Opinion

McCluskey v. Henry

Court: California Court of Appeal
Filed: Nov 2, 2020
Status: Published
Cited by: 0 cases
Authority: More cited than 13.1%

The opinion

Filed 11/2/20

CERTIFIED FOR PARTIAL PUBLICATION *

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

VERONICA McCLUSKEY,

Plaintiff and Appellant,

A158851

(City and County of

JEFF HENRY, et al., San Francisco

Defendants and Respondents; Super. Ct. No. CGC18567741)

MICHAEL MOGAN,

Objector and Appellant.

In 2019, the trial court denied plaintiff Veronica McCluskey’s

request to lift the stay imposed in her lawsuit against defendants Jeff

Henry, Dave Willner, and Sanaz Ebrahini (collectively, defendants),

found the request both factually and legally frivolous, and granted

defendants’ motion for sanctions under Code of Civil Procedure section

128.7 1. The court imposed sanctions on McCluskey’s counsel, objector

and appellant Michael Mogan, in the amount of $22,159.50, reflecting

Pursuant to California Rules of Court, rules 8.1105(b) and

8.1110, this opinion is certified for publication with the exception of the

following portions of the Discussion: Section I.c. (The Motion Papers

Met Statutory and Constitutional Standards); Section I.d. (Sanctions

Order Met Statutory and Constitutional Standards); Part II

(Substantive Challenges); and Part III (Award of Attorney Fees).

1 All further unspecified statutory references are to the Code of

Civil Procedure.

attorney fees incurred in opposing the request to lift the stay. Finally,

the trial court denied McCluskey’s request for sanctions against

defendants for their filing of the motion for sanctions.

Mogan appeals the sanctions order 2 and defendants move for

sanctions against Mogan and McCluskey for the filing of the appeal.

We affirm the sanctions order and deny the request for sanctions on

appeal.

FACTS

A. Background

In the first amended complaint (the operative complaint),

McCluskey sought damages for the termination of her account with

Airbnb, Inc. premised upon one cause of action for intentional infliction

of emotional distress against defendants 3, employees of Airbnb. 4 In

late 2018, the trial court granted defendants’ motion to stay the action

and compel arbitration pursuant to an arbitration clause in the

contract between McCluskey and Airbnb.

2 The notice of appeal also names McCluskey as an appellant. We

dismiss her appeal as she has no standing to challenge the order

directing her counsel to pay sanctions. (K.J. v. Los Angeles Unified

School Dist. (2020) 8 Cal.5th 875, 888.) In addition, no appeal lies from

the denial of her request to the trial court for sanctions against

defendants. (Wells Properties v. Popkin (1992) 9 Cal.App.4th 1053,

1055-1056.)

3 The first amended complaint uses the proper spelling of Sanaz

Ebrahini’s name, but his surname is incorrectly spelled in other

documents as Evrahini.

Defendants have requested we take judicial notice of an order

and judgment issued in the United States District Court for the Central

District of California concerning litigation between McCluskey and

Airbnb. We deny the request as the documents are not necessary to the

resolution of this appeal. (See Ketchum v. Moses (2001) 24 Cal.4th

1122, 1135, fn. 1 [documents to be judicially noticed must be relevant].)

In February 2019, 5 McCluskey filed a claim for arbitration with

the American Arbitration Association (AAA), which set initial deadlines

for each party to pay filing fees. McCluskey paid her fee and AAA

acknowledged receipt. Airbnb 6 sent defendants’ fee by wire transfer,

but AAA did not acknowledge receipt.

In an April 9 email, AAA informed all counsel that it had

administratively closed the arbitration due to defendants’ failure to pay

their filing fee. Defense counsel immediately contacted AAA, and

several days later AAA responded it still had no record of payment. On

April 19, defense counsel sent AAA documentation of an April 5 wire

transfer and an email explaining the payment had been sent together

with payment for another AAA case, which perhaps was the source of

confusion.

On May 1, AAA emailed counsel for all parties that payment had

been received after a delay in applying the fee to the correct case.

Further, “[i]n order for this case to now move forward we would need

confirmation from the claimant that they want this case reopened since

5 All further dates occurred in 2019.

Defendants’ costs and attorney fees incurred in defending this

action were paid for by their employer Airbnb pursuant to its

obligations under Labor Code section 2802, which “requires an

employer to indemnify an employee who is sued by third persons for

conduct in the course and scope of his or her employment, including

paying any . . . attorney’s fees and costs incurred in defending the

action.” (Cassady v. Morgan, Lewis & Bockius LLP (2006) 145

Cal.App.4th 220, 230; see Edwards v. Arthur Andersen LLP (2008) 44

Cal.4th 937, 951-952 [under Lab. Code §§ 2802 & 2804, employer has

nonwaivable obligation to defend and indemnify employee for all

expenses and losses incurred by employee in direct consequence of

discharge of employee’s duties].)

it was previously closed. At this time we request counsel for claimant

copied on this correspondence to confirm they would like this reopened.

Please provide confirmation by May 6, 2019 or this case will remain

closed.” Not having heard from McCluskey or Mogan, on May 9 AAA

sent another email again informing counsel for all parties that

defendants’ payment had been received but due to the wire transfer

delay it was received after the due date, but further stating that “[a]t

this time we are sending a final request for confirmation you would like

that [sic] matter to be reopened. Absent the receipt of confirmation

from claimant to reopen this matter, we will keep this matter closed.

Please confirm on or before May 16, 2019.” (Underlining and bolded

language in original.)

Mogan again did not respond.

B. August 8 Order – Request to Lift Stay Denied

On May 10, Mogan filed McCluskey’s motion to lift the stay, and

filed an amended motion on July 1 (hereinafter referred to as “the

amended motion to lift the stay”). McCluskey sought to lift the stay

based on an assertion that, pursuant to section 1281.4 and section 3 of

9 U.S.C., defendants’ failure to pay their filing fee by April 5, the

deadline set by AAA, resulted in the administrative closing of the case

and constituted a default, waiver, lack of good faith and fair dealing, or

breach of the arbitration agreement. Defendants filed an opposition

with supporting documents, to which McCluskey replied, in part, by

filing evidentiary objections to portions of the documents.

On August 8, the trial court denied the amended motion to lift

the stay. It found AAA had administratively closed the case due to its

own clerical error and then repeatedly contacted McCluskey’s counsel

in order to reopen the matter. As counsel’s failure to respond was what

prevented the arbitration from proceeding, defendants were not in

default and the trial court would not allow McCluskey “to take

advantage of AAA’s clerical error” in order to evade her contractual

obligation to arbitrate her claims. The trial court did not rule on the

evidentiary objections to portions of the documents submitted by

defendants.

C. September 11 Order – Motion for Sanctions Granted

In response to the filing of the initial May 10 motion to lift the

stay, defendants served a section 128.7 sanctions motion. Following

the filing of the amended motion to lift the stay, defendants served

another (second) section 128.7 sanctions motion. After the August 8

ruling, defendants filed the second section 128.7 motion (hereinafter

referred to as the sanctions motion), which is now under review. The

relief sought was attorney fees incurred in opposing the initial motion

to lift the stay and related sanctions motion (served but not filed), as

well as those incurred in opposing the amended motion to lift the stay

and the sanctions motion under review.

McCluskey opposed the sanctions motion, requested discovery to

challenge the reasonableness of defendants’ attorney fees, and

requested an award of attorney fees for the filing of a frivolous

sanctions motion pursuant to section 128.7, subdivision (c)(1). She also

filed evidentiary objections to portions of the evidence submitted by

defendants in support of their sanctions motion.

Defendants filed a reply and another declaration from lead

defense counsel, attaching copies of emails, sent between August 16

and August 29, in which Mogan specifically asked AAA to provide

“some sort of proof” showing when defendants paid their fee, along with

AAA’s response that “[d]ue to our financial privacy policy we cannot

disclose financial information of other parties. We can only confirm

that Respondent’s wire transfer payment was posted to the case on

4/5/19.” McCluskey filed evidentiary objections to the August emails

contending they were not relevant to the issue of whether sanctions

should be imposed based on what Mogan knew at the time he filed the

amended motion to lift the stay.

At the September 11 hearing, the trial court informed Mogan

that the “recent developments” (apparently referring to the August

2019 emails in which AAA stated defendants paid the fee on April 5)

were “neither here nor there,” because it was “gamesmanship” for

Mogan to have filed the amended motion to lift the stay on the ground

that defendants had purportedly waived their right to arbitrate. The

court emphasized the record was clear – defendants had paid their AAA

fee, AAA had made a mistake causing it to administratively close the

case, and Mogan “sought to capitalize on that mistake by ignoring two

different communications from [AAA] asking you whether your client

wished to reopen the case, and instead [you] tried to run in here and

get an Order that the defendants had waived their right to arbitrate,

when they clearly hadn’t. [¶] By doing so, you imposed financial and

other burdens on your opponent and on the Court.”

In a September 11 written order, the trial court granted section

128.7 sanctions as the filing of the amended motion to lift the stay “was

both factually and legally frivolous”:

“In particular, the Court finds that [the] contention that

defendants were in ‘default’ in the arbitration proceedings was

entirely lacking in either evidentiary or legal support. In fact,

as set forth in the [August 8] order, and as was fully known to

[McCluskey’s] counsel, the [AAA] had made a clerical error by

misapplying defendants’ timely fees and then, as a result,

administratively closed the case. Once the AAA realized and

acknowledged its mistake, it requested confirmation from

plaintiff that she wanted the case reopened. [McCluskey’s]

counsel did not respond to that repeated request by the AAA, but

instead brought the frivolous motion to lift the stay, by which

counsel sought to take advantage of the AAA’s clerical error and

her own lengthy delays in order to evade her contractual

obligation to arbitration her claims and to avoid the effect of the

Court’s earlier order granting defendants’ petition to compel

arbitration. [McCluskey’s] counsel now compounds his

misconduct by accusing defendants’ counsel of ‘continued

attempts to commit fraud upon this Court and [McCluskey]’ and

of ‘lying,’ among other things, accusations which the Court finds

to be baseless and unprofessional. [McCluskey’s] contention that

the Court lacks jurisdiction to grant sanctions because it

previously granted defendants’ motion to compel arbitration is

mistaken. (See, e.g., Roberts v. Packard, Packard & Johnson

(2013) 217 Cal.App.[4th] 822, 841 [after granting petition to

compel arbitration, trial court retains jurisdiction over the case to

conduct further proceedings]). [McCluskey’s] contention that the

definition of a prevailing party in section 128.7 is

unconstitutionally vague is unsupported by any authority, and is

itself frivolous, as is [McCluskey’s] request for an award of

sanctions against defendants for bringing the instant motion.”

The trial court ordered Mogan to pay $22,159.50, as “reasonable”

attorney fees for opposing the amended motion to lift the stay. The

court declined to award fees incurred “in bringing the initial or the

instant sanctions motion.” The trial court did not rule on the

evidentiary objections to portions of the evidence submitted by

defendants in support of their sanctions motion.

DISCUSSION

Section 128.7 provides that a trial court may impose sanctions for

the filing of a pleading if the court “concludes the pleading was filed for

an improper purpose [(subdivision (b)(1)] or was indisputably without

merit, either legally or factually [(subdivision (b)(2), (3)]. [Citation.]”

(Peake v. Underwood (2014) 227 Cal.App.4th 428, 440 (Peake).) 7 In

determining whether to impose sanctions, section 128.7 subdivision (c)

states the court shall consider whether the party seeking sanctions

exercised due diligence and may, if warranted, award reasonable

expenses and attorney fees to the prevailing party. Subdivision (d)

limits the sanction “to what is sufficient to deter repetition of this

conduct or comparable conduct by others similarly situated” and

provides that a sanction may include payment “of some or all of the

reasonable attorney’s fees and other expenses incurred as a direct

result of the violation.” Finally, subdivision (e) requires the court to

7 Section 128.7 subdivision (b) requires that an attorney or party

filing a pleading, petition, or motion do so only if, “to the best of the

person’s knowledge, information, and belief, formed after an inquiry

reasonable under the circumstances, all of the following conditions are

met:

(1) It is not being presented primarily for an improper purpose,

such as to harass or to cause unnecessary delay or needless

increase in the cost of litigation.

(2) The claims, defenses, and other legal contentions therein are

warranted by existing law or by a nonfrivolous argument for the

extension, modification, or reversal of existing law or the

establishment of new law.

(3) The allegations and other factual contentions have

evidentiary support or, if specifically so identified, are likely to

have evidentiary support after a reasonable opportunity for

further investigation or discovery.

(4) The denials of factual contentions are warranted on the

evidence or, if specifically so identified, are reasonably based on a

lack of information or belief.”

describe the conduct determined to constitute a violation of this section

and explain the basis for the sanction imposed.

Here, sanctions were imposed based on the substantive finding

that the amended motion to lift the stay was “indisputably without

merit either legally or factually.” (Peake, supra, 227 Cal.App.4th at p.

440.) A claim is factually frivolous if it is “ ‘not well grounded in fact’ ”

and it is legally frivolous if it is “ ‘not warranted by existing law or a

good faith argument for the extension, modification, or reversal of

existing law.’ [Citation.]” (Ibid.) “In either case, to obtain sanctions,

the moving party must show the party’s conduct in asserting the claim

was objectively unreasonable. [Citation.] A claim is objectively

unreasonable if ‘any reasonable attorney would agree that [it] is totally

and completely without merit.’ [Citation.]” (Ibid.)

We review a section 128.7 sanctions order under an abuse of

discretion standard and therefore presume the trial court’s order is

correct and do not substitute our judgment for that of the trial court.

(Peake, supra, 227 Cal.App.4th at p. 441.) As explained below, Mogan

fails to demonstrate any reason to reverse the sanctions order.

I. Constitutional and Procedural Challenges

a. Constitutionality of Section 128.7

Mogan argues the sanctions order is unconstitutionally vague as

applied to him in violation of his due process rights under the federal

and state Constitutions. According to Mogan, section 128.7 “was not

drawn with sufficient clarity such that it properly[] informed” him as to

what he must do to avoid sanctions for reasonable attorney fees in the

situation involving litigation with defendants whose attorney fees and

costs were being paid for by their employer Airbnb. This argument is

without merit.

The trial court “has broad discretion to impose sanctions” if the

moving party satisfies the criteria in section 128.7, subdivision (b).

(Peake, supra, 227 Cal.App.4th at p. 441.) Contrary to Mogan’s

assertions, section 128.7 clearly states the specific criteria that must be

satisfied to avoid sanctions and further clearly states that attorney fees

or other expenses may be awarded as a result of sanctionable conduct.

The fact that Airbnb was paying attorney fees incurred by defendants

in no way could have misled Mogan as to his obligations under section

128.7 and the possible sanctions for failure to meet his obligations.

Accordingly, Mogan’s claim that section 128.7 is unconstitutionally

vague as applied to him fails.

b. Trial Court’s Jurisdiction to Issue Sanctions Order

Mogan argues we must strike the sanctions order as a matter of

law because the trial court exceeded its jurisdiction. As framed by

Mogan, since “the stay of all trial proceedings remained in effect, did

[section] 1281.4 prevent the trial court from hearing and ruling upon

the sanctions motions”? The short answer is no.

The procedural predicate for the trial court’s award of section

128.7 sanctions was not conduct that occurred in the arbitration

proceeding. (Cf. Optimal Markets, Inc. v. Salant (2013) 221

Cal.App.4th 912, 925 [where action was stayed pending arbitration,

trial court had no authority to impose section 128.7 sanctions for

conduct occurring before the arbitrator].) Rather, the award of

sanctions was based on Mogan’s conduct that occurred before the trial

court. Therefore, the trial court’s “jurisdiction” to entertain defendants’

motion for sanctions, like its jurisdiction to entertain McCluskey’s

amended motion to lift the stay, “derived from the original [] suit,

which was only stayed (not dismissed) pending the results of the

arbitration.” (LaPrade v. Kidder Peabody & Co., Inc. (D.C. Cir. 1998)

146 F.3d 899, 903 (LaPrade); italics in original.) Both section 1281.4

and section 3 of 9 U.S.C. “ ‘obviously envisage[ ] action in a court on a

cause of action and [do] not oust the court’s jurisdiction of the action,

though the parties have agreed to arbitration.’ ” (LaPrade, supra, at p.

903, quoting The Anaconda v. American Sugar Refining Co. (1944) 322

U.S. 42, 44; see Roberts v. Packard, Packard & Johnson, supra, 217

Cal.App.4th at p. 841 [accord].) 8

Further, “[t]he rationale behind the principle disfavoring judicial

interference with arbitration supports what the [trial] court did here.

The principle is based on the ‘congressional [and state legislative]

purpose that the arbitration procedure, when selected by the parties to

a contract, be speedy and not subject to delay and obstruction in the

courts.’ ” (LaPrade, supra, 146 F.3d at p. 903.) “Rather than interfering

8 Mogan argues that the use of the word “shall” in section 1281.4

and section 3 of 9 U.S.C. “specifically indicated that the statutes

imposed a non-discretionary obligation upon the trial court to stay all

trial proceedings until such arbitration has been [held] . . ., and thus

the trial court acted in excess of its jurisdiction in granting an order

imposing sanctions during the stay.” However, his citation to cases

analyzing the general use of “shall” and “may” in statutes in general is

without any persuasive value. (Landry v. Berryessa Union School Dist.

(1995) 39 Cal.App.4th 691, 699 [reversible error cannot be shown by

citations to statutes, case law, or secondary authority, for general

principles of law, without applying those principles to the case in

reasoned arguments].)

with the arbitration proceeding,” the trial court here “was attempting

to protect that proceeding and the effect of its own order.” (Ibid.)

In clear contradiction of the order compelling arbitration, Mogan,

on behalf of McCluskey, filed a motion to lift the stay, in effect seeking

to “stay the arbitration and remit the parties to judicial remedies.”

(LaPrade, supra, 146 F.3d at p. 903). Mogan pursued this relief even

though 10 days before the filing of the initial motion to stay, on May 1,

AAA had expressly informed counsel that AAA would arbitrate the

claim as soon as counsel confirmed McCluskey wanted to proceed to

arbitration. “Clearly the [trial] court had jurisdiction to address this

situation: it retained jurisdiction over the original suit,” despite the

stay of the action, as well as “jurisdiction” to ensure the parties adhered

to the previous order compelling arbitration, and as a necessary

corollary, it had the authority to impose section 128.7 sanctions for the

filing of a frivolous amended motion to lift the stay. (LaPrade, supra,

at p. 903).

c. The Motion Papers Met Statutory and Constitutional

Standards

Mogan contends that, in violation of section 128.7 and the due

process clauses of the federal (U.S. Cons., 14th Amend.) and state (Cal.

Const., art. I, § 7) Constitutions, defendants’ motion papers failed to

adequately inform him that sanctions were being sought for specific

conduct that violated the criteria in subdivision (b) of section 128.7.

The notice requirement governing a motion for sanctions

mandates that a person “be informed of: (1) the source of authority for

the sanctions being considered; and (2) the specific conduct or omission

for which the sanctions are being considered so that the subject of the

sanctions motion can prepare a defense. [Citation.] Indeed, only

conduct explicitly referred to in the instrument providing notice is

sanctionable. [Citation.]” (Schlaifer Nance & Co. v. Estate of Warhol

(2d Cir. 1999) 194 F.3d 323, 334.)

Here, defendants’ motion papers not only met the specific notice

requirements of subdivision (c)(1) of section 128.7 (separate motion,

description of specific conduct alleged to violate subdivision (b), and 21-

day period to allow for withdrawal of amended motion to lift stay), but

also met all the notice requirements of California Rules of Court, rule

3.1112(d). The notice of motion was captioned, “Defendants’ Notice of

Motion and Motion for Sanctions Pursuant to Cal. Civ. Proc. Code

Section 128.7” and the motion identified defendants as the parties

bringing the motion, named McCluskey and counsel as the parties to

whom the motion was addressed, and briefly stated the basis for the

motion, the pleading that was being challenged, and the relief sought.

In the attached memorandum of points and authorities, defendants

detailed the specific conduct of McCluskey and her counsel and the

reasons why such conduct violated subdivision (b) of section 128.7, and

made a specific request for attorney fees. Further, Mogan exercised his

due process right to defend by filing a lengthy opposition and appearing

for argument.

Accordingly, Mogan’s claim of a violation of his statutory and

constitutional rights to adequate notice and the right to defend fails.

d. Sanctions Order Met Statutory and Constitutional

Standards

Mogan contends the trial court’s September 11 order violated the

mandate of subdivision (e) of section 128.7 and his constitutional due

process notice rights. As the order specifically described Mogan’s

sanctionable conduct and explained the basis for the sanction imposed,

we disagree.

Mogan argues that section 128.7 requires a moving party to

“incur” attorney fees and, since Airbnb was the entity paying

defendants’ fees, defendants could not seek and be awarded sanctions.

However, “the inclusion of the words ‘incur’ and ‘attorney’s fees’ in

section 128.7 implies an agency relationship . . . out of which the

attorney expects remuneration.” (Musaelian v. Adams (2009) 45

Cal.4th 512, 517.) On this record, the trial court could readily find that

“attorney fees were ‘incurred’ in the sense that there was an attorney-

client relationship” between defense counsel and defendants, defense

counsel “performed services on behalf of” defendants, and defense

counsel’s “right to fees grew out of the attorney-client relationship.”

(Id. at p. 520.)

Mogan also argues that defendants gained nothing by filing an

opposition to the amended motion to lift the stay and therefore did not

qualify as prevailing parties as defined in section 128.7. In addition to

this contention being waived as it was not raised in the trial court, it

has no merit. (Green v. City of Oceanside (1987) 194 Cal.App.3d 212,

222 [“arguments and objections not raised and preserved in the trial

court are waived on appeal”].) Although defendants had secured a stay

of the action, McCluskey sought “a material alteration in the legal

relationship between the parties,” by moving to lift the stay and

defendants prevailed when that motion was denied. (CRST Van

Expedited, Inc. v. Equal Employment Opportunity Commission (2016)

___ U.S. __, __ [136 S. Ct. 1642, 1651] (CRST Van Expedited).) Hence,

“[c]ommon sense undermines the notion” that defendants were not

prevailing parties in opposing the amended motion to lift the stay.

(Ibid.)

Finally, and contrary to Mogan’s assertions, subdivision (e) of

section 128.7 does not require a trial court to include any specific

language, cite to any specific portions of section 128.7, or mention any

particular facts, legal arguments, or case citations. We note that

Mogan cites to inapposite cases in support of his arguments, including

West Coast Development v. Reed (1992) 2 Cal.App.4th 693, 705

(concerning a written order granting sanctions under section 128.5

“devoid of any statement of its grounds”) and In re Yagman (9th Cir.

1986) 796 F.2d 1165, 1182, 1184 (setting aside an award of attorney

fees of $250,000.00 imposed as sanctions for bad faith conduct under

Rule 11 because it was “difficult to assess the reasonableness of a lump-

sum sanctions award, such as this one, which is intended to cover a

myriad of misconduct over a period of time and is based upon a variety

of authority,” and “[t]he task becomes impossible when the amount of

the lump-sum sanctions award assumes massive proportions”).

II. Substantive Challenges

Mogan makes various arguments in support of his contention

that the sanctions order must be reversed because the trial court’s

frivolity decision was based on “an erroneous view of the law or on a

clearly erroneous assessment of the evidence.” Again, we see no merit

to these claims.

A. The Trial Court Properly Applied the Law

It well settled law that, under section 1281.4, the trial court had

no jurisdiction to lift the stay and set the case for trial on the basis that

defendants “engaged in dilatory conduct inhibiting an arbitration.”

(MKJA, Inc. v. 123 Fit Franchising, LLC (2011) 191 Cal.App.4th 643,

661-662, citing Titan/Value Equities Group, Inc. v. Superior Court

(1994) 29 Cal.App.4th 482, 488 (Titan/Value Equities Group); see also

Blake v. Ecker (2001) 93 Cal.App.4th 728, 737 [remedy for failure to

timely prosecute arbitration was in the arbitration proceeding, not

through court order], disapproved on other grounds in Le Francois v.

Goel (2005) 35 Cal.4th 1094, 1107, fn. 5.].)

Further, by the time Mogan filed the request to lift the stay, AAA

had already informed counsel that defendants were not in default,

waiver, breach or violation of the covenant of good faith and fair

dealing, and AAA was ready to proceed with the arbitration once

counsel confirmed McCluskey wanted to proceed. Consequently, if the

trial court had granted the request to lift the stay, it would have

interfered with AAA’s decision to reopen and arbitrate the claim; such a

ruling would have been “ ‘wholly incompatible with established policies

of the law’ ” that preclude a trial court from intervening, and

necessarily interfering with the arbitration proceeding. (Titan/Value

Equities Group, supra, 29 Cal.App.4th at p. 488, quoting McRae v.

Superior Court (1963) 221 Cal.App.2d 166, 171.)

Mogan’s reliance on isolated portions of AAA’s May 1 and May 9

emails – reading them as confirmation that AAA considered the

arbitration closed and would not be reopened due to defendants’

nonpayment of fees – strains credulity. No reasonable attorney could

conclude, as Mogan contends, that AAA had determined the case would

not be reopened due to defendants’ conduct. Instead, the only

reasonable view of those emails is that despite the payment issue, if

any, AAA did not consider the case finally closed and would reopen it as

soon as counsel confirmed McCluskey wanted to proceed to arbitration.

In brief, and as the trial court correctly found, the matter did not

proceed to arbitration solely due to the failure of Mogan to confirm that

McCluskey wanted to proceed to arbitration and there was no legal

support for McCluskey’s request to lift the stay.

A. The Trial Court Properly Assessed the Evidence

Mogan misconstrues our limited authority to review the factual

underpinning of the sanctions order. We presume the trial court

“ ‘found every fact necessary to support its order that the evidence

would justify. So far as it passed on the weight of evidence or the

credibility of witnesses, its implied findings are conclusive. This rule is

equally applicable whether the evidence is oral or documentary.’ ”

(Griffith Co. v. San Diego College for Women (1955) 45 Cal.2d 501, 507-

508.) Mogan’s “elaborate factual presentation” in his briefs “is but an

attempt to reargue on appeal those factual issues decided adversely to

[him] at the trial level, contrary to established precepts of appellate

review. As such, it is doomed to fail.” (Hasson v. Ford Motor Co. (1982)

32 Cal.3d 388, 398-399.)

Mogan argues the assessment of the evidence is called into

question because the trial court (a) did not consider evidentiary

objections to defense counsel’s statement that Airbnb made a timely

payment of the fee on behalf of defendants, and (b) denied a request for

discovery as to the actual date that AAA received the fee sent by

Airbnb on behalf of defendants. These arguments are premised on the

incorrect assumption that the frivolity decision was based on a finding

that AAA had administratively closed the case due to its clerical error.

The order is clear that the trial court’s frivolity decision was based on

its further findings that by May 1, and again on May 9, AAA informed

counsel the arbitration case would be reopened as soon as counsel

confirmed intent to proceed – and counsel failed to respond.

Consequently, the trial court’s additional finding that it was AAA’s

clerical error that had caused the administrative closing of the case

became immaterial. And, more importantly, rendered moot any

objections to the evidence submitted by defendants or the request for

discovery directed at when AAA had actually received Airbnb’s

payment of the fee on behalf of defendants. Accordingly, we have no

problem concluding it is not probable that a different outcome would

have resulted in the absence of those purported errors. (In re Marriage

of Goddard (2004) 33 Cal.4th 49, 56-57 [admission of evidence, over

objection, is subject to harmless error analysis]; see People v. Elder

(2017) 11 Cal.App.5th 123, 133 [denial of motion to compel discovery is

subject to harmless error analysis].)

III. Award of Attorney Fees

The trial court employed the lodestar approach and awarded

$22,159.50 in attorney fees by multiplying the reasonable hourly rate

by the number of hours reasonably expended by defense counsel in

preparing the opposition to the motion to lift the stay. The awarded

sum was supported by a declaration of lead defense counsel, redacted

billing statements 9, and a spreadsheet that organized the information

The billing statements had been redacted to mask privileged

attorney-client communications and attorney work product, and had

been redacted to reflect only time that was incurred in preparing, in

pertinent part, the opposition to the July 1 motion, that was a direct

result of that motion, and as part of counsel’s review and approval of

in the billing invoices by date, time (10 minute intervals), specific

tasks, and the hourly rates of the attorneys and paralegal who

performed the tasks. The trial court did not rule on Mogan’s request

for discovery of information to challenge the reasonableness of

defendants’ requested attorney fees, or the evidentiary objections to the

declaration of lead defense counsel, billing invoices, and the

spreadsheet.

On appeal, Mogan makes various arguments challenging the

award of attorney fees, including that the trial court failed to grant

discovery, none of which require reversal under the applicable abuse of

discretion standard. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th

1084, 1096 (PLCM Group) [award of attorney fees reviewed for abuse of

discretion]; Kleitman v. Superior Court (1999) 74 Cal.App.4th 324, 330

[discovery order reviewed for abuse of discretion].)

Mogan’s arguments ignore well settled law that “[w]hen the

[trial] court is informed of the extent and nature of [legal] services, its

own experience furnishes it with every element necessary to fix their

value” (Spencer v. Collins (1909) 156 Cal. 298, 307), “even in the

absence of specific evidence on the subject” (Howard v. Howard (1956)

141 Cal.App.2d 233, 238; see PLCM Group, supra, 22 Cal.4th at p. 1096

[“ ‘[t]he value of legal services performed in a case is a matter in which

the trial court has its own expertise’ ”]). The trial court was also “in the

best position to determine the reasonableness of the hourly rate of an

attorney appearing before the court and the value of the attorney’s

professional services.” (Cordero-Sacks v. Housing Authority of City of

billing statements before sending them for payment, counsel

“eliminate[d] unnecessary, duplicative, and excessive time.”

Los Angeles (2011) 200 Cal.App.4th 1267, 1286; see PLCM Group,

supra, at p. 1096 [trial court did not err in calculating attorney fees

based on the “number of hours expended by counsel multiplied by the

prevailing market rate for comparable legal services in San Francisco,

where counsel is located”].)

Additionally, as the trier of fact, the trial court was free to accept

defense counsel’s declaration, and the attached billing invoices and

spreadsheet, as sufficient evidence of reasonable attorney fees incurred

in opposing the amended motion to lift the stay. (G.R. v. Intelligator

(2010) 185 Cal.App.4th 606, 620 [trial court may accept declaration of

defendant’s attorney “as sufficient proof of . . . time spent”].) Given the

evidence already submitted on the issue, and its own expertise, the

trial court could properly conclude there was no need for further

information (discovery) on the issue of the amount of monetary

sanctions to be awarded under subdivision (d) of section 128.7. (In re

Marriage of Cryer (2011) 198 Cal.App.4th 1039, 1046-1047 [“we will

disturb the trial court’s decision only if no judge could have reasonably

made the challenged decision”].)

Our decision is not altered by Mogan’s assertion that sanctions in

the amount of $22,159.50 were not necessary for deterrence. Section

128.7 does not require the trial court to expressly state that sanctions

are necessary for effective deterrence and, in any event, the trial court

limited the sanctions to reasonable attorney fees for opposing the

amended motion to lift the stay which was filed in direct violation of

subdivision (b) of section 128.7. Nor do we see any merit to Mogan’s

argument that sanctions are not sustainable because the trial court did

not expressly find he acted in bad faith. (Peake, supra, 227 Cal.App.4th

at p. 449 [“when establishing a claim is factually or legally without

merit under . . . section 128.7, it is not necessary to show the party

acted with . . . subjective bad faith”].)

IV. Defendants’ Motion for Monetary Sanctions on Appeal

Defendants have filed a motion for sanctions against both

appellants for the filing of a frivolous appeal. Section 907 provides that

“[w]hen it appears to the reviewing court that the appeal was frivolous

or taken solely for delay, it may add to the costs on appeal such

damages as may be just.” Similarly, California Rules of Court, rule

8.276(a), provides that an appellate court has the authority to “impose

sanctions . . . on a party or an attorney for: [¶] Taking a frivolous

appeal or appealing solely to cause delay. . . .”

The instant appeal comes right up to the line of sanctionable

conduct as close to all of arguments offered by Mogan – 19 issues

presented in question form – “are not supported by a careful reading of

the record or the law nor could these arguments be reasonably

characterized as presenting unique issues or arguing for extension,

modification, or reversal of existing law. [Citation.]” (Kleveland v.

Siegel & Wolensky, LLP (2013) 215 Cal.App.4th 534, 557.) By forcing

us to examine those myriad arguments before rejecting them as having

no factual or relevant legal support, Mogan has caused a “useless

diversion of this court’s attention” from “[o]ther appellate parties, many

of whom wait years for a resolution of bona fide disputes.” (Finnie v.

Town of Tiburon (1988) 199 Cal.App.3d 1, 17.)

Nonetheless, our Supreme Court has advised us that we should

hold that an appeal is “frivolous only when it is prosecuted for an

improper motive – to harass the respondent or delay the effect of an

adverse judgment – or when it indisputedly has no merit – when any

reasonable attorney would agree that the appeal is totally and

completely without merit. [Citation.] [¶] . . . [T]he punishment should

be used most sparingly to deter only the most egregious conduct.” (In re

Marriage of Flaherty (1982) 31 Cal.3d 637, 650-651.) Here we cannot

conclude that Mogan’s appeal is so totally and completely without all

arguable merit as to justify an award of sanctions under those

demanding requirements.

DISPOSITION

The appeal by plaintiff Veronica McCluskey is dismissed. The

September 11, 2019 sanctions order is affirmed. Defendants are

awarded costs on appeal.

Defendants’ motion for sanctions is denied.

_________________________

Petrou, J.

WE CONCUR:

_________________________

Siggins, P.J.

_________________________

Jackson, J.

A158851/McCluskey v. Henry et al.

Trial Court: San Francisco County Superior Court

Trial Judge: Hon. Ethan P. Schulman

Counsel: Sacks, Ricketts & Case, Michael Floyd and

Jacqueline Young for Defendants and Respondents.

Law Office of Michael Mogan, Michael Mogan, for

Plaintiff and Appellant.

Law Office of Michael Mogan, Michael Mogan, for

Objector and Appellant.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.