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Primo Hospitality Group, Inc. v. Haney

California Court of Appeals, Second District, Fifth Division

July 5, 2019

PRIMO HOSPITALITY GROUP, INC., et al., Plaintiffs,
STEVEN H. HANEY et al., Defendants and Respondents MARC LIBARLE, Objector and Appellant.

          APPEAL from order of the Superior Court of Los Angeles County No. BC587708, Michael J. Raphael, Judge. Reversed.

          Marc Libarle, in pro. per., for Objector and Appellant.

          Collins Collins Muir & Stewart, Robert H. Stellwagen, David C. Moore, Joshua A. Cohen, for Defendant and Respondent John Torbett.

          MOOR, J.

         Plaintiffs filed a legal malpractice action, then retained a new attorney. The attorney filed a declaration stating that he represented the plaintiffs. A defendant in the action immediately served the attorney with a motion for sanctions under Code of Civil Procedure section 128.7 on the ground that the complaint filed by prior counsel lacked merit.[1] After the motion for sanctions was filed several months later, the trial court granted it. On appeal from the order awarding sanctions, the attorney contends that he was denied the notice and safe harbor required under section 128.7, because the motion served on him did not identify any specific conduct he had taken that violated the statute. We conclude there is no evidence that the attorney presented the complaint to the court within the meaning of section 128.7 before he was served with the motion for sanctions. A new attorney's filing of a declaration merely notifying the court of a change in counsel does not constitute presenting the complaint to the court under section 128.7. We also conclude that a sanctions order cannot be supported solely by evidence of conduct occurring after the motion is served, because a motion for sanctions under section 128.7 must describe the specific conduct taken by the party to be sanctioned and allow a safe harbor period to withdraw or appropriately correct the sanctionable conduct. There was no evidence to support finding the attorney violated section 128.7 before he was served with the motion for sanctions, and therefore, we reverse the order awarding sanctions.


         Underlying Lawsuit between Primo and Americana

         In October 2007, Primo Hospitality Group, Inc., and its principals Charlton Lui and Anthony Riviera (collectively Primo), entered into a commercial lease with The Americana at Brand, LLC (Americana) for space at Americana's mall. Primo opened a restaurant in the space. In May 2009, the floors sustained water damage.

         The law firm of Novian & Novian, LLP, on behalf of Primo, filed a negligence action against Americana and its management company in 2010. Primo repaired the floor in May 2010, but stopped paying rent in June 2010. After the floors were damaged in a second incident, Primo vacated the space in November 2010. Americana filed a cross-complaint against Primo for breach of contract based on unpaid rent.

         The Novian firm withdrew on June 22, 2011. Primo retained the law firm of Haney Roderick Torbett & Arnold, LLP (the Haney firm), in August 2011. John Torbett was the principal attorney of the Haney firm. Primo said a pressure-washing company hired by Americana caused the water damage when the pressure-washing equipment forced water under the threshold of the door to the restaurant. Primo had repeatedly requested that Americana stop pressure-washing, but Americana refused. Primo said the Novian firm advised Primo to vacate the premises and cease paying rent.

         A jury trial was held in 2012. The jury found in favor of Primo on the causes of action for negligence, trespass, and nuisance. The jury found in favor of Americana on the remaining causes of action, including breach of the lease agreement. The trial court entered judgment in favor of Primo against Americana in the amount of $840, 000, and against the management company in the amount of $560, 000. However, the jury found Primo was liable to Americana in the amount of $1, 275, 250 for breach of the lease agreement. The trial court awarded attorney fees of $1, 250, 000 to Americana under the lease agreement.

         Legal Malpractice Action

         On July 10, 2015, Primo filed the present legal malpractice action against defendants and respondents Steven Haney, Haney Law Group (individually and as the successor to the Haney firm), Haney & Young, LLP, and Darren McBratney (collectively referred to as the Haney defendants) and Torbett. Primo alleged that the defendants negligently formulated the special verdict form in the underlying action against Americana, because the form failed to ask whether Primo was excused from performance under the lease. Primo also alleged the defendants negligently failed to name certain entities as defendants in the underlying action, including the company that performed the pressure washing.

         On January 6, 2016, the defendants filed a motion for summary judgment on the grounds that Primo could not establish causation or damages. The jury in the underlying action, in response to other questions, found Primo did not perform as required under the lease, Americana performed as required by the lease, all conditions for Primo to perform were met, and Primo was not constructively evicted. Defendants also argued that the entities who were not named as defendants in the underlying action had no potential liability, or the failure to name them was harmless.

         On July 22, 2016, Torbett filed a second motion for summary judgment, joined in by the Haney defendants, on the ground that Primo's claims were barred by the defense of unclean hands. The motion argued that Primo made false representations and concealed material information. For example, Primo concealed that the Novian firm's advice was to continue paying rent and not vacate the premises. Primo decided to vacate and forfeit the lease because of increased competition from other restaurants. As a result, Primo could not assert constructive eviction for breach of the lease agreement. Primo also failed to disclose that their insurer concluded the water damage resulted from an accidental appliance leak within the restaurant and the insurer provided Primo with substantial insurance payments. The evidence in support of the second motion for summary judgment included correspondence received in discovery from the Novian firm and Primo's insurance company.

         Motion for Sanctions ...

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