Metropolitan News-Enterprise


Tuesday, November 3, 2015


Page 1


Lawyers Sanctioned for Appeal of Sanctions


By a MetNews Staff Writer


Two Los Angeles attorneys have been sanctioned by this district’s Court of Appeal for frivolously appealing discovery sanctions imposed by a trial judge.

Div. Two yesterday ordered Henry Haddad and Sa’id Vakili to pay more than $16,000 to an opposing litigant, as well as to pay $6,000 to the Court of Appeal “for their diversion of court time and waste of taxpayer resources,” in an unpublished opinion by Presiding Justice Roger Boren.

The appeal was from an order that Haddad and his client, George Rizk, pay more than $9,000 in discovery sanctions to Youssef Raphael. Raphael, a shareholder of Caderez, Inc.—the operator of a LaVerne gas station—accused Rizk and his brother of transferring corporate property to themselves, then dissolving the corporation, depriving him of his interest without authorization or authority.

The discovery issues arose when the plaintiff sought tax and business records of the corporation and the Rizks. Retired Los Angeles Superior Court Judge Gregory O’Brien Jr. served as the discovery referee, rejected claims of privilege, and broadly granted the plaintiff’s discovery requests.

O’Brien found that the Rizks and deliberately filed business returns under their tax returns, and that they could not, in what was essentially a conversion action, assert the taxpayer privilege in order to keep the plaintiff from learning about the business in which he had invested. He added that “the purpose of the privilege is to encourage a taxpayer to make full and truthful declarations in his return,” and “not to facilitate the taxpayer in perpetrating a fraud, [which] would be inconsistent with public policy,” and that Rizk failed to assert the privilege, as to his personal return, in a timely manner.

Superior Court Judge Robert Dukes imposed sanctions on Haddad and Rizk, which they appealed.

There was no legitimate reason to appeal the sanctions, Boren said yesterday. He agreed that the attorney and his client “subverted” a court order “by failing to instruct [CPA Roy] McGarrell to bring George Rizk’s tax returns to the deposition, a point underscored by Attorney Haddad’s directions to McGarrell during the deposition that ‘you’re not here to produce tax records for George Rizk.’”

Boren went on to explain that the trial judge was within his rights to impose sanctions on the basis of the referee’s report, without a hearing. Even if a hearing had been required, he added, the error in not holding one would have been harmless because there was no argument that could be reasonably made against the sanctions.

As for sanctions on appeal, Boren wrote:

“The conduct of Rizk and his attorneys is an intolerable display of disrespect for the judicial system and court orders. The consequences for such behavior must be harsh. Appellants’ continuing refusal to produce documents despite multiple court orders can be viewed as a contempt of court….Appellants have wasted plaintiff’s time, the referee’s time, and the courts’ time….Trial was originally scheduled for 2012 in this case. Owing to their underhanded tactics, appellants have denied plaintiff his day in court for three years.”

The case is Raphael v. Rizk, B259417.


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