NATURE OF PROCEEDINGS: Hearing on Plaintiffs’ Motion to Exonerate Undertaking

 

Plaintiffs’ Motion to Exonerate Undertaking is denied.

                                                                                                                                       

BACKGROUND

Plaintiffs Niki Alexander Shetty and Adina Zaharescu brought this case against Thomas Block and Sue Emrek (Defendants) related to Defendants’ involvement with a loan and deed of trust for the property at 4351 La Barca Drive, Tarzana, California (the “Property“).

On March 22, 2022, the Court granted Plaintiffs a preliminary injunction enjoining the foreclosure sale of the deed of trust. In connection with the preliminary injunction, Plaintiffs were required to post an undertaking (the bond).

On February 20, 2024, the Court granted motions for summary judgment filed by Defendants Block and Emrek based on its determination that one or more elements of each of Plaintiffs’ claims failed as a matter of law.

Plaintiffs filed a Motion to Exonerate Undertaking. Defendant Block opposed the motion.

 

EVIDENTIARY OBJECTION

Defendant Block’s evidentiary objection is overruled.

 

 

LEGAL STANDARD

A court may require a plaintiff to post a bond or undertaking when granting a plaintiff’s request for a preliminary injunction. Dickey v. Rosso (1972) 23 Cal.App.3d 493, 496. Code of Civil Procedure[1] section 529, subdivision (a) provides in pertinent part that “[o]n granting an injunction, the court or judge must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction.” The purpose of the undertaking “‘is to afford compensation to the party wrongly enjoined or restrained . . . .’” Top Cat Productions, Inc. v. Michael’s Los Feliz (2002) 102 Cal.App.4th 474, 478 (quoting City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal. App. 4th 916, 922).

Section 996.440 sets forth a streamlined procedure through which a party may enforce the undertaking by providing in pertinent part: “(a) If a bond is given in an action or proceeding, the liability on the bond may be enforced on motion made in the court without the necessity of an independent action. “(b) The motion shall not be made until after entry of the final judgment in the action or proceeding in which the bond is given and the time for appeal has expired or, if an appeal is taken, until the appeal is finally determined.”

                                                                                                             

ANALYSIS

Plaintiffs argue that the Court should exonerate the bond because the preliminary injunction was automatically lifted upon adjudication in favor of the defendants, and there is no longer any basis to maintain the litigation bond.

The Court disagrees. Plaintiffs’ appeal of this Court’s judgment is still pending in the Court of Appeal, as Case No. B338097. Because Defendants cannot move to recover damages caused by the preliminary injunction until the appeal is finally determined, the bond remains necessary. See Nuclear Electronic Laboratories, Inc. v. William C. Cornell Co. (1965) 239 Cal.App.2d 8, 12 (holding “[because] the preliminary ruling, subject of this appeal, cannot be deemed a final decision creating a cause of action upon the bond given in support of the temporary restraining order. It would seem axiomatic that the ruling similarly cannot be deemed a final decision abolishing a cause of action upon the bond.”). Plaintiffs cite no authority authorizing the exoneration of an undertaking while the action in which the bond is given is on appeal. Accordingly, the motion is denied.

 

CONCLUSION

Plaintiffs’ Motion to Exonerate Undertaking is denied.