Judge Michael E. Whitaker, Case Number: 25SMCV00778, Date: 2025-05-28 Tentative Ruling

Judge: Michael E. Whitaker, Case: 25SMCV00778, Date: 2025-05-28 Tentative Ruling

On February 13, 2025, Plaintiff Ridge Property LLC (“Plaintiff”) brought suit against Defendant Easy Financial, LLC (“Defendant”) alleging two causes of action for (1) violations of Civil Code section 2924, subd. (a)(1)(C) and (2) violation of Business and Professions Code section 17200 et seq.

On March 21, 2025, the Court granted Plaintiff’s request for a temporary restraining order, restraining Defendants from selling Plaintiff’s property, and set an order to show cause why a preliminary injunction should not issue.

Plaintiff has filed a brief and supporting papers in support of the preliminary injunction. , Defendant opposes the preliminary injunction request and Plaintiff replies.

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.)

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 an inflated outstanding balance, 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.

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 Complaint alleges Defendant violated Civil Code section 2924, subdivision (a)(1)(C). Section 2924 requires any Notice of Default to contain “a statement setting forth the nature of each breach actually known to the beneficiary and of the beneficiary’s election to sell or cause to be sold the property to satisfy that obligation and any other obligation secured by the deed of trust or mortgage that is in default.” Here, Plaintiff asserts Defendant violated Section 2924 by recording a Notice of Default that falsely showed Plaintiff owed $2,604,855.93, when Plaintiff was not in default because Plaintiff was still making payments on the loan and as of December 31, 2024., Plaintiff contends that the account demonstrated it only owed an outstanding balance of $1,729,000 on the loan. (Complaint ¶¶ 26-30.)

In support of the Temporary Restraining Order, Plaintiff advanced the Declaration of Houshang Neysasani, a member of Ridge Property, LLC, which indicates the following:

3. Plaintiff purchased the Property via grant deed on or about December 10, 2018.

4. On or about September 27, 2019, Plaintiff took out a first position loan with Easy Financial, LLC for $2,275,000. Attached hereto as Exhibit A is a true and correct copy of the Deed of Trust secured by the Property.

5. After origination of the loan, the beneficial interest in the loan was transferred to Defendant ROC Capital, Inc. ROC Capital, Inc. remains the current beneficiary of the loan. Superior Loan Servicing services this loan on behalf of ROC Capital.

6. The interest rate under the loan was 9% per year and a default interest rate of 23%.

7. The loan was scheduled to mature on September 20, 2020. However, for four years after maturity, we continued to make our regular interest payments under the loan to Defendant ROC and Defendant ROC did not demand payment of the entire loan during that time and Plaintiff continued to make monthly payments with neither any notice to the borrower of rate change from the lender nor any notice to borrower of any default. Further, the lender continued to accept payments from the borrower for more than four years after the loan had matured.

8. On or about November 15, 2024, a Notice of Default ("NOD") was recorded against the Property at the direction of Defendant ROC. The Notice of Default states that, as of November 14, 2025 (sic), Plaintiff owed $2,604,855.93 to pay off the loan in full. Attached hereto as Exhibit B is a true and correct copy of the Notice of Default.

9. Based on the payments made under the loan, the principal balance of the loan had decreased to $1,729,000.00. Attached hereto as Exhibit C is a true and correct copy of a monthly statement dated December 31, 2024.

10. Thereafter, on February 25, 2025, a Notice of Trustee's Sale was recorded against the Property at the direction of Defendant ROC. The Notice of Trustee's Sale indicated that the outstanding balance owed on the loan was $2,369,284.57 as of February 20, 2025.

11. The amounts listed in the Notice of Default and the Notice of Trustee's Sale are inconsistent. Furthermore, based on the December 31, 2024 statement, the outstanding amount as of February 20, 2025 should have been approximately $2,169,485 including interest, not $2,369,284.57 even if the lender was charging the default interest rate of 23% (the per diem interest due on a $1,725,000.00 loan with a 23% interest rate is $1,086 per day and 51 days passed between December 31, 2024 and February 21, 2025 ($1,086 x 51= $55,386).

12. The property is scheduled to be sold at a Trustee's Sale on March 25, 2025 at 11:00 am based on inaccurate amounts.

13. Furthermore, I had a refinance lender lined up to payoff this loan in full in February 2025 but my attempts to get a payoff quote on this loan to finalize the payoff were unsuccessful. I have the ability to refinance this loan if Defendant were to provide an accurate payoff demand but Defendant has been unwilling to do so and, instead, is proceeding with the sale of the property.

(Mar. 8, 2025 Neyssani Decl. ¶¶ 3-13.) Indeed, the balance listed on the Notice of Default, attached as Exhibit B to the Neyssani Declaration, indicates $2,604,855.93 owed as of November 14, 2024, the December 31, 2024 billing statement attached as Exhibit C shows an outstanding principal balance owed of $1,729,000, and the Notice of Trustee’s Sale attached as Exhibit D shows “Amount of unpaid balance and other charges” of $2,369,284.57.

In support of the preliminary injunction, Plaintiff provides the March 20, 2025 Declaration of Houshang Neyssani, which contains identical statements as those made in support of the TRO above, and the Additional Declaration of Houshang Neyssani, which provides:

2. For years, we never received formal notices regarding the loan. All of the statements showed a balance of approximately $1,729,000.00. We never received notice that the payments were wrong, and the interest was never changed, and then all of a sudden there were different balances being requested.

4. After the loan was approved, we tried to get a payoff demand, but it didn’t come in for weeks. My team was calling the loan servicer, Superior Loan Servicing, for weeks telling them we need a payoff but no one was responding.

5. We have a loan ready with a term sheet ready to go, and we are ready to pay off the loan at the correct amount, which we estimate to be $ 1,782,166.00. The estimated amount includes the principal balance plus the last four payments which have not been tendered. We have never missed a payment on this loan until the payments were rejected suddenly, in December 2024.

6. I now ask the court to grant a temporary restraining order to stop the sale of this property. This property is unique and irreplaceable.

In Opposition, Defendant argues (1) Plaintiff concedes the loan, pursuant to its plain terms, matured on September 20, 2020, and cannot be extended by implication based upon the mere acceptance of payments past maturity; (2) the notice of default meets the requirements of Section 2924, subdivision (a)(1)(C), which does not require that the outstanding balance be accurately stated; (3) injunctive relief is not available to halt foreclosures due to violations of Section 2924, subd. (a)(1)(C); and (4) the parties’ involvement is unclear and inconsistent because (a) Plaintiff failed to name an indispensable party – the Loan Funder, who has been the beneficiary under the loan since 2019; (b) Defendant was not listed on the Deed of Trust, Promissory Note, Assignment of Deed of Trust, or any other document demonstrating Defendant has any interest in the subject property; and (c) although Plaintiff characterizes Lucas Sambrook, with whom Plaintiff corresponded by email, as being “of Roc Capital,” Plaintiff did not attach the email to the moving papers to prove any such relationship.

In the alternative, Defendant requests in opposition that if the Court is inclined to grant Plaintiff’s requested injunctive relief, that it require Plaintiff to post a bond or undertaking in the amount at issue in the notice of sale of $2,169,485.00.

In support of its argument that mere acceptance of payments past maturity does not necessarily constitute an implied extension of the loan, Defendant cites to Pacific Finance Corporation of California v. Crane (1955) 131 Cal.App.2d 399 (hereafter Pacific) and Woolwine v. Storrs (1905) 148 Cal.7, 11 (hereafter Woolwine).

In Pacific, the court held that the lender’s post-maturity and post-default consent to wait a reasonable time before foreclosure to see if the borrowers’ liquidation agreement was successful, did not in itself constitute an extension of the maturity date or a waiver of default. (Pacific, supra, 131 Cal.App.2d at p. 407.)

In Woolwine, the court found that contrary evidence established that that the lender never actually agreed to give a 1-year extension of the loan, as the plaintiff had alleged. (Woolwine, supra, 148 Cal.7 at p. 11.)

In reply, Plaintiff argues that Defendant should be equitably estopped from foreclosing on Plaintiff’s home based upon a default notice that Defendant does not dispute contained an inaccurate payoff amount, because Plaintiff’s inability to obtain financing to pay off that loan and prevent foreclosure was due to Plaintiff’s inability to obtain an accurate payoff statement from Defendant. (Mar. 8, 2025 Neyssani Decl. ¶ 13; Add’l Neyssani Decl. ¶¶ 2-5.)

The Court agrees with Defendant that acceptance of payments past the maturity date does not, in itself, demonstrate an implied extension of the loan, as it could just as easily represent a mitigation of damages or a good faith effort to allow the Plaintiff to avoid foreclosure by paying off the loan. Notwithstanding, the Court also agrees that Plaintiff has provided sufficient evidence demonstrating a likelihood that Defendant should be estopped from foreclosing on the basis of failing to provide Plaintiff with an accurate payoff statement, precluding Plaintiff from paying off the loan in full.

“If […] a power of sale is […] to be exercised after a breach of the obligation for which that mortgage or transfer is a security, the power shall not be exercised […] until all of the following apply:

(1) The trustee, mortgagee, or beneficiary, or any of their authorized agents shall first file for record, in the office of the recorder of each county wherein the mortgaged or trust property or some part or parcel thereof is situated, a notice of default. That notice of default shall include the following:

(C) A statement setting forth the nature of each breach actually known to the beneficiary and of the beneficiary's election to sell or cause to be sold the property to satisfy that obligation and any other obligation secured by the deed of trust or mortgage that is in default.

Defendant argues that, pursuant to the plain language of the statute, there is no requirement that the exact dollar amount of the loan balance be accurate. In reply, Plaintiff cites to Anderson v. Heart Federal Savings & Loan Assn. (1989) 208 Cal.App.3d 202, 214, which explains that Section 2924 forbids the power of sale until the notice of default stating a breach has occurred has been recorded, and the purpose of the provision is to ascertain the existence of a breach and to put the trustor on notice of the obligations that have been breached. Moreover, the failure to do this “renders the notice ambiguous” effectively defeating its purpose. (Id. at pp. 214-215.) Importantly, the appellate court held:

The obligation of the beneficiary to provide the trustor with an accurate accounting of the amounts due to cure a default is governed by statute. Section 2924 specifies that a copy of the notice of default must be sent to the trustor together with ”the statement specified in paragraph (1) of subdivision (b) of Section 2924c“ that the trustor may have ”the legal right to bring your account in good standing by paying all of your past due payments plus permitted costs and expenses within the time permitted by law“ and informs him that: ”This amount is ______________________ as of (date) .... ”

(Id. at p. 215.) Further, the Notice must indicate “To find out the amount you must pay, or to arrange for payment to stop the foreclosure, or if your property is in foreclosure for any other reason, contact: _______________________” (Id. at p. 216.) “Compliance with this provision necessarily requires that the beneficiary provide accurate information in response to an inquiry by the trustor.” (Ibid.)

Thus, Plaintiff has demonstrated a likelihood of prevailing at demonstrating that the notice overstated the amount Plaintiff owed, and is therefore insufficient upon which to base a foreclosure sale.

Defendant next argues that injunctive relief is not available as a remedy to alleged violations of Section 2924. In support, Defendant cites to Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150 (hereafter Lucioni.) In Lucioni, the court explained that there is no private right of action to enjoin a foreclosure sale due to purported violations of Civil Code section 2924, subd. (a)(6) [requiring that only the holder of the beneficial interest under a mortgage or deed of trust may foreclose] because it was not one of the nine enumerated statutory provisions expressly listed upon which an aggrieved plaintiff may bring an action for injunctive relief. (Id. at pp. 157-161.) Namely, Section 2924.12, subd. (a)(1) permits a homeowner to bring an action for injunctive relief for a violation of section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17, and section 2924.19, subd. (a)(1) additionally permits a homeowner to bring an action for injunctive relief for violations of sections 2923.5 or 2924.18. (Id. at p. 158.)

In so holding, the court of appeal analyzed the legislative history, where the legislature confirmed the statute purposefully contained a “narrow and targeted enforcement mechanism” adopted “in response to concerns expressed” regarding “frivolous claims” and “effects to merely delay legitimate foreclosure proceedings.” (Lucioni, supra, 3 Cal.App.5th at p. 159.) Thus, while monetary damages are available post-foreclosure for violations of the other sections, an injunction to prevent the foreclosure may only issue for violations of the nine enumerated sections above. (Id. at p. 160.)

Plaintiff does not address or distinguish this authority on reply. However, Plaintiff argues that injunctive relief is available pursuant to the second cause of action for Unfair Competition. However, Plaintiff may not use the Unfair Competition Law (“UCL”) as an end-run around the Homeowner’s Bill of Rights statutory scheme to create injunctive relief not intended by the legislature. (See, e.g., Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1380 [“When the Legislature has permitted certain conduct, courts may not override that determination by declaring such conduct to be actionable under [Business and Professions Code] section 17200”].) Thus, Plaintiff’s UCL claim does not save its request for injunctive relief.

As such, Plaintiff has not demonstrated a likelihood of success of ultimately obtaining an injunction to prevent the foreclosure sale of its home on the basis of Defendant’s violations of Section 2924.[1]

Therefore, having determined that the alleged violations of Civil Code section 2924 cannot support the injunctive relief Plaintiff seeks, and the UCL cannot revive Plaintiff’s request for injunctive relief, the Court finds that Plaintiff has not demonstrated a likelihood of success on the merits. As such, the Court denies Plaintiff’s request for a preliminary injunction. The Temporary Restraining Order the Court issued on March 21, 2025, enjoining Defendant from foreclosing upon Plaintiff’s property is vacated.

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

[1] Because the Court finds there is no right to injunctive relief based on violations of Section 2924, the Court does not analyze the parties’ remaining arguments.

DEPARTMENT	207
HEARING DATE	May 28, 2025
CASE NUMBER	25SMCV00778
MOTION	OSC re: Preliminary Injunction
MOVING PARTY	Plaintiff Ridge Property LLC
OPPOSING PARTY	Defendant ROC Capital, Inc.