Judge: Craig Griffin, Case: Darwish v. U.S. Bank National Assn., Date: 2022-09-12 Tentative Ruling
Before the court is an Order to Show Cause Re: Issuance of a Preliminary Injunction enjoining defendants Structured Adjustable Rate Mortgage Loan Trust, Mortgage Pass-Through Certificates, Series 2005-22, U.S. Bank National Association as trustee (“USB”); MTC Financial Inc. dba Trustee Corps; and Nationstar Mortgage LLC dba Mr. Cooper (“Cooper” individually; “Defendants” all together) from proceeding with a foreclosure sale on real property owned by plaintiffs Hussam Darwish (“Hussam” individually) and Danielle Darwish (“Plaintiffs” together with Hassam).
The court finds a preliminary injunction (“PI”) should not be issued in this instance. The Temporary Restraining Order (“TRO”) that was granted on 08/15/22 is also ordered to be terminated.
The court notes Plaintiffs have put forth almost no, or at most excessively minimal, legal basis, arguments, and evidence in support of their request for a PI. Instead, Plaintiffs spent most of their application simply parroting various sections of the Homeowner Bill of Rights (“HBOR”), without actually alleging (or providing supporting evidence of) any actual violations by an of the Defendants.
The burden is on the moving party to show all elements necessary to support issuance of a preliminary injunction. [Emphasis added.] (O’Connell v. Superior Court (2006) 141 Cal.App. 4th 1452, 1481.) The moving party has the burden to show that it is reasonably probable it will prevail on the merits. (San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442; Weil & Brown, ¶ 9:632.1.) Additionally, “[i]n deciding whether to issue a preliminary injunction, a trial court weighs two interrelated factors: [1] the likelihood the moving party ultimately will prevail on the merits, and [2] the relative interim harm to the parties from the issuance or noninsurance of the injunction.” (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1449–1450.)
1) Likelihood Plaintiff Will Prevail on the Merits
Plaintiffs’ causes of action (“COA”) are for 1) Violation of California Homeowner Bill of Rights; and 2) Unfair Business Practices.
a) Violation of the Homeowner Bill of Rights
“The Homeowner Bill of Rights (Civ. Proc. Code §§ 2920.5, 2923.4–.7, 2924, 2924.9–.12, 2924.15, 2924.17–.20) (“HBOR”), effective January 1, 2013, was enacted “to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower's mortgage servicer, such as loan modifications or other alternatives to foreclosure.” (§ 2923.4.)” (Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal. App. 4th 1267, 1272.)
Under HBOR, an action for injunctive relief only permissible in cases of violations of Civ Code §§ 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17. (Civ. Code § 2924.12.) Plaintiffs’ Complaint generally discussed “Civ. Code § 2924, et seq.,” and Civ. Code. § 2923.5, 2923.55, 2923.6, 2923.7, 2924.12, 2924.17, and 2924.18, but did not actually provide much in the way of arguments for specific violations of any of those code sections.
It appears Plaintiffs’ allegations against Defendants are that Defendants 1) did not provide proper notice before filing the 05/07/15 Notice of Default and Election to Sell Under Deed of Trust (“NOD”) on the property; and 2) “dual tracked” foreclosure while processing Plaintiffs’ application for modification.
As to lack of proper notice, the NOD contains a “Declaration of Mortgage Servicer Pursuant to Civ. Code § 2923.55(c),” which indicates Plaintiffs were properly and timely contacted to assess Plaintiff’s financial situation and explore options to Plaintiffs to avoid foreclosure. (Hussam Decl., Ex. B.) From evidence produced by Plaintiffs, it appears Defendants complied with the applicable code sections regarding contact prior to filing an NOD. Plaintiffs have produced no evidence to contradict the declaration. It appears unlikely Plaintiffs will prevail under this issue.
As to the “dual tracking,” Plaintiffs have not alleged they filed a completed application, not provided any information regarding when any application was supposedly filed, nor provided any evidence of such an application. The Complaint alleges only that after Plaintiffs were notified of the NOD, did Plaintiffs supposedly apply for forbearance relief. (Complaint ¶ 21.) Plaintiffs also alleged they continued to follow up with their loan modification but Cooper would routinely lose documents and representatives could not provide Plaintiffs with any consistent information regarding their loan modification review. (Complaint ¶ 22.) Plaintiffs requested this injunction to enjoin Defendants from selling the property in question at a trustee’s sale on 08/16/22. (Motion, 5:10-11.) Over seven year have passed from the date the NOD was filed to the present trustee’s sale, and it is unclear how a loan modification would take that long to be determined. Again, Plaintiffs have provided no evidence of any application, that any such application is still in process, or of communications between Plaintiffs and Defendants regarding an ongoing application. Presumably Plaintiffs would have some sort of evidence if facts were what Plaintiffs alleged. Confusingly, Plaintiffs go into the requirements placed on a loan provider if a first lien loan modification application is denied, yet Plaintiffs never actually allege (or provide information) that any application was denied. (Complaint ¶¶ 30-32.) It appears unlikely Plaintiffs will prevail under this issue.
Plaintiffs have not met their initial burden of showing they will be successful under this COA.
b) Unfair Business Practices
“The California Unfair Competition Law [“UCL”] ([Bus. & Prof. Code] § 17200 et seq.) defines ‘“unfair competition” as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”’” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 609.)
“In contrast to its limited remedies, the unfair competition law's scope is broad. The unfair competition law's scope is broad. Unlike the Unfair Practices Act, it does not proscribe specific practices. Rather, as relevant here, it defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice.” [Citation.] Its coverage is “sweeping, embracing ' ”anything that can properly be called a business practice and that at the same time is forbidden by law.“ ' ” [Citations.] It governs “anti-competitive business practices” as well as injuries to consumers, and has as a major purpose “the preservation of fair business competition.” [Citations.] By proscribing “any unlawful” business practice, “section 17200 'borrows' violations of other laws and treats them as unlawful practices” that the unfair competition law makes independently actionable. [Citations.] [¶] However, the law does more than just borrow. The statutory language referring to “any unlawful, unfair or fraudulent” practice (italics added) makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law. “Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. 'In other words, a practice is prohibited as ”unfair“ or ”deceptive“ even if not ” unlawful“ and vice versa.'” (Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal. 4th 163, 180.)
In the motion, for COA No. 2, Plaintiffs merely state defendants have failed their duties and obligations under the HBOR. As discussed in the section on COA No. 1, supra, Plaintiffs have not met their burden of showing any violation of HBOR on the part of Defendants. In the complaint, Plaintiffs allege defendants proceeded with non-judicial foreclosure while Plaintiffs were being reviewed for a loan modification. (Complaint ¶ 41.) Again, Plaintiffs provided no evidence a loan modification application was filed, when it was filed, that it is still currently in review, etc.
Plaintiffs have not met their initial burden of showing they will be successful under this COA.
2) Weighing the Relative Interim Harm
Generally, the Court must also weigh the relative interim harm on the respective parties. (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1449–1450.)
In the present matter, Plaintiffs seek an injunction prohibiting Defendants from proceeding with the foreclosure sale. Plaintiffs have provided minimal arguments and no evidence to support they will prevail on either of their COA. Although the harm in Plaintiffs losing their home through a foreclosure sale is great, defendants will also suffer relatively great harm by way of ongoing loss of income from Plaintiffs’ failure to pay all amounts due and owing and by having to expend attorney fees and costs to proceed through an what appears to be an unmeritorious lawsuit. It also appears Plaintiffs have been living on the Property for at least seven years without paying anything towards rent or the mortgage. The initial Loan was $720,000, and the estimated remaining balance is now over twice that at $1,506,262.27. (Hussam Decl., Ex. C.) Hussam also appears to have filed for Chapter 7 and Chapter 11 bankruptcies in other efforts to forestall the Property from going into foreclosure. (Davieau Decl. ¶¶ 3-6, Exs. A-C.)
Given the above, the weight of relative harm leans in favor of defendants.
As Plaintiffs have failed to meet their initial burden of showing they are likely to be successful on the merits of their case, and as the relative interim harm weighs in favor of Defendants, the court will not issue a PI to enjoin the sale of the property. The 08/15/22 TRO is also ordered to be terminated.
Defendant U.S. Bank to give notice.