Opinion
NOT TO BE PUBLISHED
APPEAL from judgments of the Superior Court of Los Angeles County No. BC381185. Terry A. Green, Judge.
Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor, Peter E. Garrell and John M. Kennedy for Susan A. Swingle, Objector and Appellant.
No appearance for Plaintiff and Respondent.
No appearance for Defendant and Respondent.
DOI TODD, J.
Objector and appellant Susan A. Swingle represented plaintiff Jewels Connection, Inc. (Jewels) when it filed a complaint against defendant and respondent Czar Jewelry/Oro Direct (Czar) alleging misappropriation of trade secrets. Following a grant of summary judgment in favor of Czar, the trial court ordered that both Jewels and appellant pay attorney fees and costs to Czar, and incorporated those orders into separate judgments. Appellant contends that the judgments should not have been entered against her personally.
We agree and reverse the judgments to the extent they order appellant, jointly and severally, to pay attorney fees and costs to Czar. Neither Civil Code section 3426.4 nor Code of Civil Procedure section 1032 makes an express provision for imposing attorney fees or costs, respectively, against counsel. Absent express statutory authorization, attorney fees and costs may not be imposed against a party’s counsel.
FACTUAL AND PROCEDURAL BACKGROUND
Jewels and Czar both sell jewelry through a catalogue. In January 2008, Jewels, then represented by appellant, filed a complaint against Czar for misappropriation of trade secrets and unfair competition. Jewels alleged that Czar had improperly and unlawfully obtained its customer list and used that information to compete unfairly with it. After answering the complaint, Czar moved for summary judgment in November 2008. At approximately the same time, appellant substituted out of the case as counsel for Jewels. In February 2009, the trial court granted the summary judgment motion. It determined the undisputed evidence showed that Jewels’ customer list was not a protectable trade secret and that even if it were, there was no evidence that Czar obtained the list through improper means.
In June 2009, Czar moved for an award of attorney fees pursuant to Civil Code section 3426.4. In support of the motion, it submitted a declaration from Czar’s counsel-attaching correspondence, pleadings, discovery responses and deposition excerpts-which averred that Jewels’ allegations were premised on tenuous circumstantial evidence that in part contradicted the complaint’s allegations, thereby supporting the inference that the claims were frivolous and filed only for the purpose of eliminating Czar as competition. It also submitted billing records in support of its request for an award of $224,989.68 in attorney fees. The motion expressly requested that the attorney fee award be imposed against Jewels and its counsel, jointly and severally, seemingly because of the “highly contentious nature of the case....”
Civil Code section 3426.4 provides: “If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney’s fees and costs to the prevailing party. Recoverable costs hereunder shall include a reasonable sum to cover the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the prevailing party.” Unless otherwise indicated, all further statutory references are to the Civil Code.
Appellant, specially appearing, and Jewels opposed the motion. In addition to arguing that Czar failed to establish its entitlement to attorney fees under section 3426.4, they specifically argued that the statute did not permit an award to be rendered against anyone other than a party. They also filed objections to Czar’s counsel’s declaration. In reply, Czar argued that attorney fees should be imposed against appellant because she filed the complaint even though there was no evidence to support the allegations. The declarations filed in support of and in opposition to the motion did not discuss any other factual basis for an award of attorney fees against appellant.
Following a hearing in July 2009, the trial court granted the motion, ordering that Jewels and appellant pay $200,000 in attorney fees to Czar. With respect to imposing the award against appellant, the trial court reasoned that such an award was permissible because nothing in the language of section 3426.4 precluded it. It overruled virtually all objections. The trial court thereafter entered a judgment in favor of Czar in the amount of $200,000, against Jewels and appellant, jointly and severally. According to the notice of ruling prepared by Czar, the trial court awarded attorney fees against both Jewels and appellant “[p]ursuant to the nature of the litigation and the record before the Court....”
Also in July 2009, Czar submitted a memorandum of costs. Thereafter, the trial court granted in part and denied in part Jewels’s motion to tax costs, awarding Czar costs just over $12,000. Appellant objected to the proposed judgment submitted by Czar that encompassed the cost award, arguing that the judgment improperly provided that the award was joint and several against Jewels and her. The trial court overruled the objection and entered judgment in favor of Czar in the amount of “$12,087.93 in costs against... Jewels... and [its] counsel..., jointly and severally.”
Appellant appealed from both judgments and the appeals are now consolidated.
Jewels satisfied the judgments and, in turn, received an assignment from Czar of any rights in the judgments. Neither Jewels nor Czar has filed a respondent’s brief.
DISCUSSION
Appellant contends that the trial court erred by imposing the attorney fee and costs awards against her personally. Typically, we review an attorney fee order deferentially, for an abuse of discretion. (E.g., Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 577.) The same deferential abuse of discretion standard generally applies to attorney fee awards made pursuant to section 3426.4. “An award of attorney fees for bad faith constitutes a sanction [citation], and the trial court has broad discretion in ruling on sanctions motions.” (Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1262 (Gemini).) We will not disturb the trial court’s exercise of discretion so long as “‘some evidence exists in support of the factual findings’” and the decision does not exceed “‘the bounds of reason.’” (Ibid.; see also Slavin v. Fink (1994) 25 Cal.App.4th 722, 726 [trial court’s award of costs to the prevailing party under Code Civ. Proc., § 1032 reviewed for an abuse of discretion].)
But we independently review the trial court’s attorney fee award where the question involves a determination of the legal basis for the award. (Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677.) Stated another way, “de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law.” (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.) Our independent review of the statutes governing the trial court’s awards of attorney fees and costs establishes that there was no statutory basis for the awards and they must therefore be reversed.
“Attorney fees are allowable as costs to a prevailing party when authorized by statute. (Code. Civ. Proc., §§ 1021, 1033.5, subd. (a)(10)(B).)” (Bond v. Pulsar Video Productions (1996) 50 Cal.App.4th 918, 921.) The statutory fee award at issue here was made pursuant to section 3426.4, which is part of the California Uniform Trade Secrets Act and provides for an award of attorney fees “to the prevailing party” if “a claim of misappropriation is made in bad faith....” While the term “bad faith” is not defined in the statute, the court in Gemini, supra, 95 Cal.App.4th at page 1262, concluded “that ‘bad faith’ for purposes of section 3426.4 requires objective speciousness of the plaintiff’s claim, as opposed to frivolousness, and its subjective bad faith in bringing or maintaining the claim.”
Here, the trial court implicitly found bad faith on the part of both Jewels and appellant, and expressly reasoned that it was empowered to impose the attorney fee award against appellant as well as Jewels because section 3426.4 did not prohibit requiring counsel to pay the fee award. The court in Doyle v. Superior Court (1991) 226 Cal.App.3d 1355, 1358–1359 (Doyle), however, expressly rejected the notion that statutory silence is sufficient to permit an award of attorney fees against counsel.
There, the defendants successfully moved for the expungement of a lis pendens and the trial court awarded them attorney fees under former Code of Civil Procedure section 409.3 (currently section 405.38), payable by the plaintiffs and their counsel. Similar to section 3426.4, the statute authorized an award of fees to the prevailing party but was silent as to whom the award may run against. (Doyle, supra, 226 Cal.App.3d at p. 1358.) The defendants argued that fees against counsel were appropriate in light of the complex issues often involved in the filing and expungement of a notice of lis pendens and the attorney’s integral role in those proceedings. (Ibid.) The defendants further argued “that since it is the attorney’s responsibility to analyze the facts, research the law, and present legal arguments, it is consequently the attorney for the losing party who should pay any monetary sanction for mistakes of law or faulty analysis.” (Id. at p. 1359.)
Though finding some surface appeal to the defendants’ argument, the Doyle court reasoned that “[t]he difficulty with the contention, as applied to this case, is that the imposition of attorneys’ fees as sanctions must be authorized by the Legislature or Judicial Council. These bodies have recognized that an award of sanctions against an attorney will be appropriate in many circumstances and have provided for such awards by specific legislation and rules. They have not done so with respect to motions to expunge lis pendens.” (Doyle, supra, 226 Cal.App.3d at p. 1359.) The court contrasted Code of Civil Procedure section 409.3 with several statutes including Code of Civil Procedure sections 128.5 and 177.5, which expressly empower a court to award expenses and attorney fees “against ‘a party, the party’s attorney, or both’ as sanctions for frivolous or bad-faith tactics, in the first instance, or unjustified disobedience of a court order, in the second.” (Doyle, supra, at p. 1359.) The statutes authorizing attorney fee awards against counsel confirmed that “sanctions awards against attorneys are generally restricted to cases in which they have personally abused the system, and are not to be imposed simply because counsel has merely urged an incorrect position on behalf of his client. [Citation.] To hold otherwise risks an interference with the attorney-client relationship and the right to effective advocacy.” (Ibid.) The court reasoned that the omission of any provision for an award of attorney fees against counsel in Code of Civil Procedure section 409.3 was significant and mandated that fees not be imposed upon the attorney for the losing party.
Construing title 17 United States Code section 505, a provision likewise allowing the recovery of costs and attorney fees to the prevailing party, the court in Neft v. Vidmark, Inc. (9th Cir. 1991) 923 F.2d 746, 747, reached the same conclusion. The court reversed an award of costs and attorney fees imposed against the plaintiffs and their counsel, jointly and severally, because there was no indication in the language of the statute or its legislative history that Congress intended the statute as a means of imposing a sanction on attorneys. (Ibid.; accord, Roadway Express, Inc. v. Piper (1980) 447 U.S. 752, 761 & fn. 9 [42 U.S.C. § 1988, which allows a prevailing party to recover attorney fees, was not intended to permit recovery from opposing counsel]; Pfingston v. Ronan Engineering Co. (9th Cir. 2002) 284 F.3d 999, 1006 [False Claims Act provision, 31 U.S.C § 3730(d)(4), which provided that the court may award attorney fees and costs to the defendant but was silent as to whom against the award may be imposed, did not authorize an award of fees against an attorney]; Moore v. Kaufman (2010) 189 Cal.App.4th 604, 614 [Code. Civ. Proc., § 425.16 “does not authorize an award of attorney fees against a party’s attorney” nor does it provide the trial court with discretion to grant an award against a party’s attorney].)
We see no reason to depart from this uniform, well-established authority. Section 3426.4 allows the court to award attorney fees and costs to the prevailing party. The award operates as a sanction for bad faith conduct. (Gemini, supra, 95 Cal.App.4th at p. 1262.) Yet, there is no indication in either the language of section 3426.4 or the cases construing comparable statutory language that the Legislature intended the provision to operate as a direct sanction against a party’s counsel. We conclude that the omission of any statutory language authorizing the imposition of the award against counsel is dispositive and dictates that an award of attorney fees to a prevailing party under section 3426.4 may be imposed only against an opposing party. Accordingly, the attorney fee award against appellant must be reversed.
For the same reasons, the cost award must also be reversed as to appellant. Code of Civil Procedure section 1032, subdivision (b) provides that “[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” Again, the statute is silent as to against whom the prevailing party may recover those costs. In the absence of any express statutory authorization permitting a prevailing party to recover costs from a party’s counsel, we must reverse the award of costs to the extent it was imposed against appellant. (E.g., California Fed. Savings & Loan Assn. v. City of Los Angeles (1995) 11 Cal.4th 342, 349 [court’s task in construing a statute is to ascertain what is contained therein and not to insert what has been omitted].)
DISPOSITION
The judgments are reversed as to appellant with directions to the trial court to strike the references to appellant being obligated, jointly and severally, to pay attorney fees and costs to Czar. Appellant to bear her own costs on appeal.
We concur: BOREN, P. J., ASHMANN-GERST,, J.