Friday, December 23, 2016
Court of Appeal Rejects Sanctions Award in Marital ‘Litigation War’ as Excessive
Panel Says Family Code §271 Does Not Allow Court to Compensate Party Beyond Fees, Costs
By a MetNews Staff Writer
An award of sanctions for litigation misconduct under Family Code §271 is limited to attorney fees and legal costs, the First District Court of Appeal has ruled.
Div. Five held that $680,000 of San Francisco Superior Court Judge Anne-Christine Massullo’s $767,000 sanctions award in favor of Curtis Kekoa Jr. and against his ex-wife Christina Sagonowsky was unauthorized.
Kekoa, an attorney who flew for United Airlines for more than 20 years and was its first Native Hawaiian pilot, and Sagonowsky, whose net worth, largely from real estate holdings, has been estimated at $15 million, have been engaged in a long-running “litigation war,” as described by the trial judge. They divorced in 2005 after 13 years of marriage, but the court reserved jurisdiction to divide their property, while allowing Sagonowsky to manage four San Francisco rental properties in the interim.
In 2010, the judge awarded Kekoa two of the rental properties, along with a property in Honolulu, while awarding five San Francisco properties, including the remaining rental properties, to Sagonowsky. The judgment required that all transfers be completed by Dec. 15, 2010.
Sagonowsky, however, refused to execute the necessary documents and appealed the judgment. That appeal was eventually dismissed for failure to prosecute.
Prior to that dismissal, the trial judge ordered that the transfers be completed and that Sagonowsky turn over to her ex-husband all funds received since Dec. 15 from the properties awarded to him. Kekoa said she didn’t do so, and moved for further relief from the court.
The judge ordered the parties to submit evidence regarding the amounts of rents received from the properties, and expenses for utilities, taxes, and the like incurred, since the previously ordered transfer date, and scheduled a hearing. Prior to that hearing, however, Sagonowsky asked for a continuance based on an alleged disability.
After a number of continuances, and other proceedings, Kekoa filed his §271 sanctions motion in February 2014. The statute authorizes an award of costs or attorney fees as sanctions for conduct by a party or attorney that “frustrates the policy of the law to promote settlement of litigation” and to encourage “cooperation between the parties and the attorneys.”
Kekoa claimed that Sagonowsky had frivolously failed to sign recordable grant deeds to the properties awarded him, refused to sign new grant deeds after the deeds she provided could not be recorded because they were not notarized, refusal to withdraw lis pendens notices from the properties after judgment became final; prevented Kekoa from moving into one of the local properties and selling the other, and frivolously seeking continuances to delay resolution of the case.
Massullo, who took over the case after Sagonowsky sought the disqualification of the previous judge, set a July 2014 hearing. Sagonowsky moved to have the hearing continued for six months, based on her asserted disability.
In denying the continuance, Massullo found that Sagonowsky was not disabled, noting that she was litigating cases against Kekoa and others in San Francisco and San Mateo courts and had appeared at hearings in those cases. The judge did, however, rule that Sagonowsky could present her testimony in the form of a video deposition, rather than live in court, if she preferred.
Sagonowsky did not give the deposition, and did not appear in court. Her attorney said she could neither be deposed nor appear due to her disability, and attempted to leave the courtroom before the judge ordered him to remain.
Massullo said, at the close of the hearing, that §271 had been enacted “to discourage this very behavior that has been demonstrated since the judgment [became] final in this action.” She awarded Kekoa $500,000 for his ex-wife’s “relentless and culpable conduct” in driving up the cost of litigation; $180,000 that Kekoa lost when the sale of one of his properties fell through because Sagonowsky would not pass good title; and $45,000 in interest on his attorney fee bill, as well as more than $50,000 in fees and costs actually incurred in litigating post-judgment issues.
Presiding Justice Barbara J.R. Jones, writing for the Court of Appeal, said it was beyond dispute that Sagonowsky had engaged in “deplorable” conduct warranting sanctions. But §271, she said, prohibits sanctions from including amounts “untethered to attorney fees and costs incurred by” the moving party.
She distinguished In re Marriage of Corona (2009) 172 Cal.App.4th 1205, which counsel for the ex-husband argued authorizes “non-cost” sanctions. That case involved an award of “unpaid support in the form of specified housing costs,” according to the wife’s motion.
Jones explained that the husband in that case did not argue that the award lacked a statutory basis, instead arguing that his actions did not warrant sanctions and that the court’s order did not comply with legal requirements. The wife, meanwhile, argued that the costs constituted “a contribution” to attorney fees.
In contrast, Jones said, Sagonowsky had squarely presented the issue by arguing that the sanctions were not authorized by §271, and Kekoa did not argue that the $680,000 was related to attorney fees.
Jones did conclude, however, that the award of interest on attorney fees was within the judge’s discretion.
In an unpublished portion of the opinion, Jones said the trial judge did not violate a court rule designed to protect the rights of disabled litigants. There was, the presiding justice said, substantial evidence that Sagonowsky was not disabled, and that the lengthy continuance she sought as an accommodation would unduly hamstring the court.
The case is Sagonowsky v. Kekoa, 16 S.O.S. 6569.
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