BILL ANALYSIS                                                                                                                                                                                                    ”






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 2274 (Lara)
          As Amended May 15, 2012 
          Hearing Date: June 26, 2012
          Fiscal: No
          Urgency: No
          SK   
                    

                                        SUBJECT
                                           
                                 Vexatious Litigants

                                      DESCRIPTION 

          Existing law authorizes a court to declare a person to be a 
          vexatious litigant when that person has repeatedly abused the 
          judicial process by bringing meritless lawsuits in propria 
          persona (for one's self) (pro per).  This bill would extend the 
          vexatious litigant statute to pro per plaintiffs who are 
          represented by counsel at the time of filing in certain 
          circumstances.  Specifically, this bill would provide that a 
          court shall dismiss an action brought by a vexatious litigant 
          when all of the following are true: (1) the court determines, 
          after hearing evidence, that the litigation has no merit and has 
          been filed for the purposes of harassment or delay; (2) the 
          vexatious litigant is subject to a prefiling order; and (3) the 
          vexatious litigant was represented by counsel at the time the 
          litigation was filed and became pro per after his or her 
          attorney withdrew from the case. 

                                      BACKGROUND  

          Under existing law, a court may declare a person to be a 
          vexatious litigant when that person represents himself or 
          herself and has repeatedly abused the legal system by doing any 
          of the following: (1) filed at least five unmeritorious lawsuits 
          in the past seven years; (2) repeatedly relitigates, after a 
          final adverse finding, the validity of the final determination 
          or the actual cause of action against the same defendant; (3) 
          repeatedly engages in tactics that are frivolous or solely 
          intended to cause unnecessary delay; and (4) has previously been 
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          declared to be a vexatious litigant by a state or federal court 
          in an action based upon the same or substantially similar facts.

          Current law permits a court to enter a prefiling order which 
          prohibits a vexatious litigant from filing any new litigation in 
          pro per ("pro per" refers to a plaintiff who represents himself 
          or herself) without first obtaining permission of the presiding 
          judge of the court where the litigation is to be filed.  
          Existing law permits the judge to allow the filing of that 
          litigation only if it appears that the litigation has merit and 
          has not been filed for the purposes of harassment or delay.  The 
          court may also require the plaintiff to furnish a security to 
          assure payment of reasonable expenses.  

          In the spring of 2010, the Policy Coordination and Liaison 
          Committee, the Trial Court Presiding Judges Advisory Committee, 
          and the Civil and Small Claims Advisory Committee of the 
          Judicial Council proposed legislation to improve the practice 
          and procedure for courts dealing with vexatious litigants.  That 
          proposed legislation was introduced as SB 731 (Committee on 
          Judiciary, Ch. 49, Stats. 2011), which clarified that the 
          vexatious litigant statutes apply to matters in the Courts of 
          Appeal and created a process for the courts to follow when a 
          vexatious litigant seeks removal from the Judicial Council's 
          vexatious litigant list.  As a part of its process, the Judicial 
          Council committees circulated the proposal that would eventually 
          become SB 731 during its Spring 2010 invitation-to-comment 
          cycle.  Several of the comments received concerned "whether 
          section 391.7 should be expanded to apply to a vexatious 
          litigant represented by an attorney."  The advisory committees 
          did not incorporate such a provision in SB 731 and instead 
          "decided to defer recommending legislation that would expand the 
          applicability of section 391.7 to a vexatious litigant 
          represented by counsel."

          Last year, SB 603 (Berryhill) was introduced and failed passage 
          in this Committee.  That bill attempted to address the same 
          issue raised by this bill, but it did so by permitting a court 
          to declare a person to be a vexatious litigant even if he or she 
          was represented by an attorney.  At the time, SB 603 was opposed 
          by the California Rural Legal Assistance Foundation, Consumer 
          Attorneys of California, Consumer Federation of CA, and Western 
          Center on Law and Poverty for a number of reasons, including 
          that existing law already addresses improper behavior by 
          attorneys, the bill could have had a possible chilling effect on 
          legitimate advocacy, and it was arguably premature since the 
                                                                      



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          California Supreme Court was considering the issue at the time.  
          The Supreme Court has since issued its decision in Shalant v. 
          Girardi (2011) 51 Cal.4th 1164 in which it held that the 
          vexatious litigant statute applies only to actions filed in pro 
          per.  Thus, if an attorney representing a vexatious litigant who 
          is subject to a prefiling order later withdraws from the case, 
          the court may not dismiss the action because the litigant did 
          not comply with the prefiling order since he or she was 
          represented by counsel at the time of the filing.  

          In Shalant, the vexatious litigant plaintiff was subject to a 
          prefiling order that prohibited him from "filing any new 
          litigation in propria persona in the courts of California 
          without approval of the presiding judge of the court in which 
          the action is to be filed."  (Id. at 1168.)  While represented 
          by counsel, the plaintiff Shalant filed an action alleging, 
          among other things, breach of contract and breach of the 
          covenant of good faith and fair dealing.  Beginning about five 
          months after the filing of the case and over the next year and a 
          half, the plaintiff was represented by his original counsel, new 
          counsel, the plaintiff himself, original counsel, and the 
          plaintiff himself, in that order.  At that point, the defendants 
          filed a notice of the plaintiff's status as a vexatious litigant 
          subject to a prefiling order and a motion to dismiss the case on 
          that basis.  The trial court granted that motion, and the Second 
          District Court of Appeal reversed the ruling, holding that a 
          prefiling order issued under the vexatious litigant statute 
          "governs only the initiation of a lawsuit, not what occurs 
          during the prosecution of the litigation."  (Shalant v. Girardi 
          (2010) 183 Cal.App.4th 545, 554.).  As noted above, the 
          California Supreme Court agreed and reiterated the appellate 
          court's statement that "? in their efforts to deal with the 
          problem of vexatious litigants, courts must observe the limits 
          set by the applicable statutory scheme.  If those limits are too 
          confining, then it is the function of the Legislature, not the 
          courts, to expand them." (51 Cal.4th at 1176.)  

          This bill, sponsored by the Civil Justice Association of 
          California, would provide for that expansion by extending the 
          vexatious litigant statute to pro per plaintiffs who are 
          represented by counsel at the time of filing in certain 
          circumstances.

                                CHANGES TO EXISTING LAW
           
           Existing law  defines "vexatious litigant" to mean a person who 
                                                                      



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          does any of the following:
        a.In the immediately preceding seven years, filed, in pro per, at 
            least five actions, other than in small claims court, that 
            have been either: (1) finally determined adversely to the 
            person or (2) unjustifiably permitted to remain pending at 
            least two years without having been brought to trial or 
            hearing;  
         b.After a final adverse ruling against the person, repeatedly 
            relitigates or attempts to relitigate, in pro per, either: (1) 
            the validity of the final determination or (2) the actual 
            cause of action against the same defendant;
        c.In any litigation while acting in pro per, repeatedly files 
            unmeritorious motions, pleadings, or other papers, conducts 
            unnecessary discovery, or engages in other tactics that are 
            frivolous or solely intended to cause unnecessary delay; and  
         d.Has previously been declared to be a vexatious litigant by a 
            state or federal court in an action based upon the same or 
            substantially similar facts.  (Code Civ. Proc. Sec. 391.)
         
          Existing law  provides that a defendant may make a motion for an 
          order requiring a plaintiff to provide security when it can be 
          shown that the plaintiff is a vexatious litigant and there is 
          not a reasonable probability that he or she will prevail in the 
          litigation.  (Code Civ. Proc. Sec. 391.1.)  After hearing the 
          evidence upon the motion, if the court determines that the 
          plaintiff is a vexatious litigant and that there is no 
          reasonable probability that he or she will prevail, the court 
          must order the plaintiff to furnish security in an amount 
          determined by the court and for the benefit of the defendant.  
          (Code Civ. Proc. Sec. 391.3.)  If that security is not 
          furnished, the lawsuit shall be dismissed.  (Code Civ. Proc. 
          Sec. 391.4.)

           Existing law  permits the court to enter a prefiling order which 
          prohibits a vexatious litigant from filing any new litigation in 
          pro per without first obtaining permission of the presiding 
          judge of the court where the litigation is to be filed.  
          Existing law permits the judge to allow the filing of that 
          litigation only if it appears that the litigation has merit and 
          has not been filed for the purposes of harassment or delay.  
          (Code Civ. Proc. Sec. 391.7.)

           This bill  would require a court to dismiss an action brought by 
          a vexatious litigant who is subject to a prefiling order if the 
          court determines, after hearing evidence, that the litigation 
          has no merit and has been filed for the purposes of harassment 
                                                                      



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          or delay.  This provision would only apply if the vexatious 
          litigant was represented by counsel at the time the litigation 
          was filed and became pro per after his or her attorney withdrew 
          from the case.

           This bill  would permit the defendant to either bring a motion 
          for an order requiring the plaintiff to furnish security or a 
          motion for an order dismissing the action, or both.  The bill 
          would require the defendant to combine all grounds for relief in 
          one motion. 

                                       COMMENT
           
          1.  Stated need for the bill  
          
          The author writes:
          
            The budget for California's judicial branch was reduced by 30% 
            this past fiscal year, and since 2008 the budget has been cut 
            by nearly a quarter - $653 million.  At the same time, 
            superior court filings have increased by 20%, according to the 
            Judicial Council's annual statistics report. Additionally, in 
            the current fiscal year, trial court funding was cut by $350 
            million statewide. At a time when courts are deeply impacted 
            by these budget cuts, AB 2274 would limit abusive and 
            frivolous lawsuits and filings to save valuable resources of 
            both the courts and the parties.  Although there are some 
            provisions on the books to protect against potentially abusive 
            lawsuits brought forward by vexatious litigants, unfortunately 
            there are still some instances in which litigants can use the 
            court system to pursue frivolous and unwarranted lawsuits.  
            This costs courts, who are already under enormous cost 
            pressure, and defendants precious time and money.

            Once a person has been designated a vexatious litigant, there 
            are certain protections in future lawsuits brought forward by 
            that person. One of the protections allows a judge to look 
            closely at what a vexatious litigant files and approve of the 
            filing.  If a vexatious litigant has an attorney, the litigant 
            is not subject to the pre-filing order or the scrutiny of the 
            judge in his or her pleadings because the attorney is subject 
            to the Rules of Professional Conduct.

            A recent Supreme Court case found that the statute as drafted 
            only requires a vexatious litigant to have an attorney at the 
            initial filing of a case.  AB 2274 would clear up a loophole 
                                                                      



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            that currently exists in which a vexatious litigant can 
            dismiss the attorney after they file papers and avoid the 
            closer judicial scrutiny of their case.

            Litigation is expensive and all too often defendants settle 
            frivolous or warrantless lawsuits simply because they don't 
            have the resources to fight them in court.  AB 2274 will make 
            it clear that a lawsuit from a vexatious litigant will be 
            subject to stricter scrutiny from a judge if, at any point, 
            the litigant dismisses their attorney.  Ensuring provisions 
            that will provide this stricter scrutiny makes it more likely 
            that cases of merit will be heard in a timelier manner and 
            will protect the scarce resources of California's courts.
          
          Sponsor Civil Justice Association of California writes, "›t]he 
          vexatious litigant statute was enacted in 1963 in order to curb 
          unwarranted litigation within California by allowing courts to 
          require a security bond or approval from the court before the 
          vexatious litigant could file additional litigation (The 
          California Vexatious Litigant Statute: A Viable Judicial Tool to 
          Deny the Clever Obstructionists Access?, 72 S. Cal. L. Rev. 275, 
          First Western Development Corp. v. Superior Court (1989) 212 
          Cal.App.3d 860).  Excessive and needless lawsuits drive up 
          business expenses, cost government additional money, and 
          increase the cost of goods and services for all Californians.  
          Consumers pay for unjustified lawsuits as businesses increase 
          their prices to cover legal costs or shut down.  This bill would 
          return the effectiveness of the statutory protections and 
          clarify that the legislature did not intend to allow vexatious 
          litigants to so easily game the system."

          2.  Existing vexatious litigant statute & changes proposed by this 
            bill    

          Under existing law, a court may declare a person to be a 
          vexatious litigant when that person has repeatedly abused the 
          judicial process by bringing meritless lawsuits in pro per.  
          This bill would extend the vexatious litigant statute to pro per 
          plaintiffs who are represented by counsel at the time of filing 
          in certain circumstances, as described in more detail in 
          subdivision (c), below.

             a.  Existing statutory requirements 

             Existing law defines a "vexatious litigant" to mean a person 
            who does any of the following: (1) in the immediately 
                                                                      



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            preceding seven years, filed, in pro per, at least five 
            actions, other than in small claims court, that have been 
            either (a) finally determined adversely to the person or (b) 
            unjustifiably permitted to remain pending at least two years 
            without having been brought to trial or hearing; (2) after a 
            final adverse ruling against the person, repeatedly 
            relitigates or attempts to relitigate, in pro per, either (a) 
            the validity of the final determination or (b) the actual 
            cause of action against the same defendant; (3) in any 
            litigation while acting in pro per, repeatedly files 
            unmeritorious motions, pleadings, or other papers, conducts 
            unnecessary discovery, or engages in other tactics that are 
            frivolous or solely intended to cause unnecessary delay; or 
            (4) has previously been declared to be a vexatious litigant by 
            a state or federal court in an action based upon the same or 
            substantially similar facts.  

            Once a plaintiff is declared to be a vexatious litigant, a 
            defendant may make a motion for an order requiring a plaintiff 
            to provide security when it can be shown that the plaintiff is 
            a vexatious litigant and there is not a reasonable probability 
            that he or she will prevail in the litigation.  After hearing 
            the evidence upon the motion, if the court determines that the 
            plaintiff is a vexatious litigant and that there is no 
            reasonable probability that he or she will prevail, the court 
            must order the plaintiff to furnish security in an amount 
            determined by the court and for the benefit of the defendant 
            to assure payment of reasonable expenses.  If that security is 
            not furnished, the lawsuit shall be dismissed. 

            A vexatious litigant may also be subject to a prefiling order 
            which prohibits that litigant from filing any new litigation 
            in pro per without first obtaining permission of the presiding 
            judge of the court where the litigation is to be filed.  
            Existing law permits the judge to allow the filing of that 
            litigation only if it appears that the litigation has merit 
            and has not been filed for the purposes of harassment or 
            delay. 

             b.  Purpose of vexatious litigant statute

             The vexatious litigant statute was enacted in 1963 to "curb 
            the abuse of vexatious litigation" (3 Witkin, Cal. Procedure 
            (5th) Actions Sec. 365), and to prevent abuse of the judicial 
            process.  In First Western Development Corp. v. Superior Court 
            (1989) 212 Cal.App.3d 860, the court noted:
                                                                      



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              The vexatious litigant statutes were enacted to require a 
              person found a vexatious litigant to put up security for the 
              reasonable expenses of a defendant who becomes the target of 
              one of these obsessive and persistent litigants whose 
              conduct can cause serious financial results to the 
              unfortunate object of his attack.  The purpose of the 
              statutory scheme is to deal with the problem created by the 
              persistent and obsessive litigant who has constantly pending 
              a number of groundless actions, often against the judges and 
              other court officers who decide or were concerned in the 
              decision of previous actions adversely to him.  . . . 

              A litigant who loses then burdens the courts with new 
              actions and repeated appeals based on the same controversy 
              and with no reasonable possibility of prevailing wastes 
              valuable court time.  It is axiomatic in our system of 
              justice that every person is entitled to his day in court; 
              however, a litigant is not entitled to two days in court.  
              ›Citations omitted.] (Id. at 867-870).

            By applying only to pro per plaintiffs, the vexatious litigant 
            statute distinguishes between plaintiffs who bring their cases 
            in pro per and those who are represented by attorneys.  In 
            upholding this distinction, the First District Court of Appeal 
            held that the statute's application "to persons proceeding in 
            propria persona is not arbitrary or unreasonable.  Attorneys 
            are governed by prescribed rules of ethics and professional 
            conduct, and, as officers of the court, are subject to 
            disbarment, suspension, and other disciplinary sanctions not 
            applicable to litigants in propria persona."  (Taliaferro v. 
            Hoogs, (1965) 236 Cal.App.2d 521.)

             c.  Changes proposed by this bill 

             Under this bill, a court must dismiss an action brought by a 
            vexatious litigant when all of the following are true: 

             1.   The vexatious litigant is subject to a prefiling order;  
              2.   The court determines, after hearing evidence, that the 
               litigation has no merit and has been filed for the purposes 
               of harassment or delay;   and  
              3.   The vexatious litigant was represented by counsel at the 
               time the litigation was filed and became pro per after his 
               or her attorney withdrew from the case.  
              
                                                                      



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            Taken together these provisions are intended to ensure that 
            sufficient safeguards are in place so that the concerns raised 
            by last year's SB 603 (Berryhill) do not arise.  For example, 
            the bill's provisions would apply only if the vexatious 
            litigant is already subject to a prefiling order.  As noted 
            above, such an order would prevent the plaintiff from filing 
            any new litigation without an attorney without first obtaining 
            permission of the presiding judge of the court where the 
            litigation is to be filed.  Second, under this bill, the 
            vexatious litigant's lawsuit would only be dismissed if the 
            court also determines, after hearing evidence on the motion, 
            that the litigation has no merit and was filed for the 
            purposes of harassment or delay.  Existing law requires that 
            the hearing be noticed and the court must consider written or 
            oral evidence, by witnesses or affidavit, that is material to 
            the ground of the motion.  

            This bill would also apply only if the vexatious litigant was 
            represented by counsel at the time the litigation was filed 
            and then became pro per after the attorney withdrew from the 
            case.  As noted above, the author's intent is to address the 
            situation where a vexatious litigant dismisses his or her 
            attorney after the case is filed in an effort to avoid closer 
            judicial scrutiny of his or her case.  Sometimes, however, an 
            attorney may need to withdraw from an action for more 
            scrupulous reasons (e.g., the attorney becomes ill and can no 
            longer represent the plaintiff).  This bill would address such 
            a situation by requiring that the court still find that the 
            litigation has no merit and was filed for purposes of 
            harassment or delay. 
             
            The Judicial Council supports this bill, writing that it "? 
            provides a modest, but important enhancement to the law 
            governing vexatious litigants.  Enactment of AB ›2274] should 
            assist in weeding out meritless lawsuits and help conserve 
            judicial resources, which is especially important during the 
            current budget crisis."  In addition, the California Rural 
            Legal Assistance Foundation, Consumer Attorneys of California, 
            Consumer Federation of CA, and Western Center on Law and 
            Poverty do not oppose this bill.  
             
          3.  Technical amendment needed  

          In order to clarify the proper standards for obtaining an order 
          requiring the plaintiff to furnish security and an order 
          dismissing the litigation, as proposed by this bill, the author 
                                                                      



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          has agreed to accept the following technical amendment:
                                        
             Technical Amendment
             
            On page 3, line 7, after "motion" insert "for an order 
            requiring the plaintiff to furnish security"


           Support  :  American Council of Engineering Companies; Association 
          of California Insurance Companies; California Association of Bed 
          and Breakfast Inns; California Association of Joint Powers 
          Authorities; California Chamber of Commerce; California Citizens 
          Against Lawsuit Abuse; California Construction and Industrial 
          Materials Association (CalCIMA); California Farm Bureau 
          Federation; California Framing Contractors Association; 
          California Grocers Association; California Hotel and Lodging 
          Association; California Independent Grocers Association; 
          California League of Food Processors; California Manufacturers 
          and Technology Association; California Retailers Association; 
          Cooperative of American Physicians; Judicial Council of 
          California; League of California Cities; Motion Picture 
          Association of America; National Federation of Independent 
          Business

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Civil Justice Association of California

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          SB 603 (Berryhill, 2011) See Background and Comment 2c. 

          SB 731 (Committee on Judiciary, Ch. 49, Stats. 2011) See 
          Background.

           Prior Vote  :

          Assembly Floor (Ayes 76, Noes 0)
          Assembly Judiciary Committee (Ayes 10, Noes 0)

                                   **************
          
                                                                      



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