Judge: Martha K. Gooding, Case: 21-01224224, Date: 2023-07-20 Tentative Ruling
Motion for Contempt
REVISED TENTATIVE RULING
Defendant/Cross-Complainant Frank Strausser (“Strausser”) asks the Court to enter an OSC directing Sheppard, Mullin, Richter & Hampton (“Sheppard Mullin”) to show cause why it should not be held in contempt pursuant to Code of Civil Procedure section 1209(a)(5) for violating the Court’s December 22, 2021 Temporary Protective Order (“TPO”), the Court’s January 26, 2022 Minute Order, and the Court’s March 3, 2022 Right to Attach Order (“RTAO”). Strausser also seeks an order compelling Sheppard Mullin to pay to Sweetwater Canyon Development, LLC the amount of $121,153.42, an award of attorneys’ fees in the amount of $20,000, and monetary sanctions against Sheppard Mullin payable to the Court pursuant to section 177.5 of the Code of Civil Procedure.
For the reasons set forth below, the Motion is DENIED.
As an initial matter, the Court notes both Strausser and Sheppard Mullin lodged unredacted documents conditionally under seal. However, neither party has filed a motion to seal the documents. Subject to a representation by the parties that they intend to withdraw the unredacted documents or that they have filed – or will promptly file – a motion to seal, all of the lodged documents will be placed into the public file following the hearing.
The parties dispute whether this Court has jurisdiction to consider this Motion, given that the action is no longer pending: Cross-Complainants dismissed their Cross-Complaint without prejudice on 9/26/2022 and Plaintiffs dismissed the Complaint without prejudice on 3/10/2023.
The parties also dispute whether the Court may properly exercise jurisdiction over Sheppard Mullin, given that it was never a party to the action.
The Court need not decide either issue because, as set forth below, even assuming the Court has jurisdiction to consider the Motion and properly may exercise jurisdiction over Sheppard Mullin, the Motion lacks merit and is denied on that ground.
“Disobedience of any lawful judgment, order, or process of the court” is contempt of the authority of the court. (Code Civ. Proc., § 1209, subd. (a)(5).)
“The substantive issues involved in a contempt proceeding are (1) the rendition of a valid order, (2) actual knowledge of the order, (3) ability to comply, and (4) willful disobedience.” (Conn v. Superior Court (1987) 196 Cal.App.3d 774, 784.) “A contempt proceeding [for indirect contempt] is commenced by the filing of an affidavit and a request for an order to show cause.” (Cedars-Sinai Imaging Medical Group v. Superior Court (2000) 83 Cal.App.4th 1281, 1286 [citing Code Civ. Proc., § 1211].) “After notice to the opposing party’s lawyer, the court (if satisfied with the sufficiency of the affidavit) must sign an order to show cause re contempt in which the date and time for a hearing are set forth.” (Cedars-Sinai Imaging Medical Group v. Superior Court, 83 Cal.App.4th at 1286.)
“[T]he filing of a sufficient affidavit is a jurisdictional prerequisite to a contempt proceeding.” (In re Koehler (2010) 181 Cal.App.4th 1153, 1169.) Each allegation (valid order, knowledge, ability to comply and willful disobedience) must be pled by factual statements; however, the affidavit may be amended to correct technical insufficiencies if the respondent would not be prejudiced by such amendment. (Code Civ. Proc., § 1211.5(b).)
To establish willful disobedience, the affidavit should show that the alleged contemnor had personal notice of the contents of the order. “The burden of proof is on the moving party to prove the respondent’s ability to comply (rather than on the respondent to prove inability).” (Koehler v. Superior Court (2010) 181 Cal.App.4th 1153, 1160, citing Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2009) ¶ 9:724.1; In re Cassil (1995) 37 Cal.App.4th 1081, 1088, fn. 1 [The burden of proof rests with the moving party when a punitive contempt judgment is imposed…in the case of a punitive contempt the burden of proving ability to comply rests with the moving party.].) “A punitive contempt for due process purposes occurs when a fixed term of incarceration or fine is set by the court.” (In re Cassil, 37 Cal.App.4th at 1087.)
The TPO, the 1/26/2022 Minute Order, and the RTAO were valid orders. Although the court that issued the TPO did not order Strausser to post an undertaking for the TPO, that does not render the TPO invalid. (Code Civ. Proc., §§ 489.210 and 489.220, subd. (a).) At most, the TPO would be voidable, subject to a motion to set it aside. (Otte v. Naviscent, LLC (N.D. Cal. 2021) 624 B.R. 883, 894-896 and 901.) No action was taken to set aside the TPO and no objection was raised to the lack of an undertaking. Sheppard Mullin has not shown the TPO is an invalid order.
Sheppard Mullin does not contend the Minute Order or the RTAO were invalid orders.
There is no proof of service showing the signed TPO or the signed RTAO were served on Sheppard Mullin. However, Sheppard Mullin acknowledges that it had actual knowledge of the TPO and RTAO. The 1/26/2022 Minute Order was served on Sheppard Mullin.
All that said, however, the Court DENIES the Motion because Strausser did not present evidence showing that Sheppard Mullin disobeyed (much less willfully disobeyed) either the TPO, the Court’s 1/26/2022 Minute Order, or the RTAO. Thus, Strausser has not presented facts shows that a contempt has been committed.
“Except as otherwise provided by Section 486.110, a temporary protective order issued under this chapter binds only the defendant, whether or not any other person knows of or is served with a copy of the temporary protective order.” (Code Civ. Proc., § 486.070; see, Ahart, Cal. Prac. Guide: Enf. J. & Debt (The Rutter Group 2023) ¶ 4:352 [“Temporary protective orders (TPOs) are designed to preserve the status quo pending a noticed hearing on plaintiff's application for an RTAO and W/A. They prevent the defendant (but not third parties) from transferring certain property for a limited period (generally, 40 days), and create a temporary lien on defendant’s attachable property.”].)
“The service upon the defendant of a temporary protective order pursuant to Section 486.080 creates a lien upon any property, or the proceeds thereof, which is described in the order, is owned by the defendant at the time of such service, and is subject to attachment pursuant to this title. The lien continues on property subject to the lien, notwithstanding the transfer or encumbrance of the property subject to the lien, unless the person receiving the property, whether real or personal, is a person listed in Section 697.740. (Code Civ. Proc., § 486.110, subd. (a).)
The TPO here prohibited only Cross-Defendant Sweetwater from transferring, directly or indirectly, any interest in its assets. See TPO ¶ 3 (“Cross-defendant shall not transfer, directly or indirectly, any interest in the property described in item 2i of the findings.”). The TPO did not order Sheppard Mullin to do – or not do – anything. (Code Civ. Proc., § 486.070.)
Similarly, the RTAO did not prohibit a third party, such as Sheppard Mullin, from receiving money from Sweetwater. The RTAO provided that Strausser had a right to attach Sweetwater’s property and directed the Clerk to issue a writ of attachment for Sweetwater’s property. (RTAO, Section 3.)
“The defendant’s interest in tangible personal property possessed or controlled by a third party (or a debt owed defendant) may be attached by serving the third party with a copy of the W/A and notice of attachment (CCP § 488.345; ¶ 4:451). Thereafter, the third party has the same duties, rights and liabilities as a garnishee under a writ of execution after judgment (see CCP §§ 701.010-701.070, discussed at ¶ 6:573 ff.). [CCP § 488.600].” (Ahart, Cal. Prac. Guide: Enf. J. & Debt (The Rutter Group 2023) ¶ 4:541.)
According to Sheppard Mullins’ Opposition, the $100,000 and $77,808.63 payments to Sheppard Mullin were made on February 3, 2022, and March 2, 2022, after the TPO had expired by its terms, 40 days after its issuance – and before the Court even signed the RTAO on March 3, 2022, and the third payment to Sheppard Mullin – of $9,824.38 on March 25, 2022 – was made after Strausser posted the undertaking required for a writ of attachment on March 7 and the Court issued writs of attachment on March 9, but before the Sheriff’s Department levied on the funds in Sweetwater’s bank account. (The Court finds no declaration from Sheppard Mullin setting forth these facts, but notes that Strausser does not appear to dispute this timetable.)
Strausser did not show he served the March 3, 2022 RTAO or the March 9, 2022 writs of attachment on Sheppard Mullin for purposes of enforcing the attachment order. In addition, Strausser did not produce any evidence showing that at the time Sheppard Mullin received the money it believed the money was transferred in violation of either the TPO, the Court’s 1/26/2002 Minute Order indicating the Court was granting the application for a right to attach order and writ of attachment, or the Court’s actual 3/3/2022 RTAO.
In any event, it does not appear that the Court’s 1/26/2022 Minute Order granting the application for a RTAO and writ of attachment could properly form the basis of a contempt charge, since at that point the Court had not actually issued either a RTAO or a writ of attachment.
Finally, Strausser cites to CCP section 488.500(e) to support his contention that the lien created by the RTAO related back to the date of the lien created by the TPO. Section 488.500, subdivision (e) provides that “[i]f an attachment lien is created on property that is subject to the lien of a temporary protective order…, the priority of the attachment lien relates back to the date the earlier lien was created. Nothing in this subdivision affects priorities or rights of third persons established while the lien of the temporary protective order…was in effect as determined under the law governing the effect of such lien.” For the reasons discussed above, even if the lien created by the RTAO related back to the date of the lien created by the TPO, Strausser still did not show Sheppard Mullin’s receipt of the payments violated any of the Court’s orders.
For the foregoing reasons, the Motion is denied in its entirety.
Strausser is ordered to give notice.