Opinion
B190718
4-30-2007
GARY G. KUIST, Plaintiff and Appellant, v. JOHN C. BEDROSIAN, Defendant and Respondent.
Hillel Chodos and Jonathan P. Chodos for Appellant. Hahn & Hahn, and Don Mike Anthony for Respondent.
NOT TO BE PUBLISHED
SUMMARY
This is an appeal from an order directing a party to pay attorneys fees as sanctions for discovery abuse in connection with a motion to tax costs. We conclude the trial court erred in granting respondents underlying motion to quash and that sanctions were unwarranted. Accordingly, we reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant Gary Kuist sued his former law partners Richard Hodge and Jefferson Gross; a law corporation and a law partnership controlled by Hodge; and respondent John Bedrosian, a former client of the Hodge firm for whom Hodge obtained a large settlement several years after Kuist was terminated from the partnership. Kuist claimed he was owed a certain percentage of a $40 million contingent fee Hodge obtained as a result of the settlement he obtained for Bedrosian. Kuist also sued Bedrosian, alleging he had breached a fiduciary duty to Kuist and "aided, abetted and acted in concert" with Hodge in its breach of fiduciary duties owed Kuist.
Bedrosians demurrer to Kuists second amended complaint was sustained without leave to amend. Bedrosian was dismissed from the action, a judgment we affirmed. (Kuist v. Bedrosian (June 27, 2006, B187848) [nonpub. opn.].)
Bedrosian filed a memorandum of costs, seeking recovery for certain expenses incurred defending the action Kuist brought against him. Kuist filed a motion to tax costs, claiming Bedrosian had neither incurred nor paid the costs for which he sought recovery, which were instead paid by Hodge. Kuist also served Bedrosian with a notice of deposition, seeking testimony and documentation related to items listed in the cost memorandum.
Bedrosian moved to quash the deposition notice. (Code Civ. Proc., § 2025.410, subd. (c).) The motion was granted. Bedrosian then filed a motion to recover sanctions against Kuist for $2,396 in attorneys fees expended in bringing the motion to quash. (Code Civ. Proc., § 2025.410, subd. (d).) That motion was also granted. Kuist appeals from the order granting sanctions.
DISCUSSION
1. Jurisdiction
Subject to narrow constitutional limitations not relevant here, the right to appeal is wholly statutory. (People v. Chi Ko Wong (1976) 18 Cal.3d 698, 709, disapproved on another point in People v. Green (1980) 27 Cal.3d 1, 33-35.) No order is appealable unless expressly made so by statute. (Enrique M. v. Angelina V. (2004) 121 Cal.App.4th 1371, 1377.) Regarding sanctions, the right to appeal is controlled by provisions of Code of Civil Procedure section 904.1. That statute authorizes independent appeals only from specified judgments or orders directing payment of monetary sanctions exceeding $5,000. (§ 904.1, subds. (a)(11), (a)(12).)
Kuist appeals from a March 2006 order directing payment of monetary sanctions of $2,396. The order was entered while Kuists action against the other defendants was still pending, but after Bedrosian had been dismissed from the litigation. Neither party raised the jurisdictional issue. However, the question of appealability goes to our jurisdiction. Thus, on our own motion, we invited the parties to address the issue of whether the order awarding sanctions of under $5,000 is an order from which an independent appeal will lie.
Kuist insists his appeal is proper because the sanctions order issued after Bedrosian was dismissed as a party defendant is expressly a final "order made after a judgment made appealable by [section 904.1, subdivision (a)(1)]." Bedrosian, of course, disagrees. He says the appeal should be dismissed because the sanctions order is for an amount under the $5,000 statutory threshold amount, and is not "final" because it does not "affect" or "relate to" the underlying judgment in Bedrosians favor, and thus runs afoul of the "one final judgment" rule.
We conclude the order is appealable. Bedrosian is correct that, generally speaking "[t]o be appealable as an order after judgment, the order must either affect the judgment or relate to it by enforcing it or staying its execution." (Olson v. Cory (1983) 35 Cal.3d 390, 400; § 904.1, subd. (b).) He is also right that entertaining Kuists appeal, which was noticed before entry of final judgment in the main action, runs afoul of the one final judgment rule. That rule permits appeal only from one judgment. It is "designed to prevent oppressive and costly piecemeal disposition and multiple appeals in a single action, and so requires that review of intermediate rulings should await the final disposition of the case." (Tinsley v. Palo Alto Unified School Dist. (1979) 91 Cal.App.3d 871, 880.) However, an exception to the rule is recognized in cases in which there has been a final determination of a collateral matter which is distinct and severable from the general subject matter of the litigation. (See In re Marriage of Laursen & Fogarty (1988) 197 Cal.App.3d 1082, 1086, fn. 4 [Appeal will lie from order requiring attorney to deposit portion of fees received from client in trust fund before withdrawing so client could afford to retain new counsel in custody dispute]; Wisniewski v. Clary (1975) 46 Cal.App.3d 499, 502 [appeal is proper from order requiring payment of fees as sanctions for partys failure to attend mandatory settlement conference or suffer dismissal of action].)
Moreover, post judgment orders which finally determine the rights or obligations of parties may be appealable even though they do not necessarily add to or subtract from the judgment. (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 653.) Lakin found a post judgment order denying attorneys fees as sanctions appealable because the order finally "determine[d] the rights and liabilities of the parties arising from the judgment, [was] not preliminary to later proceedings, and [would] not become subject to appeal after some future judgment." (Id. at p. 656; see also Shelton v. Rancho Mortgage & Investment Corp. (2002) 94 Cal.App.4th 1337, 1345 [same].) We conclude the order to pay sanctions for the motion to quash is appealable as a final order on a collateral matter, and one which finally determines Kuists and Bedrosians rights and duties as against one another and which is not preparatory to further proceedings between or rulings related to them.
Jurisdiction resolved, we turn to the merits of the appeal. We cannot, however, resolve the issue of the propriety of the order regarding sanctions from which the appeal was brought without first disposing of the question of whether the motion to quash was properly granted.
2. The trial court abused its discretion in granting the motion to quash.
Bedrosian moved to quash the notice of deposition on the grounds Kuist lacked a legitimate procedural mechanism to compel his deposition because he was no longer a party to this action and, in any event, the discovery cutoff had passed. While we know the court granted the motion to quash, we do not know the reason why it did so. The record does not contain an order granting the motion or a transcript of the hearing. Nevertheless, neither ground advanced by Bedrosian has merit.
a. Bedrosian is a party.
There is no merit to Bedrosians claim that, because Kuist successfully demurred and had been dismissed from the litigation, he was "no longer a party to the case." Kuist correctly asserts that Bedrosian was "obviously still a `party" for purposes of the proceeding he initiated to recover his litigation costs. A "prevailing party" is entitled as a matter of right to recover allowable costs in any action or proceeding. (§ 1032, subd. (b); Nelson v. Anderson (1999) 72 Cal.App.4th 111 (Nelson ).) Under section 1032, subdivision (a)(4) a "prevailing party" for purposes of determining whether a cost award is mandatory includes a defendant, such as Bedrosian, in whose favor a dismissal is entered.
Bedrosian cannot have it both ways. Either he is a party to the action and entitled to invoke and participate in the processes designed to facilitate recovery of litigation expenses, or he is not. Taken to its logical conclusion, Bedrosians argument that he ceased to be a party once he was dismissed from the action would mean any defendant able to secure a dismissal would be barred from invoking the very procedure designed to facilitate its recovery of costs by virtue of that favorable judgment. Such a result would, at a minimum, eviscerate portions of section 1032, subdivisions (a) and (b). "In the construction of a statute . . ., the office of the Judge is. . . not to insert what has been omitted, or to omit what has been inserted . . . ." (§ 1858.) The fundamental task in construing a statute is to ascertain the intent of the legislators to effectuate the purpose of the statute. (Day v. City of Fontana (2001) 25 Cal.4th 268, 272.) When, as here, the language is clear and unambiguous, the plain meaning rule applies; we presume the Legislature meant what it said. (Ibid.) It was error to grant Bedrosians motion to quash the deposition notice on the ground he was not a party to the action.
b. The passage of the pre-trial discovery cut-off was not a valid basis for granting the motion to quash.
The court also acted erroneously to the extent it granted the motion to quash based on the premise the discovery cutoff had passed. The fact that the pretrial discovery cutoff has passed is irrelevant to the question of the permissibility of discovery relating to factual matters such as litigation costs and expenses which, by their nature, cannot be at issue until a dispute is over.
c. Kuist was entitled to conduct a deposition in connection with the motion to tax.
Section 2017.010 provides that "[u]nless otherwise limited by order of the court . . ., any party may obtain discovery regarding any matter . . . that is relevant to . . . the determination of any motion made in [a pending] action." Such discovery may include the "taking . . . [of] the oral deposition of . . . any party to the action." (§ 2025.010.) An "action" includes civil actions and special proceedings, including cost disputes. (See Oak Grove School Dist. v. City Title Ins. Co. (1963) 217 Cal.App.2d 678, 710 (Oak Grove) [motion to tax costs, which is "incidental to and a continuation of the original" underlying action is a special proceeding]; cf. Avelar v. Superior Court (1992) 7 Cal.App.4th 1270, 1276.)
Kuists deposition notice and request for documentation sought information relative to the motion to tax as to whether it was Bedrosian who actually paid or incurred the costs sought in his memorandum of costs. If items listed appear to be proper charges, a verified memorandum of costs constitutes prima facie proof that the items for which recovery is sought were necessarily incurred. (Oak Grove, supra, 217 Cal.App.2d at p. 699; Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1267 (Jones).) "If so, the burden is on the objecting party to show them to be unnecessary or unreasonable. [Citation.]" (Nelson, supra, 72 Cal.App.4th at p. 131.) "On the other hand, if the items are properly objected to, they are put in issue and the burden of proof is on the party claiming them as costs." (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774 (Ladas).)
Kuist claims Bedrosian was not entitled to recover the claimed cost items because: (1) no expert accounting was ordered by the court, (2) Bedrosians interests were not implicated by the order for an accounting; and (3) Bedrosian did not pay or incur any costs and, even if he did, it was not reasonable for him to have done so. Most of these issues are addressed in attachments to Bedrosians opposition to the motion to tax. Whether they are adequately persuasive to establish the reasonable necessity of the cost items is a question of fact for the court. (Jones, supra, 63 Cal.App.4th at p. 1266.)
Nevertheless, authority supports Kuists contention that, by objecting to the memorandum of costs and specifically taking issue with Bedrosians factual assertions, he placed the items at issue and Bedrosian must show he actually incurred or expended the amounts sought. (Ladas, supra, 19 Cal.App.4th at p. 774.) In that circumstance, limited case law finds it improper for a judge to deny a specific discovery request as a matter of law when the law actually allows such discovery. (See Oak Grove, supra, 217 Cal.App.2d at p. 712.) In Oak Grove, the trial court granted a motion to quash a deposition on the same ground advanced by Bedrosian — that the non-moving party was simply not entitled to discovery in the matter. The court of appeal concluded otherwise, and reversed. The trial court has wide discretion in making the orders it deems necessary to protect a party from discovery abuse. However, " `there can be no room for the exercise of such discretion if no ground exists upon which it might operate. [Citation.]" (Ibid.) A legally unjustified exercise of discretion is an abuse of discretion. (Ibid.)
In this action, Kuist sought evidence regarding a new and pivotal matter at issue in his motion to tax costs — the disputed question of who incurred the claimed expenses. While the trial court has discretion to limit the scope of discovery, it would be an unwarranted limitation to deny Kuist the opportunity to inquire into matters related to this new area absent a showing of good cause. Bedrosians assertion that answers to all of Kuists " `questions have already been provided under oath" is disingenuous. Kuists argument is that no evidence in the form of a declaration or cancelled check from Bedrosian himself supports his claim of entitlement to over $22,000 in costs. A declaration from Hodge disputing Kuists assertion does not put this issue to rest. Kuist was entitled to conduct limited discovery to ascertain the truth of Bedrosians assertions, absent some showing by him that the right should be suppressed. (Oak Grove, supra, 217 Cal.App.2d at p. 712.) Bedrosian made no such showing. The only grounds on which he moved to prohibit the taking of his deposition were that he was no longer a party, and the pretrial discovery cut-off had passed. Neither ground was tenable. Accordingly, we conclude the trial court abused its discretion in granting the motion to quash.
3. The trial court erred in awarding sanctions.
Section 2025.410, subdivision (d) provides: a "court shall impose a monetary sanction . . . against any party, person, or attorney who unsuccessfully makes or opposes a motion to quash a deposition notice, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust." " `We review the imposition of monetary sanctions for a prejudicial abuse of discretion. [Citation.]" (Palm Valley Homeowners Assn., Inc. v. Design MTC (2000) 85 Cal.App.4th 553, 558.) Discovery sanctions will be reversed if they are the result of arbitrary, capricious, or whimsical judicial action. (Espinoza v. Classic Pizza, Inc. (2003) 114 Cal.App.4th 968, 975.)
In the circumstances of this case, and for the reasons discussed above, we conclude Kuist met his burden to show he acted with "substantial justification" in opposing the motion to quash. (California Shellfish, Inc. v. United Shellfish Co. (1997) 56 Cal.App.4th 16, 25.) Kuist was entitled to conduct Bedrosians deposition and obtain limited documentation in connection with the motion to tax. Imposition of sanctions was unjustified. (Espinoza v. Classic Pizza, Inc., supra, 114 Cal.App.4th at p. 975.) Reversal is required.
DISPOSITION
The judgment is reversed. Kuist is entitled to recover his costs.
We Concur:
COOPER, P. J.
FLIER, J. --------------- Notes: All further unspecified statutory references are to this Code.