Court Opinion

ID: 6317384
Source: CourtListenerOpinion
Date Created: 2022-02-24 21:01:54.572322+00
Date Added: 2024-06-11T09:00:35.291853
License: Public Domain

Filed 2/24/22
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                    SECOND APPELLATE DISTRICT

                          DIVISION TWO

BROADCAST MUSIC, INC.,                   B304809

       Plaintiff,                        (Los Angeles County
                                         Super. Ct. No. BC379432)
       v.

STRUCTURED ASSET SALES, LLC,

       Defendant and Appellant;

CURRENCY CORPORATION,

      Defendant and Respondent;
_________________________________
BROADCAST MUSIC, INC.,
                                         B306245
       Plaintiff,
       v.

CURRENCY CORPORATION,

        Defendant and Appellant;

STRUCTURED ASSET SALES, LLC,

       Defendant and Respondent.
     APPEALS from orders of the Superior Court of Los Angeles
County. William F. Fahey, Judge. Affirmed.

     Law Offices of F. Jay Rahimi, F. Jay Rahimi; Matthew D.
Kanin; AlvaradoSmith and William M. Hensley for Defendant
and Appellant Structured Asset Sales, LLC.

     Krane & Smith, Jeremy D. Smith and Daniel L. Reback for
Defendant and Appellant Currency Corporation.

                    _________________________

       This interpleader action arises out of a lengthy legal battle
between Structured Asset Sales, Inc. (Structured) and Currency
Corporation (Currency) over royalties and rights related to two
sets of musical compositions. Years of litigation and multiple
appeals later, the trial court determined that Currency is entitled
to the royalties as well as the rights to one set of musical
compositions (Named Songs), that it has a security interest in the
other set of musical compositions (Remainder Songs), and that
Structured has no rights. All that remains is litigation over
attorney fees and sanctions.
       Presently, Currency appeals from the denial of its motion to
recover the attorney fees it incurred litigating consolidated
appeals resolved in 2019. Structured appeals from the denial of
its motion for sanctions pursuant to Code of Civil Procedure

                                 2
section 128.7.1 In that motion, Structured contended that
Currency’s motion for attorney fees was frivolous because it was
barred by law of the case.
       We find no error and affirm.
       In part I of the Discussion, we conclude that the law of the
case doctrine barred Currency’s motion. In part II of the
Discussion, we hold that a party is not entitled to sanctions
pursuant to section 128.7 unless the target of the motion has had
a full 21 days to withdraw the allegedly offending paper, claim,
defense, contention, allegation, or denial. Thus, a moving party
cannot file a motion for sanctions until the 22nd day after the
motion was served. Nor can the moving party file a motion for
sanctions if the objectionable document has been resolved during
the 21-day safe harbor period. When calculating the earliest
possible day that a motion for sanctions can be filed, section 12
applies such that the day the motion was served is excluded and
the last day is included. The trial court properly denied the
motion for sanctions because it had resolved the attorney fees
motion on the 21st day after service of the motion for sanctions,
the last day of the safe harbor period.
                               FACTS2
“First Interpleader Action
       “In a limited jurisdiction action, Broadcast Music, Inc.
(BMI) filed an interpleader complaint against Currency, Music
Royalty Consulting, Inc. (Music Royalty), [Adeniyi Jacob Paris
[(Paris)] and Structured alleging: BMI was in the business of
licensing the public performance rights of copyrighted musical
compositions. Paris’s works have been licensed by BMI since

1     All further references are to the Code of Civil Procedure
unless otherwise indicated.

                                 3
1970. In September 2006, $889.92 in royalties became payable
due to the performance of Paris’s works.
       “Structured claimed a right to the royalties due to a
January 10, 2006 assignment (January 10 Assignment).
Currency, Music Royalty, and Paris, in contrast, averred that
Currency had a perfected security interest in Paris’s works,
Currency foreclosed on the Named Songs because Paris defaulted
on loans from Currency, and Music Royalty purchased the
Named Songs at a public sale. They further averred that the
portion of the royalties ‘attributable to [the Named Songs, i.e.,]
those compositions of [Paris] entitled “Lulu,” “Sooner or Later,”
and “I’ve Just Got a Feeling Something” (alternate title
“Something Good Is Coming My Way”) . . . should be distributed
by BMI to [Music Royalty],’ and the portion of the royalties as to
the rest of Paris’s works [, i.e., the Remainder Songs,] should be
distributed to Currency.
       “The two main parties—Structured and Currency—sought
to undermine the other’s position with BMI. Structured claimed
that Currency and Music Royalty did not have a claim to the
royalties because Currency’s loans to Paris were invalid due to
violations of the Financial Code, and because the public sale was
invalid. Currency, on the other hand, asserted that the
January 10 Assignment was rescinded by Paris or was otherwise
unenforceable.

2     In setting forth the facts of this case, we quote from
Broadcast Music, Inc. v. Structured Asset Sales, LLC (July 30,
2019, B272418) [nonpub. opn.] (Broadcast Music III), a decision
in which we decided two of the appeals related to the parties’
extensive litigation.

                                4
       “BMI requested a legal determination regarding how it
should distribute the royalties. The complaint incorporated
documentation of the public sale to Music Royalty, the transfer of
title to Music Royalty, and Paris’s assignment to Structured.
       “Paris defaulted. Structured defaulted, too, because it
determined that $889.92 was not worth the cost of litigation.
While the case was pending, Music Royalty assigned its interest
in the Named Songs to Currency. Music Royalty was later
dismissed.
       “The judgment (2007 Judgment) awarded the interpleaded
royalties to Currency.” (Broadcast Music III, B272418, supra, at
pp. 3–4, fn. omitted.)
“Second Interpleader Action
       “In an unlimited jurisdiction action, BMI filed a complaint
for interpleader and declaratory relief against Currency, Music
Royalty, Paris and Structured. The complaint alleged that BMI
was in possession of $771.94 in royalties and indicated,
essentially, that Structured claimed ownership of all rights to the
works through the January 10 Assignment and Currency claimed
it was entitled to all of Paris’s works due to the collateral estoppel
effect of the first interpleader action. BMI requested a legal
determination as to who should receive the royalties and a
declaration of the parties’ rights.
       “Currency moved for summary judgment based on the
collateral estoppel effect of the 2007 Judgment.[3] The evidence

3    “This was Currency’s second motion for summary
judgment. Previously, the trial court granted Currency’s first
motion for summary judgment and we reversed in Broadcast
Music, Inc. v. Structured Asset Sales, Inc. (Nov. 25, 2014,
B248011) [nonpub. opn.]. Currency’s first motion was deficient

                                  5
established that the Named Songs were the only songs to ever
generate royalties. In its papers, Currency disavowed any claim
to the Remainder Songs. Structured filed a cross-motion for
summary judgment and claimed ownership of all the works based
on the January 10 Assignment.
       “The trial court granted Currency’s motion and denied
Structured’s motion based on collateral estoppel and Structured’s
failure to establish a triable issue as to whether it obtained a
valid assignment. Also, the trial court deemed the motions to be
‘motions for declaratory relief[,] and in that respect[] a
declaration [was] made as to the relief sought by [the] parties in
their cross-motions and in their [a]nswers[.]’ The judgment
stated Currency was entitled to recover the interpleaded funds.
It declared that Structured had no rights to any of the songs,
Currency was the owner of the Named Songs, and Paris was the
owner of the Remainder Songs subject to Currency’s security
interest.
       “Structured appealed the judgment.
       “On June 13, 2016, Currency filed and served a notice and
notice of motion for $176,869.09 in attorney fees and costs. It
sought relief alternatively under Civil Code section 1717 or
former section 128.5. Structured filed a motion to tax costs. On
August 23, 2016, the trial court granted Currency’s motion under
former section 128.5 and denied Structured’s motion.
       “Structured appealed the sanctions order.” (Broadcast
Music III, B272418, supra, at pp. 4–6, fn. omitted.)

because it focused on ownership of the Named Songs and did not
resolve, inter alia, issues pertaining to the Remainder Songs or
the source of the royalties.”

                                6
Broadcast Music III
       In Broadcast Music III, we affirmed the judgment “because
collateral estoppel establishes that Currency owns the Named
Songs, and because Structured failed to establish that it has a
valid assignment of the Remainder Songs.” (Broadcast Music III,
B272418, supra, at p. 2.) We reversed the sanctions “because
Currency’s motion violated section 128.7, subdivision (c)(1) by
failing to comply with the 21-day safe harbor provision, and by
combining a sanctions motion with a motion for attorney fees
under Civil Code section 1717.” (Broadcast Music III, supra, at
pp. 2–3.) We concluded that the denial of the motion to tax costs
was moot. (Id. at p. 3.)
       At the end of Broadcast Music III, we stated: “Currency
requests an award of attorney fees on appeal based on Civil Code
section 1717. But an award of such fees on appeal is only
warranted when they were previously granted at the trial level.
(Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 923
[‘Where a [Civil Code] section 1717 fee award is made at the trial
level, the prevailing party may, at the appropriate time, request
fees attributable to a subsequent appeal’].) Here, the trial court
did not award attorney fees based on Civil Code section 1717. [¶]
Currency requests that we award it attorney fees for ‘the prior
two appeals.’ We are not aware of any authority permitting [the]
Court of Appeal to reach back in time and make an award in an
appeal that is final. [¶] We decline these requests.” (Broadcast
Music III, B272418, supra, at p. 17.)
       The disposition directed the parties to bear their own costs
on appeal. (Broadcast Music III, B272418, supra, at p. 18.)

                                 7
Currency’s Motion for Attorney Fees
        On November 8, 2019, Currency filed a motion pursuant to
Civil Code section 1717 for $209,385 in attorney fees incurred on
appeal in Broadcast Music III. The hearing date was identified
as December 11, 2019.
Safe Harbor Notice of Structured’s Motion for Sanctions
        On November 20, 2019, Structured served but did not file a
section 128.7 motion for $19,145.15 in sanctions in which it
argued that Currency’s motion for attorney fees incurred on
appeal was frivolous because it was foreclosed by law of the case
in Broadcast Music III.
Denial of Currency’s Motion for Attorney Fees
        The parties convened for a hearing on Currency’s motion
for attorney fees on December 11, 2019.
        Prior to hearing argument, the trial court stated: “This is
. . . [Currency’s] motion for attorneys’ fees on appeal. . . . And the
tentative is to deny it. [¶] The Court of Appeal has clearly
spoken in this case and indicated in two portions . . . of the
opinion that an award of appellate attorneys’ fees cannot be given
when it was not granted at the lower court level, and, of course, it
was not here. [¶] And in addition, the Court of Appeal[] said the
parties on appeal shall bear their own cost, which in this case
would include attorneys’ fees.” Later, in response to an argument
from Currency, the trial court concluded that it was bound by the
holding in Broadcast Music III that an award of attorney fees
pursuant to Civil Code section 1717 is “‘only warranted when
they were previously granted at the trial level[.]’” The trial court
added: “I think, frankly, by failing to pursue before [the previous
judge] an award of attorneys’ fees, the ship sailed. You waived
it.”

                                  8
       The trial court denied the motion.
       Currency appealed.
The Filing of Structured’s Motion for Sanctions
       On December 13, 2019, Structured filed its section 128.7
sanctions motion.
Denial of Sanctions
       On January 9, 2020, the trial court called Structured’s
sanctions motion for a hearing and concluded that Structured
had failed to give Currency the benefit of the full 21-day safe
harbor period required by section 128.7 and Li v. Majestic
Industry Hills LLC (2009) 177 Cal.App.4th 585, 588–596 (Li).
The sanctions motion was denied.
       Structured appealed.
                           DISCUSSION
I. Currency’s Appeal.
       Currency contends: (1) the law of the case doctrine did not
bar the trial court from awarding attorney fees; and (2) it was
entitled to contractual attorney fees because it was the prevailing
party in an action that fell within the scope of the attorney fee
provision in Paris’s security agreement. We conclude that the
trial court correctly applied the law of the case doctrine. The
second issue is moot.
       Our review is de novo. (Leider v. Lewis (2017) 2 Cal.5th
1121, 1127 (Leider).)
       “‘The law of the case doctrine holds that when an appellate
opinion states a principle or rule of law necessary to the decision,
that principle or rule becomes the law of the case and must be
adhered to through its subsequent progress in the lower court
and upon subsequent appeal. [Citations.]’” (People v. Cooper
(2007) 149 Cal.App.4th 500, 524.) The doctrine does not apply

                                 9
unless the point of law involved was necessary to the prior
decision, the matter was presented to the court and determined
by it, and application of the doctrine will not result in an unjust
decision. (Ibid.) The doctrine is applicable to “‘questions not
expressly decided but implicitly decided because they were
essential to the decision on the prior appeal.’ [Citation.]” (Leider,
supra, 2 Cal.5th at p. 1127.)
        In Broadcast Music III, we necessarily determined that in
the context of this case an award of attorney fees incurred in the
trial court had to precede an award of attorney fees incurred on
appeal. The issue was presented to us when Currency made a
one sentence request that we award attorney fees incurred on
appeal even though there had been no prior finding that an
applicable contract provided for attorney fees and that Currency
was the prevailing party on that contract. In essence, we held
that Currency waived any further claims to attorney fees when it
sat on its rights by not insisting on a ruling on its original motion
and by not appealing the trial court’s de facto denial of that
motion.4 A waiver may occur as a result of an intentional
relinquishment of a known right or an act which, according to its
natural import, is so inconsistent with an intent to enforce the
right as to induce a reasonable belief that such right has been
relinquished. (Nordstrom Com. Cases (2010) 186 Cal.App.4th
576, 583.) By not pursuing its rights, Currency intentionally
abandoned its contractual attorney fees theory and decided to put
all its eggs in one basket, choosing to rely on the sanctions award
to recoup its expenses.

4      If Currency had obtained a ruling from the trial court or
appealed the trial court’s failure to rule on its motion for attorney
fees, there would be no waiver.

                                 10
II. Structured’s Appeal.
      According to Structured, the trial court erred when it
calculated the safe harbor period and applied Li when denying
the sanctions motion. We disagree.
      Our review is de novo because the issue presented is one of
statutory interpretation. (Klem v. Access Ins. Co. (2017) 17
Cal.App.5th 595, 619). The goal of statutory interpretation is to
“ascertain the intent of the Legislature so as to effectuate the
law’s purpose. [Citation.]” (California Ins. Guarantee Assn. v.
Workers’ Comp. Appeals Bd. (2012) 203 Cal.App.4th 1328.) If a
statute is clear and unambiguous, the obvious meaning must
ordinarily be accepted. (Ibid.)
      Section 128.7, subdivision (c)(1) establishes that a notice of
motion for sanctions “shall be served as provided in Section 1010,
but shall not be filed with or presented to the court unless, within
21 days after service of the motion, or any other period as the
court may prescribe, the challenged paper . . . is not
withdrawn[.]” “‘Service of the motion on the offending party
begins a [21]-day safe harbor period.’” (Martorana v. Marlin &
Saltzman (2009) 175 Cal.App.4th 685, 698, fn. omitted
(Martorana).) The purpose of the safe harbor period is to allow a
party to withdraw an objectionable document and thereby
conserve judicial resources as well as save the parties the time
and expense of litigating sanctions. The statute is remedial, not
punitive. (Li, supra, 177 Cal.App.4th at pp. 593–594; Martorana,
supra, at p. 699.) We conclude that the statute is unambiguous.
A sanctions motion cannot be filed until the 22nd day after
service of the motion, i.e., after the 21-day safe harbor period
expires.

                                 11
       The statute does not provide a formula for calculating the
safe harbor period. We turn to section 12 for guidance. It
provides: “The time in which any act provided by law is to be
done is computed by excluding the first day, and including the
last, unless the last day is a holiday.” (§ 12.)
       When the date the sanctions motion was served (Nov. 20,
2019) is excluded from the calculation, the 21st day of the safe
harbor period was December 11, 2019. The 22nd day following
service—and the first day that Structured’s motion for sanctions
could conceivably have been filed under the terms of section
128.7—was December 12, 2019. It was, of course, not filed until
December 13, 2019.
       Nonetheless, the trial court correctly concluded that
sanctions motion was improperly filed, and that sanctions would
have been unauthorized. “If the merits of the objectionable
document are resolved by the court prior to the expiration of the
safe harbor period, there is nothing left to correct or withdraw,
thereby undermining the remedial purpose of the safe harbor
provision. (Li, supra, 177 Cal.App.4th at p. 594.) The “central
principle to be distilled from section 128.7’s language and
remedial purpose, as well as from appellate opinions interpreting
section 128.7 and [the federal rule it was modeled after], is that
the safe harbor period is mandatory and the full 21 days must be
provided absent a court order shortening that time if sanctions
are to be awarded.” (Li, supra, at p. 595.) Thus, if the
objectionable document is resolved by the court during the safe
harbor period, sanctions cannot be awarded. (Id. at pp. 595–596.)
Here, the objectionable document (the motion for attorney fees)
was resolved on December 11, 2019, which was the last day of the
safe harbor period and before that period expired. Consequently,

                                12
the sanctions motion was improperly filed on December 13, 2019.
If Structured wanted to preserve its right to obtain sanctions, it
should have requested an order shortening the safe harbor period
or sought a continuance of the attorney fees motion to a later
date. (Id. at p. 594.)
       Contrary to which Structured assumes, 21 days is not a
notice period. It is strictly a safe harbor period. It defines when
the target of a sanctions motion can act without penalty and
withdraw an objectional document. The time for filing a
sanctions motion is dictated by the safe harbor period because,
per the clear import of the statute, a motion for sanctions must be
filed outside the safe harbor period. It cannot be filed on day one
of the safe harbor period, day 21 of the safe harbor period, or any
day in between. Moreover, a sanctions motion is improperly filed
where, as here, the objectionable document was resolved during
the safe harbor period.
                           DISPOSITION
       The orders are affirmed. The parties shall bear their own
costs on appeal.
       CERTIFIED FOR PUBLICATION.

                              __________________________, J.
                                    ASHMANN-GERST
We concur:

_____________________________, P. J.
           LUI

____________________________, J.
           CHAVEZ

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