Judge: Peter A. Hernandez, Case: 24STCV04748, Date: 2024-09-23 Tentative Ruling

The Court often posts its tentative several days in advance of the hearing. Please re-check the tentative rulings the day before the hearing to be sure that the Court has not revised the ruling since the time it was posted.

Please call the clerk at (213) 633-0154 by 4:00 pm. the court day before the hearing if you wish to submit on the tentative.

Case Number: 24STCV04748    Hearing Date: September 23, 2024    Dept: 34

The Motion for Preliminary Injunction is DENIED.

 

Background   

 

Plaintiffs Daniella Fiallos and Caesar Hernandez (“Daniella” and “Caesar” and collectively, the “Plaintiffs”) alleges as follows:

 

Based on encouragement from Defendant Theresa Fiallos (“Theresa” or “Defendant”), in early 2017, Plaintiffs agreed to sell their home in Palmdale and purchase and move into 7530 Brighton Avenue, Los Angeles, CA (“Subject Property”). As the Subject Property is a duplex, the plan was to live in one unit and rent out the other. The purchase price for the Subject Property was $387,500. Defendant told Plaintiffs she was giving them a loan of $500,000 and represented to her sister, Paquita Engle-Fiallos, that the Subject Property was to be a gift she was leaving Plaintiffs. The understanding between Defendant and Plaintiffs was that the loan was only required to be paid back interest free upon the sale of the Subject Property. No deadline for the sale of the property was set. Plaintiffs never received $500,000 and are only aware of $387,500 being wired into escrow to closed the deal on the Subject Property.

 

On or about January 23, 2017, a Grant Deed was recorded granting Plaintiffs the Subject Property as tenants in common each as to an undivided 50% interest. The vacant unit at the Subject Property remained vacant as ordered by Defendant.  On or about October 27, 2017, a Deed of Trust was recorded with Defendant’s company, WEBO, LLC, as the beneficiary (“2017 Deed of Trust”).  The 2017 Deed of Trust does not have a promissory note and does not specify the amount of the promissory note.

 

Some years after their move into Subject Property, Plaintiffs moved their residence to 4203 W 141st Street, Hawthorne, California 90250 (“Hawthorne Property”).  In September 2023, relations with Defendant began to fall apart.  While Plaintiffs were away, Defendant wrongfully ejected Plaintiffs from the Subject Property, removed all of their personal belongings from the property, changed the locks, and installed her own tenants for financial gain. All of Plaintiffs’ belongings were wrongfully dumped at the Hawthorne Property without their consent.

 

Plaintiffs decided it was time to begin severing their economic ties to Defendant and listed Subject Property for sale. They listed the Subject Property for sale on October 1, 2023. On or about October 24, 2022, Plaintiffs received an all-cash offer to purchase Subject Property for $1.35 million. Defendant refused to accept the offer as the broker of the deal, stopping Plaintiff from being able to pay back any loan owed to Defendant. Defendant would continue to show up to Plaintiffs’ home unannounced and verbally harass them with name calling and threats to contact Child Protective Services. This harassment continued for months.

 

On or about September 21, 2023, a Deed of Trust was recorded with Chicago Title Co. as trustee and Defendant, trustee of the Fiallos Trust Dated November 10, 1995, as beneficiary (“2023 Deed of Trust”). Based on Defendant’s violent history, consistent threats, and concern about the safety of their family, Plaintiffs signed the 2023 Deed of Trust. On or about November 30, 2023, the police were called to the Hawthorne Property over a dispute between Defendant and Plaintiff. Defendant was verbally harassing Plaintiffs, calling them a number of names, and threatened to call Child Protective Services. On December 1, 2023, the trustee under the 2017 Deed of Trust was substituted to S.B.S. Trust Deed Network. A Notice of Default and Election to Sell is then recorded as to the 2017 Deed of Trust for $706,988.22. On the same day, the trustee under the 2023 Deed of Trust is substituted to S.B.S. Trust Deed Network. A Notice of Default and Election to Sell is then also recorded on December 1, 2023 as to the 2023 Deed of Trust for $726,365.53.

 

On February 26, 2024, Plaintiffs filed a complaint, asserting causes of action against Defendant, individually and as Trustee of Fiallos Trust Dated November 10, 1995, and WEBO, LLC for:

 

1.               Quiet Title

2.               Breach of Contract

3.               Declaratory Relief

4.               Wrongful Eviction

5.               Usury

6.               Identity Theft

7.               Cancellation of Instrument

8.               Breach of Contract

9.               Breach of Fiduciary Duty

10.            Interference for Economic Advantage

11.            Fraud

12.            Ejectment

 

A Case Management Conference is set for September 24, 2024.

 

Legal Standard

 

“An injunction is a writ or order requiring a person to refrain from a particular act. It may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court.” (Code Civ. Proc., § 525.) “[A]n injunction may be more completely defined as a writ or order commencing a person either to perform or to refrain from performing a particular act.” (McDowell v. Watson (1997) 59 Cal.App.4th 1155, 1160.)

 

“In determining whether to issue a preliminary injunction, the trial court considers who related factors: (1) the likelihood that the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction.” (14859 Moorpark Homeowner’s Ass’n v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1402.) “The trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction.” (Butt v. State of California (1992) 4 Cal.4th 668, 678.) “Generally, weighing these factors lies within the broad discretion of the superior court.” (County of Kern v. T.C.E.F., Inc. (2016) 246 Cal.App.4th 301, 315.)

 

Discussion

 

Plaintiffs seek to enjoin Defendant, and any and all persons acting in concert with them, including but not limited to their agents, employees, and persons acting with them or on their behalf, from foreclosing, attempting to foreclose, selling, attempting to sell, transferring ownership or further encumbering the Subject Property. (See Motion for Preliminary Injunction, at p. 2.)

 

Request for Judicial Notice

 

Plaintiffs’ Request for Judicial Notice is Granted as to Exhibits A, D, G, J, K, L, M, KK, and PP.

 

Merits

 

Likelihood of Prevailing on the Merits

 

Plaintiffs have proffered the following evidence:

Plaintiffs have three children together. They are one of two current owners of the Subject Property  They received an undivided 50% interest in the Property in January of 2017.

 

Defendant is Plaintiff Daniella’s aunt.  Defendant previously informed Daniella me that she is the Trustee of Fiallos Trust Dated November 10, 1995, and the owner WEBO, LLC. In 2013, Daniella asked Paquita Engle-Fiallos, who is a real estate agent, to help find a house that fit the budget. Plaintiffs purchased a Palmdale property for $137,000 in February 2014. Near the end of 2016, Defendant presented Plaintiffs with a proposal to purchase an income property in the City of Los Angeles – the Subject Property. Defendant said she would loan Plaintiffs the money for the Subject Property. Defendant told Plaintiffs to sell the Palmdale home and use the proceeds from that sale as our contribution to the purchase of the Subject Property. Defendant told Daniella she would loan us the money interest free and Plaintiffs could pay her back if, and when, they sold the Subject Property. Plaintiffs accepted Defendant’s proposal for the loan to purchase the Subject Property and decided to sell the Palmdale property.

 

Plaintiffs made an offer to purchase the Subject Property for $387,500.00 and it was accepted the same day by the sellers, Gary Carbo and Troy Carbo. Daniella was provided a formatted document with blank spaces, some of which had already been filled in, titled “Residential Income Property Purchase Agreement and Joint Escrow Instructions” (the “Purchase Agreement”). She understood the Purchase Agreement to be the formal contract for the sale and purchase of the Property. Plaintiffs initialed each page of the Purchase Agreement and executed the Purchase Agreement on January 5, 2017. Defendant informed Daniella that she wired $387,500 into escrow to finalize the sale and convey title of the Subject Property to Plaintiffs.

 

Around the time Plaintiffs opened escrow on the Property, Defendant informed Daniella that the loan she was providing would not be just the purchase price of $387,500 but would also include $112,500 to make improvements to the property. Since January 1, 2016, other than the $387,500 to purchase the Subject Property, Defendant never provided the additional $112,500. While escrow was pending on the Subject Property, Daniella was provided a document by Jose Luis Cazares, who stated he was the real estate agent representing the sellers, of a quote from a general contractor for proposed construction work to be done on the Property (the “Quote”). The Quote also contained signatures in designated spaces that had the names of the sellers, Gary Carbo and Troy Carbo, and in a space containing the name “Timothy Campbell.” When Plaintiffs met the sellers, Gary Carbo stated that the work listed in the Quote had been done on the Subject Property and Mr. Carbo also stated to me that the foundation of the Property had been recently repaired to bring it up to code.

 

Approximately two (2) days after the close of escrow on the Subject Property, Defendant handed me a blank document titled “Deed of Trust” and requested that Plaintiffs sign the document. The blank Deed of Trust did not identify a loan amount or reference any promissory note. Defendant stated the blank Deed of Trust was “just a backup and would not be used for anything.” Defendant stated that she would not record the Deed of Trust because her intent was to “gift the property to [me and Caesar].”

 

On June 8, 2017, the Palmdale property was sold for $190,000.00.  There were net proceeds in the amount of $43,015.01 from the sale of the Palmdale property. The proceeds were wired directly to Defendant’s account to pay off part of the $387,500.00 loan.

 

After Plaintiffs moved into the Subject Property, Daniella spoke to Defendant about wanting to rent out the other unit at the Subject Property. Defendant refused to agree to renting out the other unit at the Property. A few years after moving into the Subject Property, Plaintiffs entered into another transaction with Defendant for the purchase of a single-family home in the City of Hawthorne.

 

After Plaintiffs moved to Hawthorne, Defendant did not approve renting out the vacant unit at the Subject Property. Plaintiffs decided that it would be best for everyone, at this point, if the Subject Property was sold. On July 7, 2021, Daniella listed the Property on the MLS for $1.35 million with Theresa as the listing agent. On July 13, 2021, Daniella received a $1.175 million, all-cash offer for the Subject Property and informed Defendant. Defendant said the offer was not a good enough offer and that Plaintiffs could receive more. On April 15, 2022, the Subject Property was once again listed on the MLS for $1.35 million and Defendant told Daniella that she needed to be the listing agent for the transaction. On October 25, 2022, an offer was made by a third-party to purchase the Property for $1.35 million. Defendant did not agree to accept the $1.35MM offer for the Property. Defendant then demanded that Plaintiffs sign the Subject Property over to her because, she said Plaintiffs owed her more than the Subject Property was worth. Defendant said Plaintiffs owed $500,000 for the original loan and another $508,000 for the second loan for all the construction she did on the property, plus interest.

 

The Los Angeles Department of Building and Safety (“LADBS”) showed that Plaintiffs, as owners of the Subject Property, had applied for several building permits on the Subject Property. Plaintiffs deny doing so.

 

In 2023, the relationship with Defendant took a turn for the worse. Defendant started harassing Daniella with all different kinds of threats, including threatening to call Child Protective Services to have my children taken from me. The threats and harassment caused significant distress and affected my day-today life. In September 2023, and without any warning or notice to me, all the locks and keys to the Subject Property had been changed. Also around that time, Daniella found Caesar’s belongings that had been in the Subject Property strewn onto the front yard of the Hawthorne property. Daniella went to the Subject Property to check on it and was told by the people living there that they were told by Defendant Theresa that she was the owner of the property and Plaintiffs had no right to enter the premises for any reason.

 

On September 12, 2023, Defendant presented Plaintiffs with a promissory note for $508,000.00 and a new deed of trust relating to the Property. 106. When I pointed out to Theresa that the Property had been bought by Caesar and me for only $387,500, when the note was for $508,000, Defendant said it was security for the loan on the Subject Property and for improvements she made to the property. When Daniella told Defendant that no major improvements to the Subject Property had been done while I was living at the Subject Property, nor had she approved of or had any knowledge of the improvements to the Subject Property, Defendant stated she did not need approval to make improvements and that it was none of our business because it was her property. Defendant screamed and yelled to sign the documents and said she would make Plaintiffs’ lives living hells if they did not do what she said. Defendant looked out of control, and Daniella feared her in that moment.

 

By this time, my family was intending to occupy and move back to the Subject Property to be under one roof again and not lose the Subject property. On September 11, 2023, Defendant threatened to foreclose on the Subject Property if Daniella did not sign the promissory note. Defendant emailed me stating that signing the note was the only way to gain more time at the Hawthorne property or else my family would have nowhere to stay. Daniella signed the new deed of trust and the promissory note on September 12, 2023.

 

On September 20, 2023, Daniella received a 30-day notice of default on the Hawthorne property from Theresa. Plaintiffs have learned that two Notices of Default and Election to Sell Under Deed of Trust were recorded against the Subject Property.

 

(Declaration of Daniella Fiallos, ¶¶ 4-144.)

 

Defendant provided the following:

 

In January 23, 2017, Defendant assisted Plaintiffs in purchasing the Subject Property for $387,500 plus expenses for a total of $392,500. Defendant deposited all of the funds a Note and Deed of Trust was recorded. The Note Secured By A Deed of Trust was executed by both Plaintiff’s on January 20, 2017. The Subject Property’s foundation needed to be removed and replaced, Juan Ramirez of JCR Construction was hired to do the work and was issued a Permit to remove and replace the entire foundation on March 17, 2017. On March 20, 2017, Plaintiffs’ contractor applied for a Building Permit with the City of Los Angeles to replace the foundation.  In conjunction with the application, the City inspected the Subject Property. Defendant paid for the fees. Due to the extent of the work needed to bring the Subject Property up to current building code standards, the Plaintiffs moved out and lived at a property Defendant owns at 9907 National Blvd, Los Angeles, CA.  As with the Subject Property, Plaintiffs lived without paying any mortgage payments, taxes, insurance or rent, which I provided. As the garage did not have a secured footing and the structure was compromised, it needed to be torn down and rebuilt. On 11/12/2017, architectural designer Michael Scanlon began obtaining a building permit to demolish and rebuild the garage. The Permit was issued on 06/01/2018 and finalized on 10/08/2019.

 

On May 01, 2018, the Plaintiffs authorized Defendant to go into the Department of Building and Safety to modify and or obtain additional permits on their behalf. Construction continued on the property up until October 11, 2019, when all permits on the property were approved and finalized by The Department of Building and Safety inspector. Throughout, Defendant incurred considerable expenses at the Subject Property in an amount of not less than $608,000.00 to improve the Subject Property, which was why Plaintiffs executed the Second Trust Deed for $508,000.00.

 

No payments has ever been made by the Plaintiffs for principal, interest, property taxes, or insurance, and Plaintiffs never made a single payment towards the improvements. Plaintiffs moved back into the Subject Property at the end of 2019 after the Los Angeles Department of Building and Safety issued a Certificate of Occupancy on October 11, 2019.

 

On July 7, 2021, Defendant and Daniella Fiallos, a licensed real estate agent, colisted the Subject Property where all the improvements were listed as part of the writeup on the property. The co-listing displays the Daniella’s knowledge that the “[Subject] property was gutted and rehabbed[.]” An offer for the list price of $1,175,000 was received shortly thereafter but was rejected as it was well below the list price and value of the property. On September 30, 2021, Defendant refinanced my house and bought the house at 4203 W. 141st St, Hawthorne, California so that they could move to a single-family house, while the Subject Property continued to be marketed for sale. I am also the First Trust Deed Holder on the Hawthorne property. On October 12, 2021, I purchased the Hawthrone house, where Plaintiffs currently live (rent and mortgage free) and placed them on Title.

 

(Declaration of Theresa Fiallos, ¶¶ 4-35.)

 

In reviewing the factors set forth in 14589 Moorpark Homeowner’s Ass’n, the court cannot find that Plaintiffs will prevail on the merits of this case. First, the documentary evidence presented by Defendants demonstrates that Plaintiffs were involved in repairing the Subject Property. Moreover, even if they were not involved, it is clear that within two months after the purchase was completed, work commenced on the Subject Property. Yet, Plaintiffs’ denial that they had no information of any improvements prior to Defendant seeking the additional promissory note in 2023 is problematic and defies credulity. Such a stark denial in the face of documentary evidence presented by Defendant lessens the evidentiary value of Plaintiffs’ evidence. Moreover, nowhere in Plaintiffs’ evidence does she explain the circumstances of how the first note was effectuated and the written terms of any agreement. But Defendant attempts to do so. Moreover, Defendant corroborates the validity of the 2017 promissory note and its provisions with emails from an escrow officer.

 

Plaintiffs’ contention that a lack of remedy at law and irreparable harm will come due if the court does not grant the Motion for Preliminary Injunction is not supported by the facts of this case. In fact, it appears that Plaintiffs do have available remedies at law. Based on the evidence presented, the court will deny Plaintiffs’ Motion for Preliminary Injunction.

 

Conclusion

 

Based on the evidence presented, the court will deny Plaintiffs’ Motion for Preliminary Injunction.