Judge James C. Chalfant, Case 23STCV08473 2023-05-18 Tentative Ruling

Plaintiff Lawrence Adams (“Adams”) applies for a preliminary injunction enjoining Defendants City of Los Angeles (“City”), Neutral Ground, Inc. (“Neutral Ground”), and Corey Sims (“Sims”) from distributing Rent Escrow Account Program (“REAP”) funds in REAP Escrow Account 677559 – 5972 S. Normandie Avenue, Los Angeles, CA 90044 (“Property”) originally set for release on April 19, 2023 (“REAP Account”).

The court has read and considered the moving papers and the City’s opposition (no reply was filed), and renders the following tentative decision.

Plaintiff Adams commenced this proceeding on April 17, 2023 against Defendants City, Neutral Ground, Sims, and Los Angeles Housing Department (“LAHD”), alleging (1) abuse of process, (2) negligence and breach of the duty of care under Civil Code section 1714(A), (2) breach of contract under Government Code (“Govt. Code”) section 814, (4) violation of Govt. Code section 815.2, (5) declaratory relief, (6) civil conspiracy, (7) replevin, (8) breach of express contract, (9) breach of contract, (10) deceit based on concealment, (11) conversion, (12) promissory fraud, (13) negligence, and (14) promissory estoppel or detrimental reliance. The unverified Complaint alleges in pertinent part as follows.

On November 18, 2005, Neutral Ground received title to the Property. On June 12, 2012, it conveyed title to Sims via grant deed.

In January 2016, Neutral and Sims sought $100,000 in funding. Adams agreed to lend them this amount (the “Loan”). The Loan was to be secured by two pieces of real property, including the Property at issue in this action.

On February 19, 2016,[1] Sims recorded a grant deed that conveyed title of the Property to Adams. This deed expressly provided that the conveyance was to secure a debt. Neutral Ground and Sims accepted documentary terms and assurance that this grant deed and that for another property would be reconveyed, rescinded, or reversed once Neutral Ground and Sims had repaid the loan.

Per the understanding as to the temporary nature of Adam’s interest in the Property, Neutral Ground and Sims continued to try to resolve mortgage issues and other liabilities on the Property. Adams neither switched the utilities to his name nor obtained insurance. He did create new landlord-tenant relationships and assumed existing tenant relationships, and he collected rent on both. Neutral Ground and Sims would at times attempt to tender payment of the Loan to Adams in exchange for recission of the 2016 Deed. Adams did not engage with these attempts.

Because the building on the Property had certain deficiencies, LAHD placed it in REAP. This meant that all rent was deposited into the REAP Account, with no disbursement until the necessary repairs were made and City agencies approved them. Adams alone made the necessary repairs to take the Property out of REAP. All rent collected during this period and deposited in the REAP Account belongs to Adams. As of July 27, 2022, the REAP Account has $58,000 in tenant rent.

On February 18, 2020, the City filed City of Los Angeles, acting by and through the Los Angeles Department of Water & Power v. Neutral Ground (“City v. Neutral Ground”) (2020) LASC No. 20STCV06598. This lawsuit was a collection action based on Sims’ and Ground’s failure to make utility payments to the Los Angeles Department of Water & Power (“DWP”). Sims and Neutral Ground filed a cross-complaint against Adams in City v. Neutral Ground, asserting that he, as the owner of the Property, was liable for the unpaid utilities that accrued after the recording of the 2016 Deed.

Sims and Neutral Ground tried to resolve mortgage issues to prevent foreclosure, which they could not do without regaining title to the Property. Adams would not realize a return on his investment if a foreclosure sale occurred.

On November 17, 2021, a second grant deed conveyed title of the Property to Adams.

On December 5, 2022, to prevent the foreclosure sale, Adams, Neutral Ground, and Sims entered a settlement (“Settlement”) whereby Adams would receive $30,000 and revest title to the Property in Sims. The Settlement also stated that Adams would receive the back rent, which constitutes the full balance of the REAP Account.

Although the REAP Account funds were to be distributed to Adams by April 19, 2023, Defendants now refuse to distribute the funds. Adams is no longer on title due to the Settlement, and the City generates payments based on who is on title on the date of distribution.

Adams seeks an injunction compelling the City to send him payment of the full REAP Account, without distributions to anyone else. In general, Adams seeks consequential, compensatory, and punitive damages with attorney’s fees and costs.

On April 20, 2023, Department 50 (Hon. Teresa A. Beaudet) took off calendar Adams’s ex parte application for a temporary restraining order (“TRO”) and order to show cause re: preliminary injunction (“OSC”) enjoining Defendants from distributing funds from the REAP Account.

On April 21, 2023, this court denied Adams’s ex parte application for a TRO/OSC enjoining Defendants from distributing funds from the REAP Account.

On April 25, 2023, Adams withdrew an ex parte application for a TRO/OSC enjoining Defendants from distributing funds from the REAP Account.

On April 27, 2023, the court granted Adams’s ex parte application for a TRO/OSC enjoining Defendants from distributing funds from the REAP Account. The court ordered personal service on Defendants City, Sims, and Neutral Ground of the Complaint, Summons, moving papers, and TRO/OSC by May 3, 2023. Proofs of service were ordered to be filed on May 8, 2023.

On May 4, 2023, Department 86 (Hon. Mitchell Beckloff) declined to hear Adams’s ex parte application for an order of publication against Sims. The court ordered Adams to refile the application in Department 50 (Hon. Teresa A. Beaudet).

An injunction is a writ or order requiring a person to refrain from a particular act; it may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. CCP §525. An injunction may be more completely defined as a writ or order commanding a person either to perform or to refrain from performing a particular act. See Comfort v. Comfort, (1941) 17 Cal.2d 736, 741. McDowell v. Watson, (1997) 59 Cal.App.4th 1155, 1160.[2] It is an equitable remedy available generally in the protection or to prevent the invasion of a legal right. Meridian, Ltd. v. City and County of San Francisco, et al., (1939) 13 Cal.2d 424.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. See Scaringe v. J.C.C. Enterprises, Inc., (1988) 205 Cal.App.3d 1536. Grothe v. Cortlandt Corp., (1992) 11 Cal.App.4th 1313, 1316; Major v. Miraverde Homeowners Assn., (1992) 7 Cal.App.4th 618, 623. The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995, quoting United Railroads v. Superior Court, (1916) 172 Cal. 80, 87. 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402.

A preliminary injunction is issued after hearing on a noticed motion. The complaint normally must plead injunctive relief. CCP §526(a)(1)-(2).[3] Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. See e.g. Ancora-Citronelle Corp. v. Green, (1974) 41 Cal.App.3d 146, 150. Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. See CCP §527(a). For this reason, a pleading alone rarely suffices. Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007). The burden of proof is on the plaintiff as moving party. O’Connell v. Superior Court, (2006) 141 Cal.App.4th 1452, 1481.

A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. CCP §526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors, (1967) 255 Cal.App.2d 300, 307; Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565. The concept of “inadequacy of the legal remedy” or “inadequacy of damages” dates from the time of the early courts of chancery, the idea being that an injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565.

In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable harm” that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402; Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1283; Davenport v. Blue Cross of California, (1997) 52 Cal.App.4th 435, 446; Abrams v. St. Johns Hospital, (1994) 25 Cal.App.4th 628, 636. Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief. Doe v. Wilson, (1997) 57 Cal.App.4th 296, 304. The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Thornton v. Carlson, (1992) 4 Cal.App.4th 1249, 1255.

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. See CCP §529(a); City of South San Francisco v. Cypress Lawn Cemetery Assn., (1992) 11 Cal.App.4th 916, 920.

REAP is a regulatory program intended to enforce the Housing Code and encourage compliance with the maintenance and repair of residential buildings. RJN Ex. A (“LAMC”) §162.00 - §162.01. REAP seeks a just, equitable and practical method to enforce state and local housing codes to encourage compliance by landlords with respect to the maintenance and repair of their residential buildings, structures, and premises. Id.

Inspectors may refer a building/residential unit for inclusion into REAP if (1) the building/unit is the subject of one or more compliance orders; (2) the Compliance period, including extensions, expired without compliance; and (3) the violations affect the health and safety of the occupants, or the violation results in a deprivation of housing services or a habitability violation if the unit is subject to the RSO. LAMC §162.03.

Upon acceptance of a REAP referral, the City sends the property owner a REAP Notice of Acceptance. LAMC §162.04.A. The LAHD shall issue a decision setting forth (1) the date of the order which has not been complied with and the citing agency, (2) the outstanding violations, (3) the units affected, (4) the amount of rent reduction pursuant to schedule in LAMC section 16105, (5) the effective date of rent reduction (20 days after decision unless appealed, and 60 days after decision if not covered by the RSO), (6) the date on which an escrow account shall be established, (7) that a non-refundable $50 administrative fee per unit per month will be collected from the escrow, (8) a statement of tenant protections, and (9) the landlord’s right to appeal. LAMC §162.04.D.

Within five business days after the decision accepting a building into REAP has become final, the LAHD shall establish as part of the REAP Trust Fund an account for the building into which tenants may deposit rent payments. LAMC §162.07.A. The LAHD shall deduct a non-refundable administrative fee of $50.00 for each individual rent payment made into the account, but only one fee per residential unit per month. LAMC §162.07.B.1. The LAHD may collect this fee from the escrow account. LAMC §162.12.B.

If the City Council agrees, the funds shall be used to pay, in this order: (1) any administrative fees authorized in LAMC sections 162.07 B.1. and 162.12 that have not yet been collected; (2) outstanding fees, fines and penalties imposed pursuant to Article 1 of Chapter XVI of the LAMC; (3) outstanding rent registration fees or fines in an RSO building and any penalties pertaining thereto, pursuant to LAMC sections 151.05 and 151.15; and (4) if applicable, prepayment of two annual inspection fees, beyond the initial inspection and re-inspection fee set forth in the Systematic Code Enforcement Program and LAMC section 161.352, to the LAHD for each property that was included in REAP. LAMC §162.08.D.

After required expenditures under LAMC section 162.08.D, any remaining escrow funds shall be returned to the property owner who owned the property at the time the City Council authorizes the termination of the escrow account. LAMC §162.08.D. The LAHD shall refund any remaining escrow account balance to the property owner recorded with the Los Angeles County Recorder's Office. LAMC §162.08.D. It shall also file and record with the County Recorder a certificate terminating the recorded REAP status. LAMC §162.11.

On November 18, 2005, Neutral Ground received title to the Property. Adams Decl., ¶5, Ex. 1. On June 12, 2012, Neutral Ground conveyed title to the Property to Sims via quitclaim deed. Adams Decl., ¶6, Ex. 2.

On February 19, 2016, a grant deed was recorded which conveyed title of the Property fro Sims to Adams, Tracy Pugh (“Pugh”), and Family First Investment Group, LLC (“Family First”) as joint tenants. Adams Decl., ¶7, Ex. 3. The 2016 grant deed stated: “This conveyance is to secure a debt.” Adams Decl., ¶7, Ex. 3.

In or around January 2016, Neutral Ground and Sims sought funding in the amount of $100,000. Adams Decl., ¶4. Adams agreed to lend them the money and the Loan was to be secured by two pieces of property, including the Property. Adams Decl., ¶4.

On February 16, 2016 Family First executed a grant deed which conveyed its interest in the Property to Adams and Pugh. Adams Decl., ¶8, Ex. 4. The grant deed was not recorded until November 17, 2021. Ex. 4.

Sims and Neutral Ground continued to try to resolve mortgage issues and other liabilities on the two properties. Adams Decl., ¶6. The utility bills in their names were not changed to Adams’ name, nor did he obtain insurance for the properties. Adams Decl., ¶7. He did assume the existing landlord-tenant relationships, and secure new ones, and collect the rents. Adams Decl., ¶7. During his ownership of the Property, the rental unit fell into the City’s REAP. Adams Decl., ¶¶ 6, 10.[5] Between April 22, 2019 and July 27, 2022, the REAP Account accrued $58,825.02 in rent that tenants paid after fees. Adams Decl., ¶6, Ex. 5.

On December 5, 2022, Creditors, Ground, and Sims entered a Settlement of the cross-complaint in City v. Neutral Ground. Adams Decl., ¶7, Ex. 6. The same day, Adams and Sims appeared before a notary public to execute a Certificate of Acknowledgment for the Settlement. Adams Decl., ¶7, Ex. 6.

The Settlement explains that cross-complainants Sims and Ground granted the Property to cross-defendants Adams, Pugh, and First Family in 2016 as security for a $100,000 loan. Adams Decl., ¶7, Ex. 6. Sims and Neutral Ground accepted “documentary terms and assurance” that the deed for the Property would be reconveyed upon repayment of the loans. Adams Decl., ¶7, Ex. 6.

Per the understanding as to the temporary nature of cross-defendants’ interest in the Property, Neutral Ground and Sims continued to try to resolve mortgage issues and other liabilities on the Property. Adams Decl., ¶7, Ex. 6. Cross-defendants neither switched the utilities to their name nor obtained insurance. Adams Decl., ¶7, Ex. 6. They did create new landlord-tenant relationships, assumed existing ones, and collected rent on them. Adams Decl., ¶7, Ex. 6.

Neutral Ground and Sims at times attempted to tender payment of the Loan to cross-defendants in exchange for recission of the 2016 deed on the Proeprty. Adams Decl., ¶7, Ex. 6. Adams did not engage with these attempts, reconvey the Property, or rescind the deed. Adams Decl., ¶7, Ex. 6.

On February 18, 2020, the City filed City v. Neutral Ground against Ground and Sims based on unpaid utilities. Adams Decl., ¶7, Ex. 6. Sims and Ground then filed the cross-complaint against cross-defendants. Adams Decl., ¶7, Ex. 6. Through the cross-complaint, they sought an order that cross-defendants as owners of the Property were liable to the City for unpaid utilities that accrued after the recording of the 2016 deed. Adams Decl., ¶7, Ex. 6.

During this time, Sims and Neutral Ground were also trying to resolve mortgage issues to prevent foreclosure of the Property. Adams Decl., ¶7, Ex. 6. The alternative to them retaining title was an imminent foreclosure sale, which would not allow cross-defendants to realize a return on their investment. Adams Decl., ¶7, Ex. 6. To avoid this, the parties agreed to resolve all controversies between them. Adams Decl., ¶7, Ex. 6.

After cross-defendants signed the Settlement and a deed reconveying the Property to Sims by November 30, 2022, Sims and Neutral Ground would pay $30,000. Adams Decl., ¶7, Ex. 6. The parties would release each other and any successors from both known and unknown claims arising from transactions with each other, including the cross-complaint at issue. Adams Decl., ¶7, Ex. 6.

On December 12, 2022, Sims and Neutral Ground signed an addendum to the Settlement acknowledging that Adams and Pugh can collect all back rent for the Property. Adams Decl., ¶¶ 7, 9, 11, Ex. 6.[6]

On November 22, 2022, Adams and Pugh signed a grant deed that conveyed their interest in the Property to Sims. Adams Decl., ¶10, Ex. 7.

In exchange for returning the Property, Adams is entitled to all back rent that the City had collected in the REAP Account. Adams Decl., ¶¶ 11, 14. Although the REAP Account funds were to be distributed to Adams by April 19, 2023, Defendants now refuse to distribute them to Adams. Adams Decl., ¶12. Because of the Settlement and deed reconveying the Property, Adams is no longer on the title to the Property. Adams Decl., ¶13. REAP apparently generates payment based on who is on the title the day of distribution. Adams Decl., ¶15.

Because Adams alone paid for the repairs that the REAP required, it is unjust to deprive him of the $58,000 in the REAP Account. Adams Decl., ¶16. Aside from the requested preliminary injunction, Adams is also seeking an injunction that orders the City to send him payment of the full REAP Account, without distributions to anyone else. Adams Decl., ¶15.

On July 13, 2018, LAHD issued a Notice and Order to Comply for Sims and another for Adams and Pugh. Chen Decl., ¶6, Ex. A. It gave them until August 19, 2018 to remedy numerous health, safety, and habitability violations in the building on the Property. Chen Decl., ¶6, Ex. A.

On January 16, 2019, LAHD mailed Adams, Pugh, Neutral Ground, Sims, and Property residents notice of a General Manager’s hearing on February 19, 2019, to determine whether to accept the Property into the REAP Program. Chen Decl., ¶7, Ex. B. On March 14, 2019, LAHD gave notice of the General Manager’s decision to accept the building into REAP. Chen Decl., ¶8, Ex. C. The decision became final in April 2019, and the LAHD had notice recorded to that effect. Chen Decl., ¶9, Ex. D. The notice listed Neutral Ground as the Property owner. Chen Decl., ¶9, Ex. D.

On April 12, 2019, LAHD opened the REAP Account. Romero-Martinez Decl., ¶20. The REAP Account’s final accounting shows that tenants began to deposit rent therein the same month and did so through April 2023. Romero-Martinez Decl., ¶24, Ex. B.

In February 2020, the DWP filed the Complaint in City v. Neutral Ground. RJN Ex. G. Although DWP dismissed the lawsuit in March 2023, by then Sims and Neutral Ground had filed a crossclaim against Creditors. RJN Exs. H-I.

The deed that conveyed Adams and Pugh’s interest in the Property to Sims was recorded on December 15, 2022. RJN Ex. F.

On March 22, 2023, the City Council voted to remove the building on the Property from REAP. Romero-Martinez Decl., ¶21. The Property’s transaction history report shows that, at the time, Sims was the Property owner. Romero-Martinez Decl., ¶22, Ex. A. Pursuant to LAMC section 162.08, LAHD should refund the balance of the REAP Account to Sims. Romero-Martinez Decl., ¶24.

As of May 2, 2023, the balance in the REAP Account is $39,559.36. Romero-Martinez Decl., ¶24, Ex. B. LAHD must deduct $9,612.97 in outstanding fees, plus $338 in inspection fees, before it distributes the balance to the owner of record. Romero-Martinez Decl., ¶25, Ex. C. The LAHD has suspended further activity on the account, including distribution. Romero-Martinez Decl., ¶26.

As of May 5, 2023, a search of the City’s claims database does not show any claims for damages or refunds related to Adams. Valdivia Decl.[7] A search in the contracts database and for summons related to this case has not yielded any records. Valdivia Decl.

Adams seek a preliminary injunction enjoining Defendants from distributing the funds in the REAP Account.

When the court granted the TRO/OSC, it ordered that Adams personally serve the Complaint, Summons, moving papers, and TRO/OSC on Defendants City, Sims, and Neutral Ground by May 3, 2023, with proofs service filed by May 8, 2023.

To date, no proof of service is on file. The City has filed an opposition on the merits which is a general appearance. For Defendants Sims and Neutral Ground, the application must be denied for lack of service.

After receiving notice that all orders have been complied with and all violations have been corrected, including but not limited to those that caused the placement into REAP and any subsequent orders or violations, the LAHD may recommend to the City Council the termination of the rent reductions if it finds that (1) all orders affecting the units and the common areas have been signed off by the appropriate enforcement agency; and (2) there are no other outstanding orders affecting the units or common areas of the building as set forth in LAMC section 162.03.iii. LAMC §162.08.A. After required expenditures under LAMC section 162.08.D, any remaining escrow funds shall be returned to the property owner who owned the property at the time the City Council authorizes the termination of the escrow account. LAMC §162.08.D. LAHD shall refund any remaining escrow account balance to the property owner recorded with the Los Angeles County Recorder's Office. LAMC §162.08.D.

Much of the evidence is not in dispute. On February 19, 2016, Sims recorded the deed which conveyed title of the Property to Adams, Pugh, and Family First. Adams Decl., ¶7, Ex. 3. The deed was security for a $100,000 Loan to Sims and Neutral Ground which Adams, Pugh, and Family First agreed to reconvey upon payment of the Loan. Adams Decl., ¶7, Ex. 6. Because their interest in the Property was temporary, Adams, Pugh, and Family First neither switched the utilities to their name nor obtained insurance. Adams Decl., ¶7, Ex. 6. They did create new landlord-tenant relationships, assumed the existing ones, and collected rent on them all. Adams Decl., ¶7, Ex. 6.

In April 2019, the Property was accepted into the REAP. Chen Decl., ¶7, Exs. B-C. On April 12, 2019, LAHD opened the REAP Account. Romero-Martinez Decl., ¶20. Tenants began to deposit rent therein the same month and did so through April 2023. Romero-Martinez Decl., ¶24, Ex. B.

In February 2020, the DWP filed City v. Neutral Ground. RJN Ex. G. Sims and Ground then filed a cross-complaint against Adams, Pugh, and Family First. Adams Decl., ¶7, Ex. 6; RJN Ex. I. Family First then executed a deed which granted its interest in the Property to Adams and Pugh. Adams Decl., ¶8, Ex. 4.

On December 5, 2022, Neutral Ground and Sims entered into the Settlement of their cross-complaint with Adams, Pugh, and Family First. Adams Decl., ¶7, Ex. 6. Per the Settlement, once a deed was executed reconveying the Property to Sims by November 30, 2022, Sims and Neutral Ground would tender $30,000. Adams Decl., ¶7, Ex. 6. The parties would then release each other and any successors from both known and unknown claims arising from transactions with each other, including the cross-complaint at issue. Adams Decl., ¶7, Ex. 6. Sims and Neutral Ground later signed an addendum that acknowledged that Adams and Pugh can collect all back rent for the Property. Adams Decl., ¶¶ 7, 9, 11, Ex. 6.

To comply with the Settlement, on November 22, 2022, Adams and Pugh signed the grant deed reconveying their interest in the Property to Sims. Adams Decl., ¶10, Ex. 7. This deed was recorded on December 15, 2022. RJN Ex. F. The Property’s transaction history report shows that Sim became the owner of the Property on that date. Romero-Martinez Decl., ¶22, Ex. A.

The City makes a series of spurious arguments against injunctive relief. First, the City asserts that Adams can no longer challenge the decision to place the Property into REAP because it is time-barred. Resp. at 6. Adams does not do so and such a claim is not part of the TRO/OSC.

Second, the City argues that Adams cannot claim damages against it because a search of the City’s claims database does not show any claims for damages or refunds related to Adams. Valdivia Decl. Resp. at 7-8. Adams is not seeking damages; he seeks to prevent LAHD’s release of Reap Account funds.

Third, the City argues that Adams does not have a contract with the City that was breached, he cannot claim that it defrauded him, and he cannot seek declaratory relief and must seek mandamus. Resp. at 10. The court need not evaluate the Complaints’ claims. The complaint must plead a cause of action. CCP §526(a)(1)-(2); Korean American Legal Advocacy Foundation v. City of Los Angeles, (1994) 23 Cal.App.4th 376, 398-99. But the precise legal theory need not be alleged; it is sufficient that the Complaint pleads facts supporting mandamus even if not alleged as that legal theory.

The City then argues that Pugh is a necessary party under CCP section 389. The City contends that it could be subjected to double or inconsistent obligations were Pugh to file a lawsuit based on the same facts as here. Resp. at 5. This is true. For this reason, the court cannot order distribution of any funds to Adams at this stage. Adams should add Pugh to his Complaint or else obtain Pugh’s waiver of any interest in the REAP Account funds. But the interests of Pugh and the City are fully protected by the preliminary injunction sought to prevent the City from distributing funds from the REAP Account.

The City argues that Adams has not shown that he is entitled to the money in the REAP Account. Resp. at 6. First, the language in the Settlement acknowledged that Pugh and Adams could collect “back rent.” Adams Decl., ¶¶ 7, 9, 11, Ex. 6. Although tenants paid their rent to the REAP Account instead of to their landlord, they did so on time. Adams Decl., ¶6, Ex. 5; Romero-Martinez Decl., ¶24, Ex. B. The City questions whether this qualifies as back rent. Opp. at 6.

The court need not analyze this issue in detail. The Settlement recitals admit that Adams, Pugh, and Family First collected rent from both new and old tenants while they owned the Property and the Addendum states that Adams and Pugh are entitled to back rent. The parties’ understanding of their own Settlement controls and the only evidence before the court is that the REAP Account rents are owned by Adams and Pugh. The City has no standing to contend otherwise. Pugh or Sims, of course, could dispute Adams’ interpretation.

The City also argues that LAMC section 162.08.D provides that the remaining funds in the REAP Account belong to the property owner at the time of as of when the City Council authorizes the termination of the REAP Account and Sims is the owner. Adams Decl., ¶10, Ex. 7; Romero-Martinez Decl., ¶¶ 21-22, Ex. A. True, but parties can assign their rights and Sims and Neutral Ground essentially have assigned their rights to the rent to Adams and Pugh. The City must honor that assignment unless and until it is shown to be wrong. That is what Adams’ mandamus claim and preliminary injunction are all about.

In determining whether to issue a preliminary injunction, the second factor which a trial court examines is the interim harm that plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach, (2014) 232 Cal.App.4th 1171, 1177. This factor involves consideration of the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo. Id.

Adams presents evidence that between April 22, 2019 and July 27, 2022, the REAP Account accrued $58,825.02 in rent after deduction of fees. Adams Decl., ¶6, Ex. 5. The City presents evidence that as May 2, 2023, the balance in the REAP Account is only $39,559.36. Romero-Martinez Decl., ¶24, Ex. B. LAHD will keep another $9,612.97 + $338 = $9,950.97 before it distributes the rest. Romero-Martinez Decl., ¶25, Ex. C.

The City notes that the relief sought is the money that is in the REAP Account. Resp. at 5. Harm is not irreparable if damages will compensate an injured plaintiff adequately. Tahoe Keys Prop. Owners’ Ass’n v. State Water Res. Control Bd., (1994) 23 Cal. App. 4th 1459, 1472. This is true, but the City notes that Adams has no damages claim against it and he only seeks to prevent the City from distributing the funds to Sims, Neutral Ground, or someone else. The City admits that LAHD has suspended distribution of the REAP Account and therefore it will not suffer any harm from a preliminary injunction.

The application for a preliminary injunction is granted against the City only, which is enjoined from distributing funds in the REAP Account. Should Sims or Pugh be served and appear, they may seek modification of the preliminary injunction in the I/C court.

The court must require a bond from Adams. The purpose of a bond is to cover the defendant’s damages from an improvidently issued injunction. CCP §529(a). In setting the bond, the court must assume that the preliminary injunction was wrongly issued. Abba Rubber Co. v. Seaquist, (“Abba”) (1991) 235 Cal.App.3d 1, 15. The attorney’s fees necessary to successfully procure a final decision dissolving the injunction also are damages that should be included in setting the bond. Id. at 15-16. While Abba reasoned that the plaintiff’s likelihood of prevailing is irrelevant to setting the bond, a more recent case disagreed, stating that the greater the likelihood of the plaintiff prevailing, the less likely the preliminary injunction will have been wrongly issued, and that is a relevant factor for setting the bond. Oiye v. Fox, (2012) 211 Cal.App.4^th 1036, 1062. The bond in this case should be minimal as the City already has suspended distribution of the REAP Account. The bond will be $100.

[1] The Complaint misidentifies this as the year 2026. Compl., ¶10.

[2] The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. A mandatory injunction — one that mandates a party to affirmatively act, carries a heavy burden: “[t]he granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 187, 1493.

[3] However, a court may issue an injunction to maintain the status quo without a cause of action in the complaint. CCP §526(a)(3).

[4] The City requests judicial notice of (1) Los Angeles Municipal Code (“LAMC”) section 162.00 et seq. (RJN Ex. A); (2) Rent Adjustment Commission Regulations section 1200.00 et seq. (RJN Ex. B); (3) a quitclaim deed recorded for the Property on June 12, 2012 (RJN Ex. C); (4) the 2016 Deed (RJN Ex. D); (5) the 2021 Deed (RJN Ex. E); (6) a grant deed for the Property recorded on December 5, 2022 (RJN Ex. F); (7) the Complaint in City v. Neutral Ground (RJN Ex. G); (8) a request for dismissal of City v. Neutral Ground granted on March 16, 2023 (RJN Ex. H); (9) Ground and Sims’s cross-complaint in City v. Neutral Ground (RJN Ex. I); and (10) an Official Action of the City Council dated March 22, 2023 (RJN Ex. J). Request Nos. 1-2 are granted under Evid. Code section 452(b). Request Nos. 3-6 and 10 are granted under Evid. Code section 452(c). Request Nos. 7-9 are granted under Evid. Code section 452(d).

[5] The numbering of paragraphs in Adams’s declaration regresses to 6 after paragraph 8, then skips a second paragraph 8 after 7 to get to paragraph 9. The tentative adheres to the numbers actually used.

[6] City contends that the addendum does not identify its signatories. Opp. at 4.

[7] The declaration of Michael Valdivia (“Valdivia”) did not number its paragraphs.