Application to Extend the Statutory Hold (Judge Craig Griffin)

Before the Court this day is plaintiff?s application to extend the statutory hold.

Pursuant to Fin. Code ?1450, when an adverse claimant delivers to a bank an affidavit disputing the propriety of the account in any way, the bank must honor a three-court-day hold on the account.? This statute is an exception to the general rule that banks are bound by contract to honor the account holder?s wishes without scrutiny or internal policing.??Chazen v. Centennial Bank?(1998) 61 Cal.App.4th?532, 538-539.? Once this period expires, the bank is free to honor the account holder?s wishes without liability to anyone.? There is one exception:

?If at any time, either before, after, or in the absence of the filing of an affidavit by the adverse claimant, the adverse claimant procures and serves upon the bank at the office at which the deposit is carried or at which the property is held a restraining order, injunction, or other appropriate order against the bank from a court of competent jurisdiction in an action in which the adverse claimant?and all persons in whose names the deposit stands or for whose account the property is held are parties, the bank shall comply with the order or injunction, without liability on its part.?? Fin. Code ?1450(b), emphasis added.

On 12/20/17, plaintiff served its ?1450 affidavit on the bank manager at the Orange branch of US Bank (?Bank?) ? where the challenged account had been established.? There is no indication from the Bank that the affidavit was accepted, and no indication whether US Bank has established a central location for service (see Fin. Code ?1450(f)).? However, it appears from the counsel?s declaration that US Bank is cooperating and honoring the hold as provided.? See Coffee Decl para 4, 6.

On 12/21/17, plaintiff filed a civil action to hold the account.? The complaint names US Bank and Doe defendants, but not the seller (Gaynelle Harris) in whose name the account was opened and who is clearly an interested party.

On 12/26/17, duty judge Hon. Salter granted plaintiff?s TRO barring the parties to the action from ?using, transferring, concealing or otherwise making unavailable an amount not exceeding $228,002.45 in the U.S. Bank Account, account number 157507721916, that was wired or deposited in such account

on or after December 19, 2017, and any other account at U.S. Bank, to which funds from U.S. Bank Account No. 157507721916 were transferred on or after December 19, 2017.?? See Order dtd 12/26/17.? The order of course would not effectively bar the account holder in name (Gaynelle Harris) from withdrawing from the subject account.

The matter is here now for the preliminary injunction.? The matter cannot yet be granted because (1) Fin. Code ?1450 only permits a court order in a case naming all interested parties, and plaintiff has not yet named Gaynelle Harris, and (2) there is nothing in the court file showing notice of today?s proceedings to the Doe defendants at? The hearing must be continued.

That being said, the facts as established herein demonstrate a real risk of prejudice and countenancing of fraud.? Some judicial intervention is warranted in the interim.? A TRO has a different standard than a preliminary injunction.? So informal is the TRO proceeding that it does not reflect on the merits of the underlying dispute, and does not even have to afford due process protections to the person against whom the TRO is directed.??Thomas v. Quintero(2005) 126 Cal.App.4th?635,652.? All that is determined is whether the TRO is necessary to maintain the status quo pending the noticed hearing on the application for preliminary injunction.??Landmark Holding Group, Inc. v. Superior Court?(1987) 193 Cal.App.3d 525, 528.? This is why TROs are transitory, usually good for only a few weeks.? The decision to grant a TRO rests in the sound discretion of the trial court, and is most appropriate when, as here, the status quo appears to be in jeopardy before a full hearing can be held.? See?Biosense Webster, Inc. v. Superior Court?(2006) 135 Cal.App.4th?827, 834.

Motion for preliminary injunction is CONTINUED to 01/22/17 at 2pm in this department.? Plaintiff is ordered to give notice to all interested persons of the new hearing date, and to submit to this Court proof thereof as soon as practical.? Plaintiff is further ordered, prior to the next hearing date, to Doe in Gaynelle Harris or obtain a stipulation from her to submit to this Court?s jurisdiction and be bound by all orders/judgment emanating herefrom.? Plaintiff?s failure to comply may result in a denial of further provisional relief and a lifting of any hold on the subject account.? The current TRO shall remain in full force and effect until the next hearing date.