Gossai v. Soto

Filed 7/25/07 Gossai v. Soto CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from an order of the Superior Court of Los Angeles County, Ramona G. See, Judge. Reversed.

Daniel A. D. Gossai, in pro. per., for Plaintiff and Appellant.

Unis & Associates, Inc. and Gerald S. Unis, for Defendants and Respondents, David L. Soto, Westside Education Corporation, Westside California Corporation, Sussana Soto and Noel Brito.

Law Offices of Federico Castelan Sayre, Giovanni Orantes and Federico Castelan Sayre, for Defendants and Respondents Jose Luis Soto, Alma Carmen Soto and World Mission Maranatha Evangelistic Center, Inc.

_______________________

Daniel A.D. Gossai, appearing in propria persona as he did in the trial court, appeals from the trial courts order dismissing his complaint pursuant to Civil Code section 391.7, subdivision (c),[1] on the ground he had previously been determined to be a vexatious litigant and had failed to seek a prefiling order for permission to file this action. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

On February 23, 2006 Gossai filed his complaint for fraud, breach of contract and related causes of action against eight individual and corporate defendants. The complaint alleged, in part, that Gossai had founded California Alternative High School (CAHS) to provide a high school education to individuals who had not completed four years of high school and had not obtained either a high school diploma or a general equivalency diploma (GED). The individual and corporate defendants allegedly had a business relationship with Gossai or CAHS and had worked as recruiters, class-site directors or material suppliers. According to the complaint, defendants had defrauded Gossai, embezzled money that belonged to him and failed to respond appropriately to Gossais repeated requests for an accounting.

On May 16, 2006 five of the defendants, David L. Soto, Westside Education Corporation, Westside California Corporation, Sussana Soto and Noel Brito (collectively moving defendants), moved to dismiss the entire action or, in the alternative, for an order requiring Gossai to post security and to comply with other statutory prefiling conditions to discourage vexatious litigation.[2] In support of their motion the moving defendants provided the court with a copy of the amended final judgment and permanent injunction concluding a lawsuit filed in August 2004 by the California Attorney General pursuant to Business and Professions Code sections 17203 and 17535 against CAHS and Gossai, among others.[3] The permanent injunction entered on June 10, 2005 prohibited CAHS and Gossai from offering any services, courses, counseling or materials that represent or imply they will (a) result in the award of a high school diploma, (b) assist consumers in high school completion, (c) substantially assist consumers in passing the GED or (d) assist or otherwise qualify consumers with college admission or obtaining post-secondary financial aid. The injunction also requires CAHS and Gossai to clearly disclose in all promotional materials that they are not accredited by a qualified academic accrediting agency. CAHS and Gossai were further ordered to pay restitution in the sum of $400,000 and a civil penalty of $50,000. (The judgment expressly states CAHS and Gossai do not admit any liability or wrongdoing.)[4]

The moving defendants also provided the court with extensive documentation detailing Gossais prior litigation history, including lawsuits filed against various state and local authorities concerning CAHS and its business activities, litigation against dissatisfied former customers/students of CAHS and cases involving CAHSs former business partners. In one of those actions, Gossai v. State of California, et al., USDC No. CV-08299-RGK, the United States District Court for the Central District of California granted the defendants motion for an order requiring Gossai to comply with prefiling conditions to discourage vexatious litigation. The district court (Hon. R. Gary Klausner) cited its own local rule authorizing it to fashion any appropriate order to control the conduct of the vexatious litigant. (U.S. Dist. Ct. Local Civ. Rules, Central Dist. Cal., rule 83-8.2 [Wests Cal. Rules of Court (Fed. Ed. 2007 rev.) p. 685.) Such orders may include, without limitation, a directive to the Clerk not to accept further filings from the litigant without payment of normal filing fees and/or without written authorization from a judge of the Court or a Magistrate Judge, issued upon such showing of the evidence supporting the claim as the judge may require. (Ibid.) The district court explained, According to the defendants evidence, within the past two years, [Gossai] has instituted seven actions in propria persona concerning CAHS. None of those actions ha[s] resulted in a favorable decision for [Gossai] . . . . [] Based on the above facts, this Court finds that Plaintiff has abused the Courts process and is likely to continue such abuse, unless appropriate measures are taken. As such, pursuant to the authority vested in this Court, [Gossai] is declared a vexatious litigant and subject to a prefiling order. (Footnote omitted.) Accordingly, in an order entered on December 1, 2004 Judge Klausner directed the clerk of the district court to refuse all future actions and/or filings from [Gossai] without express written authorization from a judge of the Court.

The moving defendants argued the evidence submitted with their motion demonstrates Gossai qualifies as a vexatious litigant under several of the alternative definitions contained in section 391. In light of his status as a vexatious litigant and because Gossai cannot establish a reasonable probability of prevailing in the instant action, the moving defendants argued relief against his continued vexatious litigation tactics was justified.

Following receipt of written opposition and reply papers, the court heard oral argument on June 12, 2006. After taking the matter under submission, in a minute order dated June 12, 2006 the court granted that portion of the motion seeking dismissal of the entire action pursuant to section 391.7, subdivision (c). The court found Gossai had previously been determined to be a vexatious litigant within the meaning of section 391 and had failed to seek a pre-filing order pursuant [to] Section 391.7(c) before filing this complaint on February 23, 2006 [sic] and further failed to obtain an order for permission to file the case from the Presiding Judge of the Los Angeles Superior Court within 10 days of May 16, 2006, the date plaintiff was given notice of his vexatious litigant status.[5]

DISCUSSION

1. Californias Vexatious Litigant Statute

The vexatious litigant statute ( 391391.7) was enacted in 1963 to curb misuse of the court system by those acting in propria persona who repeatedly relitigate the same issues. Their abuse of the system not only wastes court time and resources but also prejudices other parties waiting their turn before the courts. . . . The statute defines a vexatious litigant, provides a procedure in pending litigation for declaring a person a vexatious litigant, and establishes procedural strictures that can be imposed on vexatious litigants. (Singh v. Lipworth (2005) 132 Cal.App.4th 40, 44.)

A vexatious litigant is defined in section 391, subdivision (b), and includes an individual who [i]n the immediately preceding seven-year period has commenced, prosecuted, or maintained in propria persona at least five litigations other than in a small claims court that have been (i) finally determined adversely to the person or (ii) unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing ( 391, subd. (b)(1)), as well as one who [h]as previously been declared to be a vexatious litigant by any state or federal court of record in any action or proceeding based upon the same or substantially similar facts, transaction, or occurrence. ( 391, subd. (b)(4).)[6]

The vexatious litigant provisions provide two general ways in which a vexatious litigant may proceed with a lawsuit. (See Forrest v. Department of Corporations (2007) 150 Cal.App.4th 183, 195.) First, sections 391.1 through 391.6 outline a procedure for a defendant to move in a pending case to require the posting of security by a plaintiff shown to be a vexatious litigant who does not have a reasonable probability of prevailing in the litigation. ( 391.1,[7] 391.3;[8] see Singh v. Lipworth, supra, 132 Cal.App.4th at p. 45 [ 391, subd. (c), 391.1 and 391.3, read in pari material, require a vexatious litigant to post security, which includes reasonable attorney fees, when he [or she] fails to establish a reasonable probability of prevailing against the defendant].) If the plaintiff fails to post the bond, the action must be dismissed as to the moving defendant. ( 391.4;[9] see Moran v. Murtaugh Miller Meyer & Nelson, LLP (2007) 40 Cal.4th 780, 783.) In addition to other relief, the court may also, on its own motion or the motion of any party, enter a prefiling order which prohibits a vexatious litigant from filing any new litigation in the court of this state in propria persona without first obtaining leave of the presiding judge of the court where the litigation is proposed to be filed. ( 391.7, subd. (a).) Copies of prefiling orders are to be provided to the Judicial Council by the clerks of the courts that entered the orders, and the Judicial Council is to maintain a record of vexatious litigants subject to prefiling orders and to disseminate annually a list of those persons to the clerks of the courts of California. ( 391.7, subd. (e).)

Second, in situations in which a section 391.7, subdivision (a), prefiling order has previously been entered, section 391.7, subdivision (c), prohibits the court clerk from filing any new litigation unless the vexatious litigant first obtains an order from the presiding judge permitting the filing, as provided in section 391.7, subdivision (b).[10] If the lawsuit has been mistakenly filed without permission notwithstanding the existence of a prefiling order, any party may file with the clerk and serve on the plaintiff and other parties a notice stating that the plaintiff is a vexatious litigant subject to a prefiling order as set forth in subdivision (a). ( 391.7, subd. (c); see Forrest v Department of Corporations, supra, 150 Cal.App.4th at p. 195.) The filing of the notice automatically stays the litigation ( 391.7, subd. (c)), and the action must be dismissed unless the plaintiff within 10 days of the filing of that notice obtains an order from the presiding judge permitting the filing of the litigation. (Ibid.)

2. The Trial Court Erred in Dismissing Gossais Complaint for Failure To Obtain Prefiling Permission To File the Action

There is no doubt Gossai was declared to be a vexatious litigant by the district court in Gossai v. State of California, et al., USDC No. CV-08299-RGK (RCx) and, as a result of its findings, the district court on December 1, 2004 entered a prefiling order directing the clerk of that court to refuse all future actions and/or filings from [Gossai] without express written authorization from a judge of the Court. Although Judge Klausner, a former Los Angeles Superior Court judge, was familiar with, and expressly referred to, Californias vexatious litigants statute,[11] it is equally clear the order was made under the federal courts broad discretion . . . to discourage vexatious litigation and neither purported to be an order under section 317, subdivision (a), nor imposed any limitation on Gossais ability to file new litigation in the California state courts.[12] Because the December 1, 2004 federal court order did not obligate Gossai to seek the permission of the presiding judge of the Los Angeles Superior Court before filing his complaint, the trial courts dismissal of the action on the ground Gossai had not obtained an order permitting the complaint to be filed was not authorized by section 391.7, subdivision (c).

In urging affirmance of the trial courts order of dismissal, the moving defendants argue the record establishes Gossai satisfies several of the alternative definitions of a vexatious litigant in section 391 and there is no reasonable probably he will prevail in this action, particularly with respect to David Soto and Westside Education Corporation because those two parties settled the consumer protection action brought against them by the California Attorney General and thereafter applied for and obtained a determination of good faith settlement, which precludes any claim by Gossai for contribution or indemnity based on comparative fault. This argument fails to address the fundamental error made by the trial court. Although it may well be that the court could properly order Gossai as a vexatious litigant to furnish security for the benefit of the moving defendants under section 391.3, absent a valid prefiling order under section 391.7, subdivision (a), an order permitting the filing of the action was not required; and dismissal of the action is not an authorized method of restraining Gossais ability to engage in vexatious litigation.

In a separate respondents brief the three defendants who had not moved in the trial court for relief under the vexatious litigant statute (Jose L. Soto, Alma Soto and World Mission Maranatha Evangelistic Center, Inc.) suggest, if we do not affirm the trial courts dismissal of the action, this court enter a prefiling order under section 391.7, subdivision (a), against Gossai. Although an appellate court undoubtedly has the authority to enter such an order (In re Shieh (1993) 17 Cal.App.4th 1154, 1167-1168; see Forrest v. Department of Corporations, supra, 150 Cal.App.4th at p. 188), a prefiling order would not benefit the defendants in this case because it affects only the future filing of any new litigation by a vexatious litigant in propria persona (Forrest, at p. 196), that is, a civil lawsuit filed after entry of the prefiling order. (Ibid.) In any event, because Gossai disputed a number of the factual assertions made by the moving defendants regarding his prior litigation activities ‑‑ disputes the trial court did not resolve in light of its erroneous dismissal of the action under section 391.7, subdivision (c) ‑‑ and because the trial court may weigh the evidence presented with a motion under the vexatious litigant statute in assessing whether Gossai has a reasonable probability of success on his claims (Moran v. Murtaugh Miller Meyer & Nelson, LLP, supra, 40 Cal.4th at p. 782), any further action regarding Gossais status as a vexatious litigant, including whether Gossai should be required to furnish security for the benefit of the moving parties and whether a prefiling order should be entered under section 391.7, subdivision (a), is properly considered by the trial court in the first instance.

DISPOSITION

The order dismissing the action is reversed, and the cause is remanded to the trial court for further proceedings not inconsistent with this opinion. Gossai is to recover his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

PERLUSS, P. J.

We concur:

WOODS, J.

ZELON, J.

Publication Courtesy of California attorney referral.

Analysis and review provided by Vista Property line Lawyers.

[1] Statutory references are to the Code of Civil Procedure unless otherwise indicated.

[2] The moving defendants also requested an immediate stay of the action pursuant to section 391.6, which provides, in part, When a motion pursuant to Section 391.1 is filed prior to trial the litigation is stayed, and the moving defendant need not plead, until 10 days after the motion shall have been denied, or if granted, until 10 days after the required security has been furnished . . . .

[3] Also named as defendants in the Attorney Generals lawsuit were moving parties David L. Soto and Westside Education Corporation.

[4] Prior to entry of the judgment and permanent injunction the Attorney General had obtained appointment of a receiver, who took possession of CAHS, marshaled its assets, including assets in the possession or control of at least some of the moving defendants, and provided restitution to consumers/students of CAHS.

[5] Because the courts minute order of June 12, 2006 does not satisfy section 581ds requirement that [a]ll dismissals ordered by the court shall be in the form of a written order signed by the court and filed in the action . . . . and is not an appealable order (Adohr Milk Farms, Inc. v. Love (1967) 255 Cal.App.2d 366, 369), at the courts instruction the clerk of the court wrote Gossai directing him to provide a copy of a signed order of dismissal or judgment or to explain why his appeal should not be dismissed. In response, Gossai submitted a copy of an Order On Motion To Dismiss signed by the court and filed on June 11, 2007. We take judicial notice of the after-filed order of dismissal (Evid. Code, 459, subd. (a), 452, subd. (d)(1)) and exercise our discretion under California Rules of Court, rule 8.104(e)(2) to treat the notice of appeal as an appeal from that order. (See Munoz v. Florentine Gardens (1991) 235 Cal.App.3d 1730, 1731-1732.)

[6] Section 391, subdivision (b), provides in full: Vexatious litigant means a person who does any of the following: [] (1) in the immediately preceding seven-year period has commenced, prosecuted, or maintained in propria persona at least five litigations other than in a small claims court that have been (i) finally determined adversely to the person or (ii) unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing. [] (2) After a litigation has been finally determined against the person, repeatedly relitigates or attempts to relitigate, in propria persona, either (i) the validity of the determination against the same defendant or defendants as to whom the litigation was finally determined or (ii) the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by the final determination against the same defendant or defendants as to whom the litigation was finally determined. [] (3) In any litigation while acting in propria persona, repeatedly files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay. [] (4) Has previously been declared to be a vexatious litigant by any state or federal court of record in any action or proceeding based upon the same or substantially similar facts, transaction, or occurrence.

[7] Section 391.1 provides: In any litigation pending in any court of this state, at any time until final judgment is entered, a defendant may move the court, upon notice and hearing, for an order requiring the plaintiff to furnish security. The motion must be based upon the ground, and supported by a showing, that the plaintiff is a vexatious litigant and that there is not a reasonable probability that he will prevail in the litigation against the moving defendant.

[8] Section 391.3 provides: If, after hearing the evidence upon the motion, the court determines that the plaintiff is a vexatious litigant and that there is no reasonable probability that the plaintiff will prevail in the litigation against the moving defendant, the court shall order the plaintiff to furnish, for the benefit of the moving defendant, security in such amount and within such time as the court shall fix.

[9] Section 391.4 provides: When security that has been ordered furnished is not furnished as ordered, the litigation shall be dismissed as to the defendant for whose benefit it was ordered furnished.

[10] Section 391.7, subdivision (b), provides: The presiding judge shall permit the filing of that litigation only if it appears that the litigation has merit and has not been filed for the purposes of harassment or delay. The presiding judge may condition the filing of the litigation upon the furnishing of security for the benefit of the defendants as provided in Section 391.3.

[11] The local rules of the district court refer to Californias vexatious litigant statute but expressly authorize the use of different procedures in the discretion of the court: Although nothing in this rule shall be construed to require that such a procedure be followed, the Court may, at its discretion, proceed by reference to the Vexatious Litigants statute of the State of California, Cal. Code Civ. Proc. 391-391.7. (U.S. Dist. Ct. Local Civ. Rules, Central Dist. Cal., rule 83-8.4 [Wests Cal. Rules of Court (Fed. Ed. 2007 rev.) p. 685.)

[12] Although not necessarily conclusive, we consider it significant that the district court clerk did not provide the Judicial Council with a copy of its order and Gossai is not included on the list of vexatious litigants disseminated by the Judicial Council pursuant to section 391.7, subdivision (e).