Computer Prepared Accounts, Inc. v. Katz

In Computer Prepared Accounts, Inc. v. Katz (1991) 235 Cal.App.3d 428, the Court affirmed a trial court order for attorney fees and sanctions, made under section 3426.4 and Code of Civil Procedure section 128.5. (Id. at pp. 430, 431.) The trial court concluded that the plaintiff had sued for trade secret misappropriation in bad faith "'in that plaintiff's claims were based upon documents that were not authentic, that plaintiff knew that the documents were not authentic, and plaintiff failed to verify the authenticity of the documents after being advised by defendants that the documents were not authentic, and for the further reason that plaintiff failed to establish that there were any trade secrets that were misappropriated by defendants.'" (Id. at p. 432.) On appeal, the plaintiff "conceded, albeit belatedly, that the trial court's judgment should be affirmed." (Id. at p. 433.) With that concession, the "sole issue" before this court was "whether the appeal was frivolous under Code of Civil Procedure section 907." (Ibid.) In determining that issue, this court observed, the courts apply a two-part test based on an objective and a subjective standard. (Id. at p. 434.) "With respect to the objective standard," this court concluded, the test was satisfied. (Id. at p. 438.) In response to the appellant's assertion that proffering forged documents was not an adequate predicate for sanctions, this court said: "This argument is ludicrous. It offends us to reiterate it. Without a doubt submitting forged documents to a trial court is sufficient indication of 'bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.' (Code Civ. Proc., 128.5.)" (Ibid.) Though decided under Code of Civil Procedure sanction provisions, Katz more broadly supports the unremarkable proposition that presenting forged documents in a judicial proceeding can give rise to a finding of bad faith.