2014-00157940-CU-CR

Randall Zanze vs. California Capital Loans Inc

Nature of Proceeding: Application for Preliminary Injunction

Filed By: Bolanos, Aldon L.

The tentative ruling of 03/21/14 granting Plaintiff Randall Zanze’s (“Zanze”) motion for
preliminary injunction is AFFIRMED, and Zanze’s request for a waiver of the bond
requirement at CCP § 529 is DENIED. The order of 03/21/14 follows the discussion
immediately below.
Zanze has produced evidence that he is appearing in forma pauperis in this case. He
has also produced that he is unable to work and receives social security benefits.
Moreover, he has produced that his sister, who lives in the second home that secures
the loan herein, relies on public benefits as well. Based on this evidence, Zanze
argues that he is entitled to a discretionary waiver of the bond requirement pursuant to
CCP § 995.240. That section authorizes the court to dispose with a bond where the
principal is indigent and unable to obtain sufficient sureties. (See McColm v.
Westwood Park Assn. (1998) 62 Cal.App.4th 1211, 1122 [waiver based on indigence
is available with all statutory bond requirements].) In deciding whether to grant a
discretionary waiver, the court must consider all relevant factors, including potential
harm to the beneficiary of the bond. (CCP § 995.240.)

Notwithstanding Zanze’s evidence, the court is not persuaded that Zanze has
insufficient assets at his disposal to obtain the $24,000 bond at issue. As Defendant
California Capitol Loans (“CCL”) observes, Zanze and his sister each live in a single
family residence, and both residences secure a $1.498 million note. Zanze concedes
that this property has appreciated recently, and he produced evidence in an earlier
proceeding that his and his sister’s residences could be used to produce a substantial
cash payment. (See CCL’s Further Opp. at 2:11-19; Reply Supp. Memo. at 1:24-2:1.)
In addition, Zanze has not disclosed the total value of trust assets at his disposal. As a
consequence, the court affirms its initial determination that Zanze must post a $24,000
bond before the court will enter the preliminary injunction.

CCL’s request for judicial notice is UNOPPOSED and GRANTED.

No later than May 7, 2014, Zanze is directed (1) to submit a revised formal order
setting the bond at $24,000, and (2) post the bond. The court will not sign the order
until the bond is posted. The TRO will remain in effect until the court signs the order
but will automatically dissolve no later than May 12, 2014.

The affirmed tentative ruling of 03/21/14 reads:

The OSC is DISCHARGED, and the motion for preliminary injunction is GRANTED as
follows:

Factual/Procedural Background

This is a nonjudicial foreclosure case. Plaintiff Randall Zanze (“Zanze”), as trustee of
the William N. Zanze and Joyce A. Zanze Revocable Trust Dated July 30, 1999, is the
borrower and trustor. Leo J. Speckert, trustee of defendant herein California Capitol
Loans, Inc. (“CCL”), is the payee under the Note and beneficiary under the Deed of
Trust (“DOT”). The DOT confers upon CCL’s trustee a security interest in two
properties. Zanze resides in one property, and his sister resides in the other. (See
Reply Zanze Decl.; Reply Moriarty Decl.)

Although Zanze does not allege that he is current on his mortgage payments, he does
allege that CCL has engaged in unlawful dual tracking by negotiating a loan
modification while simultaneously proceeding with the nonjudicial foreclosure process.
(See CC § 2923.6(c).) Zanze’s complaint contains causes of action for Violation of the
California Homeowner’s Bill of Right [Dual Tracking], Financial Elder Abuse [Cal. W&I
Code § 15610.30], and Unfair Business Practices [Fraud and Usury under B&P Code
§ 17200]. On February 11, 2014, this court granted Zanze’s ex parte application for a temporary
order enjoining the then-scheduled trustee’s sales of his and his sister’s residences.
The court issued an OSC and set the matter on today’s date for hearing on a motion
for preliminary injunction.

Discussion

In deciding whether to enter a preliminary injunction, the court must evaluate two
interrelated factors: (1) the likelihood that the applicant will prevail on the merits at trial,
and (2) the interim harm that the applicant will likely suffer if preliminary relief is not
granted, as compared to the likely harm that the opposing party will suffer if the
preliminary injunction issues. (See, e.g., Langford v. Superior Court (Gates) (1987) 43
Cal.3d 21, 28.) One of these two factors may be accorded greater weight than the
other depending on the applicant’s showing. (See Commons Cause v. Bd. of
Supervisors (1989) 49 Cal.3d 432, 447.)

The comparative interim harms tip in favor of Zanze. There is colorable evidence that
Zanze and his sister (both senior citizens) occupy the subject properties as their
primary residences. (Compare Zanze Decl., ¶ 5, Reply Zanze Decl. and Moriarty
Decl., ¶ 2 with Robinson Decl., ¶ 3(d)-(e) and Speckert Decl., ¶¶ 3(d)-(e), 4(a)-(b), 5.)
Thus, if the court were to deny the motion, Zanze and his sister likely would lose their
homes. (Given Zanze’s assertions that he was pressured to do so, evidence that
Zanze signed loan documents indicating that the properties would not serve as his or
his family’s residences does not alter the court’s conclusion at this juncture.) Although
the interim harm to CCL in being prevented from obtaining and disposing of its security
pending trial presents appreciable harm, it is less than the potential harm to Zanze.

Next, the court concludes that there is at least some likelihood that Zanze will prevail
on his dual tracking claim. CC § 2923.6(c) generally prohibits mortgagees,
beneficiaries and mortgage servicers, among others, from proceeding with a trustee’s
sale where the borrower has applied for a loan modification and the mortgage servicer
has made a written determination that the borrower is ineligible. Zanze has produced
evidence that he applied (through his real estate broker, Moriarty) for a modification
and that no written denial followed. Notably, CCL has not produced any evidence
contradicting this evidence.

Instead, CCL argues that Zanze’s dual tracking claim is meritless because that statute
does not apply to trusts. In other words, CCL posits the trust as the borrower, rather
than Zanze. The Note, however, indicates that Zanze is the borrower, though in his
capacity as trustee. Absent an authority holding that a trustee cannot benefit from CC
§ 2923.6, the court rejects the argument.

CCL also argues that Zanze’s dual tracking claim lacks merit because the loan was not
a personal loan and was not made for an owner-occupied property. As noted above,
however, there is evidence that the properties are owner occupied. In addition, there
is evidence that Zanze was pressured to sign loan documents misrepresenting the true
nature of the loan. Although the court cannot say whether this evidence will enable
Zanze to prevail at trial, it is sufficient to support his current motion for a preliminary
injunction.

Finally, CCL argues that Zanze lacks standing to pursue his dual tracking claim
because he is not a party to the Note or DOT. As previously indicated, evidence
before the court indicates that he is a party, albeit in his capacity as trustee. Given
this, and given CCL’s failure to cite any legal authority for its no-standing argument,
the court is not persuaded.

In sum, the court concludes that the equities tip in favor of an order preserving the
status quo pending disposition of Zanze’s legal claims. Because the court bases its
conclusion on Zanze’s dual tracking claim, it does not reach the parties’ further dispute
about the merits of his usury claim.

On the issue of bond, CCL proposes an amount equal to one year’s interest on the
Note plus estimated defense fees and costs.

For his part, Zanze requests a one-dollar bond. He argues that a de minimis bond is
warranted given his current convalescence and the fact that the properties are
appreciating in value. Zanze further asserts that there is no industry to provide a large
bond, and the “public benefit issues” at stake support a minimal bond.

A bond or undertaking is required for the purpose of protecting the
opposing party should it be finally determined, after trial on the merits,
that a restriction on one party’s freedom of activity was improperly
imposed or lifted and resulted in monetary damages.

(Markley v. Superior Court (1992) 5 Cal.App.4th 738, 747.) Thus, the appropriate
measure for a bond is the amount of damages, including defense costs, CCL is likely
to suffer by losing its right to dispose of the security while the litigation proceeds.
However, CCL’s proposal to measure damages against interest payments on the Note
is inapt. CCL does not appear likely to obtain such payments regardless of whether
the trustee’s sale is enjoined. Rather, an appropriate measure is the rent CCL could
obtain if it could remove Zanze and his sister from the properties.

Neither party has presented evidence of the rental value of the two properties. Five-
hundred dollars per month, however, is a conservative estimate of a single family
home’s rental value in this community. Accordingly, the court will order a bond
consisting of (1) $12,000 in lost rents (both properties rented at $500/mo. for 12 mos.)
plus $12,000 in defense fees and costs, for a total of $24,000.

CCL’s objections to evidence are OVERRULED. Even if the court were to sustain the
objections, however, it would not alter its decision to grant the motion.

CCL’s request for judicial notice of recorded land documents is GRANTED. In taking
judicial notice of these documents, the court accepts the fact of their existence, not the
truth of their contents. (Herrera v. Deutsche Bank Nat’l Trust Co. (2011) 196
Cal.App.4th 1366, 1375.)

The court notes that Zanze has filed documents containing unredacted social security
numbers as well as an unredacted checking account number. Zanze is advised that
court records are generally available for public viewing. If Zanze wishes to remove
unredacted, private information from public view, then he must file an application or
motion to seal pursuant to CRC 2.550-2.551.