Case of the Month Archive

Trial court properly retained jurisdiction to award sanctions pursuant to Fam C §271 despite dismissal of joinder complaint. . .

In affirmance, the Second District held that trial court was not divested of jurisdiction to issue an order imposing sanctions pursuant to Fam C §271 [attorney's fees as sanctions for conduct that frustrates settlement] against wife's brother, as a joined party to a dissolution action, even though husband dismissed his joinder complaint against wife's brother prior to trial court entering its final order for sanctions.

Meredith Blake and Jeremiah Michael Langer married in September 2004, and Meredith filed a dissolution action in September 2017. The litigation that ensued was extremely contentious and, in addition to the present opinion, resulted in a prior unpublished opinion. See In re Marriage of Blake and Langer (Oct. 27, 2020), 2020 WL 6280831.

In January 2018, Jeremiah's attorneys sent an e-mail to MetLife Investors USA Insurance Company, instructing it to maintain the named beneficiaries on a $2 million term life insurance policy that had been taken out on Meredith. The policy in question had been obtained in 2012, when Meredith's father, Steven Wohl, a trust and estate attorney in New York, drafted Meredith's irrevocable trust, which named Jeremiah and her brother, Daniel Wohl, as trustees. As trustees, Jeremiah and Daniel obtained the policy, which named themselves as beneficiaries. This policy was administered through Brighthouse Life Insurance Company (Brighthouse).

Beginning August 2018, Steven wrote and sent several e-mails to Brighthouse, all with the aim of assigning Meredith's policy from her 2012 trust to a new trust that Steven created for Meredith and for which Steven was the trustee. One of these e-mails was also sent to Jeremiah's attorneys and inadvertently included an attached e-mail that Steven had sent to Meredith in November 2018, which read: "'I have reviewed [your residence trust] and believe I have a method of indefinitely tying your house up in litigation against [Jeremiah], IN NEW YORK…My action may well not succeed, but it would have a very good chance of tying up your house for years—and deterring any would be buyer who would be offput 100% from buying a house in litigation, especially in NY.'"

After receipt of this e-mail, Jeremiah's attorneys brought the communication to the attention of the trial court and sought and obtained an order to join Steven and Daniel as parties in the dissolution action for their roles in interfering with the sale of the family residence. Jeremiah subsequently filed a joinder complaint against Steven and Daniel, alleging conversion, breach of fiduciary duty, wrongful use of civil proceedings, conspiracy, and ongoing conspiracy. In turn, Daniel filed a motion to disqualify Jeremiah's attorneys and refer them to the California State Bar for ethical violations, alleging that the e-mail in question constituted privileged attorney-client communication that should not have been submitted to the trial court. Jeremiah, meanwhile, argued that Steven was never Meredith's attorney in the dissolution action and, thus, the communication was not privileged material. On October 5, 2020, the trial court denied Daniel's motion to disqualify Jeremiah's attorneys.

The sanctionable conduct. . .
Jeremiah subsequently filed a motion for sanctions against Daniel pursuant to Fam C §271 [attorney's fees as sanctions for conduct that frustrates settlement]. On January 20, 2021, the trial court held a hearing on the motion and issued a tentative ruling in favor of Jeremiah, noting "'[the] motion to disqualify was meritless on a variety of bases…and I think the bringing of it is sanctionable under 271.'" At the conclusion of the hearing, the trial court ordered Jeremiah's attorneys to file billing entries demonstrating the time spent defending the disqualification motion as well as ordered Daniel to file an I&E Declaration. The trial court gave the parties until February 11, 2021, to provide the documentation, at which time the trial court would issue a final order.

The day after the hearing, Jeremiah served Daniel with a copy of his request to voluntarily dismiss the joinder complaint. This request was filed on February 5, 2021, and a clerk entered the dismissal the same day.

At the hearing for sanctions, Daniel's attorney appeared and argued that Jeremiah's dismissal of the joinder complaint terminated the trial court's jurisdiction over Daniel. The trial court (Los Angeles County's Riff) disagreed and on February 22, 2021, imposed sanctions against Daniel in the amount of $58,400. In so ruling, the trial court reasoned that it had found no direct authority on point relating to Fam C §271 but that case law generally establishes "'that a trial court retains authority to enter orders for abuse of the litigation process following a dismissal of an action.'" Daniel appealed, but the Second District affirmed.

Preliminary matter and Daniel's principal argument. . .
As a preliminary matter, the panel noted that in general once a plaintiff or cross-complainant dismisses an action or complaint, the trial court lacks jurisdiction to enter orders relating to the dismissed action. But certain exceptions to this rule exist. For example, regarding motions for attorney's fees and costs, trial courts retain jurisdiction to decide such motions for sanctions even postdismissal or postjudgment.

Although Daniel conceded that case law supports the proposition that trial courts retain postdismissal jurisdiction to decide motions for sanctions and attorney's fees, he argued that such sanctions should be permitted only where the party against whom sanctions were forthcoming filed the dismissal. According to Daniel's argument, since Jeremiah was the proponent of the sanctions motion as well as the party who filed the joinder action, the trial court was divested of jurisdiction to award sanctions pursuant to Fam C §271 once Jeremiah dismissed his joinder action.

Day sheds light on this issue. . .
To answer Daniel's argument, the panel turned to Day v. Collingwood (2006) 144 Cal.App.4th 1116, 230 Cal.Rptr.3d 113. In Day, the Fourth District considered whether the trial court had jurisdiction to hear a request for sanctions where the motion was filed by the defendant after summary judgment was entered against the plaintiff. The justices there held that whether a court has jurisdiction to hear a motion after a dismissal or judgment depends on whether the motion concerns a "'collateral proceeding'" that is not directly based on the merits of the underlying proceeding. In so holding, the Day court reasoned that "a contrary rule would allow a party to 'avoid sanctions by simply dismissing the action without prejudice.'" The postjudgment sanctions were a collateral issue since it did not undermine the merits of the judgment.

Turning back to the case at bar, the panel concluded that the trial court retained jurisdiction to impose sanctions against Daniel under Fam C §271. First, the sanctions did not bear on the merits of Jeremiah's joinder complaint but instead concerned only the collateral issue of whether Daniel abused the judicial process through his motion to disqualify Jeremiah's attorneys. Second, the justices noted that retaining jurisdiction to decide the sanctions motion satisfies the purpose of Fam C §271, which "is designed to punish 'a party [who] has unreasonably increased the cost of litigation.'" Accordingly, the Second District affirmed the sanctions against Daniel.