Legal News and Appellate Tips

Each week, TVA appellate attorney Tim Kowal reviews several recent decisions out of the appellate courts in California, and elsewhere, and reports about the ones that might help you get an edge in your cases and appeals.

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Tag: Stays on Appeal

Amendments to Judgment During Appeal Reversed for Violating Appellate Stay

The unusual thing about Kling v. Horn (D2d7 Jun. 8, 2022 no. B310164) 2022 WL 2062642 (nonpub. opn.) is that the party who won the judgment was the one raising a problem about it.

Following an arbitration over an attorney fee dispute, the trial court entered a judgment of about $120,000 to the attorney. But to the attorney’s chagrin, the judgment stated that the parties shall bear their own fees and costs. The attorney didn’t like this because he claimed he was entitled to contractual attorney fees. So the attorney moved the trial court to amend the judgment to remove that part.

But before the trial court ruled on the motion, the client appealed. So when the trial court amended the judgment confirming the arbitration award, the client appealed again. The client’s second appeal, then, argued the amended judgment violated the appellate stay.

Compounding the confusion, the trial court also granted the attorney’s motion under Code of Civil Procedure section 187 to add the client’s business entities as co-judgment debtors. Again, while the appeal was pending. This was the subject of yet another appeal, 3123 SMB, LLC v. Horn (D2d7 Dec. 14, 2021) no. B309412 (nonpub. opn.).

The court noted the trial court created a “procedural mess” by amending the judgment pending appeal.

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The Probate “Stay-Killer”

Probate litigator and appellate attorney David Greco tells why the probate “stay killer” is his “favorite provision in the Probate Code.” Probate Code section 1310(b) allows a probate judge to override the automatic appellate stay, which can, in many cases, render the appeal moot.

David explains why this is an important tool in many probate cases.

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David Greco on the Unique Challenges in Probate Appeals

David Greco, who heads up the appellate practice at the probate litigation firm RMO, LLP, shares with co-hosts Jeff Lewis and Tim Kowal some of the unique features and challenges in probate appeals:

👉 Fact challenges in probate appeals are uniquely difficult to win. Probate trials are typically bench trials, and appellate courts very rarely overturn a judge’s factual findings.

👉 The “stay killer” in Probate Code § 1310(b) can render many probate appeals moot. David explains why section 1310(b) is his “favorite provision of the Probate Code.” And should there be a similar “stay killer” in the CCP or Family Code?

👉 Fraught family relationships and charged emotions can make representation in probate appeals difficult.

👉 The large role played by professional fiduciaries—trustees, conservators, and guardians—raises unique ethical and due-process considerations. David explains how abuse of these institutional relationships can and does sometimes happen.

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Appellate Court Ducks Question Whether Probate Court Loses Jurisdiction to Award Fees Pending Appeal of Judgment

Here is a question I did not realize had not been answered about appellate stays and attorney-fee awards. When the losing party appeals an order that gives rise to a motion for fees, does the appellate stay deprive the court of jurisdiction to award fees? In civil cases, the answer is no. But in probate cases, we do not have an answer one way or another.

And we still don’t, because the Court of Appeal ducked the question In Conservatorship of Bower (D4d3 Feb. 25, 2022 no. G059112) 2022 WL 571011 (nonpub. opn.).

In that conservatorship case, the probate court found the conservator had incurred expenses in bad faith. The court ruled the conservatee’s widow was entitled to attorney fees, the amount to be determined by subsequent motion. The conservator filed an appeal of the order on the accounting, including the finding of bad faith giving rise to attorney fees. The conservator then argued that, based on the appeal and the resulting appellate stay, the trial court lacked jurisdiction to award fees.

But by this time, the appeal of the underlying accounting award and finding of bad faith had been affirmed. So the court ducked the section 1310 stay question. The court explained that “The most we could do with respect to this order, even if Andrea is correct, is to return the order to the probate court to be reissued – a pointless exercise.”

Comment: I disagree that it would be a “pointless exercise.” At a minimum, postjudgment interest has been accruing on the fee award since before the appeal of the underlying order was affirmed. If the appellant is correct that there was no jurisdiction to enter the award before affirmance, then that postjudgment interest also is void.

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Attorney Sanctions for Violating Appellate Stay (But the Stay Was Probably Void)

This recent case involving the underappreciated topic of appellate stays has me heartened on one point, but dismayed on another. What is heartening: Appellate stays have teeth. In Stupp v. Schilders (D1d2 Jan. 25. 2022 no. A161177) 2022 WL 213774 (nonpub. opn.), the trial court imposed a rather large discovery sanction against Stupp totaling over $27,000. The court stayed the sanctions order pending appeal. Undaunted, the respondent’s attorney, Ester Adut, applied for a writ of execution anyway. The trial court imposed $1,050 in sanctions under Code of Civil Procedure section 177.5, and the sanctions were affirmed on appeal.

So the appellate stay was vindicated. That is the good news.

What is dismaying about Stupp is the court ignored the rule that requires a bond to effect a stay of a money judgment on appeal. The maximum stay the court could have ordered here could extend only until 10 days after the deadline to file a notice of appeal.

By operation of law, then, the stay order here had expired by the time Adut sought the writ of execution. But Adut did not raise that argument in her appellate brief. And the court did not address it, either.

The Upshot: Pay close attention to the appellate bond and stay rules. They are complicated. And you cannot rely on the courts to understand them for you.

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Outside Reverse Veil Piercing May Be Permissible Even Against an LLC with an Innocent Third-Party Member, Published Appellate Decision Holds

When you have a judgment against a shell entity, you can amend the judgment to name the sole shareholder or member. That is called piercing the corporate veil. Until a few years ago, it didn’t work in reverse: if you have a judgment against a judgment-proof business owner, you can’t add the entity as a judgment-debtor. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1513, 77 Cal.Rptr.3d 96 (Postal Instant Press).) Except in 2017 in Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 221 (Curci), the same appellate court said you could do that — that is, at least if you were dealing with an LLC. (Curci did not apply to corporations.)

But what if the LLC has innocent members? It wouldn’t be fair to innocent LLC members to add the LLC to a judgment because of whatever some other member did. That is the issue that came up in Blizzard Energy, Inc. v. Schaefers (D2d6 Nov. 18, 2021 no. B305774) 71 Cal.App.5th 823. And the court answered the question by holding: Yes, the LLC may be liable for the judgment, but no, we can’t offer any suggestions how it could be done consistent with an innocent member’s rights. The court remanded for the trial court to think about that.

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Sale of Property Rendered Appeal Moot; Bond and Stay Were Required to Preserve the Appeal

It is not enough to appeal your case. You have to keep your case alive until the Court of Appeal has a chance to get to it.

That is the lesson of Badea-Mic v. Detres (D3 Nov. 23, 2020) **no. C085459 (nonpub. opn.). The appellant appealed an order authorizing the sale of the property, but the property was sold to a third party before the appeal concluded. Thus, the appeal was moot.

In fairness, the appellant did seek a stay in the trial court, which was the right move. But when the trial court denied that stay, the appellant waited too long to seek a writ of supersedeas (the appellate court's fancy word for stay) in the Court of Appeal. In this case, she had only four days to seek supersedeas before escrow closed. A good reason to have appellate counsel at the ready!

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"Frivolous"​ to Argue Appeal Prevents the Trial Court from Ruling on a Motion for Attorneys'​ Fees

You may think this is obvious, but I continue to see attorneys get tripped up by this question: When an appeal from a judgment is taken, which generally stays matters in the trial court (i.e., matters that are are "embraced therein or affected thereby" (CCP § 916)), does the appeal prevent the trial court from awarding the prevailing party's attorneys' fees?

Answer: No. In fact, the First District Court of Appeal recently called this a frivolous argument in Korchemny v. Piterman (D1d2 Aug. 27, 2021) 2021 WL 3828228, no. A155483 (nonpub. opn.).

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Are Injunctions Stayed on Appeal? Cal. Supreme Court Says Issue Is "Ripe for Reexamination"

The California Supreme Court in *Daly v. San Bernardino County Board of Supervisors* (Aug. 9, 2021) ___ Cal.5th ___ has decided one particular area of the law is unclear and needs "reexamination." When a trial court grants an injunction, and the injunction is appealed, does the injunction still apply during the appeal?

When the Board of Supervisors of San Bernardino violated open-meeting requirements in removing and replacing one of its members, the challenger and a citizen group filed suit and obtained an injunction requiring the Board to rescind the appointment and seat a replacement pursuant to the county charter.

But the Board was not done yet. Hoping to keep the incumbent in office long enough for the upcoming election (see this interesting coverage), the Board appealed, and under Code of Civil Procedure section 916, an appeal automatically stays the order on appeal. But the Court of Appeal denied the Board's petition for supersedeas to effect the stay.

The Supreme Court reversed. And its opinion is a letter to the state legislature to reconsider the appellate stay law.

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Failure to Exercise Discretion in Issuing a Stay of Enforcement of Judgment Is an Abuse of Discretion

In a recent case involving more than one case number, the defendant got an early victory in one case, and got an award of attorney fees. The trial court, however, did not like the idea of rewarding one party partway through a complex litigation, so it imposed a sua sponte stay of enforcement of that fee award.

That stay was reversed on appeal in Specialty Baking, Inc. v. Kohanbash (LASC App. Div. May 24, 2021) no. BV033347 (nonpub. opn.). While such a stay may be permissible, the court in making the discretionary ruling failed to consider the factors required under the operative statute. Failure to exercise discretion is an abuse of discretion.

Whenever the topic of stays and bonds come up, that is a good time to consult an appellate attorney.

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Defective Appeal Results in Loss of Entire Case to Five-Year Rule

One of the first questions an appellate attorney tries to answer is whether there is an appealable order. It is pretty obvious why this is important: if the order is not appealable, your appeal will lose.

But have you also considered: if you appeal from a nonappealable order, your entire case might lose?

That is what happened in Villegas v. Six Flags Entertainment Corporation (D2d4 Jun. 29, 2021) no. B295352 (nonpub. opn.). The appellants appealed from the denial of their class certification motion. These normally are appealable under the "death knell" doctrine, because it effectively kills the class action.

But it was not appealable here, and the appeal was dismissed. By the time it was dismissed, the five-year statute had run and the plaintiff-appellants had not brought their case to trial. Case dismissed.

Takeaway: It can be difficult to predict the problems that can arise from appealing a nonappealable order. In this case, at least, it certainly would have been worth consulting an appellate attorney before filing the notice of appeal.

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Appellant Disobeyed Injunction, Incorrectly Believing Her Appeal Stayed It; Appeal Dismissed

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 Second District Court of Appeal disagreed that the injunction was mandatory in nature, and concluded the appellant was trying to take advantage of a status quo favorable to her. And because the appellant did not bother to test the proposition in a motion to stay in the trial court, or a petition for writ of supersedeas in the Court of Appeal, the court concluded her failure to comply with the injunction amounted to a willful disobedience giving rise to disentitlement of her right to appeal.

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.

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