Judge: Michael E. Whitaker, Case: 24SMCV04645, Date: 2025-05-05 Tentative Ruling

Case Number: 24SMCV04645    Hearing Date: May 5, 2025    Dept: 207

TENTATIVE RULING

MOTION

This case arises from a dispute between homeowner and homeowner’s association. 

On September 24, 2024, Plaintiff Guy Hart (“Plaintiff”) filed suit against Defendant Sea Colony II Homeowners Association (“Defendant”) alleging that Defendant is improperly targeting Plaintiff for assessments. 

On February 20, 2025, Plaintiff filed an ex parte application for a temporary restraining order to prevent Defendant from foreclosing on Defendant’s condominium unit, interfering with Plaintiff’s rightful use of his property, and/or imposing penalties for alleged nonpayment of assessment fees, which the Court granted on February 21, 2025 and set an order to show cause why a preliminary injunction should not issue. 

Plaintiff subsequently filed a “motion” for preliminary injunction.  Defendant opposes motion and Plaintiff replies.

LEGAL STANDARDS – TRO AND PRELIMINARY INJUNCTION

Pursuant to Code of Civil Procedure section 527, subdivision (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.” (Code Civ. Proc., § 527, subd. (a).) “The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial.” (Grothe v. Cortlandt Corp. (1992) 11 Cal.App.4th 1313, 1316.) The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. (14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396. 1402.) Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See, e.g., ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016; Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.)

The trial court considers two factors in determining whether to issue a preliminary injunction: (1) the likelihood the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the court grants a preliminary injunction. (Code Civ. Proc., § 526, subd. (a).) The balancing of harm between the parties “involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.” (Husain v. McDonald’s Corp. (2012) 205 Cal.App.4th 860, 866-67.)

“The decision to grant a preliminary injunction rests in the sound discretion of the trial court ... before the trial court can exercise its discretion the applicant must make a prima facie showing of entitlement to injunctive relief. The applicant must demonstrate a real threat of immediate and irreparable injury.” (Triple A Machine Shop, Inc. v. State of Cal. (1989) 213 Cal.App.3d 131, 138.) “[A]n 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,” and the party seeking injunctive relief bears the burden to prove its absence. (Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist. (1992) 8 Cal.App.4th 1554, 1564-1565.)

ANALYSIS

A.    PROBABILITY OF SUCCESS ON THE MERITS

A preliminary injunction may not issue unless it is “reasonably probable that the moving party will prevail on the merits. (San Francisco Newspaper Printing Co., Inc. v. Superior Court (1985) 170 Cal.App.3d 438, 442; see Costa Mesa City Employees’ Association v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 309 [no injunction may issue unless there is at least “some possibility” of success].)

The operative First Amended Complaint (“FAC”) alleges:

11. Defendant HOA has alleged that Plaintiff is behind on his monthly assessment fees.

12. Defendant HOA and their layers have a pattern of three years of targeting Plaintiff delaying resolution, and illegally inflating fees. Plaintiff was waiting for years to get his hearing — the dispute resolution process that the HOA must provide, under the law. Defendant HOA dragged out the process, and did not provide Plaintiff with timely dispute resolution, even though the law requires it, and thus has racked up over three years worth of legal fees.

13. Now. as of January 27, 2025, Defendant HOA has a lien on Plaintiff’s home for $156,084.39.

14. Of that total, $82,345 is the total of monthly assessment fees that are allegedly unpaid.

15. And, of that total, $38,104.34 is the total amount of legal fees that Defendant HOA is demanding, plus $6,845.21 in “collection fees”, and $6,547.48 in late fees, and $21,876.36 in interest on all of the above. Defendant HOA is demanding that Plaintiff pay all of that $156,084.39., or Defendant HOA will foreclose on Plaintiff’s home within a few weeks — barring Court intervention.

[…]

19. Section 2924c imposes a strict cap on nonjudicial foreclosure fees — both legal fees and Trustee’s fees. Section 2924c states:

“(d) (1) Trustee’s or attorney’s fees that may be charged pursuant to subdivision (a), or until the notice of sale is deposited in the mail to the trustor as provided in Section 2924b, if the sale is by power of sale contained in the deed of trust or mortgage, or, otherwise at any time prior to the decree of foreclosure, are hereby authorized to be in an amount as follows:

(B) If the unpaid principal sum secured is greater than fifty thousand dollars ($50,000) but does not exceed one hundred fifty thousand dollars ($150,000), then in a base amount that does not exceed three hundred fifty dollars ($350) plus one-half of 1 percent of the unpaid principal sum secured exceeding fifty thousand dollars ($50,000).”

20. Application: Section 2924c is for nonjudicial mortgage foreclosures. Plaintiff is facing nonjudicial foreclosure by his HOA for allegedly unpaid monthly assessments.

[…]

21. […] Section 5710 states: “(a) Any sale by the trustee shall be conducted in accordance with Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trust.”

22. This is reiterated in the decision of Huntington Continental Townhouse Association, Inc. v. Miner, 230 Cal.App.4th 590, 600 (Cal. Ct. App. 2014)

23. Relevance: Thus, all of the protections for Homeowners facing nonjudicial mortgage foreclosure are explicitly extended, by law, to all Homeowners facing nonjudicial foreclosure by their HOA's for allegedly unpaid monthly assessment fees.

24. Under the formula in section 2924c, the cap on legal fees in the present case would be $761.72 (Under Section 2924c, if the allegedly unpaid principal sum is between $50,000 and $150,000, then the legal fees are capped at $350 plus one-half of 1 percent of the allegedly unpaid principal sum. In this case, that sum is $82,345. $350 plus one-half of 1 percent of $82,345 [which is $411.72] totals $761.72)

25. But, Defendant HOA is demanding that Plaintiff pay $38,104.34 in legal fees, plug $6,845.21 in collection fees, which are also really just legal fees, for a total of $44,949.55, with interest on all of these fees accruing for years.

26. While section 2924c caps nonjudicial foreclosure legal fees at $350 plus one-half of 1 percent of the allegedly unpaid principal sum, Defendant HOA and their lawyers are demanding legal fees totaling 46% of the allegedly unpaid principal sum ($38,104.34 in legal fees for $82.345 in allegedly unpaid principal). Defendant HOA and their lawyers are demanding] $38,104.34 — more than 50 times what they are allowed by law to charge Plaintiff ($761.72).

[…]

29. The Court has found: The “policy of the California law prohibits the mortgagor and mortgagee from entering into certain contracts attempting in advance to waive the statutory provisions incident to formal foreclosure proceedings. Such contracts are void as violating public policy.” -Winklemen v. Sides 31 Cal App 2d 387 (1939)

[…]

31. See also California Bank v. Stimson, 89 Cal.App.2d 552, 555 (Cal. Ct. App. 1949) upholding Winklemen.

32. See also Valinda Builders, Inc. v. Bissner, 230 Cal.App.2d 106, 112 (Cal. Ct. App 1964), upholding Winklemen.

[…]

36. The right to reinstatement under Civil Code section 2924 and the cap on legal fees for nonjudicial foreclosures, also in section 2924c, are necessarily intertwined.

37. The right to redemption is further codified in Civil Code section 2903, which states: “Every person, having an interest in property subject to a lien, has a right to redeem it from the lien, at any time after the claim is due, and before his right of redemption is foreclosed...”

38. If the Homeowner can only reinstate by paying an unreasonably inflated amount then the Homeowner effectively has lost the right to reinstate or redeem.

39. In the present case, Defendant HOA has alleged that Plaintiff is past due for $82,345 in assessment fees. Now, Defendant HOA has tacked on legal fees for another $38,104.34, plug $6,845.21 in “collection fees”, and $6,547.48 in late fees, and $21,876.36 in interest on all of the above, for a total of $156,084.39 as of last notice, January 27, 2025.

40. If Defendant HOA can force Plaintiff to pay $156,084.39 for reinstatement, when| only $82,345 is the principal allegedly due, then the right to reinstatement is effectively lost.

41. The point of the fees cap is to allow the Homeowner to reinstate without being forced to pay whatever arbitrary amount that the foreclosing party may demand.

42. In the present case, Defendant HOA waited over three years before sending the notice of default, delaying ADR most of that time, and racking up $38,104.34 in legal fees. Thig appears to be for the sole purpose of making money. to which they are not entitled, and denying] Plaintiff the right to reinstate.

[…]

45.  • Defendant HOA will argue that the cap on nonjudicial foreclosure legal fees starts with the notice of default.

46. • The law actually says: Under Civil Code section 2924¢(d)(1), the cap on nonjudicial foreclosure fees is for “attorney’s fees that may be charged ... until the notice of sale is deposited| in the mail ... if the sale is by power of sale contained in the deed of trust or mortgage, or. otherwise, at any time prior to the decree of foreclosure”.

47. • There is no starting date.

[…]

49. • Defendant HOA will argue that their legal fees are collection fees, and are no directly related to the nonjudicial foreclosure.

50. • The law actually says: Under Civil Code section 2924(a)(1), any “costs o1 expenses” or “attorney’s fees” for “enforcing the terms of the obligation™ (with no starting date) are “subject to subdivision (d)”. And, subdivision (d) sets the cap. In this case, the “obligation” is the allegedly unpaid monthly assessment fees. Costs or expenses” must include “collection fees™.

51. • Thus, all costs, expenses, and attorney’s fees, for enforcing the obligation to pay| the allegedly unpaid assessment fees are subject to the nonjudicial foreclosure cap in subdivision (d) and Defendant HOA cannot get around this law.

[…]

52. • Defendant HOA will argue that their legal fees are now part of the underlying debt - that their CC&R’s allow them to turn legal fees into “reimbursement special assessments”, no combined with the allegedly unpaid monthly assessment fees.

53. • The law actually says: Homeowners have a statutory right to reinstatement of their property before foreclosure, without having to pay excessive legal fees. That is the purpose of the cap on nonjudicial foreclosure legal fees. The HOA”s strategy to take legal fees out of the category and fold them into the underlying assessments is a contemptuous attempt to bypass the law and the Homeowners’ statutory rights. It is unconscionable and it creates an illegal contractual clause. Any such clause is void.

54. • The law does not allow the HOA to force the Homeowner to pay legal fees over the strict cap. The HOA cannot force the Homeowner to pay legal fees that exceed the cap, by renaming legal fees as something else. Legal fees are legal fees, whatever they are called.

[…]

55. Attachment 1 of Plaintiff’s First Amended Complaint shows Defendant HOA’s notice] of default, from December 6, 2024, and December 16, 2024.

56. Attachment 2 of Plaintiff’s First Amended Complaint shows Defendant HOA's lien.

57. Attachment 3 of Plaintiff’s First Amended Complaint shows Defendant’s CC&R’s, in which Defendant HOA attempts to force the Homeowners to pay attorney fees, including in the following clauses:

1.36 page 5

10.9 page 24

15.4 page 33

16.1 page 35

16.2 page35

16.8 page 37

22.4 page 47

58. The CC&R’s state that attorney fees become “reimbursement special assessments’ that become the responsibility of the Homeowner. See clause:

10.9 page 24

59. Renaming attorney fees as “reimbursement special assessments” does not change the fact that they are attorney fees.

[…]

98. But, Defendant HOA gave notice to Plaintiff that the cost for ADR would be $3,900) and that the cost would be split between Defendant HOA and Plaintiff, at $1,950 each. 99. Plaintiff was forced to pay $1,950 for half of the costs of the ADR.

[…]

101. Now, Defendant HOA is attempting extortion of another $1,950 from Plaintiff.

102. In their lien, upon which they are foreclosing on Plaintiff’s home, Defendant HOA is demanding as follows: “08/12/2024 Collection Cost ARC Mediation Fee $1,950.00”

103. (See Attachment 2 of Plaintiff’s First Amended Complaint: Lien: “Account Itemization as of January 27, 2025”, page 8 of 27)

[…]

107. Plaintiff would now be paying for all of the ADR, $3,900, even though the law gives Plaintiff as a Homeowner the statutory right to ADR free of charge.

[…]

111. In a further attempt to harass and discredit Plaintiff, Defendant has falsely blamed Plaintiff for a water intrusion issue, despite the fact that the building has a well-documented history of severe water problems.

112. On Friday, January 31, 2025, at 7:20 PM, Plaintiff received an email from Defendant HOA containing a notice to appear at an HOA Board Meeting on February 11, 2025, to address an unspecified new alleged 'violation', and warning that Plaintiff’s access to common areas may be suspended.

113. Their notice is defective under Defendant HOA’s governing documents, the CC&R’S, which require that, upon an alleged violation, the notice of hearing shall:

• be sent at least 15 days prior to the hearing

• describe the nature of the alleged violation - so that the Homeowner may know the allegation

• advise the Homeowner of the right to present evidence — obviously, for this, the Homeowner must know the nature of the alleged violation

114. Their notice is illegal, under Civil Code section 5855, which requires that the notice from the HOA shall:

• describe the nature of the alleged violation - so that the Homeowner may know the allegation

[…]

137. Civil Code Section 5670: “Prior to recording a lien for delinquent assessments, an association shall offer the owner and, if so requested by the owner, participate in dispute resolution pursuant to the association’s “meet and confer” program required in Article 2 (commencing with Section 5900) of Chapter 10.

[…]

144. Section 5910 (g): “A member of the association shall not be charged a fee to participate in the process.”

[…]

149. First, Sea Colony II recorded a lien for allegedly delinquent assessments Then, after recording the lien, Sea Colony II offered mediation with a neutral mediator. And, Sea Colony I1 had no deadlines, and no maximum time, so they were able rack up fees and penalties and interest and legal fees, and interest on legal fees, for over two years. And, Sea Colony II did not offer mediation free of charge.

[…]

150. The articles of the Civil Code for both internal dispute resolution (IDR, aka “meet and confer”) and alternative dispute resolution (ADR) provide for a neutral mediator. Some people think that only ADR provides for a neutral mediator. A proper reading of the law shows that IDR also requires offering the homeowner prompt mediation with a neutral mediator, before recording a lien for allegedly delinquent assessments. Sec. 5900 states: “This article [for IDR] supplements, and does not replace, Article 3 (commencing with Section 5925), relating to alternative dispute resolution as a prerequisite to an enforcement action.” Article 3, for ADR, says that ADR must be provided by the HOA before filing a lawsuit. but this “does not apply to an assessment dispute” (Sec. 5940)  […]

151. Civil Code section 5685 (c) states: “If it is determined that an association has recorded a lien for a delinquent assessment in error, the association shall promptly reverse all late charges, fees, interest, attorney’s fees, costs of collection, costs imposed for the notice prescribed in Section 5660, and costs of recordation and release of the lien authorized under subdivision (b) of Section 5720, and pay all costs related to any related dispute resolution or alternative dispute resolution.” […]

152. The law requires that mediation be provided before the HOA records a lien. The law requires that the HOA provide prompt deadlines and a procedure with a stated maximum time for the HOA to provide mediation. By not following the law, Sea Colony II was able to systematically rack up fees and costs for over a period of years, thus making it much more difficult for the homeowner to pay what they demand. They want the homeowner to give up This is a process of extortion. In the case of Sea Colony II v. Guy Hart, the Sea Colony II racked up the following costs and fees for the period of 12-1-2019 to 4-24-2024:

Late fees: $5,184.98

Attorney fees and costs: $20.587.34

Collection costs: $1,094

Interest on the above, at 12% $13.519.59

153. Now, Sea Colony II is demanding late fees, legal fees, and interest on fees, for a period of over five years. All the while, Sea Colony Il ignored the law and ignored Guy Hart, and denied Guy Hart a prompt dispute resolution process, with deadlines and a stated maximum time as required by law. Guy Hart requested, even begged for prompt dispute resolution, in his letters to Sea Colony II, to the HOA Board and its member individually, and to their attorneys, repeatedly, including on the following 11 dates: […]

[…]

164. The Board has scapegoated Guy for a water intrusion issue that neither Guy nor his unit were responsible for. The Board is solely responsible for the water intrusion issue. Guy presented the Board with clear and convincing evidence that the water intrusion was not coming from his unit. […]

165. The three photos below, from Exhibit 11, from 9-28-2022 showing a plumbing] report in which only 3 of 70 photos were of Guy’s unit, and they were not of the bathtub or shower area, as alleged. They were of the area behind the toilet by the dividing wall, with the association main AC unit.

166. The theory. put forth by Board Member A, was that Guy’s bath tub was overflowing. But, the irrefutable evidence shows that Board Member A's theory was false. The area around the bathtub was dry. Still, the Board has ignored all of the evidence, and has held Guy responsible for about $9,500 in damage that Guy is not responsible for.

167. In August, 2024, Guy’s belongings. in his storage unit at Sea Colony II. were| damaged by a water leak. Sea Colony II is solely responsible for that leak, and for the $8,000 - 10 11 20 21 22 24 25 26 27 $15,000 in damage which it caused.

(FAC ¶¶ 11-15, 19-25, 29, 31-32, 36-42, 45-47, 49-59, 98, 101-103, 107, 111-114, 137, 144, 149-153, 164-167, emphasis in original.)

            Thus, in light of the disputes concerning the amount and veracity of the underlying assessments, fees, and costs and the lien recorded against Plaintiff’s property, Plaintiff seeks a preliminary injunction to maintain the status quo during the pendency of the litigation.

            In opposition, Defendant argues (1) Plaintiff seeks a determination of issues beyond the scope of relief sought, which are appropriately resolved via dispositive motion at a later stage of the litigation; (2) Plaintiff has not presented any admissible evidence in support of the motion; and (3) the amount of money owed does not constitute irreparable harm.

            The Court acknowledges that Plaintiff has not provided any admissible evidence in support of the motion for preliminary injunction other than a declaration generally attesting to the truth of the arguments in the motion, although Plaintiff bears the burden of demonstrating both irreparable harm and a probability of success on the merits.

            Notwithstanding, Defendant does not contest that it has assessed Plaintiff the fees, that it has recorded a lien against Plaintiff’s property, or that it seeks to foreclose upon Plaintiff’s property, as alleged in the FAC and the documents attached thereto.  Nor does Defendant contest that it has claimed the attorneys’ fees Plaintiff alleged.  (See Opp at p. 5.)  Indeed, Defendant seems to acknowledge that there is a legitimate dispute concerning the amount of attorneys’ fees Defendant has included in its assessment and lien. 

            Defendant also does not address Plaintiff’s argument that the amount of the assessments and lien being improperly inflated affects his ability to reinstate or redeem.  Rather, Defendant simply categorizes the issue as a monetary dispute that can be resolved later in the litigation (and after Defendant has foreclosed Plaintiff’s property). 

            Thus, the Court finds Plaintiff has demonstrated a reasonable probability of success and Defendant has not demonstrated otherwise.

B.    IRREPARABLE HARM

With regard to irreparable harm, the impending foreclosure will prejudice Plaintiff if allowed to go forward, as it will irreparably deprive Plaintiff of right and title to the real property at issue, especially if the foreclosure is premised on assessments and a lien that are ultimately determined to have been improperly inflated, as Plaintiff has alleged and Defendant has not refuted.  However, if Defendant is ultimately meritorious in this action, there has been no evidence presented that a mere delay in the foreclosure sale will prejudice Defendant.

CONCLUSION AND ORDER

Therefore, finding Plaintiff has demonstrated both irreparable harm and a reasonable probability of success on the merits, which Defendant has not refuted, the Court grants Plaintiff’s request for a preliminary injunction and enjoins Defendant from foreclosing upon Plaintiff’s property located at 2930 Neilson Way #306, Santa Monica, CA 90405, and/or interfering with Plaintiff’s rightful use of said property, and/or imposing penalties for alleged nonpayment of assessment fees during the pendency of this litigation or until otherwise ordered by the Court. 

Plaintiff shall lodge a proposed Order in conformity with the Court’s ruling on or before May 19, 2025.  Defendant may lodge objection to the proposed Order on or before May 30, 2025.  The Temporary Restraining Order entered on February 26, 2025 remain in effect until the Court enters the Preliminary Injunction Order. 

Plaintiff shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

DATED:  May 5, 2025                                                           ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court