Any member of an HOA board or management company is aware the extreme costs lawsuits can pose to the association no matter how frivolous the suit is. Homeowner's associations can greatly benefit from the use of Motions for Sanctions under California's Code of Civil Procedure Section 128.7.
Section 128.7 is designed for the specific purposes of protecting parties from abuse of the legal system and can be very effective in compelling a plaintiff to voluntarily dismiss their lawsuit.
In California, even unrepresented parties who sign their name on a complaint filed in the Court, makes an implied "certification" to its legal and factual merit. Among other things, a primary purpose of this implied certification is to certify that 1) the lawsuit is not being brought for an improper purpose such as harassment, delay, or needless increase in costs, 2) the claims asserted are warranted by existing law, and 3) the facts set forth in the complaint have "evidentiary support". An attorney or unrepresented party who violates this certification is subject to monetary and nonmonetary sanctions.
By threatening to file, or actually filing for sanctions, a defendant can put themselves on the offensive. The first step is to serve the motion for sanctions on the other party without actually filing it. The opposing party then has 21 days by statute to withdraw the pleading and avoid sanctions. If the complaint is not withdrawn within that timeline, then the second step is filing the motion.
If the court determines that CCP Section 128.7 has been violated, the court may impose a sanction upon the attorney, the law firm, or the parties responsible for the violation, including monetary sections, striking of the offending complaint, or even referring the attorney to disciplinary authorities.
Generally, the threat of sanctions is a strong deterrent to attorneys filing frivolous or bad faith litigation. If a strong argument can be made that CCP Section 128.7 has been violated, simply providing the offending attorney with informal notice will often result in corrective action. However, attorneys must be careful when filing motions for sanctions under Section 128.7 because if the court determines that the motion for sanctions was brought for an improper purpose, then the party filing the motion could be subject to sanctions.
While it is generally uncommon to file a motion for sanctions under Section 128.8, it can be a powerful and effective tool which can save an HOA time and money when utilized correctly.
Liam Perry is an Associate Attorney at The Loftin Firm. For questions relating to this blog post or any other California real estate, land use, corporate, or estate planning matter, contact The Loftin Firm at (760) 814-9649.