Court Opinion

ID: 4035658
Source: CourtListenerOpinion
Date Created: 2016-09-21 18:03:53.546762+00
Date Added: 2024-06-11T14:36:43.204905
License: Public Domain

Filed 9/21/16 Hackard v. Holt CA3
                                           NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                      THIRD APPELLATE DISTRICT
                                                     (Sacramento)
                                                            ----

MICHAEL A. HACKARD,

                   Petitioner and Respondent,                                                C075578

         v.                                                                          (Super. Ct. No.
                                                                               34200800021853CUCOGDS)
JULIAN HOLT et al., as Co-administrators, etc.,

                   Objectors and Appellants;

SUSAN SMITH, as Trustee in Bankruptcy, etc.,

                   Respondent.

         In 2008, Michael A. Hackard sued Theodor J. Holt (his law partner) and Hackard
& Holt (the law partnership) based on allegations Holt was unable to manage the
partnership. Hackard obtained a preliminary injunction that barred Holt from interfering
with management of the partnership. The trial court conditioned the preliminary

                                                             1
injunction on Hackard posting a $100,000 undertaking. The $100,000 undertaking is the
sole object of this appeal.
       Holt died five weeks after Hackard posted the undertaking, but his estate has
continued to represent his interest. In 2009, the Holt estate filed a cross-complaint
against Hackard for fraud, conversion, and breach of contract. In 2012, the Holt estate
filed motions to lift the stay and dismiss, or alternatively to impose a new stay and to
release the undertaking to the estate. The Holt estate filed these motions to dispose of
this case because it sought to litigate the issues presented in this case in a different case:
a probate action for Holt’s estate. In essence, the Holt estate sought to transfer the issues
from this case to the probate action, which Holt’s heirs intended to serve as a global
resolution for matters related to Holt’s estate.
       In this case, Hackard agreed to the dismissal on the conditions (1) the dismissal
does not constitute a judgment that the preliminary injunction was wrongfully issued,
(2) the undertaking is released to the bankruptcy trustee, and (3) the parties bear their
own fees and costs.1 In November 2012, the trial court dismissed the case and released
the undertaking in Hackard’s favor by ordering the undertaking to be transferred to Susan
Smith, who serves as the bankruptcy trustee for the now-defunct partnership. The

1      We note the unusual nature of defendant Holt estate’s voluntary dismissal that
purported to dismiss the entire case – including the complaint for which it was the
defendant. Ordinarily, a defendant cannot unilaterally enter a voluntary dismissal of
causes of action against it. In this case, however, plaintiff Hackard’s agreement to the
dismissal of the entire action rendered the voluntary dismissal effective – akin to an
agreement to dismiss by both parties. (See Code Civ. Proc., § 581, subd. (b)(2)
[providing that a case may be dismissed “[w]ith or without prejudice, by any party upon
the written consent of all other parties”].)

       Undesignated statutory references are to the Code of Civil Procedure.

                                               2
bankruptcy trustee continues to hold the undertaking in her capacity as bankruptcy
trustee.
       The Holt estate appeals, arguing (1) the trial court violated sections 529 and
996.440 by granting Hackard’s motion to release the undertaking, (2) the order was
procedurally defective because Hackard did not give the statutorily required 30-day
notice for the hearing on the motion to release the undertaking, (3) the trial court lacked
discretion to release the undertaking to the bankruptcy trustee before expiration of the
Holt estate’s one-year window of opportunity to move for receipt of the undertaking
under section 996.440, subdivision (b), (4) Hackard failed to meet his burden of proof
because he did not submit any of the evidence required for release of the undertaking in
his favor, and (5) Hackard should be found liable on the undertaking for his misconduct
before and during the litigation.
       We conclude the Holt estate’s voluntary dismissal of this case-- including the
claims raised in the Holt estate’s cross-complaint -- precluded it from continuing with the
estate’s claim of damages arising out of the granting of the preliminary injunction. The
argument that Hackard gave insufficient notice was forfeited when the Holt estate
appeared at the hearing and argued the merits of the motion without objecting on grounds
of notice or requesting a continuance. Because the Holt estate forfeited its claim to the
undertaking by voluntarily dismissing the case, the one-year period for enforcement by a
prevailing defendant does not apply. Instead, the trial court properly released the
undertaking to the bankruptcy trustee because the purpose for the undertaking
automatically expired upon the granting of the Holt estate’s motion for voluntary
dismissal. The automatic expiration of the undertaking at the end of the case obviated the
need for Hackard to prove he was entitled to the return of the undertaking. Even so,
Hackard properly filed declarations that supported the trial court’s order the undertaking

                                              3
be released to the bankruptcy trustee because the undertaking had become part of the
partnership’s bankruptcy estate. Finally, we reject the Holt estate’s argument it suffered
damages in this case as that claim was extinguished when Holt’s estate moved for
voluntary dismissal of the case.
                       FACTUAL AND PROCEDURAL HISTORY
       In September 2008, Hackard filed a complaint for breach of fiduciary duty, breach
of contract, accounting, and mandatory injunctions. The complaint named Holt and the
Hackard & Holt partnership as defendants. Shortly after filing his complaint, Hackard
applied for a preliminary injunction enjoining Holt from managing or interfering with the
management of the partnership. In October 2008, the trial court granted the preliminary
injunction but required Hackard to post a $100,000 undertaking. Holt died approximately
five weeks after the granting of the preliminary injunction.
       On August 12, 2009, the Holt estate filed a cross-complaint against Hackard for
fraud, conversion, and breach of contract. A week later, the partnership filed a petition
for bankruptcy under chapter 7 of the United States Bankruptcy Code. Smith was
appointed as the bankruptcy trustee.
       On September 12, 2012, the Holt estate filed in superior court a motion “to lift the
stay and dismiss the Complaint, or alternatively to put in place a new stay pending
resolution of the Theodore J. Holt probate action . . . .” In support of the motion, the Holt
estate stated that “the reason for the stay has expired and it should be lifted if it has not
expired by its own terms. [¶] Next, because the present case is one of two which involve
the same parties, facts, issues, and claims, this motion raises the issue of priority in regard
to which case should proceed first. [¶] In the present case [Hackard] sought an
injunction granting him control of the [partnership] and displacing his partner [Holt] as
manager. This Court granted the injunction in October 2008. Ted Holt passed away in

                                               4
November 2008. The [partnership] entered Chapter 7 bankruptcy in August 2009. In
sum, in the present suit Hackard seeks control of a defunct firm from a deceased partner.
The case is moot.”
       On the same day, the Holt estate filed a separate motion requesting the release of
the undertaking to the Holt estate. The Holt estate asserted the motion was based on “the
material misrepresentations made to the Court in the injunction application by Michael
Hackard regarding a multi-million dollar promissory note, as well as the huge sums
removed from Hackard & Holt by Michael Hackard, the lack of progress in advancing
the firm’s cases, the release of key staff which [e]nsured that no progress would be made,
and the placing of the Hackard & Holt firm in bankruptcy, all of which damage caused
damage to Theodore J. Holt and the Theodore J. Holt estate.”
       Hackard responded by supporting the motion to dismiss and opposing the motion
to release the undertaking to the Holt estate. The response stated, “Hackard supports a
dismissal of the case so long as (i) the dismissal does not constitute a judgment that the
preliminary injunction was wrongfully issued; (ii) the $100,000 undertaking is released to
the Chapter 7 Trustee in the bankruptcy estate of Hackard & Holt, to whom the
undertaking has been assigned pursuant to the terms of a settlement approved by the
Bankruptcy Court; and (iii) the parties bear their own fees and costs.”
       Also in September 2012, the bankruptcy court approved a settlement agreement
among the partnership’s creditors and directed the bankruptcy trustee to take steps to
obtain the release of the undertaking to the bankruptcy estate of the partnership. The
bankruptcy court’s order states that “hereafter the [bankruptcy estate of the partnership]
and not Michael A. Hackard shall own whatever interest Michael A. Hackard had in the
Undertaking.” The parties to the bankruptcy proceeding signed a compromise that noted,
“the Preliminary Injunction in the Superior Court Action is moot and no longer necessary

                                             5
to protect any person’s interest.” The Holt estate, however, was not a party to the
bankruptcy compromise.
       The superior court conducted a hearing on the Holt estate’s motions for voluntary
dismissal and to release the undertaking. In November 2012, the trial court granted the
motion to dismiss. However, the trial court denied the Holt estate’s motion to release the
undertaking because there had been no finding the preliminary injunction had been
wrongfully issued. In light of the dismissal of the case, the trial court reasoned there
would be no case left in which to hear whether the preliminary injunction had been
wrongfully issued.
       In February 2013, the trial court amended its order to note that “the ‘parties may
adjudicate the release of the bond through the appropriate procedure set forth in [section]
996.440[, subdivision (a),] after entry of final judgment.’ ”
       In August 2013, Hackard moved for an order withdrawing the undertaking and for
release of the undertaking to the bankruptcy trustee. The Holt estate opposed the motion.
After a hearing, the trial court tentatively granted the motion on October 18, 2013. The
Holt estate moved for a stay of the release of the undertaking pending appeal. On
December 10, 2013, the trial court issued a written order granting Hackard’s motion. In
pertinent part, the order explains:
       “The $100,000 bond was funded by Hackard & Holt’s secured creditor, Law
Finance Group, Inc. (‘LFG’). . . . Neither Holt nor the Holt estate ever appealed the
issuance of or sought to dissolve the Preliminary Injunction Order. [¶] . . . [¶] “[Holt’s
estate] contend[s] that the preliminary injunction was wrongfully issued because Hackard
did not admit that he owed the law firm $5,000,000 on a promissory note to the firm.
[The Holt estate] contend[s] that Hackard’s actions contributed to the death of Holt. [¶]
[Hackard] contends that the Court has authority to release the bond to the bankruptcy

                                              6
trustee because [Hackard] never incurred liability to [the Holt estate] and because [the
Holt estate] cannot establish that the preliminary injunction was wrongfully issued. In
addition, [Hackard] contends that the [Holt estate] can never establish any harm
attributable to the injunction so as to give rise to a claim enforceable against the
undertaking. This is because the partnership’s debts were so great that any portion of the
$100,000 that might have been payable, if [Holt’s estate] could establish that the
preliminary injunction was wrongfully issued, would be payable to the bankruptcy
trustee. [¶] “[Holt’s estate] contends it is entitled to recover on the bond under [section]
996.440. That section provides for a summary enforcement proceeding where liability of
the principal has been determined giving rise to a presumption of enforceability against
the bond or undertaking. The right to recover damages caused by an improperly issued
injunction on a mere showing that such damages were incurred is a statutory procedure
provided in California as an action on the bond [(section 529)]. This statutory procedure,
which provides for a separate trial against the surety, may be invoked after a decision on
the injunction becomes final (Allen v. Pitchess (1973) 36 Cal. App. 3d 321.) . . .
However, no such decision occurred here, and [Holt’s estate] is therefore not entitled to
move under . . . section 996.440 to recover on the Undertaking. To recover on an
undertaking, a party must show that he [or she] sustained damages as a result of an order
issued in a prior action which resulted in a final judgment. (Nuclear Electronic
Laboratories, Inc. v. William C. Cornell Co. (1965) 239 Cal. App. 2d 8.[)] Because there
has been no decision that Hackard was not entitled to the injunction, there can be no
liability on the bond pursuant to . . . section 996.440.”
       The trial court concluded by denying the Holt estate’s “request to order the
$100,000 bond be delivered to the court, as the bankruptcy trustee is the beneficiary of
the bond pursuant to the bankruptcy settlement.”

                                              7
       The Holt estate timely filed a notice of appeal from the trial court’s order.
                                       DISCUSSION
                                              I
    The Trial Court’s Order Releasing the Undertaking to the Bankruptcy Trustee
       The Holt estate contends the trial court misconstrued the Bond and Undertaking
Law (§ 995.010 et seq.) in granting Hackard’s motion to release the $100,000
undertaking2 to the bankruptcy trustee. We disagree.
                                             A.
    Release of an Undertaking after a Defendant’s Motion for Voluntary Dismissal
       A court may require a plaintiff to post a bond or undertaking when granting a
plaintiff’s request for a preliminary injunction. (Dickey v. Rosso (1972) 23 Cal. App. 3d
493, 496.) Subdivision (a) of section 529 provides in pertinent part that, “[o]n granting
an injunction, the court or judge must require an undertaking on the part of the applicant
to the effect that the applicant will pay to the party enjoined any damages, not exceeding
an amount to be specified, the party may sustain by reason of the injunction, if the court
finally decides that the applicant was not entitled to the injunction.” The purpose of the
undertaking “ ‘is to afford compensation to the party wrongly enjoined or restrained . . . .’

2       The terms “bond” and “undertaking” are often used interchangeably. However,
they are distinguished by the individual or entity that gave them. “Section 995.190
defines ‘undertaking’ as ‘a surety, indemnity, or like undertaking executed by the sureties
alone.’ The Comment explains that ‘the only difference between a bond and undertaking
is that an undertaking is executed by the sureties and not the principal.’ (See also
§ 995.140, defining ‘bond’ as a ‘surety, indemnity, fiduciary, or like bond . . . or like
undertaking.’) Under section 995.140, ‘bond’ includes ‘undertaking,’ and under section
995.210, bonds and undertakings, as the terms are used in the diverse statutes, are
interchangeable unless specific language provides otherwise.” (Markley v. Superior
Court (1992) 5 Cal. App. 4th 738, 747.) In this case, the $100,000 was given by a creditor
of the partnership and we thus refer to it as an undertaking.

                                              8
” (Top Cat Productions, Inc. v. Michael’s Los Feliz (2002) 102 Cal. App. 4th 474, 478,
quoting City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11
Cal. App. 4th 916, 922.)
       The determination of who may receive the undertaking at the end of an action is
governed by the Bond and Undertaking Law. “In 1982, the Legislature, following the
recommendations of the California Law Revision Commission, enacted a comprehensive
Bond and Undertaking Law to codify in one chapter the provisions relating to bonds and
undertakings, the liabilities and responsibilities of the parties to those instruments, and
the methods of enforcement that had previously appeared in various statutes and case
law. By its terms, the statutory scheme applies to any ‘bond or undertaking executed,
filed, posted, furnished, or otherwise given as security pursuant to any statute of this
state, except to the extent the statute prescribes a different rule or is inconsistent.’ ”
(Lewin v. Anselmo (1997) 56 Cal. App. 4th 694, 698, quoting § 995.020, subd. (a).) The
Bond and Undertaking Law became effective on January 1, 1983, and applies to the
undertaking in this case. (Snyder v. U.S. Fidelity & Guar. Co. (1997) 60 Cal. App. 4th
561, 566; Stats. 1982, ch. 998, § 1, p. 3659.)
       Section 996.440 sets forth a streamlined procedure through which a party may
enforce the undertaking by providing in pertinent part:
       “(a) If a bond is given in an action or proceeding, the liability on the bond may be
enforced on motion made in the court without the necessity of an independent action.
       “(b) The motion shall not be made until after entry of the final judgment in the
action or proceeding in which the bond is given and the time for appeal has expired or, if
an appeal is taken, until the appeal is finally determined. The motion shall not be made
or notice of motion served more than one year after the later of the preceding dates.

                                                 9
       “(c) Notice of motion shall be served on the principal and sureties at least 30 days
before the time set for hearing of the motion. The notice shall state the amount of the
claim and shall be supported by affidavits setting forth the facts on which the claim is
based. The notice and affidavits shall be served in accordance with any procedure
authorized by Chapter 5 (commencing with Section 1010).
       “(d) Judgment shall be entered against the principal and sureties in accordance
with the motion unless the principal or sureties serve and file affidavits in opposition to
the motion showing such facts as may be deemed by the judge hearing the motion
sufficient to present a triable issue of fact. If such a showing is made, the issues to be
tried shall be specified by the court.”
       Section 996.440 contemplates enforcement of an undertaking against principals
and sureties because, “[g]enerally speaking, the sole purpose of requiring a plaintiff to
furnish a bond or undertaking as a provisional remedy is ‘to protect the defendant against
loss incurred if the defendant prevails in the main action.’ ” (West Hills Farms, Inc. v.
RCO AG Credit, Inc. (2009) 170 Cal. App. 4th 710, 717, fn. 8, quoting 6 Witkin, Cal.
Procedure (5th ed. 2008) Provisional Remedies, § 10, p. 32.) Consequently, a defendant
who does not prevail is not entitled to collect under a bond or undertaking posted to
secure a preliminary injunction.
       Because a defendant must prevail in an action before enforcing a plaintiff’s
undertaking, a defendant who agrees to a voluntary dismissal cannot move for
enforcement of the undertaking. “[W]here the dismissal results from a mutual and
voluntary agreement of the parties it does not have the same effect as a determination
by the court that the injunction was improperly issued but will be construed as a
waiver by the defendant in the injunction suit of the right to proceed upon the
bond.” (Adams v. National Auto. Ins. Co. (1943) 56 Cal. App. 2d 905, 910-911 (Adams),

                                             10
citing Wilshire Mortg. Corp. v. O.A. Graybeal Co. (1940) 41 Cal. App. 2d 1, 6-7
(Wilshire).)
       In short, agreement to voluntary dismissal of an action deprives a defendant of the
prerogative to seek the undertaking for a wrongfully granted injunction. As the Wilshire
court explained, a defendant who believes he or she is entitled to damages for a wrongful
injunction may preserve his or her rights by refusing to join in a voluntary dismissal. “In
the litigation forming the basis of the instant proceeding the defendants had an
opportunity, by refusing to sign the stipulation dismissing the action, to insist either that
plaintiff voluntarily dismiss the suit or that the court determine whether the injunction
was properly granted, to the end that an action might be prosecuted upon the bond.
Failing so to do, and consenting to the dismissal of the action, defendants must
inferentially be charged with intent to waive such rights as they possessed under the
bond. To hold otherwise would serve to promote injustice and open wide the door for
practicing oppression and fraud upon bondsmen and sureties.” (Wilshire, supra, 41
Cal.App.2d at p. 7, italics added.)3

3       Our holding does not address the question of whether the result would be different
if the Holt estate had not moved to dismiss the entirety of the case and had instead
continued to pursue its cross-complaint claims. At oral argument, counsel for the Holt
estate stated the most fair reading of the trial court’s order is that it dismissed the entire
case – including the cross-complaint. This statement is consistent with the Holt estate’s
assertion in its opening brief that this case is appealable “as a final judgment that
terminated trial court proceedings.” The record supports this position. In moving for
dismissal, the Holt estate made the unqualified assertion the case was moot. Thus, the
Holt estate moved to “dismiss the instant action” without limiting the request to the
complaint. The trial court’s order reflects this motion for dismissal’s application to the
entirety of the action when it explained why Holt’s estate had not established entitlement
to the bond posted by Hackard. The court denied Holt’s request for the undertaking on
grounds that “since the case was dismissed by the court with no finding of liability to
either side, the prerequisite of a finding of liability of the principle has not and cannot

                                              11
                                              B.
          Order Directing the Bankruptcy Trustee to Receive the Undertaking
       The trial court properly ordered the bankruptcy trustee to receive the $100,000
undertaking given to secure the preliminary injunction. By filing a motion for voluntary
dismissal of the case, the Holt estate forfeited any claim to the undertaking. (Adams,
supra, 56 Cal.App.2d at pp. 910-911; Wilshire, supra, 41 Cal.App.2d at pp. 6-7.) Instead
of moving for voluntary dismissal of the case, the Holt estate could have continued to
litigate its claim that it suffered damages from the wrongful issuance of the preliminary
injunction. (See Wilshire, at p. 7.) In the absence of a request for voluntary dismissal,
the trial court would have had an active case in which to determine whether Hackard
caused injury to the Holt estate as a consequence of the preliminary injunction. (Ibid.)
However, the effect of the Holt estate’s voluntary dismissal was to bring this case to an
end. A dismissed case leaves the Holt estate with no procedural vehicle that allows the
trial court to make findings of fact as to the merits of the action.
       The Holt estate relies on Special Editions v. Kellison (1982) 129 Cal. App. 3d 803
and Adams, supra, 56 Cal. App. 2d 905 to argue a voluntary dismissal does not foreclose a
defendant’s opportunity to enforce an undertaking. Neither case helps the Holt estate. In
Special Editions, this court held a defendant could enforce an undertaking after a
unilateral voluntary dismissal by the plaintiff. (Special Editions, at pp. 805-806.) Here,
however, it was the defendant that moved for voluntary dismissal.

ever be made.” The trial court’s explanation would not have made sense if the cross-
complaint were still pending because it would have provided Holt’s estate with a
continuing chance of establishing some degree of liability. Thus, the trial court’s
dismissal encompassed the entirety of the action with the consequence that there was no
remaining case for Holt’s estate to seek the undertaking posted by Hackard.

                                              12
       The Adams court recognized that “the voluntary dismissal by a plaintiff of an
action for injunction is to be given the same effect in fixing the liability of a surety as
follows a final determination by the court that the plaintiff was not entitled to the
injunction.” (56 Cal.App.2d at p. 910, italics added.) Adams, however, involved the
unique situation in which the defendant sought a voluntary dismissal of the case after
settling with a third party. (Id. at pp. 911-912.) Although there was an agreement,
“[p]laintiff . . . had nothing to do with these negotiations or the payment of the money.”
(Id. at p. 911.) For this reason, the Adams court held the plaintiff did not give up the right
to seek return of the undertaking to her. (Id. at pp. 911-912.) As applicable to this case,
Adams recognized a mutual and voluntary agreement to dismiss constituted a waiver of
the right of a defendant to collect on the undertaking or bond posted by a plaintiff. (Id. at
pp. 910-911.)
       The Bond and Undertaking Law provides that a bond “remains in force and effect”
only until the earliest of events that include (1) “[t]he purpose for which the bond was
given is satisfied or the purpose is abandoned without any liability having been incurred,”
and (2) “[t]he term of the bond expires.” (§ 995.430, subds. (b) & (d).) Once “[t]he bond
is no longer in force and effect and the time during which the liability on the bond may be
enforced has expired,” the bond “may be withdrawn from the file and returned to the
principal on order of the court . . . .” (§ 995.360, subd. (b).) Here, the purpose for
Hackard’s undertaking was satisfied without any liability having been incurred. The
preliminary injunction necessarily was dissolved upon voluntary dismissal. And the
voluntary dismissal precluded any finding Hackard incurred liability to the Holt estate as
a consequence of the preliminary injunction. (Wilshire, supra, 41 Cal.App.2d at pp. 6-7.)
Thus, we reject the Holt estate’s contention the voluntary dismissal had the effect of a

                                              13
final judgment allowing a determination Hackard incurred liability as a consequence of a
wrongfully issued injunction.
       Similarly, we reject the Holt estate’s contention the trial court “revised” section
996.440 to add the requirement a defendant may not enforce a bond or undertaking in the
absence of a finding of liability by the plaintiff who secured the preliminary injunction.
Section 996.440 became unavailable to the Holt estate when it voluntarily requested
dismissal of the case. (Wilshire, supra, 41 Cal.App.2d at pp. 6-7.) The trial court did not
misconstrue section 996.440 in denying the Holt estate’s request for the undertaking
given by Hackard.
       In the absence of a finding of liability for a wrongfully issued preliminary
injunction, an undertaking will ordinarily be returned to the principal or surety that gave
the undertaking. (§ 995.430, subds. (b) & (d).) In this case, however, the trial court
correctly determined the undertaking should be transmitted to the bankruptcy trustee. As
the bankruptcy compromise shows, the undertaking became part of the bankruptcy estate.
As part of the bankruptcy estate, the undertaking was properly transmitted to the
bankruptcy trustee for final determination regarding to whom the undertaking should be
returned.
       The Holt estate notes it had a motion to release the undertaking to it at the same
time it requested dismissal of the case. On this basis, the Holt estate argues the trial court
had a procedural vehicle with which to grant the motion to release the undertaking to it.
We reject the argument. The Holt estate’s request for voluntary dismissal did not request
that the trial court retain continuing jurisdiction to release the undertaking to it and not
Hackard. An unqualified request for voluntary dismissal extinguishes a defendant’s
ability to enforce an undertaking. (Adams, supra, 56 Cal.App.2d at pp. 910-911;
Wilshire, supra, 41 Cal.App.2d at pp. 6-7.) A voluntary dismissal is fundamentally

                                              14
incompatible with a continuing request for damages based on a determination of injury
arising from the preliminary injunction issued in the dismissed case.
       In sum, the voluntary dismissal requested by the Holt estate extinguished any
claim to enforce the undertaking given by Hackard for the preliminary injunction.
                                              II
                         The Holt Estate’s Procedural Objections
       In addition to the Holt estate’s argument that Hackard was not entitled to have the
undertaking released to the bankruptcy trustee, the Holt estate contends the trial court
committed procedural errors in granting Hackard’s motion. We reject the contentions.
                                              A.
                                30-day Notice Requirement
       The Holt estate argues Hackard’s motion violated the 30-day notice requirement in
section 996.440, subdivision (c), by giving only 24 days’ notice. The argument was
forfeited when the Holt estate did not object to the lack of timely notice at the hearing on
Hackard’s motion. Rather than objecting on grounds of insufficient notice or requesting
a continuance, the Holt estate addressed the merits of Hackard’s motion by arguing the
undertaking should not remain with the bankruptcy trustee.
       Under California law, “ ‘[i]t is well settled that the appearance of a party at the
hearing of a motion and his or her opposition to the motion on its merits is a waiver of
any defects or irregularities in the notice of the motion. [Citations.] This rule applies
even when no notice was given at all. [Citations.] Accordingly, a party who appears and
contests a motion in the court below cannot object on appeal or by seeking extraordinary
relief in the appellate court that he [or she] had no notice of the motion or that the notice

                                              15
was insufficient or defective.’ ” (Reedy v. Bussell (2007) 148 Cal. App. 4th 1272, 1288
(Reedy), quoting Tate v. Superior Court (1975) 45 Cal. App. 3d 925, 930.)4
         “Indeed, in Carlton v. Quint (2000) 77 Cal. App. 4th 690, the court concluded that
even when the opposing party does expressly object to the inadequate notice in its
opposition papers, it may not be sufficient to preserve the issue for appeal. Instead, if the
party appears at the appropriate hearing and opposes the motion on the merits -- but
without making any request for a continuance or demonstrating prejudice from the
defective notice, the issue is waived . . . .” (Reedy, supra, 148 Cal.App.4th at pp. 1288-
1289.)
         Even though the Holt estate’s opposition to Hackard’s motion included an
argument the motion was procedurally flawed based on the 30-day notice provision in
section 996.440, subdivision (c), the lack of objection or request for continuance at the
hearing forfeited the Holt estate’s opportunity to raise the procedural objection in this
appeal.
                                              B.
            One-year Time Period for a Defendant to Enforce an Undertaking
         The Holt estate contends the trial court erred by releasing the undertaking to the
bankruptcy trustee before the one-year period for a defendant to enforce a judgment
under section 996.440, subdivision (b), had elapsed. We reject the contention. The Holt

4       Although Reedy preserves the Tate court’s use of the term “waiver” to describe the
relinquishment of the right to appeal, “forfeit” has since been recognized as the correct
term to describe the unintentional extinguishment of a right for failure to assert it in a
timely manner. “As the United States Supreme Court has clarified, the correct term is
‘forfeiture’ rather than ‘waiver,’ because the former term refers to a failure to object or to
invoke a right, whereas the latter term conveys an express relinquishment of a right or
privilege.” (In re Sheena K. (2007) 40 Cal. 4th 875, 880, fn. 1, citing inter alia United
States v. Olano (1993) 507 U.S. 725, 733, 123 L. Ed. 2d 508.)

                                              16
estate’s lack of entitlement to enforce the undertaking after its request for voluntary
dismissal rendered the one-year limitations period in section 996.440, subdivision (b),
unavailable to the estate. Had the Holt estate proven Hackard injured it by securing a
wrongful preliminary injunction, it would have had a year to enforce the undertaking
under section 996.440, subdivision (b). However, as we have explained above, the
voluntary dismissal foreclosed the Holt estate from enforcing the undertaking.
                                             C.
                   Lack of Affidavits in Support of Hackard’s Motion
       The Holt estate asserts Hackard submitted no evidence in support of his motion
because he did not submit the affidavits required by section 996.440, subdivision (d). We
disagree for two reasons.
       First, under section 995.430, subdivision (b), the undertaking expired upon the
granting of the defendant’s motion for a voluntary dismissal. Although an injured
defendant must show entitlement to damages to enforce an undertaking (§ 996.440), the
giver of the undertaking does not need to make the same showing for the return of the
undertaking when the undertaking automatically expires under section 995.430. In other
words, Hackard did not have the same burden of proof to receive the undertaking as the
Holt estate did.
       Second, Hackard did supply the requisite evidence to support his request that the
undertaking be transmitted to the bankruptcy trustee. He filed declarations with
attachments that showed the bankruptcy compromise rendered the undertaking part of the
bankruptcy estate and thus subject to administration by the trustee. Underlying the Holt
estate’s argument is the assumption only an affidavit could supply the requisite showing
in favor of Hackard’s motion. However, the Code of Civil Procedure provides that
declarations may substitute “[a]s an alternative to the burdensome procedure of a sworn

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statement before an authorized officer . . . .” (6 Witkin, Cal. Proc. 5th (2008) Provisional
Remedies, § 3, p. 26.) To this end, section 2015.5 provides that “[w]henever, under any
law of this state or under any rule, regulation, order or requirement made pursuant to the
law of this state, any matter is required or permitted to be supported, evidenced,
established, or proved by the sworn statement, declaration, verification, certificate, oath,
or affidavit, in writing of the person making the same (other than a deposition, or an oath
of office, or an oath required to be taken before a specified official other than a notary
public), such matter may with like force and effect be supported, evidenced, established
or proved by the unsworn statement, declaration, verification, or certificate, in writing of
such person which recites that it is certified or declared by him or her to be true under
penalty of perjury, is subscribed by him or her, and . . . if executed within this state, states
the date and place of execution . . . .” (Italics added.)
       Based on section 2015.5, Hackard’s introduction of declarations in support of his
motion for release of the undertaking were an acceptable substitute for affidavits.
                                              D.
                           The Holt Estate’s Claim of Damages
       Finally, the Holt estate argues the evidence in the record shows Hackard made
false statements to the trial court about a promissory note to the partnership. Based on
this asserted misconduct, the Holt estate contends Hackard should not have received any
relief from the trial court. The Holt estate now asks for damages arising out of Hackard’s
misleading statements. We reject the argument.
       The Holt estate’s argument is foreclosed by its voluntary dismissal of the case.
(Wilshire, supra, 41 Cal.App.2d at pp. 6-7.) A voluntary dismissal is incompatible with
continued assertion of claims and defenses in the case. (Ibid.) Thus, the Holt estate’s
argument was extinguished by its motion to voluntarily dismiss this action.

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                                     DISPOSITION
       The order entered on December 10, 2013, releasing the undertaking to Susan
Smith, as bankruptcy trustee, is affirmed. Michael A. Hackard, respondent, and Susan
Smith, as bankruptcy trustee, shall recover their costs on appeal. (Cal. Rules of Court,
rule 8.278(a)(1) & (2).)

                                                              /s/
                                                 HOCH, J.

We concur:

          /s/
HULL, Acting P. J.

             /s/
BUTZ, J.

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