Ernsting v. Shelley

Filed 11/28/05 Ernsting v. Shelley CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

CHARLOTTE ERNSTING, Plaintiff and Respondent, v. GERALD N. SHELLEY, A LAW CORPORATION, Defendant and Appellant.

G034639 (Super. Ct. No. 03CC09250) O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, James M. Brooks, Judge. Appeal Dismissed.

The Morris Law Firm and Aaron P. Morris for Plaintiff and Respondent.

Gerald N. Shelley for Defendant and Appellant.

* * *

I. Introduction

We dismiss this appeal because the appellant clearly waived his right to appeal on the record in the trial court below. Indeed, he went so far as to immediately satisfy all liability against him pursuant to both a jury verdict for breach of contract and a declaratory relief cross-complaint. And he had good reason to satisfy that liability and end all possibility of appeal: In return for waiving his right to appeal, the appellant obtained de facto immunity from the possibility that the respondent might appeal herself, and ultimately obtain $66,000 more the second time around.

However, some controversies evoke the pronouncement at the end of Shakespeare’s Romeo and Juliet concerning plagues and warring houses.

We are indeed unimpressed with the appellant’s attempt to appeal the judgment after he had stated, on the record, “we’re going to waive the appeal,” and gave every indication that all litigation was over. As he himself put it, the idea was for everyone to get on with their “life.”

But we are also unimpressed with the respondent’s attempt to continue the litigation by seeking a large sum (more than 80 percent of the $66,000 given up by her waiver of appeal rights) in prejudgment interest after what should have been the cessation of all hostilities.

No, that improvident bit of grasping does not undo what was already a clear waiver of appellate rights on both sides. And no, it does not establish an estoppel which in some way can revive appeal rights already waived.

But it does require a different spin for this opinion than would otherwise have been the case. We will therefore take the unusual step, in our appellate cost order, of providing that the appellant shall recover his costs in this appeal, despite the dismissal. It is small thing, of course, but intended to symbolically register our displeasure with the fact that both sides tried to renege on a waiver made in open court. The appellant must lose, but we can balance things out to the degree we can by awarding costs against the respondent.

II. Facts

A. The Underlying Litigation

In October 1994 Charlotte Ernsting hired Gerald N. Shelley to represent her in a sexual harassment suit.[1] The retainer agreement provided that Shelley would retain one-third of any “net recovery.” At the time, however, Ernsting was already being compensated for the sexual harassment by way of a workers’ compensation claim for job-related stress.

A sexual harassment lawsuit was filed in 1995.^[2] At the conclusion of the second trial,^[3] Ernsting was awarded compensatory damages, punitive damages and attorney’s fees. Pacific Telesis appealed. This court, in an opinion dated April 27, 2000, substantially altered all three monetary awards:

-- the punitive damage award was reversed outright[4];

-- the economic and non-economic damage award of $682,716 was affirmed, but the case was remanded for the trial court to deduct the value of Ernsting’s worker’s compensation benefits from the award; and

-- the $906,420.82 attorney’s fee award was reversed, but remanded for recalculation on the basis of how many hours were actually spent working on the case, plus other factors as articulated in Salton Bay Marina, Inc. v. Imperial Irrigation Dist. (1985) 172 Cal.App.3d 914, 958.

On remand, the trial court reduced the compensatory damage award to zero based on its finding that the value of the workers’ compensation benefits which Ernsting had already received, plus the present value of her future benefits, would be more than the compensatory damage award. As for the other issue remanded, attorney’s fees, the court reduced them from $906,420.82 to $525,725.

Both sides appealed from this second judgment, but this court affirmed everything. Pacific Telesis then satisfied the judgment by tendering a check for $886,446.15, which was the $525,725 fee award increased by $360,721.15 in interest and costs accumulating for several years at a rate of $52,573.50 per year.

However, after the check from Pacific Telesis was deposited in Shelley’s attorney-client trust fund, a dispute arose between Shelley and Ernsting over how the money should be divided.

Shelley wrote a letter to Ernsting dated March 27, 2003, in which he proposed that he should be paid $506,077.94 (57 percent) of the funds. Shelley calculated this amount by taking the $682,716 original compensatory damage award (otherwise affirmed by this court) and adding to it the actual attorney fee award of $886,446.15, for a total of $1,569,162.15. Costs advanced were subtracted, leaving $1,515,962.69. One-third of that amount yielded a $506,077.94 figure for Shelley. Ernsting would have been left with roughly $380,000.

Ernsting, as she would later acknowledge at trial, did not accept Shelley’s proposed settlement. She took the position that Shelley was only entitled to one-third of the actual $886,446.15, or roughly $295,000; that would have left her with about $555,500 after adjusting for costs advanced, not $380,000.

With the parties at an impasse, Ernsting filed an action for breach of contract against Shelley on July 18, 2003, seeking two-thirds of the $886,446.15. Shelley cross-complained for declaratory relief and claimed that he should receive the entire amount. His theory was that he was entitled to it under the sexual harassment statutes (Gov. Code, § 12960 et seq.), with the backup argument that his contingency agreement with Ernsting was null due to a lack of consideration, and that if it was void, the money awarded as attorney fees was all his.

Neither side got all of what it wanted. The jury awarded Ernsting only about 55 percent of the fund ($488,998.22), which was $66,000 less than the full two-thirds of the fund (the $555,500 mentioned above). And while Shelley’s 45 percent was certainly better than the one-third that Ernsting thought he should receive, it was far short of the 100 percent which he had initially claimed for himself.

B. The Waiver of Appellate Rights

In Open Court

We now relate events in the immediate aftermath of the jury’s verdict in detail:

After the jury was excused, the trial judge specifically turned his attention to Shelley’s cross-complaint for declaratory relief.

The judge began, “First of all, is there any more evidence either side wishes to submit on that issue?” Attorneys for both sides said no.

The court then said, “I’ll hear brief arguments from the cross-complainant, Mr. Shelley. In light of the jury’s verdict, my tentative is to abide by them. They heard it all, and I can’t really find fault with their numbers, and it’s somewhere in the reasonable ballpark. If I use the amount 488,998.22 and say, as to the amount currently in your trust account, deduct that amount awarded by the jury to plaintiff, the remainder of what’s currently in your trust account, I would find you’re entitled to.” (Italics added.)

Shelley’s attorney replied, “That’s exactly what I was going to ask the court to do.” (Italics added.)

The judge then said, “Sounds fair to me,” and asked Ernsting’s attorney what he thought. Ernsting’s attorney agreed. “Oh, I think that’s the way it should be handled.”

With both sides in agreement that the declaratory relief result should be a carbon-copy of the breach of contract result, Judge Brooks summed things up. “Okay. That will be the court’s finding on the issue before the court on the cross-complaint as for declaratory relief. Mr. Shelley is entitled to not the full amount, but the amount that he just set out on the record after we deduct the amount on the jury verdict to the plaintiff, and that’s the only thing I heard is fair and reasonable. Get the fight over with.” (Italics added.)

At this point the battle was indeed over, at least as far as both the complaint and cross-complaint had been tried. So Judge Brooks next commended the attorneys for conducting a good trial (“I want to commend you guys. This was kind of a strange action. I’ve had all kinds of good attorneys, but this is a strange action, and yet you both put on the evidence right on the point. . . .”) and proceeded, like a professor of trial practice, with a helpful evaluation of the attorneys’ performances during the whole contest. (“. . . And you were in a tough spot, Mr. Shelley, because you were being attacked, so to speak, and being sued. I am glad you brought in Mr. Stevens to assist you. . . . You stayed dispassionate, stated the facts, no broadside attacks to hide the ball, no pompous grand-standing . . . . Mr. Morris, in his opening statement in his closing argument went . . . right to the heart of the matter in a very commonsensical way. . . . Mr. Shelley . . . . came across an honest, hard-working guy. . . .”) The judge concluded the evaluation with the comment, “You guys did a really great job on what could have been a really dry and boring case.”

At that point Shelley himself addressed the court: “Thank you, your honor. In the interest of getting on with our life, the timing, at least in cutting these checks, if everyone’s in agreement, we’re going to abide by the declarant’s prayer of relief, and waive the appeal period, I can write those checks tomorrow.”[5]

Then, apparently turning to counsel for Ernsting, Shelley continued: “It’s up to you, if you’d like to get it done.”

Ernsting’s attorney replied, “I’m not sure what’s being asked of me, am I waiving appeal?” After all, his client had just been disappointed to tune of some $66,000 and any waiver would have meant the loss of the opportunity to recover that amount.

Shelley responded, “Just if everybody stipulates, we’re going to waive the appeal so I can write the checks and satisfy the judgment, and --” (Italics added)

The court interjected, and apparently addressed Ernsting’s attorney: “He lost, so he’s giving up the right to appeal. I don’t know if you lost anything.” (Italics added.)

Ernsting’s counsel was now facing a tough decision: Was the $488,998.22 in hand worth hazarding as against the loss of $66,000 in the bush and the prospect that Shelley might yet convince the Court of Appeal that he was entitled to the whole $889,000?

In those few nanoseconds Ernsting’s attorney determined that the deal was good enough. His next words were, addressing the court, “I think you’re right, your honor. So stipulated.”

Shelley’s attorney then said, “So stipulated.”

Judge Brooks said, “That’s great.” And with that the hearing was over.

C. The Post-Waiver Skirmishing

That very day, August 24, Shelley faxed to Ernsting’s attorney a proposed judgment, with the statement, “Once the judgment is signed I will write the checks.” The judgment was denominated, “Judgment for declaratory relief following a jury verdict” but specifically incorporated the jury’s special verdicts on certain questions, including the express finding that Shelley had breached his fee agreement with Ernsting. The judgment did not contain any provision for costs. It was a self-sufficient document that would have ended any need to go back to court except, perhaps, to enforce the provision that Shelley disburse $488,998.22 from his trust account to Ernsting and Ernsting’s counsel.

The next day (August 25) Ernsting’s attorney faxed this message in reply, apparently irritated at the prospect of having to wait for the money: “Mr. Shelley represented in open court, on the record, that he would issue the checks from the trust account today. That promise was not conditioned on the court signing the judgment. Mr. Shelley is once again withholding funds that belong to his client. [¶] I have obtained the checks that were originally written for costs, and I will provide those when you provide the check for the judgment amount. If we have not received the check Mr. Shelley promised by tomorrow, we will move ex parte for an order requiring you to honor the agreement that was placed on the record. The check should be made payable to ‘Charlotte Ernsting and The Morris Law Firm’.”

Shelley responded with his own fax next. In salient part the message stated that if Ernsting’s counsel agreed “with the form of the judgment” it would still be 24 hours before it could be signed and filed. Further, Shelley had already “written out the trust check in the manner which” the previous fax had suggested, and it would be available in his office tomorrow (August 26) “for pick up by a representative from your office.” However, Ernsting’s counsel was still not authorized to deposit the check “until the judgment [was] signed and filed.”

The check, dated August 25, was indeed picked up and deposited in the bank by Ernsting’s counsel on August 26.

As it turned out, Judge Brooks also signed a judgment on August 26. It was clearly not the draft that Shelley had sent over, but it did, like Shelley’s document, recite the jury’s finding that the Shelley had “breach[ed] the fee agreement with Plaintiff Charlotte Ernsting.” This judgment had a different title, namely, “judgment on special verdict and judgment for declaratory relief following jury verdict.” And this judgment also left a blank after a line stating, “That plaintiff Charlotte Ernsting recover costs and disbursements taxed in the sum of.” This blank was filled in with the handwritten interlineation (apparently by Judge Brooks), “TBD.”

Shelley apparently objected to certain aspects of the August 26 judgment,[6] and those objections apparently resulted in Judge Brooks signing an almost identical “amended judgment” on September 1. The amended judgment of September 1 was identical to the original judgment of August 26, except that in two respects it was more favorable to Shelley. First, the new judgment had a provision explicitly saying that Ernsting was to recover nothing against Shelley as an individual (as distinct from his law firm). Second, Shelley now could recover some money himself. The new judgment provided that Shelley, as “an individual [was to] recover costs and disbursements taxed in the sum of” with the space left blank. The new judgment also had the same language that Ernsting was to “recover costs and disbursements taxed in the sum of” and a space following left blank, but without the previous “TBD.”

Seven days later, on September 7, 2004, Ernsting submitted a memorandum of costs for $58,389.86. Of that amount, over 95 percent ($55,719.04) consisted of prejudgment interest, which the memorandum indicated would be sought “by motion.” About a week after that Ernsting’s counsel brought a motion for the $55,719.04 in prejudgment interest. For his part, Shelley filed a motion to tax costs. Also (though it is only indirectly alluded to in the record) Shelley filed his own individual memorandum of costs as an individual.

Both sides moved to tax each other’s memorandum of costs. Ernsting’s motion to tax Shelley’s costs was granted, with the court’s written (internet-posted) tentative stating that Shelley had shown no persuasive reason “why he should recover costs for a summary judgment motion which was denied.” However, it was granted only in part, with the court concluding that costs incurred by Shelley and his law corporation should be shared equally, and only Shelley’s costs as an individual could be recovered. The result was that the court reduced Shelley’s memorandum of costs by $1,951.46, leaving Shelley with a recovery of $2,082.67.

Shelley’s corporation’s motion to tax Ernsting’s costs was granted as to Ernsting’s seeking of prejudgment interest but denied as to other costs sought to be taxed. Ernsting’s motion for an award of prejudgment interest was denied. The upshot was that Ernsting and Shelley the individual were left with a few thousand dollars in costs each, largely canceling the other’s costs out. (We need not do the math to figure out who was the net winner.)

On October 22 -- nine days after the trial court’s disposition of the cost matters and almost two months after the September 1 amended judgment was filed -- Shelley filed a notice of appeal. The notice of appeal challenged three things: (1) the original judgment of August 26; (2) the amended judgment of September 1; and (3) the court’s denial of Shelley’s motion to tax costs and the award of costs to Ernsting of October 13.

III. The Motion to Dismiss

A. Both Sides Waived Their

Appellate Rights on August 24 in Open Court

Ernsting filed a motion in this court on March 1, 2005 to dismiss the appeal.[7] Ernsting argues that Shelley waived his right to bring this appeal by expressly stating on the record that he intended to waive the appeal period and by satisfying the judgment the day after the trial. She also argues that Shelley should be estopped from bringing the appeal because Ernsting relied upon Shelley’s express waiver to her own detriment, specifically by forfeiting the right to bring a new trial motion. These arguments, so far as they go, are well taken.

It is undisputed that Shelley (and, for that matter, Ernsting) waived something. Shelley himself said, on the record, “we’re going to abide by the declarant’s prayer of relief, and waive the appeal period.” A few moments later he said, “we’re going to waive the appeal,” with no reference to “period.”

This is clear language, offered without reservation or qualification. No “we’re waiving our rights to appeal X, but not our rights to appeal Y,” just “we’re waiving the appeal,” period.

Shelley now argues, however, that while he waived an appeal from an adverse result on his own declaratory relief action, he never intended to waive an appeal from the adverse result in Ernsting’s breach of contract action. As he put it at oral argument, while he was willing to accept a judgment against him in declaratory relief, he wasn’t willing to accept a judgment against him for breach of contract.[8]

We have gone into the events just after the jury’s decision on Ernsting’s complaint for breach of contract in some detail to show that Shelley’s attempt to parse his declaratory relief action from Ernsting’s breach of contract action is untenable. There are no less than six reasons that may be extracted from the August 24 transcript alone that demonstrate that Shelley did waive all appeal rights, including any challenge to Ernsting’s breach of contract claim.

(1) The court determined that the result in the declaratory relief action was to be identical with the jury’s determination in the breach of contract action. Indeed, it was Shelley’s own attorney who said that making the declaratory relief claim identical to the jury’s decision was “exactly” what Shelley wanted. A waiver of just appeal rights concerning the declaratory relief claim would thus be meaningless, since the result of the “declaratory prayer of relief” was itself the embodiment of the contract claim.

(2) Shelley’s comment about “getting on with our life” indicated a desire to cease all litigation, not continue it. All litigation is disruptive of life; an appeal from just the breach of contract decision would be effectively no less disruptive than an appeal from both the breach of contract and declaratory relief decisions.

(3) Shelley’s comment about “we’re going to abide by the declarant’s prayer of relief” indicated an acceptance of the substance of the result in the breach of contract action. The key words are “abide” and “relief.” Even if this statement refers only to the declaratory relief action, abiding by the relief in that action effectively meant abiding by the jury’s breach of contract determination, since Judge Brooks had explicitly made that determination the very basis of the declaratory “relief.”

(4) Shelley’s comment in response to Ernsting’s counsel’s question of whether he was “waiving appeal” was “we’re going to waive the appeal so I can write the checks and satisfy the judgment.” These words clearly indicated a desire for finality. The reference to “the” judgment and its satisfaction suggests a desire to treat the result of the litigation as a unified whole. The reference to satisfaction of the judgment is consistent with a waiver of all appeal rights but not with a waiver of only some. And the fact that the words were in response to Ernsting’s counsel’s question shows that Shelley passed up a natural opportunity to qualify his waiver or otherwise reserve rights.

(5) When Judge Brooks told Ernsting’s counsel that Shelley was “giving up the right to appeal,” Shelley again passed up a natural opportunity to qualify or reserve his waiver.

(6) When the parties ended with “so stipulated,” Judge Brooks responded with, “that’s great.” The natural reading of this passage is that all possibility of further litigation was being laid to rest. Judges don’t usually say “that’s great” in situations like that when there is the possibility that the case might, in some form, yet again return from an appellate court.

Events immediately subsequent to the statements made at the August 24 hearing confirm a stipulation to waive all appeal rights, including the possibility of an attack on the jury’s determination of breach of contract.

(1) Shelley himself submitted a proposed judgment that expressly recited his own breach of contract. If Shelley thought that he would only accept a judgment that was not a “breach of contract judgment,” the one he proffered wasn’t it.

(2) Shelley wrote a check for what was the entire amount awarded Ernsting by the jury in her breach of contract judgment, and he wrote it without any reservation or quibbling on the order of, “well, you realize that this is only for the declaratory relief claim.” (See Rancho Solano Master Assn. v. Amos & Andrews, Inc. (2002)

97 Cal.App.4th 681, 688 [satisfaction of the judgment “moots the issues on appeal”].)

Next, there is the nature of this appeal itself, and Shelley’s claims on the merits. Here at least two reasons confirm the waiver of all appeal rights.

(1) If this appeal were purely about the symbolic nature of the contract claim, Shelley would not make the arguments he does to reverse the judgment. If he really meant only to waive the declaratory relief claim, he would not say, as he in effect does in his opening brief, “the sexual harassment statutes mean that all of the award should go to me” or that “all of the fees should go to me because Ernsting effectively withdrew her consideration when she refused to give up her workers’ compensation benefits, and that means there was no contract governing the fee award.” Those are arguments which apply no less to the declaratory relief claim than they do to the contract claim.

(2) It is practically impossible to separate a supposedly waived declaratory relief claim from a supposedly reserved breach of contract claim. Nowhere, for example, does Shelley explain how a judgment requiring him to fork over $488,998.22 pursuant to the declaratory relief action can remain intact -- which is what would necessarily be the result if Shelley waived anything -- while a coterminous judgment on the breach of contract action can be reversed.

Finally, there is the legal impossibility of splitting the declaratory relief claim from the breach of contract claim found in the one final judgment rule, which belies any argument based on the differences in title between the judgment proffered by Shelley and the judgments ultimately signed by Judge Brooks. To be appealable in the first place, it was necessary that any judgment embody all outstanding claims, i.e., both breach of contract and declaratory relief. (See generally Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 697 [“‘an appeal cannot be taken from a judgment that fails to complete the disposition of all causes of action between the parties’”].) For Shelley to argue, as he appears to now, that he only waived the right to appeal to the judgment as to the declaratory relief claim is a non sequitur. To have any judgment to appeal from, that judgment necessarily had to dispose of the breach of contract claim, and that disposition necessarily had to be adverse to him.

We thus have, not just clear and convincing, but overwhelming evidence Shelley intended to waive his rights to appeal.

B. Shelley Is Estopped

To Contest His Waiver

We further conclude that Shelley is estopped to contest that he waived the appeal. His words on August 24 and the writing of the check lulled Ernsting’s counsel into inaction while the time to bring a new trial motion was running. Ernsting’s forbearance meant that Ernsting lost the opportunity to correct any error in regard to the $66,000 shortfall at the trial level.

Granted, as Shelley has argued in his opposition to the dismissal motion, that Ernsting still, in theory, could have corrected the $66,000 shortfall by way of appeal. But that doesn’t affect the estoppel argument. The right to correct things cheaply by way of new trial motion is separate right from the right to do it the hard way by way of appeal.

C. The Conduct After the

Waiver Did Not Undo the Waiver

According to Shelley, Ernsting’s counsel “harbored an undisclosed intention to continue the litigation” when the parties stipulated to waive their respective appeal rights, and that undisclosed intention either excuses the waiver or otherwise estops Ernsting’s counsel from seeking dismissal.

The simple answer here is that the deal was done when the stipulation was put on the record August 24. The post-hearing conduct could not undo an unconditional waiver put on the record in open court.

The more complex answer is that Ernsting’s counsel’s seeking prejudgment interest, while a breach of the stipulation, does not affect the validity of a stipulation in the first place. Again, the deal was done on August 24.

What about Shelley’s attempt, when he left the check to be picked up, to impose the condition that the check not be cashed until Shelley’s judgment had been signed and filed? First, there was nothing in the deal as described in the record of August 24 that made it conditional on a form of judgment approved by Shelley. Second, the actual judgment signed September 1 embodied the substantive result of the August 24 hearing. In that hearing, as we have seen, Shelley made no attempt to qualify the waiver of appeal on some bifurcation of the contract and declaratory relief claims. It was clear that there would be one judgment, and it would embody both contract and declaratory relief claims.

D. But Ernsting’s Grab Back

Was Improper

The record is also reasonably susceptible, however, of the inference that this appeal was brought in reaction to Ernsting’s attempt to grab back about 84 percent of the $66,000 lost in the jury decision in the form of a motion for prejudgment interest. If we may speculate on the subject, we really doubt the case would be here now if Ernsting’s counsel hadn’t continued to litigate after the check was cashed.

Granted, arguably, the provisions in the August 26 and September 1 judgments for costs contemplated some minimal mop-up work on the cost issue. Granted further that there is nothing necessarily inconsistent with a party seeking costs in a context where both sides have already agreed not to appeal. So perhaps it can be said that the possibility of minor skirmishing over cost memorandums was not ruled out by the August 24 appellate waivers. Indeed, in the post-waiver skirmishing Shelley himself gained, in the amended judgment of September 1, the opportunity to claim costs from Ernsting, and in fact he sought those costs for himself later.

On the other hand, the August 24 record -- with Shelley’s offer to write the check immediately -- most naturally envisions Shelley’s check as the end of any possible money transfers. For either side, then, to seek even minimal costs after the check was written seems inconsistent with the stipulation of August 24.

So it is not entirely clear whether any blame can be fixed on either side for their respective attempts to seek costs after the hearing. But what is very clear is that when, in October, Ernsting’s counsel tried to use the device of prejudgment interest to gain more than four-fifths of what Ernsting had given up by way of her appeal waiver, a line was crossed. Seeking more than $55,000 in prejudgment interest was an action hardly in accord with “getting on with our li[ves],” as Shelley had introduced the idea of waiving appeal in the hearing on August 24. It was not minimal mop-up work. It violated the spirit of the appellate waiver, and arguably the letter because it represented a substantive financial threat against Shelley. It is telling that Shelley filed his appeal only after the unsuccessful attempt to gain a large sum in the form of prejudgment interest.

There is not much, of course, we can do about the unseemly post-peace treaty fighting. The waiver was, as we said, already a done deal when the grab back attempt occurred. Arguably, Ernsting’s attempt to seek costs after the waiver might provide a basis for a reversal of the judgment limited to the costs awarded to Ernsting; after all, any cost order clearly was not part of the August 24 waiver. But Shelley has not attacked that aspect of the judgment in his opening brief. We are left with the irony that, on appeal, Shelley has waived the one part of his appeal rights that clearly wasn’t waived on August 24.

So we do not have the power to afford Shelley even a token reversal on the cost matter. What we can do, however, is to take the unusual step of awarding appellate costs to Shelley, which we have the power to do under rule 27(a)(4) of the California Rules of Court, even though the appeal is being dismissed. And we can state that one of the reasons we deny Ernsting’s motion for sanctions for what she claims is a frivolous appeal by Shelley is that she has unclean hands. This all amounts to a small gesture, but it is all that is available to us.

IV. Disposition

First, the appeal is dismissed.

Second, we deny Ernsting’s motion for sanctions because of the frivolousness of the appeal. On the merits, Shelley certainly raised colorable issues as to his right to keep the sexual harassment attorney fee award (see generally Flannery v. Prentice (2002) 26 Cal.4th 572), and, as noted above, Ernsting herself is estopped to seek the equitable remedy of sanctions because she has unclean hands in the form of substantively breaking the truce that was achieved when both sides waived the right to appeal.

Third, to underscore the last point, Shelley shall recover all appellate costs in this proceeding.

SILLS, P.J.

WE CONCUR:

BEDSWORTH, J.

FYBEL, J.

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[1] The agreement was actually between Ernsting and Gerald N. Shelley, A Law Corporation. At all times, however, Shelley was acting on behalf of the corporation and therefore the opinion will treat Shelley and the corporation as one and the same except where context requires a differentiation.

[2] This was not the first sexual harassment lawsuit that Shelley had filed against Pacific Telesis and therefore he was likely to have been well aware of the relative advantages and disadvantages of entering into a contingency fee agreement with Ernsting for this suit.

[3] There were two trials, the first trial resulted in a hung jury.

[4] In a letter to Ernsting dated April 13, 1998, Shelley correctly anticipated that the punitive damage award might be overturned on appeal.

[5] According to Shelley’s declaration in opposition to the dismissal motion, Shelley may have said “declaratory” but the reporter took down “declarant.” Shelley has made no motion pursuant to rule 12(c)(1) of the California Rules of Court to correct the record, but even assuming that he did, and it was granted so that the sentence read, “we’re going to abide by the declaratory prayer of relief,” it would make no difference, as we explain anon.

[6] His objections are only alluded to in the record before us.

[7] Included in Ernsting’s motion to dismiss is a request for sanctions under Code of Civil Procedure section 907.

[8] At the time Shelley was applying for admission to the Nevada bar and, according to his declaration in opposition to the motion to dismiss, he will have to disclose the result of this action; he does not want to be “branded as someone who has breached a retainer agreement with a client.”