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Failure to Exercise Discretion in Issuing a Stay of Enforcement of Judgment Is an Abuse of Discretion

Tim Kowal     August 12, 2021

In a recent case involving more than one case number, the defendant got an early victory in one case, and got an award of attorney fees. The trial court, however, did not like the idea of rewarding one party partway through a complex litigation, so it imposed a sua sponte stay of enforcement of that fee award.

That stay was reversed on appeal in Specialty Baking, Inc. v. Kohanbash (LASC App. Div. May 24, 2021) no. BV033347 (nonpub. opn.). While such a stay may be permissible, the court in making the discretionary ruling failed to consider the factors required under the operative statute. Failure to exercise discretion is an abuse of discretion.

The dispute in Specialty Baking started when a bakery sued its landlord based on a purchase option in the lease. The landlord fired back with what proved to be a badly misguided unlawful detainer action. Following a jury trial, a judgment on a directed verdict was entered for defendants.

Defendants then got an award for their attorney fees. But only after appeal: The trial court originally denied the fees as premature, apparently preferring that the parties resolve the unlimited civil action first. On appeal, the appellate division directed the trial court to process the fee motion in due course, which, this time, it did.

But the trial judge still had other ideas. Why, the judge thought, should the defendants get their fees when there is still another action pending on the same dispute? So although the judge awarded (though gritted teeth, one guesses) fees to the defendants, the judge also imposed (unsolicited, it appears) a stay of enforcement of the fee award "pending resolution of all of the present matters between the parties."

Actually, the court may do impose a stay of enforcement in light of pending litigation between the parties. But in its zeal, the court went about it the wrong way.

Code of Civil Procedure section 918.5 provides that “[a] trial court may, in its discretion, stay the enforcement of a judgment or order if the judgment debtor has another action pending on a disputed claim against the judgment creditor.” (§ 918.5, subd. (a).) “In exercising its discretion under this section, the court shall consider all of the following: [¶] (1) The likelihood of the judgment debtor prevailing in the other action. [¶] (2) The amount of the judgment of the judgment creditor as compared to the amount of the probable recovery of the judgment debtor in the action on the disputed claim. [¶] (3) The financial ability of the judgment creditor to satisfy the judgment if a judgment is rendered against the judgment creditor in the action on the disputed claim.” (§ 918.5, subd. (b).)

Here, the trial court failed to consider the factors under section 918.5. Failure to consider and apply statutory factors can constitute an abuse of discretion. (See, e.g., In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 305 [failure to apply statutory factors re spousal support]; Nichols v. City of Taft (2007) 155 Cal.App.4th 1233, 1242 [lack of meaningful consideration of all relevant factors to determining lodestar figure determined to be an abuse of discretion]; Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 502 [failure to determine good faith of a settlement on the basis of statutory criteria identified as appropriate held to be an abuse of discretion].)

And specifically for the factors under section 918.5, those factors "shall" be considered. (See Erlich v. Superior Court (1965) 63 Cal.2d 551 (Erlich).

The respondent valiantly argued that, although the trial court failed to make findings on the factors, the record supported the stay order. After all, a trial court's order is not in error, and may not be overturned, simply because it fails to state the court's reasoning, and it will be affirmed so long as the decision is correct on any ground. (See Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443 (Howard); David v. Hermann (2005) 129 Cal.App.4th 672, 685.)

The problem with that argument here was that the respondent failed to offer any other ground on which the court's order staying enforcement might be found correct, nor any other “reasonable justification” for the order. (Howard, supra, 10 Cal.4th at p. 443.)

"Without any basis for inferring the court considered the required factors or made any findings that would support a stay, we conclude the court's order of a stay was an abuse of discretion."

One other interesting note: A stay order under section 918.5 (presuming it is supported by findings under the required factors) does not require a bond. "By their own terms, however, neither section 918 nor section 918.5 requires a bond for stays issued under the latter section. Nor does section 917.1 ... impose a bond requirement on a stay issued under 918.5; section 917.1 has to do specifically with the stay of a money judgment or order issued pending appeal."

Whenever the topic of stays and bonds come up, that is a good time to consult an appellate attorney.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
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