Judge Mitchell L. Beckloff, Case 22STCV28817 2022-10-19 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 22STCV28817, Date: 2022-10-19 Tentative Ruling

Plaintiff, Anna Zabelina, seeks a preliminary injunction enjoining Defendants, Shellpoint Mortgage Servicing, LLC (Shellpoint), the Bank of New York Mellon and Quality Loan Serve Corporation, and their agents, employees and representatives from conducting any foreclosure proceeding on Plaintiff’s real property located at 8951 Appian Way in Los Angeles (Property).

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’s underlying complaint alleges Defendants materially violated Civil Code sections 2923.6 and 2923.55, and Defendants acted negligently in connection with the non-judicial foreclosure of the Property, Plaintiff’s home. Plaintiff also alleges Defendants have engaged in unfair business practices under Business and Professions Code section 17200. Plaintiff requests that the court issue a preliminary injunction prohibiting Defendants from conducting a trustee’s sale of the Property.

Plaintiff seeks relief based on her allegations of statutory violations by Defendants.

By way of background, on or about November 18, 2005, Plaintiff obtained a $1,500,000 mortgage loan from Countrywide Home Loans, Inc. The loan was secured by the Property. (Zabelina Decl., ¶¶ 5-7; Trinkley Decl., ¶ 5, Exs. A, B.)

On May 5, 2022, Defendants recorded a Notice of Default (NOD) against the Property. (Zabelina Decl., ¶ 12, Ex. A.) Plaintiff represents Defendants never contacted her “to assess [her] financial situation and explore” foreclosure alternative options prior to recording the NOD. (Zabelina Decl., ¶ 13.)

Plaintiff attests when she received the NOD she contacted Shellpoint and spoke with a representative who told her she would qualify for a loan modification. (Zabelina Decl., ¶¶ 18-23.) Thereafter, Plaintiff submitted the required documentation for the loan modification and was told her application was “complete.” (Zabelina Decl., ¶ 27.) Plaintiff attests despite her “complete” application, she began receiving requests from Shellpoint for additional documentation. While Plaintiff had already provided the requested information to Shellpoint, Plaintiff continue to provide the requested information to Shellpoint. (Zabelina Decl., ¶¶ 30- 33.)

On August 4, 2022, Defendants recorded a Notice of Trustee’s Sale on the Property. (Zabelina Decl., ¶ 37, Ex. B.)

The evidence submitted by Plaintiff to support her claims is quite weak. Plaintiff does not submit any documentary evidence to corroborate her alleged oral and written contacts with Shellpoint. (Zabelina Decl., ¶ 30.) Plaintiff’s declaration is also devoid of particularized facts. Moreover, some of Plaintiff’s assertions are undermined by documentary evidence submitted by Shellpoint. (See, e.g., Zabelina Decl., ¶ 15 and Trinkley Decl., Ex. C.) Additionally, Plaintiff does not dispute Shellpoint’s evidence Plaintiff made only five loan payments on the loan and then defaulted in June 2006. (Trinkley Decl., ¶ 6.) Plaintiff has made no payments on the loan since June 2006. (Ibid.)

Shellpoint’s evidence undermines Plaintiff’s claim Plaintiff began to struggle with loan payments only after her husband “suddenly filed for divorce” and her business began to suffer due to the COVID-19 pandemic. (Zabelina Decl., ¶ 10.)

On the evidence before the court (as well as the lack of any response to Shellpoint’s evidence), the court finds Plaintiff’s evidence not credible and unreliable. (See Evid. Code, § 412.) The court finds Shellpoint’s evidence more detailed and more credible.

With respect to Plaintiff’s claim under Civil Code section 2923.55, Defendants submit the following evidence:

On October 15, 2020,[1] Shellpoint sent Plaintiff a letter suggesting she apply for loss mitigation assistance. (Trinkley Decl., ¶ 8, Ex. C.) The letter provided Plaintiff with information to contact HUD. (Trinkley Decl., ¶ 8.) Then again, on October 25, 2021, Shellpoint sent Plaintiff a letter soliciting her to apply for loss mitigation assistance. (Trinkley Decl., Ex. F.) The letter provided Plaintiff with information to contact the United States Department of Housing and Urban Development (HUD). (Id. at ¶ 8.)

On February 8, 2022, Plaintiff’s authorized representative, Oliver Moussa, called Shellpoint and requested a payoff statement for the loan. (Trinkley Decl., ¶ 15, Ex. G.) During the call, Shellpoint discussed loss mitigation options available to the Plaintiff, provided HUD’s contact information, and offered a follow-up meeting under the Homeowner Bill of Rights (HBOR). Moussa declined to meet with Shellpoint. (Trinkley Decl., ¶ 15.)

On March 11 and April 25, 2022, Shellpoint again sent Plaintiff letters soliciting her to apply for loss mitigation assistance. (Trinkley Decl., ¶¶ 16-17, Exs. H, I.) The letters again provided Plaintiff with contact information for HUD. (Id.)

The evidence presented by Shellpoint undermines Plaintiff’s attestation that prior to the recordation of the NOD Defendants did not contact Plaintiff to “assess [her] financial situation and explore options for [Plaintiff] to avoid foreclosure, as required by § 2923.55(b)(2).” (Zabelina Decl., ¶ 13.)

Based on the foregoing evidence and given Shellpoint’s contacts with Plaintiff, the court finds Plaintiff has not demonstrated a likelihood of success on the merits of her Civil Code section 2923.55 violation claim.

“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.”

Shellpoint submits it received loss mitigation applications from Plaintiff on March 1, 2021 and May 10, 2022. Both applications were incomplete. (Trinkley Decl., ¶¶ 9-10, 13, 18.) On March 3, 2021, Shellpoint advised Plaintiff her loss mitigation application was incomplete and requested Plaintiff provide information required by April 2, 2021. After Shellpoint did not receive the required documents from Plaintiff by April 2, 2021 deadline, Shellpoint denied Plaintiff’s application on April 23, 2021. (Trinkley Decl., ¶ 10, 13, Exs. D, E.) Shellpoint also advised Plaintiff her May 10, 2022 was incomplete by mail on May 12, 2022 and by email on May 13, 2022. (Trinkley Decl., ¶¶ 19-20.) Despite Shellpoint’s efforts to obtain a complete application, Plaintiff failed to submit the documents required to complete her loss mitigation application. Shellpoint advised Petitioner on June 23, 2022 it denied her incomplete May 10, 2022 loss mitigation application. (Trinkley Decl., ¶ 21, Ex. L.) Shellpoint’s denial of both loss mitigation applications is corroborated with documentary evidence. (Trinkley Decl., Exs. E, L.)

Defendants represent Plaintiff did not have a loss mitigation application pending at the time the they cause the August 4, 2022 Notice of Trustee’s Sale to be recorded. (Trinkley Decl., ¶¶ 22-23.)

Based on the foregoing evidence, Plaintiff has not demonstrated a likelihood of success on the merits of her Civil Code section 2923.6 violation claim.

The court finds Plaintiff has failed to demonstrate a likelihood of success on the merits of her claims.[2]

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].)

As to the balance of relative harms, Plaintiff argues she will suffer harm in the loss of her house, which is irreparable. Here, Plaintiff represents the Property is her primary residence. (See Zabelina Decl., ¶ 28.)

The court agrees 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 under certain circumstances loss of such property may result in irreparable harm].)

Defendants contend it would be inequitable to allow Plaintiff to remain in the Property without having made any loan payment for 16 years. Defendants also argue they will suffer harm if they are not allowed to sell the Property and are instead required to continue to incur legal fees.

While the court acknowledges Defendants’ equitable argument, the court also notes Defendants have failed to identify any non-monetary harm resulting to Defendants—aside from the mere delay in possession—if the injunction is granted.

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

Based on the balance of the likelihood of success on the merits and the parties’ competing harms, the court finds the Plaintiff has not demonstrated entitlement to a preliminary injunction during the pendency of the litigation. While the balancing of harms may weigh in Plaintiff’s favor, Plaintiff has not shown any likelihood of success on the merits. (Law School Admission Council, Inc. v. State of California, supra, 222 Cal.App.4th at 1280.)

[1] Defendants represent Shellpoint began servicing the loan in February 1, 2020. (Trinkley Decl., ¶ 7.)

[2] Plaintiff also has claims for violation of Business and Professions Code section 17200 and a negligence/fraud. However, Plaintiff does not make a specific argument as to the negligence/fraud claims in her moving papers and the evidence supporting the Business and Professions Code section 17200 claim appears entirely duplicative of her HBOR claims.