Metropolitan News-Enterprise


Thursday, October 19, 2017


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C.A. Lambastes Hill Farrar Attorneys, Imposes Monetary Sanctions

Justice Ikola Won’t Accept Lawyers’ Explanation


By a MetNews Staff Writer


The Fourth District Court of Appeal has taken the rare action of imposing sanctions for a frivolous appeal on attorneys for a prestigious law firm—Hill, Farrar & Burrill—as well as on the firm, itself, and instructing the clerk to send a copy of the opinion, once it’s final, to the State Bar for possible disciplinary action against the lawyers.

In a scathing denunciation of the lawyers, E. Sean McLoughlin and William A. Meyers, accusing them of trickery, Justice Raymond Ikola of Div. Three discounted the explanation they provided. Ikola indicated disbelief of Meyer’s declaration under penalty of perjury that the order denying a motion to compel arbitration which he presented to a judge for signature—which the judge signed—comported with the views he had orally stated in presiding over an ex parte hearing.

Ikola’s unpublished opinion, filed Tuesday, orders that sanctions be paid to the court “no later than 15 days after the remittitur is issued” in the amount of $8,500. It instructs that the Orange Superior Court, on remand, gage how much should be paid to the plaintiff and respondent, Francisco Diaz, for attorney fees in connection with services below and on appeal, other than spade work that will be useful in further proceedings.

‘Sharp Practice’ Alleged

Ikola wrote:

“A ‘sharp practice’ is defined as a ‘dealing in which advantage is taken or sought unscrupulously.’ (Webster’s 3d New Internat. Dict. (2002) p. 2088.) This is an appeal borne of sharp practices.

“Defendant Professional Community Management, Inc. (PCM), unilaterally orchestrated the issuance of an appealable order by: (1) applying ex parte, a mere 11 days before trial, for an order shortening time to hear its motion to compel arbitration; (2) voluntarily submitting a proposed order to the trial court that not only reflected the court’s denial of the ex parte application—the only ruling reflected in the trial court’s own minute order—but also included a denial of the motion on the merits; and (3) promptly appealing from that order, which then stayed the scheduled trial.

“We conclude PCM engaged in this course of conduct because, as respondent Francisco Diaz argued below, it anticipated the court would deny its motion to compel arbitration in any event, and it sought to obtain an appealable ruling issued before the trial commenced. PCM could then spin that ruling into a vehicle for seeking pretrial appellate review of the analysis underlying the court’s order denying its related motion for summary judgment. Thus, PCM carefully tailored the order it proposed the court issue, incorporating what it characterized as the trial court’s reasons for rejecting the summary judgment motion, and excluding any mention of issues that might distract from that analysis.”

Addressing the merits of the appeal, Ikola said that by presenting an order to the judge denying the motion to compel arbitration, there was invited error, precluding a reversal.

Judge Disparaged Motion

The lawyers argued in a response to the Court of Appeal’s notice of an intent to impose sanctions that they did more than anticipate an unfavorable ruling on the motion to compel arbitration; rather Orange Superior Court Judge Theodore Howard was understood by Meyer as indicating at an unreported ex parte hearing on Aug. 4 that the motion to compel lacked merit.

Diaz had sued for wrongful termination and disability discrimination. PCM’s answer, filed Dec.23, 2014, set forth, as an affirmative defense, that Diaz, in contravention of a proviso in the collective bargaining agreement between it and his union, had failed to arbitrate.

PCM on April 29, 2016, filed a motion for summary judgment based on Diaz’s failure to arbitrate or otherwise follow the prescribed grievance procedure. The motion was denied on Aug. 2.

The lawyers explained that McLoughlin immediately embarked on drafting a motion to compel arbitration and Meyers began preparing an ex parte application for order shorting time (“OST”), given that the earliest date the motion could normally be set was Sept. 1 and trial was scheduled for Aug. 15.

The application to shorten time was filed Aug. 3 and heard the following morning.

Lawyers’ Response

In the response to the notice of impending sanctions, it was explained:

“Because the hearing was expected to concern only the Ex Parte for OST, neither party ordered a court reporter….

“During the hearing, the trial court stated that the issues raised in PCM’s Motion to Compel arbitration had already been decided in connection with the denial—two days prior—of PCM’s motion for summary judgment….Based on Judge Howard’s statements from the bench, Meyers understood that the court had reviewed both the Ex Parte for OST and the concurrently-filed Motion to Compel, and found both to be without merit.”

In the court’s notice, inquiry was made as to “[w]hy PCM proposed the trial court sign an order denying, rather than granting, its own ex parte application for an order shortening time for hearing on its previously filed motion to compel arbitration, or alternatively for an order continuing the trial date.”

The lawyers explained:

“…PCM’s counsel went to the ex parte hearing with a proposed order granting the requested relief in its Ex Parte for OST.

“Only after the August 4, 2016 hearing did PCM submit a proposed order denying its Ex Parte for OST and Motion to Compel. PCM did not submit the order that was ultimately signed concurrently with its filing of the Ex Parte for OST and Motion to Compel, as the Court’s question suggests.

“The proposed order, submitted late in the day on August 4, was based on the trial court’s actual rulings and statements made during the hearing, which PCM’s counsel, William Meyers, understood to mean that the court had…denied in substance PCM’s Motion to Compel arbitration on the merits.”

Meyers expressed that understanding in a declaration under penalty of perjury.

Additional Questions

The court also asked “[w]hy PCM filed an appeal from the order it had proposed the trial court sign.”

The response was made:

“PCM’s counsel believes that the order signed by the trial court accurately reflects the actual rulings made by the court on August 4, 2016. Because the August 10, 2016 signing of the proposed order denied PCM’s Motion to Compel arbitration on the merits, PCM understood the August 10th order to be immediately appealable under Code of Civil Procedure section 1294.3.”

Another question was “[w]hy PCM waited until August 12, 2016, eight days after the court signed and filed its proposed order, and one court day before trial in this case was scheduled to commence, before filing its notice of appeal from the order it had proposed the court sign.”

The lawyers advised:

“PCM did not wait eight days after the trial court signed the order to file its notice of appeal. PCM waited two days. The order was signed on August 10, 2016. PCM’s counsel first obtained a copy of the order on August 11, 2016, and PCM then filed its notice of appeal the following day, on August 12, 2016.”

‘Not Credible’

Ikola charged that Meyers’s assertion that he understood Howard to be denying, in substance, the motion to compel “is not credible.” Howard lacked jurisdiction to do that, at the ex parte hearing on a motion to shorten time, he said.

The jurist went on to say:

“Whatever oral commentary the court might have offered about the supposed merits of the motion to compel arbitration during the hearing, it could not have constituted a ‘ruling’ on that motion, as Meyers suggests. To the contrary, while a court’s oral statements may be illustrative of its thinking, it is the court’s written order that constitutes the ruling….

“In any event, Meyers does not claim the court specifically stated, “I am denying your motion today,” or even words to that effect. And significantly, Meyers does not claim to have expressed any objection when he supposedly realized the court was doing that very remarkable—and wholly objectionable—thing. Stated simply, if PCM were genuinely interested in persuading the court to grant its motion to compel arbitration, we presume its counsel would have vigorously protested the court’s abrupt decision to deny that motion less than 24 hours after it had been filed.”

With respect to Howard having signed the order presented to him, Ikola said:

“[W]e are loath to conclude the court was actually tricked into signing an order it had not intended to issue, and must therefore acknowledge the possibility the court made a conscious decision to go ahead and deny the motion outright, precisely because PCM was proposing that it do so.

The case is Diaz v. Professional Community Management, Inc., G053909.

The attorneys on appeal were McLoughlin and Meyers for PCM and A. Jacob Nalbandyan and Charles L. Shute Jr. for Diaz.


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