Judge Lee W. Tsao, Case 23NWCV01094 2023-05-10 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV01094, Date: 2023-05-10 Tentative Ruling

Case Number: 23NWCV01094 Hearing Date: May 10, 2023 Dept: C

Harrold et al. v. Enzo Enterprises et al.

CASE NO.: 23NWCV01094

HEARING: 5/10/23 @ 1:30 PM

#10

TENTATIVE RULING

Plaintiffs Robert Harrold and Maureen Harrold’s motion for preliminary injunction is GRANTED.

Moving Party to give NOTICE.

Plaintiffs Robert Harrold and Maureen Harold move for a preliminary injunction pursuant to CCP § 526(a)(2).

This action concerning real property (Case No. 23NWCV01094 (“civil action”) was filed by Plaintiffs ROBERT W. HARROLD and MAUREEN M. HARROLD (Maureen) on April 10, 2023. The operative Complaint alleges, in pertinent part: “This lawsuit arises from the actions of Defendants in conspiring to steal Plaintiffs’ home located at 9527 Ives Street, Bellflower, California 90706 (‘Subject Property’ or ‘Home’)…. “ (Complaint ¶9.) Plaintiffs’ Complaint asserts the following causes of action: (1) Fraud/Deceit; (2) Financial Elder Abuse; (3) Quiet Title; (4) Cancellation of Instruments; (5) Declaratory Relief; (6) Slander of Title; and (7) Unjust Enrichment.

The Court notes that an earlier filed unlawful detainer action entitled Smooth Sailing Consulting GP v. Robert W. Harrold (Case No. 23NWUD00349) (“UD action”) was filed on March 9, 2023. A default judgment by clerk was entered on March 9, 2023. A Motion to Set Aside the Default Judgment was DENIED on March 21, 2023. On April 5, 2023, Robert W. Harrold and Maureen M. Harrold’s Motion for Reconsideration to Set Aside the Default Judgment was also DENIED.

Plaintiffs now seek a preliminary injunction to restrain Defendants from taking possession of the Subject Property pursuant to Writ of Possession issued in the UD action; from taking any steps to enforce the Judgment/Writ of Possession issued in the UD action; and from selling, attempting to auction, sell, cause to be sold, transfer, or further encumber the Subject Property.

Plaintiffs’ requests for judicial notice for Exhibits H and I containing business searches of the California Secretary of State’s website for Enzo Enterpises’ control ID and Smooth Sailing are granted.

“As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of its claim.” (White v. Davis (2003) 30 Cal.4th 528, 554 (emphasis omitted).) “[A]n order granting or denying a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy. Its purpose is to preserve the status quo until the merits of the action can be determined.” (Socialist Workers etc. Committee v. Brown (1975) 53 Cal.App.3d 879, 890-891 (citations omitted).)

“In determining whether to issue a preliminary injunction, the trial court considers: (1) the likelihood that the moving party will prevail on the merits and (2) the interim harm to the respective parties if an injunction is granted or denied. The moving party must prevail on both factors to obtain an injunction.” (Pittsburg Unified School Dist. v. S.J. Amoroso Construction Co., Inc. (2014) 232 Cal.App.4th 808, 813-814.) “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…” (Church of Christ in Hollywood v. Superior Court (2002) 99 Cal.App.4th 1244, 1251-1252.) “The ultimate goal of any test to be used in deciding whether a preliminary injunction should issue is to minimize the harm which an erroneous interim decision may cause.” (White v. Davis, supra, 30 Cal.4th at p. 554 (emphasis omitted).) The burden is on the party seeking injunctive relief to show all elements necessary to support issuance of a preliminary injunction. (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

The court can stay an unlawful detainer action pending resolution of a civil action. (See e.g., Asuncion v. Sup. Ct. (1980) 108 Cal.App.3d 141,146-47.)

“The cases have created a distinction between procedural and substantive acts. The revival of corporate powers validates any procedural step taken on behalf of the corporation while it was under suspension.” (Benton v. County of Napa (1991) 226 Cal.App.3d 1485, 1490.) “Most litigation activity has been characterized as procedural for purposes of corporate revival.” (Id.)

If the injunction is granted, the court must require an undertaking on the part of the applicant. (Code Civ. Proc. § 529.) The amount of the undertaking “is an exercise of the trial court's discretion, and will not be disturbed on appeal unless is clearly appears that the trial court abused its discretion by arriving at an estimate that is arbitrary or capricious, or is beyond the bounds of reason.” (Abba Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 14.)

In opposition, Defendants argue that Plaintiffs have not proven there is a likelihood they will prevail on the merits. Defendants argue that Plaintiffs will not be able to prove fraud because Maureen was a real estate agent for 30 years and would know the difference between a deed and a promissory note. Thus, she was not defrauded into signing the deed thinking it was a promissory note. Further, Plaintiffs have not plead facts to support a fraud cause of action with specificity. Additionally, Defendants argue that Plaintiffs will not be able to prove elder abuse because they cannot establish that Defendants obtained the property interest in Plaintiffs’ property for an improper use or acted in bad faith or with fraudulent intent.

Plaintiffs have shown a likelihood of prevailing on the merits because the deeds may be voidable under Rev. & Tax Code §§ 23302(d) and 23304.1(a) due to Enzo Enterpises (Enzo) being a suspended corporation. Rev. & Tax Code § 23304.1(a) provides that contracts made while a taxpayer’s powers, rights, and privileges are suspended are “voidable at the request of any party to the contract other than the tax payer.” Here, Plaintiffs have offered evidence from Enzo’s profile on the Secretary of State’s website evidencing that Enzo was suspended at the time of the transfer. (Judicial Notice, Exhibit H.) In opposition, Defendants argue that the deeds are voidable and not void and that procedural steps taken on behalf of the corporation in prosecution or defense while suspended are retroactively validated. Here, according to Plaintiffs, Enzo entered into a contract to deed the property to it while Enzo was suspended. (Judicial Notice, Exhibit H.) Defendants have offered no argument or evidence to dispute this. Further, the contract is not a procedural act that can be validated by revival of the corporation because it is not a litigation activity. (Benton, supra, 226 Cal.App.3d 1485, 1490.) Thus, Plaintiffs have met their burden to show there is a likelihood of prevailing on the merits as to Enzo.

Additionally, Plaintiffs claim that Smooth Sailing Consultants GP (Smooth Sailing) is a non-existent business entity and, thus, attempted conveyance of real property to a nonexistent entity is void. (Diocese of San Joaquin v. Gunner (2016) 246 Cal.App.4th 254, 273.) Here, Plaintiffs offer evidence that Smooth Sailing is not registered as a California business with the Secretary of State. (Judicial Notice, Exhibit I.) Defendants have not presented any evidence that Smooth Sailing is a business entity in the State of California and summarily state the Smooth Sailing is the real party in interest.

Plaintiffs have shown irreparable harm should the preliminary injunction not be issued. Plaintiffs will be evicted from their primary residence.

Finally, Defendants request that Plaintiffs post a bond in the amount of $108,000 for monthly rent of $4,500 for an estimate of two years to obtain a trial date to compensate Defendants should they ultimately prevail on the merits.

The court finds that posting of a bond in the amount requested by Defendants is sufficient to protect their interests. The court hereby stays the UD Action (Smooth Sailing Consulting GP v. Robert W. Harrold, Case No. 23NWUD00349) pending resolution of this lawsuit. (Asuncion v. Superior Court (1980) 108 Cal.App.3d 141.)

Accordingly, Robert Harrold and Maureen Harrold’s motion for preliminary injunction is GRANTED. Plaintiff is to post a bond of $108,000.