BILL ANALYSIS �
AB 2494
Page 1
Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 2494 (Cooley) - As Amended: April 10, 2014
PROPOSED CONSENT (As Proposed to be Amended)
SUBJECT : COURTS: BAD FAITH ACTIONS OR TACTICS
KEY ISSUE : SHOULD THE LEGISLATURE REVIVE A LARGELY SUPERSEDED
STATUTE AS REVISED IN ORDER TO PROVIDE AN ADDITIONAL TOOL BY
WHICH COURTS MAY POTENTIALLY SANCTION BAD FAITH ACTIONS OR
TACTICS?
SYNOPSIS
This bill would revive with amendments a provision of the Code
of Civil Procedure authorizing sanctions against parties and
attorneys that act in bad faith. Since 1995, Code of Civil
Procedure section 128.5 has been largely superseded by section
128.7. Section 128.5 continues to apply to what is believed to
be a very small number of still-active cases that were filed on
or before December 31, 1994. This bill would apply a revised
version of section 128.5 to new cases filed after the effective
date of the measure. Supporters believe it will aid courts in
addressing bad faith conduct. As proposed to be amended it is
believed that there is no remaining opposition.
SUMMARY : Provides an additional tool for sanctions of bad faith
actions and tactics. Specifically, this bill :
1)Provides that a trial court may order a party, the party's
attorney, or both to pay the reasonable expenses, including
attorney's fees, incurred by another party as a result of
bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay, as defined.
2)Provides that expenses pursuant to this section shall not be
imposed except on notice contained in a party's moving or
responding papers or, on the court's own motion, after notice
and opportunity to be heard. An order imposing expenses shall
be in writing and shall recite in detail the conduct or
circumstances justifying the order.
AB 2494
Page 2
3)Provides that in addition to any award pursuant to this
section for conduct described in subdivision (a), the court
may assess punitive damages against the plaintiff on a
determination by the court that the plaintiff's action was an
action maintained by a person convicted of a felony against
the person's victim, or the victim's heirs, relatives, estate,
or personal representative, for injuries arising from the acts
for which the person was convicted of a felony, and that the
plaintiff is guilty of fraud, oppression, or malice in
maintaining the action.
4)Provides that any sanction imposed pursuant to this section
shall be imposed consistently with the standards, conditions
and procedures set forth in subdivisions (c), (d) and (h) of
section 128.7.
5)Provides that the liability imposed by this section is in
addition to any other liability imposed by law for acts or
omissions within the purview of this section.
6)Specifies that the foregoing shall not apply to disclosures
and discovery requests, responses, objections, and motions.
7)Provides that this section shall remain in effect only until
January 1, 2018 and as of that date is repealed, unless a
later enacted statute, that is enacted before January 1, 2018
deletes or extends that date.
8)Provides that on or before June 30, 2018, the Judicial Council
shall submit a report to the Legislature examining the impact
and effect of this act, including the number of motions made
under both section 128.5 and 128.7, the number of motions
under both sections resulting in an award of sanctions, the
nature and amount of any sanctions awarded under both
sections, and whether or not the enactment of section 128.5
act has had a demonstrable effect on reducing the frequency
and severity of bad faith actions or tactics that would not be
subject to sanction under section 128.7.
EXISTING LAW :
1)Provides with respect to actions or tactics arising from a
complaint filed, or a proceeding initiated, on or before
December 31, 1994 that every trial court may order a party,
the party's attorney, or both to pay any reasonable expenses,
AB 2494
Page 3
including attorney's fees, incurred by another party as a
result of bad-faith actions or tactics that are frivolous or
solely intended to cause unnecessary delay, as specified.
(Code of Civil Procedure section 128.5.)
2)Provides with respect to a complaint or petition filed on or
after January 1, 1995, and any other pleading, written notice
of motion, or other similar paper filed in that matter that
every pleading, petition, written notice of motion, or other
similar paper shall be signed by at least one attorney of
record in the attorney's individual name, or, if the party is
not represented by an attorney, shall be signed by the party.
Each paper shall state the signer's address and telephone
number, if any. Except when otherwise provided by law,
pleadings need not be verified or accompanied by affidavit.
An unsigned paper shall be stricken unless omission of the
signature is corrected promptly after being called to the
attention of the attorney or party. (Code of Civil Procedure
section 128.7.)
3)Provides that by presenting to the court, whether by signing,
filing, submitting, or later advocating, a pleading, petition,
written notice of motion, or other similar paper, an attorney
or unrepresented party is certifying that to the best of the
person's knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances, specified
conditions are met. (Id.)
4)Provides that if, after notice and a reasonable opportunity to
respond, the court determines that the foregoing has been
violated, the court may, subject to the conditions stated
below, impose an appropriate sanction upon the attorneys, law
firms, or parties that have violated subdivision (b) or are
responsible for the violation. In determining what sanctions,
if any, should be ordered, the court shall consider whether a
party seeking sanctions has exercised due diligence. (Id.)
5)Specifies the procedure for making, responding to and
considering a motion for sanctions. (Id.)
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
COMMENTS : The author explains the reason for the bill as
follows:
AB 2494
Page 4
Existing law until 1995 provided that litigants subject to
bad-faith and unmeritorious tactics could seek sanctions in
the form of attorney's fees (CCP 128.5). Many thought the
bar to use this provision was too high because the statute
had been interpreted to require both an objective standard
that the act was without merit and a subjective bad-faith
motive, which was difficult to prove. Thus, in 1995 CCP
128.7 was enacted. This also brought California into
alignment with federal law (FRCP's rule 11) and imposed a
lower threshold for sanctions against an attorney by only
requiring the attorney's conduct be objectively
unreasonable. Unfortunately, it stopped the applicability
of CCP 128.5 as applied to bad-faith tactics outside the
scope of filing frivolous pleadings.
Unfortunately, bad-faith disobedience and tactics by either
side are needlessly employed in litigation. It can result
in clogging our courts and wasting precious judicial
resources. Courts routinely give litigants the benefit of
the doubt, but they have lost an important tool used to
ensure bad faith actions that can materially harm the other
party or the fairness of a trial are discouraged. Under
existing law a court can compel obedience with a court
order, but financially the most a court can do if a party
violates one is find them in contempt with penalty of up to
$1500. Moreover, if a case ends in a mistrial or in the
release of protected documents it is difficult to undo the
waste of judicial resources or harm done to the litigant
who was not at fault.
Similarly, supporters note that the effect of the bill would be
to allow for sanctions for violation of a court order.
As proposed to be amended, this measure makes clear that it is
intended to be read in harmony with the salutary cognate
provisions of section 128.7.
Author's Amendments to Address Opposition Concerns. To clarify
the intent of the bill and address opposition concerns, the
author judiciously proposes to amend the measure as follows:
128.5. (a) A trial court may order a party, the party's
attorney, or both to pay the reasonable expenses, including
attorney's fees, incurred by another party as a result of
AB 2494
Page 5
bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay. This section also applies
to judicial arbitration proceedings under Chapter 2.5
(commencing with Section 1141.10) of Title 3 of Part 3.
(b) For purposes of this section:
(1) "Actions or tactics" include, but are not limited to, the
making or opposing of motions or the filing and service of a
complaint, or cross-complaint, answer or other responsive
pleading . The mere filing of a complaint without service thereof
on an opposing party does not constitute "actions or tactics"
for purposes of this section.
(2) "Frivolous" means totally and completely without merit or
for the sole purpose of harassing an opposing party.
(c) Expenses pursuant to this section shall not be imposed
except on notice contained in a party's moving or responding
papers or, on the court's own motion, after notice and
opportunity to be heard. An order imposing expenses shall be in
writing and shall recite in detail the conduct or circumstances
justifying the order.
(d) In addition to any award pursuant to this section for
conduct described in subdivision (a), the court may assess
punitive damages against the plaintiff on a determination by the
court that the plaintiff's action was an action maintained by a
person convicted of a felony against the person's victim, or the
victim's heirs, relatives, estate, or personal representative,
for injuries arising from the acts for which the person was
convicted of a felony, and that the plaintiff is guilty of
fraud, oppression, or malice in maintaining the action.
(e) This section shall not apply to disclosures and discovery
requests, responses, objections, and motions.
(f) Any sanction imposed pursuant to this section shall be
imposed consistently with the standards, conditions and
procedures set forth in subdivisions (c), (d) and (h) of section
128.7.
(e) (g) The liability imposed by this section is in addition to
any other liability imposed by law for acts or omissions within
AB 2494
Page 6
the purview of this section.
(h) This section shall remain in effect only until January 1,
2018 and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018 deletes or
extends that date.
SEC. 2
On or before June 30, 2018, the Judicial Council shall submit a
report to the Legislature examining the impact and effect of
this act, including the number of motions made under both
section 128.5 and 128.7, the number of motions under both
sections resulting in an award of sanctions, the nature and
amount of any sanctions awarded under both sections, and whether
or not the enactment of section 128.5 act has had a demonstrable
effect on reducing the frequency and severity of bad faith
actions or tactics that would not be subject to sanction under
section 128.7.
REGISTERED SUPPORT / OPPOSITION :
Support
Civil Justice Association of California (sponsor)
American Chemistry Council
Associated Builders and Contractors of California
Association of California Insurance Companies
California Building Industry Association
California Apartment Association
California Association of Health Facilities
California Business Properties Association
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Hotel and Lodging Association
California Retail Association
California Manufacturers and Technology Association
Citizens Against Lawsuit Abuse
Civil Justice Association of California
National Federation of Independent Businesses
The Doctors Company
Sempra Utilities
U.S. Chamber Institute for Legal Reform
AB 2494
Page 7
Opposition (as proposed to be amended)
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334