Tort Actions Against Public Entities – CCP § 1038 Sanctions Cannot be Awarded Against Parties’ Counsel

by Low, Ball & Lynch

Kathryn Settle v. State of California

California Court Of Appeal, Second Appellate District (July 23, 2014)

When a public entity is sued in tort, Code of Civil Procedure (“CCP”) § 1038 requires a mandatory award of defense costs, including reasonable attorneys’ fees, where the trial court grants summary judgment and finds that plaintiff lacked reasonable cause and good faith in filing or maintaining a tort action against the public entity.In this case, plaintiff Kathryn Settle sued the State of California (“State”) and City of Morro Bay (“City”) for dangerous condition of public property after a sand cliff on the beach collapsed, causing her to fall into the water and rocks. The State did not own, control, or maintain the beach.  Counsel for the State warned plaintiff’s attorney, James McKiernan, that it would seek sanctions pursuant to § 1038 if the complaint was not dismissed. The warning went unheeded.

The State and the City were granted summary judgment on the ground that the action was barred by a statutory immunity for injuries caused by a natural condition of unimproved public property such as a beach.  (Gov. Code, §§ 831.2; 831.21.)  The trial court found that “Plaintiff was notified of the applicability of the immunities afforded to the City and the State pursuant to Gov. Code sections 831.2 and 831.21 but proceeded with the action without any evidence to overcome the immunities.  No reasonable plaintiff would have maintained this action against the City and the State.”  The trial court awarded sanctions against McKiernan pursuant to § 1038, ruling that his attempts to deflect liability for any fee award on the grounds that § 1038 only applies to a party and not his or her attorney was without merit.

McKiernan appealed the trial court’s imposition of sanctions against him, arguing that § 1038 does not authorize the imposition of defense costs against counsel. The State admitted that § 1038 is silent on whether defense costs may be imposed on counsel. Thus, the issue for the Second District Court of Appeal was one of statutory construction. The Court analyzed the language of § 1038 and acknowledged that the words “counsel,” “counsel for plaintiff” or “plaintiff’s attorney” are not in the statute. It also noted that the trial court relied on a previous appellate decision ordering plaintiffs and their attorney to pay § 1038 sanctions (Carroll v. State of California (1990) 217 Cal.App.3d 134 (“Carroll”), even though the court in Carroll did not specifically consider whether § 1038 authorized the imposition of defense costs against counsel.  The trial court also cited a treatise on Government Tort Liability Practice, which incorrectly interpreted the Carroll decision to hold that § 1038 “provides that defense costs are awardable against not only plaintiffs and cross-complainants, but also their attorneys.”  (Van Alstyne, Cal. Government Tort Liability Practice (Cont.Ed.Bar 2013) § 8.87, p. 477.)

The State argued that if a plaintiff or his/her attorney can be sued for malicious prosecution for a bad faith filing or a frivolous action, why can’t fees and costs be awarded pursuant to §1038?  In response, the Court reasoned that this argument and analogy fail because public entities are precluded from bringing malicious prosecution actions. A public entity can use § 1038 as an alternative to an action for malicious prosecution. Further, California statutes authorizing the imposition of sanctions or fees against parties and their counsel are numerous and explicit.  They include CCP §§ 128.7, 177.5, 473 (b), 2023.030, etc.The Court reversed the trial court’s award against attorney McKiernan, holding that it would only consider adding language to a statute in extreme cases where, as a matter of law, the Court was convinced that the Legislature, through inadvertence, failed to utilize the word or words which give purpose to its pronouncements. This case, according to the Court, is not such an extreme case.  As stated in a footnote, “….While the trial court’s order may have been just, fair and reasonable under the circumstances, it was not authorized by § 1038.”


This decision clarifies the scope of CCP § 1038, holding that unless and until the Legislature amends § 1038 to authorize an award of sanctions against counsel, defense costs and fees may not be imposed against counsel pursuant to this statute.  There are numerous statutory remedies available; yet, in the Settle case, the attorney general elected not to seek relief under any other statutes, including CCP § 128.7.  And a word to the wise:  treatises sometimes get it wrong.

For a copy of the complete decision, see:


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