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Beth Van Sickle v. Gregory Gilbert

June 29, 2011


APPEAL from a judgment of the Superior Court of El Dorado County, Steven C. Bailey, Judge; Jerald M. Lasarow (Retired Judge of El Dorado Sup. Court, assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Reversed in part and dismissed in part. Super. Ct. No. SC200400963

The opinion of the court was delivered by: Robie ,j.


In this action, plaintiff Beth Van Sickle filed a complaint against her former attorney, defendant Gregory F. Gilbert, arising out of his alleged mismanagement, years earlier, of certain properties Van Sickle had received in a divorce in which Gilbert had represented her. Van Sickle included in her complaint a cause of action for an accounting, and, as is generally true in accounting cases, she did not include in her complaint a demand for a specific amount of money from Gilbert in connection with that cause of action. (See Ely v. Gray (1990) 224 Cal.App.3d 1257, 1261-1262.) She also included in her complaint a cause of action for breach of fiduciary duty, in which she likewise failed to include a prayer for a specific amount of damages. There is also no evidence Van Sickle ever served Gilbert with a statement identifying the amount she sought to recover from him in this action, whether as damages or otherwise.

When Gilbert failed to comply with an order compelling him to answer Van Sickle's special interrogatories and respond to her demands for production of documents, the trial court granted Van Sickle's request for a terminating sanction and ordered Gilbert's answer stricken. Van Sickle thereafter took Gilbert's default and obtained a default judgment against him for more than $2 million, half of which consisted of punitive damages.

On Gilbert's appeal, we conclude that while the trial court did not abuse its discretion in imposing a terminating sanction on Gilbert, the default judgment and the default must be set aside because Van Sickle could not take Gilbert's default until she put him on notice of the amount of money she sought in the action, which she failed to do. Accordingly, we will reverse the judgment against Gilbert and direct the trial court to set aside his default and allow Van Sickle to amend her complaint to allege specifically the amount of money she is seeking to recover from him.

On the separate appeal of Vickilyn Gilbert from the trial court's refusal to allow her to intervene in the action, we conclude that appeal is untimely and will therefore dismiss it.*fn1


I The Underlying Facts*fn2

In 1965, Van Sickle filed for divorce from her husband of 10 years, Jack Van Sickle.*fn3 In July 1968, Van Sickle retained Anthony Scalora to represent her in a divorce proceeding on a contingency basis because Van Sickle told Scalora she had no money but felt she was entitled to some of Jack's extensive property at Lake Tahoe. Under the terms of the contingency agreement, Van Sickle agreed to pay Scalora 10 percent of the first $100,000 recovered and 30 percent of any amount recovered in excess of $100,000, plus costs not to exceed $10,000.

In 1981, Van Sickle entered into a new contingency fee agreement with Scalora and Gilbert, who had apparently been assisting Scalora with Van Sickle's representation. The new agreement recited that the property under dispute was subject to long-term leases and that attorney fees would be paid out of an assignment of proceeds from those leases. Upon termination of the leases or distribution of the property, the entire amount of attorney fees would be paid. At some later point, apparently, it was determined and/or agreed that Scalora and Gilbert would divide their 30 percent interest under the fee agreement with 12 percent going to Scalora and 18 percent going to Gilbert.

In 1984, Van Sickle, Scalora, and Gilbert agreed to modify the fee agreement because of a settlement proposal under which Van Sickle would receive certain properties that were subject to leases ranging from 20 to 50 years. If Van Sickle were required to pay the attorney fees in a lump sum, it would destroy the value of the properties; accordingly, Van Sickle and her attorneys agreed to payment of the 30 percent fee in installment payments over the life of the leases, with a lump sum due only if the properties were sold.

According to the allegations of the complaint in this action, "[i]n 1985, . . . Gilbert marshaled, gathered, and took possession of the properties that were transferred [to Van Sickle] pursuant to the final judgment of the divorce," and "[b]etween 1985 and 1992, . . . Gilbert managed the properties, distributed certain sums of money as and for attorney fees, expended certain sums of money and delivered certain sums of money to [Van Sickle]." According to Van Sickle, Gilbert also used money from the properties to pay himself and Scalora for Gilbert's defense of a tax audit, as well as paying himself attorney fees for handling tenant litigation. Also according to Van Sickle, "Gilbert so mismanaged the properties, that the taxes were not paid, delinquencies were filed, and [Van Sickle] ha[d] no way of determining the amounts of money previously paid under the contingency fee contract."

In 1992 Scalora assisted Van Sickle in obtaining management of the properties from Gilbert. That same year, Scalora died. He and his wife had previously assigned all interest under the fee agreement to a family trust.*fn4

In 1994, Van Sickle sued Gilbert and the trust to rescind the fee agreement, alleging it was void as against public policy and obtained by undue influence. The trial court granted summary judgment in favor of Gilbert and the trust on the merits. On Van Sickle's appeal, this court affirmed the judgment on the ground her action was barred by the statute of limitations.

According to Van Sickle, in April 2003 -- 11 years after Gilbert's management of the properties had ended -- she requested "a complete accounting . . . from . . . Gilbert for the time he managed the properties as well as [for] the monies received under the contingency fee agreement and additional attorney fees paid to him above the contingency fee agreement." Gilbert did not respond to that request or to several others over the following year and did not provide the requested accounting.

II The Pleadings

In June 2004, after her requests for an accounting went unheeded, Van Sickle filed a complaint for accounting, declaratory relief, constructive trust, and breach of fiduciary duty against Gilbert and the trust. Van Sickle alleged that without an accounting from Gilbert for the period he managed the properties she could not properly distribute money she was holding in trust from the condemnation of certain of the properties. Van Sickle also sought declaratory relief on whether Gilbert and the trust were entitled to 30 percent of the value of the properties she received in 1985, minus whatever payments they had already received (as she contended), or whether they were entitled to 30 percent of the value of the properties without such an offset (as they contended). In her constructive trust claim, Van Sickle alleged that Gilbert had wrongfully withheld "certain assets of the divorce settlement," consisting of stock in a certain corporation. Finally, Van Sickle alleged that Gilbert had "failed to present an accounting, . . . failed to turn over all of the assets, and . . . failed to protect [her] from adverse tax consequences, all to the detriment of [Van Sickle] for damages in an amount unascertained at this time, to be presented at trial, and in excess of the jurisdictional amount of this Court." Van Sickle also alleged that "Gilbert's actions were intentional, wrongful and deliberate and should allow the award of punitive or exemplary damages." Nowhere in the complaint did Van Sickle demand a particular amount of damages, either compensatory or punitive.

Gilbert was served with the complaint on July 13, 2004, but he did not timely file an answer, so Van Sickle took his default on September 15, 2004. In November 2004, Van Sickle agreed to set aside Gilbert's default. A stipulation and order setting aside the default, filed on January 27, 2005, provided that Gilbert would have five court days to file an answer, but it was not until March 22, 2005, that Gilbert finally answered the complaint with a general denial and 24 affirmative defenses.

III Discovery History

A Appointment Of The Accountant

In April 2005, the court (Judge Suzanne Kingsbury) continued a previously scheduled settlement conference and trial on Van Sickle's motion because there was insufficient time to complete an accounting beforehand; at the same time the court ordered an accounting to be completed by an agreed-upon accountant. The parties were unable to agree on an accountant, so in August 2005 the court (visiting Judge Arjuna Saraydarian) appointed Kerry David, a certified public accountant, to perform the accounting.*fn5

B Van Sickle's Discovery Requests

Meanwhile, on June 30, 2005, Van Sickle served Gilbert by mail with 23 requests for admissions, 128 special interrogatories, and 42 demands for production of documents.*fn6 After three prefatory questions asking for Gilbert's name, address, and the identity of anyone who helped him in answering the interrogatories, the next 72 special interrogatories asked Gilbert to state the facts on which he based each of his affirmative defenses and to identify all persons and all documents that would support those facts. The following 31 interrogatories asked Gilbert to list the properties he marshaled for Van Sickle, to list all payments he received and all expenses he paid in connection with certain specific properties and assets, and to identify all persons and all documents that would support his answers to the previous interrogatories. The remaining 22 interrogatories sought various other information.

Forty-one of the 42 demands for production of documents that accompanied the special interrogatories asked Gilbert to produce all documents he had identified in his responses to the various special interrogatories that had asked him to identify documents. The final demand for production asked him to produce "all other DOCUMENTS related to the assets and properties of the Beth Van Sickle divorce settlement."

Gilbert failed to timely serve any responses to Van Sickle's discovery requests.

C The Accountant's Requests For Documents

On November 10, 2005, the accountant wrote to Gilbert and asked him to provide various documents, primarily for the period when Gilbert managed Van Sickle's properties.*fn7 On December 1 and again on December 22, 2005, the accountant advised the court that he had not received the requested material from Gilbert. Because the lack of documents from Gilbert impacted the accountant's ability to prepare his report for the court, the court (Judge Kingsbury) issued an ex parte minute order on December 22, 2005, requiring Gilbert to provide the requested material to the accountant by January 4, 2006, in advance of a hearing to review the accountant's work that was already set for January 6, 2006. The court also set a hearing on January 6 for an order to show cause (OSC) for sanctions, in the event Gilbert failed to provide the documents as ordered.

D Van Sickle's Motion To Compel

Meanwhile, on December 14, 2005, Van Sickle filed a discovery motion against Gilbert seeking to have the requests for admissions deemed admitted (Code Civ. Proc.,*fn8 § 2033.280, subd. (b)) and an order compelling Gilbert to respond to the special interrogatories and the demands for production of documents (§§ 2030.290, subd. (b), 2031.300, subd. (b)). As part of her motion, Van Sickle sought $1,056.30 in monetary sanctions from Gilbert. The hearing on that motion was set for January 13, 2006. Copies of the discovery requests were attached to the motion.

E Gilbert's Response To The Accountant's Requests

Gilbert appeared at the review/OSC hearing on January 6 and apparently told the court that he did not believe he had any files with documents responsive to the accountant's requests. The court ordered Gilbert to file a declaration under penalty of perjury by January 27 regarding the documents and continued to February 3 both the review hearing on the accountant's work and the hearing regarding sanctions for Gilbert's failure to provide the requested documents to the accountant.

F The Order Compelling Discovery

Meanwhile, Gilbert failed to file an opposition to Van Sickle's discovery motion. On January 13, 2006, the trial court (retired Judge Thomas Smith) issued a tentative ruling granting the motion, ordering that all but two of the requests for admission were deemed admitted and that Gilbert was to serve responses to the special interrogatories and the demands for production by January 27. The court also imposed a monetary sanction of $786.30 on Gilbert. Neither side requested a hearing, so the tentative ruling became the order of the court. Additionally, the court ordered Gilbert to pay the sanctions to the court by March 10, and the court set a hearing for that date regarding Gilbert's payment of those sanctions.

G Gilbert's Declarations

On January 30, 2006, Gilbert filed three declarations "in support of" an unidentified motion that he did not file. The gist of the declarations was that due to problems with receiving mail at his office, he had never received Van Sickle's discovery requests, although his office did receive the discovery motion (albeit when Gilbert was out of the country). In addition, the employee who processed Gilbert's mail claimed he had mistakenly calendared the hearing on the discovery motion for January 27 instead of January 13. In his declaration, which was one of the three he filed, Gilbert stated that he was "seeking a stipulation by counsel to allow the filing of the Discovery without prejudice due to the two factors of not receiving the Discovery Requests and the error in scheduling."

In addition to addressing his failure to respond to Van Sickle's discovery, in his declaration Gilbert addressed his search for documents responsive to the accountant's requests. Specifically, Gilbert provided pictures of "all of the filing shelves, drawers, filing cabinets, and filing systems where [his] property is kept." He asserted that the files he had found in his search were "too voluminous to produce by copy," so he requested a joint meeting at which the accountant could review them.

H The Appointment Of The Discovery Referee

On February 2, 2006, the court (Judge Kingsbury again) issued a tentative ruling for the February 3, 2006, hearing regarding the accountant's document requests, ordering Gilbert's personal appearance as well as production of the documents he had identified in his declaration. Gilbert did not appear at the hearing nor produce any documents. The trial court appointed retired Commissioner Melvin Beverly as discovery referee and initially proposed to continue the hearing to February 17, 2006, but Van Sickle's attorney proposed that the court continue it to March 10, 2006, instead because the hearing regarding Gilbert's payment of the monetary sanctions for failing to respond to Van Sickle's discovery requests was already set for that date. Van Sickle's attorney further proposed that if Gilbert did not "show records or file a motion" by March 10, the court should "entertain a motion to set aside his answer."

In response to that proposal, the court stated that "since Mr. Gilbert failed to come to court with his files as directed, . . . if he has not complied fully with the Court's order of today by that March 10 date, it would be the intention of the Court to strike his answer." Thereafter, on February 6, 2006, the court signed and filed a formal order after hearing, which ordered Gilbert to "present all documents to Commissioner Melvin Beverly on or before March 10, 2006" and provided that "[i]f Mr. Gilbert fails to appear and produce the documents so ordered, the Court will strike Mr. Gilbert's Answer, and allow a default to enter."

I Gilbert's Production Of Documents For The Accountant

On March 10, 2006, Gilbert appeared and brought with him eight boxes of documents. The court*fn9 stated it would keep the documents and notify the referee and the accountant of them. In response to the assertion of Van Sickle's attorney that he "had an order from the Court ordering the production of the documents on [Van Sickle's] personal request for production," the court also stated that it would "look back at [Van Sickle's] motions" to determine if Van Sickle's attorney should be allowed access to the documents.

Later that day, the court issued a minute order directing that the referee would first review the documents, then the accountant. After that, Van Sickle's attorney could ask to review them.

A month and one-half later, on April 26, 2006, the court on its own motion set "a further hearing regarding discovery . . . for May 19, 2006." At that hearing, the court stated that the referee had "gone through some of the boxes," but "there [wa]s a lot of stuff that [he] doesn't have to go through" -- apparently suggesting that not all of the documents were relevant to the accountant's requests. Accordingly, arrangements were made for Gilbert to pick up the documents from the referee, and the court ordered Gilbert to go through them and give the accountant all of the financial documents the accountant had requested by June 30, 2006. The court also set a further review hearing regarding discovery for that date. At the end of the May 19 hearing, Van Sickle's attorney noted that his client had "an outstanding discovery order and sanctions against Mr. Gilbert for not supplying documents [or] answers to interrogatories," and he asked if his client was "go[ing] to be precluded from striking [Gilbert's] answer and sanctions for not responding to [the] last discovery order." The court answered that it was not going to preclude Van Sickle's attorney from anything.

At a settlement conference on June 26, 2006, regarding payment of the referee's fees, the parties agreed that Gilbert would deliver the documents for the accountant to the referee by June 29. He was unable to do so, however, so he produced them the following day at the review hearing, and the court stated it would send the box of documents on to the referee.

On July 11, 2006, the court issued an ex parte minute order directing Gilbert to file within 10 days a declaration under penalty of perjury addressing whether the documents he produced in court on June 30 were "all of the documents in his possession, or under his control, satisfying the requests of Mr. Kerry David in his letter dated November 10, 2005" and if they were not stating where any remaining responsive documents could be found.

On July 17, Gilbert filed a declaration stating that he had provided the referee with all of the documents in his possession or under his control that satisfied the accountant's requests and he was unaware of any additional responsive documents "other than those [he] provided to ...

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