Compass Bank v. Morris Cerullo World Evangelism

Filing 330

ORDER Denying 323 Motion for Sanctions. Signed by Judge Cynthia Bashant on 12/9/15. (dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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COMPASS BANK, an Alabama
banking corporation, d/b/a “BBVA
COMPASS,”

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Case No. 13-cv-654-BAS-WVG
ORDER DENYING MOTION
FOR SANCTIONS [ECF No. 323]

Plaintiff,

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v.

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MORRIS CERULLO WORLD
EVANGELISM, a California
corporation,

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Defendant.

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AND RELATED CROSS-ACTIONS

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I.

INTRODUCTION

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Defendant MCWE’s Motion for Sanctions (ECF No. 323) largely repackages

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arguments already raised and addressed by this Court. To the extent MCWE argues

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Compass Bank should be sanctioned for failing to produce the recording of a

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telephone call between Ms. Gurley and Mr. Wilkinson, Compass Bank has already

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been sanctioned for this conduct. To the extent MCWE argues there were additional

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telephone recordings that were not turned over, this was addressed by Judge Gallo
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(ECF No. 177) and again at the Motions in Limine (ECF No. 277, 289). To the extent

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MCWE argues Compass Bank improperly noticed depositions of Mr. Galluppo and

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Mr. Cerullo, this argument was addressed at the Motions in Limine and also in the

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order regarding the retaxing of costs filed simultaneously with this Order (ECF No.

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329). To the extent MCWE argues surveillance videos were never turned over, this

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issue was addressed at the Motions in Limine: Compass Bank has submitted evidence

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confirming that no surveillance videos exist and, even if they did, the fact of the

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meeting between Wilkinson and MCWE employees was undisputed at trial. It is

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unclear how any videos would add to the already agreed to testimony about the fact

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of this meeting.

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MCWE raises only three new arguments for conduct that allegedly occurred

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or was discovered post-trial. Thus, the Court will address these arguments only. First,

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MCWE argues that Compass submitted bills post-trial showing that it had performed

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an investigation of the Century Letter of Credit which it had earlier denied. Second,

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MCWE argues that Compass submitted bills post-trial showing that it had analyzed

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telephone recordings that were never turned over. Third, MCWE argues that

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Compass submitted a frivolous motion for attorney’s fees.

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II.

ANALYSIS

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A. Investigation of the Century Letter of Credit

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Post-trial, Compass Bank filed a Motion for Attorney Fees that included the

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following two entries:
Analyze Compass’s supplemental document production of Jack
Wilkinson emails to ensure no information relating to Compass’s
investigation is disclosed to MCWE.

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(ECF No. 301-3, pg. 141) and:

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Analyze Compass’s supplemental document production of Hammatt
communications with Wilkinson and other third parties concerning the
Century Letter of Credit.

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(ECF No. 301-3, pg. 262).

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MCWE argues that this shows Compass Bank “performed investigations of
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the letter of credit, despite denying at trial that it performed such investigations.”

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(ECF No. 323). This argument fails. MCWE confuses the investigation that was done

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after Compass Bank actually learned of the fraudulent letter of credit and any

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knowledge or investigation done before Compass Bank was given a copy of the

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fraudulent letter of credit. At trial, Compass Bank denied that it had done any

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investigation before it received a copy of the fraudulent letter of credit. After it

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received a copy of the fraudulent letter of credit, however, it naturally wanted to

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investigate its concerns with Wilkinson, who Compass Bank believed may be a

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problem employee. The bills submitted post-trial do not show that Compass Bank

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had conducted any sort of investigation until after the fraudulent letter of credit was

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received.

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B. Analysis of Recorded Telephone Calls

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MCWE claims that the Motion for Attorney Fees submitted post-trial shows

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Compass Bank withheld recorded telephone calls. The entry MCWE relies on reads

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“Analyze all recordings provided by client in preparation for trial.” (ECF No. 301-1,

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pg. 309). MCWE’s argument is unavailing. First, there were recordings exchanged

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between the parties, and nothing submitted by MCWE indicates that any recordings

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analyzed by Compass Bank were not turned over to MCWE. Second, MCWE is

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simply rehashing the argument it raised both before Judge Gallo and at Motions in

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Limine that recorded calls were withheld. Judge Gallo denied MCWE’s Motion to

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Compel Discovery and to Impose Sanctions on this ground (ECF No. 177), and this

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Court refused to exclude evidence based on the argument that recorded telephone

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calls were not produced. (ECF No. 277, 289). The Court declines to revisit these

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rulings.

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C. Frivolous Motion for Attorney Fees

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MCWE argues that Compass Bank should be sanctioned for filing a frivolous

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motion for attorney fees. “Sanctions should be reserved for the rare and exceptional

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case where the action is clearly frivolous, legally unreasonable or without legal
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foundation, or brought for an improper purpose.” Primus Automotive Financial

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Services, Inc. v. Baterse, 115 F.3d 644, 649 (9th Cir. 1997). Therefore, “[b]efore

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awarding sanctions under its inherent powers, . . . [a] court must make an explicit

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finding that counsel’s conduct constituted or was tantamount to bad faith.” Id. at 648.

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This is particularly true “when the court uses its inherent powers to engage in fee

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shifting.” Id. The court may not engage in such fee shifting as a sanction unless the

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sanctioned party “has engaged in bad-faith conduct or willful disobedience of the

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court’s orders.” Chambers v. NASCO, Inc., 501 U.S. 32, 47 (1991).

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In this case, the Court cannot find that the Motion for Attorney Fees is such a

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rare and exceptional case. The Court cannot find the Motion was brought in bad faith

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or in willful disobedience to the court’s orders. Therefore, MCWE’s Motion for

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Sanctions on this ground is denied.

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III.

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For the foregoing reasons, MCWE’s Motion for Sanctions (ECF No. 323) is

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CONCLUSION

DENIED.

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IT IS SO ORDERED.

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DATED: December 9, 2015

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