Primo Hospitality Group, Inc. v. Haney

Filed 7/5/2019
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
PRIMO HOSPITALITY B283030
GROUP, INC., et al., (Los Angeles County
Super. Ct. No. BC587708)
Plaintiffs,
v.
STEVEN H. HANEY et al.,
Defendants and
Respondents;
MARC LIBARLE,
Objector and Appellant.
APPEAL from order of the Superior Court of Los
Angeles County, Michael J. Raphael, Judge. Reversed.
Marc Libarle, in pro. per., for Objector and Appellant.
Collins Collins Muir & Stewart, Robert H. Stellwagen,
David C. Moore, Joshua A. Cohen, for Defendant and
Respondent John Torbett.
_______________________
Plaintiffs filed a legal malpractice action, then retained
a new attorney. The attorney filed a declaration stating that
he represented the plaintiffs. A defendant in the action
immediately served the attorney with a motion for sanctions
under Code of Civil Procedure section 128.7 on the ground
that the complaint filed by prior counsel lacked merit.1 After
the motion for sanctions was filed several months later, the
trial court granted it. On appeal from the order awarding
sanctions, the attorney contends that he was denied the
notice and safe harbor required under section 128.7, because
the motion served on him did not identify any specific
conduct he had taken that violated the statute. We conclude
there is no evidence that the attorney presented the
complaint to the court within the meaning of section 128.7
before he was served with the motion for sanctions. A new
attorney’s filing of a declaration merely notifying the court of
a change in counsel does not constitute presenting the
complaint to the court under section 128.7. We also conclude
that a sanctions order cannot be supported solely by
evidence of conduct occurring after the motion is served,
because a motion for sanctions under section 128.7 must
1 All further statutory references are to the Code of
Civil Procedure unless otherwise indicated.
2
describe the specific conduct taken by the party to be
sanctioned and allow a safe harbor period to withdraw or
appropriately correct the sanctionable conduct. There was
no evidence to support finding the attorney violated section
128.7 before he was served with the motion for sanctions,
and therefore, we reverse the order awarding sanctions.
FACTUAL AND PROCEDURAL BACKGROUND
Underlying Lawsuit between Primo and Americana
In October 2007, Primo Hospitality Group, Inc., and its
principals Charlton Lui and Anthony Riviera (collectively
Primo), entered into a commercial lease with The Americana
at Brand, LLC (Americana) for space at Americana’s mall.
Primo opened a restaurant in the space. In May 2009, the
floors sustained water damage.
The law firm of Novian & Novian, LLP, on behalf of
Primo, filed a negligence action against Americana and its
management company in 2010. Primo repaired the floor in
May 2010, but stopped paying rent in June 2010. After the
floors were damaged in a second incident, Primo vacated the
space in November 2010. Americana filed a cross-complaint
against Primo for breach of contract based on unpaid rent.
The Novian firm withdrew on June 22, 2011. Primo
retained the law firm of Haney Roderick Torbett & Arnold,
LLP (the Haney firm), in August 2011. John Torbett was
the principal attorney of the Haney firm. Primo said a
3
pressure-washing company hired by Americana caused the
water damage when the pressure-washing equipment forced
water under the threshold of the door to the restaurant.
Primo had repeatedly requested that Americana stop
pressure-washing, but Americana refused. Primo said the
Novian firm advised Primo to vacate the premises and cease
paying rent.
A jury trial was held in 2012. The jury found in favor
of Primo on the causes of action for negligence, trespass, and
nuisance. The jury found in favor of Americana on the
remaining causes of action, including breach of the lease
agreement. The trial court entered judgment in favor of
Primo against Americana in the amount of $840,000, and
against the management company in the amount of
$560,000. However, the jury found Primo was liable to
Americana in the amount of $1,275,250 for breach of the
lease agreement. The trial court awarded attorney fees of
$1,250,000 to Americana under the lease agreement.
Legal Malpractice Action
On July 10, 2015, Primo filed the present legal
malpractice action against defendants and respondents
Steven Haney, Haney Law Group (individually and as the
successor to the Haney firm), Haney & Young, LLP, and
Darren McBratney (collectively referred to as the Haney
defendants) and Torbett. Primo alleged that the defendants
negligently formulated the special verdict form in the
4
underlying action against Americana, because the form
failed to ask whether Primo was excused from performance
under the lease. Primo also alleged the defendants
negligently failed to name certain entities as defendants in
the underlying action, including the company that performed
the pressure washing.
On January 6, 2016, the defendants filed a motion for
summary judgment on the grounds that Primo could not
establish causation or damages. The jury in the underlying
action, in response to other questions, found Primo did not
perform as required under the lease, Americana performed
as required by the lease, all conditions for Primo to perform
were met, and Primo was not constructively evicted.
Defendants also argued that the entities who were not
named as defendants in the underlying action had no
potential liability, or the failure to name them was harmless.
On July 22, 2016, Torbett filed a second motion for
summary judgment, joined in by the Haney defendants, on
the ground that Primo’s claims were barred by the defense of
unclean hands. The motion argued that Primo made false
representations and concealed material information. For
example, Primo concealed that the Novian firm’s advice was
to continue paying rent and not vacate the premises. Primo
decided to vacate and forfeit the lease because of increased
competition from other restaurants. As a result, Primo could
not assert constructive eviction for breach of the lease
agreement. Primo also failed to disclose that their insurer
concluded the water damage resulted from an accidental
5
appliance leak within the restaurant and the insurer
provided Primo with substantial insurance payments. The
evidence in support of the second motion for summary
judgment included correspondence received in discovery
from the Novian firm and Primo’s insurance company.
Motion for Sanctions under Section 128.7
Torbett’s counsel served Primo’s first attorney in the
legal malpractice action, Richard Weiner, with a motion for
sanctions on the ground that the legal malpractice action
lacked merit. Weiner filed a motion to withdraw as counsel,
which the trial court granted on August 31, 2016. The trial
court set a hearing on September 29, 2016, for a status
report re new counsel and ordered that Primo have new
counsel at that hearing. On August 31, 2016, Torbett’s
counsel sent a letter to Lui and Riviera advising them that
the action lacked merit. Torbett served a motion for
sanctions with the letter.
On September 28, 2016, Torbett notified Primo that he
was filing an ex parte application for an order dismissing the
action for failing to appoint new counsel and proceed with
depositions. Appellant Marc Libarle filed a declaration with
the court that day stating he had been retained to represent
the plaintiffs in the case, but was unavailable to appear at
the hearing on the ex parte application scheduled for
September 29, 2016. He had contacted opposing counsel to
inform them of the representation and the schedule conflict.
6
Lui appeared at the hearing on September 29, 2016, and
informed the trial court that Libarle had been retained to
represent all three plaintiffs. Torbett argued that the case
should be dismissed because Primo had not complied with
the court order to retain counsel to be present at the hearing.
The trial court declined to dismiss the matter, to provide an
opportunity for Primo to get counsel and to hear from
Libarle, and it was continued to October 18, 2016.
On September 29, 2016, Torbett served Libarle with a
letter and a motion for sanctions under section 128.7. The
letter advised Libarle of the ways in which the plaintiffs’
claims lacked merit, and stated: “Your continued failure to
dismiss this matter can result in an award against you
personally for all costs expended in defending this meritless
case from the date that the ‘safe harbor’ period ends until
the matter is fully resolved. You have twenty one (21) days
from service of this motion to dismiss the matter in its
entirety, or you may be liable as indicated. Whileprior [sic]
counsel may have escaped personal liability for future costs
by being removed from this action, you are certifying the
merit of the action by signing any documents/filings upon
entering the matter.” Torbett added, “The attached motion
is served to put teeth to the repeated notices that the action
has no merit.”
The notice stated that the motion hearing would be
held on May 17, 2017. The motion for sanctions argued that
the causes of action alleged in the complaint had no merit
due to the defendants’ defenses. The plaintiffs had deceived
7
the defendants to take their case on a contingency basis,
even though the plaintiffs knew they would not win. The
plaintiffs failed to disclose that improper construction by
their own contractors had caused the water damage, the
business was closed as a result of competition from
surrounding restaurants, and plaintiffs made a business
decision to stop paying rent and vacate the premises against
the advice of the Novian firm. The motion stated that
plaintiffs’ counsel, although aware of the lack of merit and
the safe harbor to dismiss the matter, “refused to dismiss the
complaint and all causes of action and thus have violated
[section 128.7].” The motion argued that Libarle had a
continuing obligation to ensure plaintiffs’ claims were
factually and legally sound when “later advocating” the
claims. “By persisting with a meritless claim, [plaintiffs’]
attorney should be sanctioned reasonable attorneys’ fees and
costs incurred as a result.” Torbett requested sanctions
against plaintiffs and Libarle in the total amount of
$134,778.50, because plaintiffs failed and refused to dismiss
the meritless action.
Among the documents attached to the motion for
sanctions was the evidence from the second motion for
summary judgment. Torbett’s counsel spoke with Libarle by
telephone to explain that the claims were meritless.
Libarle appeared at the next hearing, on October 18,
2016. No substitution of counsel form had been filed.
Extensive discussion was held as to whether Libarle was
authorized to appear for any of the plaintiffs. The
8
defendants vigorously argued that the action should be
dismissed with respect to one or more plaintiffs, because
Libarle had not properly substituted in to the case. Libarle
was reluctant to file a substitution of counsel, because of the
threatened motion for sanctions and his conflicts with
scheduled hearing dates. The trial court questioned counsel
about the sanctions, commenting that “[t]here can’t possibly
be a threat on Mr. Libarle that if you enter in this case, you
magically are immediately subject to some significant
sanctions,” and that defendants’ prior service of a notice of
motion under section 128.7 “could not possibly be a sanction
on new counsel personally.” Torbett contended that just by
filing paper with the court, “[t]he attorney of record certifies
the merit of the case” and can be personally liable. Torbett
conceded, however, that the notice previously given to
Libarle, and the running of the safe harbor period beginning
with that notice, would not be effective if it were determined
that Libarle “is not attorney of record yet, so he hasn’t
certified the merit of the case.” Torbett indicated he would
“have to do it again if he files an actual substitution.”
Libarle requested a week or 10 days to obtain the
plaintiffs’ signatures on a substitution of counsel form. He
stated on the record that he was appearing for and
represented Primo, but could not guarantee that he would be
able to obtain his clients’ signatures to file the substitution
of counsel form that day. Counsel for all defendants took the
position that Libarle was not yet counsel in the case because
there was no written consent of the clients. The court
9
expressly found that the plaintiffs were still not represented
by counsel. The trial court set an order to show cause
regarding representation on November 2, 2016, to establish
whether the parties were self-represented or represented by
counsel, with an order to show cause regarding dismissal of
Primo if the entity did not have representation. The trial
court required that a written substitution of counsel form be
filed prior to the hearing if any of the parties were going to
be represented by counsel.
Libarle later satisfied the court’s requirement. On
November 30, 2016, he filed an opposition on behalf of the
plaintiffs to the first motion for summary judgment based on
causation and an opposition to the second motion for
summary judgment based on the defense of unclean hands.
The defendants filed replies. The motions for summary
judgment were heard on January 4, 2017. The trial court
granted the motion for summary judgment based on
causation, which disposed of the case. The trial court
entered judgment in favor of defendants on January 30,
2017.
On March 6, 2017, Torbett filed the motion for
sanctions against Libarle that had been served on
September 29, 2016. Torbett did not serve a new motion on
Libarle after September 29, 2016. Libarle opposed the
motion on procedural and substantive grounds, including
that the motion for sanctions did not provide proper notice
and the evidence submitted with the motion for sanctions
had not been served with the motion. The Haney defendants
10
filed a notice of joinder in Torbett’s motion for sanctions.
Torbett filed a reply.
A hearing was held on the sanctions motion on May 17,
2017. Torbett clarified that he was seeking sanctions solely
from Libarle, not Primo. Libarle argued that the motion was
procedurally deficient, because he was served with the
motion before he had substituted in to the case. Torbett
responded that Libarle signed his name as plaintiffs’
attorney in the declaration that he filed with the trial court
on September 28, 2016, and filing any document or paper in
a case was a certification of the merit of the case. Torbett
further argued sanctions were appropriate based on conduct
Libarle took after September 29, 2016, such as defending
depositions and making objections, submitting declarations
of plaintiffs to the court, and speaking at subsequent
hearings. Libarle certified the merit of the case every time
he filed a paper or appeared for the plaintiffs and spoke to
the court. The trial court granted the motion, finding that
“no reasonable attorney would have brought or maintained
this lawsuit believing it to be meritorious,” and awarded
sanctions of $16,000 to Torbett and the joining Haney
defendants. Libarle filed a timely notice of appeal.
11
DISCUSSION
Statutory Scheme and Standard of Review
Section 128.7, subdivision (a) requires every pleading
or similar paper to be signed by an attorney of record, or if a
party is not represented by counsel, by the party. (§ 128.7,
subd. (a).)2 Presentation of a pleading or similar paper to
the court, “whether by signing, filing, submitting, or later
advocating,” constitutes a certification by the attorney or
unrepresented party that the document is not being
presented for an improper purpose; contains legal
contentions warranted by law or a nonfrivolous argument for
changing the law; alleges factual matter that is supported by
evidence or likely to be so after a reasonable opportunity for
further investigation; and contains denials of factual
2 Section 128.7, subdivision (a) provides in full: “Every
pleading, petition, written notice of motion, or other similar
paper shall be signed by at least one attorney of record in the
attorney’s individual name, or, if the party is not
represented by an attorney, shall be signed by the party.
Each paper shall state the signer’s address and telephone
number, if any. Except when otherwise provided by law,
pleadings need not be verified or accompanied by affidavit.
An unsigned paper shall be stricken unless omission of the
signature is corrected promptly after being called to the
attention of the attorney or party.”
12
contentions that are warranted by the evidence. (§ 128.7,
subd. (b).)3
After notice and a hearing, a court may impose
sanctions on an attorney, law firm, or party that violates
subdivision (b) of section 128.7, subject to the “safe harbor”
conditions specified in subdivision (c).4 (§ 128.7, subd. (c);
3 Section 128.7, subdivision (b) provides in full: “By
presenting to the court, whether by signing, filing,
submitting, or later advocating, a pleading, petition, written
notice of motion, or other similar paper, an attorney or
unrepresented party is certifying that to the best of the
person’s knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances, all of the
following conditions are met: [¶] (1) It is not being
presented primarily for an improper purpose, such as to
harass or to cause unnecessary delay or needless increase in
the cost of litigation. [¶] (2) The claims, defenses, and other
legal contentions therein 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. [¶]
(3) The allegations and other factual contentions have
evidentiary support or, if specifically so identified, are likely
to have evidentiary support after a reasonable opportunity
for further investigation or discovery. [¶] (4) The denials of
factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on a lack of
information or belief.”
4 Section 128.7, subdivision (c), states: “If, after notice
and a reasonable opportunity to respond, the court
determines that subdivision (b) has been violated, the court
may, subject to the conditions stated below, impose an
13
Optimal Markets, Inc. v. Salant (2013) 221 Cal. App. 4th 912,
920 (Optimal).) A motion for sanctions under section 128.7
must be made separately from other motions and “shall
describe the specific conduct alleged to violate subdivision
(b).”5 (§ 128.7, subd. (c)(1).) A party seeking sanctions under
section 128.7 follows a two-step procedure. (Optimal, supra,
221 Cal.App.4th at p. 920.) First, the moving party serves
notice of the motion for sanctions on the offending party.
(Ibid.) Service of the motion starts a safe harbor period
appropriate sanction upon the attorneys, law firms, or
parties that have violated subdivision (b) or are responsible
for the violation. In determining what sanctions, if any,
should be ordered, the court shall consider whether a party
seeking sanctions has exercised due diligence.”
5 Section 128.7, subdivision (c)(1), provides in full: “A
motion for sanctions under this section shall be made
separately from other motions or requests and shall describe
the specific conduct alleged to violate subdivision (b). Notice
of motion shall be served as provided in Section 1010, but
shall not be filed with or presented to the court unless,
within 21 days after service of the motion, or any other
period as the court may prescribe, the challenged paper,
claim, defense, contention, allegation, or denial is not
withdrawn or appropriately corrected. If warranted, the
court may award to the party prevailing on the motion the
reasonable expenses and attorney’s fees incurred in
presenting or opposing the motion. Absent exceptional
circumstances, a law firm shall be held jointly responsible
for violations committed by its partners, associates, and
employees.”
14
during which the motion cannot be filed with the court.
(Ibid.) If the challenged paper, claim, defense, contention,
allegation or denial is not withdrawn or corrected within a
prescribed number of days, the second step is to file or
present the motion for sanctions to the court. (Ibid.)
“‘“This permits a party to withdraw a questionable
pleading without penalty, thus saving the court and the
parties time and money litigating the pleading as well as the
sanctions request.” [Citations.]’ [Citations.]” (Optimal,
supra, 221 Cal.App.4th at p. 920.) “‘While section 128.7 does
allow for reimbursement of expenses, including attorney
fees, its primary purpose is to deter filing abuses, not to
compensate those affected by them. It requires the court to
limit sanctions “to what is sufficient to deter repetition of
[the sanctionable] conduct or comparable conduct by others
similarly situated.” (§ 128.7, subd. (d).)’ [Citations.]” (Id. at
pp. 920–921.)
Section 128.7 was modeled nearly verbatim upon rule
11 of the Federal Rules of Civil Procedure (28 U.S.C.).
(Board of Trustees v. Superior Court (2007) 149 Cal. App. 4th
1154, 1168.)6 Therefore, California courts may look to
federal cases construing rule 11 for guidance in interpreting
the language of section 128.7. (Optimal, supra, 221
Cal.App.4th at pp. 920–921.)
“Ordinarily, a ruling on a motion for sanctions brought
under section 128.7 is reviewed under a deferential abuse-of-
6All future references to rule 11 are to rule 11 of the
Federal Rules of Civil Procedure (28 U.S.C.).
15
discretion standard. (Martorana v. Marlin & Saltzman
(2009) 175 Cal. App. 4th 685, 698; Guillemin v. Stein (2002)
104 Cal. App. 4th 156, 167; cf. Cooter & Gell v. Hartmarx
Corp. (1990) 496 U.S. 384, 401–405 (Cooter & Gell) [‘an
appellate court should apply an abuse-of-discretion standard
in reviewing all aspects of a district court’s Rule 11
determination’].) But where a question of statutory
construction is presented in the course of the review of a
discretionary decision, such issues are legal matters subject
to de novo review. [Citations.] Thus, to the extent the trial
court’s denial of the motion for sanctions here involved an
interpretation of the language of section 128.7, our review is
de novo.” (Optimal, supra, 221 Cal.App.4th at pp. 921–922,
fn. omitted.)
Presentation to the Court
Libarle contends that the motion for sanctions in this
case did not meet the requirements of section 128.7,
subdivision (c)(1), because it did not provide notice of his
sanctionable conduct with a safe harbor period for correction
or withdrawal. The motion for sanctions was based solely on
the complaint, so sanctions could not be awarded unless
Libarle had presented the complaint to the court prior to
service of the motion. We agree that Libarle’s filing of a
declaration simply notifying the court of a change in counsel
did not constitute presentation of the complaint to the court.
There is no evidence that Libarle presented the complaint to
16
the court before Torbett served the motion for sanctions, and
therefore, service of the motion was premature and sanctions
had to be denied.
Section 128.7, subdivision (c)(1), requires a motion for
sanctions to “describe the specific conduct alleged to violate
subdivision (b).” An attorney violates subdivision (b) by
presenting to the court, whether by “signing, filing,
submitting, or later advocating,” a pleading or similar paper
that contains claims presented for an improper purpose, not
warranted by law or a nonfrivolous argument for a change in
the law, or containing factual allegations without
evidentiary support.
The motion for sanctions served on Libarle was based
entirely on the complaint, which we conclude Libarle had not
presented to the court at the time that the notice of motion
was served. The notice purported to give Libarle 21 days
from service of the notice to dismiss the complaint and all
causes of action. Libarle did not sign or file the offending
complaint. When Torbett served the motion for sanctions on
September 29, 2016, Libarle’s only conduct in the case had
been to file a single declaration, in which Libarle’s only
statements about the case were that he had been “retained
to represent the plaintiffs” and he was “unavailable to
appear [on a particular date and time].” The declaration
does not submit Primo’s claims to the court or advocate any
of the claims. In fact, a few weeks after the declaration was
filed, the trial court made a finding that Primo was still
17
technically self-represented.7 We conclude that at the time
Libarle was served with the motion for sanctions, Libarle
had not presented any of the objectionable claims in the
complaint to the court, whether by signing, filing, submitting
or further advocating the claims, so he could not be held
liable for sanctions under section 128.7 based on the notice of
motion that was served. Indeed, as the trial court expressly
found, Libarle was not even counsel of record at the time the
notice was served, rendering the notice that he had 21 days
from that point to dismiss the case premature.
Libarle may have presented Primo’s claims to the court
through his subsequent conduct in the proceedings, such as
in opposition to the summary judgment motions, but the
motion for sanctions that was served in September 2016 did
not provide notice of specific conduct that violated the
statute along with a safe harbor period to withdraw or
correct the pleadings. To seek sanctions for conduct taken
after the date of the motion served on Libarle, the
respondents were obligated to serve a new motion describing
the sanctionable conduct to afford Libarle notice and the safe
7 At the hearing on October 18, 2016, the first hearing
Libarle was present in court, Torbett argued that the mere
filing of any papers in a case means the signing attorney is
certifying the case has merit, citing Banks v. Hathaway,
Perrett, Webster, Powers & Chrisman (2002) 97 Cal. App. 4th
949 (Banks). Banks does not support the proposition for
which it was cited, and Torbett does not cite or rely on Banks
on appeal. Nor does Torbett cite other persuasive authority
for this proposition.
18
harbor period under the statute. (Cf. Peake v. Underwood
(2014) 227 Cal. App. 4th 428, 447–448 [a new safe harbor
period is generally required after an amended pleading is
filed, but the trial court in Peake did not abuse its discretion
by imposing sanctions based on an amended pleading
without a new notice period when the sanctioned party filed
both the original and the amended pleading containing the
same frivolous claims, had notice of the defects, and had the
benefit of the safe harbor period for the original pleading];
Lawrence v. Richman Group of Connecticut LLC (2d Cir.
2010) 620 F.3d 153, 158–159 [vacating award of sanctions
under rule 11 because renewed motion for sanctions was
served after dismissal of second amended complaint, so
sanctioned party never received notice of defect and an
opportunity to correct second amended complaint].)
California case law supports our conclusion. In
Optimal, supra, 221 Cal.App.4th at p. 917, the plaintiff filed
a case that was referred to binding arbitration. After the
trial court stayed the action pending the conclusion of the
arbitration proceedings, the plaintiff substituted in new
counsel. (Id. at pp. 922–923.) Some of the defendants who
prevailed in the arbitration requested sanctions under
section 128.7 against the new attorneys for advocating
frivolous claims, which the trial court denied. (Id. at
pp. 918, 922.) The appellate court affirmed the order
denying sanctions. (Id. at p. 922.) Although the new
attorneys became counsel of record after the complaint was
filed, the Optimal court found the attorneys did not present
19
the objectionable pleading to the court by signing, filing,
submitting or later advocating it. (Id. at pp. 922–923.) The
attorneys advocated the complaint to the arbitrator, but
advocacy in arbitration did not constitute presentation of the
claims “to the court” as required under section 128.7. (Id. at
p. 923.)
The advisory committee note to rule 11 as amended in
1993 (Advisory Com. Notes, 1993 amend. to Fed. Rules
Civ.Proc., rule 11, reprinted at 28 U.S.C.A. (2008 ed.) foll.
rule 11, pp. 10–11) explains the obligation of an attorney or
unrepresented party under rule 11 as follows: “The rule
continues to require litigants to ‘stop-and-think’ before
initially making legal or factual contentions. It also,
however, emphasizes the duty of candor by subjecting
litigants to potential sanctions for insisting upon a position
after it is no longer tenable and by generally providing
protection against sanctions if they withdraw or correct
contentions after a potential violation is called to their
attention. [¶] The rule applies only to assertions contained
in papers filed with or submitted to the court. It does not
cover matters arising for the first time during oral
presentations to the court, when counsel may make
statements that would not have been made if there had been
more time for study and reflection. However, a litigant’s
obligations with respect to the contents of these papers are
not measured solely as of the time they are filed with or
submitted to the court, but include reaffirming to the court
and advocating positions contained in those pleadings and
20
motions after learning that they cease to have any merit.
For example, an attorney who during a pretrial conference
insists on a claim or defense should be viewed as ‘presenting
to the court’ that contention and would be subject to the
obligations of subdivision (b) measured as of that time.” The
advisory committee note to rule 11 additionally states that
“if evidentiary support [for an allegation made on
information and belief] is not obtained after a reasonable
opportunity for further investigation or discovery, the party
has a duty under the rule not to persist with that contention.
Subdivision (b) does not require a formal amendment to
pleadings for which evidentiary support is not obtained, but
rather calls upon a litigant not thereafter to advocate such
claims or defenses.” (Id. at p. 11.)
Federal case law is in accord with our conclusion. In
Bakker v. Grutman (4th Cir. 1991) 942 F.2d 236, 240, the
federal court found that a substitution of new counsel, by
itself, was not enough to conclude that the substitute counsel
intended to continue prosecution of the lawsuit. When an
attorney is substituted as counsel of record, the new attorney
is not deemed to have constructively signed the complaint;
instead, rule 11 requires a new pleading form the basis for
imposing sanctions against the successor attorney. (Ibid.)
“Rule 11 imposes upon substitute counsel a duty to
investigate the legal and factual sufficiency of the claims he
or she takes up; [citations]; but until substitute counsel files
some paper indicating an intention to continue prosecution
21
of the suit, such a decision will not be presumed by looking
to the complaint itself.” (Ibid., fn. omitted.)
The federal court’s decision in Turner v. Sungard
Business Systems, Inc. (11th Cir. 1996) 91 F.3d 1418, is
distinguishable. In Turner, a new attorney filed a notice of
appearance for the plaintiff. (Id. at p. 1420.) The new
attorney falsely told the district court during a pretrial
conference that he had evidence to support a key factual
contention of the complaint, but later did not oppose a
motion for summary judgment. (Ibid.) The district court
granted summary judgment. (Ibid.) The defendant moved
for sanctions against the new attorney under rule 11, which
the trial court imposed. (Id. at pp. 1420–1421.) Although
the only paper filed by the attorney with the court was a
notice of appearance, the Turner court found no abuse of
discretion in ordering sanctions, because the attorney’s
appearance and continued advocacy of the plaintiff’s claims
at the pretrial conference, which occurred before service of
the notice of motion, “presented” contentions to the court
which the attorney knew were meritless. (Id. at p. 1421.)
Turner is distinguishable from the instant case,
because the attorney sanctioned in Turner not only filed a
notice of appearance but presented meritless claims to the
court during the pretrial conference. The advisory
committee note to rule 11 as amended in 1993 explicitly
states that arguments made to the court during pretrial
conferences should be viewed as “presenting” the contentions
to the court. (Advisory Com. Notes, 1993 amend. to Fed.
22
Rules Civ.Proc., rule 11, reprinted at 28 U.S.C.A. (2008 ed.)
foll. rule 11, p. 11.) Further, Turner did not present the
same issues of inadequate notice as present here: in Turner,
the sanctions were imposed pursuant to an order to show
cause set by the court, not a defective notice served by
opposing counsel. (Turner v. Sungard Business Systems,
Inc., supra, 91 F.3d at p. 1421, fn. 3.) To the extent that a
portion of the discussion in Turner, read in isolation, implies
that simply filing a notice of appearance in a meritless case
is sufficient to violate rule 11, we disagree and find it
inconsistent with the plain meaning of section 128.7,
subdivision (b).
23
DISPOSITION
The order is reversed. Appellant Marc Libarle is
awarded his costs on appeal.
MOOR, J.
We concur:
RUBIN, P. J.
BAKER, J.
24