M. E. Gray Co. v. Gray

• Decision Date: 22 January 1985
• Citation: 163 Cal.App.3d 1025,210 Cal.Rptr. 285
• Court: California Court of Appeals Court of Appeals
• Parties: M.E. GRAY CO., Plaintiff, Cross-Defendant and Respondent, v. Laurence S. GRAY, et al., Defendants, Cross-Complainants and Appellants, Metal Fabrication Service, Inc. et al., Defendants, Cross-Complainants and Respondents. G 000351.

Page 285

210 Cal.Rptr. 285

163 Cal.App.3d 1025

M.E. GRAY CO., Plaintiff, Cross-Defendant and Respondent, v. Laurence S. GRAY, et al., Defendants, Cross-Complainants and Appellants, Metal Fabrication Service, Inc. et al., Defendants, Cross-Complainants and Respondents.

G 000351.

Court of Appeal, Fourth District, Division 3, California.

Jan. 22, 1985.

Hill, Wynne, Troop & Meisinger, Louis M. Meisinger and C. Dennis Loomis, Los Angeles, for plaintiff, cross-defendant and respondent M.E. Gray Co.

Grace, Neumeyer & Otto, Inc., Ronald J. Skocypec and David Belofsky, Los Angeles, for defendant, cross-complainant and respondent Metal Fabrication Service, Inc.

Wise & Nelson and John W. Nelson, Los Angeles, for defendant, cross-complainant and respondent Gordon S. Halliday.

OPINION

SONENSHINE, Associate Justice.

Sanctions were assessed against a law firm for the frivolous filing of a motion to dismiss under Code of Civil Procedure section 583, subdivision (b). The trial court found the motion was "totally without legal merit or factual support," and was filed in bad faith. The sanctioned law firm contends the motion was brought upon its reasonable belief the five-year period had expired when plaintiff failed to file a written waiver ordered by the court as a condition for continuance of trial.

* * *

* * *

The underlying litigation commenced on April 5, 1978, when a complaint for unfair competition, breach of fiduciary duty and interference with contractual relations was filed on behalf of plaintiff M.E. Gray Co. Named as defendants were Lawrence S. Gray, Ronald R. Majerick, G.C. Gloster, Gordon S. Halliday, Metal Fabrication Service, Western Fabrication Co., Inc., and Gray Pipe & Supply, Inc. On May 24, 1978, the law firm of Bewley, Lassleben & Miller (the "Bewley firm") filed a cross-complaint on behalf of all defendants for breach of contract and injunctive relief against M.E. Gray Co. and Jenkins Bros. Trial was scheduled for December 6, 1982.

On December 2, 1982, Richard L. Dewberry of the Bewley firm moved for a continuance of the trial to a date in September 1983 claiming additional time was needed to depose expert witnesses. One month earlier the law firm of Grace, Neumeyer & Otto, Inc. (the "Grace firm") had been associated as counsel for defendant Metal Fabrication Service, Inc. The Grace firm joined in the motion, claiming it needed more time to prepare for trial. ¹ The court, over plaintiff's objection, granted the continuance and directed counsel to proceed to master calendar to select a new trial date. Recognizing a trial date later than April 5, 1983 would subject plaintiff to a dismissal of its lawsuit under Code of Civil Procedure section 583, subdivision (b), ² the court stated: "So my feeling would be that I would like to go ahead and indicate that an extension of the statute, the five-year statute, should be--written extension by all defendants should be in the file by--extended until December the 6th of 1983; ..."

A few days later notice of the ruling was served by Mr. Dewberry. The notice also indicated trial had been continued to September 26, 1983.

On March 15, 1983, Mr. Dewberry, on behalf of all defendants and cross-complainants, forwarded an original document entitled "Stipulation Extending Time For Trial [C.C.P. § 583(b) ]" to plaintiff's attorney. Copies were sent to the Grace firm and to counsel for cross-defendants. The cover letter requested plaintiff's attorney to circulate the stipulation to the others for their signatures and to return it to Mr. Dewberry, who would then cause the original to be filed with the court. As of April 5, 1983, the stipulation had not been returned.

On April 11, 1983, the Bewley and Grace firms applied for an order shortening time to set a motion to dismiss under section 583, subdivision (b). The Bewley firm also sought an order shortening time to specially set a trial date on the cross-complaint, on which the five years would run May 24, 1983. The court granted the request and set the hearing on the motions to dismiss and to specially set a trial date, for April 28, 1983. Within the next few days the firm of Wise & Nelson (the "Wise firm"), counsel for defendant Gordon S. Halliday, filed its own motion to dismiss, and the firm of Kirtland & Packard, counsel for defendants Lawrence S. Gray and Ronald R. Majerick, filed a request to join in the motion. Plaintiff was given until April 27, 1983, to file its opposition.

Shortly before the close of business on April 27, 1983, plaintiff served its opposition to the motion to dismiss on the Bewley firm. Included was a request for sanctions in a sum not less than $2,950 against the moving parties and their respective attorneys, jointly and severally, pursuant to section 128.5. ³

At the hearing on April 28, 1983, the court denied the motion to dismiss and the motion to specially set the cross-complaint for trial. However, it granted plaintiff's request for sanctions in the amount of $2,950, but against the Bewley firm only. An order prepared by plaintiff's counsel was filed May 5, 1983. ⁴

On May 9, 1983, the Bewley firm filed a motion for reconsideration. The hearing was originally scheduled for June 16, 1983. However, counsel agreed to a continuance to August 18 and Mr. Dewberry advised the court by telephone. Nonetheless, on June 16 the court made its minute order denying the motion as well as what it apparently construed as a "request" for continuance.

The Bewley firm appeals that portion of the May 5, 1983 order imposing sanctions and the order of June 16, 1983 denying its motion for reconsideration. ⁵

I.

The Bewley firm first contends plaintiff's "eleventh hour" notice of its intention to request sanctions failed to satisfy due process requirements. Relying on Ellis v. Roshei Corp., supra, 143 Cal.App.3d 642, 192 Cal.Rptr. 57, it argues the provisions of section 1005 should control. We disagree.

In Ellis sanctions were sought against the defendant or his counsel for the frivolous filing of a demurrer. The request was included in the plaintiff's opposition papers served five days before the scheduled hearing. After taking the matter under submission, the trial court overruled the demurrer and imposed sanctions of $250 against the plaintiff's attorney. A motion for reconsideration was denied. The attorney contended on appeal he had inadequate notice and opportunity to be heard.

The appellate court stated: "Section 128.5 specifically provides that notice may be contained in a party's responding papers as was done in the instant case. Section 1005 provides: 'All papers opposing a motion so noticed shall be filed with the court and served on each party at least five days before the time appointed for the hearing.' " (143 Cal.App.3d at p. 647, 192 Cal.Rptr. 57) Its discussion of the notice requirement continued in a footnote: "[I]t would appear that for purposes of requesting sanctions under section 128.5 the five day response time of section 1005 would be jurisdictional to the due process requirements discussed in Bauguess [v. Paine (1978) 22 Cal.3d 626, 150 Cal.Rptr. 461, 586 P.2d 942.] Further, we do not mean to say that five days will be, in all instances, sufficient time to allow the party, against whom sanctions are requested, to answer to prepare for the hearing on the granting of sanctions. The trial court has the inherent power and the right to control its own proceedings to allow such additional time as, in its discretion, it deems necessary to insure a fair hearing on the request for sanctions." (Id., 143 Cal.App.3d at p. 648, fn. 5, 192 Cal.Rptr. 57.)

However, the Ellis court refrained from deciding the issue of "whether the minimum time requirement of five days set forth in section 1005 is sufficient to impose sanctions under section 128.5 because ... [the attorney] was given a second opportunity to contest the sanctions on his motion to reconsider." (Id., 143 Cal.App.3d at pp. 647-648, 192 Cal.Rptr. 57). ⁶ Moreover, its discussion of a five-day notice requirement cannot be construed as a holding five days' notice is essential in all cases. Rather, under the facts of that case, the court noted a period of five days was jurisdictional since the response was due five days before the hearing.

In view of section 128.5's specific provision that notice of a request for sanctions may be contained in a party's responding papers, where the time for filing a response is jurisdictional a request for sanctions should be deemed timely if included in the response. In our case the motion to dismiss was set on shortened notice, and the court gave plaintiff until the day before the hearing to file opposition. Consequently, the one-day notice would appear to be sufficient.

However, our rejection of the Bewley firm's argument need not depend upon the adequacy of the one-day notice because the Bewley firm nevertheless was given an opportunity to be heard. After the court announced its decision to assess sanctions, the following colloquy took place:

"Mr. Dewberry: On behalf of Bewley, Lassleben & Miller, this motion was required out of an obligation to our client, and that furthermore, had I failed to make this motion, I would be derelict in my duty to my client.

"The Court: Fine. Anything else?

"Mr. Dewberry: No, your honor."

In failing to raise the issue of inadequate notice, Mr. Dewberry waived any objection he may have had upon that ground. (Tate v. Superior Court (1975) 45 Cal.App.3d 925, 930-931, 119 Cal.Rptr. 835.) And although his motion for reconsideration challenged the sufficiency of the notice, he failed to explain how he was prejudiced. Furthermore, while the Bewley firm could not necessarily have anticipated plaintiff's response would also include a request for sanctions, Mr. Dewberry should not be heard to complain since he created the situation by requesting an early hearing date. ⁷

II.

Underlying the Bewley firm's second contention, that its motion to dismiss was not...