Judge: H. Jay Ford, III, Case: 24SMCV04818, Date: 2024-11-05 Tentative Ruling

Case Number: 24SMCV04818    Hearing Date: November 5, 2024    Dept: O

  Case Name:  Armeni, et al. v. SN Servicing Corporation

SUBJECT:                 MOTION FOR PRELIMINARY INJUNCTION

MOVING PARTY:   Plaintiffs Attilo Armeni and Laurel Armeni

RESP. PARTY:         Specially Appearing Defendant SN Servicing Corporation

TENTATIVE RULING

            Plaintiffs Attilo Armeni and Laurel Armenis’ Motion for Preliminary Injunction is GRANTED.  Plaintiffs meets the requirements of CCP § 526.

The Court orders Specially Appearing Defendant SN Servicing Corporation enjoined from conducting the Trustee’s Sale on the subject property at 3116 N. Summit Pointe Dr. Topanga Canyon, CA 90290.

            The Court orders an undertaking of $1,847.93 per month during the course of litigation to paid by Plaintiffs Attilo Armeni and Laurel Armeni pursuant to CCP § 529(a)

REASONING

            Plaintiff must establish the likelihood that (1) the likelihood of prevailing on these causes of action; (2) the existence of irreparable harm/inadequacy of legal remedies, i.e. a real threat of immediate and irreparable injury due to the inadequacy of legal remedies; and (3) circumstances indicating that the hardships Plaintiffs will sustain if the injunction does not issue outweigh the harm Defendants would suffer if the injunction does issue.  (See Code Civ. Proc. § 526, subd. (a).) 

            “A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor. No preliminary injunction shall be granted without notice to the opposing party.” (Code Civ. Proc., § 527, subd. (a).)

            “In deciding whether to issue a preliminary injunction, a court must weigh two interrelated factors: (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.  (Butt v. State of California (1992) 4 Cal. 4th 668, 677–678); see also Alliant Ins. Services, Inc. v. Gaddy (2008) 159 Cal. App. 4th 1292, 1299.)  “The trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other to support an injunction.”  (Butt, supra, 4 Cal. 4th at p. 678.)

            The general objective in issuing a preliminary injunction is to preserve the status quo.  (See Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.)  In addition, it is rarely appropriate to grant a preliminary injunction that not only does not preserve the status quo but also grants the ultimate relief sought in the action, before trial.  (See Paramount Pictures Corp. v. Davis (1965) 228 Cal.App.2d 827.)  A preliminary injunction must not issue unless the plaintiff can demonstrate reasonable probability that he will prevail on the merits, regardless of the balancing of the hardships or the irreparable nature of the harm.  (See San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.)

I.                Plaintiffs demonstrate irreparable harm

Plaintiffs Attilo Armeni and Laurel Armeni (“Plaintiffs”) argue they will be irreparably harmed because without a Preliminary Injunction in place Plaintiffs will lose their home and over $1,195,000.00 in equity due to Specially Appearing Defendant SN Servicing Corporation’s (“Defendant”) trustee sale. (Armeni Decl., ¶¶ 18, 31.)

Defendant’s do not dispute this fact within their opposition, and thus the Court finds that Plaintiffs have demonstrated irreparable harm. However, Plaintiffs must show a probability of prevailing on their claims in order for the injunction to be granted. (See Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454, 459 [“In a practical sense it is appropriate to deny an injunction where there is no showing of reasonable probability of success, even though the foreclosure will create irreparable harm, because there is no justification in delaying that harm where, although irreparable, it is also inevitable”].)

II.             Plaintiff’s probability of prevailing

            As moving party, Plaintiff bears the burden of establishing all necessary elements to justify issuance of the injunction.  (See O'Connell v. Sup.Ct. (Valenzuela) (2006) 141 Cal.App.4th 1452, 1481.)  This requires Plaintiff to provide the Court with admissible evidence establishing irreparable harm and the likelihood that Plaintiff will prevail on the merits in this action.  (See Code Civ. Proc. § 527, subd. (a).)  A preliminary injunction must not issue unless the Plaintiff can demonstrate reasonable probability that he will prevail on the merits, regardless of the balancing of the hardships or the irreparable nature of the harm.  (See San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.)

            In order for Plaintiff to prevail at trial they must establish his claims by a preponderance of the evidence.  In civil cases, the requisite degree of proof is generally a “preponderance” of the evidence: “Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence.”  (Evid. Code  § 115.)  “Preponderance of the evidence” means evidence that has more convincing force than that opposed to it. “If the evidence is so evenly balanced that [the jury is] unable to say the evidence on either side of an issue preponderates, [the jury's finding] on that issue [must be] against the party who had the burden of proving it.”  (See BAJI 2.60 (emphasis and brackets added); compare CACI 200—“more likely to be true than not true.”)  “The trial court is the judge of the credibility of the affidavits filed in support of the application for preliminary injunction and it is that court's province to resolve conflicts.”  (Yu v. University of La Verne (2011) 196 Cal.App.4th 779, 787 [substantial evidence supported trial court’s factual determination that university’s disciplinary action against student was not based on student’s exercise of speech rights].) 

            Plaintiffs argue they are likely to succeed on their claim for Violations of Cal. Civ. Code § 2923.6. The operative subdivisions of Cal. Civ Code § 2923.6(c) and (d) state the following:

(c) If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer at least five business days before a scheduled foreclosure sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee's sale until any of the following occurs:

(1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired.

(2) The borrower does not accept an offered first lien loan modification within 14 days of the offer.

(3) The borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower's obligations under, the first lien loan modification.

(Civ. Code, § 2923.6, subd. (c).)

(d) If the borrower's application for a first lien loan modification is denied, the borrower shall have at least 30 days from the date of the written denial to appeal the denial and to provide evidence that the mortgage servicer's determination was in error.

(Civ. Code, § 2923.6, subd. (d.)

            Plaintiffs declare that they have owned the subject property at 3116 N. Summit Pointe Dr. Topanga Canyon, CA 90290 (the “Property”) since 1999, and in 2006 Plaintiffs took out a first position loan with Countrywide Bank for $1,100,00.00.  (Armeni Decl., ¶¶ 3–5.) Plaintiffs declare that Defendant became the loan servicer “at some point thereafter,” and on 4-2-19 Plaintiffs filed for Chapter 11 Bankruptcy with the Chapter 11 Plan confirmed on 4-6-20 and bankruptcy terminated on 11-19-20. (Id., ¶¶ 6–9.) Plaintiffs declare that on 5-8-24 a notice of default was recorded on the property, and on 6-15-24 Plaintiffs submitted a request for mortgage assistance to Defendant. (Id., ¶¶ 12–14.) Plaintiffs declare that they attempted to make multiple mortgage payments which Defendants denied, and on or about 8-2-24 a Notice of Trustee’s Sale (“NOTS”) was recorded on the Property. (Id., ¶¶ 14–18.) Plaintiffs declare that on 8-26-24 Defendants informed Plaintiffs that their mortgage assistance application was denied, and Plaintiffs submitted their appeal on 9-4-24, prior to the 30-day limit, or until 9-26-24, to appeal the denial pursuant to CCP § 2923.6(d). (Id., ¶¶ 19–21.) Plaintiffs declare that the Plaintiffs were informed of the appeal denial on 10-12-24, but the sale of the property went through on 10-9-24 despite a TRO being in place. (Id., ¶¶ 23–24.) Plaintiffs declare that the sale was unwound due to the TRO, but “two separate individuals” gained access to their property, and “proceeded to bang aggressively on our front door, and try to enter our backyard yelling, “This is our house now!” (Id., ¶¶ 25–26.) Plaintiffs declare that on 10-30-24 Plaintiffs submitted all the requested material for a new loss mitigation application to Defendant. (Id., ¶¶ 27–28.)

            Defendant’s argue Plaintiffs cannot prevail on their claim because Plaintiffs appeal of their loan modification denial did not contain any evidence that Defendant’s determination was in error, rather, Plaintiff’s basis for appealing was only based on a “purported change in financial circumstance that occurred after Plaintiffs had applied for a modification of the Loan.” (Oppo., pp. 5:4–18; see 10-4-24 Aremeni Decl., ¶ 22, Ex. E.) However, Defendant provides no authority that the Plaintiffs appeal is not within the meaning of the statute’s language that Defendant’s determination was in error. Defendant’s error could very well mean that Plaintiff now has a new financial situation allowing Plaintiff to mitigate their mortgage default, and without authority supporting Defendants strict interpretation of the statute, the Court cannot find that Plaintiff did not appeal their loan modification properly and timely.

            Additionally, Civ. Code, § 2923.6(b) provides, “[i]t is the intent of the Legislature that the mortgage servicer offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority.” Thus, the legislature expressly stated their intent to provide the borrower with all available options to mitigate the default. Plaintiffs’ appeal letter falls within the intent of the legislature, and thus Defendant’s argument is not persuasive.

            Thus, the Court finds that Plaintiff will likely prevail on their claim for Violations of Cal. Civ. Code § 2923.6. Defendants provide the same arguments for the remaining causes of action, and argue they are derivative of the Violations of Cal. Civ. Code § 2923.6, therefore the Court need not analyze the probability of prevailing on the remaining claims.

III.           Balancing hardships and Maintaing Status Quo

            The Court finds that the balancing of hardships weighs in favor of Plaintiffs. Plaintiffs argue the Plaintiffs will lose their home if the Court were to deny the request while granting the request only postpones a possible forclosure sale for the Defendants. The Court agrees with the plaintiffs. Additionally, the Defendant will not lose the right to foreclose on the property pursuant to the parties’ agreement. Defendant does not provide any arguments for hardship to Defendants if the motion is granted.

            Additionally, this injunction would effectively be in place to maintain the status quo while the matter is in litigation, as it would prevent the exact issue from happening which caused the filing of the case—foreclosure on the property.

            Plaintiffs meets the requirements of CCP § 526 and thus the Motion for a Preliminary Injunction is GRANTED. The Court orders Defendant enjoined from conducting the Trustee’s Sale referenced herein.

Pursuant to CCP § 529, the Court “must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction.” (Code Civ. Proc., § 529, subd (a).) Defendant does not dispute the estimated $1,195.000.00 equity in the property.  Defendant argues the only need for a bond is to ensure property taxes and insurance payments during the course of the litigation totaling $1,847.93 per month. (Fogleman Decl., ¶ 14.)  

The Court orders the Plaintiffs to post an undertaking of ____________ [TO BE