Opinion
Respondent Hopkins & Carley (H&C) sеcured an arbitration award against appellant Timothy Gens on a debt for unpaid bills for legal services. Gens moved unsuccessfully to vacate the award, and judgment was duly entered against him. Six months later, he brought a motion to set aside the judgment under Code of Civil Procedure section 473, subdivision (b) (section 473(b)). Although the motion included perfunctory assertions that the judgment was the result of mistake, inadvertence, surprise, or excusable neglect, Gens made no attempt to substantiate them. The real gist of the motion was that he had now discovered a defense to the underlying claim, namely, that H&C had committed ethical violations in providing the legal services on which the arbitration award rested. The trial court denied the motion for relief from the judgment and granted H&C’s motion for sanctions. Because Gens offered no coherent explanation for his failure to raise the supposed defense sooner, we affirm both orders as to him. In a related appeal, Hopkins & Carley v. Gens (Nov. 21, 2011, H032780) (nonpub. opn.), we affirm the sanctions order as it affects his present attorneys.
Gens is a patent attorney licensed in Illinois, but not in California. In 2002 he engaged H&C on behalf of an entity, L-Tech, which he co-owned with one Gary Ferrell. Gens sought legal assistance in connection with the sale of L-Tech, or its assets, to SEZ Holdings (SEZ), an Austrian entity. This engagement apparently ended when the deal culminated with SEZ hiring Gens and Ferrell and absorbing L-Tech by merger.
In March 2004, Gens again engaged H&C, this time on his own behalf, to advise and represent him in a dispute with Ferrell, and perhaps with SEZ, arising from the arrangement. H&C’s engagement was embodied in a written agreement including an undertaking to submit any disputes to mandatory arbitration, subject to the client’s right to arbitrate the dispute “under the attorney fee arbitration procedure that exists under California law.” (See Bus. & Prof. Code, § 6200 et seq. [Mandatory Fee Arbitration Act] (MFAA).)
Although the precise nature of the dispute bеtween Gens and Ferrell is not apparent, Gens apparently claimed that Ferrell had made some sort of “secret deal,” apparently with SEZ, in breach of some duty to Gens. In any event, H&C brought an action against Ferrell on behalf of Gens in San Mateo Superior Court. Ferrell cross-complained alleging, among other things, that Gens had engaged in the unauthorized practice of law.
By May 2006, H&C’s outstanding bills in the Ferrell matter had risen to some $415,000, which Gens refused to pay, claiming that H&C had exceeded a supposed budget without his authorization. According to proofs of service in the present record, H&C sent Gens a letter on July 20, 2006, enclosing a notice of his rights under the MFAA, as required by Business and Professions Code section 6201, subdivision (a). On September 6, 2006, H&C formally demanded arbitration before the American Arbitration Association (AAA) as provided in the professional services agreement. Gens did not respond to this demand or to the many ensuing notices and communications directed to him by H&C and the case administrator over the next four months. In his absence, an arbitrator was appointed and a hearing on the merits was scheduled for January 16, 2007.
On January 13, 2007, Gens wrote to the AAA demanding that it “cease and desist any proceedings . . . immediately.” He denied that the matter had been “properly served and noticed,” stating, “If any such service and notice has been filed with the Association, it is false and will be proven so at the appropriate opportunity.” Apparently alluding to his rights under the MFAA, he wrote that a “Request for Arbitration of a Fee Dispute has been prepared and will be filed with the California State Bar at 9 am on Tuesday, January
The arbitrator went forward with the hearing on January 16. Gens did not attend. On January 23, 2007, the arbitrator entered an award in H&C’s favor in the amount of $474,061.56, plus $6,950 in fees and expenses.
Acting in propria persona, Gens filed a petition to vacate the arbitration award. H&C countered with a petition to confirm the award and enter judgment. In support of his petition, and opposition to H&C’s, Gens contended that he had not received proper notice, or perhaps any notice, of relevant matters, particularly the required notice of his rights under the MFAA. He implied that mail delivered to his Palo Alto residence might not have reached him, suggesting among other things that he had “sold” that home after moving to Wisconsin.
Meanwhile, on June 5, 2007, the trial court granted H&C’s petition to confirm the award, and entered a judgment for H&C. On June 19, the court denied the motion to vacate the award. Gens took two successive appeals “from the ‘Judgment’ entered June 5, 2007 and the Order entered June 19, 2007 denying Timothy Gens’ ‘Petition to Vacate.’ ” On July 17, 2007, we dismissed the first appeal, Hopkins & Carley v. Gens (H031731) (Gens II), for default in the payment of fees. Gens filed the second appeal, Hopkins & Carley v. Gens (Feb. 6, 2008, H031934) (app. dism.) (Gens III), on August 17. H&C moved to dismiss it, in part, on the ground that it was filed more than 60 days after H&C had mailed notice of entry of judgment to Gens. Gens opposed the motion, stating that the appeal was not taken from the
As a result of these maneuvers the appeal in Gens III was still pending on December 4, 2007, when Gens filed a motion in the trial court “for relief from judgment, pursuant to Code of Civil Procedure § 473” (the section 473 motion). Now represented by counsel—J. Michael Matthews of Chapman, Popik & White (CP&W)—Gens asserted in the notice of motion that “the judgment was entered against Mr. Gens through mistake, inadvertence, or excusable neglect.” The supporting memorandum suggested that Gens had only belatedly discovered certain defenses to H&C’s claim for fees, including that recovery was barred by H&C’s having represented conflicting interests, without the clients’ informed consent, by entering into the 2004 engagement. Gens also asserted thаt the judgment was “based on an impermissible ex parte default award,” and reprised his previous claim that H&C had failed to provide the notice required by the MFAA.
H&C filed opposition to the motion for relief from the judgment and moved separately for sanctions under Code of Civil Procedure section 128.7 (section 128.7). It asserted that the relief sought by Gens was procedurally barred by (1) the pending appeal; (2) the lapse of more than six months from the claimed “mistake, inadvertence, or excusable neglect” on which the motion rested; and (3) the lapse of too much time from the arbitration award, which Gens sought in effect to vacate. H&C further argued that Gens had failed to identify any substantive basis for relief. It asserted that Gens had made a “strategic decision” and “tactical choice” by absenting himself from the arbitration proceedings and in choosing his arguments against confirmation of the arbitration award, and that relief was not available in such circumstances. It also contested the facts on which Gens based his claim for relief.
After hearing argument, the trial court announced that it was denying the section 473 motion “for two reasons, [f] Number one, I do believe [the motion] is procedurally barred. [][] Assuming I’m incorrect with that conclusion, even if we reach the factual merits, I believe there is no basis for that.” It also granted the motion for sanctions, stating, “I do intend to impose sanctions against Mr. Gens in this matter, however not in the amount being requested, [f] Sanctions in the amount of 9,000 dollars will be ordered.” The court thereafter signed formal orders denying the motion for relief and granting the motion for sanctions as to both Gens and his attorneys.
Discussion
I. Denial of Relief from Judgment
A. Introduction
H&C asserts that the relief sought by Gens was barred on several procedural grounds, including that the pendency of Gens III in this court deprived the trial cоurt of jurisdiction to grant relief from the judgment. It is certainly true that an appeal from a judgment ordinarily deprives the trial court of jurisdiction. (Pazderka v. Caballeros Dimas Alang, Inc. (1998)
For a number of reasons and in a number of respects, Gens has failed to carry this burden. Most fundamentally, he has failed to identify a colorable basis for relief under the statute. He seems to suggest that the entry of the challenged judgment is attributable to mistakes of fact and law, as well as to “fraud” by H&C. But he never clearly identifies any concrete actuating mistake or misrepresentation. It was his burden to demonstrate “that due to some mistake, either of fact or of law, of himself or of his counsel, or through some inadvertence, surprise or neglect which may properly be considered excusable, the judgment or order from which he seeks relief should be reversed.” (Kendall v. Barker (1988)
In his original declaration supporting the section 473 motion, Gens averred that in 2004, when he engaged H&C for the second time, he “did not know or realize that Hopkins & Carley owed duties to SEZ on account of its handling the L-Tech/SEZ merger.”
These averments establish, if somewhat less falsifiably than might be desired, that Gens was ignorant of certain vaguely described matters.
Nor do any of the circumstances revealed by the record suggest any excuse for the belated discovery. Certainly it does not appear that Gens lacked knowledge of any relevant facts. The conflict-of-interest defense apparently rested on the propositions that (1) H&C’s actions in the merger transaction
None of these propositions appears to rest on any facts that Gens did not know long before entry of judgment. Certainly he has identified no such facts. On the contrary it appears that he knew as much about relevant matters as anyone. In his supporting declaration below he asserted the existence of an ethical obligation (proposition 1, ante) based entirely on H&C’s “handling [of] the L-Tech/SEZ merger.” In his brief here he asserts that H&C had ethical duties to “SEZ as the successor to L-Tech.” So far as this record shows, Gens knew all about the merger, and SEZ’s succession to L-Tech’s rights and privileges, when those things occurred. He declared in 2004 that it was he who, on behalf of L-Tech, engaged H&C in 2002. He went on to state that he “was the only L-Tech representative to communicate with H&C attorneys” in connection with the transaction. The inference thus seems inescapable that long before judgment was entered in this matter, Gens knew all the facts from which the alleged conflict of interest arose.
The only other obvious factual component of the defense was H&C’s supposed failure to secure the informed consent of the affected clients, or at least of Gens. But again, Gens must have known what H&C told or did not tell him and what consent he did or did not give. The record contains no suggestion to the contrary. In his declaration he averred that he was not advised of any conflict and did not consent to it. But so far as anything here suggests, he could have so attested at any time.
The claim of mistake must therefore necessarily rest on the asserted failure by Gens to “realize” that the facts he already knew supported a claim that H&C had committed an ethical violation barring it from recovering for its services. This of course would be ignorance of law, not of fact. An “honest mistake of law” can provide “a valid ground for relief,” at least “where a problem is complex and debatable,” but relief may be properly denied where
As reflected in this record, the chief actuating causes of the failure to present the conflict-of-interest defense sooner were (1) the decision by Gens to act as his own attorney, and (2) his failure, in that capacity, to adequately review the applicable law and analyze its application to facts already in his possession. Gens himself repeatedly alludes to his erstwhile “in pro. per.” status, and asserts that the defense was discovered by Attorney Matthews upon being retained. But the law casts upon every civil defendant a duty “ ‘to take timely and adequate steps to retain counsel or to act in his own person to avoid an undesirable judgment.’ ” (Hearn v. Howard, supra, 177 Cal.App.4th 1193, 1206, quoting Elms v. Elms (1946)
Given that Gens is a lawyer, albeit one licensed only in another jurisdiction, his failure to discover the conflict-of-interest defense when acting as his own lawyer is a recognized species of inexcusable neglect. “ ‘Conduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not . . . excusable.’ ” (Zamora v. Clayborn Contracting Group, Inc. (2002)
A review of relevant, readily available secohdary authorities would have promptly yielded the knowledge that an attorney’s ethical violations may fiimish a defense to a claim by him for compensation. (See 1 Witkin, Cal. Procedure (5th ed. 2008) Attorneys, § 211, p. 281, citing Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997)
Nothing in this record suggests that the denial of relief so offended the policies underlying section 473(b) as to constitute even arguable error. As we and many other courts have noted, reviewing courts tend to favor orders granting relief under section 473(b) in order to effectuate a policy favoring trial on the merits over dispositions by default. (See Shapiro v. Clark, supra,
All of these countervailing policies are implicated here, where Gens had every opportunity to raise his newly discovered defense at an earlier time but simply neglected to do so. For that same reason, the judgment he sought to set aside was in no proper sense obtained by “default,” and thus does not invoke the core policy favoring relief. The underlying arbitration award might be viewed as the product of a “default” in the brоad sense that Gens
C. Fraud
Gens also asserts that he was entitled to relief from the judgment on grounds of fraud. He made no similar assertion below and offers no exception to the general bar against raising points in derogation of a judgment for the first time on appeal. In any event the claim of “fraud” as a ground for relief from the judgment is meritless on its face. To warrant such relief, the fraud must have brought about the entry of the judgment, e.g., by lulling the movant into sacrificing his opportunity to present a defense. (See Daher v. American Pipe & Constr. Co., supra,
D. Diligence
As previously noted, Gens bore a twofold burden in the trial court: to establish not only an excuse for not seasonably asserting his conflict-of-interest defense but also reasonable diligence in seeking relief. (Huh v. Wang, supra,
In Huh v. Wang, supra,
The order denying relief from the judgment must be affirmed.
II. Sanctions
A. Background
After Attorney Matthews filed the motion for relief from the judgment on behalf of Gens, Attorney Essner sent Matthews a letter wаrning that if the motion were not withdrawn, H&C would move for sanctions under section 128.7. When Matthews declined to withdraw the motion for relief, H&C filed the motion for sanctions. The court ultimately entered a formal order assessing $9,000 in sanctions against Gens and his attorneys.
B. Sufficiency of Specification of Offending Conduct
Gens contends the trial court erred by failing to “describe the conduct determined to constitute a violation of this section and explain the basis for the sanction imposed.” (§ 128.7, subd. (e).) He correctly observes that the
Gens further assails the order as “simply recit[ing] boilerplate from the statute, not specific wrongful acts.” But while the order indeed uses language from the statute, it also describes a specific wrongful act: the filing of a motion without legal support and for an improper purpose. Once again Gens fails to marshal any authority or even offer a syllogistic argument in support of the implication that the order was deficient. Nor does he suggest what more the court might have said unless it was to elaborate on the description of the offending conduct by adding circumstantial details that are matters of record. The court could have specified the improper purpose by which it found the motion to have been actuated, but that seems obvious: To impede, delay, obstruct, and harass H&C in the pursuit of its claim against Gens.
Gens further faults the order for failing to “explain why the amount had been selected.” He writes, “[T]he record is devoid of any explanation of how the trial court arrived at $9,000 as an appropriate amount to award.” This assertion again turns a blind eye to the order itself, which states, “[T]he sanction imposed hereby is sufficient to deter repetition of the violation of Code of Civil Procedure § 128.7 identified herein, or comparable conduct by others similarly situated in that the amount of 9000 imposed as a sanction is based upon the time expended by Hopkins & Carley in defending the motion and bringing the motion for sanctions. Said time, hourly rates, and total amount of sanctions are reasonable and were incurred as a direct result of the violation of Code of Civil Procedure § 128.7.” (Italics added, underlined material handwritten in original.) This indicates that the sum was selected in part for its deterrent value and in part as a reflectiоn of the cost reasonably incurred in defending against the meritless motion and bringing the motion for sanctions. Again, Gens has failed to provide any basis for holding this language insufficient.
Gens cites Lucas v. Santa Maria Public Airport Dist. (1995)
C. Punishment for Attorney’s Conduct
Gens also suggests, with characteristic vagueness, that the sanction order offended the statutory prohibition against sanctioning a client “for a violation of paragraph (2) of subdivision (b),” i.e., for an assertion of “claims, defenses, [or] other legal contentions” that are not “warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.” (§ 128.7, subds. (d)(1), (b)(2).) This exemption appears to rest on the premise that a client should not be penalized for the assertion of an argument whose legal merits he cannot be expected to judge. That premise of course may not apply when the client is himself an attorney—though we hasten to add that attorneys are entitled, along with other citizens, to delegate legal judgments about their affairs to counsel engaged for that purpose. In any event, we think it obvious that the order here did not rest primarily on the lack of legal merit but on the absence of factual support for the section 473 motion and, most importantly, the manifestly improper purpose for which it was brought. Accordingly the award against Gens did not offend the cited prohibition.
D. Abuse of Discretion
Gens asserts that sanctions were not warranted under section 128.7 because his motion for relief from the judgment was neither frivolous nor
Here the order was not made solely, or even primarily, on the ground of legal frivolousness. It also rested on the ground, which we find far more compelling on this record, that the motion for relief from the judgment was filed for a dilatory or obstructive purpose. The court’s finding of such a purpose is amply supported by the record, a close study of which discloses an indifference to factual accuracy that is not only objectionable in its own right but also strongly indicative of a goal other than victory. Nothing short of a book could describe all the ways in which Gens and his attorneys have sought to distract and mislead the courts in this matter, but an illustrative example may be found in the recurring assertion that he remained ignorant of the arbitration proceeding against him until January 12, 2007, which was four days before the hearing on the merits. At that time he wrote to the arbitration administrator asserting, with characteristically gravid vagueness, that “[t]he above case has never been properly served and noticed.” On January 25, 2007, he offered a similarly vague denial of notice in connection with H&C’s application for an attachment, telling the court that he had “found out about” this case two days before the hearing when he happened to visit the court’s Web site in connection with another, unspecified matter. The trial court reviewed a sizable batch of declarations showing that, as we wrote in Gens I, “over the three weeks commencing on December 10, 2006, servers made at
Undeterred by this finding, Gens filed a declaration less than four months later in which he stated, “The first time that I was given notice of the AAA case was on the late Friday afternoon of January 12, 2007, the last business day before the AAA hearing. I was called by a staff person at the AAA ... to confirm the site of the AAA Arbitration hearing.”
By the time Gens moved for relief from the judgment, some seven months later, his claims about lack of notice had degenerated into abject chaos. The supporting memorandum frankly conceded what the trial court had already found: that no later than January 2, 2007, he had been served with notice of the arbitration proceeding—or, as the author of the memorandum wrote, was “finally served . . . with all of the documents related to the [arbitration] process.” Yet in the accompanying declaration, Gens again asserted a “recollection” that he “first learned of the scheduled arbitration hearing on January 12, 2007, when a staff person from the AAA called me.” No attеmpt was made to reconcile this “recollection” with the seeming concession in the memorandum that he was served on January 2.
In addition to the chimerical nature of the factual premises on which the section 473 motion stood, the proffered legal grounds for the motion were
The present record, in short, reveals a long series of legal maneuvers that the trial court could properly find, and manifestly did find, were intended not to defeat H&C but to obstruct, delay, and impede its inevitable victory. In this the matter resembles the venerable case of Keown v. Trudo (1925)
The court below quite properly found that the purpose of the motion was not to assert any arguably legitimate legal right but to frustrate and impede what Gens and his attorneys knew was an inevitable defeat. Indeed it appears to this court that if this case involves any “chill” bearing on the propriety of a sanctions award, it resides not in any tendency to inhibit zealous advocacy but in the enormous snow job that Gens and his attorneys have heaped upon their opponent, the trial court, and this court.
No error appears.
The judgment is affirmed.
Premo, J., and Elia, J., concurred.
Appellant’s petition for review by the Supreme Court wаs denied March 14, 2012, S199114.
Notes
The record contains no indication that such a request was ever submitted.
Gens declared unqualifiedly that he had “sold” his Palo Alto house in November of 2006. In fact, according to a petition later filed by H&C to set the transaction aside, he had conveyed the house to his wife by an “Interspousal Grant Deed,” an attached copy of which contained the recital, “THERE IS NO CONSIDERATION FOR THIS TRANSFER.”
An order denying relief under section 473(b) is appealable (Huh v. Wang (2007)
A sizable body of precedent holds that an appeal from a nonappealable order will not divest the trial court of jurisdiction. (See Pazderka v. Caballeros Dimas Alang, Inc., supra, 62 Cal.App.4th at pp. 666-667 [because judgment entered under Code Civ. Proc., § 998 was not appealable, purported appeal therefrom did not divest trial court of power to rule on motion for relief from judgment]; Davis v. Taliaferro (1963)
This would be an uncharacteristically straightforward assertion of fact if not for the injection of the phrase “or realize,” which renders it perplexing.
To constitute affirmative evidence, an averment in an affidavit must be falsifiable. Our observation in Gens I about certain statements there by Gens applies to nearly everything he has submitted in this matter: “Even if Gens had made these statements under oath, they were too vague and equivocal to constitute reliable evidence. (See Hoffman v. City of Palm Springs (1959)
H&C asserted below that the claim of an undisclosed conflict of interest was false in fact, and offered to rebut it by providing documents, which it said were privileged, for the court’s in camera inspection. In reply Gens expressly waived any claim of privilege. Counsel offered the documents for inspection at the heаring, but the court did not pursue the suggestion. Conceivably the documents contained confidential communications with persons other than Gens, in which case we doubt that H&C was free to disclose them to the court, in or out of chambers. In any event the court could not properly act on the basis of materials that were not made part of the record.
Although Matthews was formally substituted into this action on December 4, 2007, the record includes a letter of April 16, 2007, in which Gens “authorized” H&C “to release all files to Mike Matthews and the Chapman, Popik and White firm.” In the absence of any showing to the contrary we would expect that shortly after this date, Matthews joined Gens in having possession of the basic facts on which any conflict-of-interest defense would necessarily be based. This of course was nearly eight months before Gens, through Matthews, moved for relief from the judgment.
Indeed, we noted that “good service may have been achieved earlier, on December 11, 2006.” (Gens I, supra, H031383.) The materials served included not only the application for an attachment but numerous additional documents concerning the arbitration proceeding.
Even this seemingly simple assertion is rendered ambiguous by the construction “was given notice.” Someone trying to convey factual information might be expected to explain what he meant by “notice” (not to mention the “giv[ing]” of notice), or better yet, to forego legal jargon in favor of simple factual terms like “knowledge.”
On appeal, amazingly, Gens reverts to the original claim, asserting that he “first learned that there was a scheduled arbitration hearing date just a few days before the hearing, on January 12, 2007, when a staff person from the AAA called him.” The tangled history of this claim perhaps serves best to illustrate the sagacity of the familiar lines, “O, what a tangled web we weave, When first we practise to deceive!” (Scott, Marmion, a Tale of Flodden Field (1843) canto VI, stanza 17, p. 280.)