Daily Blast December 3, 2012

On December 3, 2012, the Court of Appeal, Second Appellate District, Division Three (LA) issued an opinion in Sino Century Development Limited v. Farley (December 3, 2012, B236912) ____ Cal.App.4th ____, analyzing whether California Rules of Court, rule 2.30, authorizes a trial court to award attorney fees as sanctions for violating a rule of court. The court held that “rule 2.30 does not authorize full compensation of all attorney fees incurred as a result of a rules violation, but only authorizes the court to award reasonable attorney fees incurred in connection with the proceedings in which the aggrieved party seeks sanctions.” (Slip opn., p. 2.)

The trial court imposed $81,461.13 in sanctions on appellant Farley and his counsel pursuant to Rule 2.30(b), which authorizes the court to impose reasonable monetary sanctions for violating a rule of court. (Slip opn., p. 2.) The court awarded these sanctions and declared a mistrial because appellants violated a rule of court that required notification of the automatic stay imposed by a bankruptcy court filing. (Id. at pp. 2-3.) These monetary sanctions included attorney fees incurred by the aggrieved party as a result of the rules violation. (Id. at p. 2.) In awarding attorney fees, the trial court relied upon Rule 2.30(d), which provides that in “addition to the sanctions awardable under (b), the court may order the person who has violated the applicable rule to pay to the party aggrieved by the violation that party’s reasonable expenses, including reasonable attorney’s fees and costs, incurred in connection with the motion for sanctions or the order to show cause.” (Id. at pp. 2-4 quoting Cal. Rules of Court, rule 2.30(d).) 

The Court of Appeal held that attorney fees are not authorized as sanctions for a rule of court violation. (Slip opn., p. 5.) According to the court, “reasonable monetary sanctions” under rule 2.30(b) do not include attorney fees. (Ibid.) The court explained that the Judicial Council eliminated attorney fees as sanctions by replacing “reasonable expenses and counsel fees” in former rule 227 with “reasonable monetary sanctions.” (Id. at p. 9.) As a result, the trial court lacked authority under rule 2.30(b) to award attorney fees as sanctions for violating a rule of court. (Id. at p. 10.) In addition, the court held that rule 2.30(d) limits attorney fees to those incurred in the proceedings seeking sanctions for violating a rule of court, and does not include attorney fees incurred as a result of the rule violation. (Ibid.) Accordingly, the court remanded the matter to the trial court to recalculate the award of attorney fees incurred in connection with the sanctions motion. (Id. at p. 14.)

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