STANLEY v. VARVELL (1982)

Clifford Stanley and Mortgage Loan Corporation, Inc. petition this court to restrain respondent court from taking any further proceedings leading to punishment of petitioners for violating a temporary restraining order.

In February 1981, Wilbur Balch and LaFonda Balch (hereinafter “plaintiffs”) sold two parcels of land to Allen Varvell, undertaking to accept as part of the purchase price a note secured by a deed of trust encumbering both parcels.   An escrow was opened with Lawyers Title Insurance Company.   At the same time, Varvell opened a second escrow with Lawyers Title to handle a transaction whereby The Mortgage Loan Corporation was to loan $30,000 to Varvell.   This loan was to be secured on the Balch parcels and on an adjoining property (sometimes called “Parcel Three”) which, unlike the Balch parcels, was otherwise unencumbered.   Varvell defaulted on both obligations.   When plaintiffs sought to exercise their rights under their deed of trust, they learned that Lawyers Title had not recorded that instrument.   They also learned that Mortgage Loan Corporation was about to cause all the property to be sold to satisfy Varvell's indebtedness to it.

Plaintiffs sued Varvell, Lawyers Title Insurance Corporation, The Mortgage Loan Corporation and Clifford Stanley (trustee under the deed of trust in favor of Mortgage Loan) seeking a declaration of rights and damages against Lawyers Title and Varvell.   Plaintiffs obtained a temporary order restraining defendants:

“1. From proceeding with foreclosure or sale of the trust property described in the complaint pursuant to the Deed of Trust made by Defendant, ALLAN VARVELL, Trustor, to Defendant, CLIFFORD EDWARD STANLEY, Trustee, in favor of Defendant, THE MORTGAGE LOAN CORPORATION, dated February 19, 1981, and recorded in Book F919, page 589, Official Records of Santa Clara County.

“2. From attempting to sell, dispose of, or hypothecate in any manner the said trust property, and from so doing.”

At the time set for a hearing on the preliminary injunction, counsel for plaintiffs requested that the court either not consider the points and authorities of Mortgage Loan, served only 30 minutes before the hearing, or to continue the hearing.   The court continued the hearing for one week.

On February 9, at the continued hearing, Lawyers Title appeared for the first time and asked for a further continuance of one day to obtain a declaration of the escrow officer who had handled the transaction, showing that Mortgage Loan had actual knowledge of the plaintiffs' deed of trust.   The court granted the continuance over Mortgage Loan's objection.   When told by Mortgage Loan that the sale would now have to be postponed for 21 days, the judge reset the continued hearing on the preliminary injunction for a later date.   During the discussion of the request of Lawyers Title for a continuance, it was brought out that the otherwise unencumbered Varvell parcel might be used to satisfy the obligation of Varvell to Mortgage Loan, thus putting Lawyers Title in a more favorable position with respect to its liability for damages;  the judge indicated that his reason for granting a longer continuance was to allow time to see if a settlement could be reached.

Stanley immediately carried out a trustee's sale of Parcel Three.   Mortgage Loan bought the property for $100.   Varvell obtained an order directing Stanley and Mortgage Loan to show cause why they should not be punished for violating the temporary restraining order.

On April 14, Judge Phelps heard the testimony of John Norman, attorney for plaintiffs, and Gary Olimpia, attorney for Lawyers Title, that they understood the order continuing the hearing on the preliminary injunction continued in effect the temporary restraining order.   Stanley testified that it was his understanding that the temporary restraining order only restrained the sale of the Balch parcels and that he had always been free to sell Parcel Three.

On April 16, the attorneys again appeared before Judge Phelps who stated that he was going to consider issuing a preliminary injunction as to Parcels One and Two.   The attorney for Mortgage Loan then announced that the trustee had sold the Balch parcels on March 25 upon the expiration of orders restraining the sale.   Attorneys for plaintiffs and Lawyers Title expressed their surprise and consternation.   The attorney for Lawyers Title then told the court that he had just found out that Stanley had just sold Parcel Three.

The court ordered Stanley to appear and show cause why he should not be held in contempt for selling the Balch parcels and ordered him not to do “one single thing with respect to that property until further order of this court.”

On the hearing on the order to show cause the court heard argument but took no testimony.   The judge stated that he saw no contempt as to the Balch parcels but ordered cancellation of the deed to Parcel Three and found Stanley guilty of one count of contempt with respect to that parcel.   The present writ proceeding ensued.

Petitioners contend that they cannot be held in contempt for violation of the temporary restraining order because that order became ineffective as a matter of law when, on February 9, the court continued the hearing on the preliminary injunction.

 A trial court must vacate its temporary restraining order if the hearing on the preliminary injunction is continued at the instance of the party benefited by temporary restraint (Code Civ.Proc., § 527, subd. (a))¹  Temporary restrained unquestionably remained in effect when the trial court continued the hearing on February 2 to February 9, since petitioners served their opposing papers on plaintiff only 30 minutes before the hearing and section 527 allows for a continuance for the plaintiff's benefit in that situation.   However, on February 9, the court continued the hearing at the request of Lawyers Title Insurance and plaintiff.   Lawyers Title Insurance was itself a defendant and under section 527 “[t]he defendant, ․ shall be entitled, as of course, to one continuance for a reasonable period, if he or she desires it, to enable him or her to meet the application for the preliminary injunction.”   This proviso does not apply in the instant situation because Lawyers Title Insurance is not a defendant affected by the temporary restraining order.

 Section 527 permits continuation of temporary restraint beyond the date first set for the hearing on the preliminary injunction in two situations—first, where the defendant requests a continuance to meet the application and second, where the applicant requests the continuance because not served with timely opposition.   Here, plaintiff and Lawyers Title were not ready because they wanted to secure the affidavit of an escrow officer.   Section 527 specifically addresses this situation when it provides:  “[I]f the party is not ready ․, the court shall dissolve the temporary restraining order.”

On the request of petitioners, the court would have been required to dissolve the temporary restraining order when it continued the hearing on injunctive relief on February 9.   But petitioners made no such request, perhaps fearing that plaintiffs and Lawyers Title would immediately have withdrawn their request for continuance and proceeded with the scheduled hearing on the basis of the evidence already in their possession.   Instead, petitioners said nothing and, deliberately risking punishment for contempt, violated the temporary restraining order.   They relied on the theory that the temporary restraining order.   They relied on the theory that the temporary restraining order had been vacated by operation of law.   The statute does not so provide.   The pertinent language of section 527 is that “the court shall dissolve the temporary restraining order.”  (Emphasis added.)   Here the court did not dissolve the order, because petitioners did not request dissolution.   While the order remained in effect, violation of it was punishable.  (Contrast Clute v. Superior Court (1908) 155 Cal. 15, 99 P. 362, cited in 5 Witkin, Cal.Procedure (2d ed. 1971) Enforcement of Judgment, § 164, pp. 3525, 3526, holding that no punishment can be imposed for violation of an order that has been stayed by operation of law.)

 Petitioners are in a position analogous to a litigant who has not objected to an error below which could have been cured or who seeks to advance a theory on appeal not presented to the court below or who asserts a claim to relief not asserted or requested below.   It is settled that a party may not obtain relief from an appellate court on such grounds “because to permit him to do so would not only be unfair to the trial court but manifestly unjust to the opposing litigant.”  (Sierra Club, Inc. v. California Coastal Com. (1979) 95 Cal.App.3d 495, 503, 157 Cal.Rptr. 190;  see also Algeri v. Tonini (1958) 159 Cal.App.2d 828, 832, 324 P.2d 724;  5 Cal.Jur.3d, Appellate Review, § 480, pp. 117–118.)

 Petitioners also argue that the temporary restraining order was void because it was not sufficiently clear that it involved Parcel Three.   This argument is without merit since the order specifically enjoins sale of trust property described in a deed of trust designated by the book and page number of its recording.   In view of the discussion of Parcel Three on February 9 and Stanley's presence in court on that date, the court's implied finding that petitioners understood the plain language of the injunction and wilfully disregarded it is reasonable.

Petitioners' final argument is that respondent court lacked jurisdiction to cancel a trustee's deed as punishment for contempt.   This argument was not made to the trial court but may be made in the further contempt proceedings.   Although respondent court announced its intention of punishing the contempt with a one-day jail sentence and cancellation of any trustee's deed, the court also announced that if writ relief was denied by this court, it would hold a further hearing on punishment.   At that hearing, the parties may present to the court facts and argument on the propriety of cancelling the deed.   We do not venture an opinion on this issue as the facts concerning disposition of the property have not been developed or a final ruling on punishment made by respondent court.

The alternative writ is discharged and the petition is denied.

FOOTNOTES

1.   Code of Civil Procedure section 527, subdivision (a), in pertinent part:  “When the matter first comes up for hearing the party who obtained the temporary restraining order must be ready to proceed and must have served upon the opposite party at least two days prior to the hearing, a copy of the complaint and of all affidavits to be used in the application and a copy of the points and authorities in support of the application;  if the party is not ready, or if he or she fails to serve a copy of his or her complaint, affidavits and points and authorities, as herein required, the court shall dissolve the temporary restraining order.   The defendant, however, shall be entitled, as of course, to one continuance for a reasonable period, if he or she desires it, to enable him or her to meet the application for the preliminary injunction.   The defendant may, in response to such order to show cause, present affidavits relating to the granting of the preliminary injunction, and if such affidavits are served on the applicant at least two days prior to the hearing, the applicant shall not be entitled to any continuance on account thereof.   On the day upon which the order is made returnable, the hearing shall take precedence of all others matters on the calendar of the day, except older matters of the same character, and matters to which special precedence may be given by law.   When the cause is at issue it shall be set for trial at the earliest possible date and shall take precedence of all other cases, except older matters of the same character, and matters to which special precedence may be given by law.”

CHRISTIAN, Associate Justice.

RATTIGAN, Acting P.J., and POCHE, J., concur.