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Tentative Ruling
Judge Colleen Sterne
Department 5 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION

Michael S. Little v. Edward G. Mannion, et al.

Case No: 17CV02405
Hearing Date: Mon Mar 12, 2018 9:30

Nature of Proceedings: Motion: Sanctions

 

 

CASE:       Michael S. Little v. Edward G. Mannion, et al., Case No. 17CV02405 (Judge Sterne)

 

HEARING DATE:                March 12, 2018

 

MATTER:                            

  Motion for Sanctions under Code of Civil Procedure Section 128.7

 

ATTORNEYS:                      

Michael S. Little, Plaintiff in Pro Per

Jennifer A. Becker for Defendants Edward G. Mannion and Mannion & Lowe, a Professional Corporation

 

TENTATIVE RULING:        Plaintiff’s motion for sanctions under Code of Civil Procedure Section 128.7 is denied. Defendants are awarded sanctions in the sum of $600.00 for fees incurred in opposing plaintiff’s motion.

 

This court is very familiar with the facts of this case from previous motions. In 2015, plaintiff referred Matthew Martin, a friend and former employee and director of Gente Oil U.S.A., Inc., to defendant Edward G. Mannion and his firm, defendant Mannion & Lowe, a professional corporation, for representation in an insurance bad faith action involving a D&O liability policy after the liability carrier refused to defend Mr. Martin in an action for conversion. Defendant firm entered into an attorney fee agreement with Mr. Martin to pursue the D&O insurer for failure to provide a defense to the conversion claim. Firm also agreed to pay plaintiff an unspecified referral fee. Mr. Martin and the D&O insurer subsequently agreed to settle the dispute at mediation for $262,500.00. Plaintiff contends that defendants encouraged Mr. Martin to settle the litigation for an unreasonably low sum, without making a claim for punitive damages, thereby reducing the amount of his referral fee.

 

On June 1, 2017, plaintiff filed his complaint against defendants for (1) breach of contract, (2) common counts, (3) professional negligence, and (4) fraud. On September 11, 2017, the court granted defendants’ special motion to strike portions of the complaint. The court also sustained defendants’ demurrer to the third and fourth causes of action for professional negligence and fraud without leave to amend, finding that defendants owed no duty to plaintiff other than the possible payment of a referral fee. On November 20, 2017, the court awarded attorney’s fees and costs to defendants in the sum of $24,840.50 based on the partial success of their special motion to strike. On February 26, 2018, plaintiff moved to set aside the court’s orders granting defendants’ special motion to strike, sustaining defendants’ demurrer to the third and fourth causes of action, and awarding attorney’s fees and costs to defendants on the ground that the orders were procured by extrinsic fraud. The court denied the motion, finding that plaintiff’s extrinsic fraud argument was without merit.

 

In the current motion for sanctions under Code of Civil Procedure Section 128.7, plaintiff contends that defendants should be sanctioned for failing to disclose a “conflict of interest” between the carrier involved in the underlying bad faith case, Catlin Syndicate at Lloyd’s, and defendants’ professional liability carrier in this case, Catlin, Inc. Plaintiff claims that defendants were obligated to disclose this “conflict of interest” and to withdraw from their representation of Mr. Martin pursuant to Rules of Professional Conduct, Rule 3-310. However, this same argument was made by plaintiff and rejected by the court in his motion to set aside the orders on defendants’ special motion to strike, demurrer, and motion for attorney’s fees. As in that motion, the court finds that defendants’ duty to avoid or disclose any potential conflict of interest was a duty owed to Mr. Martin, not to plaintiff. Further, the court finds that there was no conflict of interest since an attorney is not disqualified from representing a client simply because the client’s adversary and the attorney may have the same liability insurer. An attorney’s purchase of an insurance product, like any consumer, does not make the attorney a shareholder, investor, officer, or director of the insurance company for purposes of a disclosable conflict under the Rules of Professional Conduct.

 

Code of Civil Procedure Section 128.7, subdivision (c)(1), provides that the court may award fees to a party that successfully opposes a motion for sanctions. Here, counsel for defendants asked plaintiff to withdraw his sanctions motion given the ruling against him on his motion to set aside, which was premised on the same conflict of interest argument. (Becker Dec., ¶4.) Plaintiff did not respond to this request. (Ibid.) In opposing plaintiff’s motion, defense counsel spent 2.0 hours reviewing the moving papers and preparing the opposition and supporting papers. (Ibid.) Counsel’s rate is $300.0 per hour. (Ibid.) Accordingly, the court finds that sanctions in the amount of $600.00 are warranted. 

Based on the foregoing, plaintiff’s motion for sanctions under Code of Civil Procedure Section 128.7 is denied. Defendants are awarded sanctions in the sum of $600.00 for fees incurred in opposing plaintiff’s motion.

 
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