The request for a preliminary injunction, filed by plaintiff Christopher M. Koenig, is granted. Plaintiff Koenig shall post an undertaking, or cash in lieu of an undertaking, in the sum of $ 5,000. If Koenig chooses to post cash in lieu of an undertaking, he may pay five monthly installments of $ 1,000 to counsel for defendant Wells Fargo Bank, N.A., beginning on March 10, 2014, to be held in that counsel’s client trust account. If Koenig fails to post the $ 5,000 undertaking with the Superior Court by March 10, 2014, or if Koenig fails to timely make any of the five monthly installment payments (due on the 10th of each month), Wells Fargo may file a noticed motion for an order dissolving the injunction.

The Court finds that plaintiff Koenig has shown some likelihood of prevailing on a theory that defendant Wells Fargo breached an implied contract to evaluate Koenig’s application for a loan modification in good faith. (See, CACI 305 and annotations thereto. Cf. West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 798.) The Court further finds that considerations of relative interim harm favor Koenig.

In accordance with defendant Wells Fargo’s instructions, plaintiff Koenig made three trial period payments, paid off a substantial lien against his property, repeatedly submitted a detailed application package, and provided all additional documents and information that Wells Fargo requested. This went on for an 18-month period from around March 2012 through September 2013.

Having induced plaintiff Koenig to advance these payments and expend this time and effort, when Koenig could have simply walked away from his purchase money loan and made a fresh start, it was not reasonable for defendant Wells Fargo to deny Koenig’s application for a loan modification on the ground that “You have exceeded the number of modifications allowed by the investor.” (Grewal Dec., Exh. “O” [Wells Fargo denial letter dated 10-21-13].) The Court notes that the denial letter’s reference to “the investor” does not even make sense; this was not a securitized loan. Further, Wells Fargo’s prior denial letter made no reference to a previous loan modification. (Complaint, Exh. “G” [Wells Fargo denial letter dated 3-18-13].)

In sum, if defendant Wells Fargo was going to deny plaintiff Koenig’s application on the preemptive ground that there had been a prior loan modification, Wells Fargo should have done so at the outset — when Koenig first sought a loan modification in 2012 — so that Koenig could have expended his time, effort, and limited funds pursuing other alternatives to foreclosure, such as a Chapter 13 bankruptcy, or pursuing an alternative housing arrangement. While Wells Fargo has gone through the motions of evaluating Koenig’s application, in order to achieve technical compliance with the Homeowner Bill of Rights, the evaluation would appear to have been a mere charade.

The Court will entertain a motion to dissolve the preliminary injunction if defendant Wells Fargo conducts a good faith evaluation of plaintiff Koenig’s application for a loan modification, and either (1) offers Koenig a loan modification or (2) denies the application with reference to objective financial criteria, such as the HAMP Net Present Value analysis, showing that Koenig does not qualify for a loan modification. Any such motion shall be supported by a declaration from the bank officer who performed the good faith evaluation.

In the meantime, the Court encourages the parties to explore a negotiated resolution of this dispute. Given the improvement in plaintiff Koenig’s financial situation since the job loss that caused Koenig’s default, and given Koenig’s obviously earnest desire to pay his mortgage loan, it would seem reasonably likely that such a resolution is feasible. The Court notes the seeming discrepancy between the substantial amount of attorney fees that defendant Wells Fargo has expended and may continue to expend in the defense of this action, and the relatively small amount of the mortgage loan here at issue ($324,000).

Finally, the Court notes that “[t]he granting or denial of a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy.” (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) Accordingly, this ruling shall not be binding in the Court’s consideration of defendant Wells Fargo’s pending demurrer, or in any other future proceedings.