Metropolitan News-Enterprise


Monday, December 2, 2002


Page 3


Sanctions for Failure to Follow Court Order Were Improper, Court Rules


By a MetNews Staff Writer


A Los Angeles attorney’s failure to comply with a court order to turn over documents was an improper basis for the court’s sanctions order, this district’s Court of Appeal has ruled.

Although previous versions of California Rules of Court Rules 227 permitted sanctions for defying a court order, Div. One ruled Wednesday, the current version of the rule could not support Los Angeles Superior Court Judge Richard C. Hubbell’s order sanctioning attorney Marvin Gross.

In an unpublished opinion by Presiding Justice Vaino Spencer, the court made clear that sanctions might still be available against Gross for his firm’s actions—just not under Rule 227 or the other authority Hubbell cited, Code of Civil Procedure Sec. 575.2.

“We hold only that, if appropriate, [a sanctions order] must be made pursuant to the applicable statute,” Spencer said.

Sec. 575.2(a) permits a court to sanction a party for failure to comply with a local court rule, Spencer said. But absent citation to a local court rule authoring sanctions, no sanctions can be imposed. Reference to Rule 227, the statewide court rule permitting sanctions for failure to comply with other Rules of Court, is insufficient, she said.

“The trial court’s order imposing sanctions clearly states that sanctions are being imposed for the failure to comply with court orders,” Spencer said. “There is no mention of any failure to comply with a local court rule authorizing the imposition of sanctions.”

The ruling arises from legal wrangling over a trust and the role taken by Gross, former counsel to the trust’s wholly owned corporation, in representing a man named Michael Entel.

The maker of both the trust and the corporation, Bruce Eicher, died in November 1997.

Entel was the trustee of a different trust, and was living in a Palm Springs home held by the Eicher trust. The Eicher trust was supposed to have conveyed the property to Entel’s trust but didn’t, and litigation ensued.

The matter was complicated by the fact that property taxes had not been paid, and that the Small Business Administration, which held a security interest, was about to foreclose.

Gross, of the firm of Gross Gross & Simon, contacted the SBA and proposed buying the SBA note since Entel, his client, could not pay off the SBA loan.

Word of the proposal reached Allan Sigel, attorney to the Eicher trustee. Sigel demanded that Gross withdraw, given his previous role as the corporation’s counsel.

Gross declined. He said he had represented Entel in connection with the trust for many years. Besides, he said, the trustee had failed to make the Palm Springs payments, and Gross was working with Entel to make sure the property was not lost.

The corporation and the trustee then sought a temporary restraining order blocking Gross from acquiring the note. The Superior Court granted the application and ordered Gross’ firm to appear and show why it should be restrained from further action on the note or from representing Entel.

The court also ordered the firm to withdraw its offers to the SBA.

Prior to the date of the show-cause hearing, Sigel prepared a stipulation re preliminary injunction, and Gross signed itóbut only after crossing out a portion that provided for producing all documents relating to the note.

Sigel’s firm rejected the stipulation with the clause removed and said it would appear for the show-cause hearing and would seek sanctions. Gross did not appear, and the court issued the preliminary injunction.

Eicher, Inc. and the trustee then sought an order to show cause re contempt with respect to the order disqualifying the firm from representing Entel. They also sought sanctions under Secs. 177.5 and 575.2, and Rule 227.

Hubbell ordered that Gross and his firm pay sanctions in the amount of $3,150 to the corporation, the trust and their counsel, for violating the order to cease representing Entel.

Under most circumstances Gross would not be able to appeal a sanctions order under $5,000 until entry of a final judgment in the matter, Spencer wrote. But since neither Gross nor his firm represent Entel any longer, their role in the case is over and an appeal can be taken.

The case is Bruce Eicher, Inc. v. Entel, B154202.


Copyright 2002, Metropolitan News Company