Pham v. Trident Pacific Real Estate Group CA4/3 ( 2024 )

Filed 10/21/24 Pham v. Trident Pacific Real Estate Group CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
NAM PHAM et al.,
Plaintiffs and Respondents, G062599
v. (Super. Ct. No. 30-2021-
01228073)
TRIDENT PACIFIC REAL ESTATE
GROUP, INC., et al., OPINION
Defendants and Appellants;
CYNTHIA D. RALLS et al.,
Objectors and Respondents.
Appeal from a judgment of the Superior Court of Orange County,
William D. Claster, Judge. Affirmed in part, reversed in part, and remanded
with directions.
Murphey & Murphey, Meghan C. Murphey and Matthew D.
Murphey for Defendants and Appellants.
Nam Pham, in pro. per., for Plaintiff and Respondent.
No appearance for Plaintiff and Respondent DMVH LLC.
Lee, Landrum & Ingle, Cynthia D. Ralls and David S. Lee for
Objectors and Respondents.
* * *
A Nevada court appointed Gregory G. Williams and his company,
Trident Pacific Real Estate Group, Inc. (collectively, Williams) as receivers to
manage property owned by Nam Pham and his company, DMVH LLC
(collectively, Pham). After the Nevada receivership ended, Pham filed a
complaint in propria persona against Williams in the Superior Court of
Orange County (the California action). He later hired counsel and filed an
amended complaint.
After filing his amended complaint, Pham sought the Nevada
court’s permission to sue Williams based on his conduct as receiver. The
Nevada court denied his request and issued an injunction enjoining him from
continuing the California action. Williams demurred to Pham’s operative
complaint based on the Nevada court’s ruling, and Pham filed an opposition.
The trial court sustained the demurrer.
Following this ruling, Williams moved the trial court for
sanctions under Code of Civil Procedure section 128.7 (section 128.7) against
Pham and his attorneys (collectively, respondents). He argued that Pham’s
complaints were frivolous when filed because he had not obtained permission
to sue him. Williams also asserted respondents had engaged in sanctionable
conduct by continuing the litigation despite the Nevada court’s injunction.
2
The trial court denied the sanctions motion, concluding Pham had a
nonfrivolous argument that, based on some of the acts alleged, leave to sue
Williams was unnecessary. It further concluded that Pham and his counsel
did not actively litigate the case after the Nevada injunction and therefore
were not subject to sanctions for postinjunction conduct.
Williams challenges the trial court’s denial of his sanctions
motion, largely reiterating his arguments below. As explained below, we
conclude the court correctly ruled that Pham’s complaints were not frivolous
when filed because there was a reasonable argument that leave to sue was
unnecessary given Pham’s allegations. However, we conclude that Pham’s
postinjunction opposition to Williams’s demurrer was frivolous and therefore
sanctionable under section 128.7. Accordingly, we reverse the court’s order in
part and remand for the court to consider whether to impose sanctions on
Pham’s trial counsel.
FACTS
I.
THE NEVADA RECEIVERSHIP PROCEEDINGS
In 2018, a Nevada court appointed Williams as a receiver in
pending litigation between Pham and a third party. Williams was tasked
with managing several Nevada properties owned by Pham. In 2020, the
Nevada court approved Williams’s final report and accounting and
discharged him as receiver.
II.
THE CALIFORNIA ACTION AND RELATED NEVADA PROCEEDINGS
In 2021, Pham filed the California action in propria persona
against Williams, alleging fraud and embezzlement, among other things.
3
Pham later hired attorneys to represent him and filed an amended complaint,
asserting causes of action for fraud and conversion, among other claims. The
amended complaint alleged, inter alia, that Williams had embezzled
receivership funds and defrauded the Nevada court in various ways.
According to the amended complaint, venue was proper in the Superior Court
of Orange County because Williams resided in the county.
After filing the amended complaint, Pham petitioned the Nevada
court for leave to sue Williams.1 The Nevada court denied Pham permission
to sue Williams, concluding, inter alia, that it had already considered and
rejected his asserted grounds for suing. The Nevada court also issued an
injunction, enjoining Pham from continuing the California action.
III.
WILLIAMS’S DEMURRER
Back in California, Williams demurred to the amended
complaint. The demurrer was based on the grounds that (1) Pham had not
obtained permission to sue him, (2) the Nevada court had enjoined Pham
from continuing the action, and (3) Pham’s claims were barred by res judicata
based on the receivership proceedings.
Pham filed an opposition to the demurrer. He argued that under
common law, leave to sue a receiver is unnecessary if the claims concern
“ultra vires” acts—conduct beyond the scope of the receiver’s authority. He
maintained that his claims against Williams concerned ultra vires acts,
1 As explained further below, under both California and Nevada
law, a plaintiff generally may not sue a receiver in connection with the
receivership without leave of the court that appointed the receiver.
(Ostrowski v. Miller (1964) 226 Cal.App.2d 79, 84; Anes v. Crown Partnership,
Inc. (Nev. 1997) 932 P.2d 1067, 1070.)
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including fraud, self-dealing, and commingling of private and receivership
property. Pham acknowledged the Nevada injunction but urged the trial
court not to enforce it, criticizing the Nevada proceedings in various ways. He
offered no legal analysis or citation to authority in support of his position.
Finally, Pham noted that he had appealed the Nevada court’s ruling and the
appeal was still pending.
The trial court sustained the demurrer without leave to amend. It
reasoned that Pham was required to obtain leave from the Nevada court to
sue Williams, concluding there was no ultra vires exception to that
requirement. The court stayed the case pending resolution of the Nevada
appeal.
IV.
WILLIAMS’S MOTION FOR SANCTIONS
After the trial court sustained the demurrer, Williams moved for
sanctions against respondents under section 128.7. He argued that Pham’s
complaints were frivolous when filed because there was no basis to file in
California, given that the receivership was created in Nevada and concerned
Nevada property. He added that Pham had not obtained permission to sue.
Williams also argued that Pham had violated the Nevada injunction by
continuing the litigation in California. He maintained this was sanctionable
conduct.
The trial court denied Williams’s sanctions motion, concluding
respondents had not engaged in sanctionable conduct. First, it reasoned it
was not frivolous to file suit in Orange County, rather than in Nevada, given
that Williams resided in the county. Second, it stated that although
“California law d[id] not appear to contain the ultra vires exception [Pham]
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argue[d] for,” it was aware of “no California cases rejecting an ultra vires
exception.” Thus, it concluded Pham had a good faith argument that
California law should be extended or modified to contain such an exception.
Finally, as to the Nevada antisuit injunction, the trial court said:
“Ordinarily, the [c]ourt would agree [that it was sanctionable not to dismiss
the action based on the injunction]. But here, when the [c]ourt sustained
[Williams’s] demurrer without leave to amend, it did not dismiss the case
with prejudice. Instead, the [c]ourt stayed this action to allow [Pham] to
pursue appellate review in Nevada. There is no evidence that [Pham] actively
prosecuted this action during the stay. Since the [c]ourt itself stayed
proceedings pending appellate review in Nevada, the [c]ourt cannot say it
was frivolous for [Pham] to follow the [c]ourt’s lead and simply do nothing
while awaiting the outcome of that review.”
After Pham’s efforts to overturn the Nevada court’s ruling proved
unsuccessful, the trial court entered a judgment of dismissal. Williams
appealed, challenging the denial of his sanctions motion.
DISCUSSION
Williams contends the trial court erred in concluding that
respondents had not engaged in sanctionable conduct. He argues, inter alia,
that the complaints were frivolous when filed because Pham had not obtained
leave to sue. Alternatively, he claims respondents engaged in sanctionable
conduct by continuing this action in violation of the Nevada injunction.
As discussed below, we conclude the trial court correctly ruled
that the complaints were not frivolous at filing because respondents had a
reasonable argument that leave to sue the receiver was unnecessary based on
an ultra vires exception. However, we conclude the court erred by ruling that
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Pham’s trial counsel had not engaged in sanctionable conduct following the
Nevada injunction because their opposition to the demurrer lacked an
arguable basis in law.2
I.
SANCTIONS UNDER SECTION 128.7 AND THE STANDARD OF REVIEW
An attorney or unrepresented party who presents a pleading,
motion, or similar paper to the court makes an implied “certif[ication]” as to
its legal and factual merit (§ 128.7, subd. (b)), and may be sanctioned for
violation of this certification. (§ 128.7, subd. (c)). As relevant here, this
certification includes a representation that any legal contentions 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).) A party moving for sanctions for the violation of this
representation must show that the conduct of the opposing party or its
attorney in asserting the relevant claim was “objectively unreasonable.”
(Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189.) “A claim is objectively
unreasonable if ‘any reasonable attorney would agree that [it] is totally and
completely without merit.’ [Citations.]” (Ibid.)
2 We reject respondents’ contention that we have no jurisdiction
over this appeal because the order denying Williams’s motion for sanctions is
not appealable. Under the “one final judgment” rule, interlocutory or interim
orders are reviewable on appeal from the final judgment. (Rao v. Campo
(1991) 233 Cal.App.3d 1557, 1565.) Although Williams’s notice of appeal
expressly designated only the order denying sanctions, we construe it to
designate the judgment. (Norco Delivery Service, Inc. v. Owens-Corning
Fiberglas, Inc. (1998) 64 Cal.App.4th 955, 960 [notices of appeal are liberally
construed in favor of right to appeal].)
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If sanctionable conduct under section 128.7 occurred, the trial
court has discretion to impose sanctions, and we will reverse its decision not
to impose them only if it is arbitrary. (Kojababian v. Genuine Home Loans,
Inc. (2009) 174 Cal.App.4th 408, 422.) But whether the statute permits a
sanctions award based on undisputed facts is a legal question reviewed de
novo. (Ponce v. Wells Fargo Bank (2018) 21 Cal.App.5th 253, 261.)
II.
PHAM’S COMPLAINTS
A. Applicable Law
Under California law, receivers generally may not be sued
without leave of the court that appointed them. (Ostrowski v. Miller, supra,
226 Cal.App.2d at p. 84; 55 Cal.Jur.3d Receivers § 76.) That is also the rule in
other states, including Nevada. (E.g., Anes v. Crown Partnership, Inc., supra,
932 P.2d at p. 1070; Mashni v. Foster ex rel. County of Maricopa (Ariz.Ct.App.
2014) 323 P.3d 1173, 1179; Summerbrook West, L.C. v. Foston (Conn.App.Ct.
2000) 742 A.2d 831, 834.) At least some jurisdictions—again, including
Nevada—recognize an ultra vires exception to this rule, under which a
plaintiff may sue the receiver without leave for acts that exceeded the
receiver’s authority. (E.g., Anes v. Crown Partnership, Inc., at p. 1070;
Desulme v. Rueda (Fla.Dist.Ct.App. 2018) 252 So.3d 293, 294.) We are aware
of no California caselaw addressing the validity of this exception under
California law.
B. Analysis
We see no error in the trial court’s conclusion that respondents’
filing of the complaints was not sanctionable. At the time of filing and up to
the Nevada court’s injunction, Pham had a nonfrivolous argument that the
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action could be pursued without leave of the appointing court based on the
ultra vires exception. As noted, other jurisdictions have recognized this
exception, and we are aware of no California authority rejecting it. And at
least some claims in Pham’s complaints alleged actions outside Williams’s
authority as receiver. For instance, Pham alleged that Williams had
embezzled receivership funds.3 (See Kohlrautz v. Oilmen Participation Corp.
(9th Cir. 2006) 441 F.3d 827, 836 [receiver exceeded authority by acting
partially toward third party].) Thus, the complaints were not frivolous at the
time of filing merely because Pham had not obtained leave to sue.
Williams asserts it is irrelevant that respondents “could have
argued for an ‘ultra vires’ exception under California law” because they “did
not argue for any extension or change in California law.”(Boldface omitted.)
But even assuming an express argument may be necessary under some
circumstances to avoid potential sanctions under section 128.7, it would not
have been proper for respondents to include legal argument in Pham’s
complaints. (§ 425.10, subd. (a)(1) [complaint must contain “[a] statement of
the facts constituting the cause of action, in ordinary and concise language”];
640 Tenth LP v. Newsom (2022) 78 Cal.App.5th 840, 852, fn. 7 [“We disregard
everything in the [c]omplaint other than well-pleaded factual allegations and
matters properly subject to judicial notice”].)
3 Williams did not argue below and does not argue on appeal that
respondents should be sanctioned based on particular frivolous allegations,
as opposed to the filing of the action as a whole. We therefore do not consider
the matter. (See In re Javier G. (2006) 137 Cal.App.4th 453, 464 [“Generally,
issues not raised in the trial court cannot be raised on appeal”].)
9
Williams suggests any conclusion that respondents could have
argued for an ultra vires exception “is belied by the fact that [respondents]
did in fact seek permission to sue from the appointing court.” (Italics
omitted.) We disagree. Respondents may have wanted to play it safe, fearing
that their ultra vires argument would fail as to some or all their claims. But
that does not negate the objective reasonableness of the argument.
Williams contends that even if Pham arguably was not required
to obtain leave to sue, his complaints were legally frivolous because his
claims were indisputably barred by res judicata. However, Williams forfeited
this argument by failing to raise it in his motion for sanctions below: he
argued only that (1) there was no basis to sue in California, as opposed to
Nevada, (2) Pham needed but was denied permission to sue, and (3) the
Nevada court had enjoined Pham from maintaining this action. Williams had
argued res judicata in his demurrer, citing the Nevada decision. But that is
different from arguing it was indisputable at the time of filing that res
judicata barred the action—Williams’s required showing. (Bucur v. Ahmad,
supra, 244 Cal.App.4th at p. 189.)
In response to our invitation for supplemental briefing on the
issue of forfeiture, Williams asserts he did raise res judicata in his sanctions
motion. He points to the following elements of his memorandum in support of
the motion: (1) conclusory statements in the procedural history section;
(2) related legal principles in the “applicable law” section; and (3) a related
citation in a subsection concerning the Nevada injunction. He also points to
his reply in support of the motion, which contained related conclusory
statements in the introduction and additional conclusory statements in a
subsection on the extension of existing law. We are unpersuaded. These
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conclusory statements and undeveloped propositions, scattered in sections
devoted to different arguments or to no argument at all, did not provide
Pham or the trial court notice that Williams was asserting res judicata as a
basis for sanctions. It is therefore unsurprising that the court did not address
the issue of res judicata in ruling on the motion. Thus, Williams forfeited the
issue. (In re Javier G., supra, 137 Cal.App.4th at p. 464.)
Moreover, the appellate record does not include records of the
initial receivership proceedings in Nevada. Even assuming Pham attempted
to raise all his claims in that proceeding in some form, we cannot determine
based on the record that at the time of filing, it was indisputable that the
Nevada court had considered and rejected them. In denying Pham leave to
sue, the Nevada court later stated that it had done so, but respondents did
not have the benefit of that determination at the time the complaints were
filed. Accordingly, we find no error in the trial court’s conclusion that the
filing of the complaints was not sanctionable.4
III.
CONTINUING THE ACTION AFTER THE NEVADA INJUNCTION
The trial court erred in concluding that the conduct of Pham’s
trial counsel following the Nevada antisuit injunction was not sanctionable.
Generally, “one enjoined by another jurisdiction from maintaining an action
in this state ‘will not be permitted to proceed with his suit.’” (Smith v. Walter
E. Heller & Co. (1978) 82 Cal.App.3d 259, 271.) The court did not suggest
4 Williams contends the issue of venue is “wholly irrelevant” to
the analysis and presents no meaningful independent argument that
respondents’ choice to file this action in California, as opposed to Nevada,
was baseless. We therefore do not address the issue further.
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there were arguable grounds to reject the Nevada injunction; nor do Pham’s
counsel assert this position on appeal.
Yet after the Nevada court issued its injunction enjoining Pham
from continuing this action, his trial counsel filed an opposition to Williams’s
demurrer, defending Pham’s right to maintain the action. Their opposition
urged the trial court not to enforce the injunction but offered no reasoned
argument in support. The court overlooked this effort when it concluded that
counsel’s postinjunction conduct was not sanctionable, focusing instead on
their inaction during the subsequent stay. Pham’s trial counsel do the same
in their appellate briefs. As their opposition to the demurrer rested on no
arguable grounds, we conclude it was frivolous and therefore qualified for
sanctions under section 128.7, subject to the court’s discretion.5
Williams contends in conclusory fashion that the trial court was
required to impose sanctions under section 128.7. But even when
sanctionable conduct under the statute occurred, the trial court retains
discretion to determine whether a sanction is warranted. (Kojababian v.
Genuine Home Loans, Inc., supra, 174 Cal.App.4th at p. 422.) Williams
provides no reasons we should preclude the court from making this
determination in the first instance.
5 To the extent Williams contends Pham himself was subject to
sanctions under section 128.7, either for opposing Williams’s demurrer or for
failing to dismiss the action, he is mistaken. Section 128.7 permits sanctions
against an attorney or unrepresented party, and only for a pleading, motion,
or similar paper. (§ 128.7, subds. (b).) Williams points to no relevant propria
persona filing by Pham after the Nevada court injunction. Thus, Pham is not
subject to sanctions under section 128.7.
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DISPOSITION
The judgment is affirmed in part and reversed in part. The
matter is remanded for the trial court to exercise its discretion whether to
sanction Pham’s trial counsel under section 128.7, consistent with this
opinion. We express no view as to whether sanctions are appropriate. Pham
shall recover his costs on appeal. The remaining parties shall bear their own
costs.
O’LEARY, P. J.
WE CONCUR:
SANCHEZ, J.
GOODING, J.
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