Attorney’s Lack of Candor Warrants Sanctions
An attorney’s duty of candor includes the duty not to make material misrepresentations to a court. (Rule Prof. Conduct 3.3) In Levine et al. v. Berschneider No. B300824 (Ct. App. October 29, 2020), the Second District Court of Appeal affirmed a sanctions award against an attorney who failed to tell the judge that the subject of a hearing (a motion to enforce a settlement agreement) was moot because the settlement funds had already been received by the lawyer.
Facts of the Case
John Richards represented a group of tenants in a lawsuit against their landlord, who was represented by Harry Safarian. The parties settled the lawsuit, but more than a month passed without payment of the settlement amount by the landlord. Richards filed an ex parte application to enforce the settlement. Four days before the hearing on the ex parte application, however, Richards received the settlement checks from Safarian’s office. He did not drop the hearing.
Rather than informing the court of this fact, Richards attended the hearing. Safarian was not there. Richards told the trial court judge, “I haven’t received word from opposing counsel [Safarian]. I don’t know – has there been any communication with the Court?” Safarian had not contacted the court. During the hearing, Richards never mentioned that he had received the settlement checks already. The court granted Richards’ motion to enforce the settlement agreement, found Safarian in contempt of court for failing to comply with the court’s previous order approving the settlement, and ordered Safarian to pay monetary sanctions.
Three days later, Safarian filed an ex parte application requesting relief from the trial court’s order and asking for sanctions against Richards because he presented false information to the court. He explained in the application (and declaration) that he had not attended the motion to enforce hearing because of a staff member’s mistake. Richards filed an opposition to the application, contending that there was no basis for relief under California law and that his statements at the hearing were not false because the trial court judge never asked him whether he had received the settlement checks. In essence, Richards employed the “don’t ask, don’t tell” defense to this sanctions request. At the hearing on Safarian’s application, Richards claimed that the trial court lacked personal jurisdiction over him because he had not been properly served with the application, and argued that the court lacked subject matter jurisdiction because there was no statute authorizing sanctions against him.
The trial court vacated the sanctions order against Safarian and issued an order to show cause against Richards. Richards opposed the order to show cause, again arguing that he made no false statements before the court. Rejecting Richards’ arguments, the trial court found Richards in contempt of court and ordered him to pay $5,310 in sanctions to Safarian. The trial court also concluded that it had personal and subject matter jurisdiction. Richards appealed.
Richards Violated His Duty of Candor
The Court of Appeal addressed Richards’ several arguments in turn. First, it rejected his attempt to appeal the contempt order because contempt orders are not appealable under California law. Second, it addressed the $5,310 sanctions ordered against Richards. Richards contended that the trial court judge had a duty to ask Richards if the settlement had been paid. Since the judge did not ask, Richards did not make a false statement, he claimed. The Court rejected this contention and stressed that attorneys have a duty of candor when appearing before a court of law. The Court’s opinion explains that California law prohibits attorneys from misleading judges and requires them to inform the court when “a material statement of fact or law has become false or misleading in light of subsequent events.” Rule 3.3 and Business & Professions Code Section 6068(d) prohibit Richards from misleading the court. Here, Richards concealed the fact that he had received the settlement checks and did not inform the judge in order to get Safarian sanctioned. As a result, the sanctions against Richards were warranted.
Third, Court found that the trial court did have subject matter jurisdiction because courts can award sanctions when an attorney makes a misrepresentation of material fact. (Code Civ. Proc. § 128.5; Young Rosenthal (1989) 212 Cal.App.3d 96, 128.) Fourth, Richards received adequate notice of Safarian’s application and at any rate, never raised the issue of inadequate notice in the trial court. Finally, the trial court had personal jurisdiction over Richards because he filed an opposition to Safarian’s application.
This is a great case promoting attorney’s duty of candor in appearing in court. Rarely does a trial court put the hammer down like the Santa Barbara court did with Richards. This case illustrates that omitting material information at a hearing violates an attorney’s duty of candor. Rule 3.3 requires that when in court, attorneys must take care to fully disclose material information that would influence the outcome of a hearing rather than “lying by omission”.