Judge: Robert S. Draper, Case: 22STCV28003, Date: 2023-02-06 Tentative Ruling

Case Number: 22STCV28003    Hearing Date: February 6, 2023    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Plaintiff’s Motion for Issuance of an Order to Show Cause Re: Contempt for Violation of Preliminary Injunction Order and Request for Sanctions is DENIED.

FACTUAL BACKGROUND   

This is an action for breach of a commercial lease. The Complaint alleges as follows.

Plaintiff Hawkeye Entertainment, LLC (“Hawkeye”) entered into a lease agreement for commercial space (the “Subject Property”) with Defendants Smart Capital Investment I, LLC, Smart Capital II, LLC, Smart Capital Investment III, LLC, Smart Capital IV, LLC, and Smart Capital V, LLC’s (together, “Smart Capital”) predecessor-in-interest. (Compl. ¶¶ 9-14.) Hawkeye then sublet the Subject Property to Plaintiff W.E.R.M. (“WERM”, and with Hawkeye, “Plaintiffs”). (Compl. ¶ 20.) Smart Capital operates as Plaintiff’s landlord under the lease. (Compl. ¶ 21.)

Prior to Smart Capital’s purchase of the Subject Property, Plaintiffs invested substantial resources into making the Subject Property code compliant. (Compl. ¶ 23.) Additionally, Plaintiffs obtained a conditional use permit for the on-site sale of alcoholic beverages (the “CUB Permit”) for the Subject Property. (Ibid.) With the CUB Permit obtained, WERM opened and began operating a successful night club (the “Night Club”) in the subject property. (Compl. ¶ 23.)

Plaintiffs are current with all obligations under the Lease. (Compl. ¶ 25.) This was confirmed in a recent Bankruptcy Court evidentiary hearing on a Motion to Assume Lease and Sublease (“Assumption Motion”) filed by Hawkeye and opposed by Smart Capital. (Ibid.)

Nonetheless, Smart Capital, through its manager, Defendant Michael Chang (“Chang”, and with Smart Capital, “Defendants”), have attempted to interfere with WERM’s operation of the Night Club. (Compl. ¶ 33.) Defendants have allegedly failed to cooperate with Plaintiffs’ effort to obtain a permit to serve alcoholic beverages on site (the “CUB”); manufactured erroneous defaults; contacted regulatory agencies without justification to interfere with Plaintiffs businesses; contacted the Los Angeles Police Department without justification to interfere with Plaintiffs’ business operations; contacted Plaintiffs’ business partners to interfere with contractual relations; failed to take reasonable steps to secure the Subject Property from criminal activity; trespassed onto the Subject Property without permission during business hours; interfered with Plaintiffs’ employees while they were trying to perform their duties; and, failed to maintain the building as required under the lease. (Compl. ¶ 35.)

PROCEDURAL HISTORY 

On August 29, 2022, Plaintiffs filed the Complaint asserting seven causes of action:

1.    Breach of Contract;

2.    Breach of Implied Covenant of Good Faith and Fair Dealing;

3.    Breach of Implied Covenant of Quiet Enjoyment;

4.    Negligent Interference with Prospective Economic Advantage;

5.    Intentional Interference with Prospective Economic Advantage;

6.    Intentional Interference with Contractual Relations; and,

7.    Specific Performance

On September 28, 2022, Defendants filed a Motion to Strike Plaintiffs’ Prayer for Punitive Damages.

On October 31, 2022, Defendants filed an Anti-SLAPP Motion.

On November 7, 2022, Plaintiffs filed a Motion for Preliminary Injunction.

On December 14, 2022, the Court granted Plaintiffs’ Motion for Preliminary Injunction. The Court ordered Plaintiffs to post a bond in the amount of $100,000 within one week of the issuance of the order, and for Defendants to sign and notarize the CUB application within one day of the issuance of the bond.

On December 27, 2022, Plaintiffs filed the instant Motion for Issuance of an Order to Show Cause Re: Contempt for Violation of Preliminary Injunction Order and Request for Sanctions.

On December 28, 2022, Defendants filed a Notice of Appeal regarding the Preliminary Injunction.

On January 18, 2023, Defendants lodged the completed CUB application with the Court.

On January 19, 2023, Defendants filed an Opposition to the instant motion.

No Reply has been filed.

DISCUSSION

I.                MOTION FOR ORDER TO SHOW CAUSE RE: CONTEMPT

Plaintiffs move the Court for an Order requiring that Defendants comply with the Court’s December 14, 2022, Order granting Plaintiffs’ Motion for Preliminary Injunction and requiring that Defendants sign and complete the CUB Application as required by the Court. In addition, Plaintiffs request monetary sanctions for the cost of filing the instant motion.

In Opposition, Defendants note that the completed CUB Application has been lodged with the Court, and that all proceedings regarding the preliminary injunction are stayed pending appeal pursuant to Code of Civil Procedure sections 916 and 917.3.

Code of Civil Procedure section 916 states:

(a) Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, 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.

(b) When there is a stay of proceedings other than the enforcement of the judgment, the trial court shall have jurisdiction of proceedings related to the enforcement of the judgment as well as any other matter embraced in the action and not affected by the judgment or order appealed from.

Code of Civil Procedure section 917.3 states:

The perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order appealed from directs the execution of one or more instruments unless the instrument or instruments are executed and deposited in the office of the clerk of the court where the original judgment or order is entered to abide the order of the reviewing court.

At the February 6, 2023, hearing on this matter, Plaintiff argued that as Defendants failed to lodge the completed CUB contemporaneous with the Notice of Appeal, a stay is not affected under section 917.3. Therefore, Plaintiffs contend, this Court maintains its jurisdiction to enforce the preliminary injunction.

The Court notes that Plaintiff filed the instant Motion on December 27, 2022, Defendants filed the Notice of Appeal on December 28, 2022, and Defendants lodged the CUB Application with the Court on January 18, 2023.

Defendants contend that section 917.3 does not contain a timeliness requirement, and accordingly this Court is without jurisdiction to enforce the Preliminary Injunction as of January 18, 2023, when Defendants lodged the completed CUB Application with the Court.

Upon review of section 917.3, the Court finds Defendants’ argument correct. The statute states only that enforcement of an order pending appeal is stayed if “the instrument or instruments are executed and deposited in the office of the clerk of the court where the original judgment or order is entered to abide the order of the reviewing court.” Nowhere in this section does it state that the instrument must be deposited contemporaneous with the notice of appeal.

Moreover, Plaintiff has cited no caselaw or other authority establishing that there is a timeliness requirement under section 917.3, and the Court has found no such caselaw or authority in its own independent review.

Accordingly, while the Court notes Plaintiff’s frustration and concern, Section 917.3 clearly does not give this Court authority to further enforce the preliminary injunction pending appeal.

Accordingly, Plaintiff’s Motion for an Order to Show Cause Re: Contempt is DENIED.

DATED: February 6, 2023     

____________________________ 

Hon. Robert S. Draper

Judge of the Superior Court