Family Code Section 271 Only Authorizes Trial Courts to Issue Sanctions' Awards in the Form of Attorney Fees and Costs, and Not General Damages for the Consequences of Alleged Misconduct
We've written extensively about Family Code section 271 sanctions, which section states "the court may base an award of attorney's fees and costs on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys". Section 271 is such an important statute for reigning in, or at least evening the score against, those litigants and their attorneys who stubbornly refuse to comply with court orders, certain fiduciary duties, and procedures mandated by the California Code and Rules of Court and in so doing generate litigation expense for the other side. But trial courts are not given carte blanche to punish even the most outrageous litigants, in terms of the larger money damages that their conduct often inflicts on the hapless other party: As a recent decision makes clear, the trial court may only award attorney fees and costs per section 271.
This is another example of a trend we've noted over and over again, that appellate courts are reading the family code statutes literally - they mean what they say! (Duh). Trial courts, and creative lawyers, don't have unfettered freedom to expand their arguments beyond the plain meaning of the statutory authority.
Nonetheless, this is one of the most unfortunate outcomes we've seen given the outrageous history of this case (to some extent on both sides) highlighted below, not because the decision is wrong but because the appellate court's hands were tied and the system is broken - the California legislature may need to consider additional and stronger remedies in corralling out of control divorce court litigants. Family Code section 271 is not itself sufficient for evening the playing field.
However, as a result of a footnote in the decision there is an alternate path which must now, within the standard of care for all family law attorneys to avoid malpractice claims later, always be cited in your sanctions' briefs and in judge's rulings: CCP section 128.5. We don't know for sure yet, but that section may give authority for exactly the types of remedies that are needed for the most volatile cases. The fact that the husband in this case, who saw his sanctions of almost a million dollars evaporate at the appellate level, failed to recognize the application of this principle which is known commonly to general civil lawyers, reminds us that we family lawyers are first and foremost civil litigators! Family Code section 210 means that all the civil rules are applicable to actions under the Family Law Act.
This case personifies divorce trance at its worse - and the consequences for getting sucked into crazy battles as both sides devolve into a bar fight are amply illustrated. The more intransigent actor won not only by reversing the bulk of the sanctions awarded against her, but in the "interests of justice" the appellate court ordered each party to bear their own attorney fees and costs on appeal - a sure disapproval of the tactics of both sides. The husband's attorney arguably overreached in the scope of his sanctions' application submitted to a trial court that was clearly over the top frustrated with the other party, and so triggered the trial court into reacting in a way that was reversible error. Hence, the more aggrieved party based simply on a comparison of relative conduct blew themselves up, and chews and swallows their own fees. It happens all the time.
Meet Marriage of Sagonowsky
On December 21, 2016, the San Francisco based First Appellate District issued a partly published decision in the case of Sagonoswky v. Kekoa, A142866. It is actually a consolidated decision on two separately appealed rulings, one being the "Rents Motion" and the being the "271 Motion", and so the decision skips back and forth between the two sides of the same coin.
As the conduct over the course of the divorce litigation is described in the appellate decision, Christina Sagonowsky has got to be the poster child of obstructionist litigants who engaged in litigation war against not only her ex, but against a number of San Francisco judges themselves. If ever a divorce party deserved to be sanctioned by the trial court for exactly the behavior proscribed by section 271, this is her. In the process, the non-attorney fee related damages she cost her former partner were huge, and that was part of what the husband hoped to rectify. But he did it wrong.
For me the case is more interesting for its facts and background than the actual ruling, which is quite simple. It is the case history that exposes the problems with existing remedies for grossly unsportsmanlike conduct, and possibly when you finish reading this blog you may agree.
The trial court sanctioned Christina M. Sagonowsky the total sum of $767,781.23, which included: (1) $500,000 for her "relentless and culpable conduct" in "driv[ing] up the cost of the litigation" and "purposefully frustrat[ing] the final settlement of the case"; (2) $180,000 for causing a reduction in the sale price of real property awarded to Kekoa in the dissolution judgment; and (3) $45,000 in interest on Kekoa’s attorney fees bill. The court also partially granted Kekoa’s motion for rents and security deposits (rents motion) Sagonowsky received on properties awarded to Kekoa in the dissolution judgment and ordered Sagonowsky to pay Kekoa $28,510.80. Hence, a really pissed off trial judge sanctioned Christina $680,000 for non-attorney fee related subjects, as what were essentially consequential damages suffered by Curtis on account of Christina's recalcitrance.
The parties had an 11 year marriage, from 1992 to 2003. They acquired a number of valuable SF rental properties over the course of their marriage. In 2010 a judgment was finally issued, which awarded Curtis 3 of the properties, and Christina 5 properties. Accordingly the parties were ordered to accomplish all the deed transfers no later than December 15, 2010. Not to be told what to do by anyone, and bolstered by a $2 million war chest that she had inherited from her mother in 2008, Christina appealed the judgment and refused to transfer title or management and control of the properties awarded to Curtis to him while she collected the rents that belonged to Curtis per the trial court ruling. That appeal by Christina was dismissed in December, 2012, for her failure to file an opening brief, after having sought and received 2 prior extensions of time. Curtis' attorney in 2013 sent Christina 5 letters demanding she sign the transfer deeds to his client. Christina ignored them. Curtis' attorney next filed a motion to have the clerk of the court sign the deeds on Christina's behalf, which was granted.
The Rents Motion
Prior to that, in 2011, Curtis filed a motion to recover the rents Christina had been collecting on his properties, and to determine whether Christina was entitled to any management fees which she evidently contended she was. Christina filed no opposition, and then just before it was to be heard she filed pleadings claiming that she suffered a disability that prevented her from attending the hearing. The trial court continued the hearing several more times on that basis. Finally a hearing took place which Christina did not attend, and $58,000 was awarded Curtis. However, Christina successfully filed a Writ proceeding, so that a new trial court hearing was set.
Next, Christina 'hired' an attorney, Bradley White, who promptly tried to take Curtis' attorney's deposition. Curtis' attorney moved for a protective order to quash the subpoena, and for sanctions. The appellate decision notes that Mr. White and Christina were engaged to be married, and owned real estate together. It appeared he earlier had been advising her while she was supposedly self-represented. (Indeed, one trial court found that White had "emotional outbursts during ... proceedings, threatened the Court," and took "legal positions that were frivolous and intended solely for delay"). In any event, the day before that RFO was heard, Christina filed a CCP section 170.6 motion to disqualify the bench officer, which was granted. The hearing was continued (again) out a month and the matter was reassigned.
By the way, as we often comment, the key usually seems to fit the lock. The appellate decision notes that Curtis had himself been declared a "vexatious litigant" in other litigation per CCP section 391.7, which is something that Christina regularly used to her advantage to shield herself from his attempts to extract compliance from her to the family court's orders.
On the morning of the continued hearing, Christina filed a notice that she was unavailable because of an alleged disability, stating further that she would not be able to participate in court or discovery activities until 90 days later. She attached a vague doctor's note. At that same time, while she was unable to participate in this proceeding, she was actively waging 2 other law suits in civil courts as against Curtis. Ultimately Curtis' attorney got the protective order, and White was ordered to pay attorney fee sanctions.
The rents motion was ultimately heard in January 2014, when neither Christina nor her attorney appeared. The matter got continued again. Ultimately it was set for hearing on the same date when the next motion, for 271 sanctions, was calendared in June.
The Motion for Family Code Section 271 Sanctions
In February, 2014, Curtis filed a request for approximately $777,000 in sanctions per section 271 and using 7 different examples of conduct by Christina and her attorney allegedly violating that section. Of this sum, $43,000 was for attorney fees, $166,000 was interest on attorney fees, and and $180,000 was for the loss of value in the sales price of one of the properties awarded to Curtis - and, Curtis argued that this amount should be doubled as Christina's punishment. Bad move.
As the appellate justices note, "Shortly after Kekoa moved for sanctions, Sagonowsky began a campaign against the San Francisco Superior Court judiciary." On the date set for Curtis' sanctions motion, Christina sought to disqualify two of the bench officers assigned to the case for cause. These motions were denied. Not to be undone, Christina filed a Writ as to one of the denials, which was rejected on May 1, 2014.
The next day Christina filed a civil complaint in federal court for damages and injunctive relief as against a number of SF state court judges who had the misfortune of being assigned to the case at different points.
Then, in June, 2014 Christina requested a stay of all proceedings for 6 more months based upon her alleged total disability under the Americans With Disabilities Act (ADA). Her psychiatrist tendered a supporting declaration. Her request was denied. An evidentiary hearing was confirmed for July 8. Christina filed another extraordinary Writ to overturn the refusal to stay the proceedings, which was summarily denied. The July 8 hearing was held. Thereafter the trial court issued a lengthy statement of decision, which slammed Christina and her attorney's conduct with a number of specific examples. The trial court granted Curtis' sanctions request, including the doubling penalty of his claimed economic losses.
Christina appealed, again.
The Appellate Court Reasoning and Good Morning CCP Section 128.5!
Christina did not contest on appeal the trial court's description of her conduct as "unscrupulous," "relentless and culpable," nor the characterization that her behavior was "economic warfare fueled by her wealth, her bitter hatred of Kekoa, and her complete disregard for the law." She basically said "so what, so sad, too bad." And she was right.
While the Sagonowsky opinion has a good discussion about the limitations of the express statutory language of section 271, and explains how any prior reported decisions that seemed to imply that these types of sanctions could extend beyond attorney fees were distinguishable, it is mostly unremarkable. Clearly both the legislature and the judicial council in drafting the statute and corresponding rules were aware that they could have built in broader sanctions than merely attorney fee and cost recovery, but they did not. Court's don't have inherent powers to just punish people by way of monetary penalties payable to third parties. That power must be authorized by statute.
There is however one bit of dicta in this case that is quite important, which deals with a question we've raised before but which I don't think has ever been addressed directly in a family court appellate decision - the application of CCP section 128.5, which authorizes sanctions in general civil litigation to compensate a party for "reasonable expenses, including attorney's fees, incurred by [the] party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay." The Sagonowsky court, in footnote 10, states that section 128.5 "likely would have authorized the sanctions at issue, but Kekoa did not seek sanctions pursuant to that statute, and there is no indication the court's order imposing sanctions was predicated on that statute."
This means that had Curtis' attorney simply, and in the alternative, referenced CCP section 128.5 (and the trial court likewise in its Statement of Decision), the entire outcome could have been different. I cannot imagine but that the appellate justices would have loved to have gone the other way (though their impressions of Curtis and his counsel are unclear), but they were constrained by the mistakes that preceded the appeal.
I have to say that I am not convinced that CCP section 128.5 reaches as far as this dicta suggests, but then I've not researched its history because it is so rarely referenced in family law proceedings. Clearly the lesson of this case is to ALWAYS include reference to section 128.5 in your sanctions' motions! Assuming there is no need for the legislature to act by creating new family law sanction authorities, we will await some reported decision in the upcoming years to answer that question!
As always, be safe out there!
Author: Thurman W. Arnold III