FC 271 Sanctions

A California divorce court is reversed by an Appellate Court when the judge sanctions Mother and her attorney for actions that the Appellate Court found were not sanctionable. The California Court of Appeal has ruled that a Trial Court was wrong by ordering sanctions under California Family Code Section 271 [divorce court may impose attorney’s fees based on conduct of party or attorney that furthers or frustrates settlement] against Mother and her attorney on the grounds that Mother argued that Father should not have overnight visitation with their child until child turns two years old, Mother filed a motion to disqualify the trial judge, Mother submitted a proposed judgment with errors, and Mother argued that Father’s video calls with child should be recorded.

In the case Featherstone v. Martinez (Decided on December 21, 2022), Mother and Father had one child together in 2019. Two months after child was born, Mother filed a parentage petition requesting primary physical and joint legal custody of child. In her supporting declaration, Mother acknowledged that Father was an involved father, but that he traveled frequently for work and was in town only three to four days each month. Mother requested that Father’s initial visitation with child last only three to four hours at a time and take place at her home and that Father provide two weeks’ advance notice before each visit. Mother also requested that overnight visits with Father begin once child turns two years old.

Father filed a response and, in his proposed visitation schedule, requested each visit last eight hours and that overnight visits begin when child turns six months old.

At a hearing in December 2019, Mother appeared without an attorney and Trial Court commented on Mother’s parentage petition stating that “the way you wrote it, it was along the lines of, I control everything, I’m the boss, and, you know, I’ll do him a favor and let him see his child.” When Trial Court asked Mother if she was breast-feeding, Trial Court said “don’t . . . lie” and “don’t exaggerate” before Mother answered. Trial Court finally commented “I’m going to side completely with [Father] today, and I think in the future you’re going to have a really hard time, because although I’ve tried to explain it, emotionally—and I understand—you do not feel like he’s an equal parent and you feel like you need to drag this out and make it slow.”

After this hearing, Mother retained counsel. In March of 2020, Mother’s attorney filed a motion to disqualify the judge under California Code of Civil Procedure Section 170.1 [challenge of trial judge for cause] based on purported bias that the judge demonstrated during the first hearing. Trial Court stated that the motion was “almost by definition untimely under these circumstances.” Mother’s attorney responded that she received the

transcript from the December 2019, hearing only a few days ago. Trial Court struck the motion as untimely and during argument on visitation issues during the same hearing, Trial Court stated that Mother’s attorney was not directly answering its questions and warned that, without improvement, they would “start talking about sanctions.”

In July of 2020, Mother submitted a proposed judgment, to which Father objected on the grounds that the proposed judgment contained several errors, including misstatements of Trial Court’s ruling. Trial Court rejected the proposed judgment.

In February 2021, Father filed a trial brief in which he requested Mother pay $7,000 in attorney’s fees pursuant to Family Code Section 271(a) [divorce court may impose fee order based on conduct of party or attorney that furthers or frustrates settlement] due to Mother’s purported unreasonable litigation, including her motion to disqualify the judge, the proposed judgment that contained misstatements of the Trial Court’s ruling, and her general refusal to settle.

At a hearing on February 24, 2021, Trial Court recounted its concerns regarding Mother’s litigation conduct. Regarding Mother’s motion to disqualify the judge, Trial Court commented “[Mother] has the right to believe I was biased. She always has that right, and I can’t sanction her for that . . .. [But] she does not have the right to file late, improperly noticed, and/or out of context motions.” In response to Mother’s attorney’s argument that Father had not properly noticed a motion for sanctions under Family Code Section 271, Trial Court stated “I think I noticed [Mother] for sanctions on my own motion at one of the earlier hearings when things were not proceeding so well . . .. It’s the court’s own motion.”

At a June 21, 2021, hearing, while the parties were discussing their agreement that Father would have video calls with child, Mother interjected that she agreed to use Zoom only and not any other platforms, since Zoom calls may be recorded. When Trial Court inquired why Mother wanted to record these video calls, Mother said she would like to record the calls because she and Father had disagreed in the past about whether certain statements were made. With regard to Mother’s insistence that Father use Zoom, Trial Court stated Mother had a controlling mindset and that although it was prepared to give “just the tiniest sanctions . . . now sanctions are back, thoroughly back, on the table[.]”

In September 2021, Trial Court held a hearing to impose sanctions. At the beginning of the hearing, Trial Court stated that the motion for sanctions has been “noticed, re-noticed, and repeatedly noticed.”

Trial Court again recounted its issues with Mother’s conduct. First, Trial Court stated that Mother’s declaration was misleading and her attempt to prevent Father from having overnights for two years while also limiting his visits to three to four hours at a time was “in and of itself, sanctionable.” Second, Trial Court stated that Mother’s motion to disqualify the judge was untimely and procedurally deficient and “was written out of context in an intentionally inflammatory and dishonest manner.” Third, Trial Court noted the proposed judgment prepared by Mother that Trial Court rejected “because it was replete with errors and omissions[.]” And finally, Trial Court stated that Mother’s request to use only Zoom for video calls was “alarming, outrageous, unbelievable, tone deaf, counterproductive . . .” and that when Trial Court attempted to note its problem with Mother’s request, Mother’s attorney interrupted “in a rude and abrupt manner.” At the conclusion of the hearing, Trial Court sanctioned Mother in the amount of $10,000 and separately sanctioned Mother’s attorney in the amount of $10,000.

Mother appealed and now, a California Court of Appeals has reversed Trial Court’s decision. The Appellate Court has ruled that there is a question whether Family Code Section 271 authorizes a court to issue sanctions on its own motion. The order for sanctions against Mother’s attorney was improper since Family Code Section 271(c) provides that an award of attorney’s fees and costs as a sanction is payable only from the property or income of the party against whom sanction is imposed. Furthermore, Mother’s declarations, her motion to disqualify the judge, her proposed judgment, and her request that Father’s video calls with child take place on Zoom did not constitute sanctionable conduct. Accordingly, the Appellate Court reversed Trial Court’s award of sanctions against Mother and her attorney.

Substituted Service

Unfortunately, in many legal actions including divorce actions, the Respondent or Defendant inaccurately believes that if they avoid service of the legal papers, they can avoid the legal action altogether. In a recent decision, a California Appellate Court has ruled that substantial evidence supports that substituted service was proper where after several attempts to personally serve the Defendant, process server served the co-resident who stated that Defendant was not at home and where Defendant’s name appeared on the community’s directory.

In the case of First American Title Insurance, Company v. Banerjee (decided on December 29, 2022), Plaintiff One, a real estate broker, filed a lawsuit, in 2017, against Defendant One, a rental property company, and Defendant Two, the president and alleged alter ego of Defendant One, for breach of contract. Plaintiff One also included in its complaint a promissory estoppel cause of action against the escrow agent. In its complaint, Plaintiff One alleged Defendants signed a commission agreement in which Plaintiff One was to arrange for a tenant to lease a property owned by Defendant One that would then pay a three percent (3%) commission fee to Plaintiff One if the tenant decided to buy the property. In 2016, the tenant purchased the property in question from Defendant One for approximately $5 million. Plaintiff One demanded the escrow agent (Plaintiff Two) to hold $145,000, which represented the three percent (3%) commission fee, as well as $6,000 in outstanding lease fees. Although Plaintiff Two initially stated it would hold the funds, it ultimately did not pay Plaintiff One.

Plaintiff One served Defendants the Summons and the Complaint through substituted serviced. In the declaration of due diligence, the process server stated that the service was attempted at an address in Pleasanton on six occasions in March 2017. On the final attempt, a person at the Pleasanton address denied knowing either Defendants. The process server then attempted service at a Dublin address on seven occasions. The Dublin address was listed on the California Secretary of State’s website as the mailing address for Defendant One. This residence was in a gated community and the process server was unable to gain access through the gates during the first seven attempts. No one answered the intercom calls, although Defendant Two’s name was listed on the directory. On an eighth attempt at the Dublin address, the process server served the documents by substituted service on a “co-resident” who stated that Defendant Two was not at home. The process server also mailed the documents to the Dublin address.

In June 2017, Trial Court entered default judgments against both Defendants after they failed to file a response to the Complaint.

In July 2017, Plaintiff Two filed a cross-complaint against Defendants for indemnity and contribution. A proof of service indicted that Defendant Two was personally served the Summons and Cross-complaint by a process server in September 2017.

Plaintiff One subsequently settled its claims with Plaintiff Two and assigned its claims against Defendants to Plaintiff Two. In June 2019, Trial Court entered an order substituting Plaintiff Two as the sole plaintiff in the action. Plaintiff Two then filed a request for default judgment against Defendants in December 2019, and Trial Court entered the default judgment against Defendants in May 2020.

In June 2020, Defendants filed a motion to set aside the default and default judgment, arguing (1) the judgment against them was void for failure to state a cause of action against them; (2) the judgment was void because service of the original Summons and Complaint was improper; and (3) the default judgment should be set aside for mistake, inadvertence, surprise, or excusable neglect, pursuant to California Code of Civil Procedure Section 473(b). In support of this argument, Defendant Two submitted a declaration that he did not reside at the Dublin address when the original Summons and Complaint were served by substituted service. Trial Court denied the motion to set aside the default judgment. Defendants appealed, but California Court of Appeals has not affirmed Trial Court’s decision.

The California Court of Appeals has ruled that substantial evidence supports Trial Court’s decision that substituted service was proper. A defendant challenging a default judgment may seek relief through either a direct appeal from the judgment, a motion to set aside the judgment, or a collateral attack on the judgment but “each avenue has . . . limitations on the type of errors that can be addressed”. Pursuant to California Supreme Court decision in Christerson v. French (1919) 180 Cal. 523, a default judgment is not void if the court has jurisdiction of the parties and the subject matter, whether or not the complaint states a cause of action, so long as it apprises defendant of the nature of plaintiff’s demand. In this case, since Defendants chose to attack the default judgment by a motion to set aside the judgment under Code of Civil Procedure Section 473(d), Defendants must demonstrate that the Complaint did not apprise Defendant Two of the nature of Plaintiff One’s demand. To the contrary, Plaintiff One’s Complaint apprised Defendant Two of the nature of its demand to enforce the commission agreement that Defendant Two signed on behalf of Defendant One and that Defendant Two was being sued as an alter ego of Defendant One. Under Appellate Court’s decision in Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, in a direct appeal, appellate court reversed a default judgment against individual defendants because the Complaint did not state a cause of action against them where the Complaint did not plead evidence relating to alter ego liability. In this case, had Defendants directly appealed from the default judgment, rather than filed a motion to set aside the judgment based on Code of Civil Procedure Section 473(d), they could have relied on the reasoning of Vasey to attack the Complaint for failure to state a cause of action. The Appellate Court further stated that it is not bound by and disagrees with the decision in Grappo v. McMills (2017) 11 Cal.App.5th 996, [affirming an order setting aside a default judgment and suggesting judgment was void for failure to state a claim] and, thus, Grappo does not apply. Accordingly, this Court affirmed the order denying the motion to set aside the default and default judgment.