Judge Theresa M. Traber, Case 22STCV21462 2023-04-13 Tentative Ruling

MOVING PARTY: Plaintiffs Antaliah Thomas Vinnai, Antoinette Thomas Love, individually and as successors in interest to the Estate of Carrie Thomas (collectively, “Plaintiffs”)

RESPONDING PARTY(S): Defendants AMB LLC dba American MortgageBanc (“AMB”); Total Lender Solutions, Inc.; Lawrence Kopppelman & Co (“Lawrence”); the 1996 McDonough Family Trust, R. Emmet McDonough Trustee (“McDonough Trust”); The Anticouni Family Trust (“Anticouni Trust”), and Ralph Schiavone (“Schiavone”) (collectively, “Defendants”)

Plaintiffs initiated this action on July 1, 2022 against Defendants Total Lender; AMB; Lawrence; McDonough Trust; Anticouni Trust, and Schiavone. In the Complaint, it is alleged that Decedent Carrie Thomas (“Decedent”) took out a loan secured by a Deed of Trust (Document No. 20071724212) against the subject properly commonly known as 4120 South Normandie Avenue, Los Angeles, CA 90037, which was recorded on June 11, 2007, and that AMB is the originating lender of the loan. Decedent passed away on March 9, 2019. Prior to her death, the subject property burned down on February 17, 2017. AMB and Schiavone received funds from the Hartford to rebuild the subject property, but reconstruction of the property is still incomplete. Plaintiffs, as executors of Decedent’s estate, have attempted to assume and modify the existing loan. However, while negotiations regarding the modification of the loan were pending, Defendants proceeded with foreclosure proceedings after recording a Notice of Default on March 2, 2022 (Document No. 20220239519). Based on these allegations, Plaintiffs assert Defendants did not intend to provide them with a chance to modify the loan in good faith. It is further alleged that Defendants converted $100,000 in fire insurance proceeds.

The Complaint alleges the following causes of action: (1) violation of Civ. Code §2923.5; (2) violation of Civ. Code § 2923.7; (3) violation of Civ. Code § 2924.11; (4) promissory estoppel; (5) violation of Civ. Code § 2924.17; (6) unfair business practices; (7) breach of implied covenant of good faith and fair dealing; (8) injunctive relief (Civ. Code § 2924.12); (9) breach of fiduciary duty; (10) conversion; (11) fraud; (12) intentional infliction of emotional distress; (13) breach of contract; (14) accounting; (15) negligence; (16) elder abuse; and (17) constructive eviction.

On February 28, 2023, the Court granted Plaintiffs’ ex parte application for a temporary injunction and issued an order to show cause why a preliminary injunction should not be issued enjoining the Defendants and their agents from further proceedings regarding the trustee’s sale of the subject property.

“[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.)

“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.) Injunctive relief may be granted based upon a verified complaint only if it contains sufficient evidentiary as opposed to ultimate facts. (CCP § 527(a).) For this reason, a pleading alone rarely suffices. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2016) ¶¶ 9:579-580.) A plaintiff seeking injunctive relief must also show the absence of an adequate damages remedy at law. (Code Civ. Pro. §526(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. Pro. § 529(a); City of South San Francisco v. Cypress Lawn Cemetery Ass’n., (1992) 11 Cal. App. 4th 916, 920.)

The Court must determine whether the balance of harms favors issuing the preliminary injunction.

“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits.”¿(White v. Davis (2003) 30 Cal.4th 528, 554.) “In evaluating interim harm, the trial court compares the injury to the plaintiff in the absence of an injunction to the injury the defendant is likely to suffer if an injunction is issued.” (Shoemaker v. County of Los Angeles (1995) 37 Cal.App.4th 618, 633; IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69-70.)

Here, the declaration filed in support of Plaintiffs’ motion establishes that they would suffer irreparable harm through the foreclosure of their family property. (Plaintiffs’ Decl. ¶¶ 1-2, 5, 14-17.) Moreover, delaying the foreclosure sale would not result in great harm to the Defendants.

In opposition, Defendants argue that Plaintiffs face little to no harm because Plaintiffs are merely seeking damages. (Opposition at p. 9.) Also, Defendants contend, due to Plaintiffs’ neglect and construction delays, the subject property has fallen into disrepair. (Schiavone Decl. ¶ 33, Exh. 3.) However, the Court does not find these arguments to be persuasive for several reasons. First, the purpose of the requested injunction is to maintain the status quo. (Beehan, supra, 70 Cal.App.3d at 866.) Second, the purported pictures of the subject property in disarray have not been attached to the declaration as Exhibit 3. Instead, Exhibit 3 contains a copy of the corrective notice dated January 27, 2023 issued by the City of Los Angeles Department of Building and Safety, and the notice indicates that the debris must be cleaned up and that the gate must be sealed. (Schiavone Decl., Exh. 3.) This does not evidence that the subject property has fallen into disrepair.

Accordingly, the Court finds that, in balancing the relative harms, the evidence weighs in favor of Plaintiffs.

In support of their request for a preliminary injunction, Plaintiffs submit evidence to demonstrate a probability of prevailing on several of their claims. The Court shall address each in turn.

A preliminary injunction must not issue unless it is “reasonably probable that the moving party will prevail on the merits.” (San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.) The “likelihood of success on the merits and the balance-of-harms analysis are ordinarily ‘interrelated’ factors in the decision whether to issue a preliminary injunction.” (White v. Davis (2003) 30 Cal.4th 528, 561.) “The presence or absence of each factor is usually a matter of degree, and if the party seeking the injunction can make a sufficiently strong showing of likelihood of success on the merits, the trial court has discretion to issue the injunction notwithstanding that party's inability to show that the balance of harms tips in his favor.” (Id.) However, this does not mean that a trial court may grant a preliminary injunction on the basis of the likelihood-of-success factor alone when the balance of hardships dramatically favors denial of a preliminary injunction. (Id.; see also Yu v. University of La Verne (2011) 196 Cal.App.4th 779, 787 (a trial court’s order denying a motion for preliminary injunction should be affirmed if the trial court correctly found the moving party failed to satisfy either of the factors).)

Defendants first argue that Plaintiffs are unable to succeed on any of their claims because they lack standing on the grounds that Plaintiffs are neither “successors-in-interest” nor have they assumed the Decedent’s loan obligations. (Opposition at pp. 5-8.) The Court finds this argument partially persuasive as it applies to Plaintiff’s claims arising from the California Homeowners Bill of Rights (“HBOR”)

In connection with this argument, Defendants assert that Plaintiffs have failed to produce any evidence to show that they are successors in interest as defined under the Section 2920.7 of the HBOR. (Opposition at pp. 6-7.) What Defendants fail to highlight is that Civil Code § 2920.7 was repealed by statute on January 1, 2020. While Plaintiffs do not allege any claims pursuant to this repealed statute, their claims arising from the HBOR are wholly dependent on their “successor in interest” status. “[A]n action wholly dependent on statute abates if the statute is repealed without a saving clause before the judgment is final.” (Younger v. Superior Court (1978) 21 Cal.3d 102, 109.) There is no suggestion that Civil Code § 2920.7 explicitly or implicitly contained a saving clause. Moreover, even though Decedent passed away on March 19, 2019, prior to the repeal of Civil Code § 2920.7, a statutory remedy does not vest until final judgment. (See South Coast Regional Com. v. Gordon (1978) 84 Cal.App.3d 612, 619.) In this instance, Plaintiffs did not pursue their claims until July 1, 2022 by the filing of their complaint. Nevertheless, the HBOR protects borrowers, and “borrower” is defined as “any natural person who is a mortgagor or trustor and who is potentially eligible for any federal, state, or proprietary foreclosure prevention alternative program offered by, or through, his or her mortgage servicer.” (Civil Code § 2920.5(c)(1).) Even if Plaintiffs are eligible for a foreclosure prevention alternative program and they are the executors of the Decedent’s estate, there is no evidence to suggest that they are mortgagors or trustors as defined under the HBOR.

Accordingly, Plaintiffs have failed to show that they have a probability of prevailing on the claims that arise from the HBOR, which includes their UCL, accounting and declaratory relief claims.[1]

Plaintiffs also argue that there is a likelihood that they will be able to establish the requisite elements of promissory estoppel.

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.’ [Citation.]” (US Ecology, Inc. v. State (2005) 129 Cal.App.4th 887, 901.)

Plaintiffs contend that, even if Defendants do not have a statutory duty to approve a loan modification, a loan modification application was pending and the verified Complaint clearly alleges the promise that this application would be considered before Defendants pursued a nonjudicial foreclosure. (Motion at pg. 7; Compl. ¶78; Plaintiffs’ Decl. ¶ 17.)

In opposition, Defendants’ own evidence indicates that the parties were in discussion of alternatives to foreclosure, but their declaration also states that Plaintiffs did not submit a proper loan modification with the requisite documents. (Schiavone Decl. ¶¶ 22-23.) Notably missing from Plaintiffs’ evidence is proof of the purported promise that Plaintiffs relied upon. While Plaintiffs point to their verified complaint to provide this evidentiary support, this is insufficient for the requested relief. (See CCP § 527(a); see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2016) ¶¶ 9:579-580.)

Thus, because evidence regarding this cause of action weighs in Defendants’ favor, the Court finds that Plaintiffs have not presented sufficient evidence to establish a likelihood of success on their promissory estoppel claim.

iii. Seventh Causes of Action: Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiffs contend that they are likely to succeed on their breach of implied covenant of good faith and fair dealing on the basis that “Defendants did not work with Plaintiffs to consider alternatives to foreclosure.” (Motion at p. 13.)

The evidence submitted by Plaintiffs is insufficient to establish this cause of action. While it is alleged that Defendants committed breach by proceeding with a non-judicial foreclosure while loan modification negotiations were pending (Compl. ¶¶ 119-121), Plaintiffs have failed to present any evidence of the alleged promise. Moreover, their claim that Defendants did not act in good faith is undermined by evidence that negotiations were pending from September 2019 through March 2022. (Schiavone Decl. ¶ 22.) Even though Plaintiffs did not submit a proper loan modification application and the breach occurred in September 2019, the notice of default was not submitted until March 2022. (Schiavone Decl. ¶¶ 23-25, Exh. 2.) Thus, the record reveals there was sufficient time allotted to pursue alternatives to foreclosure.

Accordingly, based on the evidence submitted, the Court finds that Plaintiffs have not established a likelihood of success in their breach of the implied covenant of good faith and fair dealing claim.

Next, Plaintiffs argues that there is a likelihood that they will be able to establish the requisite elements of breach of contract.

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367.) “Further, the complaint must indicate on its face whether the contract is written, oral, or implied by conduct. If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-459 (internal citations omitted); Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402 [“The correct rule is that ‘a plaintiff may plead the legal effect of the contract rather than its precise language.’”].) “[A]ll essential elements of a breach of contract cause of action[] must be pleaded with specificity.” (Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150 Cal.App.4th 1, 5.)

Here, Plaintiffs rely solely on the allegations asserted in the verified complaint. (Motion at p. 14.) Specifically, the complaint alleges that Defendants breached the contract by failing to complete the reconstruction of the subject property and by converting insurance funds (Compl. ¶ 171). In opposition, Defendants explain what became of the insurance proceeds, stating that, following the fire that occurred on February 17, 2017, the fire insurance proceeds were placed in a trust account maintained by Lawrence. (Schiavone Decl. ¶ 16.) The insurance coverage proved to be insufficient in restoring the subject property due to various factors, and the policy was used to make monthly mortgage payments on Decedent’s behalf under the loss of use provisions of the policy, which was exhausted by September 2019. (Schiavone Decl. ¶¶ 17-20.) Because of the insufficient coverage, the subject property could not be built to code, and Plaintiffs failed to provide a plan to cover the shortfall. (Schiavone Decl. ¶ 26.) Besides Plaintiffs’ belief that Defendants converted the insurance funds, no evidence of such a conversion has been presented.

Thus, based on Defendants’ evidence, the Court finds that Plaintiffs have not sufficiently establish a likelihood of success as to their breach of contract claim.

Lastly, Plaintiffs contend that their evidence establishes some likelihood of success on the merits of their fraud claim for a preliminary injunction to issue. (Motion at pp. 6-7.)

The essential elements of fraud are “(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting damage.” (Conroy v. Regents of Univ. of Cal. (2009) 45 Cal. 4th 1244, 1255.) Any action sounding in fraud must be pleaded with particularity. (City of Pomona v. Sup. Ct. (2001) 89 Cal.App.4th 793, 803.) A plaintiff must plead facts in the complaint showing “how, when, where, to whom, and by what means the representations [amounting to fraud] were tendered.” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

Here, Plaintiffs argue that the verified Complaint and the supporting affidavits support that Defendants made intentional misrepresentations. Specifically, Plaintiffs assert that Defendants misstated the loan balance when presenting the payoff demand, failed to contact the borrower to discuss their financial situation, and misrepresented that they would consider foreclosure alternative measures. (Compl. ¶¶ 158-165.) However, as stated above, Defendants’ evidence shows that the parties discussed the financial circumstances from September 2019 through March 2022 to find an alternative to foreclosure. (Schiavone Decl. ¶ 22.) Other than relying on their allegations, Plaintiffs have failed to submit any evidence to substantiate their claim of fraud.

Thus, the Court finds that Plaintiffs have not sufficiently establish a likelihood of success as to their fraud claim.

Therefore, based on the foregoing, the Court finds that the evidence weighs in favor of the Defendants as to this prong. Because the evidence provided does not establish a reasonable probability that Plaintiffs will prevail on the merits of their claims, it would be improper to issue a preliminary injunction at this juncture.

For the reasons above, the Plaintiffs’ motion for preliminary injunction is DENIED.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.

[1] It is conceivable that Plaintiffs possess evidence that they are borrowers under the HBOR. However, this evidence has not been provided in their motion; in fact, Plaintiffs’ own declaration suggests that they had never assumed the loan. (See Plaintiffs’ Decl. ¶ 17.) Additionally, even if the HBOR does not apply here, it could be possible that they have standing to pursue a similar enactment as successors in interest, but such a claim, if tenable, has not been alleged.