Opinion
B309428
12-06-2021
THOMAS J. SMITH, Appellant, v. ELLEN D. SMITH STEEL, Respondent. In re Marriage of THOMAS J. SMITH and ELLEN D. SMITH STEEL.
Charles E. McClung, Jr. for Appellant. Law Office of Noelle M. Halaby, Noelle M. Halaby and Maria D. Houser for Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. GD041667, Harvey A. Silberman, Judge. Affirmed.
Charles E. McClung, Jr. for Appellant.
Law Office of Noelle M. Halaby, Noelle M. Halaby and Maria D. Houser for Respondent.
KNILL, J. [*] 1
Thomas J. Smith (husband) appeals a postjudgment order adopting the recommendations of a discovery referee and ordering him to pay discovery sanctions of $11,410 to counsel for Ellen Smith Steel (wife). We conclude husband waived his objection to the lack of a formal signed order appointing the referee, and he has not shown an abuse of discretion in the imposition of discovery sanctions. Therefore, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The 2009 Judgment
In 2009, following a marriage of more than 30 years, the parties entered into a stipulated judgment of dissolution. As relevant to this controversy, the judgment provided husband and wife were awarded 85 percent and 15 percent, respectively, of the community interest in Auritec Pharmaceuticals (Auritec).
B. The July 2019 Settlement
Wife brought various proceedings relating to the enforcement of the judgment. In April 2016, she filed a request for an order (RFO) stating the judgment divided the assets in a manner giving her certain ownership interests and the right to receive income therefrom, and husband had failed to provide her with any ongoing disclosure; she sought an accounting of all monies he had received since the entry of judgment in 2009. In January 2018, wife filed an RFO seeking to adjudicate alleged community assets not adjudicated in the judgment. In December 2018, wife filed an RFO to compel husband's compliance with an inspection demand, and for sanctions of $6,110. Then, in June 2019, wife filed an RFO, seeking to set aside the judgment in its entirety based on fraud.
Following mediation, on July 16, 2019 the parties entered into a stipulation and order for judgment on reserved issues 2 regarding unadjudicated assets. The conditional settlement provided the RFOs would be dismissed with prejudice upon, inter alia, receipt by wife of $2 million of husband's interest in the license fee payable to Auritec by Eupraxia Pharmaceuticals USA, LLC (Eupraxia).
C. The November 2019 RFO
Before the July 2019 settlement became final, in November 2019, wife filed another RFO seeking, inter alia, an order enjoining husband from entering into any further agreements with Eupraxia without her consent or further order of the court. She contended at the time she entered into the settlement in July 2019, full payment of $5 million was due by July 31, 2019, but Auritec unilaterally extended the payment date to March 31, 2020.
D. The January 2020 Proceedings and Appointment Minute Order
On January 10, 2020, wife filed an RFO to compel husband's compliance with her document demand, set four, and for sanctions. On January 15, 2020, following a chambers conference with counsel in which no court reporter was present, the court issued a minute order directing the parties to return to mediation. The order also assigned a discovery referee "to finish up discovery matters. Any and all discovery matters shall be sent to Commissioner Gretchen Taylor [of Signature Resolution, LLC (Signature)], forthwith" (Appointment Minute Order). In comments on the record concerning matters then pending, the trial judge commented, "you'll go out immediately to Commissioner Gretchen Taylor for the pending discovery motions. And when those are ruled on . . . I will send you down to Department 2 for scheduling [on pending RFOs]." Husband's 3 counsel responded, "[w]ell, let's have the conference call, and we'll report back to you if we haven't finished the discovery yet." The court then summarized, "[s]o any and all pending discovery matters are to be sent to Commissioner Gretchen Taylor for resolution . . . . And the court will authorize a conference call the week of February 17th. If Commissioner Taylor is finished with her rulings and all responses are in, then I'll set your matter for the trial . . . . All right?" Husband's counsel responded, "[y]es."
The Appointment Minute Order directed counsel "to draft up [an] order and submit same to Court for signature." It never happened. The parties subsequently disagreed over the content of their proposed orders but not over the appointment of the referee.
Meanwhile, on January 23, 2020, wife filed another discovery motion, an RFO to compel compliance with document demand, set three, as well as special interrogatories, and for sanctions of $5,310.
In a minute order entered following wife's counsel's request to take one of her RFOs scheduled for February 27, 2020 off calendar, the court noted, "all discovery matters have been referred to discovery referee, Commissioner Gretchen Taylor."
E. The Proceedings Before the Discovery Referee
On March 5, 2020, the referee served the parties with a statement regarding the proceedings to be conducted before her pursuant to California Rules of Court, rule 3.931(b).
All unspecified rule references are to the California Rules of Court.
The parties filed papers with Signature in anticipation of the hearing before the referee. On or about April 16, 2020, 4 husband filed an opposition to wife's motion to compel compliance with document demand, set three. He argued, inter alia, the court had not entered an order after hearing to determine the scope of the referee's duties. In counsel's supporting declarat on, he explained after the January hearing, he and opposing counsel could not agree on an order after hearing, despite good faith negotiations.
It appears the record on appeal is lacking a complete set of the papers filed with Signature.
This filing appears to be husband's first time objecting to the referee, but the filing is buried in the record on appeal as an attachment to another document. Neither husband nor wife address it in their briefing before us.
It appears the hearing before the referee took place on April 29, 2020. The referee issued her recommendations on June 16, 2020, by way of a "First Amended Notice of Rulings on Motions to Compel by Discovery Referee" (Recommendations). The Recommendations summarized the parties' positions as set forth in their papers, and then pointed out during argument, husband raised an objection there was no order entered from the January 15, 2020 hearing appointing the referee and that the Appointment Minute Order was insufficient. Wife's counsel pointed to the proposed orders each side submitted. The referee wrote she offered to contact the court clerk to bring the pending court orders to its attention and ask the judge to enter one of them, stating, "[n]aturally the fact that they were submitted in late February 2020 as the pandemic started to affect operations is one good reason that they may just be lying in [a] pile awaiting resumption of Court services." The referee wrote husband's 5 counsel "strongly objected to [her] engaging in any effort to clear this up" but instead demanded the action be "frozen."
Ultimately the referee overruled husband's objection stating, "The Minute Order of 1-15-2020 is sufficient to empower this Referee to finish up 'ANY AND ALL' Discovery matters. Since Orders are effective when made and the attorneys are officers of the Court and they and the parties were present, the objection that a formal order has not been entered is not a legal impediment to the discovery reference."
The referee then: (1) granted the motion to compel compliance with inspection demand and for attorney fees, filed December 21, 2018 and ordered husband to pay $6,100 in sanctions to wife's counsel; (2) denied the motion to compel compliance with document demand, set four, and for attorney fees, filed January 10, 2020; and (3) granted the motion to compel compliance with document demand, set three, and special interrogatories, filed January 23, 2020 and ordered husband to pay $5,310 in sanctions to wife's counsel.
F. The Trial Court's Adoption of the Recommendations
On June 29, 2020, husband filed objections to the Recommendations in the trial court, arguing the Recommendations should be denied without prejudice because the discovery referee must be appointed pursuant to a written order specifying the reason for the appointment, the scope of the assignment, and the costs, in accordance with Code of Civil Procedure section 639. Wife filed a response in which she argued proposed orders were submitted to the court in March 6 before the pandemic court closure, which occurred around March 19, 2020.
All further unspecified statutory references are to the Code of Civil Procedure.
Wife did not and cannot argue an order was signed by the court.
On August 28, 2020, the matter came on for hearing in the trial court. The court acknowledged the January 15, 2020 minute order "issued by the court in reliance on a proper order . . . is not compliant with an order mandated by the Code," but also found husband did not properly object to lack of a formal appointment order. The court explained, "[i]n reliance on counsel drafting an appropriate order, the court drafted a rather perfunctory minute order and left scheduling to counsel. They went ahead, and they scheduled a hearing with the discovery referee, secured her services, provided the requisite documents, and argued their case and only brought up the lack of a compliant court order while already in session with the discovery referee and never with this court until after the discovery referee had made her recommendation. [¶] And so subsequent to the issuing of those recommendations, [husband] now comes to the court and objects. The . . . sole reason for the objection lies in the fact that there was not an appropriate order directly from the court." The court also noted "everyone agreed" in the chambers conference on January 15, 2020, that Commissioner Taylor would rule on the three discovery motions.
We note that one of wife's three discovery motions had not yet been filed. We consider it immaterial, however, because the discovery referee's services were engaged to resolve "any and all" discovery matters.
The parties returned to court on September 22, 2020. With respect to the issue of the appointment of the discovery referee, 7 the court reiterated "there were agreements made in chambers and understood by all the parties." The trial court issued an order adopting the Recommendations as to all three motions, except that it set new production dates because those dates had already passed. The court also ordered payment of sanctions totaling $11,410 ($5,310 plus $6,100) in accordance with the Recommendations. In addition, husband was directed to pay $6,600 in reimbursement for half of the referee's fees, and the parties were directed to share equally in any future fees for the discovery referee.
On November 30, 2020, husband filed a timely notice of appeal from the September 22, 2020 order.
The September 22, 2020 order adopting the Recommendations is appealable as a postjudgment order. (§ 904.1, subd. (a)(2).) The order is also appealable insofar as it directs payment of sanctions in excess of $5,000. (Id. at subd. (a)(12).)
DISCUSSION
Husband contends: (1) the trial court erred in finding an order was not necessary to appoint a discovery referee; (2) the trial court erred in finding the discovery referee was appointed by an agreement made off the record and never memorialized in the court's minutes or a written order; and (3) the trial court abused its discretion in awarding monetary sanctions against him because he acted with substantial justification. 8
Thus, husband does not challenge the court-adopted referee's rulings compelling discovery or the order he pay half the referee's fees.
A. Overview of General and Special References
A reference by the trial court involves the sending of a pending proceeding, or some issue raised therein, to a referee for hearing, determination and reporting back to the court. (Jovine v. FHP, Inc. (1998) 64 Cal.App.4th 1506, 1521 (Jovine).) The procedure is commonly employed to resolve discovery disputes or certain types of family law issues. (Ibid.)
The Code of Civil Procedure provides for two types of references. A "general" reference is conducted pursuant to section 638, which authorizes the trial court to refer any or all issues to a referee for trial and determination, provided the parties have agreed thereto in an agreement filed with the clerk or judge or entered in the minutes or docket. (Jovine, supra, 64 Cal.App.4th at p. 1522.) Agreement of the parties is required in order to comport with the constitutional prohibition against delegation of judicial power. (Ibid.) The finding and determination of the referee upon the whole issue must stand as the finding of the court, and judgment may be entered thereon in the same manner as though the matter had been tried by the court. (Ibid.)
A "special" reference is one conducted pursuant to section 639. The findings of the referee are advisory only, and do not become binding unless adopted by the court, which must independently consider the referee's findings before acting. (Jovine, supra, 64 Cal.App.4th at p. 1522.) The consent of the parties is not required. (Ibid.) When the parties do not consent, the court may, upon the written motion of any party, or of its own motion, appoint a referee in specified cases, including "[w]hen the court in any pending action determines that it is necessary for the court to appoint a referee to hear and determine any and all 9 discovery motions and disputes relevant to discovery in the action and to report findings and make a recommendation thereon." (§ 639, subd. (a)(5).)
This statutory scheme carefully preserves the required distinction between general and special references in order to comply with the constitutional mandate regarding the delegation of judicial power. (Jovine, supra, 64 Cal.App.4th at pp. 1522-1523.)" '[A] general reference has binding effect, but must be consensual, whereas a special reference may be ordered without consent but is merely advisory, not binding on the [ ] court. [Citations.]' (Aetna Life Ins. Co. v. Superior Court (1986) 182 Cal.App.3d 431, 436 [(Aetna)]." (Ibid.)
Despite the carefully preserved distinction between general and special references, neither the trial court nor the parties complied with the requirements of either. Husband argues the reference was contemplated under section 639, because the court appointed the referee on its own motion. Wife insists the reference was made pursuant to section 638, because the appointment was by agreement. The appointment of a discovery referee may be initiated by the parties' agreement (§ 638), a party's motion (§ 639), or the court's own motion (§ 639). If under section 638, a stipulation or motion and a proposed order are required. (§ 638; rules 3.901, 3.902.) If under section 639, a written order is required. (§ 639, subds. (c)-(d); rule 3.922.)
Although imperfect, in this case we consider the referee to have been appointed under section 639, subdivision (a)(5), on the court's own motion. It is apparent this was a special reference to a discovery referee pursuant to section 639, not section 638, because the referee's recommendations were merely advisory and not binding on the court (see Jovine, supra, 64 Cal.App.4th at p. 1522), 10 and because there was no "agreement of the parties filed with the clerk, or judge, or entered in the minutes," as required by section 638. In any case, without a record of the in-chambers proceedings, wife has not convinced us otherwise.
B. The Trial Court Properly Ruled Husband's Belated Objection Waived the Absence of an Order Appointing the Referee Pursuant to Rule 3.922
Husband argues he timely objected to the lack of a formal order appointing the referee. The question of waiver is generally a question of fact, and the trial court's finding of waiver is binding on us if it is supported by substantial evidence. (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035, 1043.) Here, the trial court's determination husband waived his objection to an order appointing the referee is supported by substantial evidence.
The January 15, 2020 minute order assigned "any and all" disputes to a discovery referee. Because the appointment of the referee was pursuant to section 639, rule 3.922 is applicable. It provides an order appointing a referee must be in writing (rule 3.922(a)), and the order must address the matters set forth in subdivisions (b) through (g) of rule 3.922.
In its ruling, the trial court acknowledged the Appointment Minute Order was not in compliance with the applicable rule, and we agree. However, the trial court also found husband waived the issue, noting "[t]hey went ahead, and they scheduled a hearing with the discovery referee, secured her services, provided the requisite documents, and argued their case and only brought up the lack of a compliant court order while already in session with the discovery referee and never with this court until after the discovery referee had made her recommendation." The trial 11 court's finding husband waived the issue has ample support in the record.
The record reflects husband did not object to the trial court's January 15, 2020 order assigning the discovery referee when it was made. Rather, it appears he agreed to it during the unreported chambers conference, an inference supported by his counsel's on-the-record response "yes" to the court's summary of the court hearing. Nor did he object when the court entered its February 27, 2020 minute order noting all discovery matters had been referred to the referee. Significantly, this was after wife filed her third discovery motion on January 23, 2020.
Husband did not object when the referee issued the March 5, 2020 statement to the parties concerning the discovery proceedings to be conducted before her. On April 16, 2020, husband objected that the court had not entered an order after hearing to determine the scope of the referee's duties, but it was too late. He never filed any request of the trial judge to clarify the court's order or to compel the trial court to enter one of the proposed orders appointing the referee prior to agreeing to proceed before the referee. It was not until argument before the referee on the discovery motions that he raised the "further objection" that the Appointment Minute Order was insufficient. Notably, when the referee offered to contact the court clerk to correct the issue, husband "strongly objected" to the referee taking action to contact the court clerk.
We conclude husband's delay in objecting to the referee's appointment until after the parties had already relied on the Appointment Minute Order to shift the discovery controversy from the trial judge to the referee, coupled with his flat rejection of the referee's offer to initiate steps to correct the lack of a 12 written order appointing her, waived the argument he now raises.
Husband's two citations to the record on appeal (Appellant's Appendix 1564, 1610) do not support his contention that he duly objected below. At oral argument on appeal, husband for the first time asserted there were other instances in which he objected below to the lack of an appointment order. However, husband's counsel could not provide this court with additional record citations. "It is counsel's duty to point out portions of the record that support the position taken on appeal. The appellate court is not required to search the record on its own seeking error." (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 768.) Further, we do not consider arguments raised for the first time at oral argument. (Rosen v. St. Joseph Hospital of Orange County (2011) 193 Cal.App.4th 453, 464, fn. 4.) We deem the points raised at oral argument waived (ibid.) and have confined our discussion to the record citations contained in husband's appellate briefs.
Husband's reliance on Hood v. Superior Court (1999) 72 Cal.App.4th 446 (Hood) is misplaced. In Hood, plaintiff sued an alleged creditor for damages, contending the creditor improperly sought to collect a nonexistent debt. After discovery disputes arose, the trial court determined sua sponte it was necessary to appoint a referee to hear and determine any and all discovery motions and disputes in the action and directed the parties to each pay one-half of the referee's fees. Plaintiff objected, contending the referee's appointment was unnecessary and would create a financial hardship for him. The trial court confirmed the reference. Plaintiff then successfully petitioned for writ relief to vacate the reference order. (Hood, supra, 72 Cal.App.4th at pp. 448-449.) 13
Similarly, in Solorzano v. Superior Court (1993) 18 Cal.App.4th 603 (Solorzano), plaintiffs immediately objected to the trial court's order appointing a discovery referee on the ground they were indigent and could not afford his hourly fee, and then sought a writ of mandate directing the trial court to vacate the order. (Id. at pp. 608-609.)
Thus, unlike husband here, in Hood and Solorzano, plaintiffs promptly objected in the trial court at the time the court appointed a discovery referee, and then followed up with a writ petition to overturn the reference order. Here, in contrast, husband proceeded to appear and litigate the discovery motions before the referee and did not object to the appointment until after the proceedings were well under way. 14
Two other cases relating to a party's participation in a special reference involved circumstances not present in the instant case. Aetna held a party's participation in a special reference proceeding under section 639 did not waive the party's right to object to the trial court's later erroneous treatment of the referee's decision as a binding general reference. (Aetna, supra, 182 Cal.App.3d at p. 436.) Similarly, in Jovine, a party's participation in a special reference under section 639 to resolve pending discovery matters did not preclude the party from objecting to the referee's authority to hear and determine three separate summary adjudication motions which effectively disposed of the plaintiff's case. (Jovine, supra, 64 Cal.App.4th at pp. 1523, 1526-1531.) Here, the referee stayed within the scope of the assignment under section 639 by limiting the reference to the discovery matters, in which she made advisory recommendations to the trial court.
C. The Trial Court Did Not Abuse Its Discretion in Imposing Discovery Sanctions
Husband contends the trial court abused its discretion in awarding sanctions because he acted with substantial justification when he objected to proceeding without a proper order appointing the referee. We review an order imposing discovery sanctions under the abuse of discretion standard of review. (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1422.) Here, there was no abuse of discretion.
Husband's argument is meritless, because he was not sanctioned on account of his belated objection to the referee's appointment. Husband was sanctioned for misuse of the discovery process. Husband has not shown the trial court erred in adopting the referee's Recommendations concerning sanctions. 15
DISPOSITION
The September 22, 2020 order adopting the referee's Recommendations and imposing discovery sanctions is affirmed. Wife shall recover her costs on appeal.
We concur: EDMON, P.J., LAVIN, J. 16
[*] Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.