Judge: Frank M. Tavelman, Case: 23BBCV02240, Date: 2024-01-17 Tentative Ruling

Case Number: 23BBCV02240    Hearing Date: April 5, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION FOR PRELIMINARY INJUNCTION

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

Ann Shabtay, as trustee of the Ann Shabtay Children’s Trust, (Plaintiff) brings this action for quiet title on the property commonly known as 4833 Morella Avenue, Valley Village, California 91607 (the Property). Plaintiff alleges the title to the Property was improperly used by her son, Eran Shabtay, who has no ownership interest in that property, to secure a loan. Eran Shabtay subsequently defaulted on the loan and the lenders issued a notice of non-judicial foreclosure.

Plaintiff initially asserted claims for (1) Quiet Title, (2) Cancellation of Instruments, and (3) Declaratory/Injunctive Relief. The only named Defendants in Plaintiff’s initial claim were JR Jainclan Foundation & Total Lender Solutions, Inc.

Plaintiff has since amended her complaint. The First Amended Complaint (FAC) names the following as Defendants:

·         JR Jainclan Foundation (Jainclan)

·         Total Lender Solutions, Inc. (Total)

·         Eran Shabtay, individually and as Successor Trustee of the Ann Shabtay Sole Separate Grandchildrens Trust dated May 1994 (sued as DOE 1) (Eran)

·         Red Dragon Investments (Red Dragon)

·         Amit Dhir, Trustee of The Amit Dhir and Sonia Chopra Dhir Living Trust,

·         Sonia Chopra Dhir, Trustee of The Amit Dhir and Sonia Chopra Dhir Living Trust,

·         Vikas Dhir, Trustee of The Vikas and Rachna Dhir Family Trust,

·         Rachna Dhir, Trustee of The Vikas and Rachna Dhir Family Trust,

·         FCI Lender Services, Inc. (FCI)

·         California TD Specialists (TD)

·         Shaurya Ray Jain

·         HML Investments

·         Yanni Raz

·         Daniel Tepper

The FAC now asserts claims for (1) Quiet Title (against all Defendants), (2) Cancellation of Instruments (against all Defendants), (3) Declaratory/Injunctive relief (against all Defendants), (4) Fraud and Deceit (as to Eran, HML Investments, Yanni Raz, Daniel Tepper, and Jainclan), (5) Elder Abuse (as to HML Investments, Yanni Raz, Daniel Tepper, and Jainclan), and (6) Racketeering, and Unfair Business Practices (as to HML Investments, Yanni Raz, Daniel Tepper, Jainclan, and Red Dragon)

Before the Court is Plaintiff’s motion for Preliminary Injunction, prohibiting the foreclosure sale of the Property by Jainclan. Jainclan opposes the motion and Plaintiff Replies.

ANALYSIS: 

Judicial Notice

Jainclan requests the Court take judicial notice of the dockets for various bankruptcy proceedings initiated by Eran, Yerev Shabtay (Yerev), and Plaintiff. (See RJN Exhs. 1-7.) Jainclan asserts notice of these documents is proper considering they are records of the United States Bankruptcy Courts. (See Evid. Code § 452.) The Court GRANTS the request.

Timeline for this Motion

This motion has appeared on the Court’s calendar numerous times and presents a complicated fact pattern. Accordingly, the Court finds its helpful to summarize the events leading up to this hearing.

On September 28, 2023, Plaintiff filed her Complaint. Also on September 28, 2023, Plaintiff filed an Ex Parte Application for Temporary Restraining Order (TRO). This TRO sought to restrain Jainclan from executing a trustee’s sale of the Property. That same day the Court granted the TRO and set a hearing for a Preliminary Injunction on November 3, 2023.  The partes thereafter stipulated to continue this hearing to November 21, 2023. Jainclan and Plaintiff then filed their opposition and reply papers. The Court approved the stipulation but moved the date to November 30, 2023 to prevent calendaring conflicts.

At the November 30, 2023 hearing, the parties represented that Plaintiff was in the process of a refinance of the Property which would potentially moot the issue. To allow Plaintiff more time to complete this potential refinance, the Court once more continued the matter to December 21, 2023. On December 21, 2023, Plaintiff informed the Court that she was still undergoing the refinance process. Defendant requested the Court place a date for the Preliminary Injunction hearing sometime in January. The Court informed the parties that the Judicial Officer who had handled the matter up to this point would be out on leave during the month of January. Regardless, the Court set January 17, 2024 as the hearing date for the Preliminary Injunction.

On January 12, 2024, a non-party by the name of Rev Shabtay filed an “Objection and Reply” to Jainclan’s opposition of the Preliminary Injunction. On January 17, 2024, Plaintiff filed an amendment to her Complaint to correct a fictitious or incorrect name, more commonly known as a Doe Amendment. Plaintiff sought to add Eran Shabtay as a Doe party

On January 17, 2024, the motion for Preliminary Injunction came on for hearing before an interim Judicial Officer. Rev Shabtay attempted to electronically file a C.C.P. § 170.6 preemptory challenge to the interim Judicial Officer, asserting belief of prejudice against her. It is unclear who filed this document and whether Rev Shabtay and Eran are the same person. The preemptory challenge was rejected as it was both improperly electronically filed and filed by a non-party to the action. On January 18, 2024, the Court issued its final ruling denying Plaintiff’s motion for preliminary injunction.

On January 24, 2024, the Court heard Plaintiff’s Ex Parte Application to reinstate the TRO. The Court vacated its January 18 order denying the motion for Preliminary Injunction, reinstated the TRO, and set the motion for Preliminary Injunction for February 2, 2024. The Court also noted that Eran had not paid the initial appearance fee as a party in the matter. Eran insisted that he was Rev Shabtay and that he had paid the initial appearance fee in that name on January 12, 2024. The Court disagreed, citing that Eran was not added as a party to the action until January 17, 2024, making his payment of an appearance fee five days earlier nonsensical. Regardless, the motion for Preliminary Injunction remained on the Court’s calendar.

On January 31, 2024, Plaintiff filed her First Amended Complaint (FAC).

Plaintiff’s FAC

This amendment adds a host of Defendants which appear to be associated with Jainclan. The FAC maintains Eran as a Defendant. Plaintiff has also added causes of action for Fraud and Deceit (as to Eran, HML Investments, Yanni Raz, Daniel Tepper, and Jainclan), Elder Abuse (as to HML Investments, Yanni Raz, Daniel Tepper, and Jainclan), Racketeering, and Unfair Business Practices (HML Investments, Yanni Raz, Daniel Tepper, Jainclan, and Red Dragon Investments). Plaintiff’s FAC alleges that Eran fraudulently conveyed interest in the property to Jainclan and forged Plaintiff’s signatures on two Trust Transfer Grant Deeds. (FAC ¶¶ 21-22.) Plaintiff alleges Eran conspired with various Defendants to secure a loan against the property under the name of the fictitious “Ann Shabtay Sole Separate Grandchildrens Trust Dated May 1994”. (FAC ¶ 24.)

Plaintiff alleges the Property was improperly used as collateral on three loans to Eran. The first loan is alleged to have been from Defendants Amit Dhir and Sonia Chopra Dhir Living Trust, The Vikas and Rachna Dhir Family Trust, and Shaurya Ray Jain as lenders in the amount of $1,700,000.00. (FAC ¶ 25(a).) The second loan is alleged to be from Defendant JR Jainclan Foundation as lender in the amount of $1,000,000.00. (FAC ¶ 25(b).) The third loan is alleged to also be from Defendant JR Jainclan Foundation as lender in the amount of $1,250,000.00. (FAC ¶ 25(c).) This third loan was also secured by another property, which Plaintiff alleges was foreclosed upon to satisfy the loan. (FAC ¶ 26.)

Lastly, Plaintiff now alleges that her refinance attempts have been sabotaged by Jainclan. (FAC ¶¶ 28-29.)

Facts Regarding Transfer

On February 3, 2003, Plaintiff appears to have created the “Ann Shabtay Children’s Trust”, naming herself and Yerev as trustees. (FAC Exh. A.) The trust document also provided for the transfer of the Property to the trust. (Id.) Plaintiff also attaches a quitclaim deed reflecting this transfer dated May 2, 2004. (FAC Exh. B.)

Plaintiff attaches a number of Trust Transfer Deeds recorded on October 11, 2019, October 6, 2020, November 10, 2021, November 10, 2021, and June 27, 2022. (FAC Exhs. C-G.) Plaintiff alleges all of these documents were produced as the result of the conspiracy between Eran, HML Investments, Yanni Raz, and Daniel Tepper. The transfers in these documents are as follows:

·         The October 11, 2019 Trust Transfer Grant Deed reflects a transfer of the Property from “Eran Shabtay as trustee of the Ann Shabtay Children’s Trust” to “E. Ron Shabtay Trustee for Shabtay Childrens Trust”. (FAC Exh. C.)

·         The October 6, 2020 Trust Transfer Grant Deed reflects a transfer of the Property from “Eran Shabtay trustee for Shabtay Childrens Trust” to “Ann Shabtay Sole Separate Grandchildrens Trust Dated May 1994, Ann D. Shabtay Trustee and Yrev Breskin Trustee.” (FAC Exh. D.)

·         The first November 10, 2021 Deed of Trust reflects a loan encumbering the Property to “Eran Shabtay, successor trustee of the Ann Shabtay Sole Separate Grandchildrens Trust date May 1994” from HML Investments. (FAC Exh. E.)

·         The second November 10, 2021 Deed of Trust reflects a loan encumbering the Property to “Eran Shabtay, successor trustee of the Ann Shabtay Sole Separate Grandchildrens Trust date May 1994” from Jainclan.  (FAC Exh. F.)

·         The June 27, 2022 Deed of Trust reflects a loan encumbering the Property to “Eran Shabtay, successor trustee of the Ann Shabtay Sole Separate Grandchildrens Trust date May 1994” from Jainclan. (FAC Exh. G.)

Plaintiff also includes two Grant Deeds which she alleges Eran forged her signature on. (FAC Exhs. H-I.) The contents of these documents are as follows:

·         The June 2, 2023 Trust Transfer Grant Deed purportedly transferring the Property from “Ann Shabtay Grantor and Trustee” to “Ann D. Shabtay Grantor and Trustee of the Ann Shabtay Sole Separate Grandchildrens Trust date May 1994”. (FAC Exh. H.)

·         The June 27, 2023 Trust Transfer Grant Deed purportedly transferring the Property from Ann D. Shabtay Grantor and Trustee of the Ann Shabtay Sole Separate Grandchildrens Trust date May 1994” to “Yerev Breskin…Ann Shabtay…and Ann Shabtay Sole Separate Grandchildrens Trust, as joint tenants in common.”

In evaluating the likelihood of success on the merits, the Court must also consider statements and documents from Plaintiff’s initial moving papers. In her moving papers, Plaintiff stated that for a brief time in 2019 the title was returned to her individually; however, she does not include any documents that such a transfer occurred. Plaintiff provides documents that the property was conveyed to “Ann Shabtay, Trustee of Ann Shabtay Children’s Trust” again on April 17, 2019 and the deed was filed April 24, 2019. (Shabtay Decl. ¶ 5, Exh. C.)

On November 3, 2021, Eran signed a Deed of Trust encumbering the property, naming Jainclan as the lender. (Shabtay Decl. ¶ 6, Exh. D.) The borrower on this deed is listed as “Eran Shabtay, as successor trustee of the Ann Shabtay Sole Separate Grandchildren’s Trust”. (Id.)

On the Propriety of the Amendment

At the January 17, 2024 hearing, the Court expressed concerns about the validity of the Doe Amendment adding Eran as a party. Doe Amendments are those made pursuant to C.C.P. § 474, which permits a plaintiff to amend a pleading to name a party to whose name they were ignorant of at the time of filing. The Court expressed doubt that Eran was a party to whom Plaintiff was ignorant at the time of initially filing her quiet title action.

Regardless, the Court notes that neither Plaintiff nor Jainclan have submitted any briefing concerning the amendment. The Court also finds any improper amendment under C.C.P. § 474 has been superseded by the filing of the FAC on January 31, 2024.

Accordingly, the Court sees no reason why the addition of Eran as a Defendant is improper.

Preliminary Injunction

“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits. (White v. Davis (2003) 30 Cal. 4th 528, 554; see generally C.C.P. § 426(a)(2) [a preliminary injunction “may be granted … [w]hen it appears … that the commission or continuance of some act during the litigation would produce … great or irreparable injury … to a party to the action].)

“The extraordinary remedy of injunction cannot be invoked without showing the likelihood of irreparable harm.” (Intel Corp. v. Hamidi (2003) 30 Cal. 4th 1342, 1352 [internal citation and quotation marks omitted].) The threat of “irreparable harm” must be imminent. “An injunction cannot issue in a vacuum based on the proponents’ fears about something that may happen in the future…[i]t must be supported by actual evidence that there is a realistic prospect that the party enjoined intends to engage in the prohibited activity.” (Korean Philadelphia Presbyterian Church v. California Presbytery (2000) 77 Cal. App. 4th 1069, 1084.)

“If the threshold requirement of irreparable injury is established, then [the court] must examine two interrelated factors to determine whether … a preliminary injunction should be [issued]: (1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or non-issuance of the injunction.” (Costa Mesa City Employees Assn. v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 306 [internal citation and quotation marks omitted].) The greater the showing on one factor, the lesser the showing must be on the other. (Butt v. State of California (1992) 4 Cal. 4th 668, 678.)

Before issuing a preliminary injunction, the trial court must carefully weigh the evidence and decide whether the facts require such relief. (Fleishman v. Superior Court (2002) 102 Cal. App. 4th 350, 356.) The Court evaluates the credibility of witnesses and makes factual findings on disputed evidence. (Id.) In the absence of a reasonable probability of success, a trial court should deny a preliminary injunction. (Jessen v. Keystone Savings & Loan Ass’n (1983) 142 Cal. App. 3d 454, 458.)

The Court evaluates first Plaintiff’s claim for Quiet Title. While Plaintiff states additional claims for Cancellation of Instruments and Declaratory/Injunctive relief, these both stem from her Quiet Title claim. As discussed below, the Court finds Plaintiff has shown a reasonable probability of success on her Quiet Title claim. As such, the Court need not evaluate Plaintiff’s newly added claims for purposes of this motion.  

The Court finds Plaintiff has sufficiently made the threshold showing of irreparable injury should the injunction not issue. As concerns irreparable injury, the general legal maxim is that real property is unique and that the loss of real property through foreclosure proceedings cannot be adequately compensated by money damages. Civil Code § 3387 states “It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation. In the case of a single family dwelling which the party seeking performance intends to occupy, the presumption is conclusive. In all other cases, the presumption is a presumption affecting the burden of proof.”

Here, Plaintiff has demonstrated that she lives at the Property and has for the last 50 years. (Shabtay Decl. ¶ 10.) Plaintiff also states that she suffers from Parkinsons Disease and the Property has been modified to accommodate her illness. (Id.) Jainclan has submitted no evidence in contravention of these claims. These showings are sufficient to establish that the foreclosure sale of the Property would result in irreparable injury to Plaintiff.

With respect to the likelihood of success on the merits, the Court finds the evidence currently presented weighs in favor of granting the preliminary injunction. Plaintiff presents the document which created the Childrens Trust in full as Exhibit A to her FAC. This document shows that Plaintiff and Yerev were the only named trustees. (Fac Exh. A.) Eran’s name and signature are present on this document only as a witness to its signing. (Id.) Although the Property was supposedly transferred to Plaintiff individually at some point in 2019, Plaintiff has shown that the Property was transferred back to the “Ann Shabtay Childrens Trust” via Grant Deed filed April 24, 2019. (Shabtay Decl. ¶ 5, Exh. C.) This transfer to the Ann Shabtay Children’s Trust took place before the Jainclan loan and before any documents listing Eran as a trustee. In the absence of a document adding Eran as trustee of the “Ann Shabtay Childrens Trust” or a document conveying interest to him, it is clear that Eran had no authority to encumber the Property.

In an attempt to establish legitimate transfer from Eran, Jainclan submits the declaration of its member Sanjiv Jain (Sanjiv). Sanjiv states that “On November 3, 2021, the Shabtay Grandchildren Trust, through the signature of its successor trustee, Eran, obtained a loan from Jainclan by executing and delivering to Jainclan a promissory note in the principal amount of $1,000,000.00.” (Sanjiv Decl. ¶ 2.) The Court finds this declaration unpersuasive as to Eran’s authority to encumber the property. For the November 3, 2021 transfer to be valid, Eran must have had authority to make that transfer. Though the chain of transfer is long and includes multiple parties, the validity of Eran’s authority boils down to the validity of the October 11, 2019 Trust Transfer Grant Deed. This deed purportedly transferred the Property from “Eran Shabtay as trustee of the Ann Shabtay Children’s Trust” to “E. Ron Shabtay Trustee for Shabtay Childrens Trust”. (FAC Exh. C.) Plaintiff’s claim is that Eran could not do so because he was never a trustee for the “Ann Shabtay Children’s Trust”. Plaintiff has provided the foundational trust documents which show Eran was not a trustee. Jainclan, nor any other party, has even so much as claimed that Eran was added as a trustee at any point.

Jainclan’s offerings of the various bankruptcy filings by Eran, Yerev, and Plaintiff are similarly unpersuasive. Jainclan offers the various bankruptcies as evidence of an attempt to stall creditors. (See Sanjiv Decl. ¶ 14.) The Court first notes that only Yerev’s bankruptcy filing was stayed as the result of an alleged “scheme to delay, hinder, or defraud creditors…” (Id., RJI Exh. 7.) No evidence of a similar stay obtained in Plaintiff’s bankruptcy has been presented.

In short, Plaintiff has provided evidence that the Property was owned solely by the Ann Shabtay Children’s Trust” at the time it was purportedly encumbered by the loan from Jainclan. The evidence also shows Eran had no authority to transfer the Property away from the “Ann Shabtay Children’s Trust”. In the absence of any evidence showing Eran was a trustee, the subsequent chain of transfers would be invalid. In essence, the Court finds the evidence shows a reasonable probability of success on Plaintiff’s Quiet Title claim.

As a final matter, the Court notes that Jainclan’s opposition papers are silent as to what interim harm would result should the injunction be granted. On its face, a delay of a foreclosure sale by a creditor does not appear to the Court as an interim harm significant enough to outweigh Plaintiff’s harm should she be successful on her underlying action. Given the alternative, requiring Jainclan to wait until the matter has been resolved to sell the property does not appear to be a significant interim harm.

Accordingly, the Motion for Preliminary Injunction is GRANTED.

Undertaking

Pursuant to California Rules of Court, Rule 3.1150, the Court finds that a surety bond in some amount is in order. Jainclan suggests a bond in the amount of $1,500,000 in order to cover lost profits and attorney’s fees incurred in any appeal or subsequent defense. The Court notes that Jainclan provides no evidence in support of its claim of lost profits; however, they do support claims based on the note’s balance, including interest of over $1,300,000. The Property is estimated to be worth somewhere near $6,000,000 and Jainclan has provided no reason why a delay in its sale would affect the equity in the home, but the Court is also aware of other encumbrances on the property.

Regardless, some amount of surety is still appropriate. Given the nature of the litigation and the amount of motion work already involved, the Court finds that a surety in the amount of the loan would be an appropriate undertaking.   The surety is set at $1,200,000.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Ann Shabtay’s Motion for Preliminary Injunction came on regularly for hearing on April 5, 2024, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION FOR PRELIMINARY INJUNCTION IS GRANTED.

PLAINTIFF IS TO SUBMIT A PROPOSED ORDER FOR THE COURT’S APPROVAL WHICH SHALL INCLUDE THE $1,200,000 SURETY BOND.

UNLESS ALL PARTIES WAIVE NOTICE, PLAINTIFF TO GIVE NOTICE.  

IT IS SO ORDERED. 

DATE:  April 5, 2024                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles