Payan v. Cartwright Termite & Pest Control CA4/1 ( 2015 )

Filed 3/18/15 Payan v. Cartwright Termite & Pest Control CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
FIROOZ PAYAN, D064866
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2013-00049616-
CU-OR-CTL)
CARTWRIGHT TERMITE & PEST
CONTROL, INC., et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of San Diego County, Joan M.
Lewis, Judge. Affirmed.
Nicholas & Tomasevic, Craig M. Nicholas, Alex M. Tomasevic, Tracy J. Jones;
Law Offices of George Rikos and George D. Rikos for Defendants and Appellants.
H. Paul Kondrick for Plaintiff and Respondent.
This judicial foreclosure action arises out of a loan in the amount of $960,000
purchased by plaintiff Firooz Payan, and which was given to defendants Cartwright
Termite and Pest Control, Inc. (Cartwright, Inc.) and Michael R. Cartwright II
(Cartwright) (together sometimes, defendants). The loan was secured by the defendant's
business real property in El Cajon, California (the subject property).
After instituting this action, Payan sought a writ of attachment, appointment of a
receiver, and a temporary protective order. The court declined to impose a writ of
attachment or appoint a receiver, but did issue a protective order directing defendants to
deposit the amount owed on the note into their attorney's trust account and stating that the
amount to be deposited each month was $9,600. However, after depositing two of the
$9,600 monthly payments, defendants stopped making the required payments and filed
this appeal.
On appeal, defendants assert (1) the requirements for a writ of attachment were not
met; and (2) the "strict requirements" governing mandatory injunctions were also not
met. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Payan is in the business of lending and real estate investment. In 2012 he
purchased rights to a two-thirds interest in a $960,000 promissory note from Esola
Capital Investments, LLC (Esola) to Cartwright and Cartwright, Inc. The note was
secured by a deed of trust on the subject property. The note and deed of trust were
assigned by Esola to Payan. On November 16, 2012, the assignment of the deed of trust
was recorded in the San Diego County Recorder's Office.
On May 21, 2013, Payan filed his complaint for judicial foreclosure against
Cartwright, Cartwright, Inc. and CTPC, LLC (CTPC). The complaint alleged that in
April 2007 defendants borrowed $960,000 from Overland Direct, Inc. (Overland). The
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complaint further alleged that Overland signed an assignment of the deed of trust,
granting a one-third ($320,000) interest in the note and deed of trust to Paul Galuppo.
Galuppo thereafter assigned that one-third interest to CTPC. Overland thereafter
assigned its two-thirds interest to Esola, and the assignment was recorded in the San
Diego County Recorder's Office. Esola then assigned the note and deed of trust to Payan,
and that assignment was also recorded. The complaint further alleged that the defendants
were in default under the note by failing to make required payments.
Thereafter, Payan filed an ex parte application for a writ of attachment,
appointment of a receiver, and temporary protective order (TPO). At that time
Cartwright, Inc. and Cartwright owed approximately $312,000 in unpaid monthly
payments on the promissory note, in addition to the $960,000 in principal owed under the
promissory note. The trial court denied the ex parte application for writ of attachment.
However, it granted a TPO that provided: "The [subject] property shall not be sold by
Cartwright Termite & Pest Control Inc."
Payan thereafter filed a noticed motion for a right to attach order and TPO. The
application/motion was heard by the trial court on August 16, 2013.
In the application for right to attach order and/or TPO, Payan asserted that he was
seeking to secure a debt of $861,500. In that application, Payan, requested a protective
order, directing that Cartwright, Inc. and Cartwright "[i]mmediately remit minimal
monthly installments of $8,000 . . . ."
In opposition to the application, Cartwright and Cartwright, Inc. argued that (1)
"Cartwright is an innocent victim of a behind-the-scenes business dispute between three
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companies—Overland (the original deed of trust holder), Esola, and Aurora Fidelity (an
Israeli company that held a bonded interest in Overland's properties, including Plaintiff's
[sic] business premises)," and (2) "[t]he reason for the default is that Payan, Esola, and
Tepper held no valid interest in the promissory note and deed of trust."
During oral argument on Payan's application, the trial court directed counsel to
confer to agree to a reasonably accurate monthly payment owed under the terms of the
promissory note. After conferring, the parties informed the court that the monthly
installment amount due under the promissory note was $9,600, based on the "most
accurate information available" to defendants' counsel, based upon a "Loan Extension
Agreement" into which the parties entered. Based upon that representation by counsel
the court ordered that (1) the TPO would "remain in effect until further court order;" (2)
the "amount of money owed on the note be placed in defendant's counsel's trust account;"
and (3) the "amount to be deposited each month is $9,600."
On November 20, 2013, defendants brought an ex parte application requesting that
the court reconsider its August 16, 2013 order. At that hearing, defendants requested that
the court "dissolve [the] mandatory injunction." The trial court denied the application.
Following that order, defendants deposited only the August and September 2013
monthly payments of $9,600 to their attorneys' client trust account.
Thereafter, Overland brought an ex parte application, seeking to intervene in the
action, so that it could assert a fraud claim against Payan. The application was denied.
As noted, ante, Overland originally lent the $960,000 to Cartwright, Inc. and
Cartwright. Defendants assert, however, that "Payan cannot prove lawful assignments
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from Overland to Tepper/Esola and then to Mr. Payan. Payan cannot prove a lawful
chain of title." Defendants further assert that "Overland itself, the original lender,"
contends that its assignment of the deed of trust and promissory note by its president,
Doron Ezra, was secured by fraud.
However, that assertion is contrary to Ezra's deposition testimony. At his
deposition, Ezra admitted that neither he, nor Overland, claimed any interest whatsoever
in the $960,000 promissory note and deed of trust.
On January 8, 2014, defendants filed a motion to "dissolve" the minute order,
referring to it as a "mandatory injunction." On January 31, 2014, the trial court denied
the motion to dissolve the minute order. .
On or about April 4, 2014, Overland filed yet a third application to the trial court
for leave to intervene, which the court denied "because Overland's proposed claims in
intervention are the subject of an already pending action. Overland Direct, Inc., etc., et
al. v. Esola Capital Investment, LLC, etc., et al., SDSC Case No. 37-2013-00078078-CU-
BT-CTL. Overland cited no authority that would permit intervention where the claim in
intervention would be duplicative of an already filed lawsuit."
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DISCUSSION
I. APPLICABLE AUTHORITY
Code of Civil Procedure section 486.0101 provides: "(a) At the time of applying
for a right to attach order . . . , the plaintiff may apply pursuant to this chapter for a
temporary protective order by filing an application for the order with the court in which
the action is brought. [¶] (b) The application shall state what relief is requested and shall
be supported by an affidavit, which may be based on information and belief, showing that
the plaintiff would suffer great or irreparable injury . . . if the temporary protective order
were not issued."
Where a plaintiff seeks the ex parte issuance of a right-to-attach order, the court
may, in its discretion, deny the ex parte issuance of the writ and instead set a hearing
date, order service of notice, fix a briefing schedule, and issue a TPO, in which case the
writ application is treated as one sought on regular notice. (§ 486.030.) Section 486.030,
subdivision (a) provides, in this regard:
"In any case where the plaintiff has applied for a right to attach order
and writ of attachment . . . the court may in its discretion deny the
application for the order and writ an issue instead a temporary
protective order . . . if it determines . . . that the issuance of the
temporary protective order instead of the right to attach order and
writ would be in the interest of justice and equity to the parties,
taking into account the effect on the defendant of issuing a writ of
attachment . . . , the effect on plaintiff of issuing the temporary
protective order instead of the writ, and other factors that bear on
equity and justice under the circumstances of the particular case."
1 All further undesignated statutory references are to the Code of Civil Procedure.
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It must describe the protected property in a manner adequate to permit the
defendant to identify the property. (§ 486.050, subd. (a).) The order may prohibit the
transfer of any of the defendant's property in this state. (§ 486.050.)
When the TPO is issued, a lien is created on the property described in the order.
The lien continues until the TPO expires. (§ 486.110, subd. (b).) The defendant may
have the protective order modified or vacated on an ex parte application if the court
determines that doing so would be in the interest of justice and equity to the parties.
(§ 486.100.) The defendant may also seek by noticed motion an order terminating the
TPO, and upon the defendant's filing an undertaking to pay plaintiff the amount of any
judgment in a penal sum equal to the amount sought to be secured by the attachment, the
court must terminate the TPO. (§ 489.320.)
II. ANALYSIS
Here, rather than addressing the requirements for obtaining a TPO preserving the
status quo, defendants address the law applicable to writs of attachment and mandatory
injunctions. However, the trial court denied Payan's request for a writ of attachment and
Payan never sought injunctive relief. By failing to address the law applicable to TPO's,
defendants have waived the right to challenge the court's ruling on appeal. (Niko v.
Foreman (2006) 144 Cal. App. 4th 344, 368; Cahill v. San Diego Gas & Electric Co.
(2011) 194 Cal. App. 4th 939, 956.)
Moreover, the record shows the trial court acted well within its discretion in
ordering a TPO to protect the status quo. As discussed, ante, the court was permitted to
take into account the interests of justice and equity to the parties, including its assessment
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of the effect on defendants of the issuance of a writ of attachment, and instead issuing the
more modest relief of a TPO. In this regard, the court acted well within its discretion in
maintaining the status quo by requiring the defendants to deposit the monies owing under
the loan into the attorney's client trust account, and ordering payments into that trust
account of $9,600 per month.
Defendants assert that Payan's claim is not one upon which a TPO could be
granted because the claim was secured by real property. This contention is unavailing.
Generally, an attachment may not be issued on a claim secured by real property.
However, an exception applies where (1) the security has diminished in value to less than
the amount owing on the claim, and (2) the plaintiff was not responsible for that
diminution. (§ 483.010, subd. (b); Bank of America v. Salinas Nissan, Inc. (1989) 207
Cal. App. 3d 260, 273.)
In support of his application for an attachment or TPO, Payan submitted a
declaration from appraiser Jean V. G. Catling, who stated that the market value of the
subject property that secured the promissory note had declined in value to $390,000, and
therefore was inadequate to secure the promissory note. Thus, Payan submitted evidence
adequate to support its application for a TPO, even though the loan was secured by real
property.
Defendants assert that the issuance of the TPO was improper because Payan never
demonstrated the probable validity of his claim and did not post a bond. As to the
probable validity of Payan's claim, defendants assert that he could not demonstrate a
valid chain of title. However, Payan demonstrated the valid assignments, which were
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filed in the San Diego County Recorder's Office, from Overland to Esola, and from Esola
to Payan. That created prima facie evidence and a rebuttable presumption as to the
validity of the assignments. (Evid. Code, §§ 1450, 1451, 1532.) Moreover, an
undertaking is only required for a writ of attachment, not a TPO designed to maintain the
status quo. (Code Civ. Proc., § 489.210.)
Defendants assert that Payan failed to satisfy the strict requirements governing
mandatory injunctions. However, the court ordered only a TPO to maintain the status
quo, not a mandatory injunction.
Moreover, although a mandatory injunction is automatically stayed when an
appeal is taken and a writ of supersedeas lies to prevent a trial court from enforcing such
an injunction by way of contempt during the pendency of the appeal (Smith v. Smith
(1941) 18 Cal. 2d 462, 465-466), to the extent the TPO in this matter could be considered
an injunction, it is not a mandatory in nature.
"[T]he general rule is that an injunction is prohibitory if it requires a person to
refrain from a particular act and mandatory if it compels performance of an affirmative
act that changes the position of the parties. [Citations.] The substance of the injunction,
not the form, determines whether it is mandatory or prohibitory." (Davenport v. Blue
Cross of California (1997) 52 Cal. App. 4th 435, 446.) Further, "'[t]he character of
prohibitory injunctive relief . . . is not changed to mandatory in nature merely because it
incidentally requires performance of an affirmative act.'" (People ex rel. Brown v.
iMergent, Inc. (2009) 170 Cal. App. 4th 333, 342.)
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Here, the TPO maintains the status quo by ordering the defendants not to transfer
the subject property, to continue making payments by placing the money owing into their
attorney's client trust account, and to continue paying that $9,600 per month as required
by the loan. "An injunction that restrains the continuance of an act or series of acts may
be just as much a preventive or prohibitory injunction as one that restrains the
commission of an act." (Jaynes v. Weickman (1921) 51 Cal. App. 696, 699.)
Finally, defendants assert that because the court required payment of the entire
$9,600 due under the note, as opposed to Payan's two third's interest, the court's order
was a "forced interpleader," requiring money due to a nonparty, who defendants refer to
as a Paul Gallupo, to also be set aside. However, defendants do not cite to the record to
support its contention that Gallupo holds such an interest. In fact, Payan asserts, and the
record shows, coappellant CTPC holds that interest. Accordingly, defendants cannot
show that the court's order resulted in a "forced interpleader."
DISPOSITION
The order granting Payan's application for a TPO is affirmed. Payan shall recover
his costs on appeal.
NARES, J.
WE CONCUR:
BENKE, Acting P. J.
McDONALD, J.
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