Public Entities: Costs Against Counsel

Posted in Public Entity Liability on June 29, 2015

Settle v. State of California, (Second District, July 23, 2014) — Cal.Rptr.3d —-, 2014 WL 3615482

A woman who was injured when a sand escarpment on a beach collapsed causing her to fall into the water and rocks, sued the State of California and the City of Morro Bay, alleging a dangerous condition of public property. The defendants moved for summary judgment, contending that the action was barred by a statutory immunity for injuries caused by a natural condition on unimproved public property. (Gov. Code, §§ 831.2; 831.21.) The trial court granted the motion and ordered the plaintiff and her attorney pay attorney’s fees and costs pursuant to Gov. Code § 1038, which  requires a mandatory award of defense costs where a trial court grants summary judgment and finds that plaintiff lacked reasonable cause and good faith in filing or maintaining a tort action against a public entity.

The plaintiff’s attorney appealed, contending that section 1038 does not authorize the imposition of defense costs against counsel. The court of appeal agreed and reversed, rejecting the State’s contention that an award for defense costs is similar to an action for malicious prosecution:

A patron orders a hamburger from the menu at a diner and asks the server if he can substitute edamame for french fries. “No substitutions,” says the server. We, like the server who cannot add or substitute entries on the menu, cannot add or substitute words in a statute.

… State asks if a plaintiff and his/her attorney can be sued for malicious prosecution for the bad faith filing of a frivolous action, why can’t fees and costs be awarded pursuant to section 1038? The argument and the analogy fail because public entities are constitutionally precluded from bringing malicious prosecution actions. (citation) Section 1038 does, however, provide public entities a protective remedy and is a judicially approved alternative to a constitutionally proscribed action for malicious prosecution. …

We are compelled to add language only in extreme cases where, as a matter of law, we are convinced that the Legislature, through inadvertence, failed to utilize the word or words which give purpose to its pronouncements. (Citation.) We may consider ‘… the consequences that will flow from a particular interpretation.’ (Citations.)” (citation) This is not such an extreme case and we decline the invitation to add attorney liability to section 1038. As we shall explain, the Legislature has provided for remedies against an offending attorney in the presenting situation. There are no dire consequences which will flow from this opinion and the Legislature is at liberty to amend section 1038 if it disagrees with our holding.
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Sanctions awards against attorneys are generally restricted to cases in which the attorney personally abused the system and may not be imposed simply because counsel urged an incorrect position on behalf of his client.

Section 128.7 provides for attorney fees sanctions against an attorney. The Attorney General, relying on the Carroll case, here elected not to seek section 128.7 relief. Unless and until the Legislature amends section 1038 to authorize an award of “sanctions” against counsel, defense costs and fees may not be imposed against counsel pursuant thereto. Just as the server at the diner said, “No substitutions.”