Trans-Action Commercial Investors, Ltd. v. Firmaterr, Inc.

In this case we must decide whether a lawyer can be ordered to pay an opposing party $50,000 in counsel fees and costs under California Rules of Court, rule 227, as a sanction for causing a mistrial. Rule 227 provides that a court “may order the person at fault” for failure to comply with a court order “to pay the opposing party’s reasonable expenses and counsel fees ... in addition to any other sanction permitted by law.” We recognize the rule was intended to consolidate existing statutory authority. However, the plain terms of rule 227 purport to confer on trial courts a broad sanctioning power inconsistent with the more limited judicial authority to impose sanctions provided by the Legislature. (Code Civ. Proc., §§ 128.5, 128.7, 177.5, 1218.) We conclude rule 227 is invalid to the extent it fails to conform with the statutory conditions for an award of attorney’s fees as sanctions. The sanctions order before us does not meet the conditions of any statute, and therefore must be reversed.

Background

1. Pretrial Proceedings

Appellant Donald A. Jelinek represented Firmaterr, Inc., and Firmaterr’s sole owner, Jerry A. Sulliger (collectively, Firmaterr) in defending an…