Did you know that, when you appeal a mandatory preliminary injunction, the injunction is automatically stayed? An appeal in that instance can be very powerful.
But when is an injunction truly mandatory? Whether an appeal is mandatory or prohibitory can be very tricky to determine. Getting it wrong can be devastating, as the appellant learned in Chanin v. Community Rebuild Partners (D2d5 Apr. 23, 2021) no. B299188 (nonpub. opn.).
The appellant entered into an unorthodox contract to purchase a home, kind of a rent-to-own agreement by which she lived the house while paying $18,000 in rent, a portion of that going toward the balance of the purchase price. At the end of the six-month lease period, the appellant was to deposit the $100,000 balance of the down payment into escrow. The appellant didn't pay the $100,000 and stopped paying rent. But she did not move out.
After some litigation, the court issued a preliminary injunction ordering the appellant to open escrow, deposit the unpaid rent, and continue paying rent through the litigation. The appellant appealed this order, and filed a notice of stay, contending the preliminary injunction was mandatory in nature and thus stayed on appeal.
Appeal Dismissed Under the Disentitlement Doctrine:
The Second District Court of Appeal dismissed the appeal under the disentitlement doctrine. The court held the preliminary injunction was not mandatory in nature because it merely preserved the status quo. Thus, the appellant's willful refusal to comply with the trial court's order was not justified and warranted dismissal of the appeal.
Here is the court's helpful statement of the disentitlement doctrine:
“ ‘An appellate court has the inherent power, under the “disentitlement doctrine,” to dismiss an appeal by a party that refuses to comply with a lower court order.’ (Stoltenberg v. Ampton Investments, Inc. (2013) 215 Cal.App.4th 1225, 1229 ....) “ ‘Appellate disentitlement ‘is not a jurisdictional doctrine, but a discretionary tool that may be applied when the balance of the equitable concerns make it a proper sanction ....’ [Citation.]” [Citation.] No formal judgment of contempt is required; an appellate court “may dismiss an appeal where there has been willful disobedience or obstructive tactics. [Citation.]” [Citation.]The doctrine “is based upon fundamental equity and is not to be frustrated by technicalities.’ ” (Id. at p. 1230.) [¶] The ‘disentitlement doctrine “is particularly likely to be invoked where the appeal arises out of the very order (or orders) the party has disobeyed.’ ” (Ironridge Global IV, Ltd. v. ScripsAmerica, Inc. (2015) 238 Cal.App.4th 259, 265 ... [(Ironridge)].) ‘[T]he merits of the appeal are irrelevant to the application of the doctrine.’ (Ibid.)” (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 166.)
When Is an Injunction "Mandatory" Rather Than Merely "Prohibitory"?
The analysis is a close call on this point. The appellant was correct that filing a notice of appeal automatically stays a preliminary injunction where the injunction is mandatory in nature, requiring affirmative conduct on the part of the appellant. (Kettenhofen v. Superior Court (1961) 55 Cal.2d 189 (Kettenhofen).)
But how do you know if the automatic stay applies? The “automatic stay pending appeal turns on whether [an] injunctive order to be reviewed alters the status quo”, and status quo for these purposes is defined as ““““the last actual peaceable, uncontested status which preceded the pending controversy.”””” (Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178, 1184.)
Here, the injunction ordered the appellant to open an escrow and deposit certain sums in it. That is not an order to stop doing something; that is an order to take affirmative actions. So it sounds like a mandatory injunction. But that is not what the Second District held: "Although, as plaintiff notes, the order required her to take an affirmative act, it did not, under the facts of this case, alter the status quo. The last ““““actual peaceable, uncontested”””” status prior to the instant controversy found plaintiff and her family in possession of the residence paying $18,000 per month, at least $12,000 of which was attributable to rent."
So while the injunction mandated certain actions by the appellant, it did not mandate anything different than what she had been doing before the dispute arose.
The Appellant Failed to Seek a Stay in the Trial Court or Supersedeas in the Court of Appeal:
As mentioned above, whether the injunction was mandatory or prohibitory seems an arguable point. That is often the case. (Kettenhofen, supra, 55 Cal.2d at p. 191 [“[W]hether a decree is one or the other may be difficult to determine in some situations ....”].
Given the legal question was a close call, the court found it significant that the appellant did not seek a stay in the trial court, and did not seek supersedeas (stay) in the Court of Appeal. While normally this is not required (an automatic stay does not require any order), it is probably a good idea in close cases. Especially here, when there was a strong inference that the appellant was taking advantage of the automatic stay to "continu[e] to reside in the residence rent-free."
Trial Court's Failure to Require a Bond Did Not Make the Injunction Void:
The appellant raised a good argument that the preliminary injunction was void because it did not require the moving party to post a bond. This requirement is imposed by statute at Code of Civil Procedure section 529. The courts have upheld it in many cases, including in the Second District Court of Appeal: Oskner v. Superior Court (1964) 229 Cal.App.2d 672, 687 [a preliminary injunction without a bond is a nullity]; Miller v. Santa Margarita Land etc. Co. (1963) 217 Cal.App.2d 764, 766 [an injunction is “of no effect” when it does not require the mandatory undertaking]; Condor Enterprises, Ltd. v. Valley View State Bank (1994) 25 Cal.App.4th 734, 741 [the failure to comply with the statutory scheme requiring a bond is a jurisdictional defect which preclude holding noncompliant party subject to injunction in contempt].
The Chanin court here did not address any of these cases holding bondless preliminary injunctions to be a "nullity" and "of no effect." The court did acknowledge such orders are in excess of the trial court's jurisdiction. But that merely means the order is voidable, not void. An act that is in excess of jurisdiction, and merely voidable, is presumed valid until it is set aside, and a party may be precluded from setting it aside by waiver, estoppel, or the passage of time. [Citation.]” (Ironridge, supra, 238 Cal.App.4th at p. 267.)
(But again, this seems to undermine prior cases: ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 10: “[An] undertaking is an indispensable prerequisite to the issuance of a preliminary injunction, regardless of whether the party to be restrained has reminded the court to require the applicant to post one, the restrained party does not waive its right to that statutorily-mandated protection by failing to affirmatively request it.”)
Thus, the court held a preliminary injunction that fails to comply with CCP § 529's bond requirement must still be complied with pending appeal and until it is formally declared void. Until then, it was a presumptively valid order, and failure to comply with it triggered the disentitlement doctrine.
This case is a surprising application of the disentitlement doctrine, because the appellant's conduct was supported by fairly strong legal propositions: (1) on its face, the injunction did appear to be mandatory and thus stayed; (2) the automatic stay does not require the appellant to seek court orders to effect the stay; and (3) the injunction failed a key statutory requirement that it require the moving party to post a bond, and was thus invalid as a matter of law. But the Court of Appeal dismissed the appeal anyway.
The lesson: If an automatic appellate stay seems too good to be true, it might be.
Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. His appellate practice covers all of California's appellate districts and the Ninth Circuit, with appellate attorneys in offices in Orange County and Monterey County. Contact Tim at email@example.com or (714) 641-1232.