Transcon Financial, Inc. v. Reid & Hellyer, APC

Citation: Not availableDocket: E076728

Court: California Court of Appeal; July 22, 2022; California; State Appellate Court

Original Court Document: View Document

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Reid. Hellyer, APC moved for sanctions against Transcon Financial, Inc. and its counsel, Ronald B. Talkov, under Code of Civil Procedure sections 128.5 and 128.7. The trial court granted both motions, ruling that Reid. Hellyer complied with the safe harbor provisions, allowing them to file the sanctions motion on the last day of the 21-day period. Transcon and Talkov appealed, arguing the court erred in this determination. The appellate court agreed, stating that the sanctions motions were improperly filed on the last day of the safe harbor period, which led to a violation of the statutory requirements. The court emphasized that under sections 128.5 and 128.7, a sanctions motion must not be filed until the 21-day safe harbor period has expired, confirming that Reid. Hellyer filed their motions prematurely. Consequently, the appellate court reversed the trial court's decision, indicating that sanctions were unwarranted and ordering that the costs imposed on Transcon and Talkov be vacated.

A party seeking sanctions under California Civil Code sections 128.5 and 128.7 must adhere to a two-step procedure. Initially, the moving party must serve the offending party with a motion for sanctions, which initiates a 21-day safe harbor period during which the moving party cannot file the motion, allowing the offending party the opportunity to withdraw the challenged pleading. If the offending party fails to withdraw within this period, the moving party may then file the sanctions motion. Notably, the motion must be filed only after the conclusion of the safe harbor period, specifically on the 22nd day or later. Strict compliance with these provisions is mandatory; failure to do so precludes the award of sanctions.

In the case discussed, the court erred, concluding that Reid. Hellyer complied with the safe harbor requirements when it filed sanctions motions on December 7, 2020, after serving them on November 12, 2020. The safe harbor period was extended by two court days due to electronic service, making the final date for withdrawal December 7, 2020. Therefore, the motions could not be filed until December 8, 2020. The trial court's miscalculation required reversal, as proper adherence to the safe harbor provisions would have mandated denying the sanctions motions. Reid. Hellyer’s reliance on the precedent from In re Marriage of Falcone, Fyke was misplaced; that case emphasized the importance of serving the same papers that would be filed with the court at least 21 days later.

Marriage of Falcone does not support Reid. Hellyer’s argument because the court did not address the propriety of filing on the 21st day after service. It is established that cases cannot serve as authority for unconsidered propositions. Furthermore, the interpretation of the relevant statutes aligns with the language cited by Reid. Hellyer, which states that a sanctions motion may be filed no less than 21 days after service. Filing on the 21st day constitutes filing less than 21 days later, contrary to the requirement that the entire 21-day period must elapse before filing. Consequently, the court erred in granting the sanctions motions, leading to a reversal of those orders with directions to deny both motions. Transcon and Talkov are entitled to recover their appeal costs. The ruling is certified for publication.