CONRAD v. ALLEN (1987)

OPINION AND ORDER FOR PEREMPTORY WRIT OF MANDATE

Petitioner successfully moved to have a default judgment against him set aside.   Real parties appealed that ruling.   Petitioner moved the respondent court to have returned to him certain property which was the subject of the judgment.   The respondent court denied the motion, stating that it had no jurisdiction over the matter because real parties had filed a notice of appeal.   We hold that the court had jurisdiction to entertain the motion.

FACTS

Doctors Benton and Marjorie Allen, both psychologists, owned the Pomona Valley Psychological Center (“the Center”).   They sold the Center to petitioner Dr. Rex Conrad pursuant to an agreement which provided, among other things, that the Allens could continue to treat their patients at the Center.

Matters soon deteriorated to the point where Dr. Conrad accused the Allens of stealing his patients and the Allens accused Dr. Conrad of not paying them fees that were owed and making disparaging remarks about them, informing their patients that they were “no longer in practice and their whereabouts were unknown.”   Dr. Conrad sought an injunction to prevent the Allens from attempting to lure patients from the Center, and the Allens responded with a cross-complaint seeking rescission of the agreement and damages based upon breach of contract, conspiracy to interfere with business, slander, fraud, conversion and breach of trust.   The Allens also sought an injunction and an accounting.

The Allens obtained a default judgment on their cross-complaint because, according to them, Dr. Conrad failed to prosecute the action or respond to discovery.   Dr. Conrad moved successfully to have the default judgment set aside on the grounds that he had been “abandoned” by his attorney.

The Allens have appealed the order setting aside the default judgment.   It is the Allens' position that the notice of appeal stayed enforcement of the order and therefore the judgment is still in effect.   Dr. Conrad contends that the order setting aside the default judgment is not stayed pending appeal, and that it returned the litigation to its status before the Allens obtained the default judgment.

The “Judgment of Restitution” obtained by the Allens permitted them to once again assume ownership of the Center.  (It also granted the Allens over $300,000 in damages, which they had commenced collecting at the time the judgment was set aside.)   Although the Allens returned certain of Dr. Conrad's patient files to him at the patients' requests, the Allens remain in possession of the Center and its books, records, bank accounts and other property.

After the respondent court entered its order setting aside the default judgment, Dr. Conrad filed a “Motion for Order to Compel the Delivery of Personal Property and for Sanctions.”   Dr. Conrad wanted the Center, and the money collected by the Allens during the pendency of the judgment, returned to him.   The respondent court denied the motion, stating that it had no jurisdiction to consider the matter because a Notice of Appeal had been filed by the Allens.   Dr. Conrad then filed this petition.

After reviewing the petition and the opposition thereto filed by the Allens, we issued an order to the effect that we were considering the issuance of a peremptory writ in the first instance.  (Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 180–181, 203 Cal.Rptr. 626, 681 P.2d 893.)   The Allens submitted additional opposition in the form of a letter filed on September 14, 1987.   We are still of the opinion that the matter requires appellate guidance, and accordingly we direct the issuance of a peremptory writ of mandate.

DISCUSSION

With the exception of certain judgments and orders provided by statute,¹ “the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order.”  (§ 916).   The automatic stay provisions of section 916 apply to “special orders after judgment.”  (9 Witkin, Cal. Procedure (3d ed. 1985) Appeals, § 213.)   An order vacating a default judgment is one such order.

The respondent court's order setting aside the default judgment was conditional upon Dr. Conrad's (1) paying the Allens $5,000 in attorney's fees, (2) paying the Allens “previously awarded sums totalling $3,800 in sanctions,” and (3) posting a $50,000 bond, to be placed into “an agreed two signatory interest-bearing account.”  (Dr. Conrad was credited with $37,927.76, the value of the property on which the Allens had already levied.)   The above conditions are the matters “embraced in or affected by” the order setting aside the default, and therefore Dr. Conrad's obligations under the order are stayed pending appeal.   Because the effect of the order (i.e., setting aside the default judgment) is also stayed, the judgment remains in effect.  (Spencer v. Nelson (1947) 30 Cal.2d 162, 180 P.2d 886;  Martin v. Board of Trustees (1940) 37 Cal.App.2d 481, 99 P.2d 684.)

However, the court has the discretion under section 917.9 to require security to stay enforcement of judgments and orders that would otherwise be automatically stayed under section 916.  (California Civil Appellate Practice, 2d ed. (Cont.Ed.Bar 1985) § 6.31, p. 134.)   In fact, section 917.9 is the last of the “statutory exceptions” to section 916:  if the trial court, in its discretion, requires the posting of a bond, and the bond is not posted, the order or judgment is not stayed.   This includes judgments and orders as to which a notice of appeal has been filed.  (§ 918;  Miller v. Gross (1975) 48 Cal.App.3d 608, 121 Cal.Rptr. 875.)

Thus, in this case the respondent court has jurisdiction over matters in the litigation not “embraced or affected by” the order setting aside the default, and also has jurisdiction to stay the effect of that order or require the posting of a bond, even though a notice of appeal has been filed.   This is a case in which a stay and/or a bond would be appropriate, since the Allens continue to enjoy the fruits of a judgment which at least one court has determined should be set aside.

Let a peremptory writ of mandate issue directing the respondent court to vacate its order of July 10, 1987, denying petitioner's “Motion to Compel the Delivery of Personal Property and for Sanctions,” and to set the motion for rehearing in accordance with the views expressed in this opinion.

FOOTNOTES

1.   The exceptions, contained in the Code of Civil Procedure, are small claims judgments (§ 117.7), money judgments (§ 917.1), judgments or orders relating to hazardous waste (§ 917.15), judgments directing the assignment or delivery of personal property (§ 917.2), the execution of one or more instruments (§ 917.3), or the sale, conveyance or delivery of real property (§ 917.4), or a judgment appointing a receiver (§ 917.5) or directing the performance of two or more of the acts set forth in sections 917.1 through 917.5 (§ 917.6).   The perfecting of an appeal does not stay enforcement of a right to attach order (§ 917.65), a judgment affecting custody of a minor (§ 917.7), or an order in a quo warranto proceeding, a proceeding in which a corporation is directed to permit the inspection of books or records, or a proceeding in which a building or other place is adjudged to be a nuisance and the order or judgment appealed from directs the closing or discontinuance of any specific use of the building or place (§ 917.8).All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

BOREN, Associate Justice.

ASHBY, Acting P.J., and HASTINGS, J., concur.