Judge: Carolyn M. Caietti, Case: 37-2024-00011987-CU-BC-CTL, Date: 2024-05-10 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - May 09, 2024

05/10/2024  10:30:00 AM  C-70 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Carolyn Caietti

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Civil - Unlimited  Breach of Contract/Warranty Motion Hearing (Civil) 37-2024-00011987-CU-BC-CTL INTERNATIONAL COMMUNICATIONS NETWORK INC VS PALAZUELOS [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Plaintiff International Communications Network, Inc.'s Order to Show Cause Re: Preliminary Injunction is DENIED.

Background As alleged in Complaint, 'Plaintiff ICN is the victim of Defendants' conspiracy to lure it into a contract to purchase a television station that Defendants represented was profitable and had a lucrative network affiliation, despite Defendants knowledge that the affiliation, and the profit, were about to end.' The Complaint asserts 15 causes of action including breach of an asset purchase agreement, fraudulent misrepresentation, and tortious interference with a contract.

At an ex parte on April 17, 2024, the Court granted a temporary restraining order, deemed the ex parte papers as the moving papers and set a briefing schedule. (ROA 23 – Minute Order; ROA 24 – Order Granting Ex Parte Application for (1) Order to Show Cause Regarding Preliminary Injunction; and (2) Temporary Restraining Order.) The Court set this Order to Show Cause re: Preliminary Injunction. (Ibid.) In this motion for preliminary injunction, Plaintiff seeks an order: (i) restraining and enjoining Defendants from selling or offering to sell any of the assets of the broadcast television station KTAS; (ii) 'enjoining Defendants to allow' ICN to conduct the appraisal of the real property within the next 30 days; and (iii) lowering the $30,000 bond amount set at the TRO hearing.

Preliminary Matters Sur-replies, including objections, are not permitted. (C.C.P., § 1005(b).) The Court has not considered Defendant's sur-reply objections. (See, ROA 35-41.) Discussion The general purpose of a preliminary injunction is to preserve the status quo pending a determination on the merits of the action. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) 'In deciding whether to issue a preliminary injunction, a court must weigh two 'interrelated' factors: (1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or nonissuance of the injunction.' (Butt v. State of California (1992) 4 Cal.4th 668, 677-678; see also, Midway Venture LLC v. County of San Diego (2021) 60 Cal.App.5th 58, Calendar No.: Event ID:  TENTATIVE RULINGS

3117682  42 CASE NUMBER: CASE TITLE:  INTERNATIONAL COMMUNICATIONS NETWORK INC  37-2024-00011987-CU-BC-CTL 76 (Midway Venture).) 'The trial court's determination must be guided by a 'mix' of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other to support an injunction.' (Butt, supra; Midway Venture, supra.) Injunctive relief lies only to prevent threatened injury and has no application to completed wrongs. It should neither serve as punishment for past acts, nor be exercised in the absence of any evidence establishing the reasonable probability the acts will be repeated in the future. It must appear with reasonable certainty that the wrongful acts will be continued or repeated. (Scripps Health v. Marin (1999) 72 Cal.App.4th 324, 332-333.) The Likelihood to Prevail on the Merits An injunction 'must not issue unless it is reasonably probable that the moving party will prevail on the merits.' (San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.) There must be 'some possibility' the moving party will ultimately prevail on the merits of the claim. (Butt, supra, 4 Cal.4th at p. 678.) In the moving papers, Plaintiff primarily bases the injunction request on the first three causes of action for specific performance, breach of written contract (regarding the asset purchase agreement (APA)) and breach of implied contract (regarding the escrow instructions).

Second Cause of Action – Breach of Written Contract (APA) Plaintiff argues Defendant refused to allow an appraisal or proceed with the deal, constituting a breach of the APA. (Ex Parte App., at p. 9:21-23.) However, the evidence shows – and Plaintiff does not acknowledge in a reply – that by the time Defendant purportedly did not allow for the appraisal in December 2023, Defendant had terminated the APA two months earlier. Defendant's evidence shows, and Plaintiff acknowledges, it did not pay the purchase price by the March 28, 2023, closing date.

(Declaration of Joan Stewart, at ¶¶ 8-9, 13 & Ex. 9.) While in reply Plaintiff disputes the closing date, Plaintiff's supplemental brief acknowledges 'ICN and Sellers planned on close on March 28, 2023...' (Supp. Brief, at p. 2:27-28, citing Agha Supp. Decl., at ¶ 8.) Plaintiff also concludes the APA was not validly terminated but without explaining how.

In reply, Plaintiff moves the ball by arguing Defendant breached the APA by failing to operate and maintain the business in accordance with Section 5.1 of the APA. This was not raised in the original or supplemental application. (See, Ex Parte App., at p. 9:22-23 [limiting the breach to 'Sellers refused to allow an appraisal or proceed with the deal, constituting a breach of the APA.'].) Moreover, Section 5.1 required Defendant to continue to operate and maintain the business and operation of KTAS in accordance in all material respect with the terms of the FCC Authorization and in material compliance with all applicable laws and FCC rules and regulations.' (Emphasis added.) It does not require Defendant to operate and maintain the business – period.

Third Cause of Action – Breach of Implied in Fact Contract Plaintiff argues Defendant promised if Plaintiff signed joint escrow instructions, they would grant access for an appraisal and not submit the instructions to the escrow agent, thereby not releasing certain escrow funds; Defendant breached by immediately submitting the instructions to the escrow agent, demanding the release of $100,000; and attempting to terminate the APA. This is not supported by Plaintiff's evidence, which primarily relies on one email dated December 6, 2023.

Rather, the evidence shows that starting on November 10, 2023, Defendant sent a termination notice and asked Plaintiff to counter-sign the escrow instructions. (Defendant's Ex. 14.) Additional requests were made to sign the instructions on November 14, November 20, December 1, December 2 and December 5. By December 6, Defendant reaffirmed her position Plaintiff defaulted, forfeited escrow and only if the escrow release was signed and returned 'immediately,' Defendant 'would consider' granting Calendar No.: Event ID:  TENTATIVE RULINGS

3117682  42 CASE NUMBER: CASE TITLE:  INTERNATIONAL COMMUNICATIONS NETWORK INC  37-2024-00011987-CU-BC-CTL one additional extension to hold his signature during an extension period, apply the funds towards the purchase price and provide access to the site once the signed escrow release was received. On December 9, Defendant confirmed Plaintiff still had not returned the signed escrow release and the family was no longer willing to do business. In Plaintiff's reply evidence, Defendant again reaffirmed her position Plaintiff defaulted and the family only agreed to consider an extension of time to close. (ROA 31 – Reply Declaration of Maxwell Agha, at Ex. 8.) The Court does not agree with Plaintiff that Defendant's email dated December 6 shows an agreement to hold the escrow instructions, particularly in light of the other communications before and after that email. Rather, it was an outline of what would need to happen for Defendant to 'consider' holding the escrow instructions and allowing the appraisal. Plaintiff has not demonstrated a likelihood of success on the merits of the third cause of action.

Remaining Causes of Action Finally, in the moving application, Plaintiff summarily concluded that it was likely to prevail on the other causes of action, but without any citation to the evidence and legal authority and assessment of these twelve other claims. (Cal. Rules of Ct., rule 3.1113(b) [memorandums must contact evidence and arguments relied on and a discussion of the statutes and cases cited in support of the position advanced].) The Court's determination is guided by a 'mix of the potential-merit and interim-harm factors.' (Butt, supra, 4 Cal.4th at p. 678.) Here, since Plaintiff has not made a showing it would prevail, it cannot issue the injunction regardless of the amount of any interim harm to Plaintiff. (Ibid.) The Requested Injunction is Overbroad Even if Plaintiff met its burden for a preliminary injunction, the injunction requested is overbroad. An injunction including an order essentially mandating and compelling Defendant to conduct an appraisal does not preserve the status quo. (Brown v. Pacifica Foundation, Inc. (2019) 34 Cal.App.5th 915, 925 (explaining courts should only issue preliminary injunctions mandating an affirmative act that changes the status quo in 'extreme cases where the right thereto is clearly established').) Concluding Orders For these reasons, the motion for preliminary injunction is DENIED.

The temporary restraining order is dissolved.

This decision is not a final adjudication of the ultimate rights in the controversy. (Midway Venture, at p. 77.) If the tentative ruling is confirmed without modification, the minute order will be the Court's final ruling.

Plaintiff is ordered to serve written notice of the Court's final ruling on all appearing parties by May 14, 2024.

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