Plaintiff is sanctioned $15,000 for filing an appeal with no merit in an attempt to delay the removal of a mechanic’s lien
The Second District, Division Six, has sanctioned counsel for appellant Avery and his counsel of record, Steven Slavitt, $15,000 for filing and maintaining a frivolous appeal designed for the purpose of delay. (Champlin/GEI Wind Holdings v. Avery (June 2, 2023) B319563.) Plaintiff and respondent Champlin/GEI Wind Holdings (“respondent”) entered into an agreement to develop a wind energy project in Oahu. Appellant and defendant Keith Avery (“appellant”) was to receive both a return on capital and a “monthly services fee:”
Appellant, acting through West Wind Works, LLC (3W). . . and respondent entered into a Development Services Agreement (DSA) to develop a wind energy project on Oahu, Hawaii. Pursuant to the DSA and related agreements, appellant had a 5 percent interest in Champlin Hawaii, an entity formed to jointly develop wind energy projects on Oahu. These agreements provided that all distributions from Champlin Hawaii would be made to respondent until respondent received a 15 percent internal rate of return on its invested capital. Then, appellant’s limited liability company, 3W, would participate in distributions. Appellant was paid a monthly services fee, starting at $2,000 per month, with a cap of $250,000.
About two years after these agreements were made, appellant assigned his 5 percent interest in Champlin Hawaii to respondent. . . The parties also amended the DSA. . . . [and] provided for a bonus to be paid to appellant after the project achieved its commercial operation date (COD) or was sold, and respondent achieved its 15 percent pre-tax internal rate of return. (Id., pp. 2-3.)
When the project was terminated, appellant maintained he was entitled to additional compensation and filed a mechanic’s lien in Hawaii:
Respondent terminated the DSA in March 2015, after appellant stopped working on project-related matters and the project missed many of its development milestone dates. . . . In December 2018, respondent sold its interest to a third party. . . resulting in an actual internal rate of return of 8.60676 percent.
In May 2020, appellant filed a mechanic’s lien in Hawaii, alleging he was entitled to additional compensation under the amended DSA. Respondent filed its complaint against appellant in California. It alleged that appellant breached the DSA by, among other things, failing to mediate before filing the mechanic’s lien and ignoring the DSA’s choice of law and forum selection provisions. Appellant’s cross-complaint alleges only that respondent breached the DSA when it “sold the project . . . without [appellant’s] knowledge or approval,” resulting “in the termination of [appellant’s] compensation . . . .” (Id., pp. 3-4; footnote omitted.)
Respondent brought a motion for summary judgment and/or summary adjudication upon its complaint and/or the cross-complaint. Appellant, however, did not oppose the motion until the day before the hearing, failing to properly oppose the motion for summary judgment by filing opposing papers 14 days in advance providing admissible contrary evidence cited in a separate statement as to what facts were or were not disputed. (See, e.g., Code of Civil Procedure section 437c(b).)
Appellant also acknowledged his cross-complaint did not reflect the legal theory upon which his claim was made and made a last-minute oral request to amend the complaint, which was denied. The Hon. Thomas P. Anderle, of the Superior Court County of Santa Barbara therefore granted summary judgment in favor of respondent upon both the complaint and the cross-complaint.
The actions of appellant in the trial and appellate courts showed a lack of understanding of basic civil procedure
The appellate court affirmed all rulings of the trial court. Moreover, it found the entire appeal to be without merit and noted the willful ignorance of the appellant and his counsel as to these merits warranted reiteration of the “duties of counsel” toward the court:
. . .[W]e must opine on the duties of counsel as an officer of the court. We expect counsel to know and follow basic law relating to civil procedure. That did not happen here. We will impose sanctions for the filing of a frivolous appeal from a discretionary trial court ruling. We publish this opinion for several reasons, not the least of which is a guidepost to the bar not to file a frivolous appeal. We ourselves had occasion to warn attorneys concerning the abuse of discretion standard on appeal twenty-five years ago. [Citations.] We borrow the phrase from our previous opinion: This appeal “was ‘dead on arrival’ at the appellate courthouse.” [Citation.] This does not mean that we do not consider the contentions of counsel. We do. But sometimes, the contentions are frivolous in light of the record on appeal. That is the case here. (Id., pp. 1-2.)
As Champlin pointed out, appellant did not make a formal request to amend or otherwise file a motion to amend the complaint. Appellant thereafter filed a notice of appeal from both the denial of oral request to amend the cross-complaint and the order granting the motion for summary judgment, both of which are non-appealable orders and not final judgments. Nonetheless, the appellate court utilized its discretion to treat the appeal as if it had been from an actual judgment following the granting of the motion, and therefore considered the merits of the appeal.
Which, of course, the appellate court found lacking. In particular, the appellate court was critical of the failure of appellant to follow correct procedure in the trial and appellate courts. This included appellant’s improper reliance upon “facts” which had not been established by citation to a separate statement supported by admissible evidence, such as appellant’s claims that he was entitled to additional monies under the amended DSA.
Appellant also failed to appreciate the importance of the standard of review, to wit, the manner in which an appellate court looks at trial court rulings. While an appellate court ordinarily utilized a “de novo” review whereby the appellate court looks at the evidence without deference to the trial court’s determinations, appellant’s failure to provide a proper opposition to the motion for summary judgment made this impossible:
Trial counsel at the motion for summary judgment also represents appellant in this court. He ignores all of the traditional rules of appeal. He is correct that our review of a grant of summary judgment is de novo. That does not mean we consider counsel’s conclusion that there are issues of fact to be resolved at trial. These “facts” are not in the record, i.e., not in a separate statement of disputed facts or supported by declarations or other evidence. (Champlin, p. 11.)
The appellate court also noted appellant did not understand that the trial court’s ruling denying the motion to amend was left to the sound discretion of that court, meaning it would be disturbed absent an abuse of discretion:
He is also correct in saying that pleadings are to be liberally construed. That does not mean his oral motion to amend the cross-complaint should have been granted. This is a discretionary ruling. Again, counsel does not appreciate traditional rules on appeal. [Citation.]
The Second District therefore upheld the grant of summary judgment, finding appellant was not entitled to any additional monies beyond what he had already been paid. Writing for a unanimous panel, Justice Yegan explained the appellate court’s finding there was no merit to any of appellant’s claims should “end” this matter and result in the removal of the mechanic’s lien filed in Hawaii.
Champlin is a stark lessen for practitioners who wish to avoid sanctions at the appellate level
One crucial lesson is that if counsel is not fluent in the procedural nooks and crannies of motion practice and has no experience in appellate procedure it is incumbent upon said counsel to seek assistance. (See California Rules of Professional Responsibility, rule 11, setting forth the minimum competency required in a particular matter and noting this competence may be met by “professionally consulting another lawyer whom the lawyer reasonably believes to be competent. . . or referring the matter to another lawyer whom the lawyer reasonably believes to be competent.”)
The appellate court in turn concluded the subject appeal was frivolous, and, even worse, was intended for the purpose of delay. As Champlin aptly pointed out, despite a choice of law provision that disputes were to be decided in Santa Barbara county, appellant filed a mechanic’s lien in Hawaii. Worse, the filing and maintenance of the appeal delayed the resolution of the mechanic’s lien, to the detriment of respondent.
Parties who intend to file an appeal where said filing extends the life of a lien or other encumbrance should consider whether this filing will later be viewed as a frivolous tactic designed for purposes of delay. Counsel should also consider whether they have a good-faith basis to ignore a clearly-worded choice of law provision by making the deliberate choice to file in another jurisdiction.
Here, of course, the failure to consider the merits of the appeal resulted in appellant and counsel being ordered to pay respondent $10,000 and the Clerk of the Court $5,000. [1] In summary, a
trial lawyer may need the help of an attorney with particular expertise in 1) civil motion practice, and, 2) appellate procedure, including someone with sufficient experience to determine whether an appeal has sufficient merit to avoid a claim it is “frivolous.” [2]
1 - These sums were chosen to deter future conduct and to compensate for the harm caused by defending against the appeal and the mechanic’s lien. However, respondent claimed these expenses were much greater than the $10,000 awarded, leaving open the question as to whether respondent may seek the remainder of its attorney fees in a California or Hawaii court. This is because the opinion does not set forth whether, in addition to its mandatory arbitration and choice of law provisions, the amended DSA contained an attorney fee clause provision. The opinion is also silent as to whether respondent’s complaint pled entitlement to attorney fees.
2- Such practitioners may include those certified by the California Bar as Certified Specialists in the area of Appellate law.
