Judge: Margaret L. Oldendorf, Case: 22BBCV00516, Date: 2023-02-27 Tentative Ruling

Case Number: 22BBCV00516    Hearing Date: February 27, 2023    Dept: P

       SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

 

HCMC LEGAL, INC., a Delaware corporation,

 

                                            Plaintiff,

vs.

 

BRIAN HARTSTEIN, an individual; and DOES 1 -10, inclusive,

 

                                            Defendants.

 

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Case No.:  22BBCV00516

 

 

[TENTATIVE] ORDER TAKING OFF CALENDAR PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

PENDING APPEAL

 

Date:   February 27, 2023

Time:  8:30 a.m.

Dept.:  P

 

           

 

I.         INTRODUCTION

            Defendant Brian Hartstein (Hartstein) was employed by Plaintiff HCMC Legal, Inc. (Hire Counsel) for over 21 years. He was hired as a salesperson in 2000; from 2011 on he was a senior manager with a stock ownership interest. Hire Counsel alleges that in June 2022 Hartstein quit with no notice and went to work for a competitor, thereafter soliciting its customers to the new company and enticing former co-workers to follow him as well.

            Hire Counsel initiated litigation against Hartstein on July 15, 2022, by filing this lawsuit. The Complaint alleges Harstein breached his employment agreement and breached duties owed to Hire Counsel when he began soliciting its customers after leaving the company. Hartstein responded by filing a motion to compel arbitration and for an injunction precluding Hire Counsel from enforcing certain provisions of the Employment Agreement he had with them. Specifically, he sought an injunction precluding Hire Counsel from enforcing a provision prohibiting Harstein from soliciting its customers after leaving employment. Both motions were denied on December 12, 2022. Both rulings were appealed.

            Hire Counsel now seeks an injunction against Harstein. Because the relief requested is a matter embraced by the appeals, the motion is taken off calendar pending resolution of the appeals.

 

II.        LEGAL STANDARD

            Code Civ. Proc. §916(a) provides that “the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.”

 

            In Varian Med. Sys. Inc. v. Delfino (2005) 35 Cal.4th 180, 189 the California Supreme Court stated:

Subject to certain exceptions not relevant here, “the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” [fn. 5] (§ 916, subd. (a).) The purpose of the automatic stay provision of section 916, subdivision (a) “is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.” (Elsea v. Saberi (1992) 4 Cal.App.4th 625, 629, 5 Cal.Rptr.2d 742 (Elsea).)

To accomplish this purpose, section 916, subdivision (a) stays all further trial court proceedings “upon the matters embraced” in or “affected” by the appeal. In determining whether a proceeding is embraced in or affected by the appeal, we must consider the appeal and its possible outcomes in relation to the proceeding and its possible results. “[W]hether a matter is ‘embraced’ in or ‘affected’ by a judgment [or order] within the meaning of [section 916] depends on whether postjudgment [or postorder] proceedings on the matter would have any effect on the ‘effectiveness' of the appeal.” (In re Marriage of Horowitz (1984) 159 Cal.App.3d 377, 381, 205 Cal.Rptr. 880 (Horowitz).) “If so, the proceedings are stayed; if not, the proceedings are permitted.” (Betz v. Pankow (1993) 16 Cal.App.4th 931, 938, 20 Cal.Rptr.2d 841 (Betz).)

 

            III.      DISCUSSION

            “Under California law, an appeal from the denial of a motion to compel arbitration automatically stays all further trial court proceedings on the merits. [See Varian Med. Systems, Inc. v. Delfino (2005) 35 C4th 180, 190, 25 CR3d 298, 306-307; and detailed discussion in Eisenberg, Cal. Prac. Guide: Civil Appeals & Writs (TRG), Ch. 7.]” Knight, Cal. Practice Guide- Alternative Dispute Resolution (The Rutter Group 2022) ¶5:338.2.

            Hire Counsel makes three arguments as to why it is entitled to seek injunctive relief despite the stay. First, it argues that Harstein “conceded” in his motion to compel arbitration that provisional relief was not subject to the arbitration provision. Second, Hire Counsel argues that it opposed the motion to compel arbitration by arguing that not all causes of action were subject to the arbitration agreement and further, that the 7th cause of action for violation of Penal Code §502(c)(3) allows Hire Counsel to seek provisional relief. Third, Hire Counsel notes that Code Civ. Proc. §1281.8(b) authorizes a party to seek a provisional remedy whether or not arbitration is pending. None of these arguments is persuasive in this case.

            The determinative issue is whether the relief sought (a preliminary injunction) is a proceeding on the order appealed from or matters “embraced therein or affected thereby.” The concessions made and/or arguments raised by the parties in connection with the motion to compel arbitration do not determine whether the relief sought here is embraced or affected by the orders appealed from. The fact that injunctive relief may be appropriate for violations of Penal Code §502, or that Code Civ. Proc. §1281.1(b) provides for injunctive relief, are also not determinative. None of these arguments bears on the critical question of whether a preliminary injunction proceeding enforcing the Employment Agreement (or denying such relief) is a proceeding on the order appealed from or matters embraced or affected thereby. It is.

            The orders denying Harstein’s petition to compel arbitration and request for injunctive relief involve contract interpretation issues concerning the very provisions on which Hire Counsel bases its request for a preliminary injunction. In other words, the relief sought is matter “embraced” and “affected” by the orders appealed from. Consequently, the stay applies to it.

 

 

 

 

 

 

 

VI.      ORDER

            Hire Counsel’s motion for preliminary injunction is removed from calendar at this time, pursuant to the automatic stay.  Hartstein is ordered to give notice.  

 

 

           

Dated: ____________                                 ___________________________________

                                                                                  MARGARET L. OLDENDORF

                                                                            JUDGE OF THE SUPERIOR COURT