FACTS AND PROCEEDINGS BELOW
This case was originally filed in 2013 as a limited jurisdiction matter, and at various stages has been removed to federal court and remanded to the trial court in general jurisdiction. Because this appeal concerns only the question of an award of sanctions against Moofly and Riley, we describe only those facts and proceedings relevant to the issue at hand.
On November 10, 2016, the trial court granted a motion by defendants and respondents Sandra Favila, the Estate of Richard Corrales, and Motion Graphix, Inc. (collectively defendants) for terminating sanctions on Moofly's claims against defendants.
Moofly does not appeal from these terminating sanctions. Rather, Moofly challenges the monetary sanctions imposed for filing a motion dated November 23, 2016, in an unsuccessful attempt to obtain a reversal of the terminating sanctions. Moofly filed its motion pursuant to section 473, which under certain circumstances allows parties relief from defaults and dismissals entered against them as a consequence of their mistakes or neglect. Moofly argued that the discovery violations that led the court to issue terminating sanctions were the result of excusable neglect by its representatives, who filed late responses to defendants' discovery requests. Defendants filed an opposition to the motion on December 7, 2016, pointing out that Moofly had made the same arguments in its earlier opposition to terminating sanctions, and that Moofly's motion was in essence an incorrectly labeled motion for reconsideration pursuant to section 1008 of the trial court's grant of terminating sanctions. Defendants argued that the motion should be denied because Moofly had cited no new facts, circumstances, or law to justify such a
On December 20, 2016, the court denied the motion, issued an order to show cause regarding sanctions against Moofly, and set the hearing on the order to show cause for January 23, 2017. Moofly filed a response
On February 2, 2017, the court granted the motion for sanctions against both Moofly and Riley in the amount of $10.499.51, payable to defendants' counsel.
DISCUSSION
Moofly contends that the trial court's sanctions order must be reversed because the court violated statutory requirements for the imposition of sanctions. In particular, Moofly argues that the trial court failed to allow it a 21-day safe harbor period in which to withdraw the motion in order to escape sanctions, as required by section 128.7, subdivision (c)(2). Defendants contend that when imposing sanctions under section 1008, subdivision (d), a court need not comply with the requirements of section 128.7, including the 21-day safe harbor period. Because this is a question of statutory interpretation, our review is de novo. (See Optimal Markets, Inc. v. Salant (2013)
A California court may impose attorney fees as a sanction only when authorized by statute to do so. (See Interstate Specialty Marketing, Inc. v. ICRA Sapphire, Inc. (2013)
The plain language of the statute guides our interpretation: A court may impose sanctions under section 1008, subdivision (d), "as allowed by [s]ection 128.7." Sanctions are not "allowed by [s]ection 128.7" ( § 1008, subd. (d) ), unless all the requirements of section 128.7, including safe harbor, are followed. This interpretation is consistent with the one courts have applied in
Additional case law supports our conclusion that the requirements of section 128.7 apply to sanctions under section 1008, subdivision (d). Although we are not aware of any other case that has considered the procedural rules a court must apply in imposing sanctions under section 1008, subdivision (d), several cases have addressed the substantive standard of conduct for which sanctions may apply. In every case that we are aware of, the court has upheld sanctions under section 1008, subdivision (d) only for conduct that violates the standards of section 128.7. (See, e.g., Young v. Rosenthal (1989)
Defendants contend that because section 1008, subdivision (d), allows for violations to be "punished as a contempt and with sanctions as allowed by [s]ection 128.7" (italics added), and because there is no 21-day safe harbor provision in initiating contempt proceedings, the court need not observe the safe harbor requirement of section 128.7 either. We are not persuaded. Section 1008, subdivision (d) establishes two alternatives a trial court may choose: contempt, or sanctions pursuant to section 128.7. Each is subject to its own separate substantive and procedural requirements.
Having concluded that the requirements of section 128.7 apply to sanctions imposed under section 1008, subdivision (d), we must now consider whether the trial court correctly followed those requirements in this case. Section 128.7 provides two procedures for the award of sanctions. A party may request
In this case, the trial court did not notify Moofly that it would be subject to sanctions if it did not withdraw the motion for reconsideration. Instead, the court denied Moofly's motion for reconsideration at the same moment that it issued the order to show cause. Moofly's subsequent attempt to withdraw its motion was thus moot. In its order imposing sanctions, the court recognized this, stating that Moofly's "purported 'withdrawal' of the motion for relief is meaningless since [defendants] already opposed the motion and the court already ruled on the motion." Courts of Appeal have uniformly rejected efforts by parties to obtain sanctions when the court has already ruled on the offending motion on the ground that " '[a] party seeking sanctions must leave sufficient opportunity for the opposing party to choose whether to withdraw or cure the offense voluntarily before the court disposes of the challenged contention.' " ( Barnes v. Department of Corrections (1999)
Defendants also contend that Moofly's opposition to the trial court's order to show cause was void because the Franchise Tax Board had suspended Moofly's certification at the time Moofly filed its opposition. The suspension occurred on
Moreover, a corporation's suspension by the Franchise Tax Board does not render all the corporation's actions in litigation void. (See Center for Self-Improvement & Community Development v. Lennar Corp. (2009)
Because the trial court's order imposing sanctions on Moofly and its attorney did not comply with the statutory requirements, that order is reversed.
DISPOSITION
The order of the trial court is reversed. The parties shall bear their own costs on appeal.
We concur:
JOHNSON, J.
BENDIX, J.
Notes
Unless otherwise specified, subsequent statutory references are to the Code of Civil Procedure.
Because the trial court ordered Riley as well as Moofly to pay the sanctions, Riley herself is a party to this appeal. Except where necessary to distinguish between them, we refer to appellants collectively as Moofly.
Defendants' cross-claims against Moofly remain active.
Defendants later filed a separate motion to sanction Moofly for continuing to participate in the case and failing to notify either the trial court or defendants of its suspension. The trial court denied that motion.