Case Number: BC710561 Hearing Date: July 12, 2018 Dept: 85
Marcel Jordan as Trustee of the Fifth Avenue Trust v. The Bank of New York Mellon Trust Company, N.A., et al.,
Tentative decision on application for preliminary injunction: denied
Plaintiff Marcel Jordan as Trustee of the Fifth Avenue Trust (“Jordan”) applies for a preliminary injunction against Defendants Bank of New York Mellon Trust Company, N.A., as trustee for Mortgage Asset-Backed Pass-Through Certificates Series 2006-RPI (“BONY Trust 1”), as trustee, Pooling and Servicing Agreement Dated as of February 1, 2006 Mortgage Asset-Backed Pass-Through Certificates Series 2006-RPI (“BONY Trust 2”), and as trustee for Residential Asset Mortgage Products Inc., Mortgage Asset-Backed Pass-Through Certificates Series 2006-RPI (“BONY Trust 3”), Ocwen Loan Servicing, LLC (“Ocwen”), and Western Progressive, LLC (“Western”) enjoining them from selling or attempting to sell real property located at 849 5th Avenue, Los Angeles, California 90005 (“Property”).
The court has read and considered the moving papers (no opposition has been filed), and renders the following tentative decision.
- Statement of the Case
Plaintiff Jordan commenced this proceeding on June 20, 2018, alleging causes of action for (1) wrongful initiation of foreclosure, (2) wrongful foreclosure, (3) cancellation of written instrument, (4) quiet title, and (5) declaratory relief. The verified Complaint alleges in pertinent part as follows.
On May 2, 1997, Coast Federal Bank (“Coast”) recorded an instrument purported to be a deed of trust (“Coast Deed of Trust”) against the Property. The Coast Deed of Trust allegedly secures a promissory note (“Note”) in the amount of $98,000 payable to Coast by Tamara Masloff Guinkh (“Guinkh”), former owner of the Property. Coast never assigned or otherwise transferred the Note or Deed of Trust to any person or entity.
On July 14, 2003, Jordan acquired title to the Property from Guinkh by recorded deed. The Property is Jordan’s personal residence.
On November 8, 2005, a document entitled “Assignment of Deed of Trust” was recorded purporting to assign the Coast Deed of Trust from Washington Mutual Bank, FA, (“WAMU”) to Homecomings Financial Network, Inc. (“Homecomings”).
On June 8, 2006, a document entitled “Corporation Assignment of Deed of Trust” was recorded purporting to assign the Coast Deed of Trust from Homecomings to JP Morgan Chase Bank (“JP Morgan”).
On October 25, 2013, a document entitled “California Assignment of Deed of Trust” was recorded purporting to assign the Coast Deed of Trust from JP Morgan to BONY Mellon Trust 2.
On August 5, 2014, BONY Trust 2 filed a verified complaint against Jordan seeking judicial foreclosure of the Property under the Coast Deed of Trust. In its complaint, BONY Trust 2 admitted that no assignment transferring interest under the Coast Deed of Trust to BONY Trust 2 exists and that Coast ceased all operations and is incapable of executing an assignment. On June 22, 2015, BONY Mellon Trust 2 dismissed the suit.
On May 15, 2015, a document entitled “Corporate Assignment of Deed of Trust” was recorded purporting to assign the Coast Deed of Trust from BONY 2 to BONY 3.
On September 6, 2017, Ocwen recorded a purported Substitution of Trustee substituting Western as Trustee under the Coast Deed of Trust. On September 15, 2017, BONY 3 through its trustee Western commenced a non-judicial foreclosure proceeding by recording a Notice of Default (“NOD”) against the Property. On December 19, 2017, Western recorded a Notice of Trustee’s Sale (“NOTS”) against the Property setting a foreclosure sale date of January 31, 2018. The NOTS was later cancelled. On May 21, 2018, Western again recorded an NOTS against the Property setting a foreclosure sale date of June 26, 2018.
Defendants do not have legal authority to conduct foreclosure proceedings for several reasons. First, the beneficial interest in the Coast Deed of Trust was never assigned or otherwise transferred from Coast to BONY Trust 3, Western, or any other Defendant. Hence, all purported assignments are void. Second, the BONY Trusts do not actually exist. Third, the Note and Coast Deed of Trust have become irrevocably separated rendering the Note unsecured and barred by the statute of limitations. Fourth, Guinkh paid off the obligation on the Note and, thus, the obligations under the Note have been satisfied in full.
- Course of Proceedings
On June 22, 2018, the court granted Jordan’s ex parte application for a temporary restraining order (“TRO”) and order to show cause (“OSC”) re: preliminary injunction.
Proofs of service on file with the court show that all Defendants were personally served with the ex parte application, OSC, and TRO on July 2, 2018. No proofs of service on file reflect service of the Complaint and Summons on Defendants.
- Applicable Law
- Preliminary Injunction
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. CCP §525. An injunction may be more completely defined as a writ or order commanding a person either to perform or to refrain from performing a particular act. See Comfort v. Comfort, (1941) 17 Cal.2d 736, 741. McDowell v. Watson, (1997) 59 Cal.App.4th 1155, 1160. It is an equitable remedy available generally in the protection or to prevent the invasion of a legal right. Meridian, Ltd. v. City and County of San Francisco, et al., (1939) 13 Cal.2d 424.
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. Grothe v. Cortlandt Corp., (1992) 11 Cal.App.4th 1313, 1316; Major v. Miraverde Homeowners Assn., (1992) 7 Cal.App.4th 618, 623. The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995, quoting United Railroads v. Superior Court, (1916) 172 Cal. 80, 87. 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402.
A preliminary injunction is issued after hearing on a noticed motion. The complaint normally must plead injunctive relief. CCP §526(a)(1)-(2). 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 on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. See CCP §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. CCP §526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors, (1967) 255 Cal.App.2d 300, 307; Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565. The concept of “inadequacy of the legal remedy” or “inadequacy of damages” dates from the time of the early courts of chancery, the idea being that an injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565.
In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable 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. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402; Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1283; Davenport v. Blue Cross of California, (1997) 52 Cal.App.4th 435, 446; Abrams v. St. Johns Hospital, (1994) 25 Cal.App.4th 628, 636. 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 CCP §529(a); City of South San Francisco v. Cypress Lawn Cemetery Assn., (1992) 11 Cal.App.4th 916, 920.
- Statement of Facts
On May 2, 1997, the Coast Deed of Trust was recorded against the Property listing Guinkh as the trustor, Coast as the beneficiary, and Coast Federal Services as the trustee. RJN Ex. 1. The Coast Deed of Trust secures a Note in the amount of $98,000 payable from Guinkh to Coast. Id.
On July 14, 2003, Guinkh transferred the Property to Jordan by grant deed. RJN Ex. 2; Jordan Decl. ¶1. Jordan has lived at the Property continuously since then. Jordan Decl. ¶1.
On March 2, 2005, an Assignment of Deed of Trust assigned the Coast Deed of Trust from WAMU to Homecomings. RJN Ex. 4.
On June 8, 2006, a Corporation Assignment of Deed of Trust assigned the Coast Deed of Trust from Homecoming to JP Morgan. RJN Ex. 5.
On October 25, 2013, a California Assignment of Deed of Trust assigned the Coast Deed of Trust from JP Morgan to BONY Trust 2. RJN Ex. 6.
On January 15, 2015, a Corrective Assignment of Deed of Trust reflects that JP Morgan, acting as attorney in fact for the Federal Deposit Insurance Corporation (“FDIC”), which itself was acting as receiver of WAMU, corrected the March 2, 2005 assignment. RJN Ex. 7. This instrument states that WAMU assigned its interest in the Coast Deed of Trust to Homecomings. Id.
On March 24, 2015, a Corporate Assignment of Deed of Trust assigned the Coast Deed of Trust from BONY Trust 2 to BONY Trust 3. RJN Ex. 8.
- Prior Lawsuits
On August 5, 2014, BONY Trust 2 filed a verified complaint against Jordan seeking judicial foreclosure of the Property under the Coast Deed of Trust. RJN Ex. 9. In this complaint, BONY Trust 2 conceded that no assignment transferring interest under the Coast Deed of Trust to BONY Trust 2 exists, and that Coast ceased all operations and is incapable of executing an assignment. RJN Ex. 9, ¶¶ 15-16. In response to a request for production of documents, BONY Trust 2 produced an incomplete response. Lashlee Decl. ¶2(f). On June 22, 2015, BONY Trust 2 dismissed the suit. RJN Ex. 12.
On September 30, 2015, BONY Trust 2 filed another complaint against Jordan. RJN Ex. 13. BONY Trust 2 alleged causes of action for equitable assignment of lien and declaratory relief determining that BONY Trust 2 is the current beneficiary of the Coast Deed of Trust. Id. On February 23, 2016, before Jordan made an appearance, BONY Trust 2 dismissed the suit. Lashlee Decl. ¶2(h); RJN Ex. 14.
On July 19, 2017, in response to Jordan’s counsel’s written request for documents, Ocwen sent a Lost Note Affidavit. Lashlee Decl. ¶2(i); RJN Ex. 19. The Affidavit states that Ocwen is not in possession of the Note. RJN Ex. 19.
Since June 2010, Jordan has made no payments under the Note because he believes the loan to be paid off. Jordan Decl. ¶7.
On October 4, 2010, Old Republic Default Management Services as agent for JP Morgan recorded an NOD on the Property. RJN Ex. 15. In December 2010, Quality Loan Service, then-trustee under the Coast Deed of Trust, notified Jordan that the pending foreclosure would be cancelled due to defects in the chain of title. Jordan Decl. ¶6.
On August 29, 2017, BONY 3 substituted Western as trustee under the Deed of Trust. RJN Ex. 16.
On September 13, 2017, Western as trustee recorded an NOD on the Property. RJN Ex. 17. On December 18, 2017, Western recorded an NOS on the Property alleging an unpaid balance owed of $184,478.15. RJN Ex. 18. Jordan’s counsel was thereafter notified that this sale date was cancelled and would be reset at a later date. Lashlee Decl. ¶2(l).
On May 16, 2018, Western recorded an NOS on the Property alleging an unpaid balance owed of $192,271.65 and setting forth a date of sale on June 26, 2018. RJN Ex. 20.
The current fair market value of the Property is in excess of $1 million. Jordan Decl. ¶4. The current amount that Defendants claim is owed under the Coast Deed of Trust is approximately $193,000. Jordan Decl. ¶5.
Jordan applies for a preliminary injunction against Defendants on the grounds that they lack the authority to foreclose on the Property. Defendants do not oppose.
- Service of Process
The plaintiff must serve the defendant with the complaint, the TRO/OSC, the memorandum of points and authorities, and any supporting declarations within five days after the TRO is issued or two days prior to the hearing, whichever is earlier. CCP §527(d)(2). The service requirement is jurisdictional, and the court may not issue a preliminary injunction without personal jurisdiction over the defendant. If the defendant has not been served by the date of the OSC hearing, the judge must dissolve the TRO. CCP §527(d)(3).
In issuing the TRO/OSC, the court ordered Jordan to personally serve the Complaint, Summons, moving papers, and TRO/OSC on or before July 2, 2018. Proofs of service on file reflect that Jordan only has served Defendants with the moving papers and TRO/OSC, not the Complaint and Summons. By failing to serve the Complaint and Summons, Jordan has violated a court order and failed to satisfy a jurisdictional prerequisite. For these reasons, Jordan’s application for a preliminary injunction is denied.
- Probability of Success
Assuming arguendo that Jordan has properly served Defendants, Jordan asserts that he is likely to prevail at trial because Defendants have wrongfully initiated foreclosure proceedings against the Property. App. at 10.
A nonjudicial foreclosure sale under the power-of-sale in a deed of trust or mortgage must be conducted in strict compliance with its provisions and applicable statutory law. Coppola v. Superior Court, (1989) 211 Cal.App.3d 848, 868. A trustee’s powers and rights are limited to those set forth in the deed of trust and laws applicable thereto. Id. If the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process. Yvanova v. New Century Mortg. Corp., (“Yvanova”) (2016) 62 Cal.4th 919, 927-28.
A borrower can challenge an assignment of his note and deed of trust if the defect asserted would void the assignment, not merely render it voidable. Yvanova, supra, 62 Cal.4th at 931 (citing Glaski v. Bank of America, National Association, (2013) 218 Cal.App.4th 1079, 1095). If a purported assignment necessary to the chain by which the foreclosing entity claims that power is absolutely void (i.e., of no legal force), the foreclosing entity has acted without legal authority by pursuing a trustee’s sale, and such an unauthorized sale constitutes a wrongful foreclosure. Id. at 935.
Jordan’s argument is persuasive. Jordan has standing to challenge the assignments of the Coast Deed of Trust because he alleges that Defendants’ authority to foreclose the Property is premised on void assignments. He has presented unrebutted circumstantial evidence showing the assignments to be void. He has presented a defense admission that no assignment from Coast transferring interest under the Coast Deed of Trust to BONY Trust 2 exists, and that Coast ceased all operations and is incapable of executing an assignment. RJN Ex. 9, ¶¶ 15-16; Ver. Com. ¶14(a)-(b). Absent a valid assignment from Coast, Defendants do not have the legal authority to pursue a trustee’s sale to foreclose Jordan’s residence and Jordan is entitled to relief. Yvanova, supra, 62 Cal.4th at 936.
- Balance of Hardships
In determining whether to issue a preliminary injunction, the second factor which a trial court examines is the interim harm that 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. Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach, (2014) 232 Cal.App.4th 1171, 1177. This factor involves consideration of the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo. Id.
The balance of hardships plainly favors issuance of an injunction. If a preliminary injunction is not issued, Defendants will proceed with foreclosure and Jordan will lose his personal residence. If a preliminary injunction is issued, Defendants will suffer no discernible harm apart from delay.
The application for a preliminary injunction is denied due to service of process defects. The court may reissue the TRO/OSC and set another hearing date upon a declaration that the Defendants could not be timely served. CCP §527(d)(5).
 The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. A mandatory injunction — one that mandates a party to affirmatively act, carries a heavy burden: “[t]he granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 187, 1493.
 However, a court may issue an injunction to maintain the status quo without a cause of action in the complaint. CCP §526(a)(3).
 Jordan asks the court to judicially notice (1) the Coast Deed of Trust (Ex. 1), (2) a grant deed (Ex. 2), (3) affidavits of lost note (Exs. 3, 19), (4) assignments (Exs. 4-8), (5) various court documents filed in other lawsuits (Exs. 9, 12-14), (6) discovery documents in other lawsuits (Exs. 10-11) (7) NODs and NOTSs (Exs. 15, 17-18, 20), (8) a substitution of trustee (Ex. 16), and (9) “Results of EDGAR CIK Lookup” (Ex. 21).
Jordan’s request is granted as to Exhibits 1-2, 4-8, 15-18, and 20 because they are official acts. Evid. Code §452(c); Yvanova v. New Century Mortg. Corp., (2016) 62 Cal.4th 919, 924 fn.1. Jordan’s request is also granted as to Exhibits 9 and 12-14 because they are court documents. Evid. Code §452(d). Jordan’s request is denied as to the affidavits of lost note (Exs. 3, 19), unfiled discovery documents (Exs. 10-11), and EDGAR Lookup (Ex. 21). Nonetheless, these non-judicially noticed exhibits still qualify as admissible evidence as they are sufficiently authenticated in the Lashlee and Jordan Declarations. Lashlee Decl. ¶2(f), (g), (i); Jordan Decl. ¶8.
 The exceptions to this rule, as set forth in CCP section 527(f), do not apply because the moving papers were not served within the time required for a regularly noticed motion under CCP section 1005 (at least 16 court days before the OSC hearing).