Wednesday, March 28, 2007
C.A. Overturns Default Judgment Based on Terminating Sanction
Panel Chides ‘Obstreperousness,’ but Says Defendant Must Be Allowed to Contest Damages
By a MetNews Staff Writer
The rule prohibiting entry of a default judgment where the defendants had no notice of the amount of damages being sought applies where the judgment is a result of terminating sanctions, the Fourth District Court of Appeal has ruled.
In a Feb. 23 ruling, certified Monday for publication, the panel ordered a new trial, limited to the question of damages, in connection with an action for misappropriation of trust funds.
The ruling grew out of a 2005 trial before retired Orange Superior Court Judge Robert D. Monarch, sitting on assignment, on five consolidated petitions brought by Jacqueline Reedy.
Reedy sued as trustee of three trusts established by her parents, Elmer and Helen Bussell. She alleged that her sister-in-law, Letantia Bussell, was liable for restitution of more than $300,000 that John Bussell, Letantia’s husband and Reedy’s brother, had siphoned from the trusts prior to his death in 2002.
Reedy also accused John and Letantia Bussell’s son, Todd Bussell, of improperly gaining access to a brokerage account belonging to one of the trusts and using that access to cause an unauthorized sale of stock belonging to the trust.
John Bussell apparently jumped to his death from a window of the Embassy Suites Hotel in Santa Ana while he and his wife were on trial for tax violations and bankruptcy fraud.
Letantia Bussell, a Beverly Hills dermatologist, and her husband were convicted of crimes including conspiracy, lying in bankruptcy filings, and attempting to evade taxes.
The doctor, who remains licensed but is facing disciplinary charges according to Medical Board records, was sentenced to three years in prison and ordered to pay nearly $2.5 million in restitution, fines, and costs of prosecution. The conviction and sentence were upheld in 2005.
Bussell’s patients included a number of prominent entertainers—she was reportedly the doctor who told actor Rock Hudson that he had AIDS—and she started a line of skin care products.
In the trust actions, Reedy brought numerous motions to compel discovery, including motions for terminating sanctions based upon failure to comply with an order compelling to produce trust documents and other records, continuing refusal to submit to depositions, failure to respond to interrogatories, and failure to meet and confer regarding compliance with an earlier request to produce.
After resolving some of the discovey issues, Monarch eventually allowed the case to go to trial, but warned the Bussells that he was taking some of the earlier motions under submission. After the Bussells repeatedly engaged in conduct which the judge found to be in bad faith and in violation of his instructions, he granted terminating sanctions.
The imposition of terminating sanctions was within the judge’s discretion, Justice William Bedsworth wrote for the Court of Appeal. The Bussells’ “obstreperousness” and “continually unredeemable behavior,” he wrote, justified the trial judge’s action.
The justice agreed, however, that default judgments totaling nearly $360,000 against Todd Bussell were improper because he was never placed on notice that damages in that amount were being sought against him. On remand, however, the trial judge may impose evidentiary and issue sanctions in order to limit the scope of the trial, Bedsworth said.
The case is Reedy v. Bussell, 07 S.O.S. 1430.
Copyright 2007, Metropolitan News Company