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Court of Appeal:
Judge May Order Non-Party to Pay Fees as Sanction
Opinion Says That If a Person Is Subject to Orders in Post-Judgment Enforcement Proceedings, and Disregards Them, Court May Properly Make a Contempt Adjudication and Award Costs as Penalty
By Kimber Cooley, associate editor
A trial court may impose attorney fees as sanctions on a non-party to the underlying lawsuit, under a statute that applies to “parties,” if that person has disobeyed a discovery order and been found in contempt, the Court of Appeal for this district declared yesterday.
Such a person, Justice Brian M. Hoffstadt of Div. Two explained, “is a party to the post-judgment enforcement proceedings.”
At issue is the reach of Code of Civil Procedure §1218, which provides that “a person who is subject to a court order as a party to the action…who is adjudged guilty of contempt for violating that court order may be ordered to pay to the party initiating the contempt proceeding the reasonable attorney’s fees and costs incurred by this party in connection with the contempt proceeding.”
Appealing an attorney fee award as a sanction was Chaim Cohen, who was pulled into post-judgment litigation between creditors and his friend Suki Ben Zion after Zion indicated that Cohen was paying his expenses. In 2016, Ofek Rachel Ltd. and M.M.N. Yad David USA Ltd. obtained a judgment against Zion in Israel for $5.5 million. The creditors filed a lawsuit in New York, successfully seeking enforcement of the Israeli judgment.
After Ofek Rachel and Yad David attempted to enforce the judgment, Zion professed to have no assets despite the fact he was living in a multi-million-dollar condominium in Manhattan, holding valuable property in Brooklyn, and sending his three children to an expensive private school.
During a post-judgment examination, Zion averred that Cohen was paying his expenses, often with personal American Express credit cards. According to a 2011 story in The Forward, a publication that identifies itself as “Jewish.Independent.Nonprofit.,” the two men were business partners in a number of real estate ventures and each had ties to the adult film industry.
Ofek Rachel and Yad David served a subpoena on Cohen at his California address, seeking his American Express statements. When Cohen failed to respond, the judgment creditors filed a petition in Los Angeles Superior Court asking the court to order compliance.
Los Angeles Superior Court Judge Theresa Traber granted the motion. In February 2022, after Cohen responded by providing statements with such heavy redactions that they revealed no information, the creditors filed a motion to compel appropriate discovery responses.
On March 11, 2022, Traber issued an order compelling Cohen to “conduct an examination of his redactions to ensure that only Cohen’s own charges have been redacted” and to otherwise respond to the outstanding discovery requests without objection.
When Cohen failed to comply with the order, Ofek Rachel and Yad David filed a motion to hold Cohen in contempt under §1218. After a three-day trial, Traber found Cohen guilty and imposed a fine and ordered Cohen to pay the judgment creditors $185,095.20 in attorney fees and an additional $8,964.71 in costs.
Cohen paid the fine and timely appealed, arguing that as a non-party to the enforcement action the court exceeded its jurisdiction by imposing attorney fees as sanctions.
Hoffstadt acknowledged in a footnote that “[a]lthough [the parties] dispute whether an order challenging the attorney’s fees portion of a contempt order is subject to review by appeal, we elect to sidestep this threshold issue of appealability by construing Cohen’s appeal as a petition for a writ of mandate because it entails a pure question of law.”
Turning to the merits, he said:
“Cohen does not challenge his guilt of contempt charges for disobeying the trial court’s order compelling discovery…or the amount of attorney’s fees imposed. Instead, he presents a single question: Does section 1218 grant a trial court the power to impose attorney’s fees against a person for non-compliance with a court order in post-judgment enforcement proceedings when that person was not a party to the underlying litigation giving rise to that judgment?”
Saying the answer is “yes,” the jurist explained that the conclusion was supported by the plain language of the section, the Legislative purpose behind the statute, and the “tapestry of remedies available in post-judgment enforcement proceedings.”
CCP §1218
He wrote:
“First and foremost, the language of section 1218 so dictates, and that language controls….Under…the statute, a court may only impose attorney’s fees against a person who was ‘subject to a court order as a party to the action’ and who is ‘adjudged guilty of contempt for violating that court order.’….Because an ‘action’ is defined as ‘an ordinary proceeding…by which one party prosecutes another for the…enforcement…of a right’ (§ 22), and because post-judgment enforcement proceedings between judgment creditors on the one hand, and judgment debtors and third parties on the other, can entail the enforcement of rights to discovery conferred by court orders…, persons who are subject to court orders as a party to post-judgment enforcement proceedings can be ordered to pay attorney’s fees if they violate any such orders.”Continuing, Hoffstadt remarked that “[n]othing in the language of section 1218 requires the violator also to be a party-litigant to the underlying proceeding giving rise to the judgment, which is a separate and distinct action.”
Turning to the Legislative purpose, he reasoned:
“When our Legislature in a 1994 amendment added the language [referenced] above, it had a distinct reason for empowering trial courts to award attorney’s fees against persons who violate court orders—namely, ‘to encourage parties to enforce contempt violations and to encourage parties to comply with court orders’ by imposing an additional cost for non-compliance….We must give effect to this reason, especially when it reinforces the statute’s plain text.”
Distinction Rejected
Cohen argues that 1218 draws a distinction between a “person adjudged guilty of contempt” and one who is “subject to a court order as a party to the action” and provides for an award of attorney fees only against those in the latter category. Because Cohen was not a “party” to the underlying action, he contends that he is merely a “person” adjudged guilty of contempt and thus cannot be assessed attorney’s fees under the statute.
Unpersuaded, Hoffstadt wrote:
“Cohen’s argument misreads the text of section 1218, which makes eligibility for an award of attorney’s fees contingent upon being ‘subject to a court order as a party to the action’ and upon being found ‘guilty of contempt for violating that order’—not contingent upon being a party to a separate, underlying proceeding….The unavailability of attorney’s fees in this scenario would remove a powerful incentive for private parties to initiate a contempt action, and thereby weaken the effect of court orders—a result inimical to the above-noted purpose of encouraging compliance with court orders.”
‘Tapestry of Remedies’
Saying that the court’s “interpretation fits most consistently with the tapestry of remedies available in post-judgment enforcement proceedings,” the justice commented:
“In the post-judgment enforcement context, the availability of attorney’s fees as a remedy depends on the specific enforcement mechanism used. Although the default rule is that attorney’s fees are not available unless granted by a contract in the underlying litigation…, that default rule does not apply where ‘otherwise provided by law’….Attorney’s fees are available when….a court issues an order compelling compliance with a post-judgment document subpoena, even against a non-party to the underlying litigation. (§§ 1987.2, 1987.1, subds. (a), (b)(2).) It would therefore make little sense to construe the contempt statute—which can be used to enforce an order compelling compliance with such a subpoena—to disallow attorney’s fees.”
Presiding Justice Elwood Liu and Justice Victoria M. Chavez joined in the opinion.
The case is Ofek Rachel Ltd. v. Zion, B333959.
Ofek Rachel and Yad David were represented in the appeal by Anne Katherine Edwards and Theodore Hyun Dokko with the Los Angeles office of Smith Gambrell & Russell LLP. Robert L. Esensten and Randi R. Geffner of the West Los Angeles-area firm Esensten Law acted for Cohen.
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