56 Cal.App.5th 771
Cal. Ct. App.2020Background
- Plaintiffs Cornerstone Realty Advisors, LLC (CRA) and Cornerstone Ventures, Inc. (CVI) concealed critical accounting records (general ledgers/Yardi backup files) sought by defendants beginning in 2014 and misrepresented what they produced.
- Defendants (including Summit) repeatedly moved to compel; a discovery referee ordered production; plaintiffs produced a large 1.8 million‑page dump and an unusable "July 29, 2016" ledger that omitted major expense categories.
- Now CFO (a third‑party accountant) later produced Yardi backup files showing original ledgers that had been accessible to plaintiffs since 2014; those files undercut plaintiffs' claims.
- The trial court imposed terminating sanctions (dismissal) and awarded monetary discovery sanctions totaling $588,671.66; defendants sought over $2 million and asked that plaintiffs’ former counsel Winget Spadafora & Schwartzberg (WSS) be held jointly and severally liable.
- On appeal the court largely affirmed the monetary award and the refusal to sanction WSS, but reversed insofar as the trial court denied recovery of attorney fees incurred by defendants before July 12, 2016 and remanded for consideration of those pre‑July 12 fees.
Issues
| Issue | Cornerstone's Argument | Summit's Argument | Held |
|---|---|---|---|
| Adequacy of monetary sanctions (amount awarded) | Trial court exercised discretion; award reasonable under causation and reasonableness principles | Award was too low; defendants entitled to recover ~ $2,034,592 incurred from discovery abuse | Affirmed in large part: court did not abuse discretion in setting amount, applying compulsion, causation, and reasonableness; award upheld except as to pre‑July 12 fees |
| Liability of plaintiffs' counsel (WSS) for sanctions | WSS did not advise concealment; acted in good faith and attempted to obtain and produce ledgers | WSS failed to procure ledgers and effectively advised withholding—should be jointly/severally liable | Affirmed: substantial evidence supports trial court finding WSS did not advise the misconduct; sanctions against counsel reversed/denied |
| Recoverability of fees incurred before July 12, 2016 | Pre‑July 12 fees were either already compensated or not recoverable | Defendants entitled to fees incurred before July 12, 2016 for efforts to obtain ledgers | Reversed in part: trial court erred by categorically denying pre‑July 12 fees; remand to determine reasonable fees causally linked to those discovery abuses |
| Recoverability of other specific categories (summary adjudication fees, trial prep, costs, review of 1.8M‑page production) | Many contested categories were not caused by discovery misuse or were unreasonable | All listed fees were caused by plaintiffs' misconduct and should be awarded | Mixed: court properly denied or reduced awards where causation or reasonableness lacked (summary adjudication, trial prep, many costs); trial court likely included some fees for reviewing the 1.8M‑page dump but had discretion to reduce amounts |
Key Cases Cited
- Cedars-Sinai Medical Center v. Superior Court, 18 Cal.4th 1 (Cal. 1998) (framework for discovery misuse sanctions)
- Department of Forestry & Fire Protection v. Howell, 18 Cal.App.5th 154 (Cal. Ct. App. 2017) (sanctions must identify which fees were incurred as a result of discovery abuse)
- Doppes v. Bentley Motors, Inc., 174 Cal.App.4th 967 (Cal. Ct. App. 2009) (abuse‑of‑discretion review of discovery sanctions; context for terminating sanctions)
- Parker v. Wolters Kluwer United States, Inc., 149 Cal.App.4th 285 (Cal. Ct. App. 2007) (trial court may reduce requested discovery sanctions as unreasonable)
- Ghanooni v. Super Shuttle, 20 Cal.App.4th 256 (Cal. Ct. App. 1993) (reasonableness limits on monetary discovery sanctions)
- Sherman v. Kinetic Concepts, Inc., 67 Cal.App.4th 1152 (Cal. Ct. App. 1998) (court may award fees sufficient to compensate for discovery abuses that forced retrial)