N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
In re : JAY W . JOHNSON; DEB R A F. JOHNSON, De btors,

______________________________ R OSENDO GONZALEZ, Truste e of the B ankruptc y

Esta t e of Ja y W . Johnson a

nd De bra F. Johnson, Pla i ntiff-Appe lle e , v. DEB R A F. JOHNSON; JAY W
. JOHNSON; JAY JOHNSON A.I.A. AND ASSOC IATES, INC .; R

ANDAL A. JOHNSON; R OB IN L. JOHNSON; JJ AND A AR C HITEC TS, INC .; Q FINANC IAL GR OUP, LLC ,

De fe nda n ts-Appe lla

nts. No. 17-55220

DC No. C V 16-01257 B R O
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia B e ve rly R e id O’ C onne ll, Distric t Judge , Pre siding 

# F IL ED JAN 08 2019 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.Argue d an d Subm i tte d De c e m be r 6, 2018 Pa sa de n a , C a l ifornia B e fore : TASHIM Aand WARDLAW , C irc uit Judge s, a n d PR ATT, ** Distric t Judge
. De fe nda nts-Appe lla

nts a ppe a l the distric t c ourt’ s a ffirm anc e of the ba nkruptc y c ourt’ s de nia l of the ir m otion for a ttorne y s’ fe e s . W e a ffirm
. 1. De fe nda

nts-Appe lla

nts c onte nd tha

t the ba nkruptc y c o urt should ha

ve
awarde d fe e s a s a

sa nc t ion for ba d fa ith c onduc t by the Truste e , Pla intiff-Appe lle e R ose ndo Gonz a le z , a

nd his c o unse l. The de nia l of sa nc t ions unde r a

c ourt’ s inhe re nt p;owe rs is re vie we d for a buse of disc re tion. Se e C hambe rs v . N

ASC O, Inc
. , 501 U.S. 32, 55 (1991). “ Findings of fa c t tha

t unde rlie a

c ourt’ s le ga l
c onc lusions a

re re vie w e d for c l e ar e rror.” U n ite d C ompute r Sy

s., Inc . v . AT& T C orp. , 298 F.3d 256, 260 (9th C ir. 2002)/ A c ourt m ay , unde r its inhe re nt powe rs,
a sse ss a ttorne y s’ fe e s a s a

sa nc t ion whe n a pa

rty ha s “ a c te d in ba d fa ith,
ve xatiously , wa

ntonly , a nd for oppre ssive re a sons.” C hambe rs , 501 U.S. a

t 45–46. He re , the ba

nkruptc y c ourt m a de a

fa c tua l finding tha

t , a lthough the

c a se ha d be e n vigorously

litiga te d a nd De fe nda

nts-Appe lla

nts ultimate ly

pre v a ile d, no pa

rty ha d
a c te d in ba d fa ith. On this le ngthy re c ord, the ba

nkruptc y c ourt’ s fa c tua l

* * The Honora

ble R obe rt W . Pra tt, Unite d State s Distric t Judge for the Southe rn Distric t of Iowa , sitting by de signa t ion. 2de te rm i nation re ga rding la c k of ba d fa ith is not c le arly e rrone ous. Se e Primus Auto. Fin. Serv

s., Inc . v . Batarse , 115 F.3d 644, 649 (9th C ir. 1997) (noting tha t a tria l c ourt “ ha s ‘ b roa d

fa c t-finding powers’ with re spe c t to sa nc tions, a nd its findings wa

rrant ‘ gre at de fe re nc e ’ ” (quoting Tow n se nd v . Holman C onsulting C orp. , 929 F.2d 1358, 1366 (9th C ir. 1990) (e n ba nc ))). In a ddition, the ba nkruptc y c ourt a pplie d the c orre c t le ga l sta nda rd, a nd its ultim

ate c onc lusion, that sa n c t ions we re not wa

rrante d unde r C

hambe rs , wa s not “ illogic a l , im p la usible , or without support from

infe re nc e tha

t m ay be draw n from

the re c ord.” Unite d State s v . Hink son , 585 F.3d 1247, 1263 (9th C ir. 2009) (e n ba nc ) (footnote
om i tte d); se e also Primus Auto. , 115 F.3d a t 649 (e m pha siz ing tha

t “ s anc tions should bere se rve d for the ‘ rare and e xc e ptiona l c a se whe re the a c tion is c le arly frivolous, le ga l ly unre a sona ble or without le ga l founda t ion, or brought for a

n im prope r purpose ’ ” ). 2. De fe nda

nts-Appe lla

nts ne x t argue that the ba

nkruptc y c ourt should ha ve a llowe d the m

to pre se nt a dditional e vide nc e of ba d fa i th a t a n e vide ntia ry he a ring or in supplem e nta l brie fing. There c o rd, howe v e r, be lie s De fe nda nts-Appe lla

nts’ sugge stion tha

t the ba nkruptc y c o urt de c l ine d

to c onside r
a ll of there le va

nt e vide nc e sim

ply be c a use it wa s not prope rly

subm i tte d with the fe e s m o tion. Theba

nkruptc y judge c are fully c onside re d “ the re c ord pre s e nte d at

3tria l ,” he r “ 161 pa ge s of tria l note s,” the doc ke t, he r “ e xpe rie n c e with this c a se ove r

the l a st te n y e ars,” and De fe nda nts-Appe lla

nts’ argum e nts a

t the le ngthy

he aring on the fe e s m otion. Afte r “ turn[ing] to the e vide nc e ,” the ba nkruptc y judge
c onc lude d tha

t she “ just c o uld not m ake ” a

finding tha

t the Truste e or his c o unse l ha d a c t e d in ba d fa ith. M ore ove r, the ba

nkruptc y c ourt wa s not re quire d to hold a n e vide ntia

ry he aring unde r Fe de ra l R

ule of C ivil Proc e d

ure 43(a ). The only

a uthoritie s tha

t De fe nda nts-Appe lla

nts c ite in support of the i r argum e nt to the c ontra ry are two
c a se s, both of whic h pre date C hambe rs and c onc e rn c onte m pt proc e e dings. 1 The y do not c o ntrol he re . In the c irc um sta nc e s of this c a se , be c a

use the ba nkruptc y c ourt’ s c o nc lusion tha

t a n e v ide ntia ry he a ring wa s unwa

rrante d is not illogic a l, im pla usible , or without support, its dec ision to deny the re que st for a n e vide ntia

ry he aring unde r R

u le 43(c ) wa s not a

n a buse of disc re tion. 3. De fe nda

nts-Appe lla

nts a lso a rgue tha t, pursua nt to C a lifornia

C ivil C ode § 1717 a

nd a n attorne y s’ fe e provision in the 2005 Se ttle m e nt Agre e m e nt, the y are e ntitle d to a

ttorne y s ’ fe e s for se rvic e s inc urre d in opposing the Truste e ’ s e fforts to e n forc e the 2005 Se ttle m e nt Agre e m e nt. Howe ve r, § 1717 is lim ite d in

1 Se e Sande rs v . Monsato C o. , 574 F.2d 198, 199–200 (5th C ir. 1978); Hoffman v . Be e r Driv e rs & Sale sme n , 536 F.2d 1268, 1277 (9th C ir. 1976).

4sc ope
–

it a pplie s only

to “ any a c tion on a

c o ntra c t.” C a l. C iv. C ode § 1717(a ).

“ [A] c tion” in this c onte xt is “ sy nony m ous with ‘ suit,’ ” tha

t is, a judic ia l proc e e ding tha

t te rm inate s with thee ntry of judgm e nt. Robe rts v . Pac k ard, Pac k ard &J ohnson , 159 C a l. R

ptr. 3d 180, 186 (C t. App. 2013); se e also Gil v
. Mansano , 17 C a l. R

ptr. 3d 420, 424 (C t. App. 2004). “ [S] te ps ta ke n during pe nding litiga

tion a re not a n ‘ a c tion’ within the

m e a n ing of se c tion 1717.” Robe rts , 159 C a l. R

ptr. 3d a t 186 (holding tha

t unde r the “ pla in m e aning of se c tion 1717 . . . a

pe tition to c om

pe l a rbitration file d in a pe nding law

suit is not a

n

‘ a c tion’ ” ); s e e also Gil , 17 C a l. R ptr. 3d a t 423–24 (e xpla ining tha

t while “ a de fe nse to a

tort a c tion ba se d on a

provision of the

c ontra c t m a y have the e ffe c t of
e nforc ing the provisions of the c ontra c t, . . . thea sse rtion of a de fe nse doe s not
c onstitute the bringing of a

n a c tion to a c c om

p lish tha t goa l” ). He re , the ba nkruptc y c a se and a dve rsary proc e e dings we re not a c tions “ on” the 2005 Se ttle m e nt Agre e m e nt. Ac c ordingly , the ba nkruptc y an d distric t c ourts c orre c tly
c onc lude d tha

t De fe nda nts-Appe lla

nts a re not e ntitle d to a

ttorne y s’ fe e s unde r § 1717. Nor c an De fe nda

nts-Appe lla

nts, sepa ra te and a pa rt from § 1717, re c ove r
attorne y s’ fe e s ba s e d pure l y on a c ontra c tua l right unde r the 2005 Se ttle m e nt Agre e m e nt, be c a

use the ba nkruptc y c ourt he ld tha

t Agre e m e n t to be une nforc e a ble
. 5Se e S

antisas v . Goodin , 951 P.2d 399, 406 (C a l . 1998) (e xpla i ning tha t be c a use
argum e nts tha

t a c ontra c t is une nforc e a

ble or none xiste n t “ are inc onsiste n t with a
c ontra c tua l c la i m

for attorne y

fe e s unde r the sa

m e a g re e m e nt, a pa

rty pre va iling on
any of the se ba se s usua lly

c annot c la im

attorne y fe e s a s a c ontra c t ua l right” ). AFFIRM E D
.

6