Ordinarily, an order or judgment imposing sanctions in an amount of $5,000 or less is not appealable until entry of a final judgment in the action. (CCP §904.1(b).) But what if the sanctions arise from a discovery dispute between a party and her counsel and nonparty witness and his counsel at deposition?
That was the backdrop for a decision recently published by the First District Court of Appeal. In Diepenbrock v. Brown, 2012 Cal. App. LEXIS 896 (August 20, 2012), the court reversed a judgment imposing $5,000 in sanctions against plaintiff Claire Louise Diepenbrock and her attorney for unsuccessfully opposing a motion for protective order by a nonparty deponent – defendant Kyle Brown’s husband, Derek.
Diepenbrock’s attorney took the deposition of Derek Brown and asked questions that could have resulted in him testifying against his wife. Derek asserted the marital privilege under Evidence Code section 970 and refused to answer such questions. The deposition adjourned after the attorneys could not agree on the scope and applicability of the privilege.
Diepenbrock brought a motion to compel Derek to answer the questions. Derek responded by filing a motion for a protective order to preclude further questioning into such areas. Diepenbrock opposed the motion, contending an exception to the marital privilege applied. Both motions sought sanctions. (CCP §§2025.480(f), 2025.420(d), 2023.030(a).)
The trial court granted the motion for protective order and imposed sanctions after concluding that Diepenbrock and her attorney acted without substantial justification in opposing the motion because the marital privilege clearly applied.
Interestingly, as Diepenbrock’s attorney argued at the hearing, the law on that issue is unsettled – there are conflicting court of appeal decisions – and his waiver argument was based on available authority. So even if the court ultimately disagreed with him, sanctions were improper because he acted reasonably by basing his argument on good law.
The court of appeal agreed with Diepenbrock and reversed the sanction order, concluding that “while the court may properly have rejected plaintiff’s contention concerning the scope of the exception to the marital privilege, the conflicting legal authority on an unsettled issue provided substantial justification for appellants’ position, negating the basis for the sanction order.”
So Diepenbrock and her attorney were vindicated. But several procedural questions arise: How was their challenge even properly heard and decided when the litigation was ongoing? The amount of sanctions was only $5,000. Isn’t Diepenbrock required to wait until the court enters a final judgment in the main action? How could this interlocutory judgment awarding sanctions become immediately and independently appealable?
The jurisdictional statute – CCP §904.1(a)(11)(12) permitting an appeal from an interlocutory judgment or order directing payment of monetary sanctions by a party or an attorney for a party if the amount exceeds $5,000 – clearly does not apply. The sanctions amount in Diepenbrock did not exceed $5,000. But the judgment was immediately appealable as a final judgment on a collateral matter “because it finally resolve[ed] all issues between appellants and Derek [Brown] and [his attorney], who are not parties to the underlying litigation.” Although Diepenbrock was still litigating the underlying action, on appeal, she was only challenging the sanction award, not the underlying discovery ruling. The court of appeal was therefore able to resolve the dispute without interfering with the "orderly administration of the underlying trial."