Judge: David A. Hoffer, Case: 30-2023-01306532, Date: 2023-05-15 Tentative Ruling
Plaintiffs Edward A. Sierra and Sabrina A. Sierra’s (“Sabrina” individually; “Plaintiffs” together) unopposed Motion for Preliminary Injunction (“PI”) is GRANTED.
“In 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.)
Plaintiff seeks an injunction to prohibit defendants Ruth Anne Della Vedova (“Della Vedova” individually); Barbara A. Kerr; and Asset Default Management, Inc. (“ADMI” individually; ‘Defendants” together with Vedova) from selling real property located at 19311 Oriente Drive in Yorba Linda (“Property”).
1) Likelihood of Prevailing On the Merits
Plaintiffs’ Complaint states various causes of action (“COA”) related to issues with residential mortgage lending.
Regarding COA No. 1 – Violation of the Truth in Lending Act (“TILA”), Plaintiffs alleged Defendants never provided them with two copies of properly filled out Notice of Right to Cancel and the TILA APR disclosure sheet. Pursuant to 15 U.S.C.A. § 1635(a) and 12 C.F.R. 1026.23(b)(1), the lender is required to provide a notice of the right to cancel/rescind the loan notifying the borrower of funds secured by property of the right to cancel the loan. Plaintiffs allege they were never provided two copies of the notice of right to rescind. (Sabrina Decl. ¶ 21.) As such, it would appear Plaintiffs have three-years from the date of consummation of the loan to assert their right to rescind, which they in turn timely asserted. (12 C.F.R. § 1026.23(a)(3)(i); Sabrina Decl. ¶ 25, Ex. A.) Plaintiffs allege Defendant also did not provide disclosures related to the APR under 15 U.S.C.A. § 1639. It is unclear from the allegations in the complaint and Sabrina’s declaration if the disclosures conformed with that code section as Plaintiffs allege they were notified of APR and payment scheduled. (Sabrina Decl. ¶ 12.) There is no evidence the notice of right to rescind was ever delivered to Plaintiffs. Plaintiffs are therefore likely to prevail on that portion of COA No. 1 at this time. Additionally, while Plaintiffs timely exercised their right of recission within the three-year period (assuming no notice was provided), Della Vedova has not complied with her duties and rescinded the loan.
Plaintiffs also allege that as the loan qualified as a “high-cost” mortgage, it fell under Homeowners Equity Protection Act (“HOEPA”). Since the loan held a 9% APR at a time when home loans were averaging much lower in October 2020, the loan likely qualified as a “higher-priced mortgage loan” under the code. (12 C.F.R. § 1026.35(a).) There are specific requirements under the code for “higher-priced mortgage loans” including required disclosures (12 C.F.R. § 1026.35(d) - which Plaintiffs contend they never received) and verification of ability to repay the loan (15 U.S.C.A. § 1639(h) – which allegedly did not occur). Defendants also allegedly demanded late charges of 10% per day and 10% of the debt. (Sabrina Decl. ¶ 20), which appears to be in excess of the maximum 4% of the amount of the payment past due permitted by the code. (12 C.F.R. § 1026.34(a)(8).)
Based on the evidence before the court at this time, which is limited, it appears Plaintiffs will be successful on the first COA.
COA No. 2 - Violation of the Homeowner Bill of Rights. Plaintiffs contend Della Vedova, as the mortgage servicer, failed to comply with Civ. Code § 2924.17(a) requirements prior to initiating the non-judicial foreclosure. The failures include not providing correct information to AMDI of amounts owed. Despite that Plaintiffs rescinded the loan, Della Vedova proceeded with having AMDI record the NTS and schedule the non-judicial foreclosure sale. Even after AMDI was notified of Della Vedova’s prior acceptance of payments, the amounts on the Notice of Default and Notice of Trustee’s Sale remained incorrect.
Based on the evidence before the court at this time, it appears Plaintiffs will be successful on the second COA.
COA No. 7 - Violation of the Unfair Competition Law. “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.)
Plaintiffs have alleged unlawful practices by Defendants as noted in the two COA above.
“Unfair acts are those that ‘offend an established public policy’ or are ‘immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.’ ” [Citations.] “A practice may be deemed unfair even if not specifically proscribed by some other law.” [Citation.] The plaintiff must identify a misleading statement or act [Citation] and lose money or property as a result of such unfair competition.” (Canas v. Citimortgage, Inc., No. SA CV 13-00322-DOC, 2013 WL 3353877, at *5 (C.D. Cal. July 2, 2013).) The acts of Defendants as noted above would appear to be “unfair” acts under the code.
“What constitutes ‘unfair competition’ or ‘unfair or fraudulent business practice’ under any given set of circumstances is a question of fact ... the essential test being whether the public is likely to be deceived ....” (People v. McKale (1979) 25 Cal. 3d 626, 635.) Given Plaintiffs were not provided required disclosures, that amounts the non-judicial foreclosure was based on were incorrect and not changed, and that Della Vedova did not rescind the loan when demanded, Plaintiffs have shown fraudulent business practices.
Based on the evidence before the court at this time, it appears Plaintiffs will be successful on the seventh COA.
2) Weighing the Relative Interim Harm
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 reaching that conclusion, the court considers whether a greater injury will result to the defendant (and to third persons) from granting the injunction or to the plaintiff from refusing it.” Socialist Workers etc. Comm. v. Brown (1975) 53 Cal. App. 3d 879, 888.) “[T]he trial court must determine which party is the more likely to be injured by the exercise of its discretion [citation] and it must then be exercised in favor of that party [citation].” (Jessen v. Keystone Sav. & Loan Assn. (1983) 142 Cal. App. 3d 454, 458–59.)
If the injunction is not issued, then Plaintiffs will likely lose their home as the foreclosure sale will go forward. The harm to Plaintiffs is very high. If the injunction is issued, then Defendants will not be able to proceed with the foreclosure. Given only Della Vedova is the holder of the present lien on the Property, she is the main defendant that would be affected. While Della Vedova would not be able to sell the property and recover the debt, the loan will continue to accrue interest until it is paid off assuming the recission was not valid. Della Vedova will therefore be able to be made whole at the end of the lawsuit if the court finds in her favor. The minimal benefit to ADMI as the foreclosing entity would be recovering its fees.
The interim harm weighs heavily in favor of Plaintiffs.
As Plaintiffs have shown a likelihood of success at trial, which was not rebutted in anyway by Defendants, and as the relative interim harm weighs in favor of Plaintiffs, the Motion must be granted.
3) Request to Take Judicial Notice
Plaintiffs request the court take judicial notice of three documents filed with the County of Orange. This request is granted as the court can take notice of recorded deeds. (Evid. Code § 452(h); Evans v. California Trailer Ct., Inc. (1994) 28 Cal. App. 4th 540, 549, disapproved of on other grounds by Black Sky Cap., LLC v. Cobb (2019) 7 Cal. 5th 156.)
Plaintiffs are ordered to give notice of this ruling.