Judge: Andrew E. Cooper, Case: 24CHCV00371, Date: 2024-11-15 Tentative Ruling

Case Number: 24CHCV00371    Hearing Date: November 15, 2024    Dept: F51

PRELIMINARY INJUNCTION

Motion Filed: 2/13/24

MOVING PARTY: Plaintiff Arthur Burleigh (“Plaintiff”)

RESPONDING PARTY: Defendant Select Portfolio Servicing, Inc. (“Defendant”)

NOTICE: OK

RELIEF REQUESTED: A preliminary injunction restraining the foreclosure sale of the Subject Property.

TENTATIVE RULING: The request is denied.

BACKGROUND 

This is a wrongful foreclosure action wherein Plaintiff, who owns and resides at certain real property located at 22326 Heritage Pass Place, Chatsworth, CA 91311 (the “Subject Property”), brings various causes of action against Defendant based on Defendant’s alleged violations of the California Homeowner Bill of Rights (“HBOR”). (Civ. Code, § 2923.4 et seq.) 

On 2/6/24, Plaintiff filed his complaint against Defendant, alleging the following causes of action: (1) Violation of Civil Code Section 2923.7; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing; (3) Negligent Misrepresentation; and (4) Unfair Business Practices.

On 2/8/24, Plaintiff filed an ex parte application for a temporary restraining order restricting the foreclosure sale of the Subject Property, which the Court granted on 2/9/24. On 2/13/24, Plaintiff filed the instant motion for a preliminary injunction. On 6/28/24, Defendant filed its opposition. No reply has been filed to date (The Court notes a “declaration re: filing of reply in support of preliminary injunction” was filed on November 13, 2024---this will be addressed at the hearing).

ANALYSIS

In determining whether to issue a preliminary injunction, the Court considers two interrelated factors: (1) the likelihood that the plaintiff will prevail on the merits at trial and (2) the interim harm the plaintiff will likely suffer if the injunction does not issue as compared to the harm the defendant is likely to suffer if the injunction does issue. (White v. Davis (2003) 30 Cal.4th 528, 554; Smith v. Adventist Health System/West (2010) 182 Cal.App.4th 729, 749; Brown v. Pacifica Foundation, Inc. (2019) 34 Cal.App.5th 915, 925; Amgen Inc. v. Health Care Services (2020) 47 Cal.App.5th 716, 731.)

1.      Balancing of Equities

In making a determination on the issuance of a preliminary injunction, the Court must balance the equities between the parties. If denying the requested relief would result in great harm to the plaintiff, and the defendant would suffer little harm if the relief is granted, it is an abuse of discretion to deny relief. (Robbins v. Superior Court (1985) 38 Cal.3d 199, 205; Butt v. State of California (1992) 4 Cal.4th 668, 678 (the greater the plaintiff’s showing on one factor, the less that must be shown on the other to support an injunction).)

Irreparable harm (i.e., inadequate legal remedy) is one of the traditional considerations for the issuance of a preliminary injunction. (Code Civ. Proc. § 526, subd. (a)(2).) The threat of irreparable harm must be imminent and not a mere possibility of harm sometime in the future. (Korean Philadelphia Presbyterian Church v. California Presbytery (2000) 77 Cal.App.4th 1069, 1084.) However, plaintiffs need not wait until they have suffered actual harm and may seek injunctive relief against threatened infringement of their rights. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1292; Costa Mesa City Employees’ Assn. v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 305-306.)

Where a piece of real property is under threat of sale under a deed of trust, “such damage may be considered irreparable for in equity each parcel of real property is considered unique.” (Stockton v. Newman (1957) 148 Cal.App.2d 558, 564.) Here, Plaintiff argues that he “stands to lose his home to foreclosure, in which he and his wife, both of whom have several ongoing medical ailments, reside. In addition, Plaintiff stands to lose the substantial equity he has in his home.” (Pl.’s Mot. 6:11–13.) “As such, Plaintiff stands to suffer irreparable harm if the instant temporary restraining order is not issued.” (Id. at 6:15–16.)

Defendant does not dispute that Plaintiff may suffer irreparable harm should the Court deny the preliminary injunction; rather, Defendant argues that such harm is inevitable because Plaintiffs cannot prevail on their claims in this action. (Id. at 10:26–11:6, citing Teachers Ins. & Annuity Assn. v. Furlotti (1999) 70 Cal.App.4th 1487, 1498 [“an injunction should not issue where there is no possibility of success even though its issuance might prevent irreparable harm.”].)

Based on the foregoing, the Court finds that the potential harm to Plaintiff outweighs the potential harm to Defendant should the injunction not be issued.

2.      Likelihood of Success on the Merits

A trial court may not issue an injunction, regardless of the amount of interim harm, “unless there is some possibility” that plaintiff will ultimately prevail on the merits of the claim. (Jamison v. Department of Transp. (2016) 4 Cal.App.5th 356, 362; Association of Orange County Deputy Sheriffs v. County of Orange (2013) 217 Cal.App.4th 29, 49.)

a.       Violation of Civil Code Section 2923.7

Plaintiff’s first cause of action alleges that Defendant failed to assign a “single point of contact” to Plaintiff in violation of Civil Code section 2923.7. Under this portion of the HBOR, “when a borrower requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” (Civ. Code § 2923.7, subd. (a).) “For purposes of this section, ‘single point of contact’ means an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described” below. (Id. at subd. (e).)

“The single point of contact shall be responsible for doing all of the following: (1) Communicating the process by which a borrower may apply for an available foreclosure prevention alternative and the deadline for any required submissions to be considered for these options; (2) Coordinating receipt of all documents associated with available foreclosure prevention alternatives and notifying the borrower of any missing documents necessary to complete the application; (3) Having access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative; (4) Ensuring that a borrower is considered for all foreclosure prevention alternatives offered by, or through, the mortgage servicer, if any; and (5) Having access to individuals with the ability and authority to stop foreclosure proceedings when necessary.” (Id. at subd. (b).)

Here, Plaintiffs argue that Defendant “violated Civil Code § 2923.7 by failing to provide Plaintiff with a direct means of communication with Plaintiff’s assigned single point of contact and failing to carry out the duties assigned to a single point of contact. At all times relevant, … Plaintiff was not provided a direct means of contacting the individual assigned to his account. In fact, Plaintiff talked to many different representatives throughout the time that he submitted an application for a foreclosure prevention alternative.” (Pl.’s Mot. 7:11–20.)

Defendant argues in opposition that as a preliminary matter, Plaintiff is not protected under the HBOR because he previously received a loan modification in 2021. (Def.’s Opp. 12:1–16.) Nevertheless, Defendant argues that “multiple contacts at SPS spoke with Plaintiff about his account, loss mitigation options, and the process of applying for assistance review.” (Id. at 13:2–3, citing Decl. of Michelle Simon ¶¶ 18–36.) “The evidence demonstrates appointed relationship managers, and SPS representatives that complied with the duties outlined by the statute. There was no violation of section 2923.7, let alone a material one as would be required to succeed on it.” (Id. at 13:11–14.)

The Court notes that Plaintiff has not submitted any reply argument. The Court further notes that the statute defines a “single point of contact” to include a “team of personnel each of whom has the ability and authority to perform the responsibilities described.” (Civ. Code § 2923.7, subd. (e).)  Based on the foregoing, the Court finds that Plaintiff has shown a low probability of success on the merits of his first cause of action.

b.      Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiff’s second cause of action alleges against Defendant a breach of the implied covenant of good faith and fair dealing. Every contract contains an implied covenant of good faith and fair dealing that neither party will do anything to interfere with the other party’s right to receive the benefits of the agreement. (Howard v. American Nat’l Fire Ins. Co. (2010) 187 Cal.App.4th 498, 528.) The precise nature and extent of the duty depends on the nature and purpose of the underlying contract and the parties’ legitimate expectations arising from the contract. (Ibid.) “A breach of the implied covenant of good faith is a breach of the contract … and breach of a specific provision of the contract is not ... necessary to a claim for breach of the implied covenant of good faith and fair dealing.” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.)

Here, Plaintiff argues that he “was in a contractual relationship with Defendant SPS under the Deed of Trust and servicing contract for the mortgage loan. As such, Defendant SPS had a contractual obligation to refrain from hindering Plaintiff’s performance under the contract.” (Pl.’s Mot. 9:1–3.) Plaintiff asserts that “Defendant SPS, induced Plaintiff to breach the contract and then utilized that very breach as the event of default upon which it is basing the ongoing foreclosure.” (Id. at 9:14–16.)

Defendant argues in opposition that its representatives informed Plaintiff of the payment schedule of the COVID loan forbearance plan, therefore “the evidence demonstrates Plaintiff was not induced into the Forbearance Plan, and that he was informed that all payments would come due at the end, and at most he would be reviewed for potential options.” (Def.’s Opp. 15:6–8, citing Simon Decl. ¶¶ 18–20.)

The Court again notes Plaintiff’s lack of reply argument, and therefore finds that Plaintiff has shown a low probability of prevailing his second cause of action.

c.       Negligent Misrepresentation

Plaintiff’s third cause of action alleges Negligent Misrepresentation against Defendant. The elements of a cause of action for negligent misrepresentation include “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154 [quotations omitted].)

Fairness requires that allegations of fraud be pled “with particularity” so that the court can weed out nonmeritorious actions before a defendant is required to answer. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The particularity requirement necessitates pleading facts that “show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Here, Plaintiff argues that “when Plaintiff was current in his mortgage payments, Defendant induced Plaintiff into a forbearance plan, indicating to Plaintiff that the forbearance plan provided that at the end of the plan, if Plaintiff could not immediately pay that accrued during the forbearance term, the loan would be modified to address the payments that accrued during the forbearance term and that Plaintiff could resume regular payments.” (Pl.’s Mot. 9:21–25.) “In reliance on this conversation, Plaintiff entered into the second forbearance plan[.] While Plaintiff performed as instructed, SPS later did an about-turn, telling Plaintiff that his loan was past due and threatening legal action and foreclosure proceedings.” (Id. at 9:17–10:1.) “Defendant SPS knew or should have known of that statement’s falsity because as a servicer of mortgage loans, it should understand the implications of ceasing payments during forbearance and its effect on the borrower’s account.” (Id. at 10:2–4.)

Defendant argues in opposition that it made no misrepresentation here. “The evidence demonstrates Plaintiff was not induced into the Forbearance Plan, and there was no misrepresentation about the Forbearance Plan. Plaintiff was informed that all payments would come due at the end, and at most he would be reviewed for potential options.” (Def.’s Opp. 16:18–21, citing Simon Decl. ¶¶ 18–20.) The Court agrees and finds that the evidence submitted shows that Defendant’s representatives communicated to Plaintiff that he would be reviewed for additional repayment options at the end of the forbearance term, not that the loan would automatically be modified. Even if Defendant had made such a representation, “any purported oral communication relating to potential future modification cannot support a negligent misrepresentation claim.” (Id. at 16:27–28, citing Richard P. v. Vista Del Mar Child Care Service (1980) 106 Cal.App.3d 860, 865 [“Fraudulent representations, to constitute ground for relief, must be as to existing and material facts; predictions of future events are ordinarily considered non-actionable expressions of opinion.’].)

Based on the foregoing, the Court finds that finds Plaintiff has shown a low probability of prevailing on his third cause of action.

d.      Unfair Business Practices

Plaintiff’s fourth cause of action alleges Unfair Business Practices against Defendant. To succeed on a claim for unfair business practices in violation of the Unfair Competition Law (“UCL”), a plaintiff must establish that the defendant was engaged in an “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising” and certain specific acts. (Bus. & Prof. Code, § 17200.) “In essence, an action based on Business and Professions Code section 17200 to redress an unlawful business practice ‘borrows’ violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under section 17200 et seq. and subject to the distinct remedies provided thereunder.” (People ex rel. Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 515.) A plaintiff alleging an “unfair” business practice under the UCL must show that the defendant’s conduct is “tethered to an underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 613.) “‘Fraudulent,’ as used in the statute, does not refer to the common law tort of fraud but only requires a showing members of the public ‘are likely to be deceived.’” (Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 618.)

Here, Plaintiff argues that Defendant violated the UCL under the “unfair” prong because Defendant “will not allow Plaintiff to be reviewed for loss mitigation, despite California’s clear policies (1) of fostering more cooperative relations between lenders and borrowers who are at risk of foreclosure, so that homes will not be lost a loan and (2) that a loan modification be offered if such a modification or plan is consistent with its authority.” (Pl.’s Mot. 11:23–26.) “In the case at hand, Defendant placed Plaintiff into a forbearance plan, when Plaintiff’s loan was current, and failed to adequately explain to Plaintiff what to expect at the end of the forbearance term. When Plaintiff’s forbearance plan ended and he tried to submit regular payments, Defendant told Plaintiff he had to apply for loss mitigation but failed to adequately advise Plaintiff of the deadlines to do so. Defendant then closed the request, advising Plaintiff that the request was closed without review and that Plaintiff could not submit a new application. Plaintiff appealed the decision, informing Defendant of the change in income that would support a review, but Plaintiff’s efforts have been denied.” (Id. at 11:15–23.)

Defendant argues in opposition that “Plaintiff cannot demonstrate that seeking a modification of his own contractual obligation offends a public policy tethered to any underlying constitutional, statutory or regulatory provision.” (Def.’s Opp. 17:16–18.) Defendant further asserts that “if the Property sells at a trustee’s sale, it will be due to his own default, not any act of SPS.” (Id. at 18:1–2.) Based on the foregoing, the Court finds that Plaintiff has not sufficiently shown that Defendant violated the “unlawful” prong of the UCL. While the Court finds that Plaintiff has sufficiently shown that Defendant’s conduct constitutes an “unfair” business practice in violation of the spirit of the HBOR, Plaintiff has failed to make a showing that he may prevail on the merits of this cause of action.

Based on the foregoing, the Court finds that Plaintiff has not made a sufficient showing that he is likely to prevail on the merits of his claims in this action. Accordingly, the request for a preliminary injunction is denied.

CONCLUSION 

Plaintiff’s request for a preliminary injunction is denied.