Court Opinion

ID: 8208472
Source: CourtListenerOpinion
Date Created: 2022-09-22 17:02:27.077662+00
Date Added: 2024-06-11T16:41:32.785542
License: Public Domain

Filed 9/22/22 Yue v. Alvernaz Partners CA1/2
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                   DIVISION TWO

 JERRY YUE,

             Plaintiff and Respondent,                                  A161119
 v.
                                                                        (Alameda County Super.
 ALVERNAZ PARTNERS, LLC et al.,                                         Ct. No. RG19014821)
             Defendants and Appellants.

         Jerry Yue (Yue) purports to own a 50 percent interest in the real
property located at 424 Merritt Avenue in Oakland. After Yue’s ex-wife
defaulted on a third-position loan secured by the property, a non-judicial
foreclosure ensued. In turn, Yue brought suit for wrongful foreclosure and
other claims against several defendants, including Cosmas Mahagama
(Mahagama), who funded the third-position loan. Mahagama appeals from
an order imposing monetary sanctions against him for misuse of the
discovery process, arguing that the order was an abuse of discretion and that
there was “substantial justification” for Mahagama’s alleged misconduct
under Code of Civil Procedure section 2023.030, subdivision (a),1 inter alia.

       All subsequent statutory references are to the Code of Civil
         1

Procedure unless otherwise noted.

                                                               1
We conclude that the trial court acted well within its discretion and assess
further sanctions against Mahagama for taking a frivolous appeal.
                              BACKGROUND
                                      I.
                               The Complaint
      On April 12, 2019, Yue filed a verified complaint for wrongful
foreclosure and other causes of action against Mahagama and two other
named defendants. The complaint alleges that in 1989, Yue recorded his
interest in the Oakland property, which he co-owned with his then-wife,
known today as Patricia Jiang. When the two divorced in 1998, Yue was
taken off the title. However, Yue and Jiang remained amicable and a grant
deed recorded two years later restored Yue to half ownership.
      On May 6, 2015, without Yue’s knowledge, Jiang took out a second
mortgage in the amount of $350,000 and a third mortgage of $135,000, both
of which were secured against the Oakland property. The second position
deed of trust was held by a Stuart Herman, with Mahagama holding the
third position. To arrange the loan, Mahagama hired Olympia Financial
Mortgage, Inc. (Olympia), and to insure title to the Oakland property, he
contracted with Fidelity National Title Company (Fidelity). The grant deed
and deed of trust recorded in connection with Mahagama’s loan make no
mention of Yue’s interest in the property.
      After Jiang fell behind on the loan payments, an August 31, 2018
Notice of Default began the non-judicial foreclosure process underlying Yue’s
complaint.

                                       2
                                       II.
                                   Discovery
      On January 21, 2020,2 Mahagama was served Yue’s “Special
Interrogatories Set One,” “Requests for Production of Documents Set One,”
“Requests for Admissions, Set One” and “Form Interrogatories Set One.”
Those discovery requests went unanswered until March 27, the date of
Mahagama’s unverified “Responses to Plaintiff Jerry Yue’s Special
Interrogatories, Set One.” On May 13, Mahagama finally provided verified
responses to the interrogatories but produced no documents until his
“Amended Responses to . . . Yue’s Requests for Production of Documents, Set
One” were served on May 22.
      On May 19, Yue requested an informal discovery conference. When the
trial court held the conference on June 1, it agreed with Yue’s counsel, who
argued that Mahagama’s then-current responses were deficient for their
various failures to comply with relevant provisions of the Code of Civil
Procedure. Accordingly, Mahagama’s counsel promised to “investigat[e] and
provid[e] . . . code-compliant responses.” However, he failed to respond for
another four weeks.
      On June 25, having received none of the promised responses, Yue filed
a “Motion to Compel Responses to Requests for Production of Documents and
Special Interrogatories and Request for Sanctions Against Defendant Cosmas
Mahagama and His Attorney . . . .” Yue’s motion argued that Mahagama had
failed to produce code-compliant responses to Yue’s discovery requests and
that Mahagama appeared to be withholding information and documents he
had a legal obligation to produce. In support of the latter argument, Yue
cited Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 782, for the proposition

      2   All dates below refer to the year 2020 unless otherwise noted.

                                        3
that a party “cannot plead ignorance to information which can be obtained
from sources under his control.” Thus, according to Yue, Mahagama had a
duty to request relevant materials from “his agents,” Olympia and Fidelity.
      Mahagama served his unverified “Second Amended Responses to . . .
Yue’s Requests for Production of Documents, Set One” on June 29, later
verifying those responses on August 20. He filed an opposition to Yue’s
motion to compel on August 13, arguing that any materials “in the
possession, custody and control of Olympia . . . and Fidelity” were not within
Mahagama’s control. As to the failure of his previous responses to comply
with the Code of Civil Procedure, Mahagama’s opposition suggested that any
such defects had been remedied by his June 29 responses. On August 26, the
motion to compel was argued before the Honorable Paul D. Herbert.
                                        III.
                 The Order Imposing Monetary Sanctions
      The trial court issued its order granting the motion to compel and
imposing monetary sanctions on Mahagama on September 9. Relying in part
on the passage from Deyo v. Kilbourne cited in Yue’s motion, the trial court
held that “if Mahagama has a legal right to obtain the documents requested
by [Yue], Mahagama must exercise that right and then provide the requested
documents . . . .” In addition to that discussion of “control,” the trial court’s
order observes that “by the time the moving party filed this motion,
Mahagama still had not provided verified, code[-compliant] responses to the
Requests at issue herein.” Accordingly, the trial court found that
“Mahagama’s unreasonable conduct necessitated the filing of this motion and
that Mahagama opposed this Motion without substantial justification.” For
those reasons, Mahagama was ordered to “pay $7,314.00 to [Yue’s] counsel to
compensate for the time spent on” the motion to compel.

                                         4
      After Mahagama timely filed this appeal challenging the trial court’s
sanctions order, Yue moved this court to sanction Mahagama and his
attorney, arguing that the appeal was frivolous or taken solely for delay.
                                DISCUSSION
      We must therefore decide whether the trial court abused its discretion
in sanctioning Mahagama, and if not, whether raising that question was so
frivolous or dilatory as to call for further sanctions. Because there was no
abuse of discretion and no good reason to believe otherwise, we affirm the
trial court’s order and assess further sanctions against Mahagama and his
counsel.
                                        I.
               The Trial Court Acted Within Its Discretion.

      Mahagama argues that the trial court erred in its September 9 order
imposing monetary sanctions on him in the amount of $7,314.00. We
disagree.
      A trial court’s order imposing monetary sanctions is reviewed for abuse
of discretion. (Kwan Software Engineering, Inc. v. Hennings (2020)
58 Cal.App.5th 57, 73.) It will be reversed “only if [the trial court] was
arbitrary, capricious, or whimsical in the exercise of that discretion.”
(Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th
154, 191 (Howell), disapproved on another ground by Presbyterian Camp &
Conference Centers, Inc. v. Superior Court (2021) 12 Cal.5th 493, 516, fn. 17.)
“An order or judgment correct on any theory will be affirmed on appeal,” even
where the trial court “might have had the wrong statute in mind.” (Mattco
Forge, Inc. v. Arthur Young & Co. (1990) 223 Cal.App.3d 1429, 1440 (Mattco
Forge).)

                                        5
      “[I]n reviewing the trial court’s determination, ‘[w]e defer to the court’s
credibility decisions and draw all reasonable inferences in support of the
court’s ruling.’ [Citation.] To the extent the trial court’s decision to issue
sanctions depends on factual determinations, we review the record for
substantial evidence to support those determinations. [Citation.] Thus, our
review ‘ “begins and ends with the determination as to whether, on the entire
record, there is substantial evidence, contradicted or uncontradicted, which
will support the determination [of the trial court].” ’ ” (Howell, supra,
18 Cal.App.5th at p. 192.)
      Section 2023.030, subdivision (a), provides that a trial court “may
impose a monetary sanction ordering that one engaging in the misuse of the
discovery process . . . pay the reasonable expenses, including attorney’s fees,
incurred by anyone as a result of that conduct.” “Misuses of the discovery
process include, but are not limited to [¶] . . . [¶] [m]aking, without
substantial justification, an unmeritorious objection to discovery,” and
“[m]aking an evasive response to discovery.” (§ 2023.010, subds. (e), (f).)
When monetary sanctions are authorized, the trial court must “impose that
sanction unless it finds that the one subject to the sanction acted with
substantial justification or that other circumstances make the imposition of
the sanction unjust.” (§ 2023.030, subd. (a).)
      “The party subject to sanctions bears the burden to establish it acted
with substantial justification or other circumstances make the imposition of
the sanction unjust. [Citation.] Substantial justification means clearly
reasonable justification that is well grounded in both law and fact.
[Citations.] The losing party has the burden of proving substantial
justification on appeal. [Citations.]” (Padron v. Watchtower Bible & Tract
Society of New York, Inc. (2017) 16 Cal.App.5th 1246, 1269.)

                                         6
      Here, the trial court ordered Mahagama to “pay $7,314.00 to [Yue’s]
counsel to compensate for the time spent on” Yue’s June 25 Motion to Compel
Responses to Requests for Production of Documents and Special
Interrogatories. In so ruling, the trial court found that “Mahagama’s
unreasonable conduct necessitated the filing of [Yue’s] motion.”
      Accordingly, Yue’s motion provides crucial context for the trial court’s
order. In that motion, Yue rested his argument for sanctions on two discrete
grounds. First, Yue argued under sections 2031.300 and 2023.010, which
govern the sanctionable misconduct that occurs when a party
“unsuccessfully . . . opposes a motion to compel” responses without
“substantial justification.” In that category of misconduct Yue placed
Mahagama’s then-ongoing refusal to demand or request information from
Fidelity. Secondly, Yue argued that Mahagama “engag[ed] in conduct that is
a misuse of the discovery process” under section 2023.030 by providing
deficient responses to Yue’s requests; according to Yue, Mahagama’s
responses were “ ‘evasive’ ” and failed to comply with multiple requirements
of the Code of Civil Procedure.
      That the trial court ordered sanctions on the second ground as well as
the first is evident from the order’s discussion of Mahagama’s “unreasonable
conduct.” Mahagama was originally served the discovery requests at issue
“on January 21.” He “failed to respond” within the statutorily prescribed 35-
day window and in turn “waived any objections to the [r]equests.” Although
Mahagama eventually responded, the inadequacy of his responses was the
subject of an informal discovery conference requested by Yue on May 19. At
that conference, the trial court informed Mahagama that his “responses were
deficient and further responses were warranted.” By the time Yue filed the

                                       7
motion that led to the trial court’s order, “Mahagama still had not provided
verified, code[-compliant] responses.”
      Not only are these statements of fact supported by substantial
evidence; they are uncontested. Both parties agree that the discovery
requests underlying the sanctions were served on Mahagama on or around
January 21. In his opposition to Yue’s motion to compel, Mahagama
“agree[d] that since his attorney did not obtain an extension of time to
respond to the requests for production and interrogatories . . . , his objections
to these responses have been waived.” At the hearing on the same motion,
Mahagama’s attorney acknowledged that “in [the] informal discovery
conference on Monday, June 1st, . . . the Court agreed with [Yue’s attorney]
that [Mahagama’s] amended responses to the request for documents were
deficient and that further responses were warranted.” Mahagama’s counsel
went on to note that Mahagama’s ostensibly code-compliant responses3 were
not served on Yue until June 29—four days after Yue filed the motion to
compel—and that Mahagama didn’t verify them until the week before the
August 26 hearing.
      Nor is there any doubt as to the failure of Mahagama’s responses to
comply with the requirements of the Code of Civil Procedure before Yue filed
the motion to compel. The responses operative at that time were
Mahagama’s verified “Amended Responses to Plaintiff Jerry Yue’s Special
Interrogatories, Set One,” and verified “Amended Responses to Plaintiff Jerry

      3 Replying to Mahagama’s opposition to the motion to compel, Yue
denied that those June 29 responses were fully code-compliant. Because the
deficiency of Mahagama’s earlier responses is dispositive of this appeal, we do
not decide whether his later responses satisfied all relevant statutory
requirements.

                                         8
Yue’s Requests for Production of Documents, Set One”—both served in May—
and their deficiencies are beyond dispute.
      An illustrative example can be found in Mahagama’s May 22 response
to Yue’s “Request for Production No. 48,” which asked Mahagama to “produce
all documents and communications REFERRING TO the SUBJECT
PROPERTY.” Section 2031.210, subdivision (a), requires a non-objecting
party to respond to a demand for production by either stating that the party
“will comply with the particular demand” or representing “that the party
lacks the ability to” do so. The latter kind of representation should: “affirm
that a diligent search and a reasonable inquiry has been made in an effort to
comply with that demand[;] . . . specify whether the inability to comply is
because the particular item or category has never existed, has been
destroyed, has been lost, misplaced, or stolen, or has never been, or is no
longer, in the possession, custody, or control of the responding party[; and]
set forth the name and address of any natural person or organization known
or believed by that party to have possession, custody, or control of that item
or category of item.” (§ 2031.230.)
      When responding to Request 48 (and several others), Mahagama failed
to make any such representation, stating only that he “refers to the attached
Exhibits ‘A’ and ‘B’ Deeds of Trust, the Exhibit ‘C’ Notice of Default,” the
Exhibit ‘D’ Trustee’s Deed upon Sale, the Exhibit ‘E’ Preliminary Report, and
the Exhibit ‘F’ Loan Policy.” More, Mahagama’s June 29 responses do
contain such representations—a tacit concession that his earlier responses
failed to comply with the Code of Civil Procedure in this respect. This was no
trivial omission, either, given the paucity of materials Mahagama had
produced. As Yue argued in his motion to compel, the “equivocal statement”
in Mahagama’s May 22 response could do “nothing to assuage the concern

                                        9
that” Mahagama, or his “attorney/agents may have some documents
responsive to this request.” In light of Mahagama’s contemporaneous failure
to have produced any of his correspondence with Olympia, for example, this
was an eminently reasonable concern. 4, 5
      In his opening brief, Mahagama argues that the “Second Amended
Responses” he served on June 29 and verified on August 20 met “the
requirements of Code of Civil Procedure Section 2031.230.” Thus, Mahagama
claims to have served verified, code-compliant responses before the
September 9, 2022 sanctions order. This argument ignores that the sanctions
order rested in part on the ground that “Mahagama’s unreasonable conduct
necessitated the filing of” Yue’s June 25 motion to compel. That basis for the
trial court’s order is unaffected by Mahagama’s post-June 25 conduct.
Moreover, Mahagama did not concede that his responses were inadequate.
He filed opposition to the motion, which required Yue to expend additional
time and funds to obtain a ruling that would resolve the issues that remained
in dispute.
      Furthermore, as our colleagues in the Second District found in Sinaiko
Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007)
148 Cal.App.4th 390, 408-409 (Sinaiko), a “trial court retains the authority to
hear the motion” to compel responses even if “a party provides an

      4   Mahagama produced such correspondence later, on August 6.
      5  We grant Yue’s unopposed January 25, 2022 request for judicial
notice under Evidence Code section 452, subdivision (d). (Cal. Rules of Court,
rule 8.252 (a)(2)(C).) As relevant here, we note that on June 18, 2021, the
trial court denied Mahagama’s motion for summary judgment because there
remained a triable issue of material fact concerning Mahagama’s “liability for
the actions of his agents Olympia Financial and Fidelity National Title
Company in recording a Deed of Trust and Grant Deed on May 6, 2015[,] that
appears to represent that . . . Jiang was the only interest in the title.”

                                      10
untimely . . . response” which “might completely or substantially resolve the
issues raised by [that] motion.” In such a case, the court “might deny the
motion to compel responses as essentially unnecessary . . . and just impose
sanctions.” (Id. at p. 409.) Here, where we are reviewing the imposition of
sanctions and not the portion of the order compelling further responses, it is
enough to note that the trial court maintained the authority to impose those
sanctions even after Mahagama produced his June 29 responses, and that it
remained within the court’s discretion to sanction Mahagama for the
misconduct he committed before those untimely responses were served.
        As to that misconduct, Mahagama has made no showing that would
support a finding that he “acted with substantial justification” so as to
exempt him from sanctions under section 2023.020. Rather, he argues that
he had substantial justification for opposing Yue’s June 25 motion for
sanctions, contending that he did not have “control” over the materials Yue
sought. However, because we uphold the order based on the misconduct that
pre-dated the filing of Yue’s motion, we need not reach the issue of “control”
here.
        Finally, we reject Mahagama’s contention that the trial court’s written
order lacks the specific findings purportedly required “to meet the ‘rudiments’
of due process.” As Yue notes in his opposition, the principal authority
Mahagama invokes for that contention, Lavine v. Hospital of the Good
Samaritan (1985) 169 Cal.App.3d 1019, 1029, concerns sanctions imposed for
frivolous actions or delaying tactics under section 128.5, not discovery
sanctions of the kind imposed here. In contrast to sanctions imposed under
section 128.5, when imposing discovery sanctions there is “no need for the
trial court to make written findings explaining its order.” (Mattco Forge,

                                       11
supra, 223 Cal.App.3d at p. 1438.) Thus, Mahagama’s “due process”
argument is unavailing.
      In sum, the trial court rightly observed that Yue’s June 25 motion to
compel was necessitated by “Mahagama’s unreasonable conduct.” It
identified as unreasonable conduct Mahagama’s failure to provide code-
compliant responses to Yue’s requests before the filing of Yue’s motion to
compel. The record supports these determinations with substantial evidence,
and Mahagama has not demonstrated on appeal that he had any substantial
justification for his failures in this respect. Thus, because “[a]n order . . .
correct on any theory will be affirmed on appeal,” we find no abuse of
discretion here. (Mattco Forge, supra, 223 Cal.App.3d at p. 1440.)
                                        II.
  This Court Assesses Sanctions on Mahagama and His Counsel for
                     Filing a Frivolous Appeal.
      Yue moves this court to sanction Mahagama under section 907, which
authorizes a “reviewing court” to “add to the costs on appeal such damages as
may be just,” upon finding “that the appeal was frivolous or taken solely for
delay.” (See also Cal. Rules of Court, rule 8.276 (a)(1).) For the reasons given
below, we find the instant appeal frivolous and grant the motion for sanctions
accordingly.
      In inquiring as to whether an appeal is frivolous, a reviewing court
measures the appeal against subjective and objective standards. (In re
Marriage of Flaherty (1982) 31 Cal.3d 637, 649.) An appeal is subjectively
frivolous “when it is prosecuted for an improper motive,” such as harassment
or delay, and objectively frivolous “when it indisputably has no merit.” (Id. at
p. 650.) “The two standards are often used together,” as when reviewing
courts view a “total lack of merit” as “evidence that [the] appellant must have
intended it only for delay.” (Id. at p. 649.)

                                        12
      This appeal’s “total lack of merit” is apparent. The only issue raised is
whether the trial court abused its discretion by sanctioning Mahagama on
September 9. The applicable standard of review is exceedingly deferential to
the trial court, requiring us to uphold the order if it is “correct on any theory”
and allowing us to reverse it “only if it was arbitrary, capricious, or
whimsical.” (Mattco Forge, supra, 223 Cal.App.3d at p. 1440; Howell, supra,
18 Cal.App.5th at p. 191.) Here, the order itself justifies the imposition of
sanctions on at least one theory that is not seriously contested: the failure of
Mahagama’s May 22 responses to comply with relevant provisions of the
Code of Civil Procedure. That failure “necessitated the filing” of Yue’s
June 25 motion to compel and thus, the trial court ordered Mahagama to pay
Yue’s attorney for the time he spent on that motion. Under Sinaiko, supra,
148 Cal.App.4th at pp. 408-409, an authority cited in Mahagama’s own
opening brief, Mahagama’s subsequent filing of ostensibly code-compliant
responses did nothing to affect the court’s authority to sanction him. And as
a matter of logic, responses filed after Yue’s motion to compel could do
nothing to affect the portion of the trial court’s order discussed ante.
      For Mahagama and his counsel at Fidelity National Title Group, Inc.
to challenge of a $7,314 sanction via a patently unmeritorious and far more
costly appeal is sanctionable—whether or not the purpose was delay or
harassment.6 An appeal may be held to be frivolous “when it is prosecuted

      6 The record in this case—including Yue’s unopposed April 25 and
June 16, 2022 requests for judicial notice under Evidence Code section 452,
subdivision (d), which we grant—reflects a pattern of failure to communicate
and other unreasonable conduct by Mahagama and his counsel that have
driven up Yue’s attorney fees and costs in this appeal and in the trial court.
While we make no finding regarding the motives of Mahagama and his
counsel, we note that such conduct is not without consequences; it wastes the

                                        13
for an improper motive—to harass the respondent or delay the effect of an
adverse judgment—or when it indisputably has no merit—when any
reasonable attorney would agree that the appeal is totally and completely
without merit.” (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650,
italics added.) Here, any reasonable attorney would recognize this appeal
is totally and completely without merit.
      Accordingly, we find the instant appeal frivolous and therefore sanction
Mahagama and his attorney in the amount of Yue’s attorney fees and costs.
That amount includes the costs of opposing Mahagama’s appeal, moving for
sanctions, and replying to Mahagama’s opposition to sanctions after
Mahagama’s late filing of a “Replacement Reply Brief” mitigated the
relevance of some of Yue’s arguments in the original motion for sanctions.
The total cost so incurred by Yue is $56,389.70.
                                 DISPOSITION
      We affirm the trial court’s order. We assess sanctions of $56,389.70
jointly and severally against Mahagama and his attorney, to be paid
immediately to Yue’s attorney.

courts’ and other litigants’ time and imposes costs that can be prohibitive for
litigants of limited means.

                                      14
                                          _________________________
                                          STEWART, Acting P.J.

We concur:

_________________________
MILLER, J.

_________________________
MAYFIELD, J.*

Yue v. Alvernaz Partners, LLC et al. (A161119)

     *
       Judge of the Mendocino Superior Court assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

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