Supreme Court of California Justia
Citation 45 Cal.4th 512, 198 P.3d 560, 87 Cal.Rptr.3d 475

Musaelian v. Adams

Filed 1/15/09

IN THE SUPREME COURT OF CALIFORNIA

MARY MUSAELIAN,
Plaintiff,
S156045
v.
Ct.App.
1/4
A112906
WILLIAM L. ADAMS et al.,
Sonoma
County
Defendants and Respondents; )
Super. Ct. No. SCV236208
JOHN G. WARNER,
Objector and Appellant.

Code of Civil Procedure section 128.7 (section 128.7) authorizes trial
courts to impose sanctions to check abuses in the filing of pleadings, petitions,
written notices of motions or similar papers. Sanctions may include payment to
the movant of attorney fees incurred as a consequence of the violation. (§ 128.7,
subd. (d).) The issue here is whether section 128.7 allows an award of attorney
fees to a party attorney who represented himself or herself in responding to a filing
abuse. This issue is similar to one we considered in Trope v. Katz (1995) 11
Cal.4th 274 (Trope), where we concluded the phrase “attorney’s fees” in Civil
Code section 1717 does not include compensation for the time and effort attorneys
expend representing themselves or for professional business opportunities lost as a
result of self-representation. (Trope, at pp. 277, 292.) We reach the same
1

conclusion here, holding section 128.7 does not authorize sanctions in the form of
an award of attorney fees to self-represented attorneys.
FACTS
Plaintiff Mary Musaelian is married to Andrew Musaelian. Joseph Reiter,
represented by Attorney William L. Adams, brought suit against Andrew
Musaelian and Andrew Musaelian’s business, Attorney Legal Research (ALR),
seeking damages for conduct relating to litigation between Reiter and one of
ALR’s clients. Reiter obtained default judgments against both Andrew Musaelian
and ALR. Reiter then sought partial satisfaction of the judgments by means of a
forced sale of a residence Andrew Musaelian owned jointly with plaintiff.
Plaintiff sought to avoid the sale by filing a third party claim of ownership of the
residence, but the superior court denied her claim. Plaintiff and Andrew
Musaelian sought to protect their home by filing for chapter 13 relief in the United
States Bankruptcy Court for the Northern District of California. Reiter filed
claims against the bankruptcy estate to recover sums representing the judgments
against Andrew Musaelian and ALR. The bankruptcy court dismissed the claim
for the sum represented by the judgment against ALR, reasoning that claim could
be satisfied only from ALR’s assets, which did not include plaintiff’s home. The
Ninth Circuit Bankruptcy Appellate Panel affirmed.
Plaintiff, represented by Attorney John G. Warner, then filed this action
against Reiter and Adams, seeking damages on theories of negligence, intentional
infliction of emotional distress, abuse of process, slander of title, invasion of
privacy and malicious prosecution, all based on Reiter’s attempts to force the sale
of plaintiff’s home to satisfy the default judgment entered against ALR. Adams,
representing himself and joined by Reiter, demurred on the grounds the first five
causes of action were subject to the litigation privilege of Civil Code section 47,
and the sixth cause of action, for malicious prosecution, lacked merit because the
2

state court action had terminated in Reiter’s favor. Adams and Reiter also moved
under section 128.7 for sanctions including attorney fees against plaintiff and
Warner.
The trial court sustained defendants’ demurrers without leave to amend. It
later granted the motions for sanctions, finding Reiter had been the prevailing
party throughout the state court proceedings, no reasonable person or party could
have believed plaintiff’s lawsuit had merit, and it was clear the suit was filed for
an improper purpose to delay, harass, increase the cost of litigation or otherwise
acquire a bargaining chip usable in the ongoing litigation between the parties. The
court ordered plaintiff and Warner to pay $25,050 to Adams as “reasonable
sanctions including attorney fees,” a sum matching the amount of attorney fees
sought by Adams. The Court of Appeal reversed the award of attorney fees to
Adams, concluding that because Adams had represented himself, he had not
“incurred” attorney fees for purposes of sanctions under section 128.7.
DISCUSSION
California follows the “American rule,” under which each party to a lawsuit
ordinarily must pay his or her own attorney fees. (Trope, supra, 11 Cal.4th at
p. 278; Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504.) Code
of Civil Procedure section 1021 codifies the rule, providing that the measure and
mode of attorney compensation is left to the agreement of the parties “[e]xcept as
attorney’s fees are specifically provided for by statute.”
Section 128.7 is such a statute. Subdivision (b) requires that parties and
their attorneys certify that pleadings or other written matters presented to the
courts have merit, “to the best of the person’s knowledge, information, and belief,
formed after an inquiry reasonable under the circumstances.” Subdivision (c)
authorizes sanctions for a violation of subdivision (b). Subdivision (d) provides:
“A sanction imposed for violation of subdivision (b) shall be limited to what is
3

sufficient to deter repetition of this conduct or comparable conduct by others
similarly situated. . . . [T]he sanction may consist of, or include, directives of a
nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion
and warranted for effective deterrence, an order directing payment to the movant
of some or all of the reasonable attorney’s fees and other expenses incurred as a
direct result of the violation.” (§ 128.7, subd. (d), italics added.)
“When construing statutes, our goal is ‘ “to ascertain the intent of the
enacting legislative body so that we may adopt the construction that best
effectuates the purpose of the law.” ’ ” (City of Santa Monica v. Gonzalez (2008)
43 Cal.4th 905, 919.) “We first examine the words of the statute, ‘giving them
their ordinary and usual meaning and viewing them in their statutory context,
because the statutory language is usually the most reliable indicator of legislative
intent.’ ” (Ibid.)
In Trope, supra, 11 Cal.4th 274, we examined the words “incur” and
“attorney’s fees,” finding their ordinary and usual meaning implies an agency
relationship inconsistent with self-representation. We were concerned there with
Civil Code section 1717, which provides in subdivision (a): “where the contract
specifically provides that attorney’s fees and costs, which are incurred to enforce
the contract, shall be awarded either to one of the parties or to the prevailing party,
then the party who is determined to be the prevailing party on the contract . . .
shall be entitled to reasonable attorney’s fees in addition to other costs.” (Italics
added.) We found the ordinary and usual meaning of the word “incur” is to
“become liable.” (Trope, at p. 280.) The ordinary and usual meaning of
“attorney’s fees,” in both legal and general usage, is the consideration a litigant
actually pays or becomes liable to pay in exchange for legal representation. An
attorney litigating in propria persona pays no such compensation. (Ibid.)
4

As section 128.7 was adopted before our decision in Trope, that decision
could have had no influence on the Legislature’s intent when it drafted and
enacted section 128.7. Nevertheless, the usual and ordinary meaning of the words
did not change between 1961, when Civil Code section 1717 was enacted, and
1994, when section 128.7 was added to the Code of Civil Procedure.1 We find,
therefore, that the inclusion of the words “incur” and “attorney’s fees” in section
128.7 implies an agency relationship under which the client and the party are not
one and the same, and out of which the attorney expects remuneration. Section
128.7 also identifies attorney fees as an expense, authorizing a court to impose
sanctions in the form of “reasonable attorney’s fees and other expenses incurred.”
(Italics added.) The word “expense” is associated with an obligation to pay:
“something that is expended in order to secure a benefit or bring about a result.”
(Webster’s New Internat. Dict., supra, p. 800.) A party who acts on his or her
own behalf does not thereby generate an expense that the party has become
obligated to pay. And although such a party may lose earnings he or she might
have obtained but for devoting time to the litigation, the loss of time from other
employment is a loss, not an expense.
Adams acknowledges the similarity in language between Civil Code
section 1717 and Code of Civil Procedure section 128.7. He contends, however,
that the construction of words in a statute awarding contractual attorney fees as an
item of costs should not control their construction in a statute authorizing an award
of attorney fees as a sanction. But unless there is evidence the Legislature had a

1
As of 1994, when section 128.7 was enacted, “incur” was still defined as to
“become liable.” (Webster’s New Internat. Dict. (3d ed. 1993) p. 1146.) “Fee”
was defined as “compensation often in the form of a fixed charge for professional
service . . . .” (Id. at p. 833.)
5

contrary intent, logic and consistency suggest the same language in analogous
statutes should be construed the same way. Adams’s contention, moreover, is
inconsistent with federal court decisions denying attorney fees as sanctions to self-
represented attorneys. Section 128.7 was modeled almost word for word on rule
11 of the Federal Rules of Civil Procedure (28 U.S.C.),2 making the views of the
federal courts particularly pertinent. At least three federal courts, including two
circuit courts, have concluded the phrase “attorneys’ fees” in rule 11 implies an
agency relationship between a client and an attorney such that the fees attorneys
might charge themselves are not “attorneys’ fees.” (See Pickholtz v. Rainbow
Technologies, Inc. (Fed.Cir. 2002) 284 F.3d 1365, 1375; Massengale v. Ray (11th
Cir. 2001) 267 F.3d 1298, 1303; see also DiPaolo v. Moran (E.D.Pa. 2003) 277
F.Supp.2d 528, 536.)
Two California appellate court cases, however, have reached the opposite
conclusion. In Abandonato v. Coldren (1995) 41 Cal.App.4th 264, 269, the court
distinguished Trope, supra, 11 Cal.4th 274, and upheld an award of attorney fees

2
Rule 11, like section 128.7, authorizes courts to impose sanctions for filing
abuses. In 1994, when section 128.7 was enacted, rule 11 provided, in language
comparable to that in section 128.7, subdivision (d): “A sanction imposed for
violation of this rule shall be limited to what is sufficient to deter repetition of
such conduct or comparable conduct by others similarly situated. Subject to the
limitations in subparagraphs (A) and (B), the sanction may consist of, or include,
directives of a nonmonetary nature, an order to pay a penalty into court, or, if
imposed on motion and warranted for effective deterrence, an order directing
payment to the movant of some or all of the reasonable attorneys’ fees and other
expenses incurred as a direct result of the violation.” (Fed. Rules Civ.Proc., rule
11(c)(2), 28 U.S.C. [1993 amend.].) The California Legislature essentially sought
to replicate rule 11 when it enacted section 128.7. (See Goodstone v. Southwest
Airlines Co. (1998) 63 Cal.App.4th 406, 419, citing Assem., 3d reading analysis of
Assem. Bill No. 3594 (1993-1994 Reg. Sess.) as amended May 23, 1994, pp. 1-2;
and Assem. Com. on Judiciary, Analysis of Assem. Bill No. 3594 (1993-1994
Reg. Sess.) as amended Apr. 26, 1994, p. 2.)
6

to a self-represented attorney as a sanction against the plaintiff for bad faith tactics
under Code of Civil Procedure section 128.5.3 In Laborde v. Aranson (2001) 92
Cal.App.4th 459, 469, a different panel of the same court upheld an award of
attorney fees under section 128.7 to an attorney who had responded, in propria
persona, to a filing abuse. Both courts identified a need to compensate parties who
had been compelled to respond to bad faith tactics, concluding a construction of
the statutory language disallowing an award of attorney fees to a self-represented
attorney would create a separate and artificial category of litigants who would be
inadequately protected against another party’s sanctionable activities. (Laborde,
at p. 469; Abandonato, at p. 269.)4 The courts also were persuaded the
considerations underlying an award of contractual fees under Civil Code section
1717 are not present when attorney fees are ordered as a sanction under either
Code of Civil Procedure section 128.5 or 128.7.
While section 128.7 does allow for reimbursement of expenses, including
attorney fees, its primary purpose is to deter filing abuses, not to compensate those
affected by them. It requires the court to limit sanctions “to what is sufficient to
deter repetition of [the sanctionable] conduct or comparable conduct by others
similarly situated.” (§ 128.7, subd. (d).) Subdivision (d) lists a number of

3
Code of Civil Procedure section 128.5, subdivision (a) provides: “Every
trial court may order a party, the party’s attorney, or both to pay any reasonable
expenses, including attorney’s fees, incurred by another party as a result of bad-
faith actions or tactics that are frivolous or solely intended to cause unnecessary
delay. . . .”
4
In Laborde v. Aranson, supra, 92 Cal.App.4th 459, the court found support
for its position in Kramer, Levin, Nessen, Kamin & Frankel v. Aronoff (S.D.N.Y.
1986) 638 F.Supp. 714, 726. (Laborde, at pp. 467-468.) However, Pickholtz v.
Rainbow Technologies, Inc., supra, 284 F.3d 1365, Massengale v. Ray, supra, 267
F.3d 1298, and DiPaolo v. Moran, supra, 277 F.Supp.2d 528, were decided more
recently than Kramer, two by higher courts, and all reach the opposite conclusion.
7

sanctions the court may impose, only one of which relates to compensating the
moving party for the time and effort of responding to a filing abuse. Even then,
subdivision (d) speaks not to compensating a party for the party’s time and effort,
but only to reimbursing reasonable attorney fees or other expenses, and then only
when “warranted for effective deterrence.” (Ibid.)
The purpose of section 128.7—deterring filing abuses—will not suffer if
attorney fees are not allowed to attorneys representing themselves. Section 128.7
provides the trial court with a wide range of options all of which are designed to
deter filing abuses. These options include ordering penalties payable to the court.
It follows that a party who engages in abusive filing practices will not avoid
monetary sanctions simply because the opposing party is a self-represented
attorney. The court also is entitled to act on its own motion, eliminating the
possibility a transgressing party might escape sanctions should the injured party
fail to file a motion because he or she will not recover attorney fees. (§ 128.7,
subd. (c).) Nor does disallowing attorney fees to attorneys litigating in pro se
create a separate and artificial category of litigant who will be inadequately
protected against another party’s filing abuses. Attorneys are not required to
represent themselves but, like other litigants, can choose to engage attorneys to
respond to bad faith tactics.
In Trope, we recognized awarding attorney fees to self-represented
attorneys but not to other self-represented litigants “would be to hold that the time
and opportunity that an attorney gives up when he chooses to litigate a case in
propria persona are somehow qualitatively more important and worthy of
compensation than those of other pro se litigants.” (Trope, supra, 11 Cal.4th at
p. 285.) This “would in effect create two separate classes of pro se litigants—
those who are attorneys and those who are not—and grant different rights and
remedies to each.” (Id. at p. 277.) Such disparate treatment between attorney and
8

nonattorney litigants would be viewed by the public as unfair, allowing only
lawyer litigants to qualify for fee awards. “ ‘In our view, the public perception of
fairness in the legal system is of greater moment than a lawyer litigant’s claim to
an attorney fee award if he elects to represent himself.’ ” (Id. at p. 286.)
Adams suggests the problem of disparate treatment between self-
represented attorneys and other self-represented parties could be obviated by
construing section 128.7 to require or allow the court to compensate any self-
represented litigant for the time and effort spent responding to filing abuses as an
“expense.” But as we have said, the phrase “expenses incurred” contemplates an
obligation that a party has become liable to pay. Section 128.7 does not provide
for compensation for time lost from other employment.
Adams also contends disallowing attorney fees to an attorney litigating in
pro se is inconsistent with our decisions in Lolley v. Campbell (2002) 28 Cal.4th
367, where we reversed an order denying attorney fees under Labor Code section
98.2 to the Labor Commissioner after the commissioner had represented a party
without charge; PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, where we
upheld an award of fees under Civil Code section 1717 to in-house counsel; and
Ketchum v. Moses (2001) 24 Cal.4th 1122, where we upheld an award of attorney
fees under Code of Civil Procedure section 425.16, subdivision (c) to a party
represented by an attorney under a contingency fee arrangement. Not so. In each
case attorney fees were “incurred” in the sense that there was an attorney-client
relationship, the attorney performed services on behalf of the client, and the
attorney’s right to fees grew out of the attorney-client relationship. We explained
in PLCM: “There is no problem of disparate treatment; in-house attorneys, like
private counsel but unlike pro se litigants, do not represent their own personal
interests and are not seeking remuneration simply for lost opportunity costs that
could not be recouped by a nonlawyer.” (PLCM, at p. 1093, fn. omitted.)
9

Similarly, privately or publicly funded legal services providers representing
indigent parties, or attorneys litigating on a contingency fee basis, are not
representing their own personal interests or seeking remuneration for lost
opportunities. In any event, these cases present special situations neither
considered nor discussed in Trope, supra, 11 Cal.4th 274. (See Lolley, at p. 377.)
They have no application when, as in Trope and here, a party is litigating his or
her own case.
We hold therefore that an attorney who responds in pro se to a filing abuse
may not recover sanctions under section 128.7 in the form of an award of attorney
fees. Laborde v. Aronson, supra, 92 Cal.App.4th 459, and Abandonato v.
Coldren, supra, 41 Cal.App.4th 264, are disapproved to the extent they are
inconsistent with our holding here.
DISPOSITION
The judgment of the Court of Appeal is affirmed.
WERDEGAR, J.
WE CONCUR:
GEORGE, C. J.
KENNARD, J.
BAXTER, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.

10

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Musaelian v. Adams __________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 153 Cal.App.4th 882
Rehearing Granted

__________________________________________________________________________________

Opinion No. S156045
Date Filed: January 15, 2009
__________________________________________________________________________________

Court: Superior
County: Sonoma
Judge: Dean A. Beaupré*

__________________________________________________________________________________

Attorneys for Appellant:
Law Office of John G. Warner and John G. Warner for Objector and Appellant.

__________________________________________________________________________________

Attorneys for Respondent:
Mark T. Clausen for Defendants and Respondents.
Cyrus Sanai as Amicus Curiae.

*Retired judge of the Alameda Superior Court, assigned by the Chief Justice pursuant to article VI, section
6 of the California Constitution.

Counsel who argued in Supreme Court (not intended for publication with opinion):
John G. Warner
Law Office of John G. Warner
21 Tamal Vista Blvd., Suite 196
Corte Madera, CA 94925
(415) 924-2640

Mark T. Clausen
18 E. Fulton Road
Santa Rosa, CA 95403
(415) 221-1817

Petition for review after the Court of Appeal reversed the judgment in a civil action. The court limited review to the following issue: Was defendant, an attorney representing himself in a civil action, entitled to an award of attorney fees as a sanction against the plaintiff under Code of Civil Procedure section 128.7 for engaging in frivolous litigation?

Opinion Information
Date:Citation:Docket Number:Category:Status:
Thu, 01/15/200945 Cal.4th 512, 198 P.3d 560, 87 Cal.Rptr.3d 475S156045Review - Civil Appealclosed; remittitur issued

Parties
1Adams, William L. (Defendant and Respondent)
Represented by Mark Todd Clausen
Attorney at Law
18 E. Fulton Road
Santa Rosa, CA

2Adams, William L. (Defendant and Respondent)
Represented by William Louis Adams
Attorney at Law
P.O. Box 1050
Windsor, CA

3Musaelian, Mary (Plaintiff)
P.O. Box 15258
Santa Rosa, CA 95402

4Warner, John G. (Objector and Appellant)
Represented by John G. Warner
Attorney at Law
21 Tamal Vista Boulevard, Suite 196
Corte Madera, CA

5Reiter, Joseph (Defendant and Respondent)
Represented by Mark Todd Clausen
Attorney at Law
18 E. Fulton Road
Santa Rosa, CA

6Sanai, Cyrus (Amicus curiae)
Represented by Cyrus Mark Sanai
Attorney at Law
433 N. Camden Drive, Suite 600
Beverly Hills, CA


Opinion Authors
OpinionJustice Kathryn M. Werdegar

Disposition
Jan 15 2009Opinion: Affirmed

Dockets
Sep 5 2007Petition for review filed
  William L. Adams, et al., respondents Mark T. Clausen, counsel CRC 8.25b
Sep 6 2007Record requested
  via email
Sep 12 2007Answer to petition for review filed
  John Warner, objector and appellant, in pro per
Sep 13 2007Received Court of Appeal record
  one file folder/briefs/accordian folder
Oct 10 2007Petition for review granted; issues limited (civil case)
  The issue to be briefed and argued is limited to the following: Whether an attorney who is appearing in propria persona is entitled to attorney fees as a sanction under Code of Civil Procedure section 128.7. Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno and Corrigan, JJ.
Oct 11 2007Order filed
  The order filed on October 10, 2007, granting review is amended to read, in its entirety: The petition for review is granted. The issue to be briefed and argued is limited to the following: "Was defendant, an attorney representing himself in a civil action, entitled to an award of attorney fees as a sanction against the plaintiff under Code of Civil Procedure section 128.7 for engaging in frivolous litigation?"
Oct 17 2007Certification of interested entities or persons filed
  John Warner, objector and appellant
Oct 19 2007Certification of interested entities or persons filed
  William Adams, Joseph Reiter, defendants and respondents Mark Clausen, counsel
Oct 31 2007Motion filed (non-AA)
  "For Issuance of Partial Remittitur" John G. Warner, objector and appellant
Jan 29 2008Request for extension of time filed
  for respondent Adams to file the opening brief on the merits, to 3-3-08.
Jan 30 2008Filed:
  "Notice of unavailability of counsel" , Mark Clausen, attorney for respondent Adams
Feb 1 2008Extension of time denied
  The application of respondent William Adams for an extension of time to file the opening brief on the merits is hereby denied. The Court will entertain a motion for relief from default if the opening brief is submitted on or before March 3, 2008.
Feb 26 2008Received:
  Respondent's Opening Brief on the Merits, with application for relief from default.
Feb 27 2008Opening brief on the merits filed
  William Adams, defendant and respondent Mark Clausen, counsel *filed with permission
Feb 29 2008Request for judicial notice filed (granted case)
  William Adams, defendant and respondent Mark Clausen, counsel
Mar 3 2008Motion filed (non-AA)
  to strike respondent's opening brief and opposition to application for relief from default John Warner, objector and appellant
Mar 5 2008Filed:
  "Appellant's Reply Memorandum in Support of Motion to Strike Respondent's Opening Brief, Combined With Opposition to Respondent's Application for Relief From Default" John Warner, objector and appellant
Mar 6 2008Filed:
  "Opposition to Appellant's Motion to Strike Respondent's Opening Brief on the Merits" William Adams, respondent Mark Clausen, counsel
Mar 28 2008Answer brief on the merits filed
  John Warner, objector and appellant
Apr 18 2008Reply brief filed (case fully briefed)
  William Adams, Joseph Reiter, respondents Mark Clausen, counsel timely per CRC 8.25b
Apr 18 2008Motion filed (non-AA)
  "Respondent's motion to extend the court's decision on the merits to defendant Joseph Reiter" William Adams, Joseph Reiter, respondents Mark Clausen, counsel
Apr 24 2008Opposition filed
  Opposition to Respondent's Motition to Extend the Court's Decision on the Merits filed by John G. Waner, objector and appellant in pro se
May 19 2008Received application to file Amicus Curiae Brief
  Attorney Cyrus Sanai in pro per
Jun 2 2008Permission to file amicus curiae brief granted
  The application of Cyrus Sanai for permission to file an amicus curiae brief is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jun 2 2008Amicus curiae brief filed
  Cyrus Sanai, in pro per
Jun 11 2008Response to amicus curiae brief filed
  William Adams, Joseph Reiter, respondents Mark Clausen, counsel Response to amicus brief of Cyrus Sanai
Jun 19 2008Response to amicus curiae brief filed
  John Warner, objector and appellant Response to amicus brief od Cyrus Sanai
Jul 14 2008Received:
  "Notice of defective service address for pro se amici Cyrus Sanai" (from respondents)
Sep 10 2008Case ordered on calendar
  to be argued Thursday, November 6, 2008, at 9:00 a.m. in Sacramento
Sep 17 2008Motion filed (non-AA)
  "Motion for leave to appear at oral argument" filed by amicus curiae Sanai, requesting the court grant 10-15 minutes of additional case argument time for the purpose of amicus argument.
Sep 18 2008Order filed
  The "Motion for Leave to Appear at Oral Argument" filed by amicus curiae Sanai on September 17, 2008, is denied.
Sep 18 2008Note: Mail returned and re-sent
  October calendar resent to Mr. Sanai "Suite 600" reference added to address for Cyrus Sanai
Sep 22 2008Filed:
  "Opposition to Motion of pro se amici Cyrus Sania for Leave to Appearl at Oral Argument", filed by Mark T. Clausen, counsel for respondents Adams et al.
Sep 22 2008Association of attorneys filed
  William Adams, as counsel in pro per
Sep 25 2008Note: Mail returned and re-sent
  9/22 order resent to Mr. Sanai
Sep 26 2008Received:
  respondents' citations of additional authorities for oral argument.
Oct 2 2008Received:
  Objector/appellant's Warner's opposition to the authorities cited by respondents
Oct 2 2008Received:
  Objector/appellant's non-opposition to A/C Sinai's request to participate in oral argument
Oct 21 2008Request for judicial notice denied
  The motion to strike respondent's opening brief, filed by John G. Warner on March 3, 2008, is denied. The respondent William Adams's request for judicial notice of the unpublished decision in Reiter v. Musaelian (June 30, 2006, A110100), filed February 29, 2008, is denied. The motion for issuance of a partial remittitur, filed by Joseph Reiter on October 31, 2007, is denied.
Oct 31 2008Filed:
  Respondents' Notice of Pending State Bar Disciplinary Suspension
Nov 6 2008Cause argued and submitted
 
Jan 14 2009Notice of forthcoming opinion posted
 
Jan 15 2009Opinion filed: Judgment affirmed in full
  The judgment of the Court of Appeal is affirmed. Majority opinion by Werdegar, J. -----joined by George, C.J., Kennard, Baxter, Chin, Moreno and Corrigan, JJ.
Jan 16 2009Order filed
  Respondent's motion to extend the court's decision on the merits to defendant Joseph Reiter, filed April 18, 2008, is denied.
Feb 24 2009Remittitur issued (civil case)
 

Briefs
Feb 27 2008Opening brief on the merits filed
 
Mar 28 2008Answer brief on the merits filed
 
Apr 18 2008Reply brief filed (case fully briefed)
 
Jun 2 2008Amicus curiae brief filed
 
Jun 11 2008Response to amicus curiae brief filed
 
Jun 19 2008Response to amicus curiae brief filed
 
Brief Downloads
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If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website
May 22, 2011
Annotated by Katherine Bearman

--Facts--
The plaintiff was Mary Musaelian. Her husband, Andrew Musaelian, owned a business called Attorney Legal Research (ALR).

The defendants were Joseph Reiter and his attorney, William L. Adams. Adams had represented Reiter in a prior action against Andrew Musaelian and ALR. After obtaining default judgments against both parties in that action, Reiter attempted to recover the judgments in part by forcing the sale of the Musaelians’ home. Ultimately, the United States Bankruptcy Court for the Northern District of California ruled that the judgments could be satisfied only with ALR’s assets, which did not include the home. The Ninth Circuit Bankruptcy Appellate Panel affirmed.

Although Reiter’s attempt to force the home sale never came to fruition, it formed the basis of the present action. More specifically, plaintiff Mary Musaelian brought this suit for damages against Reiter and Adams on the theory that pursuing a forced sale of the Musaelians’ home constituted negligence, intentional infliction of emotional distress, abuse of process, slander of title, invasion of privacy, and malicious prosecution.

--Procedural History--
Defendant Adams represented himself in this action and demurred; Reiter joined in the demurrers. The defendants argued that the litigation privilege of California Civil Code section 47 applied to the first five causes of action. They also argued that the plaintiff’s malicious prosecution claim was meritless because Reiter had prevailed in state court in his suit against Andrew Musaelian and ALR. Finally, the defendants moved for sanctions—including attorney’s fees to be paid to Adams—under California Code of Civil Procedure section 128.7. Section 128.7 provides for sanctions against a party that knowingly submits meritless pleadings or other meritless filings to a court.

At trial, the Superior Court of Sonoma County sustained the defendants’ demurrers without leave to amend. It also granted the defendants’ motion for sanctions, including the full amount of attorney’s fees ($25,050) that Adams had requested. In granting the motion for sanctions, the trial court reasoned that Reiter had won his state court proceedings against Andrew Musaelian and ALR; that the plaintiff’s suit lacked merit; and that the plaintiff had filed the suit to delay, to harass, to make litigation more expensive, and to obtain leverage in negotiations with the defendants.

The plaintiff appealed, and the Court of Appeal for the First Appellate District, Division Four, upheld the trial court’s finding that the plaintiff’s filings were abusive. It reversed, however, the attorney’s fee award to defendant Adams on the theory that an attorney who represents himself cannot “incur” attorney’s fees under the meaning of section 128.7.

--Issue--
Under California Code of Civil Procedure section 128.7, can a court award attorney’s fees to “a party attorney who represented himself or herself in responding to a filing abuse”?

--Holding--
When an attorney represents himself or herself against a filing abuse, he or she cannot recover attorney’s fees as a sanction under section 128.7. The court disapproved two California Court of Appeal opinions—Abandonato v. Coldren, 41 Cal. App. 4th 264 (1995), and Laborde v. Aronson, 92 Cal. App. 4th 459 (2001)—“to the extent they are inconsistent” with this holding.

Justice Werdegar wrote the unanimous opinion for the court.

--Analysis--
The court first explained that in order to deter parties from filing meritless pleadings or other writings, California Code of Civil Procedure section 128.7 authorizes courts to impose sanctions when it finds that a party has made a meritless filing in violation of section 128.7(b). Central to the case at hand is section 128.7(d), which lists attorney’s fees among the types of sanctions that a court can impose. Section 128.7(d) states that a court should impose only those sanctions that are “sufficient to deter” meritless filings. Furthermore, it specifies that a sanction “may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorney’s fees and other expenses incurred as a direct result of the violation.”

Because there was disagreement among various California Courts of Appeal regarding the way in which section 128.7 should be construed, see Abandonato v. Coldren, 41 Cal. App. 4th 264 (1995); Laborde v. Aronson, 92 Cal. App. 4th 459 (2001), the Musaelian court sought to settle the meaning of that section. The court first analyzed legislative intent by exploring the ordinary and contextual meaning of certain statutory language. It then addressed section 128.7’s stated purpose of deterrence. Finally, the court discussed policy rationales and distinguished related cases in order to further support its holding.

Statutory Language
In analyzing section 128.7’s language, the court first focused on the words “incur” and “attorney’s fees,” and it adopted the meaning that it had assigned to those words in Trope v. Katz, 11 Cal. 4th 274 (1995). At issue in Trope was whether a party was entitled to attorney’s fees under California Civil Code section 1717—a statute that awards attorney’s fees as an item of costs when a contract makes them available. The Trope court found that “incur” ordinarily means “to become liable,” and that “attorney’s fees” ordinarily means “the consideration a litigant actually pays or becomes liable to pay in exchange for legal representation.” It further explained that these words are often invoked in the principal-agent context. An attorney who represents himself is not in a principal-agent relationship, and thus does not “pay” for legal representation.

Defendant Musaelian argued that the meaning of “incur” and “attorney’s fees” under Trope is inapplicable, since awarding contractual attorney’s fees differs from granting attorney’s fees as a sanction. The court disagreed, however, reasoning that section 1717 and section 128.7 are “analogous” statutes. Therefore, because a principle-agent relationship was lacking in Musaelian, awarding attorney’s fees as a sanction was inappropriate under section 128.7.

As further support for this conclusion, the court noted that the California Legislature drafted section 128.7 to track the language of Federal Rules of Civil Procedure Rule 11. See Goodstone v. Southwest Airlines Co., 63 Cal. App. 4th 406 (1998). Rule 11 grants attorney’s fees as a sanction for filing abuses, and various federal courts have found—based on principal-agent theories—that “the fees attorneys might charge themselves are not ‘attorney’s’ fees.’” See, e.g., Pickholtz v. Rainbow Technologies, Inc., 284 F.3d 1365 (Fed. Cir. 2002).

The final piece of the Musaelian court’s statutory language analysis focused on the word “expense” in section 128.7(d). The court found that “expense” as it appears in that section is consistent with the meaning that the court applied to “incur” and “attorney’s fees.” This is because an expense “is associated with an obligation to pay.” Moreover, “expense” does not refer to wages from another job that a party—such as a lawyer—foregoes while representing himself. Therefore, a lawyer is not entitled to attorney’s fees as reimbursement for the opportunity costs foregone while representing himself against abusive filings. For all of these reasons, the ordinary and contextual meanings of “incur,” “attorney’s fees,” and “expense” in section 128.7 suggest that under that statute, courts cannot award attorney’s fees to self-represented lawyers as a sanction against the opposing party.

Section 128.7’s Purpose
The court next supported its holding by discussing section 128.7’s deterrence rationale. Indeed, section 128.7 states that courts should award attorney’s fees as a sanction only when doing so is “warranted for effective deterrence.” The statute permits various types of sanctions besides attorney’s fees, including “ordering penalties payable to the court.” Therefore, a court can deter parties from engaging in filing abuse against self-represented lawyers even if it cannot award attorney’s fees to those lawyers.

Public Policy
As a policy matter, the court pointed out that awarding attorney’s fees in cases such as this one could degrade the public’s confidence in and respect for the legal system. This could occur because a non-lawyer that goes pro se will not be able to recover anything similar to attorney’s fees as a sanction against the opposing party. Thus, to award attorney’s fees to defendant Adams would imply that the legal system values lawyers’ work and opportunity costs more highly than it does non-lawyers’ work and opportunity costs.

Finally, the court stated that barring attorney’s fee awards under section 128.7 was not at odds with three prior decisions that upheld attorney’s fee awards. Those decisions were Lolley v. Campbell, 28 Cal. 4th 367 (2002) (granting attorney’s fees under Labor Code section 98.2 to the Labor Commissioner who had represented a client for free); PLCM Group, Inc. v. Drexler, 22 Cal. 4th 1084 (2000) (granting attorney’s fees under Civil Code section 1717 to in house counsel); and Ketchum v. Moses, 24 Cal. 4th 1122 (2001) (granting attorney’s fees under Code of Civil Procedure section 425.16(c) to a party whose lawyer had worked on a contingency basis). The Musaelian court distinguished these cases with reasoning related both to the principal-agent interpretation of section 128.7’s statutory language and to the aforementioned desire to preserve the integrity of the judicial system. Namely, the court stated that the attorneys in Lolley, Drexler, and Ketchum did not “represent their own personal interests and [were] not seeking remuneration simply for lost opportunity costs” that a non-lawyer would not be able to recover.

--Key Related Cases--
Abandonato v. Coldren, 41 Cal. App. 4th 264 (1995)
Laborde v. Aronson, 92 Cal. App. 4th 459 (2001)
Trope v. Katz,11 Cal. 4th 274 (1995)
Goodstone v. Southwest Airlines Co., 63 Cal. App. 4th 406 (1998)
Pickholtz v. Rainbow Technologies, Inc., 284 F.3d 1365 (Fed. Cir. 2002)
Lolley v. Campbell, 28 Cal. 4th 367 (2002)
PLCM Group, Inc. v. Drexler, 22 Cal. 4th 1084 (2000)
Ketchum v. Moses, 24 Cal. 4th 1122 (2001)

--Related Statutes--
California Civil Code section 47
California Code of Civil Procedure section 128.7
California Civil Code section 1717
California Labor Code section 98.2
California Code of Civil Procedure section 425.16(c)

--Tags--
attorney's fees
sanctions
abusive filings
meritless filings
self-represented attorney
pro se
principal-agent
opportunity costs
statutory language
legislative intent

--Related Media--
John Roemer, State Justices Send Message to Lawyers: Hire a Professional, Daily Journal, Jan. 16, 2009, at 4.

--Subsequent Related References--
The website for the California Court of Appeal, First District, contains records of ongoing litigation between these parties. The litigation does not relate to the California Supreme Court's holding on section 128.7 attorney's fees. Rather, the parties have disputed other issues from Reiter's prior action against Mr. Musaelian and ALR. They have also disputed lower courts' imposition and enforcement of other sanctions in Musaelian v. Adams. Decisions in these matters are unpublished. According to the First District's website, the most recent filing was on January 18, 2011. The website contains no information about the subject matter of that filing or about its disposition, if any.

Annotation by Kate Bearman