Judge Teresa A. Beaudet, Case Number: 22STCV22953, Date: 2023-10-19 Tentative Ruling

In the Complaint, Plaintiff alleges that at all relevant times, she owned the property located at 637 E 29th Street, Los Angeles CA 90011. (Compl., ¶ 7.) Plaintiff alleges that “[i]n mid-2015, a fire virtually destroyed most of the Property and left it in severe disrepair.” (Compl., ¶ 9.) Plaintiff alleges that “[o]n August 20, 2015, Plaintiff received a refinance from [Defendant] in the amount of $350,000.00.” (Compl., ¶ 10.) “In the loan origination process, Plaintiff was told by [Defendant] to use a different address for her personal residence. Plaintiff alleges that [Defendant] knew Plaintiff’s only residence was the property but was told to use a different address to fund the loan.” (Compl., ¶ 11.) “In February 2016, the loan came due, and Plaintiff was unable to pay the balloon amount.” (Compl., ¶ 13.) “In September 2017, [Defendant] filed a Notice of Default. On December 26, 2017, [Defendant] filed a Notice of Trustee’s Sale.” (Compl., ¶ 14.)

Plaintiff further alleges that “[o]n January 18, 2018, Plaintiff filed for Chapter 11 Bankruptcy. Plaintiff made payments throughout the bankruptcy until early 2023 when [Defendant] filed a Motion for Relief from stay.” (Compl., ¶ 15.) “The Bankruptcy court granted the Motion for Relief from stay and [Defendant] recorded a new Notice of Default on May 31, 2023.” (Compl., ¶ 16.) Plaintiff alleges that “[o]n September 5, 2023, Defendant recorded a Notice of Trustee’s Sale and set the property for auction on October 3, 2023. Despite the fact that Defendant failed to contact Plaintiff to ‘assess her financial situation and explore options to avoid foreclosure’ as required by Civil Code 2923.55, Defendant intends to proceed [sic] the sale...” (Compl., ¶ 18.)

On January 4, 2024, the Court issued a minute order in this action providing, inter alia, that “the Court grants Plaintiff’s motion for a “preliminary Injunction to enjoin the Trustee’s Sale of the subject property located at 637 E. 29th Street, Los Angeles, CA 90011.”

The Court’s January 4, 2024 minute order further provides that “[o]n the Court’s own motion, the Order to Show Cause Re: Re: Temporary Restraining Order to Restrain Recording of a Notice of Trustees Sale scheduled for 01/04/2024 is continued to 02/16/24…Defendant may file and serve by January 18, 2024 at 4:00p.m. a brief pertaining to the requested amount of the bond. Plaintiff may file and serve a response thereto on or before February 1, 2024 at 5:00p.m.”

On January 18, 2024, Defendant filed a brief captioned “Defendant’s Evidence of Damages Defendant May Sustain by Reason of the Injunction Ordered by the Court on January 4, 2024.” Defendant also filed a second supporting declaration on January 19, 2024.

On February 1, 2024, Plaintiff filed an “Opposition to Defendant Center Street Lending Corp.’s Motion for Plaintiff to Post an Undertaking.”

Defendant cites to Code of Civil Procedure section 529, subdivision (a), which provides that “[o]n granting an injunction, the court or judge must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction. Within five days after the service of the injunction, the person enjoined may object to the undertaking. If the court determines that the applicant’s undertaking is insufficient and a sufficient undertaking is not filed within the time required by statute, the order granting the injunction must be dissolved.”

Defendant notes that “the trial court’s function is to estimate the harmful effect which the injunction is likely to have on the restrained party, and to set the undertaking at that sum.” ((ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 14.) “[T]he first step is to identify the types of damages which the law allows a restrained party to recover in the event that the issuance of the injunction is determined to have been unjustified. The sole limit imposed by the statute is that the harm must have been proximately caused by the wrongfully issued injunction. (§ 529, subd. (a).) Case law adds only the limitation that the damages be reasonably foreseeable.” (Ibid.) The ABBA Court also noted that “[i]t is now well settled that reasonable counsel fees and expenses incurred in successfully procuring a final decision dissolving the injunction are recoverable as ‘damages’ within the meaning of the language of the undertaking, to the extent that those fees are for services that relate to such dissolution…Thus, a successful appeal from an order granting an injunction, after notice and hearing, gives rise to liability on the bond for damages in the amount of the attorney’s fees incurred in prosecuting that appeal. If the preliminary injunction is valid and regular on its face, requiring the defendant to defend against the main action in order to demonstrate that the injunction was wrongfully issued, the prevailing defendant may recover that portion of his attorney’s fees attributable to defending against those causes of action on which the issuance of the preliminary injunction had been based.” (Id. at pp. 15-16 [internal quotations and citations omitted].)

Defendant also cites to Surety Sav. & Loan Assn. v. National Automobile & Cas. Ins. Co. (1970) 8 Cal.App.3d 752, 759, where the Court of Appeal noted that “where a sale under a deed of trust wrongfully is enjoined compensation for the delay caused by the injunction may include an award to the beneficiary of interest on the amount which would have been received from the enjoined sale, provided the amount of the award, taking into consideration the amount received from the subsequent sale, may not exceed the actual loss sustained.”

Defendant asserts that its damages as a result of the injunction include $105,900.00, representing Defendant’s reasonable attorney’s fees and costs “to be incurred in either prosecuting an appeal of the preliminary injunction, or defending at trial against those causes of action upon which the preliminary injunctive relief had been granted.” (Defendant’s Brief at p. 3:15-19, citing ABBA Rubber Co. v. Seaquist, supra, 235 Cal.App.3d at p. 16.) Defendant submits the declaration of its counsel, who states that “[b]ased on my prior experience, I anticipate that $105,900 will represent a fair estimate of Defendant’s fees and costs to defend and pursue this matter through trial…” (Im Decl., ¶ 3.)

Defendant also asserts that it “has suffered from lost profits that it could have generated through recovery of the balance on the Loan on its original maturity date. For instance, Defendant could have made separate loans with the balance recover [sic] on the Loan. In addition, Defendant’s carrying costs associated with the Loan…Defendant will continue to suffer from these costs as a result of the imposition of the injunction because it cannot enforce its security interest and stop the ongoing losses associated with the unpaid Loan.” (Defendant’s Brief at pp. 3:24-4:1.) In support of this assertion, Defendant submits the declaration of Luis Montero, an “authorized agent of defendant Center Street Lending Corporation.” (Montero Decl., ¶ 1.) Mr. Montero states that “[t]he Loan remains outstanding and as of the date of this Declaration, the total outstanding balance on the Loan is $615,951.55.” (Montero Decl., ¶ 9.) Mr. Montero further states that “[t]he daily interest charge is $261.42,” and that “Defendant’s monthly costs associated with the Loan are 182.57 per month for force-placed insurance.” (Montero Decl., ¶ 9.) The Court notes that Mr. Montero does not appear to set forth a total amount of “lost profits that [Defendant] could have generated through recovery of the balance on the Loan on its original maturity date.” (Defendant’s Brief at p. 3:24-25.)

In any event, Defendant states that it “requests that the Court order Plaintiff to post an undertaking in an amount no less than an amount that will reimburse Defendant for its attorney’s fees and costs and ongoing costs for the Loan. At minimum, Defendant should be repaid for the fair rental value of the Property which Plaintiff admitted was $4,500 to represent the value of the ongoing loss to Defendant from its inability to foreclose pursuant to the Deed of Trust and sell the Property at a foreclosure sale.” (Defendant’s Brief at p. 4:4-9.)[1] Accordingly, Defendant appears to concede that an undertaking in the amount of $4,500.00 is sufficient.

In her opposition, Plaintiff argues that the Court should “deny Defendant’s motion for Plaintiff to post an undertaking in an amount of $4,500.00. Defendant will not suffer any monetary damages or harm because of the issuance of this injunction given the amount of equity that there is in this property for the sole and senior lien holder and thus, Plaintiff requests that any bond requirement be $1,000.00.” (Opp’n at p. 3:15-18.) Plaintiff contends that “[i]n the foreclosure context, the bond amount is discretionary because the security interest in the Deed of Trust is sufficient security.” (Opp’n at p. 2:7-8.) But Plaintiff does not appear to cite to any binding legal authority in support of this proposition. (See Opp’n at p. 2:7-27.)

Based on the foregoing, the Court finds that Defendant has shown that an undertaking in the requested amount of $4,500.00 is warranted here.

Based on the foregoing, and pursuant to Code of Civil Procedure section 529, the Court orders that Plaintiff shall post an undertaking in the amount of $4,500.00.

[1]Defendant appears to cite to “Exhibit F” to Defendant’s Supplemental Request for Judicial Notice filed on November 30, 2023 in this case. Exhibit “F” is “Debtor’s Second Revised Sixth Amended Disclosure Statement Describing Revised Sixth Amended Chapter 11 Plan of Reorganization filed on November 7, 2019 in in the U.S. Bankruptcy Court for the Central District of California, in the matter In re: Denise Latrice Wheeler, Case No. 2:18-bk-10597.” Exhibit “F” provides, inter alia, that “Debtor also generates rental income from rental property in the amount of $4,500 per month.” (Defendant’s Supplemental Request for Judicial Notice, Ex. F, p. 10:16-18.)

Superior Court of California

County of Los Angeles

Department 50