Opinion
B299188
04-23-2021
LIEBA CHANIN, Plaintiff and Appellant, v. COMMUNITY REBUILD PARTNERS, et al., Defendants and Respondents.
WLA Legal Services, Inc., Steven Zelig, for Plaintiff and Appellant. Law Office of Baruch C. Cohen, Baruch C. Cohen and Michael Alan Abramson, for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC652405) APPEAL from an order of the Superior Court of the County of Los Angeles, John P. Doyle, Judge. Dismissed. WLA Legal Services, Inc., Steven Zelig, for Plaintiff and Appellant. Law Office of Baruch C. Cohen, Baruch C. Cohen and Michael Alan Abramson, for Defendants and Respondents.
I. INTRODUCTION
Plaintiff and appellant Lieba Chanin appeals from the trial court's order requiring that she deposit current and past due rent pending the outcome of an arbitration with defendants and respondents. In response to plaintiff's appeal from the court's order, defendants move to dismiss the appeal under the disentitlement doctrine, arguing that plaintiff's refusal to deposit the required sums prevents her from seeking relief on appeal. We agree and therefore dismiss the appeal.
Defendants are Community Rebuild Partners, LLC, Community Rebuild Asset Holdings, LLC, and Greg Hebner.
Plaintiff maintains that her coplaintiffs—her husband, Shmuel Chanin, and their three children—are also parties to this appeal. But, as explained below, plaintiff is the only party aggrieved by the confirmation order with standing to appeal from it.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. Purchase Transaction
In May 2016, plaintiff entered into a residential purchase agreement with defendants pursuant to which she agreed to buy a residence in Sherman Oaks. The total purchase price for the residence was $2,575,000. The purchase agreement's finance terms called for an initial deposit into escrow of $100,000; a first loan in the amount of $2,060,00; and a balance of $415,000 to be deposited into escrow. The purchase agreement also provided that escrow would close 180 days from acceptance of the buyers' offer. (Community Rebuild Partners, LLC v. Chanin (Apr. 24, 2019, B284632 [nonpub. opn.].)
Plaintiff and defendants also entered an interim occupancy agreement under which plaintiff and her family members were permitted to occupy the residence. Under the interim occupancy agreement, plaintiff agreed to pay $18,000 a month beginning on June 1, 2016, with "$6,000 of each month's rent credited towards the purchase price[,] with a cap on the credit of $36,000."
For the next six months, plaintiff paid $18,000 per month, in addition to her initial $100,000 deposit under the purchase agreement. But, at the end of that six-month period, the escrow did not close, plaintiff failed to pay the purchase price and acquire title, failed to return possession to defendants, and ceased to pay $18,000 in rent. B. Complaint, Arbitration Order, and Cross-Complaint
In March 2017, plaintiff and members of her family filed the operative complaint against defendants and others asserting 20 causes of action. In September 2017, the trial court ordered the action to arbitration. Defendants then filed a cross-complaint in the arbitration, asserting causes of action against plaintiff for ejectment and injunctive relief. The latter claim sought an order requiring plaintiff to pay past due and current rent or to deposit those amounts into an escrow account. C. Request for Preliminary Injunction
In August 2018, defendants filed with the arbitrator a motion for preliminary injunction requiring plaintiff and her husband (the Chanins), among other things, to deposit "past due and prospectively accruing rent" into an escrow account pending entry of the arbitrator's final award. The Chanins opposed the motion. D. Arbitrator's Order and Plaintiff's Noncompliance
On October 26, 2018, the arbitrator issued a preliminary injunction (arbitrator's order) requiring that: "Within 10 days of receipt of this [r]uling, the parties shall open an escrow account with Mission County Escrow or another company mutually agreed to by the parties and [plaintiff] should deposit into the escrow account the amount equal to the reasonable rental value of the subject property, which the [a]rbitrator determines to be $7,000, for a period from January 1, 2017 to the present. [Fn. omitted.] . . . [¶] . . . [¶] [Plaintiff] shall deposit $7,000.00 into the escrow account on the first of every month hereafter until the ruling on and conclusion of the pending litigation, following which an appropriate accounting can be accomplished." In explaining the basis for the decision, the arbitrator observed, "[E]quity weighs in favor of requiring [the] Chanins to deposit into an escrow account the past due reasonable rental value amounts since January of 2017 up to the present. Equity cannot favor [the] Chanins' reaping the benefits of living in the [residence] completely rent free."
On November 6, 2018, defendants requested that the arbitrator hold plaintiff in contempt for failing to comply with the order.
On December 10, 2018, following a dispute between the parties over the selection of an escrow company, the arbitrator ordered that the parties open escrow with Escrow of the West and that plaintiff deposit $175,000 at the opening of escrow.
On December 21, 2018, following a further dispute about the terms of the escrow agreement with Escrow of the West, the arbitrator denied plaintiff's request to stay and modify the arbitrator's order.
On December 26, 2018, plaintiff requested that the arbitrator reconsider his order; and, as of January 10, 2019, she had failed to deposit funds in escrow as ordered.
On January 17, 2019, the arbitrator denied defendants' request to hold plaintiff in contempt "because the [a]rbitrator lack[ed the] power to order [such] relief . . . ." The arbitrator noted that defendants could "request such relief from the [trial c]ourt." E. Confirmation Order
Defendants filed in the trial court a motion to confirm the arbitrator's order, which plaintiff opposed. The trial court conducted a hearing on the motion on May 1, 2019, May 10, 2019, and June 3, 2019. The court orally stated that it would grant the motion, but then advised the parties that it would wait at least 10 days before issuing its written order so that they could make any applications they deemed appropriate.
The record does not include a reporter's transcript or suitable substitute, such as an agreed or settled statement of the proceedings on May 1, 2019 or May 10, 2019.
On June 20, 2019, the trial court issued an order (confirmation order) requiring that: "Within five court days of this [o]rder, the parties shall execute all documents, including but not limited to signing Escrow of the West['s] standard form [e]scrow [i]nstructions . . . and take all steps necessary to open an escrow account with Escrow of the West, . . . this being the escrow company selected by the [a]rbitrator upon the submission of three escrow company candidates by both parties, as per the [arbitrator's escrow order]. [¶] On the same day as the opening of escrow, which shall be within five court days of the date of this [o]rder, [plaintiff] shall deposit into the escrow account the amount of $7,000 for each month that has passed from and including January 1, 2017 to June 1, 2019. As of the execution of this order, the amount that [plaintiff is] to deposit into escrow amounts to [29] months multiplied by $7,000, equaling a total amount of [$203,000]. [¶] [Plaintiff] shall further deposit $7,000.00 into that same escrow account on the first of every month thereafter, starting July 1, 2019, until the [a]rbitrator has rendered his final award in this case, following which an appropriate accounting can be accomplished as to the appropriate disposition of those funds. Ordered by the arbitrator, and/or the Court. [¶] The escrow fees are to be divided equally, one-half each, among the Chanin and Community parties."
Plaintiff was personally served with the confirmation order on June 28, 2019. As of the filing of defendants' motion to dismiss on August 9, 2019, plaintiff had failed to comply in any respect with the confirmation order. F. Appeal from Confirmation Order
In their respondents' brief filed on January 28, 2021, defendants represent that plaintiff has continued her refusal to comply with the confirmation order. But in her reply brief, plaintiff represents that since "the last quarter of 2019[,]" she has deposited $7,000 per month into the trust account of defendants' attorney, apparently pursuant to an order of the trial court in a related unlawful detainer action.
On July 8, 2019, plaintiff, her husband, and her children filed a notice of appeal from the confirmation order. The notice of appeal characterized the order as a mandatory injunction and asserted that it was automatically stayed by the appeal. Plaintiff did not, however, file a writ of supersedeas or otherwise seek a stay of the order. Nor did she post a bond in connection with her appeal from the order.
Plaintiff maintains that her husband and children are also parties to this appeal with independent standing to challenge the court's order. Plaintiff, however, does not explain how those parties are aggrieved by the confirmation order, which compels plaintiff, and plaintiff alone, to execute escrow instructions and deposit certain sums with Escrow of the West. The appeal therefore is dismissed as to plaintiff's husband and children. (Code Civ. Proc., § 902; Conservatorship of Gregory D. (2013) 214 Cal.App.4th 62, 67-68.) As we will explain below, the appeal is also dismissed as to plaintiff.
On August 9, 2019, defendants filed a motion to dismiss the appeal, arguing that plaintiff's open and flagrant disobedience of the arbitration order and confirmation order prevents her from seeking affirmative appellate relief. In response, plaintiff filed an opposition and supplemental opposition, raising several arguments concerning the application of the doctrine and the merits of the appeal. She also raised arguments in opposition to the motion in her reply brief.
III. DISCUSSION
A. Appealability
We first consider defendants' assertion that the confirmation order is not appealable because there has been no final adjudication of the rights of the parties; instead, there is only an interlocutory order preserving the status quo pending a final adjudication on the merits. We disagree.
The confirmation order has "the same force and effect as" a court's issuance of a preliminary injunction (Code Civ. Proc., § 1287.4) and is thus appealable pursuant to Code of Civil Procedure, section 904.1, subdivision (a)(6). The order is also appealable as a final ruling on a collateral matter directing the payment of money. (Koshak v. Malek (2011) 200 Cal.App.4th 1540, 1544-1545.) B. Disentitlement: Legal Principles
Before we can consider the merits of plaintiff's appeal, we must first resolve defendants' claim that plaintiff is not entitled to pursue affirmative relief on appeal due to her flagrant disobedience of the very order from which she appeals.
"'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.) C. Analysis
Defendants move to dismiss the appeal "because [plaintiff has] willfully disobeyed two [o]rders (one from the arbitrator and the [second] from the trial court) . . . ." In her opposition to defendants' motion, supplemental opposition to the motion, and reply brief on appeal, plaintiff raises a number of arguments against disentitlement, some addressing the application of the doctrine itself and others based on the underlying merits of her appeal. Specifically, plaintiff contends that: (1) she is excused from complying with the confirmation order because it was automatically stayed by her appeal; (2) the doctrine does not apply because the arbitrator and the trial court both failed to hold her in contempt; (3) the doctrine does not apply because defendants' own litigation conduct, including alleged misrepresentations made in the arbitration forum and in court, shifts the balance of the equities in favor of plaintiff; (4) the doctrine cannot be applied to her husband and children because the escrow and confirmation orders enjoined only plaintiff; (5) the court had no authority to confirm the escrow order because it was not a final award under Code of Civil Procedure sections 1283.4 and 1286; (6) the confirmation order is unenforceable because it was issued without requiring a bond; and (7) the order is otherwise invalid because it was based on defendants' ejectment claim which they have since voluntarily dismissed.
We agree with defendants that the disentitlement doctrine applies under the circumstances of this case. The confirmation order is a presumptively valid order of the trial court that must be obeyed regardless of the underlying merits of plaintiff's appeal. (Blumberg v. Minthorne (2015) 233 Cal.App.4th 1384, 1390 ["'"A trial court's judgment and orders, all of them, are presumptively valid and must be obeyed and enforced. [Citation.]"' [Citation.]"].) Rather than comply with that order, plaintiff continued the tactic she has pursued since October 26, 2018, which is to willfully refuse to comply while continuing to reside in the residence rent-free. Such conduct prevents her from seeking the assistance of this court in overturning that order, even if her appeal were meritorious, an issue that we do not reach.
1. Automatic Stay
As noted, plaintiff did not request that the trial court stay the confirmation order. Nor did plaintiff file a writ of supersedeas seeking such a stay. Nevertheless, she contends that her filing of the notice of appeal automatically stayed the order. Citing to our Supreme Court's decision in Kettenhofen v. Superior Court (1961) 55 Cal.2d 189 (Kettenhofen), plaintiff labels the confirmation order a "mandatory" injunction and concludes that it is automatically stayed by her appeal.
We disagree with plaintiff's contention. Although the court in Kettenhofen, supra, 55 Cal.2d 189 concluded that a mandatory injunction, unlike a prohibitory one, is stayed by the filing of an appeal, it specifically noted that "whether a decree is one or the other may be difficult to determine in some situations . . . ." (Id. at p. 191.) An injunction is generally considered prohibitory unless it mandates an affirmative act that effects a change in the status quo. (See Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178, 1184 [noting that "automatic stay pending appeal turns on whether [an] injunctive order to be reviewed alters the status quo"].) Status quo for these purposes is defined as "'"'"the last actual peaceable, uncontested status which preceded the pending controversy."'"'" (Ibid.)
Here, the confirmation order required that the parties open an escrow account and that plaintiff deposit certain sums into that account. 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. Viewed in that context, the confirmation order did not mandate affirmative acts that effected a change in the status quo and plaintiff does not raise any argument to the contrary. By requiring plaintiff to pay rent into an escrow account, and not directly to defendants, the order sought only to approximate and preserve the status quo by placing the parties in the same, or substantially similar, positions that they occupied prior to the controversy. We therefore conclude that on these facts, the confirmation order was prohibitory in nature and the filing of a notice of appeal did not operate to automatically stay it.
2. Contempt
Plaintiff does not deny that she has failed and refused to comply with the confirmation order. Nevertheless, she asserts that because neither the arbitrator nor the trial court has held her in contempt for those violations, the disentitlement doctrine cannot be applied to her. Plaintiff's arguments are meritless because, as we explain above, the doctrine does not require a formal finding of contempt. All that is required to trigger the application of the doctrine is willful disobedience or obstructive tactics, both of which have been shown in this case. After refusing to comply with the arbitrator's order, plaintiff opposed the motion to confirm it and then refused for over two years after it was confirmed to make any attempt to comply with that presumptively valid order.
3. Balance of Equities
Pointing to the equitable underpinnings of the disentitlement doctrine, plaintiff argues that it cannot be applied here due to unrelated litigation conduct by defendants. According to plaintiff, defendants allegedly tried to pursue arbitration before the American Arbitration Association without court authority; refused to timely comply with their discovery obligations and the arbitrator's discovery orders; and tried to disavow their dismissal of their ejectment claim in the arbitration. Based on that conduct, plaintiff maintains that the "balance of equitable concerns" favors her position on the disentitlement issue.
"Our Supreme Court reminds us that courts cannot properly exercise equitable powers without considering the equities on both sides of a dispute. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 180 . . . .) This basic principle of equity jurisprudence means that in any given context in which the court is prevailed upon to exercise its equitable powers, it should weigh the competing equities bearing on the issue at hand and then grant or deny relief based on the overall balance of these equities. (Ibid.)" (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1133-1134, italics added.)
The dispute at issue here is whether plaintiff has complied with the confirmation order. Plaintiff complains generally about defendants' litigation conduct, but cites no conduct by defendants bearing on the issuance or enforcement of that order, such as, for example, misrepresentations or other misconduct by defendants in the procurement of it. Based on our review of the record, the balance of equities here supports the application of the disentitlement doctrine.
4. Other Plaintiffs
Plaintiff suggests that application of the disentitlement doctrine to her will not result in a dismissal of the appeal because there are other appellants—her husband and three children—who would be unaffected by the doctrine. As we have explained, because plaintiff is the only proper party to this appeal with standing to challenge the validity of the confirmation order, we dismiss the appeal as to her husband and children. Thus, a dismissal as to plaintiff will dispose of the appeal in its entirety.
5. Authority to Confirm Escrow Order
Plaintiff contends that she was not required to comply with the confirmation order because the trial court lacked authority to issue it under Code of Civil Procedure sections 1283.4 and 1285. That is a challenge to the underlying merits of the confirmation order which, as explained above, is irrelevant to our analysis of the disentitlement issue. (Ironridge, supra, 238 Cal.App.4th at p. 266 ["we will not consider [plaintiff's] arguments on the merits of the injunction because arguments as to the merits are irrelevant to the application of the disentitlement doctrine"].) Even if the court erred in issuing the order—and we find no such error—plaintiff was still obligated to comply with it before seeking to overturn it on appeal as unauthorized.
Even if we were to consider the merits of plaintiff's argument, we would reject it. A trial court may confirm a partial award in arbitration even while other portions of the arbitration are pending. (Hightower v. Superior Court (2001) 86 Cal.App.4th 1415, 1437-1438.) A court may also issue, in the first instance, a preliminary injunction as a provisional remedy pursuant to Code of Civil Procedure section 1281.8, subdivision (a)(3). (Jay Bharat Developers, Inc. v. Minidis (2008) 167 Cal.App.4th 437, 446.)
6. Bond Requirement
Asserting that the confirmation order, as a mandatory injunction, is not "valid or operative" until a bond is obtained, plaintiff argues that she cannot be held in contempt for violating it. As we have discussed above, the court's confirmation order was not a mandatory injunction. Further, to the extent she is asserting that disentitlement requires a finding of contempt, we have already rejected that assertion. Finally, her argument about the validity and enforceability of the confirmation order goes to the merits of her appeal, which are irrelevant to the disentitlement analysis.
In her reply brief, plaintiff also suggests that the confirmation order was "void" because it did not require a bond and, as such, she was under no obligation to comply with it. Her argument, however, confuses the distinction between void and voidable orders. "A judgment is void when there is a lack of jurisdiction over the subject matter or the person. [Citation.] Additionally, a judgment may be voidable when the trial court has subject matter and personal jurisdiction, but 'exceeds its jurisdiction' because it '"'has no "jurisdiction" (or power) to act except in a particular manner, or to give certain kinds of relief, or to act without the occurrence of certain procedural prerequisites.'" [Citation.]' [Citations.] 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.) Plaintiff's contention that the trial court erred in issuing the confirmation order, even if successful, would only demonstrate that the order was voidable, not void. Because plaintiff chose to ignore a presumptively valid order, the disentitlement doctrine applies.
7. Dismissal of Ejectment Claim
In yet another argument addressed to the merits of the appeal, plaintiff contends that she has no obligation to obey the confirmation order because the only cause of action to which it attached, ejectment, was subsequently dismissed. This merits-based challenge to the continued validity of the confirmation order has no bearing on the disentitlement issue. Moreover, the effect of the dismissal on the validity of the confirmation order was not before the trial court when it issued its order, and our record does not reflect whether the issue has since been adjudicated in that forum. The dismissal therefore does not bear on our consideration of defendants' motion to dismiss.
IV. DISPOSITION
The appeal is dismissed. Defendants are awarded costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KIM, J.
We concur:
BAKER, Acting P. J.
MOOR, J.