Judge: Michael E. Whitaker, Case: 24SMCV05179, Date: 2025-02-05 Tentative Ruling

Case Number: 24SMCV05179    Hearing Date: February 5, 2025    Dept: 207

TENTATIVE RULING

This case arises from a dispute concerning Defendant’s foreclosure on Plaintiff’s real property.  On October 22, 2024, Plaintiff Westmount Duplex, LLC (“Plaintiff”) brought suit against Defendant CFIN 2022-RTL1 Issuer, LLC (“Defendant”) alleging five causes of action – three causes of action for violations of Civil Code section 2924, breach of contract, and violation of Business and Professions Code section 17200. 

On December 10, 2024, the Court granted Plaintiff’s Ex Parte Application for a Temporary Restraining Order to restrain the foreclosure sale of Plaintiff’s property, which was scheduled for December 11, 2024, and set an Order to Show Cause (“OSC”) why a preliminary injunction should not issue restraining the foreclosure sale of Plaintiff’s property during the pendency of this action. 

Plaintiff filed a memorandum in support of the Court’s OSC, Defendant opposes the OSC, and Plaintiff replies.

REQUEST FOR JUDICIAL NOTICE

            Defendant requests judicial notice of the following:

1.     Notice of Default and Election to Sell Under Deed of Trust recorded in the Official Records of Los Angeles County on June 10, 2024, as Document No. 20240376459, a true and correct copy of which is attached hereto as Exhibit 1.

2.     Notice of Trustee’s Sale recorded in the Official Records of Los Angeles County on October 8, 2024, as Document No. 20240686486, a true and correct copy of which is attached hereto as Exhibit 2.

Courts can take judicial notice of the existence and recordation of real property records, including deeds, if authenticity is not reasonably disputed.  (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265.)  “The official act of recordation and the common use of a notary public in the execution of such documents assure their reliability, and the maintenance of the documents in the recorder’s office makes their existence and text capable of ready confirmation, thereby placing such documents beyond reasonable dispute.”  (Ibid.)  Moreover, courts can take judicial notice not only of the existence and recordation of recorded documents but also matters that can be deduced from the documents, including the parties, dates, and legal consequences of recorded documents relating to real estate transactions.  (Ibid.) 

Therefore, the Court takes judicial notice of the existence, recordation, and legal consequences of Exhibits 1 and 2.

EVIDENTIARY OBJECTIONS

            The Court rules as follows with respect to Defendant’s Evidentiary Objections to the Declaration of Hooman Nissani:

1.     Overruled

2.     Sustained as to “pursuant to which the loan would be extended until June 1, 2024” Overruled otherwise

3.     Overruled

4.     Overruled

5.     Overruled

6.     Overruled

7.     Overruled

8.     Sustained

9.     Overruled

10.  Overruled

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, 866-867.)

“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].)

Plaintiff argues that Defendant’s foreclosure of Plaintiff’s property is wrongful because (1) it is premised on the expiration of the original loan term, despite the fact that the parties subsequently extended the loan and Plaintiff continued to timely make all payments; (2) Defendant did not properly serve Plaintiff with the notice of default or notice of sale; and (3) the maturity date in the notice of default incorrectly indicates October 1, 2023.

In support, Plaintiff has provided the Declaration of Hooman Nissani, which provides as follows:

2. Plaintiff WESTMOUNT DUPLEX, LLC is the owner of the property located at 424 Westmount Drive, West Hollywood, CA 90048, which is located in Los Angeles County, California.

3. CFIN 2022-RTL1 Issuer, LLC (hereinafter "Defendant CFIN"), is the current beneficiary of the Deed of Trust recorded as Instrument No. 20220369845, of the Official Records in the office of the Recorder of Los Angeles County, California. CFIN was the owner of the loan at issue secured by Plaintiff’s property during the time periods alleged herein.

4. The Property was purchased in or around April 2022, via a purchase money transaction through Easy Financial, LLC. To secure the financing, the LLC, and I on its behalf, executed a Deed of Trust in favor of Easy Financial, LLC.

5. The loan was for $3,377,900.00 and was scheduled to mature in April 2023.

6. In March 2023, we began discussing a loan extension through Churchill Real Estate, who had the authority to discuss and negotiate an extension of the loan on behalf of the lender, Defendant CFIN, and the loan was extended to October 2023.

7. Following this first extension, we later began discussing a second extension of the loan

8. In early 2024, the parties agreed to another extension, this time for ninety (90) days.

9. On or about March 14, 2024, I executed the extension agreement, […]

10. The extension agreement was sent to Defendant via email that same day.

11. A couple of weeks later, in late March 2024, after we returned the signed extension, I spoke via telephone with Ryan Barrett of Churchill Real Estate. One of the issues that prompted this call was what seemed to be a misunderstanding regarding the maturity date under the extension agreement.

12. So, 1 called Ryan Barrett of Churchill Real Estate to discuss the issue. During this call, I went over the financials demonstrating that we qualified for the loan, as well as, my personal and firm's status as an exemplary borrower with sufficient financial backing and collateral to support the ongoing financial transaction. At the end of this call, we agreed that the loan extension was good through June and that the parties would enter into another 90-day extension thereafter.

13. Following this call, we continued making payments on the loan, which were accepted, and we heard nothing further issue about the extension agreement.

14. Then, in or around June or July 2024, Defendant inexplicably began returning our payments.

15. Upon inquiry, Mr. Barrett told my staff that, despite the parties’ signed agreement, late March 2024 conversation about the extension agreement, and the ongoing payments on the loan, the loan matured as of October 1, 2023 and was referred to foreclosure in June 2024.

16. So, 1 again contacted Mr. Barrett via telephone to resolve the clear misunderstanding.

17. During this July 26, 2024 call, Mr. Barrett indicated that he would review the loan file and system notes and get back to me. However, Mr. Barrett never got back in touch with me or my team, despite his representation otherwise.

18. Rather, in August 2024, Defendant apparently caused a Notice of Default to be recorded for the Property. However, the Notice of Default had was not mailed to me or the LLC's address. We only learned of the Notice of Default upon researching title to the property.

19. Moreover, the Notice of Default indicates that the loan matured on October 1, 2023, which is inaccurate given the extension agreements.

20. Despite our attempts to remedy the dispute, a Notice of Trustee's Sale was recorded for the Property on or about October 8, 2024. […]

21. In fact, I have security at the address at all times, and there have been no reports of a Notice of Default or Notice of Trustee's Sale being posted to the Property.

22. This property has substantial equity of approximately $1,462,000.00, and the loss would be a devastating financial harm.

23. Therefore, I ask that the Court enjoin the foreclosure sale of this property.

(Nissani Decl. ¶¶ 2-23.)

            As a threshold issue, Plaintiff has not provided any documentation supporting the assertion that the loan term was ever extended.  (Civ. Code, § 1624, subd. (a)(3) [contracts for an interest in real property invalid unless made in writing]; see also Secrest v. Security Natl. Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552 [loan forbearance agreement subject to the Statute of Frauds].) 

            Notwithstanding, in opposition, Defendant has provided a copy of an Extension Agreement extending the Maturity Date of the Loan to October 1, 2023.  (See Dameron Decl. ¶ 6 and Ex. 8.)  With regard to a purported further extension, however, the Dameron Declaration indicates as follows:

8. Following Borrower’s failure to repay the Loan by the Extended Maturity Date, Borrower and Lender discussed further extending the maturity date of the Loan, to March 1, 2024. In or around January 2024, Lender approved extension terms, including an extension of the maturity date to March 1, 2024, and provided a proposed extension agreement to Borrower (“Proposed Extension Agreement”). A true and correct copy of the Proposed Extension Agreement is attached hereto as Exhibit 9.

9. Neither Borrower nor the guarantors executed the Proposed Extension Agreement. Instead, Borrower unilaterally revised the Proposed Extension Agreement to (i) extend the maturity date of the Loan to June 1, 2024, and (ii) remove Niccolai Golshan as a guarantor of the Loan. A true and correct copy of the altered extension agreement is attached hereto as Exhibit 10.

10. Neither of these unilateral changes to the Proposed Extension Agreement were agreeable to Lender. This was communicated to Borrower on March 15, 2024. A true and correct copy of the parties’ communications in this regard is attached hereto as Exhibit 11.

11. As a result of Borrower’s defaults under the Loan Documents, Lender commenced the non-judicial foreclosure process.

12. The Trustee’s Sale was originally scheduled for November 6, 2024. It was continued multiple times by agreement of the parties while they discussed resolution of the Loan defaults. The Trustee’s Sale was initially continued to November 6, 2024, then to November 13, 2024, then to November 27, 2024, then to December 11, 2024, and then to February 1, 2025.

13. The Loan remains all due and payable.  As of November 26, 2024, the Loan balance is no less than $2,451,172.12.  Interest accrues at the daily amount of $1,261.14.

(Dameron Decl. ¶¶ 8-13 and Exs. 9-11.)

            Thus, Defendant has demonstrated that the loan was mutually extended to October 1, 2023, but the parties did not reach an agreement regarding a further extension.

            In reply, Plaintiff argues that Defendant is estopped from asserting the statute of frauds because Defendant’s oral promise that the loan was extended through June 1, 2024 caused Plaintiff’s detrimental reliance.  The Court disagrees.

            The Nissani Declaration indicates that, despite that the first loan extension expired on October 1, 2023, Defendant’s purported oral promise to further extend the loan by 90 days did not occur until late March 2024, nearly six months after the loan term had already expired.  Thus, Plaintiff’s failure to pay off the loan on or before the October 1, 2023 extended maturity date could not have occurred in reliance upon a March 2024 oral promise that had not yet occurred.

            Further, even if the loan were extended through June 1, 2024, which Plaintiff has not demonstrated, Defendant did not record a notice of default until June 10, 2024.  Plaintiff has not demonstrated, or even argued, that it paid off the balance of the loan on or before June 1, 2024.  Rather, Plaintiff merely contends it continued to make loan payments, which Defendant eventually returned and recorded a notice of default.

            Regarding service of the notice of default and notice of sale, Defendant has provided the Declaration of Charlene Broussard, indicating that the Notice of Sale was sent via first class and certified mail on October 8, 2024 to Plaintiff at numerous addresses, including the property in question.  Defendant has also provided the Declaration of Travis Toth, indicating that he posted the Notice of Trustee’s Sale in a conspicuous place at the property.  (Troth Decl. ¶ 3 and Ex. 1.)  Attached to the Toth Declaration is photographic evidence of the Notice of Trustee’s Sale taped to the brick wall.  (Ibid.)

            Defendant has further provided the Declaration of Aaron Ayala, demonstrating that the Notice of Default was mailed by first class and certified mail on June 11, 2024 to Plaintiff at numerous addresses, including the property in question.

            The only admissible evidence Plaintiff has provided is the Nissani Declaration, indicating that its security did not report any notice being posted at the property. 

            The Court finds Defendant’s declaratory and photographic evidence demonstrates that the notices were properly served, and the Nissani Declaration that Nissani did not receive word about the posting does not demonstrate otherwise.

            Therefore, Plaintiff has not demonstrated a likelihood of success on the merits to warrant a preliminary injunction.[1]

CONCLUSION AND ORDER

Therefore, because Plaintiff has failed to demonstrate a likelihood of success on the merits, the Court hereby vacates the temporary restraining order entered on December 10, 2024 and denies Plaintiff’s request for a preliminary injunction. 

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

DATED:  February 5, 2025                                                    ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court