Peake v. Underwood

Plaintiff-appellant Joanne Peake purchased a home from Marviel and Deanna Underwood. About two years later, Peake brought an action against the Underwoods and the Underwoods' real estate agent, Paul Ferrell. Peake sought to recover damages for defendants' alleged failure to disclose defective subfloors in the home. After the case had been pending for more than one year, Ferrell moved to dismiss and for monetary sanctions against Peake and her counsel Norman Shaw under Code of Civil Procedure section 128.7, arguing Peake's claims were factually and legally frivolous because the undisputed evidence showed Ferrell had fulfilled his statutory and common law disclosure duties, and Peake had actual notice of facts disclosing prior problems with the subfloors. Peake declined to dismiss the action during the statutory safe harbor period, and instead amended her complaint to add claims similar to claims she had previously dismissed. The trial court found Ferrell met his burden to show Peake's claims were "without legal or evidentiary support" and Peake's continued maintenance of the lawsuit demonstrated "objective bad faith" warranting sanctions. As sanctions, the court dismissed Peake's claims against Ferrell and ordered Peake and her attorney to pay Ferrell for his attorney fees incurred in defending the action. On appeal, Peake and Shaw challenged the sanction order. The Court of Appeal concluded that the trial court acted within its discretion in awarding the section 128.7 sanctions. View "Peake v. Underwood" on Justia Law