Shiheiber v. JPMorgan Chase Bank, N.A.

• Decision Date: 26 July 2022
• Docket Number: A160188
• Citation: 81 Cal.App.5th 688,297 Cal.Rptr.3d 442
• Parties: Hanan SHIHEIBER, Cross-complainant, v. JPMORGAN CHASE BANK, N.A., Cross-defendant and Respondent; Dennise S. Henderson et al., Objectors and Appellants.
• Court: California Court of Appeals Court of Appeals

81 Cal.App.5th 688

297 Cal.Rptr.3d 442

Hanan SHIHEIBER, Cross-complainant,

v.JPMORGAN CHASE BANK, N.A., Cross-defendant and Respondent;

Dennise S. Henderson et al., Objectors and Appellants.

A160188

Court of Appeal, First District, Division 2, California.

Filed July 26, 2022

Law Office of Richard L. Antognini, Richard L. Antognini, Lincoln, for Objectors and Appellants.

Lubin Olson & Niewiadomski, Mia S. Blackler, Laura L. Gildengorin, for Cross-defendant and Respondent.

STEWART, J.

Attorney Dennise S. Henderson violated several local court rules governing the timely service and filing of materials preparatory to trial (e.g., motions in limine and trial exhibits). As a result, the trial court sanctioned her in the amount of $950 under Code of Civil Procedure section 575.2,¹ the statute authorizing superior courts to provide by local rule for sanctions to enforce their local court rules. The trial court could have imposed a higher amount and was generous in awarding only an amount below that required to be reported by the State Bar.

Nonetheless, Henderson now appeals and challenges the legal basis for the sanctions on two grounds. She contends a superior court's power to impose sanctions for violations of its local rules does not extend to violations of local rules regulating the conduct of trial. She also contends that she could not be sanctioned for violating local court rules because the trial court exonerated her of acting in bad faith.

We reject both of these arguments because the statute by its terms is not limited to pre-trial proceedings and the Legislature did not incorporate, expressly or otherwise, the section 128.5 bad faith standard into section 575.2.

BACKGROUND

Henderson was lead trial counsel for the borrower in a foreclosure dispute with respondent JPMorgan Chase Bank, N.A. (Chase) that went to trial in San Mateo County Superior Court. The case was on remand for re-trial after we previously reversed the grant of a nonsuit after opening statements in the first trial. (See Shiheiber v. JPMorgan Chase Bank, N.A. , 2018 WL 4090842 (Aug. 28, 2018, A147310 [nonpub. opn.].)

In the midst of the re-trial, Chase filed a wide-ranging motion asking for $25,000 in sanctions against the borrower's attorneys for a variety of conduct Chase contended had caused the re-trial to drag on far longer than necessary, all because the borrower's attorneys were ill-prepared for trial. The motion argued, among other things, that opposing counsel had violated numerous local rules and court orders imposing deadlines to submit various trial-related documents (specifically, the parties’ motions in limine, jury instructions, witness lists, trial briefs and trial exhibits), and it sought relief under section 128.5, section 575.2 and San Mateo County Local Court Rules, rule 0.2.² The $25,000 figure was based on Chase's estimate that, 10 days into the re-trial, opposing counsel's untimely filings and other conduct had caused its own attorneys to waste about three days of trial time. Chase then expanded its claims in the reply brief it filed months later (after the jury had returned its verdict and the bench portion of trial had been aborted), ultimately seeking $37,587.50 in sanctions for a variety of conduct by opposing counsel, including during the trial.

The trial court issued much more limited relief, on much more narrow grounds. At the hearing on the sanctions motion, the trial court expressed disdain for sanctions motions such as the one filed by Chase, which it said "are not helpful to our judicial system" because they devolve into "collateral matters that take away from the issues from the jury, and more important[ly], the relationship that should [exist] between Counsel," who should be able to "work things out" and "fight[ ] vigorously but professionally."

The trial court found Henderson had not acted in bad faith and thus declined to sanction her under section 128.5.

Nonetheless, the trial court ruled that sanctions were appropriate for several violations of its local rules of court. Specifically, the trial court made factual findings—which are not contested on appeal—that Henderson: (1) did not timely serve her motions in limine on Chase's counsel, which was required to be done five days before trial under local rule 2.21³ ; (2) did not timely file her motions in limine, which was required under local rule 2.20 to be done upon assignment of the case to a trial department⁴ (which in this case was July 15, 2019); (3) did not timely file oppositions to Chase's motions in limine, which also were required to be filed at the same time—i.e., when the case was assigned to a trial department (see footnote 4, ante ); and (4) failed to provide sufficient copies of her trial exhibits to the court and opposing counsel by the time the case was assigned to a trial department, which violated local rule 2.22, and caused considerable problems and delay.⁵

Henderson took full responsibility for the situation, and so the court declined to impose sanctions against the other two lawyers representing the borrower and imposed sanctions against Henderson and her law firm alone.⁶ The court stated it had "thought quite a bit about the amount of sanctions to be awarded," and declined to impose sanctions in an amount that would require a referral to the State Bar ($1,000). Instead, it ordered Henderson to pay $950 in sanctions to Chase within 30 days.

After the court issued its ruling from the bench, Henderson asked to be heard one final time. In the ensuing colloquy, Henderson became very heated and "rud[e]" toward the court, which exercised commendable restraint. She repeatedly interrupted the court, raised her voice to the point of yelling, and at one point appeared to make a gratuitous insinuation of racial bias. Ultimately, in a fit of pique, she abruptly ended her appearance by telephone before the hearing concluded, essentially hanging up on the trial court.

The court then reiterated its finding that counsel simply had not been prepared for trial and clarified that the $950 in sanctions are "not attorney's fees. They are sanctions for violating the ... Local Rules, and they're awarded under Code of Civil Procedure [section] 575.2." Its ruling was embodied in a subsequent written order, and this timely appeal followed.

DISCUSSION

As noted, Henderson challenges the sanctions order on two legal grounds. One, she contends that sanctions are not authorized under section 575.2 for violating a local rule regulating the conduct of trial. Second, she argues that a superior court's local rule cannot authorize sanctions on a ground broader than is permitted by section 128.5.

I.The Pre-Trial/Trial Issue

The Legislature has authorized superior courts to promulgate local rules and to impose sanctions for local rule violations. Specifically, section 575.1 broadly authorizes superior courts to enact local rules "designed to expedite and facilitate the business of the court." ( § 575.1, subd. (a).) The next sentence expressly disclaims any temporal limitation in its coverage: "The rules need not be limited to those actions on the civil active list but may provide for the supervision and judicial management of actions from the date they are filed ." (Ibid. , italics added.)

In turn, section 575.2 contains an enforcement mechanism. It states in relevant part: "Local rules promulgated pursuant to Section 575.1 may provide that if any counsel, a party represented by counsel, or a party if in pro se, fails to comply with any of the requirements thereof, the court on motion of a party or on its own motion may strike out all or any part of any pleading of that party, or, dismiss the action or proceeding or any part thereof, or enter a judgment by default against that party, or impose other penalties of a lesser nature as otherwise provided by law, and may order that party or his or her counsel to pay to the moving party the reasonable expenses in making the motion, including reasonable attorney fees ." ( § 575.2, subd. (a), italics.) At the same time, section 575.2 precludes an award of sanctions against an innocent client. Section 575.2, subdivision (b) states: "It is the intent of the Legislature that if a failure to comply with these rules is the responsibility of counsel and not of the party, any penalty shall be imposed on counsel and shall not adversely affect the party's cause of action or defense thereto." (See also Garcia v. McCutchen (1997) 16 Cal.4th 469, 475, 66 Cal.Rptr.2d 319, 940 P.2d 906 ["Courts have interpreted section 575.2 [, subdivision] (b) as ‘sharply limit[ing] penalties in instances of attorney negligence’ "].)

Notwithstanding the breadth of the statutory language, Henderson argues that sanctions imposed under section 575.2 must be limited to violations of local rules governing pre-trial proceedings such as case management conferences and pretrial conferences, not local rules regulating the conduct of trial. Her construction of section 575.2 rests on two points: the fact that the title of the code in which sections 575.1 and 575.2 are located (Title 7a of Part 2 of the Code of Civil Procedure) is labeled "Pretrial Conferences," and on the fact that, in a different statute ( section 575 ), the Legislature authorized the Judicial Council to "promulgate rules governing pretrial conferences" (see § 575 ).

We could reject this argument outright because Henderson has not engaged in any meaningful attempt at statutory interpretation. As recently summarized by our Supreme Court, " ‘If the language is clear, courts must generally follow its plain meaning unless a literal interpretation would result in absurd consequences the Legislature did not intend.’ " ( Busker v. Wabtec Corp. (2021) 11 Cal.5th 1147, 1157, 282 Cal.Rptr.3d 333, 492 P.3d 963.) As the Court of Appeal in State of California ex rel. Public Works Bd. (1986) 183 Cal.App.3d 1018, 228 Cal.Rptr. 576 ( Bragg ) observed, " ‘Although a court may properly rely on extrinsic aids, it should first turn to...