Judge Mitchell L. Beckloff, Case 22STCV26395 2022-09-07 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 22STCV26395, Date: 2022-09-07 Tentative Ruling

Plaintiff, Nicole Shepherd, seeks a preliminary injunction enjoining Defendants, Trinity Financial Services, LLC and Entra Default Solutions, LLC (collectively, Defendants), and its agents, employees and representatives from conducting any sale of Plaintiff’s real property located at 17732 San Fernando Mission Boulevard in Granada Hills (the Property).

Defendants’ objection to the late-filed reply declaration of Shepherd is overruled based on a lack of identified prejudice to Defendants.

The standards governing a preliminary injunction are well known. “[A] court will deny a preliminary injunction unless there is a reasonable probability that the plaintiff will be successful on the merits, but the granting of a preliminary injunction does not amount to an adjudication of the merits.” (Beehan v. Lido Isle Community Assn. (1977) 70 Cal.App.3d 858, 866.) “The function of a preliminary injunction is the preservation of the status quo until a final determination of the merits.” (Ibid.)

As the parties recognize, “Trial courts traditionally consider and weigh two factors in determining whether to issue a preliminary injunction. They are (1) how likely it is that the moving party will prevail on the merits, and (2) the relative harm the parties will suffer in the interim due to the issuance or nonissuance of the injunction.” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) “[T]he greater the . . . showing on one, the less must be shown on the other to support an injunction.” (Ibid. [quoting Butt v. State of California, (1992) 4 Cal.4th 668, 678].) The burden of proof is on the plaintiff as the moving party “to show all elements necessary to support issuance of a preliminary injunction.” (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

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.) A plaintiff seeking injunctive relief must also show the absence of adequate damages remedy at law. (Code Civ. Proc. § 526, subd. (a)(4).)

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 Code Civ. Proc. § 529, subd. (a); City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal. App. 4th 916, 920.)

Plaintiff requests the court issue a preliminary injunction prohibiting Defendants from conducting a non-judicial foreclosure sale of the Property.

Plaintiff’s preliminary injunction is based on her claims Defendants’ attempts to foreclose on the Property are improper and unlawful.[1]

As background, in 2006, Plaintiff purchased the Property. (Def.’s RJN Ex. 1.) To purchase the Property, Plaintiff obtained a residential loan for $515,200 (First Loan) from the lender, Right-Away Mortgage, Inc. (Right-Away), secured by the Property. (Def.’s RJN, Ex. 2.) Plaintiff also obtained a second loan in the sum of $128,800.00 (Second Loan) from Right-Away also secured by the Property. (Madden Decl., ¶ 4, Ex. 4.)

In 2014, Trinity was assigned beneficial interest in the Second Loan after purchasing it. (Madden Decl., ¶ 5.)

Plaintiff reports American Home Mortgage Servicing, Inc. (American Home) modified the First Loan in 2009 at which time American Home became the servicer. The First Loan was modified again by PennyMac after it acquired the First Loan in or about 2013. (Shepherd Decl., ¶ 11.)

Further, and relevant to Plaintiff’s claims here, Plaintiff represents that in 2013, PennyMac represented to her they held (that is, owned) both the First Loan and Second Loan. (Shepherd Decl., ¶ 12, Ex. E.) Plaintiff claims she made “mortgage payments to PennyMac pursuant to the 2013 modification and in doing so, believed that (a) both loans had been wrapped and rolled into one and (b) that I was dealing with my only lender.” (Shepherd Decl., ¶ 13.) Not until May 2020—during Plaintiff’s Chapter 13 Bankruptcy proceeding—did Plaintiff learn of Trinity’s purported ownership of the Second Loan. (Shepherd Decl., ¶ 15.)[2]

To support her claim she is likely to prevail on the merits of her claims against Defendants that they may not non-judicially foreclose, Plaintiff makes several arguments.

First, Plaintiff argues the Second Loan should have either been extinguished or modified under the Home Affordable Modification Program (HAMP) when she received a loan modification in 2013 in connection with the First Loan—the senior loan encumbering the Property. In support of the argument, Plaintiff cites HAMP related-Guidelines: Making Home Affordable Program, Handbook for Servicers of Non-GSE Mortgages, v. 5.3, February 5, 2019.

The evidence submitted in support of Plaintiff’s preliminary injunction is limited and vague. In fact, Plaintiff has failed to show that any of the loan modifications she received on the First Loan were even a HAMP modification or that such a modification extinguished or modified the Second Loan. That is, nothing in the 2013 Loan Modification of the First Loan indicates it was modified under HAMP; nor does it mention or reference the Second Loan. (Shepherd Decl., Ex. H.)[3] Therefore, Plaintiff has failed to establish the Second Loan was even eligible for the Second Lien Modification Program under HAMP.

Moreover, case authority cited by Defendants suggests even if the Second Loan was subject to HAMP, Plaintiff has no private right of action to enforce the HAMP guidelines or any requirements under HAMP. (See Opposition 10:6-17 [citing Wigod v. Wells Fargo Bank, N.A. (7th Cir. 2012) 673 F.3d 547, 559 fn. 4 [“some homeowners tried to assert rights arising from under HAMP itself. Court have uniformly rejected these claims because HAMP does not create private federal right of action for borrowers against servicers.”]; see also Maurizio v. Bank of America (C.D. Cal. Dec. 26, 2013) N.A., 2013 WL 12146479, *2 [“Neither TARP nor HAMP provide a private right of action.”]; Simon v. Wells Fargo Bank N.A. (C.D. Cal. Jul. 11, 2014) 2014 WL 12573552, *3].) Plaintiff does not address these authorities in reply. (The reply consists only of Petitioner’s declaration.)

Further, Plaintiff’s evidence to support her belief that PennyMac “rolled” both loans into a single loan is purportedly based a letter from PennyMac, sent in 2021. (Shepherd Decl., ¶ 12, Ex. E.) Thus, even Plaintiff’s reliance argument appears to fail. Moreover, the court is unable to ascertain where any such representation is made in the letter. The letter specifically addresses modification of the “first lien mortgage, deed of trust, or security deed . . . .” (Ibid.) The letter from PennyMac references the same loan as the modification. Thus, there is no suggestion, the Second Loan was extinguished.

Similarly, Defendants’ opposition evidence shows only a Modification Agreement with PennyMac Loan Services, LLC in 2017 in connection with the First Loan. Plaintiff submits no documentary evidence that the Second Loan was modified, extinguished, discharged, or cancelled in connection with the modification of the First Loan.

Lastly, Plaintiff appears to argue Defendants violated Civil Code section 2923.6, subdivision (c). However, Defendants persuasively argue Civil Code section 2923.6 has no relevance to junior liens—such as the Second Loan; rather, the language of the statute itself indicates it applies only to first lien modifications. Plaintiff appears to have selectively quoted to this statute, omitting this crucial language.[4]

Based on the foregoing evidence and argument, the court finds Plaintiff is not likely to prevail on her claims against Defendants.

The second part of the preliminary injunction analysis requires the court to evaluate the harm the plaintiff is likely to sustain if the preliminary injunction is denied compared to the harm the defendant is likely to suffer if the injunction is issued. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69-70.) “However, ‘[a] trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.’ ” (Law School Admission Council, Inc. v. State of California (2014) 222 Cal.App.4th 1265, 1280 [quoting Butt v. State of California (1992) 4 Cal.4th at 678].)

In support of the balancing of harms analysis, Plaintiff argues she will suffer harm in the loss of her real property, which is irreparable. (Shepherd Decl., ¶¶ 6, 24.)

The court agrees that such a harm is irreparable and significant: “loss of a home can constitute irreparable harm.” (Diaz v. Wells Fargo Bank, N.A. (N.D. Cal., Nov. 25, 2013, No. 13-CV-04915-LHK) 2013 WL 6172648, at *3; see also Sundance Land Corp. v. Community First Federal Sav. and Loan Ass'n (9th Cir. 1988) 840 F.2d 653, 661 [recognizing real property is unique and in certain circumstances, the loss of such property may result in irreparable harm].)

In opposition, Defendants do not dispute that the balance of harms weighs in Plaintiff’s favor but requests an undertaking in the amount of $406,426.22 if an injunction is granted. (Opposition 15:14-22.)

Accordingly, the court finds the balance of harms weighs in Plaintiff’s favor.

Based on the balancing of the likelihood of success on the merits prong and the parties’ competing harms prong, the court finds the Plaintiff has not demonstrated entitlement to a preliminary injunction during the pendency of the litigation. Despite the balancing of harm weighing in Plaintiff’s favor, Plaintiff has not shown a likelihood of success on the merits. An injunction may not issue where Plaintiff has no demonstrated likelihood of success on the merits of her claims.

[1] The Complaint also contains causes of action for fraud and negligence, but Plaintiff made no specific arguments concerning the claims in her motion for preliminary injunction. Instead, Plaintiff merely asserts the following unsupported argument: “One can only assume that Defendant TRINITY intentionally lied in wait, striking Plaintiff with a Notice of Default and Notice of Sell via its trustee, Defendant ENTRA, in an effort to capitalize on the clear (mis)representations by all predecessors that this loan was in fact extinguished.” (Supp. Briefing 8:5-8.)

[2] Contrary to Plaintiff’s representations, Defendants assert Plaintiff contacted Defendant Trinity for the first time regarding the Second Loan in October 2014 when she received a letter from Trinity advising of the transfer of the Second Loan. (Madden Decl., ¶ 6, Ex. B [letter dated October 22, 2014 from Trinity to Plaintiff informing her that the Second Loan had been transferred to Trinity effective October 8, 2014].) Plaintiff disputes she received “ANYTHING from Trinity until 2021.” (Shepherd Reply Decl., ¶ 3.)

[3] Defendants’ evidence suggests that there was no loan modification with PennyMac until 2017. (Def.’s RJN Ex. 10 [Bankruptcy Action, “OPPOSITION TO DEBTOR’S MOTION TO COMMENCE LOAN MODIFICATION” p. 2:13-3:2, Ex. 1].) That is, Plaintiff received offers for a loan modification—including in 2013—but Plaintiff only approved a modification in 2017. (Id.)

[4] Civil Code section 2923.6, subdivision (c), states more fully: “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer at least five business days before a scheduled foreclosure sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee's sale until any of the following occurs: . . . .” (Emphasis added)