Selma Auto Mall II v. Appellate Department

44 Cal. App. 4th 1672, 52 Cal. Rptr. 2d 599, 96 Daily Journal DAR 5087, 96 Cal. Daily Op. Serv. 3108, 1996 Cal. App. LEXIS 401
CourtCalifornia Court of Appeal
DecidedApril 30, 1996
DocketF023828
StatusPublished
Cited by20 cases

This text of 44 Cal. App. 4th 1672 (Selma Auto Mall II v. Appellate Department) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Selma Auto Mall II v. Appellate Department, 44 Cal. App. 4th 1672, 52 Cal. Rptr. 2d 599, 96 Daily Journal DAR 5087, 96 Cal. Daily Op. Serv. 3108, 1996 Cal. App. LEXIS 401 (Cal. Ct. App. 1996).

Opinion

Opinion

THAXTER, J.

In the published portion of this opinion we decide that ordering an appellant, as a condition to staying enforcement of a writ of possession pending appeal, to guarantee payment of attorney fees awarded against other, nonappealing parties is an abuse of discretion. In the unpublished portion we conclude that the appellate department of respondent Fresno County Superior Court acted in excess of jurisdiction when it purported to make postremittitur orders concerning an appeal bond. Jurisdiction lies solely in the trial court. We will grant appropriate writ relief.

Facts and Procedural History

Real parties in interest Ralph Kazarian, Jr., Donald M. Serimian, Lionel M. Serimian, Daniel L. Serimian, David M. Serimian, Marlon D. Serimian, and Leslie A. Morgan (collectively, landlords) own commercial premises in Selma, California. In 1984, they entered into a 10-year lease with Beckhaus Enterprises, Inc. (Beckhaus), which operated Selma Honda on the leased premises. In 1986, James R. and Judy Williams (Williams) purchased Beckhaus. Williams subsequently formed NJB Wheels West, Inc. (NJB) and owned 100 percent of its stock. Williams then transferred their shares of Beckhaus to NJB, so NJB owned 100 percent of the Beckhaus stock.

In 1991, Selma Honda was experiencing severe financial problems. Accordingly, in October 1991, Beckhaus, NJB and Williams signed a new 20-year lease agreement with landlords which provided for a more favorable *1676 rental return to landlords in consideration for a cash infusion to the lessees from the landlords when the lease was signed. In November 1991, Williams and Dwight Nelson formed Selma Auto Mall II (SAM II or petitioner). A few months later, Williams and Nelson formed Selma Auto Mall III (SAM III). Beckhaus sold its Selma Honda assets to SAM III. In May 1992, SAM III moved the Honda dealership franchise to a nearby Chevrolet dealership and SAM II began operating Selma Toyota on the leased premises. At that time, Beckhaus, NJB, SAM II, and SAM III were all owned by Williams and Nelson. When Beckhaus belatedly requested landlords’ consent to sublease the premises to SAM II under the terms of the 1984 lease, landlords refused, contending that lease was superseded by the 1991 lease and the tenants had breached the 1991 lease in a number of regards.

In March 1993, landlords filed an unlawful detainer complaint against Beckhaus, NJB, Williams, SAM II, and others. After a 20-day trial, the justice court found the 1991 lease agreement was valid and binding on Beckhaus, NJB, and Williams. The court also found that those parties had materially breached the lease, therefore, landlords did not unreasonably withhold consent to sublet to SAM II. SAM II was not a party to the lease and landlords were justified in their concern about SAM II’s willingness and ability to fulfill the terms of the lease.

In June 1993, the court awarded possession of the premises to landlords, $25,000 in damages, $234,496.75 in attorney fees, and $3,644.30 in costs. The attorney fees award was against Beckhaus, NJB, and Williams only. SAM II appealed the portion of the judgment granting possession of the premises to landlords and requested a stay of execution. Beckhaus, NJB and Williams did not appeal. When the unlawful detainer action commenced, Beckhaus and NJB were insolvent, and Williams filed for bankruptcy in August 1993.

In August 1993, the trial court granted SAM II’s request for a stay of execution of the writ of possession pending appeal pursuant to Code of Civil Procedure 1 section 1176 on the following conditions: (1) that SAM II pay landlords $13,167 monthly rent in advance and all property taxes and assessments; (2) that SAM II post two bonds, one in the amount of $240,000 to secure performance of the rental payments, and a second in the amount of $238,000 to secure payment of the attorney fees awarded to landlords. The court was aware that attorney fees were not awarded against SAM II, but ordered the bond “to balance [] the equities between the parties.” Landlords’ counsel argued that, unless SAM II was required to post bond covering the *1677 attorney fees award as a condition of its being permitted to retain possession of the property while the appeal was pending, SAM II would achieve all it hoped to by resisting the unlawful detainer action despite the fact that landlords had prevailed. In resisting the unlawful detainer action, SAM II contended the 1984 lease, rather than the 1991 lease, controlled and entitled it to remain in possession until 1994. By then, SAM II would have built up its Selma Toyota business and could relocate to other premises.

The Bonds

SAM II petitioned respondent court for a writ of supersedeas and challenged the bonding conditions imposed by the trial court. On November 5, 1993, respondent court issued a writ of supersedeas conditioned on SAM II’s posting a bond of at least $400,000. SAM II provided bond No. 2-572-899 (bond 1) issued by West American Insurance Company in the amount of $400,000 to secure (a) payment of the monthly rent, (b) payment of taxes and assessments, and (c) payment of any damages for waste. The surety, West American, did not typically underwrite such risks; so the bonding company, Sharp Insurance and Bonding Company (Sharp), continued to look for another surety to replace West American on the bond.

Landlords challenged the sufficiency of bond 1, contending it failed to indemnify real parties with respect to the attorney fees portion of the award. On December 3, 1993, respondent court declared the bond insufficient and ordered SAM II to post the bond “without condition of any kind.” In response, SAM II filed bond No. 2-601-244 (bond 2) issued by West American Insurance Company in the amount of $400,000 to secure “all damages or costs which may be awarded [landlords] against SAM II under the judgment or arising from the stay of execution . . . .” On December 8, 1993, when SAM II filed West American’s bond 2, it had obtained agreement from American Diversified Insurance Company to provide the bond. However, the bonding company was unable to secure possession of the executed original American Diversified bond within the five-day deadline set by respondent court for filing a sufficient bond and so filed bond 2 from West American with the intent of replacing bonds 1 and 2 with the American Diversified bond when it arrived. SAM II received the executed American Diversified bond No. AD 1727 (bond 3) on December 10, 1993. However, before SAM II did anything about substituting the bonds, landlords challenged the sufficiency of bond 2, contending its “ambiguous language” constituted an attempt to limit liability on the bond contrary to the express intentions of respondent court.

On December 17, 1993, respondent court clarified the bonding conditions. The court ordered SAM II to provide within five days a $400,000 bond for *1678 the purpose of assuring to landlords the performance of Beckhaus, NJB, Williams, and/or SAM II as to payment of rent, taxes and assessments, any damages resulting from waste pending appeal and “payment of all attorneys’ fees and/or costs awarded, or to be awarded . . . against appellants or any of them

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Bluebook (online)
44 Cal. App. 4th 1672, 52 Cal. Rptr. 2d 599, 96 Daily Journal DAR 5087, 96 Cal. Daily Op. Serv. 3108, 1996 Cal. App. LEXIS 401, Counsel Stack Legal Research, https://law.counselstack.com/opinion/selma-auto-mall-ii-v-appellate-department-calctapp-1996.