Judge: Nathan Vu, Case: 30-2022-01284501, Date: 2023-07-24 Tentative Ruling

Motion for Preliminary Injunction

Plaintiff Robert T. Clawson’s Motion for Preliminary Injunction and Prejudgment Writ of Attachment is GRANTED in part and DENIED in part.

The court ORDERS that Defendant Theodore G. Laurent is PROHIBITED and ENJOINED from selling, encumbering, or transferring the mobile home located at 20600 Main St. Space 8, Carson, CA 90745, and the two automobiles owned by Defendant Theodore G. Laurent, as well as the proceeds or profits from the mobile home and two automobiles.

The court further ORDERS that Defendant Theodore G. Laurent is PROHIBITED and ENJOINED from selling, encumbering, or transferring any funds or property that constitute or were derived from the proceeds of the March 1, 2021 sale of the real property located at 8662 Pacheco Avenue, Westminster, CA 92683.

Plaintiff is ORDERED to file an undertaking in the amount of $50,000 and attach evidence that the undertaking is valid and in good standing within 15 days of this ruling.

Plaintiff Robert T. Clawson moves for an order preliminarily enjoining Defendants Theodore G. Laurent (Defendant Laurent), individual and as trustee of The Theodore G. Laurent Living Trust Dated October 30, 2017, from selling, encumbering, or transferring the mobile home located at 20600 Main St. Space 8, Carson, CA 90745, the two automobiles he owns, and any cash in his bank account(s). In the alternative, Plaintiff seeks a lien against the same properties.

Standard for Preliminary Injunction

Section 526 of the Civil Procedure Code authorizes a Court to grant an injunction in the following cases:

(1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.

(2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

(3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.

(4) When pecuniary compensation would not afford adequate relief.

(5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.

(6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings.

. . .

(Code Civ. Proc., § 526, subd. (a).) The Court may also grant a preliminary injunction “at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exists therefor.” (Code Civ. Proc., § 527, subd. (a).)

In determining whether to issue a preliminary injunction, the court evaluates the two interrelated factors: “1) the likelihood that the plaintiff will prevail on the merits, and (2) the relative balance of harms that is likely to result from the granting or denial of interim injunctive relief.” (See White v. Davis (2003) 30 Cal.4th 528, 554; Church of Christ in Hollywood v. Superior Court (2002) 99 Cal.App.4th 1244, 1251.)

With respect to the 1st factor, the court should consider whether “there is a reasonable probability that the plaintiffs will prevail on the merits.” (Robbins v. Superior Court (1985) 38 Cal.3d 199, 206.)

The 2nd factor requires the court to ask, “Are the plaintiffs likely to suffer greater injury from a denial of the injunction than the defendants are likely to suffer from its grant?” (Ibid.)

“The latter factor [also] involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.” (14859 Moorpark Homeowner's Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1402.) If monetary damages provide an adequate remedy, then injunctive relief generally cannot be granted. (See Thayer Plymouth Center Inc. v. Chrysler Motor Corp. (1967) 255 Cal.App.2d 300, 306.)

“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 v. State of California (1992) 4 Cal.4th 668, 678.)

At the same time, “[t]he scope of available preliminary relief is necessarily limited by the scope of the relief likely to be obtained at trial on the merits.” (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 441-442.) Therefore, “[a] trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Butt v. State of California, supra, 4 Cal.4th at p. 678.)

The purpose of a preliminary injunction is to preserve the status quo until a final determination following a trial. (Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1542, overruled in part on other grounds by Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, 353.)

As the Supreme Court has stated: “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.” (IT Corp. v. County of Imperial (1983) 35 Cal.4d 63, 73.) “[A] court faced with the question of whether to grant a preliminary injunction cannot ignore the possibility that its initial assessment of the merits, prior to a full adjudication, may turn out to be in error.” (White v. Davis, supra, 30 Cal.4th at p. 561.) Thus, the court should act in favor of the party most likely to be injured. (McCoy v. Matich (1954) 128 Cal.App.2d 50, 52.)

“An injunction properly issues only where the right to be protected is clear, injury is impending and so immediately likely as only to be avoided by issuance of the injunction.” (East Bay Municipal Utility Dist. v. Department of Forestry & Fire Protection (1996) 43 Cal.App.4th 1113, 1126.) Injunctive relief “cannot issue in a vacuum based on the proponents’ fears. It must be supported by actual evidence that there is a realistic prospect that the party enjoined intends to engage in the prohibited activity.” (Korean Philadelphia Presbyterian Church v. California Presbytery (2000) 77 Cal.App.4th 1069, 1084.)

The burden is on the party seeking injunctive relief to show all elements necessary to support its issuance. (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) Thus, if the moving party fails to establish either requirement, a preliminary injunction should be denied. (See Jessen v. Keystone Savings and Loan Assoc. (1983) 142 Cal.App.3d 454, 459.)

A ruling on an application for a preliminary injunction is not an adjudication on the merits of the ultimate rights in controversy. (Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286.) It merely represents the trial court’s discretionary decision whether defendant should be restrained from exercising a right claimed by it. (Ibid.)

Likelihood of Prevailing on the Merits

Plaintiff’s 1st Cause of Action is for fraud. “’The elements of fraud, which gives rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638, quoting 5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 676, p. 778.)

Here, Plaintiff presents evidence that (i) Defendant Laurent concealed that he had not recorded the quitclaim deed on the real property, listed the real property for sale, and sold the real property to a third party, (see Decl. of Robert T. Clawson (Clawson Decl.), ¶¶ 11-13, Exh. 4 at p. 3:26-4:7); (ii) that Defendant Laurent had knowledge of the falsity because he only partially disclosed these facts to Plaintiff in a manner likely to deceive Plaintiff (i.e., providing Plaintiff a copy of the executed quitclaim deed but not disclosing that it had not been filed), (id., ¶ 9, Exh. 4 at p. 2:11-18); (iii) Defendant’s intent to defraud, (id., ¶¶ 11-13); (iv) Plaintiff’s ignorance of the true facts, (ibid.); and (v) resulting damages (id., ¶¶ 11, 15.)

Plaintiff’s 2nd Cause of Action is for breach of contract. “[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

In this case, Plaintiff has shown that on October 1, 2013, Plaintiff, Plaintiff’s mother, and Defendant entered into an agreement that Plaintiff would be added to the title of certain real property and that upon the death of Plaintiff’s mother and Defendant, Plaintiff would become 100% owner of the real property. (Clawson Decl., ¶ 7, Exh. 1; see also id., ¶. 8, Exh. 2.)

Plaintiff also presented evidence that, under the agreement, he was to pay the mortgage expenses and that he performed his obligations under the agreement. (Id., ¶¶ 7, 9.) Plaintiff also showed that Defendant breached the agreement by listing the real property for sale and selling the real property to a third party without Plaintiff’s knowledge or consent. (Id., ¶¶ 11-13, Exh. 4 at p. 3:26-4:7). Plaintiff also showed the resulting damages. (Id., ¶¶ 11, 15.)

Plaintiff’s 3rd Cause of Action seeks treble damages for violation of Penal Code section 496. (See Penal Code, s 496, subd. (c).) Penal Code section 496 states that “[e]very person . . . who conceals, sells, withholds, or aids in concealing, selling or withholding any property from the owners, knowing the property to be so stolen or obtained shall be punished . . . .” (Penal Code, § 496, subd. (a).) A Plaintiff makes out a claim under Section 496(c) where they prove that the defendant fraudulently diverted partnership funds belonging to plaintiff, concealed or withheld said funds from plaintiff, knew that the funds were fraudulently obtained, and caused injury to plaintiff. (See Siry Investment, L.P. vs. Farkhondehpour (2022) 13 Cal.5th 333, 361-362.)

The evidence presented by Plaintiff to show fraud and breach of contract are sufficient to show a likelihood of success on the merits with respect to violation of section 496.

In response, Defendant has not presented any evidence or argument that Plaintiff does not have a likelihood of success on the merits. Defendant’s failure to address the issue constitutes a waiver on that issue. (See Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 288; see also Wright v. Fireman’s Fund Ins. Companies (1992) 11 Cal.App.4th 998, 1011 [“it is clear that a defendant may waive the right to raise an issue on appeal by failing to raise the issue in the pleadings or in opposition to a . . . motion”].)

The weight of the evidence thus shows that Plaintiff is likely to succeed on his 1st, 2nd, and 3rd Causes of Action.

Balance of Harms

The court must now ask, “Are the plaintiffs likely to suffer greater injury from a denial of the injunction than the defendants are likely to suffer from its grant?” (Robbins v. Superior Court, supra, 38 Cal.3d at p. 206.) In considering this question, the court must look to the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.

Here, Plaintiff shows the Defendant has dissipated the sale proceeds from the real property at issue in this case and purchased both a mobile home and two vehicles. (See Clawson Decl., Exh. 4 at p. 3:21-24, Exh. 7 at p. 2:16-21.)

A court may properly find irreparable harm where there is sufficient evidence to believe dissipation of the profit is already occurring, as plaintiffs “would be left with a ‘naked claim for damages . . . to be obtained through an action at law.’” (Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 136, quoting Lathrop v. Bampton (1866) 31 Cal. 17, 23.)

In this case, Plaintiff may suffer irreparable harm if the injunction is not granted and Defendant dissipates all the property. At the same time, there will be relatively less harm to Defendant if the court enjoins Plaintiff from selling, encumbering, or transferring the mobile home and two vehicles, as Defendant will still be able to reside in and/or use that property. Because the court will not enjoin the use of the funds in Defendant’s bank account(s) for the reasons stated below, it need not consider the balance of harms associated with that portion of the preliminary injunction.

Scope of Preliminary Injunction

Plaintiff seeks a preliminary injunction enjoining Defendant “from selling, encumbering, or transferrign [sic] the mobile home located at 20600 Main St. Space 8, Carson, CA 90745, the two automobiles he owns, and any cash in his bank account(s).” (ROA #36 at pp. 1:25-2:3.)

The court may grant a preliminary injunction imposing a constructive trust over only the improperly acquired sale proceeds and property acquired with the fruit of those sale proceeds. (See Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 136-137; Haskel Engineering & Supply Co. v. Hartford Acc. & Indem. Co. (1978) 78 Cal.App.3d 371, 376.)

Here, Plaintiff does not submit evidence that all the funds in Defendant’s bank account(s) are come from the sale proceeds. (See Clawson Decl., ¶ 17, Exh. 7.) The court therefore deny without prejudice the preliminary injunction as to the funds in Defendant’s bank account(s).

In addition, Plaintiff submitted evidence that defendant “paid off two vehicles” with the sale proceeds, but does not identify the two vehicles with specificity. (See Clawson Decl., Exh. 7 at p. 2:16-24.) This may cause issues with the enforcement of the preliminary injunction so the court will allow Plaintiff to move ex parte to amend the preliminary injunction to clearly specify the two vehicles if Plaintiff is able to present evidence that the specified vehicles are the ones purchased or paid off by Defendant with the proceeds from the sale of the real property.

Undertaking

“On granting an injunction, the court must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunctions.” (Code Civ. Proc., § 529, subd. (a).)

This bond requirement is mandatory such that a defendant’s failure to request a bond does not normally waive the requirement. (See Abba Rubber Co. v. Seaquest (1991) 235 Cal.App.3d 1, 10; cf. Smith v. Adventist Health System/West (2010) 182 Cal.App.4th 729, 740 [implied waiver of right to bond found where party to be enjoined consciously chose not to address bond requirement as part of a tactical decision].

“If the court determines that the applicant’s undertaking is insufficient and a sufficient undertaking is not filed within the time required by statute, the order granting the injunction must be dissolved.” (Code Civ. Proc., § 529, subd. (a).)

The bond is intended to compensate the defendant for any damages caused by the issuance of the injunction in the event it is finally determined that the plaintiff is not entitled to the injunction. (Code Civ. Proc., § 529, subd. (a); see Abba Rubber Co., 235 Cal.App.3d at 14 [“[T]he trial court’s function is to estimate the harmful effect which the injunction is likely to have on the restrained party, and to set the undertaking at that sum.”].) The amount of the bond must be based on damages that are reasonably foreseeable and not too remote. (Rice v. Cook (1891) 92 Cal. 144, 148.)

In this case, the preliminary injunction prohibits Defendant from selling, encumbering, or transferring assets that are worth approximately $387,000. However, Defendant will not be prohibited from using said property. Thus, the potential damages that Defendant may suffer as a result of the preliminary injunction will be relatively low and likely less than the total value of the assets themselves.

Plaintiff shall give notice of this ruling.