Judge Mark A. Young, Case Number: 20SMCV01023, Date: 2023-09-26 Tentative Ruling

Judge: Mark A. Young, Case: 20SMCV01023, Date: 2023-09-26 Tentative Ruling

Case Number: 20SMCV01023 Hearing Date: March 15, 2024 Dept: M

CASE NAME: Klenk, v. Behringer Harvard Redwood LLC, et al.

CASE NO.: 20SMCV01023

MOTION: Motion for Sanctions, OSC re: Dissolution of Preliminary Injunction

HEARING DATE: 3/15/2023

Legal Standard

The Court has the power to impose reasonable money sanctions, not to exceed fifteen hundred dollars ($1,500), payable to the court for any violation of a lawful court order by a person, done without good cause or substantial justification. (CCP §177.5.) The party seeking to impose sanctions need only show the failure to obey earlier orders. (Puritan Ins. Co. v. Superior Court (1985) 171 Cal.App.3d 877, 884 [interpreting former statute dealing with “refusal” to comply].) Numerous cases hold that severe sanctions (i.e., terminating or evidentiary sanctions) for failure to comply with a court order are allowed only where the failure was willful. (See R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 495; Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545; Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.) The burden of proof then shifts to the party seeking to avoid sanctions to establish a satisfactory excuse for his or her conduct. (Corns v. Miller (1986) 181 Cal.App.3d 195, 201; Williams v. Russ (2008) 167 Cal.App.4th 1215, 1227.)

Analysis

Defendants request: (1) dissolution of the preliminary injunction; and (2) an order that Plaintiff refund Defendants the $652,166.39 paid to Plaintiff under the preliminary injunction, or a portion of it. The Court is inclined to dissolve the injunction, but not inclined to grant a refund.

As to the dissolution, Code of Civil Procedure section 533 “articulates three independent bases on which a modification of an injunction may be predicated – (1) change in the facts, (2) change in the law, or (3) ends of justice.” (Luckett v. Panos (2008) 161 Cal.App.4th 77, 85.) Here, there has been a substantial change of circumstances based upon the jury’s verdict following a jury trial.

Here, the purpose behind the preliminary injunction has been completed. The principal purpose of such an injunction is to preserve the status quo pending trial. (Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536.) Trial is no longer pending, and therefore, the injunction would no longer preserve the status quo pending trial. The jury verdict expressly found there were no habitability violations, which substantially undermines the express purpose of the injunction order to “provide alternative housing to Plaintiff until the habitability issues at Plaintiffs residence are remediated.” While remediation efforts are still ongoing, the habitability issue was adjudicated against Plaintiff. Furthermore, at the time the injunction was issued, the court expressly expected that this was a “temporary solution” that could take “several months or longer to complete.” Contrary to the court’s expectations, it has been more than 30 months and $650,000 in expenses incurred since the injunction issued. Considering these facts, and the fact that jury awarded Plaintiff only $58,000 on a negligence cause of action, the injunction has gone far enough, and is “no longer necessary or desirable” to preserve the status quo pending trial. (City of Oakland v. Sup.Ct. (1982) 136 Cal.App.3d 565, 569.) The ends of justice would therefore require dissolution.

As to the claw back request, Defendants have not shown entitlement to the $652,166.39 paid per the preliminary injunction. (Vaca Decl., Ex. F.) Defendants cite to general, inherent powers of the court, which recognize the power to exercise “reasonable control over all proceedings connected with the litigation before it,” and fundamental fairness. (Hayes v. Super. Ct. (1940) 16 Cal.2d 260, 264; see also CCP §128.) The Court would not find it fair to burden Plaintiff with the responsibility of the payments under the injunction. Nothing in the injunction order suggested that Plaintiff would become responsible for any payments under the injunction, or that the payments would be subject to a claw back procedure. In fact, the design and purpose of the preliminary injunction in this case suggests any risk of delay was borne by Defendants. Defendants alone had control over the speed of the construction. Defendants should have appealed the initial preliminary injunction if they were unhappy with the order or the lack of a bond to insure against damages caused by an improper injunction. Also, there was no evidence adduced at trial that supported the 30-month delay in construction, or how Defendants attempted to minimize payments under the injunction. Instead, Defendants accepted the injunction, and permitted these circumstances to languish. Further, the court declined to order a bond, which would be the typical mechanism to recover from an improperly granted preliminary injunction. Since there is no bond posted, case law suggests Defendants may only recover in a collateral action. (See, e.g., Dickey v. Rosso (1972) 23 Cal.App.3d 493, 497-498 [when a preliminary injunction is dissolved as having been improperly granted, the aggrieved defendant may recover damages by proceeding against the injunction bond or by a malicious prosecution action]; see also Top Cat Productions, Inc. v. Michael's Los Feliz (2002) 102 CalApp.4th 474, 478 [the purpose of a bond is to afford compensation to party wrongly enjoined or restrained].)

Accordingly, the Court orders that the subject preliminary injunction is dissolved and no longer in effect as of the date of judgment – December 15, 2023. In light of the ruling on the dissolution issue, the Court will decline to require further payments on the injunction, including for any of Plaintiff’s costs incurred following the judgment. Plaintiff did not fairly incur any expenses following the judgment, given that the habitability issues were resolved against her and the purpose of the injunction was complete. Plaintiff claims that from December 15, 2023 (the date of judgment) through March 15, 2024 (this hearing date), she incurred approximately $32,294 in housing, $16,562 in per diems, and $264 in parking, for total costs of $49,120.00. Plaintiff claims that Defendants still owe $34,331.05 in outstanding payments based on her total claimed expenses of $281,335.80, and Defendants’ undisputed payment of $247,004.75. Lowering Plaintiff’s total claimed costs ($281,355.80) by the amounts incurred after the judgment ($49,120.00) would bring Plaintiff’s cost total under the injunction to $232,235.80, less than the total amount paid by Defendants ($247,004.75). Thus, Defendants do not owe any further payments under the injunction. As such, the Court will decline to issue additional sanctions against Defendants for non-payment. (CCP§177.5.)