People v. Mobile Magic Sales, Inc.

• Decision Date: 20 August 1979
• Citation: 157 Cal.Rptr. 749,96 Cal.App.3d 1
• Court: California Court of Appeals Court of Appeals
• Parties: , 1979-2 Trade Cases P 62,940 The PEOPLE, Plaintiff and Respondent, v. MOBILE MAGIC SALES, INC., et al., Defendants and Appellants. Civ. 18350.

Page 749

157 Cal.Rptr. 749

96 Cal.App.3d 1, 1979-2 Trade Cases P 62,940

The PEOPLE, Plaintiff and Respondent, v. MOBILE MAGIC SALES, INC., et al., Defendants and Appellants.

Civ. 18350.

Court of Appeal, Fourth District, Division 1, California.

Aug. 20, 1979.

de Krassel, Tierney & Cohen and Timothy T. Tierney, Beverly Hills, for defendants and appellants.

Edwin L. Miller, Jr., Dist. Atty., and Peter C. Lehman, Charles R. Hayes, Robert C. Fellmeth, and John R. Heisner, Deputy Dist. Attys., for plaintiff and respondent.

STANIFORTH, Associate Justice.

The People sought civil penalties and injunctive relief against defendants Mobile Magic Sales, Inc. (Mobile), Ralph Forgeon dba La Moree Mobilehome Estates (La Moree), and other mobilehome dealers in North San Diego County (North County), based upon charges of unfair competition and restraint of trade in violation of the Cartwright Act (Bus. & Prof.Code, §§ 16720, 16727 and 16754.5). At the order to show cause hearing, the trial court granted a preliminary injunction which prohibited:

"a. Conditioning the rental or lease of sites within Mobilhome Parks in San Diego County on the purchase or lease of mobile homes from MOBILE MAGIC SALES, INC., or any consenting dealer and/or their agents, employees, and servants;

"b. Intentionally misrepresenting the availability of mobile home park space within Mobilhome Parks in San Diego County;

"c. Displaying, or allowing to be displayed, any mobile home by MOBILE MAGIC SALES, INC., or any consenting dealer and/or their agents, employees, and servants, as a model home within Mobilhome Parks in San Diego County except as permitted by the California Vehicle Code or the Department of Motor Vehicles. Removal of any so situated mobile homes by any such dealers shall be accomplished within 45 days of the issuance of this order."

Defendants appeal, contending the trial court "improperly" granted the preliminary injunction and citing inter alia Sherman v. Mertz Enterprises, 42 Cal.App.3d 769, 117 Cal.Rptr. 188. For reasons set forth below, we conclude the order granting the preliminary injunction must be affirmed.

I

The relevant facts, as established by the pleading, declarations made under penalty of perjury, as well as oral testimony adduced at the hearing on the motion for preliminary injunction, are as follows: ¹

Mobile is one of the largest retail dealers in new mobilehomes within San Diego County and the State of California. Within the North County area, Mobile is the largest of such dealers by volume ² and competes with approximately 15 other retail dealerships.

Beginning in 1976, certain other retail dealers entered into business "arrangements" with the owners of mobilehome parks (including defendant La Moree) located in the North County area. In this arrangement, retail dealers contracted to lease or rent available homesites from cooperating park owners. By this process, trailer homesites were preempted by the retail dealer now lessee and as a direct result, these homesites were not available to the individual consumer unless they purchased or leased a mobilehome from the retail dealer-lessee. The dealer-lessee also displayed their mobilehomes for sale on these homesites and used these models to conduct retail sales activity.

In 1976, North County mobilehome spaces declined from approximately 200 to 50 homesites. This reduction was attributable to two factors: (1) limited development of new homesites, and (2) restriction of remaining homesites through leaseholds by certain retail dealers.

From 1976 to April of 1978 (when the People filed this complaint) available homesites in the North County area continued to decline. By 1978, "an insignificant number" of homesites existed, and only seven or eight homesites were available for individual consumer lease or rental which were not subject to the requirement that the mobilehome be purchased from Mobile. During the period 1976-1978, Mobile had obtained leaseholds on between 50 to 100 of the 600 homesites then available.

By 1978, Mobile had made such lease arrangements with 14 mobilehome parks in North County. Pursuant to this "arrangement" the trailer park owner referred prospective mobilehome tenants to Mobile to secure an available space. Mobile in turn advised such prospective tenants that such park space was available only upon the purchase of a new mobilehome from Mobile.

Prospective tenants, due to their individual preference to locate in one particular mobilehome park, as opposed to any other such park, were forced to forego selective shopping for mobilehomes and were compelled either to purchase such a home, not of their own choosing, and pay the price demanded, or live elsewhere.

As of mid to late 1978, Mobile had such arrangements with respect to the majority of available space in La Moree Mobilehome Estates, and La Moree actively participated in referring prospective tenants to Mobile. A majority of the retail dealers in mobilehomes in the North County area sell brand name mobilehomes that meet the specifications for entry into La Moree. By virtue of its extensive involvement in the foregoing "arrangements," Mobile has been able to price its new homes at levels exceeding those of its North County competitors. Retail dealers in North County without such business arrangements are in imminent danger of going out of business.

II

Defendants contend the preliminary injunction issued was "mandatory" in nature and was improperly issued because it encompassed matters that must await determination on trial. Secondly, defendants argue that the trial court abused its discretion in granting the injunction in that "no California case" holds the species of "tying" agreement ³ here imposed to be illegal.

The resolution of these contentions requires, first, an examination of the factual and legal prerequisites to issuance of a preliminary injunction under Code of Civil Procedure sections 526 and 527. Code of Civil Procedure section 527, so far as here pertinent, provides: "An injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor."

In Continental Baking Co. v. Katz, 68 Cal.2d 512, 528, 67 Cal.Rptr. 761, 771, 439 P.2d 889, 899, the Supreme Court summarized the basic principles governing issuance of a preliminary injunction:

" 'The granting or denial of a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy. It merely determines that the court, balancing the respective equities of the parties, concludes that, pending a trial on the merits, the defendant should or that he should not be restrained from exercising the right claimed by him.' (Citations.) The general purpose of such an injunction is the preservation of the status quo until a final determination of the merits of the action. (Citations.) Thus, the court examines all of the material before it in order to consider 'whether a greater injury will result to the defendant from granting the injunction than to the plaintiff from refusing it; . . .' (Citations.) In making that determination the court will consider the probability of the plaintiff's ultimately prevailing in the case and, it has been said, will deny a preliminary injunction unless there is a reasonable probability that plaintiff will be successful in the assertion of his rights. (Citations.) As was said in Family Record Plan, Inc. v. Mitchell (1959) 172 Cal.App.2d 235, 242, 342 P.2d 10, 15. . . . 'In the last analysis the trial court must determine which party is the more likely to be injured by the exercise of its discretion (citation) and it must then be exercised in favor of that party (citation).' " (See also Weingand v. Atlantic Sav. & Loan Assn., 1 Cal.3d 806, 820, 83 Cal.Rptr. 650, 464 P.2d 106.)

Further the granting or denial of a preliminary injunction, even though the evidence with respect to an absolute right therefor may be conflicting, rests in the sound discretion of the trial court and may not be disturbed on appeal except for an abuse of discretion. (People v. Black's Food Store, 16 Cal.2d 59, 61, 105 P.2d 361; Allied Artist Pictures Corp. v. Friedman, 68 Cal.App.3d 127, 137 Cal.Rptr. 94.)

Discretion is abused in the legal sense "whenever it may be fairly said that in its exercise the court in a given case exceeded the bounds of reason or contravened the uncontradicted evidence." (Estate of Parker, 186 Cal. 668, 670, 200 P. 619, 620; State Farm etc. Ins. Co. v. Superior Court, 47 Cal.2d 428, 432, 304 P.2d 13.)

Finally, appellate review of the issuance of a preliminary injunction requires a determination whether substantial evidence supports the discretion exercised by the trial court. (Fresno Canal etc. Co. v. People's Ditch Co., 174 Cal. 441, 447, 163 P. 497; Weingand v. Atlantic Sav. and Loan Assn., supra, 1 Cal.3d 806, 820, 83 Cal.Rptr. 650, 464 P.2d 106; City & County of San Francisco v. Evankovich, 69 Cal.App.3d 41, 54, 137 Cal.Rptr. 883.)

III

We begin our task by examining defendants' contention that the decision in Sherman v. Mertz Enterprises, supra, 42 Cal.App.3d 769, 117 Cal.Rptr. 188, precluded the granting of the preliminary injunction here. Mertz involves an appeal from the granting of a Summary judgment. On such motion, the function of the trial court is not "issue determination" but rather "issue finding." (Walsh v. Walsh, 18 Cal.2d 439, 441, 116 P.2d 62.) The appeal court reversed the judgment, holding Sherman was entitled to a trial upon the claim that the tying agreement (similar to that used here) was illegal. Concerning tying agreements, the Mertz court stated at 42 Cal.App.3d pages 779-780, 117 Cal.Rptr. at page 194:

" ' "For our purposes a tying arrangement may be defined as an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied)...