Palmco Corp. v. SUPERIOR COURT OF ORANGE CTY.

California Court of Appeal Jun 1, 1993 No. G013659Published

Before: Wallin

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Holding. The trial court acted within its inherent equitable powers in ordering an accounting of profits earned by the petitioner during the pendency of an appeal, even though the underlying injunction had been stayed.

Issues

Whether a trial court exceeds its jurisdiction by ordering an accounting of profits earned by a defendant during the pendency of an appeal when the injunction was stayed.
Whether an express reservation of jurisdiction is required to award damages that accrue during the pendency of an appeal.

Disposition. denied

Quotations verified verbatim against the opinion

“The trial court acted within its equitable powers in granting Kim’s request.”

“An equity court has inherent power to make its decree effective by additional orders affecting the details of performance, irrespective of reservation of power in the decree.”

“By ordering an accounting, the trial court kept Palmco from being unjustly enriched by delaying execution of the judgment.”

Opinion

WALLIN, J.

Palmco Corporation petitions for a writ of mandate directing the superior court to vacate an order for an accounting of its profits from a business conducted after operations were enjoined but while the injunction was stayed on appeal. It contends the court exceeded its jurisdiction. We conclude the trial court acted within its equitable powers and deny the writ petition.

[223]

Chul Ki Kim was a shareholder in Palmco, an importer and exporter of goods.

Kim sold his shares to Palmco in exchange for an agreement that he would receive all rights of Palmco to engage in a stainless steel flatware import and sales business. Subsequently, Palmco entered into contracts with United and American Airlines to supply flatware. Kim filed suit against Palmco for specific performance and breach of contract and obtained a judgment awarding him damages and injunctive relief.

The judgment, filed August 27, 1987, ordered Palmco to pay Kim $325,000 plus 10 percent interest from June 3. In addition, Palmco was ordered to transfer to Kim all rights under the contracts with United and American Airlines, to sell its existing flatware inventory to Kim, to refrain from contracting with the two airlines for flatware sales for six months and from purchasing flatware from a Korean manufacturer, Kyung Dong, for eighteen months. The trial court retained jurisdiction to “monitor and ensure compliance with the letter and intent” of the judgment.

Palmco appealed. The money judgment was stayed under Code of Civil Procedure section 917.1 when Palmco deposited $500,000 with the court. Palmco also made several requests to stay the injunctive provisions of the judgment. In one such request it argued Kim would suffer no harm if a stay of the injunction was granted because “any damage suffered by [Kim] during [appeal] can be fully compensated by an award of money damages for provable loss of profits should he prevail on the appeal.”

The trial court originally denied the stay because further delay would unjustly enrich Palmco at Kim’s expense. Ultimately, the court granted a stay of the injunction, without bond, pursuant to Code of Civil Procedure section 916. While the appeal was pending Palmco continued to import and sell flatware to the two airlines.

Palmco Corp. v. SUPERIOR COURT OF ORANGE CTY.

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WALLIN, J.

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