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Singh v. Montclair Yamaha Inc.

California Court of Appeals, Fourth District, Second Division
Apr 30, 2008
No. E042184 (Cal. Ct. App. Apr. 30, 2008)

Opinion

NOT TO BE PUBLISHED

APPEAL from the Superior Court of San Bernardino County. No. SCV127974 Kenneth Barr, Judge.

Beck & Jenkins, Haleh R. Jenkins; Prindle, Decker & Amaro, Grace C. Mori and Kristie Kawakami Wong for Objectors and Appellants.

McCoy, Turnage & Robertson, Ellen Turnage; Law Office of Bryce C. Anderson and Bryce C. Anderson for Plaintiffs and Respondents.


OPINION

Gaut J.

Haleh R. Jenkins (Jenkins), attorney of record for Western Service Contract Corporation (Western), issuer of an extended service warranty pursuant to a retail sales contract for the purchase of a wave runner from dealership Montclair Yamaha (Montclair), appeals from an order imposing monetary sanctions of $8,730, for filing a motion for summary judgment found to be meritless. We affirm.

1. Background

On July 11, 2001, Jasminder Singh and his wife Jillian Singh (the Singhs) purchased a 2001 Yamaha XL 1200 Wave Runner from Montclair. The purchase price was $6,995. The Singhs financed the purchase price through Model Finance, the only finance company the Singhs could use because their credit was poor due to recent bankruptcy proceedings. As a condition of the finance agreement, the Singhs had to purchase an extended warranty service contract. The cost of the extended service contract was listed as a finance charge on the retail sales contract for the wave runner.

Montclair is the authorized agent of Western, and is authorized to bind Western to extended service contracts. The warranty, which was an extended service contract provided by defendant Western, cost an additional $495. The Singhs were told that the extended service contract provided “bumper to bumper” coverage, covering everything in the engine, and would give them peace of mind. Montclair did not discuss any exclusions under the service agreement with the Singhs. Thus, the Singhs believed they had purchased total coverage for the wave runner.

In the summer of 2004, the wave runner stopped operating while being ridden on Lake Mojave. When Mr. Singh removed the seat covers to examine the engine, he discovered metal fragments in the bottom of the hull. He removed the wave runner from the water, put it onto the trailer, and six weeks later (the earliest appointment he could get from Montclair), he took it to Montclair for repair under the extended service agreement.

The wave runner stayed at Montclair for two weeks where the engine was taken apart. Subsequently, Western sent an appraiser to inspect the wave runner. After Western’s appraiser examined the wave runner, Montclair contacted the Singhs and informed them that the damage was caused by water intrusion. Moreover, Montclair informed the Singhs that Western would not repair the wave runner because water intrusion was excluded from coverage under the extended service agreement. On September 15, 2004, Western sent a letter to the Singhs denying coverage due to water intrusion. On December 18, 2004, the Singhs sought a second opinion from a forensic engineering consultant, who concluded the damage could not have been caused by water intrusion.

On June 21, 2005, the Singhs, through counsel, served a Notice of Violation of Consumers Legal Remedies Act and the Song-Beverly Consumer Warranty Act on Western. On July 8, 2005, the Singhs filed their original complaint against Montclair, Model Finance Company, and Western. Western demurred to this complaint on October 19, 2005, and the Singhs filed an amended complaint on December 23, 2005. On January 18, 2006, Western demurred to the first amended complaint and moved to strike portions of it. Montclair joined in Western’s motion and demurrer. The court sustained the demurrer as to one cause of action but overruled as to the balance.

The second amended complaint was filed on April 26, 2006, for unfair and deceptive practices in violation of the California Consumers’ Legal Remedies Act (first cause of action), failure to provide complete disclosures of finance charges in violation of the California Automobile Sale Finance Act (second cause of action), and the California Unruh Act (third cause of action), breach of warranty of fitness in violation of the Song-Beverly Consumer Warranty Act (fourth cause of action), and for injunctive and declaratory relief in violation of the (fifth cause of action).

On May 31, 2006, Montclair demurred to the second amended complaint alleging that the first cause of action was barred by the statute of limitations. Western joined the demurrer. On July 17, 2006, the court overruled the demurrer, holding that the statute of limitations was tolled until an injury occurred or a reasonable plaintiff would have known the injury had occurred. Notwithstanding this ruling, on August 28, 2006, Western filed a motion for summary judgment, or, in the alternative, for a summary adjudication of issues, asserting that the first cause of action was barred by the statute of limitations and has no merit because there is no evidence Western was an agent of Montclair respecting Montclair’s representations of the scope of coverage, the fourth cause of action lacked merit because the defect at issue was an excluded cause, and the fifth cause of action lacked merit because there was no unlawful conduct by Western.

Prior to being served with the motion for summary judgment, Ellen Turnage, counsel for the Singhs, was contacted by an associate of Haleh Jenkins, the attorney representing Western, to discuss the motion for summary judgment, specifically the statute of limitations. The Singhs’s attorney informed the associate that the statute of limitations issue raised in the summary judgment motion was the same issue the court had ruled on in Montclair’s demurrer, which Western had joined. After the motion was filed, attorney Turnage called Jenkins’s office to request that Western’s counsel withdraw the motion for summary judgment, and left a message for Jenkins’s secretary (because Jenkins was unavailable) about the possibility of filing a motion for sanctions. In addition to the statute of limitations issue that had previously been ruled upon, Singhs’s counsel referred to the agency issue, providing citations to cases holding that agency is a question of fact for the jury. In a separate phone message, Singhs’s counsel pointed to the fact that the issue of what caused the wave runner to become inoperable was a disputed fact, given that two experts disagreed as to cause. Western’s attorney refused to withdraw the motion for summary judgment.

The Singhs filed opposition to the motion for summary judgment. They also filed a motion for sanctions, seeking $8,730 for attorney’s fees in opposing the summary judgment motion. On November 9, 2006, the court denied Western’s motion for summary judgment or, in the alternative for summary adjudication of issues. On December 20, 2006, the court granted the Singhs’s motion for sanctions. Western’s attorney, Haleh Jenkins, appeals the order imposing sanctions.

2. Discussion

Jenkins, counsel for Western, argues that the trial court abused its discretion in ordering monetary sanctions against her because she had objectively reasonable grounds for filing the summary judgment motion on Western’s behalf. We disagree.

a. Standard of Review

An award of sanctions is discretionary. (Day v. Collingwood (2006) 144 Cal.App.4th 1116, 1130.) We therefore review a trial court’s order imposing sanctions for abuse of discretion. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.) In reviewing an order granting or denying sanctions, we presume the trial court’s order is correct and we are not permitted to substitute our judgment for that of the trial judge. (Shelton v. Rancho Mortgage & Investment Corp. (2002) 94 Cal.App.4th 1337, 1345.) To be entitled to relief on appeal from an alleged abuse of discretion, the court’s action must be sufficiently grave to amount to a manifest miscarriage of justice. (Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 867.)

With these standards in mind, we turn to the trial court’s order imposing sanctions in the amount of $8,730.

b. The Lower Court Acted Within Its Discretion in Imposing Sanctions

In relevant part, Code of Civil Procedure, section 128.7, provides that the filing of a pleading certifies that, to the attorney or unrepresented party’s knowledge, information, and belief, the pleading is not being presented primarily for an improper purpose, the claims, defenses and other legal contentions contained in the pleading are warranted, and the allegations and other factual contentions have evidentiary support. (Code Civ. Proc., § 128.7, subd. (b)(1)-(4).) If these standards are violated, a trial court may impose sanctions, including monetary sanctions, sufficient to deter future misconduct. (In re Mark B. (2007) 149 Cal.App.4th 61, 64.)

Code of Civil Procedure section 128.7 was adopted to apply rule 11 of the Federal Rules of Civil Procedure (hereinafter rule 11), as amended in 1993, to cases brought on or after January 1, 1995. (Guillemin v. Stein, supra, 104 Cal.App.4th at p. 167.) Because Code of Civil Procedure section 128.7 is patterned after the federal rule, state courts may look to the federal courts’ interpretation of the rule. (In re Mark B., supra, 149 Cal.App.4th at p. 76.) Under the federal rule, an attorney signing any motion warrants that the motion is well-grounded in fact, is warranted by existing law, or by a good faith argument for an extension, modification or reversal of existing law, and that it is not filed for an improper purpose. (Golden Eagle Distributing Corp. v. Burroughs Corp. (9th Cir. 1986) 801 F.2d 1531, 1536.) Breach of the warranty gives rise to mandatory sanctions against the represented party, the lawyer, or both. (Ibid.)

The major purpose of rule 11 is to deter dilatory or abusive pretrial tactics and to streamline litigation. (Golden Eagle Distributing Corp. v. Burroughs Corp., supra, 801 F.2d at p. 1536.) Sanctions under Code of Civil Procedure section 128.7 are intended to deter frivolous filings, not to punish parties. Thus, it is intended to serve as “fee shifting” which is appropriate to compensate a litigant for legal fees he should never have been forced to incur. (Laborde v. Aronson (2001) 92 Cal.App.4th 459, 468.)

The federal rule was designed to create an affirmative duty of investigation both as to law and as to fact before motions are filed, and creates an objective standard of reasonableness under the circumstances. (Golden Eagle Distributing Corp. v. Burroughs Corp., supra, 801 F.2d at p. 1536.) This was intended to be a standard more stringent than the original good faith formula so that a greater range of circumstances would trigger its violation. (Ibid.) Sanctions may therefore be assessed if a paper filed in district court and signed by an attorney or unrepresented party is frivolous, legally unreasonable or without factual foundation, even though it was not filed in subjective bad faith. (Id. at p. 1538.)

The adoption of Code of Civil Procedure section 128.7 by the Legislature was intended to strike a balance between the competing interests: the need to control improper litigation tactics and the desire to avoid chilling vigorous advocacy. (Levy v. Blum (2001) 92 Cal.App.4th 625, 637.) The “safe harbor” provision prevents an imposition of sanctions if the offending party withdraws the frivolous motion or pleading within the statutory period. (Ibid.) If the court determines, after notice or a reasonable opportunity to respond, that the attorney improperly certified a document, it may impose an appropriate sanction. (Barnes v. Dept. of Corrections (1999) 74 Cal.App.4th 126, 130.)

A party seeking sanctions is required to follow a two-step procedure. First, the party must serve a notice of motion for sanctions on the offending party at least 21 days before filing the motion with the court, which specifically describes the sanctionable conduct. (Code Civ. Proc., § 128.7, subd. (c)(1).) Service of the motion on the offending party begins a 21-day “safe harbor” period during which the sanctions motion may not be filed with the court. This gives the party against whom sanctions are sought the opportunity to withdraw the motion to avoid sanctions. If the pleading is withdrawn or dismissed, the motion for sanctions may not be filed with the court; however, if the pleading is not withdrawn, the motion for sanctions may then be filed. (Levy v. Blum, supra, 92 Cal.App.4th at p. 637.)

In the present case, the Singhs’s counsel contacted the law firm representing Western before preparing or serving the motion for sanctions. Singhs’s counsel explained the bases for her belief that the motion for summary judgment was frivolous. First, the statute of limitations claim had been litigated in a previous demurrer, to which Western had requested a joinder, and the trial court had ruled that the statute was tolled until injury occurred. (Mass. Mut. Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1295.) Second, the issue of whether Montclair and Western had an agency relationship is always an issue of fact for the jury. (Mejia v. Community Hospital of San Bernardino (2002) 99 Cal.App.4th 1448, 1457.) Third, given the contradictory experts’ opinions as to whether water intrusion was the cause of the defect in the wave runner, a situation which existed at the time of, and was pled in, the complaint, there was a disputed issue of a material fact for trial. (Code Civ. Proc., § 437c, subd. (c).) The trial court found in favor of the Singhs on all three bases.

In challenging the sanctions order on appeal, Jenkins argues the three bases for the summary judgment motion were objectively reasonable to assert. She argues it was reasonable for her to believe the statute of limitations ground was properly raised in the motion for summary judgment because respondents’ request to withdraw the statute of limitations defense argument had been based on the fact the trial court’s prior ruling related to a demurrer, which treats the facts pled in the complaint as true, while the summary judgment ascertains the existence of a triable issue. This is not true in the present case.

While the motion for summary judgment relied on certain documentary evidence, it did not rely on new facts or evidence showing a different date by which the respondent’s should have discovered the injury. The documentary evidence on which Jenkins relies only demonstrates when the extended service agreement was signed and what it covered; the documents do not establish when the injury occurred or the cause of action accrued. As a matter of law, therefore, the issue was grounded on the same facts as pled in the complaint and the same ruling was impelled. It was not objectively reasonable to reassert the defense which had previously been decided on the same facts.

Relating to the question of agency, Jenkins argues only that respondents cited two cases in their motion for sanctions which did not deal with a relationship similar to that which existed between Montclair and Western. This argument misses the point: the existence of an agency relationship is a question of fact. (CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 1118.) The third basis for the summary judgment motion was the opinion of one expert that the cause of the damage was an excluded cause. However, there was a contradictory opinion by another expert. By its very terms, summary judgment is not proper where inferences reasonably deducible from the evidence are contradicted by other inferences or evidence, which raise a triable issue as to any material fact. (Code Civ. Proc., § 437c, subd. (c).)

The trial court found the arguments in Western’s summary judgment motion were “not objectively reasonable, and it’s [sic] failure to withdraw the motion after being presented with supporting facts and law was equally unreasonable.” The record supports the trial court’s exercise of discretion in awarding sanctions for the improvident motion, which was not objectively reasonable.

Because a summary judgment is a drastic procedure (see, Kasparian v. AvalonBay Communities (2007) 156 Cal.App.4th 11, 15), it is reasonable to expect counsel filing such a motion to exercise care in filing, to insure that the motion has merit. Therefore, where counsel was informed that each of the three bases the summary judgment motion lacked merit, was provided an opportunity to withdraw the motion and refused to do so, a court is well within its discretion to determine the attorney’s action in pursuing the motion is objectively unreasonable.

Western has not challenged the trial court’s ruling on the summary judgment motion.

3. Disposition

The judgment is affirmed. Appellant is directed to pay the costs of the appeal.

We concur:Richli,Acting P. J., King, J.


Summaries of

Singh v. Montclair Yamaha Inc.

California Court of Appeals, Fourth District, Second Division
Apr 30, 2008
No. E042184 (Cal. Ct. App. Apr. 30, 2008)
Case details for

Singh v. Montclair Yamaha Inc.

Case Details

Full title:JASMINDAR SINGH et al., Plaintiffs and Respondents, v. MONTCLAIR YAMAHA…

Court:California Court of Appeals, Fourth District, Second Division

Date published: Apr 30, 2008

Citations

No. E042184 (Cal. Ct. App. Apr. 30, 2008)