Judge: Virginia Keeny, Case: 22VECV00958, Date: 2023-01-24 Tentative Ruling

Case Number: 22VECV00958    Hearing Date: January 24, 2023    Dept: W

MICHAEL SHERIDAN v. PATRICIA BARR, et al.

MOTION FOR PRELIMINARY INJUNCTION

Date of Hearing:        January 24, 2023                               Trial Date:       None Set  

Department:              W                                                        Case No.:         22VECV00958

Moving Party:             Plaintiff Michael Sheridan

Responding Party:      Defendants The Russak Family Trust Dated February 8, 2001, Robert M. Russak and/or Marlene Russak; and Steven M. Russak and/or Robyn L. Russak, Trustees of the Steven Russak Family Trust dated December 14,2009 erroneously sued herein as Steven M. Russak and/or Robyn L. Russak Trustees of the Steven Russak Family Trust dated December 14,2009

BACKGROUND 

On July 12, 2022, Plaintiff filed a Complaint against Defendants Patricia Barr, Dihn Luu, FCI Lender Services, and Union Home Loans (“Defendants”). On October 18, 2022, Plaintiff filed a First Amended Complaint (“FAC”) alleging (1) Financial Elder Abuse; (2) Fraud; (3) Negligent Infliction of Emotional Distress; (4) Cancellation of Written Instrument under Civil Code § 3412; (5) Slander of Title; (6) Breach of Fiduciary Duty; and (7) Negligence. 

Longview Valley Inc., The Russak Family Trust Dated February 8, 2001, Robert M. Russak and /or, Marlene Russak and Union Home Loans, Inc. collectively and jointly while acting as agent of each other filed a substitution of trust and retained a foreclosure trustee to foreclose the subject real property. (Amend. Mot., Exh. D.) 

On October 19, 2022, Plaintiff filed an ex parte application for Temporary Restraining Order (TRO) and Preliminary Injunction.

On November 2, 2022, Plaintiff filed an Amended Application for TRO and Preliminary Injunction. Plaintiff seeks the issuance of a preliminary injunction to maintain the status quo and prevent irreparable harm that will occur if Defendant Longview Valley Inc., The Russak Family Trust Dated February 8, 2001, Robert M. Russak and/or, Marlene Russak and Union Home Loans, Inc. Collectively hereinafter (Union Home Defendants) proceed with nonjudicial foreclosure on the real property commonly known as 5060 Campo Road, Woodland Hills, California. Union Home Loan Inc. is the servicer of the loan subject of this litigation, and Union Home Defendants are the investors of the loan subject of this litigation.

[TENTATIVE] RULING 

Plaintiff’s Motion for Preliminary Injunction is GRANTED.

REQUEST FOR JUDICIAL NOTICE 

Defendants and Cross-Complainants, The Russak Family Trust Dated February 8, 2001, Robert M. Russak and/or Marlene Russak (the "2001 Russak Trust"); and Steven M. Russak and/or Robyn L. Russak, Trustees of the Steven Russak Family Trust request this court take judicial notice of the following documents: 

(1) Grant Deed, in favor of Michael J. Sheridan and Gail P. Martin, as joint tenants, recorded on November 27,1985 (Exh. 1); (2) Grant Deed, in favor of Michael J. Sheridan and Gail P. Martin, as joint tenants, recorded on January 18, 1990 (Exh. 2); (3) Durable Power of Attorney for Finances, recorded on September 9, 2020, as Document No. 20201076792 (Exh. 3); (4) Affidavit of Death of Joint Tenant (death of Gail Sheridan), recorded on September I0,2020, as Document No. 20201081479 (Exh. 4); (5) Grant Deed, executed by Michael J. Sheridan, a widow, in favor of Patricia L. Barr, Trustee of the Sheridan Family Trust UTA August 20,2020, recorded on September 10, 2020, as Document No. 20201081480 (Exh. 5); (6) Deed of Trust, recorded on September20,2020, as Document No.20201081481 in the Official Records of the Recorder's Office of Los Angeles County, California, in favor of Longview Valley, Inc., as to an undivided 50.000o/o interest and Robert M. Russak and/or Marlet Russak, trustees, or successor trustee(s) of the Russak Family Trust Dated February, 200I, as to an undivided 50.000% interest, as beneficiaries, Patricia L. Barr, Trustee of the Sheridan Family Trust UTA August 20, 2020, as borrower, and Union Home Loan, Inc., as trustee (Exh. 6); and (7) Assignment of Deed of Trust (Longview to 2009 Russak Trust), recorded on July 22, 2022, as Document No. 20220749366 (Exh. 7).  

The court grants Defendants’ request.

discussion

Plaintiff claims unless the court issues the requested TRO/Preliminary injunction, Defendants will foreclose on Plaintiff’s real property, thereby rendering any potential recovery of this case futile and causing Plaintiff irreparable harm. Plaintiff claims that Union Homes Defendants recorded a fraudulent “Deed of Trust and Assignment of Rents Securing a Promissory Note” (DOT). (Exh. D.) Plaintiff argues Union Home Defendants have no right or ability to foreclose on the Property as the DOT is invalid, void, and unenforceable and thus subject to rescission and cancellation.

Likelihood of Prevailing on the Merits

Plaintiff claims the DOT is a forgery which Plaintiff neither entered into nor signed because Defendant Barr fraudulently obtained Durable Power of Attorney and forged the Family Living Trust to procure the said DOT without Plaintiff’s knowledge or consent. Plaintiff also claims that Defendants fraudulently pre-paid the mortgage note due on the said undisclosed promissory note for a full year, thereby preventing Plaintiff from timely becoming aware of the existence of the DOT and timely exercising his Rescission Rights under the Truth in Lending Act (TILA).

Defendants, The Russak Family Trust Dated February 8, 2001, Robert M. Russak and/or Marlene Russak (“2001Russak Trust"), and Steven M. Russak and/or Robyn L. Russak, Trustees of the Steven Russak Family Trust dated December 14, 2009 (“2009 Russak Trust") (collectively as “Russak Family Defendants”) argue although Plaintiff may have viable claims against Goldfarb, Patricia L. Barr and Luu, among others, Plaintiff’s claims against the Russak Family Defendants will undoubtedly fail because the Russak Family Defendants are each bona fide encumbrancers. The Russak Family Defendants further argue Goldfarb, Barr, and Luu, who allegedly induced Sheridan into signing the POA, were not even present when Sheridan signed the documents. As such, their absence from this “fraudulent event” belies Sheridan's claim that he was induced into executing the documents.

“California law distinguishes between fraud in the ‘inducement’ of a contract and fraud in the ‘execution’ or ‘inception’ of a contract.  [Citation.]  The more usual case of fraud in the inducement occurs when ‘ “the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.  In order to escape from its obligations[,] the aggrieved party must rescind, by prompt notice and offer to restore the consideration received, if any…. [Citations.]  Fraud in the execution, on the other hand, occurs when ‘“the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and it is void.  In such a case it may be disregarded without the necessity of rescission….  [Citations.]   … ‘claims of fraud in the execution of the entire agreement are not arbitrable under either state or federal law.’  [Citation.]  If the entire contract is void at its inception because of fraud, then the parties have not agreed to anything, including the arbitration of any controversy. [Citation.]”  (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 763-64.) “[A] forged deed does not divest ‘the rights of the original owner ... even as to a [subsequent] bona fide purchaser.’” (OC Interior Services, LLC v. Nationstar Mortgage, LLC (2017) 7 Cal.App.5th 1318, 1332.)

The court finds Plaintiff has shown likelihood of prevailing on the merits. The court finds Plaintiff’s Declaration sufficient in supporting his claim that Defendants Goldfarb, Barr, and Luu fraudulently procured Plaintiff’s signature such that the Durable Power of Attorney and Family Trust is void. Defendants were in a fiduciary relationship with the Plaintiff as a court appointed fiduciary, in their role as Plaintiff’s wife court appointed Conservator and attorneys respectively. Plaintiff makes a prima-facie case for elder financial abuse given that he is a disabled elder, 80 years of age and claims that Defendants wrongfully procured the DOT to secure a promissory note. The Cancellation of Instrument claim is also viable given that Plaintiff alleges the Durable Power of Attorney and Family Trust were procured by fraud. Although the Russak Family Defendants may be bona fide encumbrancers, fraud in the inducement will be enforceable against a bona fide encumbrancer. As noted above, a forged document by fraudulent inducement is void ab initio and therefore, Plaintiff has a claim against the Russak Family Defendants. Thus, Plaintiff has demonstrated a likelihood of prevailing on the merits.

Balance of Harm to the Parties

Plaintiff claims he will suffer irreparable harm if the Russak Family Defendants are not immediately enjoined from foreclosing on the Property as he risks losing property worth more than $1,028,000.00, and it is the only thing of value he owns after the passing of his wife. (Sheridan Decl. ¶¶ 2-42.) Plaintiff states he hopes to return to his home, which he will be unable to do if the sale takes place.

The Russak Family Defendants argue they have as  much “a real property interest” as does  Sheridan. The crux of the Preliminary Injunction sought by Sheridan is to deprive the Russak Family Defendants of their legal, bargained for, right to foreclose in the event of a default in repayment of the $450,000.00 loan.

The court agrees with Plaintiff’s arguments. While the Russak Family Defendants harm from a preliminary injunction is monetary, Plaintiff has demonstrated that the Property is unique and holds sentimental value to him for which monetary damages would be inadequate.

Thus, the balance of harm weighs in favor of Plaintiff.

Finally, 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. (CCP § 529(a); City of South San Francisco v. Cypress Lawn Cemetery Association (1992) 11 Cal.App.4th 916, 920.)

The Russak Family Defendants contend they will incur damages, including but not limited to, those caused by the declining real estate market, the time-delay associated with coordinating multiple postponements of the foreclosure sale, further unnecessary attorneys' fees and court costs, and having to advance sums for property taxes, hazard insurance, and other expenses on Sheridan's behalf as required under the terms of the Russak DOT.

The court will determine the proper undertaking at the time of the hearing.