Judge James C. Chalfant, Case Number: 24STCV27271, Date: 2025-04-15 Tentative Ruling

Cross-Complainants BV Industries, LLC (“BVI”), Sean Benaroya (“Benaroya”), Anna Vishnevsky (“Vishnevsky”) (collectively, “BVI”), and Osip Vishnevsky (“Osip”) apply for a preliminary injunction enjoining Cross-Defendants National Mortgage Resources, Inc. (“NMR”) and Steven Miller (“Miller”) (collectively, “NRM”) from foreclosing on the property located at 2101 Hercules Drive, Los Angeles, California 90046 (“Hercules Drive Property”).

The court has read and considered the ex parte moving papers, opposition, and reply, and renders the following tentative decision.

Plaintiff Cohen filed the Complaint for interpleader against Defendants NMR, BVI, Benaroya, and Vishnevsky on October 18, 2024. The Complaint alleges in pertinent part as follows.

Cohen is the escrow holder of a deed in lieu of foreclosure (“DIL”) for real property located at 806-816 East 61st Street, Los Angeles, CA 90001 (“61st Street Property”). Compl., Parties ¶3, Material Allegations ¶1,[1] Ex 2.

On or about August 31, 2023, NMR, as lender through its president Miller, and BVI, as borrower through its managers Benaroya and Vishnevsky, signed a term sheet for a monthly funding agreement (“Term Sheet”). Compl., ¶2, Ex. 1. NMR holds deeds of trust (“DOTs”) against the 61st Street Property and other properties related to prior loans where Benaroya and Vishnevsky are borrowers or guarantors. Compl., ¶5.

On October 17, 2024, NMR demanded Cohen release the DIL according to the Term Sheet. Compl., ¶6. The same day, BVI objected and asserted that NMR had not yet distributed funding for the full six-month period of the Term Sheet and was not entitled to receive the DIL. Compl., ¶7. BVI asserts that NMR only provided five months of funding at $45,000 per month beginning on September 1, 2023. Compl., ¶8. NMR asserts that it did make six monthly payments of $45,000, including a payment made before September 1, 2023, and so has fully performed. Compl., ¶9.

Plaintiff Cohen seeks (1) a determination as to whether and to what extent each party is entitled to recover and receive delivery of and/or recording of the DIL, (2) any further orders the court deems proper, and (3) costs. Compl. Prayer.

On March 20, 2025, Cross-Complainants BVI, Benaroya, Vishnevsky, and Osip filed their Cross-Complaint against Cross-Defendants NMR and Miller for (1) wrongful foreclosure, (2) breach of contract, (3) breach of implied covenant of good faith and fair dealing, (4) breach of fiduciary duty, (5) tortious interference with prospective economic advantage, (6) unfair business practices, and (7) elder abuse. The Cross-Complaint alleges in pertinent part as follows.

BVI’s managers, Benaroya and Vishnevsky, are a husband and wife living at the Hercules Drive Property. Cross-Compl., ¶16. BVI purchased the 61st Street Property in 2015 with the intend to develop it for commercial rental. Cross-Compl., ¶17.

On or about March 19, 2021, NMR and BVI entered a loan agreement (“Loan Agreement”) including a $3,000,000 business line of credit net after fees and a loan of approximately $3,000,000 (“Loan”) to be evidenced by a promissory note (“Note”). Cross-Compl., ¶18. The Note specified a principal sum of $3,144,285. Cross-Compl., ¶20.

Under the Loan Agreement, the line of credit would be secured by a cross-collateralized DOT for the 61st Street Property, the Hercules Drive Property, and 1913 Teton Way, Pine Mountain Club, California 93222 (“Teton Way Property”). Cross-Compl., ¶19. The Loan would be secured by a separate DOT for the 61st Street Property. Cross-Compl., ¶20.

On March 19, 2021, BVI signed the DOT for the 61st Street Property. Cross-Compl., ¶21. BVI never signed a Cross-Collateralized Deed. Cross-Compl., ¶19. BVI also signed a DOT for the Teton Way Property, also stated to be security for the Note. Cross-Compl., ¶23.

On March 19, 2021, Vishnevsky and Osip signed a DOT for the Hercules Drive Property, stated to be security for the Note. Cross-Compl., ¶22.

The Note’s maturity date was March 19, 2022 with the possibility to extend by up to six months. Cross-Compl., ¶24.

On or about March 15, 2022, BVI and NMR modified the Note (“Modified Note”), increasing the principal sum to $6,328,738 with ma aturity date of March 15, 2023. Cross-Compl., ¶25.

In March 2023, the Los Angeles Department of Water and Power (“DWP”) was preventing BVI from providing utility services to the 61st Street Property, preventing BVI from securing a tenant for the property. Cross-Compl., ¶26. BVI sued DWA. Cross-Compl., ¶26. In March 2023 and before March 15, 2023, NMR agreed to a moratorium for the Modified Note and Loan Agreement. Cross-Compl., ¶26.

In or around August 2023, BVI and NMR executed the Term Sheet for additional funding under the Loan Agreement. Cross-Compl., ¶27. Under the Term Sheet, NMR would provide $45,000 per month for six months beginning on September 1, 2023 (“Funding Period”). Cross-Compl., ¶28. The Term Sheet stated that BVI would execute a Grant Deed In Lieu of Foreclosure (“DIL”) with NMR was trustee, not to be recorded for at least six months after the expiration of the Funding Period (“Redemption Period”). Cross-Compl., ¶29. The Term Sheet included a mutual release and Civil Code section 1542 waiver. Cross-Compl., ¶30.

BVI and NMR also agreed to Joint Escrow Instructions re: the DIL which instructed the escrow holder, Plaintiff Cohen, to hold the DIL “during the term of funding under the [Term Sheet]… and continuing thereafter for the duration of the six-month Redemption Period (which Redemption Period commences upon the conclusion of the Fundraising Period).” Cross-Compl., ¶31.

On or about September 1, 2023, NMR disbursed the first $45,000 payment, and then subsequently four more. Cross-Compl., ¶32. NMR refused to disburse the final payment. Cross-Compl., ¶32.

In October 2024, NMR demanded Cohen release the DIL under the Term Sheet, claiming all conditions precedent were satisfied. Cross-Compl., ¶33. BVI objected on the ground that the Funding Period never expired, and the Redemption Period never began because NMR had not made the sixth and final payment. Cross-Compl., ¶¶ 34-35.

In or around August 2023, BVI was able to restore utility services to the 61st Street Property. Cross-Compl., ¶37. Since then, BVI has attempted to market the 61st Street Property. Cross-Compl., ¶37. NRMI interfered with BVI’s efforts by representing to interested parties that BVI was in violation of the Loan Agreement and that NMR was going to foreclose on the 61st Street Property. Cross-Compl., ¶38. NMR represented to BVI that all brokers in the area knew NMR was going to foreclose on the 61st Property, and so finding a buyer or tenant would be impossible. Cross-Compl., ¶38. Additionally, the refused sixth payment under the Term Sheet was intended to pay for costs and expenses related to the 61st Street Property. Cross-Compl., ¶39.

On October 23, 2024, NMR sent Benaroya a letter incorrectly stating that BVI was in default on the Loan Agreement and grossly inflating the amount due. Cross-Compl., ¶40.

On December 3, 2024, NMR recorded a Notice of Default and Election to Sell Under Deed of Trust (“NOD”) for the Hercules Drive Property. Cross-Compl., ¶41. As of the time of the Cross-Complaint, the trustee sale under the NOD is scheduled for March 2, 2025. Cross-Compl., ¶43.

BVI has performed all its obligations under the Loan Agreement except those obligations it was excused from performing. Cross-Compl., ¶47.

If the trustee sale is permitted, BVI will lose its interest in the Hercules Drive Property, which is the residence of Benaroya, Vishnevsky, their two children, and Osip. Cross-Compl., ¶49.

Miller has a fiduciary duty to BVI as his real estate broker and mortgage broker. Cross-Compl., ¶62.

Osip is 74 years old and disabled, and at all relevant times was over 65 years of age. Cross-Compl., ¶81. NMR’s wrongful acts threaten to deprive Osip of his interest. Cross-Compl., ¶¶ 83-89.

BVI and Osip seek (1) a declaration of the rights and duties of the parties, (2) injunctive relief preventing NMR from proceeding with the trustee sale, (3) compensatory and consequential damages, (4) economic and non-economic damages, including mental anguish and emotional distress, (5) punitive damages, (6) prejudgment interest, (7) attorney fees, (8) costs, and (9) such other and further relief as the court deems proper. Cross-Compl. Prayer.

Cohen filed the Complaint on October 18, 2024. Proofs of service on file reflect drop service after three unsuccessful attempts for personal service to both Benaroya and Vishnevsky, and to BVI.

On March 20, 2025, BVI, Benaroya, Vishnevsky, and Osip filed their Cross-Complaint.

On March 24, 2024, the court granted temporary restraining order (“TRO”) and order to show cause re: preliminary injunction (“OSC”) preventing NMR from foreclosing on the Hercules Drive Property based only on the issue of NMR’s performance of the Term Sheet.

On March 27, 2025, BVI, Benaroya, and Vishnevsky filed their Answer to the Complaint.

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. Code of Civil Procedure (“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.

Benaroya and Vishnevsky are the managing member and member of BVI, respectively, which owns the Hercules Drive Property, where they reside. Benaroya Decl., ¶¶ 2, 4/

On or about March 19, 2021, NMR and BVI entered the Loan Agreement, including the $3,000,000 business line of credit (inclusive of fees) and the approximately $3,000,000 Loan to be evidenced by the Note. Benaroya Decl., ¶¶ 6-7, Ex 1. Under the Loan Agreement, NMR would loan BVI principal of $3,144,285, secured by a DOT on the 61st Street Property. Benaroya Decl., ¶8.

On March 19, 2021, Benaroya and Vishnevsky each signed the Note on behalf of BVI in the amount of $3,144,285. Benaroya Decl., ¶9, Ex, 2. The same day, Vishnevsky signed the DOT on behalf of BVI for the 61^st Street Property. Benaroya Decl., ¶10, Ex. 3.

Also on March 19, 2021, Vishnevsky and Osip signed DOTs for the Hercules Drive Property and the Teton Way Property, which they own. Benaroya Decl., ¶¶ 11-12, Exs. 4-5. The DOT for the Hercules Drive Property states that it secures payment of the Note, which contradicts the Loan Agreement. Benaroya Decl., ¶11, Ex. 4.

The Note had a maturity date of March 19, 2022. Benaroya Decl., ¶14. On March 15, 2022, NMR and BVI agreed to the Modified Note, increasing the principal to $6,328,738 and extending maturity to March 15, 2023. Benaroya Decl., ¶15, Ex. 6. That day, Benaroya and Vishnevsky each signed a new DOT for the 61^st Street Property on behalf of BVI. Benaroya Decl., ¶15, Exs. 7A, 7B.

On or around March 2023, but before March 15, 2023, NMR agreed to enter a moratorium for the Loan Agreement, the Note, and the Modified Note. Benaroya Decl., ¶17. BVI was engaged in a controversy with DWP for failure to provide utility services to the 61st Street Property. Benaroya Decl., ¶17. Services were restored in August 2023. Benaroya Decl., ¶19.

In 2023, the parties had a dispute over NMR’s performance and Miller’s lending practices. Benaroya Decl., ¶18. NMR threatened to foreclose unless BVI agreed to new terms and BVI refused as it deemed the terms unreasonable. Benaroya Decl., ¶18.

On or around August 31, 2023, BVI and NMR entered into the Term Sheet. Benaroya Decl., ¶20. The Term Sheet provided that NMR would disburse six further monthly payments of $45,000 each, starting on September 1, 2023. Benaroya Decl., ¶21, Ex. 8. In exchange, in part, Benaroya agreed to release various claims of misconduct by NRM. Benaroya Decl., ¶21. The Term Sheet Agreement specified BVI would execute the DIL for the 61st Street Property naming NMR as the trustee, but the DIL must not be recorded until after the Redemption Period. Benaroya Decl., ¶22, Ex. 9.

BVI and NMR signed the Escrow Instructions confirming that Cohen should hold the DIL throughout the Funding Period and the Redemption Period. Benaroya Decl., ¶23.

Benaroya and his wife understood the terms of the Term Sheet and Escrow Instructions would give BVI time and capital to market the 61st Street Property, and the DIL would prevent any foreclosures of the three properties for which NMR held a DOT. Benaroya Decl., ¶24. This understanding was reflected in NMR’s monthly invoices for the Loan. Benaroya Decl., ¶24.

Beginning September 1, 2023, NMR disbursed five of the six $45,000 payments required by the Term Sheet. Benaroya Decl., ¶27. However, it refused to disburse the sixth payment intended for marketing and operating expenses for the 61^st Street Property. Benaroya Decl., ¶27.

NMR interfered with BVI’s efforts by falsely telling agents, brokers, and/or prospective tenants that BVI was in breach and that NMR would soon foreclose on the 61^st Street Property. Benaroya Decl., ¶¶ 29-31. This caused prospective tenants and buyers to drop out or make low-ball offers. Benaroya Decl., ¶29.

On or about October 23, 2024, NMR sent Benaroya a letter stating BVI was in default on the Loan Agreement in amount owed of $8,439,725.81. Benaroya Decl., ¶32, Ex. 11. NMR caused the NOD to be recorded on December 3, 2024, including a Trustee Election to Sell Under Deed of Trust (“NOS”). Benaroya Decl., ¶33, Ex. 12. The trustee sale was scheduled for March 25, 2025 before this court’s TRO postponed it. Benaroya Decl., ¶36. The NOD states a balance due as $3,144,285, which is the amount of the Note, but the Hercules Drive Property did not secure the Note. Benaroya Decl., ¶ 34.

On or About March 19, 2021, NMR and BVI entered the Loan Agreement, also evidenced by the Note for a sum of $3,144,285 dated the same day. Miller Decl., ¶4, Ex. 1. The Note matured on March 19, 2022 and bore an interest rate of 13.95%. Miller Decl., ¶4.

The Note was secured by: (a) the DOT on the 61st Street Property; (2) a pledge agreement of BVI’s assets executed by Vishnevsky as BVI managing member on March 19, 2021 (“Pledge Agreement”); (3) a personal guaranty agreement by Benaroya and Vishnevsky executed on March 19, 2021 (“Personal Guaranty”). Pursuant to the Personal Guaranty, the Note also was cross-collateralized by (1) the DOT on the Hercules Drive Property and (2) the DOT on the Teton Way Property. Miller Decl., ¶¶ 5-9, Exs. 2-6. The DOTs for the Hercules Drive Property and the Teton Way Property were signed by Vishnevsky and Osip. Miller Decl., ¶¶ 8-9, Exs. 5-6.

NMR advanced BVI a total of $6,010,030.53 under the Loan Agreement and Note. Miller Decl., ¶10. By the maturity date of the Note, BVI requested an extension. Miller Decl., ¶11.

On or about March 15, 2022, NMR and BVI agreed to the Modified Note in principal sum $6,328,738. Miller Decl., ¶11, Ex. 33. The Modified Note matured on March 15, 2023 with an interest rate of 12%. Miller Decl., ¶11.

BVI took an additional $100,000 advance on or about April 4, 2022. Miller Decl., ¶12, Ex. 34. By the new maturity date, BVI owed approximately $6,304,787, and again requested an extension which required an additional extension fee of 160,119.69. Miller Decl., ¶13.

NMR and BVI continued to discuss additional extensions in the summer of 2023. Miller Decl., ¶14. NMR believed they had reached an informal deal, and so extended $45,000 in additional credit on or about June 23, 2023. Miller Decl., ¶14.

It became clear that the parties did not agree to the amount of additional financing. Miller Decl., ¶15. NMR and BVI continued discussing until August 31, 2023, when they agreed to the Term Sheet. Miller Decl., ¶15, Ex. 7. The Term Sheet provided for six monthly extensions of $45,000 and BVI would execute the DIL for the 61st Street Property. Miller Decl., ¶15. The DIL would be held in trust by BVI’s attorney for 12 months and, if after that time BVI had not repaid the debt, the trustee would record the DIL. Miller Decl., ¶15.

NMR resumed the $45,000 monthly payments the next day (September 1, 2023) and then continued to make such payments in October and November. Miller Decl., ¶16. NMR determined BVI had not delivered the DIL to its attorney as trustee, so demanded the same. Miller Decl., ¶16. BVI eventually delivered the DIL to its lawyer as trustee, and NMR resumed payments. Miller Decl., ¶16, Ex. 8.

In February 2024, NMR and BVI had a disagreement over whether the June 2023 payment constituted one of the six monthly advances under the Term Sheet, which they never resolved. Miller Decl., ¶17. NMR thereafter waited the entire six-month Redemption Period and gave BVI every opportunity to make payments on the Loan. Miller Decl., ¶18. NMR had no choice but to serve a NOD and begin foreclosure.

In September 2024, NMR offered to forebear in demanding the DIL for 45 days to allow BVI more time to either sell the 61st Street Property or find a tenant. Miller Decl., ¶18. By October 15, 2024, BVI had not refinanced and had not presented a proposed tenant or buyer. Miller Decl., ¶18. Therefore, NMR demanded that the trustee record the DIL. Miller Decl., ¶18. BVI objected, and the trusteed initiated this action. Miller Decl., ¶18.

In or about May 2023, on behalf of BVI, Benaroya asked Miller, on behalf of NMR, for 12 months of additional funding of $50,000 per month to pay for various carrying costs for the 61st Street Property because the ongoing dispute and lawsuit with DWP for utilities at the 61st Street Property was taking longer than expected to resolve. Benaroya Reply Decl., ¶2.

Miller responded that for 12 months of funding, NMR would only agree to monthly payments of $45,000 and would require that BVI sign the DIL for the 61st Street Property. Miller stated: “Sean, after negotiating with investors I was able to move it from 6 months to a year.” Benaroya Reply Decl., ¶3.

Benaroya sent a June 10, 2023 email to Miller confirming the terms of this June 2023 agreement. Benaroya Reply Decl., ¶4, Ex. 15. On June 11, 2023, Miller sent a response email which confirmed and further explained the terms. In that email, Miller confirmed the 12-month financing period at $45,000 per month. Benaroya Reply Decl., ¶5, Ex. 16. Subsequently, Miller asked for an email from Benaroya stating as follows: “Pursuant to the terms in our last email exchange we are in agreement on all the items.” Benaroya did so on June 15, 2023, at 10:51 a.m. Benaroya Reply Decl., ¶6, Ex. 17.

On June 15, 2023, at 11:16 a.m., NMR sent email confirmation of a wire transfer for $45,000 pursuant to the June 2023 agreement. Benaroya Reply Decl., ¶7, Ex. 18. Benaroya understood that this disbursement confirmed the June 2023 agreement as binding. Benaroya Reply Decl., ¶8.

On June 28, 2023, Miller’s attorney sent a draft of a formal agreement to memorialize the June 2023 Agreement. However, the draft only provided for a six-month payment period instead of the 12 months to which they had agreed. Benaroya Reply Decl., ¶9. Benaroya responded to Miller that that they had already agreed on the 12-month financing period. Benaroya Reply Decl., ¶11. Miller, nonetheless, refused to honor the June 2023 agreement and stopped making the promised payments. Benaroya Reply Decl., ¶11.

In or about August 2023, because Miller reneged on the June 2023 agreement, Benaroya threatened to report him to the Department of Real Estate. Benaroya Reply Decl., ¶12. Miller said he would only agree to provide further financing if BVI agreed not to report Miller to the Department of Real Estate. Miller further said he would only agree to a financing period of six months, with the option of an additional six months of funding if mediation with the DWP resulted in BVI declining an offer to settle for more than $3 million. Miller would also again require the DIL for the 61st Street Property. Benaroya Reply Decl., ¶13. Benaroya confirmed that he would not report Miller. Benaroya Reply Decl., ¶13.

At this point, BVI, Benaroya, and Vishnevsky desperately needed the further financing, in large part because of the ongoing the lack of utility services for the 61st Street Property, and to keep up with the monthly insurance payments and other expenses. They were relying on the 12 months of further financing NMR had initially promised but were forced to accept the new agreement for only six months of financing. Benaroya Reply Decl., ¶14.

On August 31, 2023, Benaroya signed the Term Sheet. The Term Sheet provides per sections 2, 3 and 4 that the “Start Date” for “additional funding” and the “initial term” of six months will be September 1, 2023. Benaroya Reply Decl., ¶16. The additional funding was intended to be in addition to the June 15, 2023 disbursement. Benaroya Reply Decl., ¶16.

In section 5, the Term Sheet provides that BVI would execute a DIL for the 61st Street Property, which would be held for either six or 12 months after the six-month funding term that started on September 1, 2023. That period ended on March 1, 2024. Benaroya Reply Decl., ¶17.

Section 8 of the Term Sheet has the language that Miller specifically requested that they would not report Miller to the Department of Real Estate. Benaroya Reply Decl., ¶18.

On or about September 1, 2023, NMR disbursed the first of six $45,000 funds. It made the next four payments in October, November, December and January 2024. However, NMR refused to disburse the sixth and final $45,000 advance, which was intended to be used for the operating and marketing costs and expenses for the 61st Street Property. Benaroya Reply Decl., ¶19.

Cross-Complainants BVI and Osip seek a preliminary injunction enjoining NMR and Miller from a foreclosure sale of the Hercules Drive Property. The sole issue under the OSC is whether NMR performed its obligations under the Term Sheet by lending six monthly advances.

Although the parties present considerable evidence and argument, there are only a few issues.

The first is whether NMR failed to perform the Term Sheet. NMR argues that it did because its $45,000 advance in June 2023 is part of the Term Sheet’s six-advance obligation. Opp. at 3, 8.

This requires interpretation of the Term Sheet. Contract interpretation is a matter of law. Civil Code §§ 1636, 1639. Courts should interpret a contract based on the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made. Rice v. Downs, (2016) 248 Cal. App. 4th 175, 185-86. No extrinsic evidence may be received to vary the terms of a contract that is fully integrated. The existence of an integration clause in the contract is a key factor in determining whether the parties intended the contract as a final and complete expression of their agreement. Grey v. Am. Mgmt. Servs., (2012) 204 Cal.App.4^th 803, 807. When the parties dispute the meaning of contract language, the first issue is whether the language is reasonably susceptible to the interpretation urged by the party. Dore v. Arnold Worldwide, Inc., (2006) 39 Cal.4^th 384, 393. If so, the court must consider all credible evidence offered to prove the intention of the parties. Pacific Gas & Electric Co. v. G.W. Thomas Drayage, (1968) 69 Cal.2d 33, 39-40. The parties’ undisclosed intent or understanding is irrelevant to contract interpretation. Iqbal v. Ziadeh, (2017) 10 Cal.App.5^th 1, 8-9.

As Cross-Complainants argue, the plain meaning of the Term Sheet supports them. The Term Sheet provides for “additional funding of $45K/Month”, with a “Start Date” for the “Initial Term” of September 1, 2023. Benaroya Decl., Ex. 8. This language plainly suggests that any $45,000 payments will be new money after August 31, 2023. The Term Sheet states that it is binding.

The Term Sheet is not integrated, and extrinsic evidence therefore is permissible. Benaroya explains that in or about May 2023 Benaroya asked Miller for 12 months of additional funding. Benaroya Reply Decl., ¶2. The parties agreed to a 12-month extension in June 2023 as confirmed in emails. Benaroya Reply Decl., ¶4, Exs. 15-17. Based on the agreement, NMR wired $45,000 on June 15, 2023. Benaroya Reply Decl., ¶7, Ex. 18. Benaroya understood that this disbursement confirmed the June 2023 agreement as binding. Benaroya Reply Decl., ¶8.

The parties did not agree on a formal agreement, however, and Miller refused to honor the June 2023 agreement and stopped making the promised payments. Benaroya Reply Decl., ¶11. Because they were desperate, BVI, Benaroya, and Vishnevsky accepted the Term Sheet for only six months of financing. Benaroya Reply Decl., ¶14. This extrinsic evidence supports Cross-Complainants’ position that the June 15, 2023 $45,000 wire transfer was outside the six-months of financing agreed to in the Term Sheet.

The June 15 advance did not just vanish, however, and NMR argues that it is entitled to set-off of this amount. Opp. at 7. This is true, but it has no bearing on the issue of NMR’s performance of the Term Sheet.

NMR characterizes the Term Sheet as a forbearance agreement and argues that it was both an immaterial breach and does not supersede the underlying debt. NMR relies on caselaw that a DIL does not extinguish debt unless the parties clearly so intend and the Term Sheet’s DIL was executed to add to, not substitute for, NMR’s rights. A breach of the forbearance agreement does not automatically discharge BVI from its separate and independent obligations under the Loan and DOTs. Opp. at 9-10.

For their part, Cross-Complainants argue that the Term Sheet was based on new consideration, including a mutual release under Civil Code section 1542 and a promise not to report Miller or NMR to the Department of Real Estate. The breach was material because NMR failed to advance the last $45,000 to which it agreed. As a result, the Funding Period never expired, and the Redemption Period never began because NMR had not made the sixth and final payment. Reply at 6.

Neither party cites case law on the issue of what happens when a lender breaches a forbearance agreement. Such agreements typically have consideration, or they would not be enforceable. Consequently, Cross-Complainants’ reply argument is not on point.

The court believes that forbearance agreements customarily have language that a breach entitles the lender to take whatever action the original loan agreement permits as a remedy in the event of default. The Term Sheet has no such language. NMR has not shown, therefore, that its breach of the Term Sheet cannot halt the foreclosure of property securing an underlying debt.

The materiality of the missing $45,000 advance is unclear, given that it occurred in the face of BVI owing more than $6 million in Loan debt. Materiality is a question of fact, and it will depend on whether Cross-Complainants can show that the loss of a $45,000 advance prevented them from marketing the 61st Street Property such that they could avoid default on the Loan and foreclosure of the Hercules Drive Property. Cross-Complainants contend that it did, and the court is not prepared to decide this factual issue for the preliminary injunction.

While there is plenty of room for doubt, Cross-Complainants have shown a reasonable probability of success.

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.

Cross-Complainants argue that real property is unique, Benaroya and Vishnevsky reside in the Hercules Drive Property, and an injunction is necessary to prevent loss of their home. App. at 7.

Defendants argue that the balance of hardships works in NMR’s favor. BVI has the option of tendering the Loan and tender is required to prevent foreclosure. Kalrsen v. American Savings & Loan Assn., (1971) 15 Cal.App.3d 112, 117. Opp. at 5. This is incorrect. Although tender is required to set aside a foreclosure sale, courts have not required tender before foreclosure. Pfeifer v. Countrywide Home Loans, Inc., (2012) 211 Cal. App. 4th 1250, 1280.

There remains an issue stemming from the fact that Benaroya and Vishnevsky do not own the Hercules Drive Property, BVI does. That Benaroya and Vishnevsky chose to hold the property in their investment company has meaning. While both residential and commercial real property are considered unique for purposes of irreparable harm (see Civil Code §3387), damages may adequately compensate property owned for investment property which has an established value, and the foreclosing entity is solvent. Jessen v. Keystone Savings & Loan Assn., (1983) 142 Cal.App.3d 454, 458. That is the case for BVI.

The balance of harm works in Cross-Complainants’ favor, but not as strongly as it would if Benaroya and Vishnevsky resided in the Hercules Drive Property as its owners.

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 parties do not address the issue of bond. NMR is owed more than $6 million. Cross-Complainants argue without evidence that the Loan is well secured by the value of the 61^st Street Property. If that were true, the court wonders why Cross-Complainants do not stipulate to the recording of the DIL. Without further evidence or argument from Cross-Complainants, the bond could be substantial – e.g., the lost use of $6 million for two years while the case is pending plus the attorney fees necessary to set the injunction aside.

The application for a preliminary injunction is granted. NMR and Miller are enjoined from a foreclosure sale of the Hercules Drive Property. The court will discuss the issue bond with counsel at hearing.

[1] Paragraph numbering in the Complaint restarts at paragraph 1 beginning at the Material Allegations heading. All further citations to the Complaint refer to the paragraphs beginning at Material Allegations unless otherwise specified.

[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] Some of Benaroya’s reply declaration is irrelevant or else improper under Regency Outdoor Advertising v. Carolina Lances, Inc., (1995) 31 Cal.App.4th 1323, 1333 (new evidence/issues raised for the first time in a reply brief are not properly presented to a trial court and may be disregarded. The court only refers to pertinent evidence.