Abbett Electric Corp. v. Sullwold

• Decision Date: 14 July 1987
• Citation: 238 Cal.Rptr. 496,193 Cal.App.3d 708
• Court: California Court of Appeals Court of Appeals
• Parties: ABBETT ELECTRIC CORPORATION, Plaintiff and Respondent, v. Robert T. SULLWOLD; Orrick, Herrington & Sutcliffe, Defendants and Appellants. A033766.

Page 496

238 Cal.Rptr. 496

193 Cal.App.3d 708

ABBETT ELECTRIC CORPORATION, Plaintiff and Respondent, v. Robert T. SULLWOLD; Orrick, Herrington & Sutcliffe, Defendants and Appellants.

A033766.

Court of Appeal, First District, Division 4, California.

July 14, 1987.

Review Denied Sept. 30, 1987.

Jerome B. Falk, Jr., Marla J. Miller, Howard, Rice, Nemerovski, Canady, Robertson & Falk, San Francisco, for appellants.

Peter J. Zouras, Raymond H. Levy, Inc., San Francisco, for plaintiff and respondent.

SABRAW, Associate Justice.

Robert Sullwold (hereafter Sullwold) and his employer Orrick, Herrington & Sutcliffe (OHS) appeal from an order under Code of Civil Procedure section 128.5 directing them to pay legal expenses incurred by plaintiff Abbett Electric Corporation (AEC). ¹ The order was entered after the court declared a mistrial based on references in the jury's presence to the alleged drinking of one of AEC's employees. We reverse.

I. FACTS

AEC brought this action to recover for electrical contracting services it performed on a building project in San Francisco. The owner, defendant Storek & Storek Environmental Center (hereafter Storek) was represented by appellants Sullwold and OHS. Storek cross-complained, alleging that AEC failed to perform in a timely manner and in some respects failed to perform at all.

On the eleventh day of trial before a jury, Sullwold, as counsel for Storek, was cross-examining AEC's president, J. Conrad Abbett. Abbett testified that AEC's foreman, Jim Berg, had been late to work on the project more than once. Abbett was asked the reasons for Berg's tardiness and testified that he understood Berg had just been divorced and "was upset about it and so forth." Sullwold asked if Abbett knew any other reason. Abbett replied, "I can't say." With no substantive objection having yet been asserted, Sullwold asked, "Did you ever find out one of the reasons that Mr. Berg was late for work is that in his off-hours he perhaps drank a bit more than normal?" Opposing counsel then objected, in open court, on the ground that Berg's off-duty conduct was irrelevant. The following colloquy then took place in the jury's presence: "MR. SULLWOLD: Your Honor, ... I have already established the man was late for work. Now, I am asking him why. I think I will--I intend to go ahead and show that Mr. Berg showing up late in Mr. Abbett's own opinion, affected his progress of the job. [p] THE COURT: What is the significance of the reason why he was late for work? If he was late for work and it held up the job, so be it. What is the significance of the reason? [p] MR. SULLWOLD: Well, I think the reason is--the significance of it is this: Your Honor, if a man is late for work because he has been all night drinking, he is probably less effective a worker than if he was late because the Muni didn't get him to the job on time. [p] THE COURT: Are you prepared to prove that he was out all night drinking? [p] MR. SULLWOLD: Yes, I am, Your Honor."

The jury was then excused for the day. On the following morning AEC moved for a mistrial and an award of sanctions. Sullwold conceded that he could not prove the literal truth of the statement that Mr. Berg was drinking "all night," and apologized for saying that he could. The court, however, granted a mistrial, apparently concluding that the jury's objectivity had been irreparably damaged. ² A ruling on sanctions was postponed to permit briefing.

In opposition to sanctions, Sullwold filed his own declaration in which he declared among other things, as follows: "I learned from Don Stoddard, Storek's job superintendent, that on more than one occasion he had found Abbett's foreman, Jim Berg, 'passed out'--Mr. Stoddard's words--in his truck when Mr. Stoddard arrived at the jobsite to begin the day's work. Mr. Stoddard told me that when Mr. Berg awakened, sometimes as late as 10:00 or 11:00 a.m., he told Mr. Stoddard that he had gone out the night before and 'gotten drunk'--Mr. Stoddard's recollection of Mr. Berg's words. Specifically, Mr. Stoddard recalled an occasion on which Mr. Berg told him that he had 'gotten drunk,' 'gotten into a fight' with his girlfriend and then returned to the jobsite and 'passed out.' Mr. Stoddard also told me that during one period he found Mr. Berg 'passed out' a 'couple of times' a week...." ³

Sullwold also pointed to the deposition testimony of Abbett, who had stated that he "presumed" Berg occasionally showed up for work with a hangover; that there was a period when Berg was regularly late to work, a problem which Abbett discussed with him as affecting his performance; and that Abbett "might have believed at sometime during the course of the time that [Berg] was on the particular job ... that drinking might have been a problem that hurt his ability to supervise and complete the project."

The court granted AEC's motion, awarding some $20,000 in expenses. This figure was reached by identifying expenses which would not be beneficial in a retrial, and then reducing that sum by 30 percent for comparative fault based on AEC's failure to make a motion in limine concerning Berg's alleged drinking. ⁴

II. ANALYSIS

A. The "Not Based on Good Faith" Requirement.

Code of Civil Procedure section 128.5, as worded at the time of the events in question, empowered trial courts to assess monetary sanctions only for "tactics or actions" not based on good faith "which are frivolous or which cause unnecessary delay." ⁵ A strong argument can be made that this language requires both a subjective element of bad faith and an objective element of frivolousness or unwarranted delay. (See Lesser v. Huntington Harbor Corp. (1985) 173 Cal.App.3d 922, 935, 219 Cal.Rptr. 562 [lack of merit not enough; court must further determine whether action brought with improper motive]; Garcia v. Sterling (1985) 176 Cal.App.3d 17, 22-23, 221 Cal.Rptr. 349 [award reversed where reasonable to think issues arguable and no evidence of "subjective bad faith or improper motive"]; Luke v. Baldwin-United Corp. (1985) 167 Cal.App.3d 664, 669, 213 Cal.Rptr. 654 [reversing award based on speculation about what law firm could or should have discovered].) On the other hand, a number of cases have allowed an award without appearing to require a finding of subjective bad faith, sometimes implying that constructive notice of impropriety is sufficient ground for an award. (See In re Marriage of Gumabao (1984) 150 Cal.App.3d 572, 577, 198 Cal.Rptr. 90; Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1334, 231 Cal.Rptr. 355; Winick Corp. v. County Sanitation Dist. No. 2 (1986) 185 Cal.App.3d 1170, 1177, 230 Cal.Rptr. 289 [finding that plaintiff knew "or should have known" that facts and law precluded action, declared sufficient].)

There is some inescapable overlap between the notion of an indisputable lack of merit and "subjective" bad faith, in that the presence of the former will support an inference that the latter also exists. (See In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649, 183 Cal.Rptr. 508, 646 P.2d 179.) ⁶ However we need not determine here whether there is a conflict in the cases or, if so, how it should be resolved. The case before us satisfies neither of the tests suggested by the cases, i.e., a lack of subjective good faith or patent, objective meritlessness.

B. "Subjective" Bad Faith.

The order under review cannot be reasonably construed as containing a finding that Sullwold lacked subjective good faith. AEC insisted that Sullwold's actions (and his entire conduct of the trial) were calculated to produce a mistrial, but the court made no such finding and even observed during argument that it was "not too concerned" with the other instances of alleged misconduct. Even as described by AEC in its papers below, these instances suggest at most an overzealous or perhaps abrasive attorney; they do not produce the impression of someone bent on sabotaging the trial. In any event these portions of the trial have not been transcribed, and the record before us shows only a desire by Sullwold to avoid a mistrial. Thus when it became clear that the court was displeased, he offered to refrain from any further mention of drinking. When it appeared that a mistrial was imminent, he sought to avoid it by offering to apologize to the jury and requesting an opportunity to brief the issue before the court ruled.

It appears that the court itself accepted the premise that "Sullwold believed in good faith that his questions and statements were relevant and warranted by the evidence." ⁷ To the extent it made any findings on the subject of good faith, they were that Sullwold is a "competent trial attorney" who "should have recognized and anticipated the risk of error attendant to pursuing questioning of a witness on what objectively should have been considered to be inflammatory, prejudicial, and inadmissible matter"; that "[i]n proceeding without caution, he bore the risk of the eventual mistrial by treading on such dangerous ground before the jury"; and that because of this conduct and Sullwold's admission that he could not prove Berg was literally drinking "all night," his actions were "irresponsible, and 'not based on good faith.' " (Emphasis added.)

This is not a finding of a wrongful state of mind, but of a failure to exercise due care. At most it suggests a form of negligence. No case known to us supports the idea that negligence can, in the context of section 128.5, constitute a subjective lack of good faith. An inquiry into good faith necessarily focuses on the actor's belief as to the propriety of his or her actions, and his or her purposes in taking those actions. (See In re Marriage of Flaherty, supra, 31 Cal.3d at pp. 649-650, 183 Cal.Rptr. 508, 646 P.2d 179.) The trial court did not find and apparently refused to find, that there was any lack of belief or any improper purpose behind Sullwold's conduct. Accordingly the award of sanctions cannot be...