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Attorney-Fee Award Against Firm That Filed Motion Upheld
C.A. Says There’s No Abuse of Discretion in Imposing a Monetary Sanction on Lawyers Who Frivolously Sought a Terminating Sanction Rather Than Moving for Summary Judgment
By a MetNews Staff Writer
Div. Five of this district’s Court of Appeal held on Friday that an order granting attorney fees against the attorneys who represented the losing party on a motion for sanctions—which asked for dismissal of the complaint against their client—was not an abuse of discretion where the request was frivolous and the wrong vehicle for obtaining the relief sought.
Justice Dorothy C. Kim authored the unpublished opinion affirming the order awarding fees by then-Los Angeles Superior Court Judge Steven J. Kleifield (now a mediator/arbitrator). Acting Presiding Justice Lamar W. Baker and San Bernardino Superior Court Judge Corey Lee, sitting by assignment, joined in the opinion.
Appealing the order were Hany Barhoma and the Irvine law firm of Miller Barhom Gerber LLP (“MMG”). MMG attorneys Adam Miller, Corey Miller and Jonathan Gerber represented Barhoma after he was named as a defendant in a complaint by Yongtong Lan.
Allegations of Fraud
In 2019, Lan sued a former business partner, Wasam Eshak, alleging fraud relating to the pharmaceutical business they founded, ILAbPharma (“ILab”). On Jan. 27, 2021, Lan filed an amended complaint asserting causes of action against Barhoma for fraud, breach of fiduciary duty, and negligent misrepresentation arising out of accounting services Barhoma provided to ILab.
On March 16, 2021, MMG filed a motion on Barhoma’s behalf under Code of Civil Procedure §128.7 for sanctions against Lan and his attorneys, Rodney T. Lewin and Allyson P. Wittner of the Beverly Hills Law Offices of Rodney T. Lewin. The motion alleged that the amended complaint lacked legal and factual merit, the asserted claims were barred by applicable statutes of limitations, and the pleading was otherwise flawed.
Sec. 128.7(c) provides for sanctions against “attorneys, law firms, or parties” who violate subdivision (b). Sec. 128.7(b), in turn, provides that an attorney certifies, by filing motions with the court, that the following conditions are met:
“(1) It is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
“(2) The claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.
“(3) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.
“(4) The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.”
Dismissal as Sanctions
As sanctions, Barhoma requested that the trial court dismiss the claims against him with prejudice and award him $22,960, the amount of attorney fees he incurred defending against Lan’s action and preparing for the sanctions motion.
Kleifield denied the motion, finding the use of a motion for sanctions to achieve a dismissal was a misuse of the legal process, and saying:
“If a demurrer is available to a party, use demurrer. If there are no triable issues of fact, you file a summary judgment motion. If we were to have this type of a motion every time somebody filed a pleading, we would have just endless motions for sanctions.”
Kleifield noted that sanctions are proper when the moving party proves that another party’s conduct in asserting a claim was without merit or objectively unreasonable. He said that the arguments in the sanctions motion failed to identify specific facts to support the assertion that the complaint’s legal claims or factual allegations were meritless.
He added:
“Essentially, [Barhoma] dumped 450 pages of documents….References to these exhibits are broad, referring to entire exhibits, and are scattered through the points and authorities. Effectively, the [c]ourt is asked to scour through 450 pages of exhibits to locate the pearls on which to find for [Barhoma]. This would all have been avoided had [Barhoma] brought a summary judgment motion.”
The judge awarded Lan costs and attorney fees pursuant to §128.7(c)(1) against Barhoma and MMG due to the frivolous nature of the sanctions motion. Barhoma and MMG appealed the attorney fee award after Lan dismissed the action against Barhoma, following a compromise between the parties.
Procedurally Improper
MMG contends that Kleifield erred when he found that the sanctions motion was procedurally improper. Disagreeing, Kim said:
“Because Barhoma expected the court to rule on factual issues…he should have brough[t] a summary judgment motion. Moreover, apart from whether Barhoma should have brough[t] a summary judgment motion rather than a sanctions motion, Barhoma’s sanctions motion was deficiently presented.”
She reasoned that “[t]he court accurately described Barhoma’s section 128.7 sanctions motion and did not abuse its discretion in finding that the motion was the inappropriate motion to have brought under the circumstances and that the motion was otherwise deficient.”
Proper Party
MMG argued that §128.7(c) does not authorize a trial court to award attorney fees to the prevailing party on a sanctions motion against the attorneys who represented the losing party.
Kim noted that MMG had forfeited appellate review of the issue by failing to raise the it in the trial court, but said:
“[W]e reject MMG’s unreasonable construction of section 128.7, subdivision (c) that would limit the imposition of expenses and attorney fees to a party for a motion its attorney filed that involved a document ‘dump,’ asserted conclusory arguments, and failed to identify specific supporting facts.”
Finding that “[s]uch a construction would be contrary to the purpose of section 128.7,” she concluded that the fee award was reasonable, adding:
“Barhoma’s sanctions motion was objectively frivolous because it was the wrong vehicle to address the alleged deficiencies in Lan’s second amended complaint. Moreover, given the poor quality of the motion, it apparently was brought for its harassment value. Accordingly, the court did not abuse its discretion in awarding Lan the reasonable expenses and attorney fees he incurred in opposing the motion.”
The case is Lan v. Barhoma, B316931.
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