SUPPLEMENTAL MEMORANDUM IN SUPPORT OF PLAINTIFFS’ MOTION FOR
PRELIMINARY INJUNCTION
Date: May 22, 2003
Time: 2:00 p.m.
Dept.: 53
[do we need special notation on caption?]
INTRODUCTION AND SUMMARY OF ARGUMENT
Both common law and the provisions of Code of Civil Procedure Section 995.240 confer
courts with the power to relieve litigants of limited means and/or those acting as private
attorneys general, such as the Plaintiffs in this case, from bonds and other cost burdens that
would preclude them from obtaining the equitable relief to which they would otherwise be
entitled.
As plaintiffs have already established a likelihood of success on the merits and that
the balance of harm tips decidedly in their favor, applying the standards set forth in these
authorities, the Court should waive the injunction bond requirement for all of them, including
non-profit Plaintiff California Coalition of Rural Housing Project (CCRHP).
ARGUMENT
I. The Court Has the Inherent Power to Waive the Bond Requirements of California Code
of Civil Procedure Section 529.
For nearly a century, it has been well-settled that the courts of this state have the inherent
power to waive fees and other costs for poor litigants who are unable to pay. Martin v. Superior
Court, 176 Cal. 289 (1917); see also [concurring opinion tracing history]. This power was
extended to waiver of an injunction bond in Conover v. Hall, in which the court, tracing the
common law history of this “firmly established” power, concluded that “California courts retain
common law authority to waive such bond requirements at the behest of poor litigants.” Id. at 11
Cal.3d 842, 846-47 (1974). Notwithstanding Code of Civil Procedure Section 529, the Supreme
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Court in Conover concluded that it could and so did waive the bond required by that section.
The common thread in these cases is the principal that the courthouse door should not be
closed to litigants simply because they are of limited means. Martin ; Baltayan @ 8; Sutter @ 4;
McDonald @ 4.
This principal applies equally to all plaintiffs, whether they be individuals or
organizations. For example, in Martin, the seminal case in this area, the Supreme Court noted
that it would bring “reproach to the system of jurisprudence of the state of California if” the
courts of this state had “shut their doors upon . . . poor suitors” by requiring such litigants to pay
fees they were unable to tender. Martin at 294. Subsequent cases have amplified this
principal, distinguishing between fees charged to litigants by the courts, and those, such as the
bond at issue in the present case, which are required as a means of securing the costs of an
opposing party. [Cites] The courts are united in their view that in the latter class of cases, one
party should not be permitted to use the poverty of his opponent as a shield to meritorious
litigation. [Cites]. Indeed, in the context of an injunction bond, in which the plaintiff has
already met the heavy burden of demonstrating a likelihood of success and a greater showing of
irreparable harm as compared to the defendants, the courts have found waiver particularly
appropriate. Convover, 852, fn 6.
II. The Exercise of the Court’s Common Law Power to Waive an Injunction Bond
Extends to All Litigants of Modest Means, Including Organizations
Consistent with the rationale of ensuring litigants access to court regardless of income,
the courts have applied the common law waiver principal broadly, holding that litigants of
limited financial means are entitled to a waiver, even if their financial status is not so low as to
qualify them to proceed formally in forma pauperis. McDonald, Conover, Solorzano.
Indeed,
while some cases use the word “indigent” in this context, it is clear that a litigant does not need
to demonstrate indigence, however defined, to be entitled to a waiver of a bond. For example in
Conover, the court rejected an argument that waiver of the bond was not permitted because
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plaintiffs had not proceeded in forma pauperis nor established indigence. Conover supra, at 852
The Court concluded that all that was necessary was a showing that the party was “poor.” Id. In
Solorzano v. Superior Court, the court concluded that the use of private discovery referees with
fees of up to $300 had the potential to price indigent litigants out of enforcing discovery and
effectively limited their access to the courts. Id.,18 Cal. App. 4th 603, 615 (1993). The court
expressed this same concern regarding persons who do not qualify to proceed in forma pauperis
and held (?) that trial courts must ensure that costs are not assessed on litigants of modest income
that price them out of the courts. Id. See also McDonald v. Superior Court, supra. at ____
(trial court must weigh impact of litigant's ability to pay referee fees even though not qualified to
proceed in forma pauperis). Thus, the Court’s inherent power to waive an injunction bond
extends to any litigant of limited means, not simply those who are “indigent”or in forma
pauperis. Indeed, courts have waived injunction bonds for non-profit organizations. See
California Independent Systems Operator Corp. v. Reliant Energy Services, Inc., 181 F.Supp.2d
1111 (Dist Ct. E.D. 2001) (citing People of State of California ex rel. Van De Kamp v. Tahoe
Regional Planning Agency, 766 F.2d 1319, 1325 (9th Cir.1985)). Accordingly, the Court here
should waive bond not only for plaintiffs Sofia Ordaz and College Gardens Preservation
Committee (CGPC, but also to non-profit plaintiff California Coalition for Rural Housing
Corporation (CCRHP).1
The particulars of the present case perfectly illustrate why this court should exercise its
power to waive bond for organizational Plaintiff CCRHP.
CCRHP is a non-profit organization
with an obligation, derived from its funding sources and mission, to preserve and produce
affordable housing for lower income persons throughout the State of California. Declaration of
1
The Court has indicated to the parties that it is prepared to waive bond for plaintiff Sofia Ordaz, a tenant at
College Gardens currently living on unemployment benefits, and plaintiff CGPC, which represents current and
prospective College Gardens tenants. See Declaration of Sofia Ordaz in Support of Preliminary Injunction, paras.
2 , 3 and 6. Hence Plaintiffs focus herein on Plaintiff CCRHP and how its status and role with respect to this case
entitle it to the same consideration.
3
Rob Wiener in Support of Plaintiffs’ Supplemental Memorandum, para. ____. It must carry out
its statewide operations with a small staff and a limited budget. Wiener, para. _____. Its
solvency depends upon a variety of funding sources with varying levels of stability and its
budget does not include funds for litigation expenses. Wiener, para. _____.
CCRHP’s
members are also non-profit entities and public agencies (Wiener, para.)---the limited class of
entities for whom Section 65863.11 was enacted and who are entitled to injunctive relief
thereunder .2 See § 65863.11(d).
As a matter of efficiency, CCRHP has taken on the burden of
seeking relief from Defendants’ violation of Section 65863.11 under that section’s remedial
provisions on behalf of its members. See Residents of Beverly Glen, Inc. v. City of Los
Angeles, 34 Cal.3d 117, 121 (1973).
Thus, as the non-profit CCRHP has made a proper
showing of its limited resources and means, just as with the other Plaintiffs, the Court should
waive the bond requirement with respect to CCRHP.
If not, Defendants, by the sheer fortuity
of CCRHP’s financial status, will be permitted to benefit from its unlawful conduct and the
courthouse door be forever shut to non-profit organizations of limited means like CCRHP
seeking enforcmenment of important public rights. Moreover, the public purpose prompting the
enactment of Section 65863.11–the preservation of affordable housing for low income families-will be frustrated.
III. The Court Should Waive the Bond Requirement Because Plaintiffs are Private
Attorney General Litigants.
Assuming Plaintiffs ultimately prevail, this action will benefit hundreds, if not thousands
of persons, including current and prospective College Gardens tenants and their families,
non-profit entities with the desire and ability to purchase and maintain affordable rents at College
Gardens, and many other lower-income persons and families in the Sacramento area in need of
2
Both CCRHP and the other Plaintiffs in this litigation have standing to enforce this section under Business and
Professions code Section 17200 et. seq. as comprehensively briefed in Plaintiffs’ Reply. See pp. _______.
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affordable housing. Given that Plaintiffs’ action stands to benefit a large number of persons and
the public as a whole, Plaintiffs are private attorneys general who should not be burdened with
securing Defendants’ potential monetary losses, particularly where the occurrence of such loss is
highly improbable.
The private attorney general doctrine was established in California in Serrano v. Priest,
20 Cal.3d 25 (1977). There, the Supreme Court, in the absence of statutory authority, approved
the award of attorneys’ fees to parties successfully enforcing important public rights. 3
Explaining the necessity for a private attorney general doctrine, the high court reasoned:
In the complex society in which we live it frequently occurs that citizens in great
numbers and across a broad spectrum have interests in common. These, while of
enormous significance to the society as a whole, do not involve the fortunes of a single
individual to the extent necessary to encourage their private vindication in the courts.
20 Cal.3d at 44.
In recognition of this concern, California and federal courts have refused to impose
onerous financial burdens, such as litigation bonds, on private attorney general litigants. As
discussed in “Injunction Bonding in Environmental Litigation,” a law review article analyzing
and critiquing the imposition of injunction bonds in environmental public interest litigation, the
California Supreme Court vacated the decision of an appellate court requiring a $50,000 bond to
be paid by a homeowners group to maintain a writ of supersedeas in an environmental case,
accepting the homeowners’ arguments that they were acting as private attorneys general. See
Henson and Gray, “Injunction Bonding in Environmental Litigation,” 19 Santa Clara L.Rev. 541,
571 (1979) discussing Laurel Hills Homeowners Association v. City Council of Los Angeles, 2
Civ. No. 52606 (Cal.Sup.Ct. Jan. 19, 1978).
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3
The doctrine is now codified by Code of Civil Procedure Section 1021.5.
4
Notably, the homeowners in Laurel Hills were not low income persons.
5
County of Suffolk v. Secretary of the Interior, 76 F.R.D. 469 (1977) is also instructive.
There, the court denied a costs award against plaintiffs who had unsuccessfully litigated an
important environmental issue. The court reasoned that the plaintiffs
devoted their limited resources to litigating questions of significant public important
protection of the environment. Because plaintiffs brought this litigation in good faith
and it resulted in substantial benefits to the public. . .trial costs are disallowed. It is not
winners alone who contribute to society; this is an instance where the losing litigants are
entitled to some consideration for their aid to the common weal.
Id. at 471.
In the instant case, not only have plaintiffs “devoted their limited resources to litigating
questions of significant public importance,” —unlike the plaintiffs in County of Suffolk, they
have established a likelihood of success on the merits which in turn will likely result in
“substantial benefits to the public.”
This is a paradigm private attorney general case. In pursuing this action, Plaintiffs do
not seek to become rich nor vindication of just their rights alone. Rather, Plaintiffs seek compel
to defendants to follow state notice laws designed to preserve affordable housing for the long
term and/or to mitigate the harms associated with the loss of such housing to the benefit of
current and prospective tenants and the public as a whole.5
In Covenant Mutual Ins. Co. v. Young, 179 Cal.App.3d 318, 326-27 (1986), the court
held that awarding prevailing defendants attorney fees would have an unacceptable chilling
effect on the statutory right of insurance companies to sue law firms for breach of the warranty
of authority--in that case, a law firm’s misrepresenting its power to settle a lawsuit–and would
5
Even an individual suing solely on her own behalf can be a private attorney general if the litigation enforces
important public rights. See, e.g., Baggett v. Gates, 32 Cal. 3d. 128, 142-44 (1982) (private attorney general fees
awarded to police officers vindicating their rights to fair disciplinary procedures); Bouvia v. Los Angeles County,
195 Cal.App.3d 1075 (1987) (fees awarded to patient who won right to discontiue involuntary feeding.) Thus, the
fact that Plaintiffs in this action are proceeding on claims under state prepayment notice laws and Business and
Professions Code Sections 17200, et seq. (Unfair Competition Law) which provide broad injunctive relief as a
remedy, strongly supports conferring private attorney general status upon Plaintiffs.
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frustrate this public purpose as contemplated by the legislature in enacting a “unilateral” fee
award statute.
Here, where Plaintiffs, including non-profit plaintiff CCRHP bring this action
not just to vindicate their own rights, but for the public interest in preserving affordable housing,
surely the same rationale against imposing undue financial burdens that would deter such actions
applies.6
IV. The Court Should Exercise its Power, as Conferred by Code of Civil Procedure
Section 995.240, to Waive the Injunction Bond in this Case.
In addition to its discretionary power under common law, the Court has statutory
authority under Code of Civil Procedure Section 995.240 to waive the bond requirement.
Section 995.240, which codifies the holding and principles in Conover v. Hall, supra. provides
The court may, in its discretion, waive a provision for a bond in an action or proceeding
and make such or orders as may be appropriate as if the bond were given, if the court
determines that the principal is unable to give the bond because the principal is indigent
and is unable to obtain sufficient sureties, whether personal or admitted surety insurers.
In exercising its discretion the court shall take into consideration all factors it deems
relevant, including but not limited to the character of the action or proceeding, the nature
of the beneficiary, whether public or private, and the potential harm to the beneficiary if
the provision for the bond is waived.
Id. (Emphasis added.)
As Plaintiffs herein have established that they are indigent or of modest or limited means,
the Court must look at all relevant factors in the case, including those specifically articulated in
Section 995.240, in deciding whether to waive the bond requirement.
With regard to each of the factors expressly set forth in Section 995.240, the analysis
favors Plaintiffs here.
First, this action is “public interest” in character. It is brought for the
public good not for the personal or individual enrichment of any of the Plaintiffs as evidenced by
the injunctive nature of the remedies provided under the claims Plaintiffs are prosecuting.
Moreover, since “[p]ublic enforcers are routinely exempted from the filing of a bond [footnote omitted]. . . it seems
somewhat illogical to exact a bond from the private [public interest] plaintiffs who litigates to achieve the same
goals.” See Henson and Gray, p. 565 discussing Cal. Civ. Proc Code Sec. 529, which exempts public entities or
officers from the bond requirement. See Sec 529(b)(3).
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Moreover, success in this action will potentially benefit not only current residents of College
Gardens, but prospective residents and all those in the community, particularly those in need of
affordable housing.
Second, the potential beneficiaries of the bond in this case are private entities. Thus, in
weighing the private nature of the beneficiary in this case against the public interest on the side
seeking waiver of the bond, the Court should tip the balance in favor of the public interest and
public good. [Find a case, if possible.]
Third, the potential harm to Defendants if the bond is waived is minimal. The Court has
already found that plaintiffs’ harm significantly outweighs the speculative harm claimed by
defendants. [Is saying this presumptuous?]
Indeed, in Conover, the holding and principles of
which are codified by Section 995.240, the Supreme Court opined that
the argument in favor of permitting a waiver of an “injunction bond” is even
stronger than permitting waiver of a “cost bond” because in the ‘injunction bond”
context, a poor litigant who is relieved of an undertaking has already prevailed on
the substantive issue before the trial court and thus there is less chance that the
opposing party will be injured by the waiver of the bond requirement.
Conover supra, at 852, fn 6.
Thus, in analyzing the potential harm to the beneficiary the Court should consider the
fact that there is relatively little chance that Defendants here will prevail on the merits, i.e. be
harmed by waiver of the bond.7
Indeed, it is fair to ask whether waiver of a bond would harm Defendants at all. The
only harm Defendants allege is the inability to timely repay a debt accrued on Eugene Burger’s
personal line of credit due no later than May 10, 2003. Opposition, Declaration of Eugene
7
Cf. ABBA Rubber Co. v. Seaquist, 235 Cal.Ap.3d 1 (1991) (probability of success not relevant to determination of
bond amount). However, the Court must view ABBA Rubber for what it is-- a business dispute case focusing on
the amount of bond to be set. It is not a public interest or private attorney general case nor was it brought by
litigants of limited means. Thus it does not implicate Section 995.240 and the Supreme Court’s decision in
Conover, which is codified by Seciton 995.240 controls.
8
Burger, para. ____.
The Court granted the temporary restraining order herein on May 9, 2003
enjoining Defendants from taking the action they claimed they needed to take on May 10, 2003,
the only date Defendants refer to in attempting to articulate harm.
As Defendants articulate no
other harm, no other additional damages or harm, will result from the granting of a preliminary
injunction. A bond is issued in a preliminary injunction to compensate the party who is
enjoined from an activity or transaction if it is determined that the injunction was wrongfully
issued. ABBA Rubber Co. v. Seaquis, supra. 235 Cal. App.3d at 14 citing Hummell v.
Republic Fed. Savings & Loan Assn., 133 Cal. App.3d 49, 51 (1982).
In this instance, the only
harm that could result from the Court issuing an injunction has already occurred.
Moreover, to the extent Defendants have articulated any harm, it is self-created and was
easily preventable. The actual debt accrued by Eugene Burger has existed for several years.
Declaration of Eugene Burger para. 9. That debt has already reached maturity and Eugene
Burger had previously been granted extensions on the repayment of that debt. Burger dec.
paras. 9 ,10. The only harm Defendants claim is the inability to pay that debt off on the
specific date of May 10, 2003.
Defendants do not describe any on going or permanent loss due
to the Court’s issuance of a TRO or preliminary injunction. In fact, it is relatively unclear
whether that harm would actually occur due to Mr. Burger’s ability to obtain extensions from his
bank on previous occasions and his allusions to seeking further extensions. Burger, para. ____.
All defendants had to do to avoid their current “predicament” is provide proper one year and 6
month notice under Sections 65863.10 and .11.
For all these reasons, the potential harm to
Defendants in the event of a bond waiver is minimal.
Finally, the Court should deem relevant to its determination on waiver of the bond the
nature of the plaintiffs in this case. Sofia Ordaz is not only a current tenant at College Gardens,
but a board member of Plaintiff CGPC. Ordaz decl, para. 6.
CGPC’s mission is to pursue
“the prservation of affordable rents at College Gardens to benefit current and future low-income
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tenants.” Ordaz, para. 6.
Plaintiff CCRHP’s mission is to preserve and produce affordable
housing on a statewide basis and its members consist solely of non-profit housing providers with
the same purpose. Wiener, para. _____.
Taking into account all of these factors, it is clear that the group of plaintiffs here are
acting in the public interest.8 By contrast, the private interest at stake–Defendants’ potential
“harm” if the bond is waived, is self-created and speculative, at best. Accordingly, under the
“totality of the circumstances” standard of Section 995.240, the Court should exercise its
discretion to waive bond.
II. The Court must Consider the Plaintiff's Ability to Pay, and Should Reduce the Bond
Accordingly
In the unlikely event that the Court determines that a bond cannot be waived, CCRHP is,
as a matter of due process, entitled to a reduction of that bond to an amount that it can reasonably
be expected to pay given its limited means, and in light of the considerable merits of Plaintiffs
case. Beaurdeau at 460; Baltayan v. Estate of Getemyan, 90 Cal.App.4th 1427, 1441
(concurring opinion). Id. Even in the case of a wrongful issuance of an injunction damages
must not be speculative or remote. Rice v. Cook, 92 Cal.144, 148 (1891).
Given CCRHP’s
limited means and the speculative nature of Defendants’ harm, the Court should not inquire
anything more than a nominal bond.
CONCLUSION
Based on the foregoing, the Court should waive the injunction bond requirement for all
Plaintiffs. Alternatively, in the unlikely event that the Court finds imposition of a bond is
In the anti-SLAPP context, “public interest” is “broadly construed to include not only governmental matters, but
also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to
that of a governmental entity.” Damon v. Ocean Hills Journalism Club, 85 Cal.App.4th 468. 479 (2000) (citations
omitted). Here, plaintiffs seek to enforce notice requirements that the Legislature has deemed of “paramount
importance.” See CA Senate Bill 1913, 1990 Cal.Stat. 1438 (1990), Plaintiffs’ First Appendix of Authorities.
8
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warranted, such bond should be nominal.
Dated:
Respectfully submitted,
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