Judge Ronald F. Frank, Case 23TRCV00253 2023-03-02 Tentative Ruling

Judge: Ronald F. Frank, Case: 23TRCV00253, Date: 2023-03-02 Tentative Ruling

Case Number: 23TRCV00253 Hearing Date: March 2, 2023 Dept: 8

Tentative Ruling

HEARING DATE: March 2, 2023¿

CASE NUMBER: 23TRCV00253

CASE NAME: HL Group 2 Limited Partnership v. Pacific Point Fund I, LP, et al

MOVING PARTY: Plaintiff, HL Group 2 Limited Partnership

RESPONDING PARTY: Defendant, Pacific Point Fund I, LP

TRIAL DATE: None set

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MOTION:¿ (1) Motion for Preliminary Injunction

Tentative Rulings: (1) The Court will Grant a TRO and set a further hearing on the PI. Plaintiff’s verified Complaint ¶21 asserts an oral agreement by PPF to refrain from any foreclosure sale “until such time as the title issue was resolved either by court action or by the parties.” Were PPF to provide a declaration and/or exhibits bearing on whether there was any such agreement, and were plaintiff given fair opportunity to respond, the Court would then be in a better position to evaluate the likelihood of success on the merits and the balance of equities/hardships. Counsel should be prepared at the March 2 hearing to discuss the timing of the proposed PI hearing (e.g., 3/29/23) and a schedule for PPF to provide evidence (e.g., 3/15/23) and Plaintiff to respond (e.g., 3/23/23) to the same.

I. BACKGROUND¿

A. Factual¿

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This is one of two lawsuits pending in the Southwest District concerning the same parcel of real property. The first lawsuit, filed and pending in Torrance before Judge Hill, is Case No 22TRCV01540. It does not name PPF. This second lawsuit was filed on January 27, 2023, by Plaintiff, HL Group 2 Limited Partnership (“Plaintiff”) and is pending in Inglewood. The Inglewood complaint alleges a cause of action for promissory estoppel. This cause of action is based on the following asserted facts: In September 2020, Borrower LOANCO allegedly took out a business-purpose loan for $1,360,000 from Defendant PPF as first lien secured by the Property. In December 2020, Borrower LOANCO apparently entered into an agreement with Plaintiff HGL2 under which Plaintiff would manage the subdivision of the Property into three residential condominium units that, upon development completion, would be sold. Pursuant to this agreement, LOANCO quitclaimed the Property to Plaintiff. PPT’s loan went into default and it exercised its contractual right to commence a nonjudicial foreclosure sale. The initial Notice of foreclosure sale was recorded on October 12, 2022 with the sale date was initially scheduled for November 2, 2022.

With the November foreclosure sale date pending, Plaintiff asserts that it contacted PPF requesting that the foreclosure be stayed. Plaintiff alleges that it had entered into sales agreements for three parcels, and PPF agreed to extend the date of the non-judicial foreclosure sale. Plaintiff contends in Paragraph 12 of its Verified Complaint (attached as Exhibit A to the motion) that the parties entered an oral agreement which provided that HLG2: (1) would pay the real estate tax arrearages and keep all tax payments current; (2) would complete the work necessary for the City of Inglewood to approve the subdivision of the Property into three condominium parcels; (3) would complete all the necessary work to complete the renovation and/or conversion of the property to the three condominium units; and (4) market and sell the three proposed condominiums to willing buyers.”

Based on Plaintiff’s representation of imminent sales of the subdivisions, Plaintiff contends that PPF agreed to delay the foreclosure sale. PPF first extended the sale from November 2 to November 30, and then again from November 30 to December 28. Apparently, on December 16, 2022, agents for LOANCO recorded a deed purporting to quitclaim the Property from Plaintiff back to LOANCO. Plaintiff claims this deed was false and further that it prevented the arranged sales from being completed on the subdivisions. Plaintiff filed suit on December 20, 2022, against LOANCO based thereon with Case No. 22TRCV01540 (the “First Action”). Plaintiff moved ex parte in the First Action for a TRO, which the Torrance Court granted. Plaintiff claims that it amended its purported foreclosure delay agreement with PPF, such that PPF’s name would be omitted from the restraining order request if PPF agreed to postpone the sale. PPF in its opposition brief -- but not in any declaration yet filed -- denied that there was any such agreement, however PPF in it opposition brief concedes that it extended the foreclosure sale yet again until January 18, 2023. When PPF refused to provide Plaintiff an extension of the nonjudicial foreclosure past January 18, 2023, the foreclosure sale occurred on that date. On January 27, 2023 Plaintiff filed this lawsuit against PPF and filed first an ex parte application for a TRO which the parties then stipulated would be treated as a motion for a preliminary injunction.

B. Procedural

On January 21, 2023, Plaintiff filed an Ex Parte Application for Temporary Restraining Order to Show Cause Re Preliminary Injunction. On February 21, 2023, Defendant filed an opposition. On February 27, 2023, Plaintiff filed a reply brief. Unlike most other PI motions the Court has ever seen, there are no witness or party declarations supporting or opposing the motion. Plaintiff instead relies on its verified Complaint.

¿II. ANALYSIS ¿

A. Legal Standard

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. (See¿Scaringe¿v.¿J.C.C. Enterprises, Inc.¿(1988) 205 Cal.App.3d 1536.) 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.) Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. (See Code Civ. Proc. § 527(a).) For this reason, a pleading alone rarely suffices. (Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007).) The burden of proof is on the plaintiff as moving party. (O’Connell v. Superior Court¿(2006) 141 Cal.App.4th 1452, 1481.) A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. (Code Civ. Proc. § 526(4);¿Thayer Plymouth Center, Inc. v. Chrysler Motors¿(1967) 255 Cal.App.2d 300, 307.)¿¿¿

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(a);¿Husain v. McDonald’s Corp.¿(2012) 205 Cal.App.4th 860, 866-67.) 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, supra, 205 Cal.App.4th at 867.)¿Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief.¿ (Doe v. Wilson¿(1997) 57 Cal.App.4th 296, 304.) The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. (Thornton v. Carlson¿(1992) 4 Cal.App.4th 1249, 1255.)¿

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(a); Cal. Rules of Court, rule 3.1150(f);¿City of South San Francisco v. Cypress Lawn Cemetery Assn.¿(1992) 11 Cal.App.4th 916, 920.)¿

B. Discussion

Likelihood of Success on the Merits

Plaintiffs’ instant action alleges a single cause of action for promissory estoppel arising from the alleged wrongful conduct of defendant in allegedly breaching an apparently oral agreement to postpone indefinitely the foreclosure sale of the property through the judicial resolution of a title dispute described in the Torrance action. “The elements of a promissory estoppel claim are (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” (Flintco Pacific, Inc. v. TEC Management Consultants, Inc. (2016) 1 Cal.App.5th 727, 734, quotation marks and brackets omitted.)

Here, PPF has not provided the Court with any admissible evidence bearing on the requested equitable relief. PPF only filed a 10-page opposition brief, without a declaration or exhibits. The Court refrains at this time from drawing any inference from the absence of any evidence being submitted by PPF, and is inclined to enter a TRO to maintain the status quo so as to give PPF an opportunity to file a declaration and exhibits, and then to give Plaintiff an opportunity to reply to that evidence. The Court’s reasoning in part is that the evidence before the Court is not as compelling as the Court would prefer before issuing a preliminary injunction, particularly given the nature of a promissory estoppel cause of action. The Court maintains an open mind but expresses its healthy skepticism. The key paragraph 21 of the verified Complaint is thin on specifics as to the essential element of a clear and unambiguous promise, i.e., on what date did which representative of PPF say what specific things that led Plaintiff to conclude that PPF had agreed to an unlimited duration delay of its demonstrated efforts to foreclose promptly on the property? An unlimited duration delay is inconsistent with the overt acts taken by PPF, i.e., to agree to very brief extensions of its notices of foreclosure sale to dates certain. Further, the lack of reference to a corroborating email when the parties had been exchanging emails affects the weight the Court gives to the allegations in Paragraph 21. Given the amount of money Plaintiff asserts it has invested in the development of the three subdivided parcels and the sale prices of those parcels, given the involvement of counsel and the filing of a lawsuit in Torrance concerning these same parcels, it would be natural to expect some corroboration and greater detail as to what PPF purportedly agreed to do or refrain from doing.

The Court is also mindful that while a TRO was ordered in the Torrance action, Judge Hill decided to defer ruling on the Notice of Related Case filed in her, earlier-filed Torrance case, with a recognition that there are different parties named as defendants in the Inglewood case.

Balance of Equities

The Court currently lacks sufficient facts to comment on the balance of equities or hardships issue, which is yet another reasons for the Court to proceed patiently, one step at a time, and to elicit additional evidence bearing on the factors for the Court to consider before issuing an injunction.

Posting of a Bond

Defendant asserts that in the event this Court were to grant any injunction, Plaintiff should be required to post a bond for the full amount that Plaintiff alleges the property is worth. In its reply brief, Plaintiff submits that the outstanding equity protecting Defendant’s lien and loan is approximately $900,000 and requests that if this Court order the posting of a bond, it be for minimal bond for the issuance of the Preliminary Injunction sought. The Court is not so sanguine as to the ability of PPF to monetize its collateral from the three purchasers of the parcels with whom PPF has no contractual or other relationship. Counsel should be prepared to argue the bond issue at the March 2 or later hearing.