Filed 3/18/15 Payan v. Cartwright Termite & Pest Control CA4/1

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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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