Judge: Gary I. Micon, Case: 23CHCV03650, Date: 2024-01-31 Tentative Ruling
Case Number: 23CHCV03650 Hearing Date: January 31, 2024 Dept: F49
Dept.
F-49
Date:
1-31-24
Case
# 23CHCV03650
Trial
Date: N/A
PRELIMINARY INJUNCTION
MOVING
PARTY: Plaintiff Steve Orocio
RESPONDING
PARTY:
RELIEF
REQUESTED
Motion
for Preliminary Injunction
SUMMARY
OF ACTION
Plaintiff
Steve Orocio (Plaintiff) is the owner of the property located at 11001 Belmar
Ave, Porter Ranch, California 91326. After a fire severely damaged the
property, Plaintiff entered into a loan agreement with Defendant Private Money
Solutions (PMS) in order to complete repairs on the property. The loan
agreement was for $335,000.00. Plaintiff agreed to pay the principal on the
loan, and Premium Remodeling, Inc., (Premium), which was performing the repairs
on the property, agreed to cover the interest and fees on the loan, with an
agreement that Plaintiff would reimburse Premium once certain conditions were
met. Plaintiff alleges that these conditions were never met. Plaintiff also alleges
that the broker and someone from Defendant PMS (Defendant) told Plaintiff to
sign documents saying that the loan was for business purposes. Plaintiff claims
that he did know the implications of this.
Plaintiff
alleges that because the repairs were costing more than anticipated, he had to
refinance the loan. He claims that PMS filled out the application for him and marked
the property down as an investment property, though Plaintiff claims it has
never been an investment property because it has been used as his family home.
After
the 2018 Refinance, the loan was refinanced for $575,000.00 and had an interest
rate of 9.99% and interest rate of 24% upon default. The loan was to mature in
April 2020. Premium stopped paying the interest and fees in February 2019,
which Plaintiff alleges was in breach of his agreement with Premium. Because
full payments were no longer being made, Defendant assessed the default
interest rate of 24%.
Another
refinance was done between Plaintiff and Defendant in 2019, and the refinance
amount was increased to $685,000.00. Plaintiff was again told to declare the
loan for business purposes. Plaintiff was unable to pay the high payments of
the loan due to his unemployment at the time. The loan was to mature in January
2021.
In
2020 and 2021, Plaintiff and Defendant had discussions about a forbearance plan
and extension of the maturity date. Plaintiff did not wish to agree to this
because Defendant originally wanted to mark it as a business loan again. Defendant
unilaterally extended the maturity date to May 2023.
On
May 5, 2023, Defendant recorded a Notice of Default and stated that the amount
past due was $714,499.00, which included interest. Plaintiff’s home is
scheduled to sell at foreclosure on February 9, 2024. Plaintiff argues that he
will be irreparably harmed if the sale goes forward, and he will lose his
family home of nearly a decade, as well as equity in the property, which is
estimated to be at least $200,000.00.
Plaintiff
made a prior attempt at filing a restraining order on September 19, 2023, in
case 23CHCV02815. Plaintiff’s claims were based on the theory that Defendant
was improperly charged a default interest rate to Plaintiff’s loan and
foreclosing on those sums. That case was moved to federal court, with case
number 2:23-cv-08500-SVW-PVC. The federal court denied Plaintiff’s request for
injunctive relief, and Plaintiff voluntarily dismissed the case.
Plaintiff
re-filed his lawsuit on November 30, 2023, as the current action. On January
11, 2024, Plaintiff filed a First Amended Complaint with one cause of action
for Unfair Business Practices in violation of Civil Code § 17200. Plaintiff’s action
is now based on the new theory that Defendant’s actions were unfair business
practices because Defendant induced Plaintiff into a loan with terms provided
for non-consumer loans when Plaintiff’s loan was for consumer purposes and
should have been a consumer loan.
RULING: Preliminary
injunction denied.
Plaintiff’s
Request for Judicial Notice: Plaintiff has requested that the Court take
judicial notice of Plaintiff’s application for a temporary restraining order
from federal court and Plaintiff’s current First Amended Complaint. The Court
grants Plaintiff’s request.
Defendant’s
Request for Judicial Notice: Defendant has requested that the Court take
judicial notice of several court documents as well as notices of tax liens. The
Court grants Defendant’s request.
Defendant
made numerous evidentiary objections. The only one that the Court needs to address
is Defendant’s objection to Paragraph 25 of Plaintiff’s Declaration. There is
absolutely no foundation for this paragraph. Plaintiff provides no foundation
for where he got these alleged interest rates. Defendant’s objection to
Paragraph 25 is sustained.
Plaintiff moves for a preliminary
injunction on the basis that Plaintiff will suffer irreparable harm in the
absence of relief, Plaintiff is likely to succeed on the merits of claim, the
balance of hardships favors Plaintiff, and the relief requested is in the best
interest of the public.
Defendant argues in its opposition
that Plaintiff has no reasonable probability of success at trial; therefore,
the Court should deny Plaintiff’s preliminary injunction. Defendant also argues
that Plaintiff is unable to tender the money to pay back the loans. Further,
Defendant argues that the claim is barred by the statute of limitations and the
relief is barred by the doctrine of quasi-estoppel. Defendant has also provided
evidence that there are various tax liens against Plaintiff’s property, thereby
demonstrating that Plaintiff was unable to pay his property taxes as well as
the loan.
In
ruling on a motion for preliminary injunction, the court first considers both
the likelihood of prevailing on the merits and irreparable harm. (Millennium Rock Mortg., Inc. v. T.D. Service
Co. (2009) 179 Cal.App.4th 804, 812.) “An evaluation of the relative harm
to the parties upon the granting or denial of a preliminary injunction requires
consideration of: ‘(1) the inadequacy of any other remedy; (2) the degree of
irreparable injury the denial of the injunction will cause; (3) the necessity
to preserve the status quo; [and] (4) the degree of adverse effect on the
public interest or interests of third parties the granting of the injunction
will cause.’” (Vo v. City of Garden Grove
(2004) 115 Cal.App.4th 425, 435.) “‘[T]he more likely it is that plaintiffs
will ultimately prevail, the less severe must be the harm that they allege will
occur if the injunction does not issue .... [I]t is the mix of these factors
that guides the trial court in its exercise of discretion.’” (Right Site Coalition v. Los Angeles Unified
School Dist. (2008) 160 Cal.App.4th 336, 342.) “The ultimate questions on a
motion for a preliminary injunction are (1) whether the plaintiff is ‘likely to
suffer greater injury from a denial of the injunction than the defendants are
likely to suffer from its grant,’ and (2) whether there is ‘a reasonable
probability that the plaintiffs will prevail on the merits’” (Huong Que, Inc. v. Luu (2007) 150
Cal.App.4th 400, 408. Procedurally, an application for a preliminary
injunction, must be based upon sufficient evidence. (CCP § 527(a); Bank of America v. Williams (1948) 89 Cal.App.2d 21, 29.)
Irreparable Harm
Irreparable injury is one of the requirements that a
plaintiff must show for a preliminary injunction. (CCP § 526(a); see Trader
Joe’s v. Progressive Campaigns (1999) 73 Cal.App.4th 425, 429 [a plaintiff
must show both, “(1) a reasonable probability it will prevail on the merits and
(2) that the harm to the plaintiff resulting from a refusal to grant the
preliminary injunction outweighs the harm to the defendant from imposing the
injunction.”].)
Plaintiff’s home is scheduled to be sold in a foreclosure
sale on February 9, 2024. There is no doubt that the loss of the home would
constitute irreparable harm to Plaintiff. However, as discussed below,
irreparable harm by itself is not sufficient justification for a preliminary
injunction.
Probability of Success on the Merits
A preliminary injunction should only be granted where
there is a reasonable probability that a plaintiff will prevail on the merits
at trial. (Prigmore v. City of Redding (2012) 211 Cal.App.4th 1322, 1333.)
Even when a party could sustain irreparable harm, there must be a probability
of success on the merits. (See Jessen v. Keystone Savings and Loan
Association (1983) 142 Cal.App.3d 454, 459 [delaying the foreclosure sale
with a preliminary injunction would only delay the inevitable].)
Plaintiff’s claim is based on California’s Unfair
Competition Law (UCL). The UCL prohibits “any unlawful, unfair or fraudulent
business act or practice and unfair, deceptive, untrue or misleading
advertising.” (Cal. Bus. & Prof. Code § 17200.)
Pursuant to this section, there are three varieties
of unfair competition: acts or practices which are unlawful, or unfair, or
fraudulent. (Berryman v. Merit Prop. Mgmt., Inc. (2007) 152 Cal.App.4th
1544, 1554.) “Because section 17200 is written in the disjunctive, a business
act or practice need only meet one of the three criteria – unlawful, unfair or
fraudulent – to be considered unfair competition under the UCL.” (Buller v.
Sutter Health (2008) 160 Cal.App.4th 981, 986.) A plaintiff can plead a UCL
violation under the “unlawfulness” prong by pleading that a business practice
violated a predicate federal, state, or local law. (See Cel–Tech Commc'ns,
Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 180.) To
assert a UCL claim, a plaintiff must have suffered injury in fact and lost
money or property as a result of the unfair competition. (See Cal. Bus. &
Prof. Code § 17204.)
Unfair behavior under the UCL is behavior that is “immoral,
unethical, oppressive, unscrupulous or substantially injurious to consumers.” (Bardin
v. Daimlerchrysler Corp. (2006) 136 Cal.App.4th 1255, 1260.)
Defendant argues in its opposition that Plaintiff has
provided no evidentiary facts showing that he could prevail on his claim.
Plaintiff argued in his motion that Defendant’s conduct is in violation of the
California Business and Professions Code because Defendant purposefully cast
Plaintiff’s loan as an investment loan so that it could charge higher interest
rates.
Plaintiff is unlikely to succeed on this merits of
his claim. Exhibit B attached to the Orocio Declaration is the Uniform
Residential Loan Application that Plaintiff signed. The box for Investment
property is checked. Plaintiff’s declaration is contradictory. He claims on one
hand that he submitted the application, but on the other hand claims that
portions of it were forged. (Orocio Decl., ¶ 10.) He says that PMS filled out
the application for him because he was busy, and the signature on it was not
his or wife’s. (Orocio Decl., ¶ 11.) He does not, however, say what portions
were allegedly forged, other than mentioning the investment property part in
the next paragraph. He also does not say whether he had a chance to review the
application before PMS submitted it on his behalf. Nor does he say, if they
were submitting it on his behalf, how it could be forged.
Assuming arguendo that Defendant did make it an
investment loan when Plaintiff wanted it to be a consumer loan, that would be a
violation. However, under the UCL, a plaintiff must show causation and damages.
Plaintiff would have to show that a lower interest rate was available. In fact,
Plaintiff provides no evidence supporting what he claims were the interest rates
at the time he took out the loan. He makes no admissible showing regarding what
lower interest rates might have been available. He provides no evidence that he
would have even qualified for the lower interest rate given his financial
condition at the time. Even if he had gotten the lower rate, Plaintiff does not
show whether he would have been able to pay it. Plaintiff also does not provide
any solid authority to support his position. Without this information,
Plaintiff would not be able to succeed on the merits.
Defendant makes an argument in its opposition that
Plaintiff’s complaint is also unlikely to succeed on the merits because it is
barred by the statute of limitations. The relevant statute of limitations is
four years. (Business and Professions Code § 17208.) Defendant argues that the
statute of limitations began to run in June of 2019, when the Note for the loan
was issued. Plaintiff did not file this iteration of his lawsuit until November
30, 2023, more than four years after the Note was issued. While the Court will
not make a determination on the statute of limitations issue at this time due
to the uncertainty of when it would have begun to run, this does not bode well
for Plaintiff’s success.
Defendant also makes an argument about quasi-estoppel
and the Parole Evidence Rule, CCP § 1856. Defendant argues that because
Plaintiff signed an agreement, he cannot escape liability on the grounds he did
not read the agreement. While Plaintiff claims that he did not sign the
agreement, he has not presented sufficient evidence that someone did not sign
it on his behalf.
Based on the foregoing, Plaintiff is unlikely to
succeed on the merits.
Balance of Equities
In weighing the hardships to the
parties when deciding whether to grant or deny a preliminary injunction, a
trial court’s discretion should be exercised in favor of the party most likely
to be injured. (Andrews v. San Bernardino (1959) 175 Cal.App.2d 459,
463.)
Plaintiff will be injured if the
preliminary injunction were to be denied. If the foreclosure sale goes forward
as scheduled before this case can be heard, Plaintiff could lose his home. That
is an irreparable injury, as Plaintiff would not be able to replace his home. Defendant
would suffer much less by a delay of a potential foreclosure sale.
However, as previously discussed, irreparable
injury does not matter if it only means delaying the inevitable. Plaintiff is
unlikely to succeed on the merits, so Plaintiff’s request preliminary
injunction will not be granted.
The motion is denied.
Moving party to give notice.