A California state appeals court has affirmed a $29,055 sanctions award against a law firm that re-alleged claims, including one under the Rosenthal Fair Debt Collection Practices Act, that a trial judge had already thrown out.
The background: The fight grew out of a vehicle lease dispute in which the plaintiff, a law firm suing in its own name, went after an auto finance company and several other defendants.
- Two years ago, the plaintiff filed an amended complaint raising six claims: breach of contract, breach of express warranty, breach of implied warranty, unfair business practices, fraud, and a violation of the Rosenthal Act.
- The trial judge sustained the auto finance company’s objection without leave to amend as to three of those claims, including the Rosenthal Act claim.
- Months later, the plaintiff filed a third amended complaint that repeated all six claims. The defendant’s lawyers spent the fall asking the plaintiff to withdraw the three claims that should not have been refiled. The plaintiff refused.
- The defendant then served a motion for sanctions. The served notice listed a January 17 hearing date. Twenty-nine days later, the defendant filed the same motion, this time carrying a March 18 hearing date, because San Mateo County does not assign a hearing date until a motion is actually filed.
- After the trial judge imposed the sanctions on the plaintiff and its counsel, the plaintiff argued on appeal that the award had to be reversed because the served notice and the filed notice were not identical, and because the original date left no room for both the 21-day safe harbor period and the state’s separate 16-court-day filing deadline.
The ruling: The Appeals Court affirmed the ruling, writing that the later hearing date did not “eviscerate strict compliance with the safe harbor provisions.”
- The only change between the served and filed papers was the hearing date. The substance was identical, and the motion was not filed until after the 21-day window had closed, so the plaintiff knew precisely what conduct was at issue and had the full period to withdraw the pleading.
- The court did break with two published decisions from another California appellate district holding that a notice of motion failing to specify when it will be heard is fatally defective. Those cases blurred the safe harbor requirement together with the state’s general notice statute, something the earlier strict-compliance decisions never did.
- The court also rejected the idea that a moving party should file a separate ex parte request just to lock in a hearing date, noting that the workaround “increases the volume of sanctions litigation,” one of the outcomes the statute was written to reduce.
- The safe harbor period “is not a notice period,” according to the ruling. It sets the window in which the target of a sanctions motion can pull an offending document without penalty.
- The plaintiff also waived the argument by opposing the sanctions motion on the merits, appearing at the hearing, and never claiming it suffered any prejudice.
- In a footnote, the judge cautioned that the January placeholder date would not have satisfied the filing deadline anyway, and that local scheduling practices do not justify using a placeholder date that fails to meet statutory requirements.
- The Appeals Court denied the defendant’s request for sanctions on appeal, finding the plaintiff’s argument was not frivolous given the published decisions it relied on.
