Judge: Deborah C. Servino, Case: 30-2023-01325662, Date: 2023-07-21 Tentative Ruling
Plaintiffs Stuart and Renee Smith seek a preliminary injunction restraining and enjoining Defendants CZ Master Association, Inc. (“HOA”) and Community Legal Advisors, Inc. (“Legal Advisors”) (collectively, “Defendants”) and each of their employees and agents, or any other persons acting with Defendants or on Defendants’ behalf from proceeding with foreclosure and/or selling the property commonly known as 1 Shire, Coto de Caza, California 92679 (“Subject Property”) during the pendency of this action. The request for preliminary injunction is granted.
Service Deficiency
As an initial matter, Plaintiffs did not show that they served the summons, complaint, moving papers in support of their request for a preliminary injunction, or OSC on HOA. Plaintiffs filed a proof of service showing Stuart Smith served the summons, complaint, supporting papers, and OSC on Legal Advisors by mail. (ROA 24.) This service deficiency appears to be the subject of a future motion to quash service of summons scheduled to be heard on October 27, 2023. (See ROA 57.)
Personal jurisdiction over a defendant “depends upon valid service and demonstration of minimum contacts.” (Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1229.) Proper service of a summons and complaint by mail must include an acknowledgment of receipt. In addition, documents may not be mail served by a party to the action. (Code Civ. Proc., §§ 414.10 and 1013a.)
Because Defendants have not appeared in the action, the OSC must be served in the same manner as a summons and complaint. (Cal. Rules of Court, rule 3.1150(a).) Defendants’ appearance to oppose Plaintiffs’ ex parte application for a TRO and OSC does not constitute a general appearance. (Code Civ. Proc., § 418.11.)
Legal Advisors represents itself and HOA in this action. Although Defendants objected to service of the OSC, summons, and complaint, Defendants opposed Plaintiffs’ request for a preliminary injunction on the merits. Accordingly, the Court will proceed with deciding the merits of this order to show cause regarding preliminary injunction.
The court reminds the parties that litigants who choose to represent themselves must be treated in the same manner as represented parties and must follow the correct rules of procedure. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 984-985; Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246-1247.) A self-represented litigant is not entitled to any greater consideration than other litigants and attorneys. (Petrosyan v. Prince Corp. (2013) 223 Cal.App.4th 587, 594 [self-represented litigants are entitled to same treatment as represented parties]; see Cal. Rules of Court, rule 1.6(15) [defines “parties” as including both self-represented persons and persons represented by an attorney of record without making any distinction between them].) The fact that Plaintiffs are self-represented litigants does not relieve them of the requirements, law, and procedures applied to all parties who appear in this court. Self-represented litigants are “held to the same standards as attorneys.” (Kobayashi v. Superior Court (2009) 175 Cal.App.4th 536, 543.)
Request for Judicial Notice
Defendants’ request for judicial notice of HOA’s Articles of Incorporation is denied. (Ojavan Investors, Inc. v. California Coastal Com. (1994) 26 Cal.App.4th 516, 527, citing People v. Thacker (1985) 175 Cal.App.3d 594, 598-599; Bell v. Greg Agee Construction, Inc. (2004) 125 Cal.App.4th 453, 459, fn. 2.)
Defendants’ requests for judicial notice of the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Coto De Caza; Grant Deed for the Subject Property; Notice of Delinquent Assessment; Notice of Delinquent Assessment Lien and Substitution of Trustee; Notice of Default and Election to Sell; Notice of Trustee’s Sale, are granted. (Poseidon Development, Inc. v. Woodland Lane States, LLC (2007) 152 Cal.App.4th 1106, 1117 [the court may take judicial notice of documents recorded with the County Recorder’s Office; however, that does not mean it may take judicial notice of factual matters stated therein]; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 [courts may also take judicial notice of a variety of matters that can be deduced from the documents, such as the parties, dates, and legal consequences of a series of recorded documents relating to a real estate transaction].)
Defendants’ requests for judicial notice of the May 18, 2023 Minute Order and proof of service filed on May 24, 2023 in this case are denied. It is unnecessary to ask the court to take judicial notice of materials previously filed in this case. A party may “simply call the court’s attention to such papers.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2023) ¶ 9:53.1a.)
Plaintiffs' objection to Defendants’ requests for judicial notice number 1 is moot in light of the court’s ruling. Plaintiffs’ remaining objections to Defendants’ request for judicial notice are overruled.
Evidentiary Objections
Plaintiffs’ objection to exhibit D to Speights declaration is sustained. Plaintiffs’ remaining objections to Speights’ declaration are overruled. Plaintiffs’ objections to the Larkin declaration are overruled.
New Arguments Raised on Reply
The court did not consider arguments raised by Plaintiffs for the first time on reply. (Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8.)
General Principles Applicable to Preliminary Injunctions
Pursuant to Code of Civil Procedure section 526 provides for when an injunction may be granted. The burden is on the plaintiff to show all elements necessary to support issuance of the injunction. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) “A superior court must evaluate two interrelated factors when ruling on a request for a preliminary injunction: (1) the likelihood that the plaintiff will prevail on the merits at trial and (2) the interim harm that the plaintiff would be likely to sustain if the injunction were denied as compared to the harm the defendant would be likely to suffer if the preliminary injunction were issued.” (Smith v. Adventist Health System/West (2010) 182 Cal.App.4th 729, 749.)
Merits
Plaintiffs' Complaint alleged seven causes of action.
Violation of Civil Code Sections 1367.1 and 5660
Plaintiffs allege Defendants violated Civil Code section 1367.1 by failing to provide a pre-lien notice before filing its assessment lien, failing to provide adequate notice of an assessment, and/or failing to convey the pre-lien notice within the required time period in violation of Civil Code section 1367.1, subdivision (d). (Complaint, at ¶ 18; Stuart Smith Decl., at ¶¶ 6 and 7.)
Section 1367.1 was repealed as of January 1, 2014. It appears the applicable subdivisions relevant to the allegations in Plaintiffs’ complaint are now sections 5660 and 5675.
Defendants recorded the notice of delinquent assessment on July 25, 2013. (Defendants’ Request for Judicial Notice [“RJN”], Exh. E.) As such, Defendants were required to provide a pre-lien notice of at least 30 days. Defendants have shown they sent a pre-lien letter to Plaintiffs via ground and certified mail on June 18, 2013 and its contents. (Larkin Decl., Exhs. D and P.) Plaintiffs have not shown a likelihood of prevailing on this claim.
Violation of Civil Code Section 5670
Plaintiffs allege Defendants violated Civil Code section 5670 by failing to offer Plaintiffs the option to participate in dispute resolution prior to filing each assessment lien. (Complaint, ¶ 25; Stuart Smith Decl., ¶ 8.) By the Larkin Declaration, exhibits D and P, Defendants have shown they complied with section 5670. Accordingly, Plaintiffs have not shown they are likely to prevail on this cause of action.
Violation of Civil Code Section 5705, Subdivision (d)
Plaintiffs allege Defendants violated Civil Code section 5705, subdivision (d) by not personally serving Defendants’ notice of intent to initiate nonjudicial foreclosure. (Complaint, at ¶ 28; Stuart Smith Decl., at ¶ 9.) Defendants have shown that Plaintiffs were personally served with a notice of intent for non-judicial foreclosure and the board meeting minutes approving the non-judicial foreclosure. (Speights Decl., at ¶ 5, Exh. H.) Accordingly, Plaintiffs did not show they are likely to prevail on this cause of action.
Violation of Civil Code Section 5715, Subdivision (b)
Plaintiffs allege Defendants violated Civil Code section 5715, subdivision (b) by not including a statement in the notice of sale that the property is being sold subject to the right of redemption. (Complaint, at ¶ 31; Stuart Smith Decl., at ¶ 10.)
Defendants have shown that the notice of sale included the language required by section 5715, subdivision (b). (Defendants’ RJN, Exh. K, p. 2, last paragraph.) Accordingly, Plaintiffs did not show they are likely to prevail on this cause of action.
Violation of Civil Code Section 5710, Subdivision (b)
Plaintiffs allege Defendants violated Civil Code section 5710, subdivision (b) by not personally serving Plaintiffs with a notice of default. (Complaint, at ¶ 34; Stuart Smith Decl., at ¶ 11.) Defendants only showed that they personally served a draft of the notice of default on Plaintiffs and then sent a copy of the recorded notice of default by certified mail to Plaintiffs. The notice of default was not signed and was not notarized. (Speights Decl., at ¶¶ 5-6, Exhs. H & J; Orey Decl., Exh. H; RJN Exh. I [recorded notice of default].) Defendants did not show that they served the notice of default on Plaintiffs with the manner of service of summons, as required by Civil Code section 5710, subdivision (b).
This interpretation of Civil Code section 5710 comports with the plain meaning of the statute and the legislative history of its former statute (Civil Code section 1367.1). The court in Diamond v. Superior Court (2013) 217 Cal.App.4th 1172, 1190 discussed the Legislature's intent regarding the public purpose of former Civil Code section 1367.1 and 1367.4 and the statutory notice requirements: "In 2005, the Senate Judiciary Committee's bill analysis stated: 'This bill protects owners' equity in their homes when they fail to pay relatively small assessments to their common interest development associations.' (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 137 (2005-2006 Reg. Sess.) Mar. 29 2005, p. 1.)" "[T]he legislative history indicates that the public purpose of Civil Code section 1367.1 and 1367.4, including the notice requirements, was to protect the interest of a homeowner who has failed to timely pay an assessment levied by a homeowners association. The legislative history further indicates that to accomplish this purpose, the notice requirements were intended to be mandatory." (Diamond v. Superior Court, supra, 217 Cal.App.4th at pp. 1190-1191.) Defendants failed to strictly comply with Civil Code section 5710, subdivision (b). Accordingly, Plaintiffs have shown they are likely to prevail on this cause of action.
Violation of Business & Professions Code Section 17200
Plaintiffs’ seventh cause of action is predicated on Defendants’ violation of the Davis-Stirling Act. (Complaint, at ¶¶ 39 and 42-45.)
Business & Professions Code section 17200 prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Under the unlawful prong, a violation of law may be actionable as unfair competition under Business & Professions Code section 17200. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 81.) “An unfair business practice occurs when that practice offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers . . . An unfair business practice also means the public policy which is a predicate to the action must be tethered to specific constitutional, statutory or regulatory provisions.” (Ibid. [internal citations omitted].)
Plaintiffs have shown that they are likely to prevail on their cause of action alleging Defendants violated Civil Code section 5710. Accordingly, Plaintiffs have shown that they are likely to prevail on this cause of action as well.
Balancing the equities weigh in favor of the issuance of an injunction. Finally, the harm suffered by Plaintiffs (the loss of real property) outweighs the harm to Defendants, even after almost many years of non-payment. A preliminary injunction is warranted to maintain the status quo until this case can be adjudicated on the merits. Plaintiffs’ request for a preliminary injunction is granted. Defendants and each of their employees and agents, or any other persons acting with Defendants or on Defendants’ behalf are enjoined from proceeding with foreclosure and/or selling the property commonly known as 1 Shire, Coto de Caza, California 92679 during the pendency of this action.
It is further ordered that an undertaking on this preliminary injunction is hereby fixed in the amount of $43,836.38. (Code Civ. Proc., § 529.) The undertaking shall be furnished no later than August 4, 2023. In the event Plaintiffs fail to furnish the undertaking on or before August 4, 2023, the court will consider an application/motion to dissolve the preliminary injunction.
Plaintiffs shall give notice of the ruling.