Judge: William A. Crowfoot, Case: 19GDCV00602, Date: 2023-05-16 Tentative Ruling

Case Number: 19GDCV00602    Hearing Date: May 16, 2023    Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

I.            INTRODUCTION

On April 21, 2023, plaintiff Jenny Zhang filed this motion for a preliminary injunction.  Plaintiff requests the Court enjoin Defendants from “requesting any Special Meeting of the Shareholders Steps Academy, Inc. and/or Special Meeting of the Board of Directors of Steps Academy, Inc.”  (Motion, p. i.)  Plaintiff claims that defendants Janice Yen and Jenny Chan have previously attempted to call various meetings on behalf of Steps Academy, Inc. (“Steps Academy”) for the purposes of consummating a merger transaction with Arroyo Pacific Academy (“Arroyo Pacific”) and that this would result in “moving all assets of [Steps Academy] to [Arroyo Pacific]” and leave Plaintiff “utterly in the lurch and irreparably harmed.”  (Ibid.)

II.          LEGAL STANDARD

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. (See Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536.) The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. (14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396. 1402.) Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See, e.g., ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016; Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.)

The trial court considers two factors in determining whether to issue a preliminary injunction: (1) the likelihood the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the court grants a preliminary injunction. (Code Civ. Proc. § 526(a); Husain v. McDonald’s Corp. (2012) 205 Cal.App.4th 860, 866-67.) The balancing of harm between the parties “involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.” (Husain, supra, 205 Cal.App.4th at p. 867.) The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. (Thornton v. Carlson (1992) 4 Cal.App.4th 1249, 1255.)

III.        DISCUSSION

To obtain a preliminary injunction, “[t]he applicant must demonstrate a real threat of immediate and irreparable injury.”¿ (Triple A Machine Shop, Inc. v. State of California¿(1989) 213 Cal.App.3d 131, 138.)¿¿“[A]n injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff,” and the party seeking injunctive relief bears the burden to prove its absence.¿ (Dep’t of Fish & Game v. AndersonCottonwood Irrigation Dist. (1992)¿8 Cal.App.4th 1554, 1564-1565.)¿¿¿

Plaintiff’s evidence, which relies heavily on statements from deposition transcripts provided without any context, does not reflect any immediate or irreparable harm of the kind that she fears.  Plaintiff does not show that calling a “special meeting” would result in Defendants “push[ing] through a merger” that moves Steps Academy’s assets.  Janice Yen testified that in 2019, Steps Academy discussed a partnership with Arroyo Pacific (Ex. 14) wherein Steps Academy would purchase Arroyo Pacific.  Janice Yen stated that although the purchase did not go through in 2019, the parties agreed to a “try out” where Steps Academy uses Arroyo Pacific’s facilities but pay for costs on a stepped-up basis.  (Ex. 15; Opp., Declaration of Janice Yen (“J. Yen Decl.”), ¶ 7.)  All the notices for special meetings included in Plaintiff’s attorney’s declaration state that the topics to be decided at these meetings include whether “[t]o approve the lease agreement and cooperating [sic] with Arroyo Pacific Academy” and “[d]ecide on the purchase of Arroyo Pacific Academy.”  (Exs. 20, 22.)  Plaintiff’s own evidence shows that Arroyo Pacific Academy and Steps Academy have already been working together for several years.  Therefore, there is no threatened change to the status quo that would justify an injunction. 

Furthermore, the most recent “request for special meeting”, dated March 29, 2023, for a meeting scheduled on April 10, 2023, says nothing about merging with Arroyo Pacific and instead states that “[t]he general nature of the business to be transacted is the replacement of the current directors and the appointment of new directors, and no other business may be transacted.”  (Ex. 23.)   

Lastly, in their opposition brief, Defendants argue that an injunction is unnecessary because there are no plans for Steps Academy to sell its operations.  Defendants state, “[t]o the contrary, Arroyo Pacific has never made any such offer” and “[t]he discussion has always been whether Steps Academy would want to purchase Arroyo Pacific.”  (Opp., p. 6; J. Yen Decl., ¶¶ 11-12.)  Defendants emphasize that Plaintiff’s fears are unsubstantiated by evidence and that there have been no offers to purchase Steps Academy.  (Yen Decl., ¶ 12.) 

The Court notes that Plaintiff did not file a reply brief, which the Court construes as a concession that her motion lacks merit.  Accordingly, the motion for a preliminary injunction is denied.

Moving party to give notice.

Dated this 16th day of May, 2023

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter.  Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue.  If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.