Thursday, June 30, 2011
Court of Appeal Throws Out Default Judgment Against Sacramento Lawyer
By a MetNews Staff Writer
A Sacramento-area lawyer yesterday escaped a $2 million default judgment in a lawsuit for an accounting, brought by a former client.
The Third District Court of Appeal, in a decision by Justice Ronald B. Robie, explained that Beth Van Sickle was unable to accept the default of her former attorney, Gregory F. Gilbert, because she did not request a specific amount of money in her complaint or prove that she had served a statement of damages on Gilbert.
Van Sickle had retained Gilbert and Anthony Scalora, now deceased, to represent her in a divorce proceeding on a contingency basis. The fee agreement provided that the attorneys would receive installment payments over the live of the leases in effect on certain properties awarded to Van Sickle in the final judgment of the divorce.
According to Van Sickle’s complaint, Gilbert “marshaled, gathered, and took possession of the properties that were transferred [to Van Sickle]” in the divorce and “[b]etween 1985 and 1992…managed the properties, distributed certain sums of money as and for attorney fees, expended certain sums of money and delivered certain sums of money to [Van Sickle].”
She claimed that the attorney “so mismanaged the properties, that…taxes were not paid, delinquencies were filed, and [she] ha[d] no way of determining the amounts of money previously paid under the contingency fee contract.”
Undue Influence Claim
In 1992, Van Sickle sued Gilbert and Scalora’s estate to rescind the fee agreement, alleging it was void as against public policy and obtained by undue influence. The trial court granted summary judgment in favor of Gilbert and the trust on the merits, and the appellate court affirmed on the ground that her action was time-barred.
Nearly 11 years later, Van Sickle filed suit again, this time seeking “a complete accounting” from Gilbert “for the time he managed the properties as well as [for] the monies received under the contingency fee agreement and additional attorney fees paid to him above the contingency fee agreement.”
Her complaint asserted causes of action for accounting, declaratory relief, constructive trust, and breach of fiduciary duty. However, nowhere in the complaint did she demand a particular amount of damages, either compensatory or punitive.
In June 2005, Van Sickle served Gilbert by mail with 23 requests for admissions, 128 special interrogatories, and 42 demands for production of documents. Gilbert failed to timely serve any responses to her requests.
Retired El Dorado Superior Court Judge Thomas Smith later ruled that all but two of the requests for admission were deemed admitted and imposed sanctions of $786.30 on Gilbert. He also ordered Gilbert to serve responses to the interrogatories and demands for production.
A discovery referee subsequently issued a report finding Gilbert had not complied with Smith’s order or otherwise cooperated in discovery. The referee said Gilbert’s conduct was “so egregious as to make it apparent that no lesser sanction than the terminating sanction would compel [him] to obey the orders of the Court regarding discovery.”
The trial court approved the referee’s report and ordered Gilbert’s answer to the complaint to be stricken. On Van Sickle’s request, the court also entered Gilbert’s default in the action.
Van Sickle later filed a request for default judgment against Gilbert, requesting a money judgment of either $1,330,230.71 or $984,812.22.
A prove-up hearing was held before El Dorado Superior Court Judge Steven C. Bailey, and Van Sickle sought a money judgment of $984,812.22. Bailey awarded her $1,090,101.26 in compensatory damages, and an equivalent amount of punitive damages, for a total of $2,180,202.52.
Writing for the appellate court, Robie reasoned the trial court acted reasonably in issuing terminating sanctions to protect Van Sickle’s interests in the litigation, since Gilbert’s conduct was “a textbook example of bad lawyering which resulted in an inordinate burden on opposing counsel and the court.”
The default, however, could not stand, he said, based on Ely v. Gray (1990) 224 Cal.App.3d 1257.
In that case, Robie noted, the Third District held that a statement of damages equivalent to that required by Code of Civil Procedure Sec. 425.11 is necessary in an action for an accounting, if the complaint provides no estimate of this amount.
Pursuant to Ely, Robie said, if “a complaint seeking an accounting does not request a specific amount of money from the defendant, the plaintiff must serve a statement of damages before taking the defendant’s default, otherwise the resulting default judgment is invalid, as is the entry of default itself.”
Since there was no evidence Van Sickle served Gilbert with a statement of damages before she took his default, and she did not include an estimate of the amount due to her in her complaint, Robie concluded, she had failed to comply with the requirements of Ely and the default judgment against Gilbert had to be reversed.
Justices Vance W. Raye and Elena J. Duarte joined Robie in his decision.
According to an internet search, Gilbert is a director of Diabetic Innovations, a Dallas-based corporation which markets “Cellular Activation Therapy” as a form of treatment for diabetes. His company biography also lists him as CEO of Bionica Inc., which manufacturers medical infusion devices, and Hamilton PNG, a pharmaceuticals company.
He was briefly suspended from the practice of law in 1997 for failure to pay his State Bar dues but has no other public record of discipline.
The case is Van Sickle v. Gilbert, 11 S.O.S. 3474.
Copyright 2011, Metropolitan News Company