Paradise Hills Associates v. Procel

• Decision Date: 15 November 1991
• Docket Number: No. E008024,E008024
• Citation: 235 Cal.App.3d 1528,1 Cal.Rptr.2d 514
• Court: California Court of Appeals Court of Appeals
• Parties: PARADISE HILLS ASSOCIATES, Plaintiff and Respondent, v. Brenda PROCEL, Defendant and Appellant.

Page 514

1 Cal.Rptr.2d 514

235 Cal.App.3d 1528

PARADISE HILLS ASSOCIATES, Plaintiff and Respondent, v. Brenda PROCEL, Defendant and Appellant.

No. E008024.

Court of Appeal, Fourth District, Division 2, California.

Nov. 15, 1991.

As Modified Dec. 11, 1991.

[235 Cal.App.3d 1534] Michael Leight, Seal Beach, for defendant and appellant.

Nebenzahl and Kohn, Randall S. Leff and Gerald S. Frim, Beverly Hills, for plaintiff and respondent.

OPINION

DABNEY, Acting Presiding Justice.

Brenda Procel (Procel) appeals from a preliminary injunction which restricts certain speech and activities. She contends that the injunction improperly interferes with her First Amendment rights.

FACTS

Paradise Hills Associates (PHA) is the owner and developer of Paradise Hills Subdivision (Paradise Hills) in Colton. Paradise Hills consists of three phases. Phase 1 contains 39 single family houses, all of which have been sold; Phases 2 and 3 are being built and sold and will eventually contain 70 houses. PHA maintains a sales office and model houses within Paradise Hills to solicit buyers for houses in Phases 2 and 3.

In March 1989, Procel and her husband bought a house from PHA in Phase 1. Procel claims that the workmanship and materials in her house were inferior, and the house was not constructed and completed according to her contract with PHA. PHA denies Procel's claims. However, through its contractor, D.E.H.H. Corp., PHA performed substantial reconstruction, repairs and upgrading on her house.

Procel posted various signs on her house to call attention to her dispute with PHA. ¹ At various times, up to 20 other homeowners had posted similar signs on their houses in Phase 1. Procel spoke with newspaper reporters about her house, and a local newspaper published an article about the situation. PHA alleges that Procel and other homeowners distributed leaflets in front of PHA's model home on two weekends, spoke to prospective customers there urging them not to buy from PHA, and displayed large signs which disparaged PHA.

Based on these activities, PHA filed a complaint against Procel for declaratory relief, damages for interference with prospective economic advantage and conspiracy to interfere with prospective economic advantage, and injunctive relief for interference and conspiracy. PHA did not allege that any of Procel's statements were false; however, PHA alleged that her statements were made with the intention to injure PHA in its business of selling houses.

To support its application for a temporary restraining order and preliminary injunction, PHA submitted the declarations of (1) a real estate sales person affiliated with the company which provides marketing and real estate sales services to PHA, (2) a general partner of PHA, (3) the contractor responsible for the construction of the houses in Paradise Hills, and (4) an attorney for PHA. The declarations listed Procel's activities and identified the damages allegedly caused by those activities. The declarations also asserted that the City of Colton had created special arbitration procedures for dissatisfied customers in Paradise Hills, but Procel had declined to participate in those procedures.

The trial court granted a temporary restraining order. Following a hearing, the trial court later entered a preliminary injunction which provides: "IT IS HEREBY ORDERED that defendants and their agents, servants, employees, and all persons under their direction in active concert and participation with them, shall be and hereby are enjoined, during the pendency of this action, from:

"(a) Making any statement, or written communication, attributing to Phase 2 or 3 of the Paradise Hills Subdivision any alleged defect or problem relating to construction or repair of any home in Phase 1;

"(b) Preventing or hindering any person from visiting the Paradise Hills Subdivision sales office or any of the Paradise Hills Subdivision model homes;

"(c) Entering the sales office of Paradise Hills Associates ..., located on Lot 22 of Phase 1 of the Paradise Hills Subdivision;

"(d) Expressing, either verbally or in writing, to members of the public, in general, any form of conclusion, assumption, presumption, or generalization, regarding PHA, PHA's business, the Paradise Hills Subdivision, or homes for sale in Phases 2 and 3 of the Paradise Hills Subdivision; provided, however, that defendant is not restricted from reciting facts as they may relate to specific problems on defendant's property;

"(e) Being present within 150 feet of the sales office located on Lot 22 of Phase 1 of the Paradise Hills Subdivision; provided, however, that defendant is not restricted from the lawful use of public property within that radius for the purpose of ingress and egress." ²

Additional facts are set forth in the discussion of the issues to which they pertain.

DISCUSSION

I Law of the Case

Following the issuance of the preliminary injunction, Procel applied for a writ of mandate or prohibition. PHA contends that this court's denial of Procel's application established law of the case which determines Procel's rights on appeal.

An order on an application for an extraordinary writ does not establish law of the case unless the court issues an opinion or statement of reasons which addresses the merits of the appeal. "[A] summary denial 'cannot properly be deemed a conclusive decision on the merits' [citation] because there are many possible grounds for denial other than the merits." (Richer v. Superior Court (1976) 63 Cal.App.3d 748, 755-756, 134 Cal.Rptr. 52.)

This court's order stated, "The petition for writ of mandate or prohibition is denied as petitioner has shown no need for extraordinary relief. [p] While it is true that equity will not normally restrain a libel [citation] the rule is not without exception, especially where trade libel is involved. [Citations.] The trial court's order appears to have been carefully crafted to balance petitioner's right to freedom of expression against real party's interest in preventing injurious falsehoods. As the restriction on petitioner's right to free speech, if any, appears to be minimal, we decline to intervene." (Emphasis added.)

Because PHA did not allege trade libel in its complaint and does not claim that any of Procel's statements were false, our order cannot reasonably be construed as reaching the merits of the appeal. Rather, the order addresses the test for the appropriateness of extraordinary relief: whether the remedy of appeal is deemed adequate. (Code Civ.Proc., § 1086; Sutco Construction Co. v. Modesto High School Dist. (1989) 208 Cal.App.3d 1220, 1227, 256 Cal.Rptr. 671.)

Moreover, for an appellate judgment to be binding, at least two justices must concur. (Cal.Const., art. VI, § 3; People v. Castellano (1978) 79 Cal.App.3d 844, 862.) The earlier order, signed by a single justice, cannot establish law of the case.

II Standard of Review

The grant of a preliminary injunction does not determine the merits of the controversy. (Baypoint Mortgage Corp. v. Crest Premium Real Estate etc. Trust (1985) 168 Cal.App.3d 818, 823, 214 Cal.Rptr. 531.) However, a trial court may order a preliminary injunction if the plaintiff shows that the status quo should be maintained pending a trial of the merits. (Cox Cable San Diego, Inc. v. Bookspan (1987) 195 Cal.App.3d 22, 25, 240 Cal.Rptr. 407.)

To issue a preliminary injunction, the trial court must consider two interrelated factors. First, the court must evaluate whether the plaintiff is likely to prevail on the merits at trial. Second, the court must weigh the interim harm to the plaintiff if the injunction is denied against the harm to the defendant if the injunction is issued. (Cox Cable San Diego, Inc., supra, 195 Cal.App.3d at p. 25, 240 Cal.Rptr. 407.)

On appeal, we "merely determine whether the trial court 'exceeded the bounds of reason' in determining [plaintiff] has a 'reasonable probability of prevailing on the merits' and that the 'balance of hardships' favors [plaintiff]. We can reverse the order only if appellant demonstrates an abuse of discretion in resolving these two issues. [Citation.]" (Baypoint, supra, 168 Cal.App.3d at p. 824, 214 Cal.Rptr. 531.)

III Balance of Hardships

We first examine the relative hardship to the parties. A preliminary injunction is justified when the trial court determines that a greater injury will result to the moving party if the injunction is denied than will result to the opposing party if the injunction is granted. (See Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528, 67 Cal.Rptr. 761, 439 P.2d 889.)

1. PHA's Prospective Hardship. PHA's prospective hardship is economic: sales of the houses it constructs are allegedly deterred by Procel's activities. PHA also contends that Procel does not have the resources to pay damages. The asserted insolvency of the defendant is not an independent ground for an injunction, but may be considered in determining whether damages provide an adequate remedy. (West Coast Const. Co. v. Oceano Sanitary Dist. (1971) 17 Cal.App.3d 693, 700, 95 Cal.Rptr. 169.) California courts have issued injunctions against unlawful interference with business rights when the plaintiff proves that damages will not afford an adequate remedy. (California G.C. Bd. v. California P. Corp. (1935) 4 Cal.App.2d 242, 244, 40 P.2d 846.)

2. Interference With Procel's First Amendment Rights. In contrast, the hardship to Procel from an injunction is the potential for interference with her freedom of speech. "[T]he deprivation of first amendment rights for even minimal periods constitutes irreparable harm in the context of an action for injunctive relief." (Great Western Cities, Inc. v. Binstein, (N.D.Ill.1979) 476 F.Supp. 827, 835.) A party seeking to justify a prior restraint on speech carries a heavy burden of justifying such restraint. (Organization for a Better Austin v. Keefe (1971) 402 U.S. 415, 419, 91 S.Ct. 1575, 29 L.Ed.2d 1.) A preliminary...