the terminating sanctions. Moofly
filed its motion pursuant to section 473, which under certain
circumstances allows parties relief from defaults and dismissals
entered against them as a consequence of their mistakes or neglect.
Moofly argued that the discovery violations that led the court to
issue terminating sanctions were the result of excusable neglect by
its representatives, who filed late responses to defendants’
discovery requests. Defendants filed an opposition to the motion
on December 7, 2016, pointing out that Moofly had made the same
arguments in its earlier opposition to terminating sanctions, and
that Moofly’s motion was in essence an incorrectly labeled motion
for reconsideration pursuant to section 1008 of the trial court’s
grant of terminating sanctions. Defendants argued that the
motion should be denied because Moofly had cited no new facts,
circumstances, or law to justify such a motion, as is required for
relief under section 1008. In addition, defendants asked the court
to issue an order to show cause regarding sanctions.
On December 20, 2016, the court denied the motion, issued
an order to show cause regarding sanctions against Moofly, and
set the hearing on the order to show cause for January 23, 2017.
Moofly filed a response on January 18, in which it sought to
3 Defendants’ cross-claims against Moofly remain active.
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withdraw its motion for reconsideration—nearly a month after
the court denied it—and opposed sanctions.
On February 2, 2017, the court granted the motion for
sanctions against both Moofly and Riley in the amount of
$10.499.51, payable to defendants’ counsel.
DISCUSSION
Moofly contends that the trial court’s sanctions order must
be reversed because the court violated statutory requirements for
the imposition of sanctions. In particular, Moofly argues that the
trial court failed to allow it a 21-day safe harbor period in which
to withdraw the motion in order to escape sanctions, as required
by section 128.7, subdivision (c)(2). Defendants contend that when
imposing sanctions under section 1008, subdivision (d), a court need
not comply with the requirements of section 128.7, including the
21-day safe harbor period. Because this is a question of statutory
interpretation, our review is de novo. (See Optimal Markets, Inc. v.
Salant (2013) 221 Cal. App. 4th 912, 921-922.) We conclude that
the requirements of section 128.7 do apply to sanctions imposed
under section 1008, subdivision (d). Because the trial court’s
order imposing sanctions did not comply with the safe harbor
requirement of section 128.7, subdivision (c)(2), we reverse.
A California court may impose attorney fees as a sanction
only when authorized by statute to do so. (See Interstate Specialty
Marketing, Inc. v. ICRA Sapphire, Inc. (2013) 217 Cal. App. 4th
708, 717.) In this case, the court imposed sanctions pursuant to
section 1008, subdivision (d), which provides that a “violation of
this section may be punished as a contempt and with sanctions
as allowed by [s]ection 128.7.” Section 128.7 allows sanctions
against parties who file papers in court frivolously, in bad faith,
or otherwise improperly.
4
The plain language of the statute guides our interpretation:
A court may impose sanctions under section 1008, subdivision (d),
“as allowed by [s]ection 128.7.” Sanctions are not “allowed by
[s]ection 128.7” (§ 1008, subd. (d)), unless all the requirements
of section 128.7, including safe harbor, are followed. This
interpretation is consistent with the one courts have applied in
analogous cases involving the award of attorney fees and costs
under the anti-SLAPP statute, section 425.16. The anti-SLAPP
statute requires courts to “award costs and reasonable attorney’s
fees to a plaintiff prevailing on the motion, pursuant to
[s]ection 128.5.” (§ 425.16, subd. (c)(1).) Courts have concluded that
“[t]he ‘reference to section 128.5 in section 425.16, subdivision (c)
means a court must use the procedures and apply the substantive
standards of section 128.5 in deciding whether to award attorney
fees under the anti-SLAPP statute.’ ” (Moore v. Shaw (2004)
116 Cal. App. 4th 182, 199.)
Additional case law supports our conclusion that the
requirements of section 128.7 apply to sanctions under section 1008,
subdivision (d). Although we are not aware of any other case that
has considered the procedural rules a court must apply in imposing
sanctions under section 1008, subdivision (d), several cases have
addressed the substantive standard of conduct for which sanctions
may apply. In every case that we are aware of, the court has
upheld sanctions under section 1008, subdivision (d) only for
conduct that violates the standards of section 128.7. (See, e.g.,
Young v. Rosenthal (1989) 212 Cal. App. 3d 96, 123 [sanctions
appropriate because motion for reconsideration was “clearly
frivolous and . . . brought in bad faith”]; In re Marriage of Green
(1989) 213 Cal. App. 3d 14, 26 [motion for reconsideration was
“totally and completely without merit, and was frivolous”]; Lucas v.
Santa Maria Public Airport Dist. (1995) 39 Cal. App. 4th 1017, 1028
[sanctions overturned because the trial court made no finding that
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the sanctioned party “engaged in bad faith or that the
reconsideration motion was frivolous”]; Tutor-Saliba-Perini
Joint Venture v. Superior Court (1991) 233 Cal. App. 3d 736, 745
[sanctions overturned because trial “court’s conclusion that the
motion was frivolous and brought solely for the purpose of delay
was clearly an abuse of discretion”].)
Defendants contend that because section 1008,
subdivision (d), allows for violations to be “punished as a contempt
and with sanctions as allowed by [s]ection 128.7” (italics added),
and because there is no 21-day safe harbor provision in initiating
contempt proceedings, the court need not observe the safe harbor
requirement of section 128.7 either. We are not persuaded.
Section 1008, subdivision (d) establishes two alternatives a trial
court may choose: contempt, or sanctions pursuant to section 128.7.
Each is subject to its own separate substantive and procedural
requirements.
Having concluded that the requirements of section 128.7
apply to sanctions imposed under section 1008, subdivision (d),
we must now consider whether the trial court correctly followed
those requirements in this case. Section 128.7 provides two
procedures for the award of sanctions. A party may request
sanctions, pursuant to subdivision (c)(1), or the court may
impose sanctions on its own motion, pursuant to subdivision (c)(2).
In this case, defendants contend that the trial court followed
the procedures for imposing sanctions on its own motion. In
order to sanction a party on its own motion under section 128.7,
subdivision (c)(2), the court must “enter an order describing
the specific conduct that appears to violate [section 128.7,]
subdivision (b) and directing an attorney, law firm, or party to
show cause why it has not violated [section 128.7,] subdivision (b),
unless, within 21 days of service of the order to show cause, the
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challenged paper, claim, defense, contention, allegation, or denial
is withdrawn or appropriately corrected.” (§ 128.7, subd. (c)(2).)
In this case, the trial court did not notify Moofly that it
would be subject to sanctions if it did not withdraw the motion
for reconsideration. Instead, the court denied Moofly’s motion
for reconsideration at the same moment that it issued the order
to show cause. Moofly’s subsequent attempt to withdraw its
motion was thus moot. In its order imposing sanctions, the court
recognized this, stating that Moofly’s “purported ‘withdrawal’
of the motion for relief is meaningless since [defendants] already
opposed the motion and the court already ruled on the motion.”
Courts of Appeal have uniformly rejected efforts by parties
to obtain sanctions when the court has already ruled on the
offending motion on the ground that “ ‘[a] party seeking sanctions
must leave sufficient opportunity for the opposing party to choose
whether to withdraw or cure the offense voluntarily before the court
disposes of the challenged contention.’ ” (Barnes v. Department
of Corrections (1999) 74 Cal. App. 4th 126, 135, quoting Ridder v.
City of Springfield (6th Cir. 1997) 109 F.3d 288, 297.) The same
reasoning applies to sanctions imposed on the court’s own motion.
Defendants also contend that Moofly’s opposition to the
trial court’s order to show cause was void because the Franchise
Tax Board had suspended Moofly’s certification at the time Moofly
filed its opposition. The suspension occurred on January 3, 2017,
after the trial court had denied Moofly’s motion for reconsideration
and issued its order to show cause regarding sanctions, but
before the hearing at which the court ordered sanctions against
Moofly. In support of their position, defendants cite Fresno
Rock Taco, LLC v. National Surety Corp. (E.D.Cal. Sept. 3, 2014,
No. 1:11-CV-00845-SKO) 2014 WL 4374228, a case in which a
federal district court sanctioned a party because its suspension
for failure to pay taxes caused a two-month delay in a jury trial.
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(See id. at pp. *8-*9.) But in this case, the trial court did not
sanction Moofly because its suspension caused any delay or
inconvenience to the court or to defendants. Indeed, the court was
unaware of Moofly’s suspension at the time it imposed sanctions.4
Moreover, a corporation’s suspension by the Franchise Tax
Board does not render all the corporation’s actions in litigation void.
(See Center for Self-Improvement & Community Development v.
Lennar Corp. (2009) 173 Cal. App. 4th 1543, 1552-1553.) Instead,
once a corporation pays its taxes and obtains relief from suspension,
“the revival of corporate powers has the effect of validating the
earlier acts and permitting the corporation to proceed with the
action.” (Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972)
8 Cal. 3d 369, 373.) In this case, Moofly paid its taxes and was
revived in August 2017. At that point, its actions while suspended
were validated. (See id.; Bourhis v. Lord (2013) 56 Cal. 4th
320, 329.)
Because the trial court’s order imposing sanctions on Moofly
and its attorney did not comply with the statutory requirements,
that order is reversed.
4 Defendants later filed a separate motion to sanction Moofly
for continuing to participate in the case and failing to notify either
the trial court or defendants of its suspension. The trial court
denied that motion.
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DISPOSITION
The order of the trial court is reversed. The parties shall bear
their own costs on appeal.
ROTHSCHILD, P. J.
We concur:
JOHNSON, J.
BENDIX, J.
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Filed 6/22/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
MOOFLY PRODUCTIONS, LLC, B282084
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC516308)
v.
CERTIFICATION AND
SANDRA C. FAVILA et al., ORDER FOR PUBLICATION
Defendants and Respondents;
NINA M. RILEY,
Appellant.
THE COURT:
The opinion in the above-entitled matter filed on June 1,
2018, was not certified for publication in the Official Reports. For
good cause, it now appears that the opinion should be published in
the Official Reports and it is so ordered.
_______________________________________________________________
ROTHSCHILD, P. J. JOHNSON, J. BENDIX, J.
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