Internat. Marketing Enterprises v. Biofilm CA4/1 (2014) · DecisionDepot
Internat. Marketing Enterprises v. Biofilm CA4/1
California Court of Appeal Mar 5, 2014 No. D064139Unpublished
Filed 3/5/14 Internat. Marketing Enterprises v. Biofilm CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
INTERNATIONAL MARKETING D064139 ENTERPRISES, LLC,
Plaintiff and Appellant, (Super. Ct. No. 37-2012-00100243- v. CU-MC-CTL)
BIOFILM, INC.,
Defendant and Respondent,
LEON E. CAMPBELL,
Objector and Appellant.
APPEAL from an order of the Superior Court of San Diego County, Joel M.
Pressman, Judge. Reversed.
Leon E. Campbell for Plaintiff and Appellant and Objector and Appellant.
Solomon Ward Seidenwurm & Smith and Edward J. McIntyre for Defendant and
Respondent.
This case underscores the requirement that a party seeking sanctions under Code
of Civil Procedure1 section 128.7 strictly comply with that statute. International
Marketing Enterprises, LLC (IME) and especially its attorney Leon E. Campbell
(Campbell and IME together Appellants) engaged in repeated untoward conduct.
Campbell in particular ignored court orders and filed multiple meritless suits on behalf of
a variety of entities related to IME. It appears that none of these suits has been pursued
for a valid purpose, but instead, Campbell's litigation strategy appears to be little more
than a harassment campaign aimed at Biofilm, Inc.
Based on Appellants' actions, it is no surprise that Biofilm brought a motion for
sanctions under section 128.7, and the superior court entered an order directing payment
of monetary sanctions to Biofilm. Appellants appeal that order, contending, among other
arguments, that Biofilm failed to provide the required "safe harbor" period under section
128.7, subdivision (c)(1) before filing its motion. We agree. Biofilm's original notice of
motion failed to include a hearing date and the amended notice of motion was served and
filed on the same day; thus, the "safe harbor" requirement was not satisfied.
Accordingly, we reverse.
FACTUAL AND PROCEDURAL BACKGROUND
The genesis of the dispute between IME and Biofilm is a $360,000 loan Biofilm
made to Fay Avenue Properties, LLC (Fay Avenue), IME's sister company. The loan
was secured by a deed of trust recorded against certain commercial real property located
1 Statutory references are to the Code of Civil Procedure unless otherwise specified. 2
at 7630 Fay Avenue, La Jolla, California 92037 (the Property). Fay Avenue defaulted on
the loan, and Biofilm began foreclosure proceedings.
Prior to the trustee's foreclosure sale, Fay Avenue filed for bankruptcy protection,
delaying the sale. After resolving the issues with the bankruptcy court, Biofilm
proceeded with the foreclosure with a new trustee's sale date. On the eve of the new sale
date, Fay Avenue deeded the Property to Diane York, Fay Avenue's owner. York then
filed for personal bankruptcy protection. Biofilm eventually was able to sort out the
procedural morass and conducted the trustee's sale and was the successful bidder at the
sale.
York would not vacate the Property; therefore, Biofilm filed an unlawful detainer
action against several of York's companies, which allegedly operated at the Property.2
The unlawful detainer proceeded to trial, and the court awarded Biofilm possession of the
Property. In the course of the unlawful detainer action, York apparently produced a lease
for the Property in favor of IME. The court found that the lease was a "sham" and was
"created to try and subvert the foreclosure sale, the unlawful detainer action, or both."
Prior to Biofilm's filing of the unlawful detainer action, two of York's companies
filed complaints against Biofilm. On February 7, 2012, York filed La Jolla Spa MD, Inc.
v. Biofilm, Inc. (Super. Ct. San Diego County, No. 37-2012-00091882-CU-OR-CTL) (the
La Jolla Spa Action). On July 9, 2012, York filed the instant matter. Although neither of
these complaints is in the record, it appears, based on court orders and related pleadings,
2 York owns and controls Fay Avenue, La Jolla Spa MD, Inc., DYG Spa, Inc., and IME. 3
that the respective complaints challenged Biofilm's loan to Fay Avenue and the
foreclosure.
While the unlawful detainer action was pending, on July 25, 2012, York filed a
third complaint against Biofilm entitled Fay Avenue Properties, LLC v. Biofilm, LLC
(Super Ct. San Diego County, No. 37-2012-00101256-CU-MC-CTL) (Fay Avenue I
Action). On August 8, Campbell made his first ex parte application in that action to
prevent the unlawful detainer action from proceeding to trial. The court denied the
application, finding that no ex parte notice was given. In addition, the court noted that
Fay Avenue was in bankruptcy so it lacked standing to serve as plaintiff in the Fay
Avenue Action I. Campbell renewed his ex parte application two days later, but the court
again denied the application for the same reasons it denied the first ex parte application.
Despite two orders denying the requested relief, Campbell filed a "virtually
identical complaint" on August 13, 2012, entitled Fay Avenue Properties, LLC v. Biofilm,
LLC (Super Ct. San Diego County, No. 37-2012-00102277-CU-MC-CTL) (Fay Avenue
II Action). The Fay Avenue II Action was assigned to a different judge than the Fay
Avenue I Action. Campbell then dismissed the Fay Avenue I Action.
The day after the trial of the unlawful detainer action, Campbell appeared ex parte
in the Fay Avenue II Action, requesting the same relief the court denied in the Fay
Avenue I Action. Campbell, however, did not inform the court about the orders denying
his requested relief in the Fay Avenue I Action. Nevertheless, like the court in the
previous action, the court denied the requested relief.
4
Biofilm filed motions for judgment on the pleadings in the La Jolla Spa Action,
the Fay Avenue II Action, and the instant action. Ultimately, the courts granted all the
motions based on the same fatal defect in the respective complaints: the plaintiff lacked
standing.
While the motion for judgment on the pleadings was pending in the instant matter,
Biofilm's counsel sent Campbell a letter dated October 15, 2012 requesting that IME
withdraw its opposition to the motion, dismiss the instant matter, and expunge the related
lis pendens. The letter warned Campbell that if IME did not take corrective action
"within the time that . . . section 128.7 prescribes," a motion for sanctions would be filed.
The letter enclosed a copy of the notice of motion, motion, and a memorandum in support
of the motion for sanctions. The notice accompanying the letter (Oct. 2012 notice),
however, did not indicate the date or time of the hearing on the motion for sanctions.
Campbell did not take any corrective action, and Biofilm served and filed an
amended notice of motion and motion for sanctions under section 128.7 on April 4, 2013.
This amended notice included a hearing date of April 26, 2013 at 10:30 a.m. The motion
and supporting memorandum clearly set forth the sanctionable conduct, the legal
authority permitting the requested sanctions, and evidence supporting the request for
sanctions.3
IME filed a two-page opposition to the motion for sanctions in which IME argued
that it had not received the 21-day "safe harbor" required under section 128.7,
3 Except for the missing date and time of the hearing on the motion, the pleadings served on October 15, 2012 appear to be the same as those served on April 4, 2013. 5
subdivision (c)(1). Except for the reference to section 128.7, the opposition did not
include any citation to relevant case law. Also, IME did not include any evidence in
support of its opposition. Further the opposition did not challenge the merits of the
motion for sanctions.
At the hearing on the motion for sanctions, the court issued a tentative ruling
awarding sanctions to Biofilm against IME, Fay Avenue, La Jolla Spa, and Campbell
(jointly and severally) in the amount of $143,435.13. During oral argument, Campbell
admitted that IME had only opposed the motion on procedural grounds. To this end,
Campbell handed the court what he referred to as a supplemental memorandum and a
copy of the opinion in Galleria Plus, Inc. v. Hanmi Bank (2009) 179 Cal.App.4th 535
(Galleria). The court noted that the supplemental memorandum merely cited two cases
without "argument," "comment," or "research."
Noting that the court did not appear inclined to deny the motion because IME had
not received the required 21-day safe harbor, Campbell asked the court for a six-week
continuance to "respond adequately to the merits." The court denied the request for a
continuance and the tentative ruling became the court's order.
Appellants timely appealed.
DISCUSSION
Section 128.7 requires attorneys (or parties if they are unrepresented) to certify,
through their signature on documents filed with the court, that every pleading, motion or
other similar paper presented to the court has merit and is not being presented for an
improper purpose. (Musaelian v. Adams (2009) 45 Cal.4th 512, 516; see § 128.7, subd.
6
(b)(1)-(4).) If, after notice and a reasonable opportunity to respond, the court determines
the certification was improper under the circumstances, it may impose an appropriate
sanction. (§ 128.7, subd. (c).)
Before a party may file a motion seeking sanctions under section 128.7, that party
must first serve a copy of the motion on the offending party and allow 21 days to
withdraw the offending pleading. This 21-day "safe-harbor" period " ' "permits a party to
withdraw a questionable pleading without penalty, thus saving the court and the parties
time and money litigating the pleading as well as the sanctions request." [Citations.]' "
(Day v. Collingwood (2006) 144 Cal.App.4th 1116, 1127.) "If the pleading is withdrawn,
the motion for sanctions may not be filed with the court"; but if "the pleading is not
withdrawn, the motion for sanctions may then be filed." (Levy v. Blum (2001) 92
Cal.App.4th 625, 637; see also § 128.7, subd. (c)(1).)4
At issue here is whether Appellants received the required 21-day "safe harbor" to
take corrective action. (See § 128.7, subd. (c)(1).) Appellants contend they did not
because the October 2012 notice did not include the date and time of the hearing. Thus,
they argue that notice was defective. (See Galleria, supra, 179 Cal.App.4th at p. 538.)
4 Section 128.7, subdivision (c)(1) provides: "A motion for sanctions under this section shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subdivision (b). Notice of motion shall be served as provided in Section 1010, but shall not be filed with or presented to the court unless, within 21 days after service of the motion, or any other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected. If warranted the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion. . . ." 7
Biofilm asserts Appellants forfeited this argument by failing to raise it in
opposition to Biofilm's motion for sanctions. We disagree.
As a general rule, an appellate court will not review an issue a party did not raise
by some proper method in the trial court. (See City of San Diego v. D.R. Horton San
Diego Holding Co., Inc. (2005) 126 Cal.App.4th 668, 685 [contentions or theories raised
for the first time on appeal are not entitled to consideration]; Amato v. Mercury Casualty
Co. (1993) 18 Cal.App.4th 1784, 1794 ["It must appear from the record that the issue
argued on appeal was raised in the trial court. If not, the issue is waived."].) Here,
Appellants opposed the motion for sanctions on the sole ground that they did not receive
the required 21-day safe harbor. Indeed, the opposition stated: "In this case no safe
harbor was included in the Notice of Motion."
Although Appellants did not cite Galleria, supra, 179 Cal.App.4th 535 in their
opposition, they clearly argue they did not receive the required safe harbor based on the
notice of motion. Only three reasonable inferences could be drawn from this argument.
One, the October 2012 notice was defective. Two, the amended notice of motion served
on April 4, 2013 was flawed. Three, both failed to comply with section 128.7,
subdivision (c)(1).
Biofilm replied to Appellants' contention by arguing it provided sufficient notice
with multiple letters and the October 2012 notice. Therefore, it is apparent that Biofilm
understood that Appellants were challenging the October 2012 notice. We agree with
Biofilm that Appellants could have been more explicit in their opposition by specifically
arguing that the October 2012 notice of motion was defective because it lacked a date,
8
but do not believe this omission was sufficient to cause Appellants to forfeit this issue on
appeal. Biofilm was aware that Appellants were challenging the sufficiency of the
October 2012 notice. In addition, Biofilm knew or should have known that if Appellants
were challenging the October 2012 notice then the amended notice could also prove to be
defective because it was filed the same day it was served in violation of section 128.7,
subdivision (c)(1).
In any event, even if we were to determine that Appellants forfeited their
challenge by failing to raise it below, we would still address Appellants' argument
because it a pure question of law with no factual disputes. (Menefee v. County of Fresno
(1985) 163 Cal.App.3d 1175, 1182.)
Having resolved to reach the merits of the instant matter, we next turn to whether
Appellants received the required safe harbor. To address this question, we must
determine whether the October 2012 notice satisfies the requirements of section 128.7.
Under Galleria, supra, 179 Cal.App.4th 535, the answer is a clear no.
In Galleria, the respondent served the appellant with a purported notice of motion
for sanctions on April 25, 2008. "The face page and body of the document stated that the
motion would come on for hearing 'on AAA at BBB.' " (Galleria, supra, 179
Cal.App.4th at p. 537.) The document also noted that the motion for sanctions could not
be filed until 21 days after it was served, which would be "on or after May 23, 2008."
(Ibid.) On June 13, 2008, the respondent served the appellant with a motion for sanctions
and filed it with the court the same day. The notice for that motion provided a hearing
date of August 6, 2008. (Ibid.)
9
The Court of Appeal reversed the superior court's order granting the motion and
awarding sanctions. The court interpreted section 128.7 as requiring the notice of motion
to be served in compliance with section 1010, but not to be " 'filed with . . . the court,
unless, within 21 days after service of the motion, or any other period as the court may
prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not
withdrawn or appropriately corrected. . . .' " (Galleria, supra, 179 Cal.App.4th at p. 537,
quoting § 128.7, subd. (c)(1).) The court also noted that section 1010 provides that a
notice must " 'state when . . . it will be made.' "5 (Galleria, supra, at p. 538, quoting
§ 1010.) The court stated that "[s]trict compliance with the statute's notice provisions
serves its remedial purpose and underscores the seriousness of a motion for sanctions."
(Galleria, supra, at p. 538.) Based on its interpretation of sections 128.7 and 1010, the
court determined that the respondent's original notice failed to specify when the motion
would be made, and therefore, that document did not provide notice of the 21-day period
or serve the remedial purpose of section 128.7's notice provisions. (Galleria, supra, at
p. 538.)
5 Section 1010 provides: "Notices must be in writing, and the notice of a motion, other than for a new trial, must state when, and the grounds upon which it will be made, and the papers, if any, upon which it is to be based. If any such paper has not previously been served upon the party to be notified and was not filed by him, a copy of such paper must accompany the notice. Notices and other papers may be served upon the party or attorney in the manner prescribed in this chapter, when not otherwise provided by this code. No bill of exceptions, notice of appeal, or other notice or paper, other than amendments to the pleadings, or an amended pleading, need be served upon any party whose default has been duly entered or who has not appeared in the action or proceeding." 10
Galleria, supra, 179 Cal.App.4th 535 is directly on point here. The exact issue
pending before that court is the primary issue before us: does a notice of motion that
does not include a date or time for the hearing on the motion satisfy the requirements of
section 128.7 and begin the 21-day safe harbor period. Biofilm does not attempt to
distinguish Galleria, supra, 179 Cal.App.4th 535, but instead, argues it was wrongly
decided. Specifically, Biofilm maintains the court incorrectly incorporated section 1010
into section 128.7. Biofilm insists section 128.7 only requires a party to serve the
opposing party "as provided in section 1010" and nothing else. Section 1010 contains an
express service provision: "Notices and other papers may be served upon the party or
attorney in the manner described in this chapter, when not otherwise provided by this
code." Biofilm argues section 128.7's reference to section 1010 merely compels a party
to serve a motion for sanctions on another party or its attorney by any method provided
by chapter 5 of the Code of Civil Procedure. Because Biofilm personally served
Appellants with the October 2012 notice, it argues that it complied with the notice
requirements of section 128.7 and the safe harbor time period was triggered. (See
§§ 128.7, subd. (c)(1), 1010, 1011.) Biofilm's argument, however, neglects to consider
the basis of section 128.7 and how various courts have interpreted the need for a formal
noticed motion to satisfy the statute's safe harbor requirement.
Section 128.7 was modeled on the 1993 revision of Rule 11 of the Federal Rules
of Civil Procedure. (See Cromwell v. Cummings (1998) 65 Cal.App.4th Supp. 10, 14
(Cromwell).) "To stress the seriousness of a motion for sanctions and to define precisely
the conduct claimed to violate the rule, the revision provides that the 'safe harbor' period
11
begins to run only upon service of the motion." (Fed. Rules Civ.Proc., rule 11,
28 U.S.C.A. (2008) Advisory Com. Notes, 1993 amendments, p. 14.) As the court in
Cromwell noted, "[b]y specifically requiring service of the 'motion' and 'notice of
motion,' the Legislature made clear that the papers to be served on the opposing party are
the same papers which are to be filed with the court no less than [21] days later."6
(Cromwell, supra, 65 Cal.App.4th Supp. at p. 15.) That court determined that letters
threatening sanctions did not trigger the safe harbor provision of section 128.7. In doing
so, the court noted that one of the problems with the letter was that it did not specify
when the motion for sanctions would be made: "Correspondence to opposing counsel
which threatens sanctions of an unknown nature at an unspecified time against
unidentified persons, and which lacks citation to controlling authority, does not fulfill
these statutory purposes." (Cromwell, supra, at p. 15.)
In Barnes v. Department of Corrections (1999) 74 Cal.App.4th 126 (Barnes), the
respondent served and filed a motion for sanctions after the conclusion of the case. In
response to the argument that the defendant failed to comply with the safe harbor
provision of section 128.7, subdivision (c)(1), the defendant argued that it earlier gave the
plaintiff "informal notice" that it would seek sanctions if the plaintiff did not dismiss the
6 The motion must include at least the notice of hearing of the motion, the motion itself, and a memorandum of points and authorities in support. (Cal. Rules of Court, rule 3.1112(a).) The first page of each paper filed must reflect the date, time, and location of the hearing, and the nature or title of any attached documents. (Cal. Rules of Court, rule 3.1110(b)(1), (2).) Thus, if the same papers are to be filed with the court that are served on the opposing party (see Cromwell, supra, 65 Cal.App.4th Supp. at p. 15) then it logically follows that the notice of the motion served on the opposing counsel or party would include the date and time of the hearing on the motion. 12
complaint. (Barnes, supra, at p. 135.) In determining that the defendant's informal
notice did not satisfy the requirements of section 128.7, the court noted, "it is apparent
that section 128.7 requires a formal noticed motion in order to comply with the statute."
(Barnes, supra, at p. 135.) "Therefore, informal notice of an intent to seek sanctions in
the future cannot serve as substitute to the requirements set forth in section 128.7 for a
formal noticed motion." (Barnes, supra, at p. 136.)
Although the court in Barnes, supra, 74 Cal.App.4th 126 was not focused on the
defendant's failure to provide the time and date of the hearing, it is telling that the court
repeatedly stated the need for a "formal noticed motion." (Id. at pp. 134-136.) A formal
noticed motion requires the date and time of the hearing. (See Cal. Rules of Court, rule
3.1110(b)(1), (2); § 1010; Bohn v. Bohn (1913) 164 Cal. 532, 536-537.) In Bohn, the
defendant filed a motion for change of venue, without specifying a time for the hearing of
the motion. The court concluded a change of venue must be sought by noticed motion,
and such notice was required by section 1010 to state when the motion would be heard.
The court stated: " 'In the present matter, if the formal motion which appellant served on
the attorneys for plaintiff be treated as a notice of motion, it was radically defective as
such in the very essential particular that it did not state any time when the motion would
be made or brought on for hearing, and for that reason the motion for a change of the
place of trial was properly denied.' " (Bohn, supra, at pp. 536-537.) Thus, it has been
long established that a formal noticed motion requires the date and time of the hearing on
the motion to be included in the notice. It is undisputed that Biofilm's October 2012
notice did not contain the date and time for the hearing on the motion for sanctions. As
13
such, it was fatally defective and could not have been a formal noticed motion. (Ibid.) It
thus did not satisfy the safe harbor requirements of section 128.7, subdivision (c)(1).
(See Galleria, supra, 179 Cal.App.4th at p. 538; Cromwell, supra, 65 Cal.App.4th Supp.
at p. 15; Barnes, supra, 74 Cal.App.4th at p. 135.)
at p. 136; Cromwell, supra, 65 Cal.App.4th Supp. at p. 15.)
We follow the holding of Galleria, supra, 179 Cal.App.4th 535. The October
2012 notice was defective as it did not include the date and time of the hearing on the
motion for sanctions. Because Biofilm filed its April 26, 2013 motion for sanctions the
same day it was served, it did not comply with section 128.7, subdivision (c)(1) and the
order must be reversed.7
7 Because we resolve this matter on Biofilm's failure to provide a safe harbor, we do not reach the other issues Appellants raised in this appeal. 17
DISPOSITION
The order awarding sanctions is reversed. IME is awarded its costs on appeal.
HUFFMAN, Acting P. J.
WE CONCUR:
O'ROURKE, J.
AARON, J.
18
AI Brief
AI-generated · verify before citing
Holding. A motion for sanctions under Code of Civil Procedure section 128.7 must strictly comply with the statute's safe harbor requirements, which include serving a formal noticed motion that specifies the date and time of the hearing. Because the initial notice served by Biofilm failed to include a hearing date, it was fatally defective and failed to trigger the 21-day safe harbor period.
Issues
Whether a notice of motion for sanctions that omits the date and time of the hearing satisfies the 'safe harbor' requirements of Code of Civil Procedure section 128.7.
Whether the failure to include a hearing date in the initial notice of motion renders the subsequent sanctions order invalid.
Disposition. Reversed.
Quotations verified verbatim against the opinion
“Biofilm's original notice of motion failed to include a hearing date and the amended notice of motion was served and filed on the same day; thus, the "safe harbor" requirement was not satisfied.”