SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTHEAST DISTRICT
|EVA NEUMANN , et al.;
SELENE FINANCING, L.P. , et al.,
|Hearing Date:||August 17, 2022|
[TENTATIVE] ORDER RE:
ORDER TO SHOW CAUSE RE: PRELIMINARY INJUNCTION
MOVING PARTY: Plaintiffs Eva Neumann and Jianying Wu
RESPONDING PARTY: Defendant Selene Financing, LP
Order to Show Cause Re: Preliminary Injunction
The court considered the moving papers, response, and reply filed in connection with the order to show cause.
Plaintiffs Eva Neumann (“Neumann”) and Jianying Wu filed this action on July 22, 2022, against, among others, Defendant Selene Financing, LP. The complaint asserts causes of action for (1) violation of Civil Code § 2923.5; (2) violation of Civil Code § 2924(a)(1); (3) violation of Civil Code § 2923.6(c), (4) violation of Civil Code § 2923.7, (5) violation of Civil Code § 2924.9, (6) violation of Civil Code § 2924.10, (7) violation of Business and Professions Code section 17200, and (8) cancellation of written instruments.
This action arises out of the imminent foreclosure sale of Plaintiffs’ home, the real property located at 661 W. Lemon Avenue, Arcadia, California 91007. Plaintiffs executed a Note on May 23, 2007 in favor of Bank of America for the principal amount of $411,000. (Royal Decl., ¶ 2.) The Deed of Trust for the mortgage loan was recorded on June 28, 2007. (Plaintiffs’ Ex. A; Royal Decl., ¶ 2, Ex. A.) On May 22, 2019, the Trustee recorded a Notice of Default and indicating that Plaintiffs had been in default since March 1, 2016. (Royal Decl., ¶ 4, Ex. C.) On June 27, 2022, the Trustee recorded a Notice of Trustee’s Sale of the Property. (Plaintiffs’ Ex. L; Royal Decl., ¶ 5, Ex. D.)
On July 27, 2022, pursuant to an ex parte application filed by Plaintiffs, the court issued a temporary restraining order prohibiting Defendant from proceeding with the foreclosure sale. The court also issued an order to show cause why a preliminary injunction should not be issued.
“As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of its claim.” (White v. Davis (2003) 30 Cal.4th 528, 554 (emphasis omitted).) “In determining whether to issue a preliminary injunction, the trial court considers: (1) the likelihood that the moving party will prevail on the merits and (2) the interim harm to the respective parties if an injunction is granted or denied. The moving party must prevail on both factors to obtain an injunction.” (Pittsburg Unified School Dist. v. S.J. Amoroso Construction Co., Inc. (2014) 232 Cal.App.4th 808, 813-814.) “The trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other….” (Church of Christ in Hollywood v. Superior Court (2002) 99 Cal.App.4th 1244, 1251-1252.) The burden is on the party seeking injunctive relief to show all elements necessary to support issuance of a preliminary injunction. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)
- Interim Harm to the Parties
“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, supra, 30 Cal.4th at p. 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.)
The court finds that Plaintiffs have established irreparable injury or harm. Plaintiffs contend that they will suffer irreparable injury if their home is sold at a foreclosure sale.
- Likelihood of Success on the Merits
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, supra, 30 Cal.4th at p. 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.” (Ibid.)
On an order to show cause why a preliminary injunction should not issue, the burden is on the plaintiff to show all elements necessary to support issuance of a preliminary injunction. (O’Connell v. Superior Court (2006) Cal.App.4th 1452, 1481.)
Plaintiffs contend that they are likely to succeed on their claims for violations of the Homeowner Bill of Rights (“HBOR”). In support, Plaintiffs offer evidence that Neumann applied for a loan modification on or about February 2022. (Neumann Decl., ¶ 6.) Since then, Neumann has not received a letter appointing a single point of contact, a 5-day acknowledgement of the application, requests for missing or additional documents, the “QWR,” debt validation, or a final decision on the application. (Neumann Decl., ¶¶ 4-7.) Plaintiffs argue that these actions (or omissions) constitute violations of the HBOR for the following reasons:
- Civil Code section 2923.6, subdivision (c) prohibits recording a notice of sale or conducting a trustee’s sale during the time a complete first lien loan modification application is pending.
- Civil Code section 2923.7 requires lenders or servicers to establish a single point of contact with the borrower.
- Civil Code section 2924.9 requires servicers to send a written communication to the borrower that contains foreclosure prevention alternatives within five business days after recording a notice of default.
- Civil Code section 2924.10 requires servicers to provide written acknowledgement of the receipt of modification applications within five business days of such receipt.
Defendant counters that none of these violations are actionable because Plaintiffs underwent a full modification review that resulted in denial. Pursuant to Civil Code section 2924.12, subdivision (a), before a trustee’s deed upon sale has been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Civil Code sections 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17. Any such injunction shall remain in place until the court determines that the servicer has corrected and remedied the violation(s). (Civ. Code, § 2924.12(a)(2).) Although there is no competent evidence that Plaintiffs’ application was received, assessed, and denied, Plaintiffs’ moving papers argue that Plaintiffs applied for a modification in January 2022, that they were offered a trial payment plan (“TPP”), that they made the first two payments but missed a third payment, and that the TPP offer was then canceled. (Mot., p. 4:12-19.) More importan, these facts about the TPP are made in Plaintiffs’ verified complaint. Therefore, it is Plaintiffs’ burden as the moving party for a preliminary injunction to explain how these facts do not render the HBOR claims defective. Plaintiffs allege in the complaint that they discussed “the denial of the permanent modification” with someone, presumably Defendant. (Compl., ¶ 25.) And although Plaintiffs contend that they should have been sent a denial letter and an opportunity to dispute the denial, Plaintiffs point to no statute that requires this.
Based on the evidence presented, the court finds that Plaintiffs have failed to establish a likelihood of success on the merits of their HBOR claims. Plaintiffs base their unfair business practices claim (Business and Professions Code section 17200) and the cancellation of instruments claim on the alleged HBOR violations. Because Plaintiffs have not demonstrated that they are likely to succeed on any of their HBOR claims, the court finds that the unfair business practices claim and the cancellation claim are unlikely to succeed as well. Weighing the likelihood of irreparable injury to Plaintiffs if their home is sold with the fact that Plaintiffs have failed to show that they are likely to succeed on their claims, the court concludes that a preliminary injunction is not merited.
Based on the foregoing, the court denies Plaintiffs’ motion for preliminary injunction and the temporary restraining order is hereby dissolved.
Defendant is ordered to give notice of this ruling.
IT IS SO ORDERED.
DATED: August 17, 2022
Judge of the Superior Court
 This date conflicts with the February 2022 date set forth in Neumann’s declaration.