Once a judgment is entered and a notice of appeal filed, it is tempting to think that everything in the trial court is stayed until the Court of Appeal issues its decision and sends the case back to the trial court via remittitur. After all, Code of Civil Procedure Section 916(a) broadly states that the perfecting of an appeal stays "proceedings in the trial court upon the judgment or order appealed from or upon matters embraced therein." And practitioners often refer to this statute as the "automatic stay" available on filing an appeal. That label, however, turns out to be a bit of a misnomer. The reality is that a stay of all trial court proceedings pending appeal under Section 916(a) is anything but automatic. On balance, the trial court retains jurisdiction to resolve any issues that do not implicate the merits of what is up on appeal. As the parties recently found out in Marteney v. Elementis Chemicals, Inc., 2018 DJDAR 10645 (Cal. App. 2nd Dist., Nov. 1, 2018), that reservoir of jurisdiction can support highly consequential procedural and substantive decisions -- and even awards of affirmative relief.
To begin with, Section 916(a) is subject to various express carve outs and contingencies found in the statutes immediately following it. For instance, enforcement of a money judgment may be stayed only if the appellant posts a bond. Cal. Civ. Proc. Code Section 917.1. The same is true of a judgment directing the assignment of personal property, the sale of real property, or the appointment of a receiver. Id. Sections 917.2, 917.4, 917.5. There also is no stay at all in certain situations -- such as where a party has been found guilty of usurping public office, a corporate officer has been given permission to inspect corporate books, or a building has been shuttered as a public nuisance. Id. Sections 917.8(a)-(c). This list is not exhaustive but it makes the point: there is reason for a practitioner to check the entirety of Title 13, Chapter 2 in the Code of Civil Procedure to see if the "automatic" stay applies and to what.
Moreover, for many cases, the most significant caveat rests in the express carve out in Section 916(a) itself. Under its terms, notwithstanding an appeal, the trial court may proceed "upon any other matter embraced in the action and not affected by the judgment or order." The critical inquiry for this analysis is "whether postjudgment [or postorder] proceedings on the matter would have any effect on the 'effectiveness' of the appeal." Varian Med. Sys. v. Delfino, 35 Cal. 4th 180, 189 (2005) (quoting Marriage of Horowitz, 159 Cal. App. 3d 377, 281 (1984)). For the stay to take hold, the trial court proceeding must "directly or indirectly seek to enforce, vacate, or modify [the] appealed judgment or order," or "substantially interfere with the appellate court's ability to conduct the appeal" -- such as where "the possible outcomes on appeal and the actual or possible results of the [trial court] proceeding are irreconcilable." Id. (internal quotations omitted).
As one might imagine, whether a trial court proceeding impacts the effectiveness or substantially interferes with an appeal necessarily is a case-by-case inquiry. And this brings us back to Marteney. There, a husband and wife were plaintiffs in a personal injury lawsuit. They entered into pre-trial settlements with several defendants and ultimately recovered just over $1.5 million against the remaining defendants UCC and Elementis. After the trial court reduced the damages award to account for settlement credits and the jury's comparative fault determinations, the resulting judgment went up on appeal.
While the appeal was pending, the husband unfortunately passed away. His wife (individually and on behalf of his estate) and children filed an amended complaint for wrongful death. After the Court of Appeal affirmed the judgment in favor of the husband and wife in their personal injury action against UCC and Elementis, the wife dismissed her wrongful death claim from the amended complaint and UCC settled. The case proceeded to a damages-only jury trial on the wrongful death claims (brought by the estate and children) against Elementis. The jury returned a damages verdict against Elementis, which the trial court further apportioned and reduced based on comparative fault and settlement credits. The trial court then amended the judgment to reflect the final revised damage awards in favor of the estate and the children.
Elementis moved to vacate the judgment under Code of Civil Procedure Section 473(d), contending that the appeal from the earlier judgment triggered an automatic stay divesting the trial court of jurisdiction over any proceedings involving the amended complaint and voiding the amended judgment. The trial court denied the motion, finding that the amended complaint did not impact the effectiveness of the appeal in the personal injury action and therefore it had jurisdiction to resolve the wrongful death action.
Division 4 of the 2nd District affirmed. It first explained that there are two species of judgments where Code of Civil Procedure Section 473(d) is concerned. On the one hand, judgments are "absolutely void" where the rendering court lacked jurisdiction over the subject matter or the parties. Marteney, 2018 DJDAR at 10647. Importantly, void judgments are a legal nullity -- meaning that all proceedings founded on a void judgment are also a nullity -- and thus are subject to attack any time, at any place. Id. On the other hand, judgments are "voidable, rather than absolutely void," where the rendering court possessed fundamental jurisdiction over the subject matter and the parties but then acted in excess of its jurisdiction. Id. at 10648. Voidable judgments remain valid until set aside; parties attacking voidable judgments are subject to principles of estoppel, waiver and forfeiture. Id.
The court then analyzed the jurisdictional implications of the automatic stay through Section 473(d)'s bifocal lens. It recognized that Section 916(a) bars all proceedings that directly or indirectly seek to enforce, vacate or modify the order or judgment on appeal. Id. The principal effect of that bar, according to the court, is to divest the trial court of jurisdiction over matters within the scope of the appeal. Id. Any trial court proceedings over such matters are not merely voidable, but altogether void. Id.
On the facts before it, however, the court held that the appeal from the earlier judgment did not divest the trial court of jurisdiction to adjudicate the merits of the later amended complaint. This was so because the amended complaint asserted claims arising from the husband's wrongful death (post-judgment) and thus did not implicate the earlier judgment on the personal injury claims. In effect, the court viewed the amended complaint as akin to a party's attempt to intervene in a trial court action during an appeal, which is not subject to the automatic stay.
The court did not stop there. It noted that even if the trial court's decision to permit the amended complaint during the appeal was in excess of its jurisdiction -- thus rendering the judgment voidable (as opposed to void) -- Elementis failed to preserve the error. In this regard, the court noted that Elementis had answered the amended complaint, stipulated to a stay of the amended complaint proceedings pending appeal, and then participated without objection in the wrongful death trial. Because Elementis waited until after entry of the amended judgment to raise the jurisdictional question, the court saw little difficulty in concluding that Elementis waived the challenge.
For its part, Elementis contended that because the amended complaint superseded the original complaint, it necessarily implicated matters within the scope of the earlier appeal. The Court of Appeal disagreed, explaining that the amended complaint functioned as the original complaint for the wrongful death plaintiffs and constituted the beginning of a new action as far as they were concerned. Elementis also contended that once the court issued its remittitur in the wake of the earlier appeal, the earlier judgment became final and precluded any proceedings on the amended complaint. The court disagreed here, too, explaining that the remittitur rendered the earlier judgment final and precluded relitigation of anything in the scope of that judgment. But, the court explained, the amended complaint did not fall within the scope of the earlier judgment because it involved different parties and claims that were not barred.
Marteney is instructive in several respects. First, it reminds us of the important distinction between (1) a judgment that is void because the trial court lacked fundamental jurisdiction to render it, and (2) a judgment that is voidable because the trial court exceeded its jurisdiction in rendering it. This duality is more than metaphysical, and holds real-world consequences for practitioners as the parties in Marteney discovered. Although a party may challenge a void judgment at any time, a challenge to a voidable judgment is subject to procedural traps like waiver, estoppel and forfeiture.
Second, the case underscores that the automatic stay pending appeal does not "automatically" encompass everything that could occur in the trial court after judgment is entered. Rather, the automatic stay generally covers matters that only would interfere or hinder the appellate court's decisionmaking authority. That inquiry necessarily arises on a case-by-case basis and practitioners would be wise not to assume that an appeal per se operates as a "pause" button on trial court proceedings.
Third, because of the possibility of further proceedings in the trial court after the filing of an appeal, counsel should consider asking the trial court for a stay pending the outcome of the appeal. If the stay is granted, further proceedings will be on hold. If it is denied, the motion will give counsel an opportunity to limit those proceedings as Section 916(a) would contemplate and make a record for later proceedings in an appellate court if the trial court presses forward and resolves issues that implicate the effectiveness or the merits of the pending appeal.