Monday, July 27, 2015

Disentitlement Strikes Again

Ironridge Global IV, Ltd. v. Scripsamerica, Inc., No B256198 (D2d8 Jun. 30, 2015)

Under the terms of a settlement, entered on the record as a judgment under Code of Civil Procedure § 664.6, Defendant had to pay Plaintiff by issuing stock and delivering it to Plaintiff. If the price went down, Defendant was required to pony up more stock. The price did, in fact, go down. When Defendant refused to turn over the stock, Plaintiff successfully sought to enforce the judgment in court. The court ordered Defendant (1) not to give away any of its stock to any other party; and (2) to give Plaintiff the stock it was entitled to.

Defendant appealed. Under established appellate procedure, that stayed order (2), because the turnover obligation is mandatory, but not order (1) which is just a prohibitory injunction. See Kettenhofen v. Superior Court, 55 Cal. 2d 189, 191 (1961) (“An appeal stays a mandatory but not a prohibitory injunction.”). But while the appeal was pending, Defendant violated order (1) by issuing 8.7 million shares of its stock to third parties. Bad idea. Under the disentitlement doctrine, when there’s no stay, an appellate court has the discretion to dismiss an appeal when the appellant violates the underlying trial court order being appealed. The court does so here.

Appeal dismissed.

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