(1) OSC re Preliminary Injunction (2) CMC

Tentative Ruling: Plaintiffs’ request for a Preliminary Injunction is DENIED, as Plaintiffs have failed to meet their burden of demonstrating a probability of prevailing. (Butt v. State of California (1992) 4 Cal.4th 668, 678; O’Connel v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

Specifically, Plaintiffs failed to demonstrate a claim arising from the allegedly unconscionable Deed of Trust and failed to demonstrate the Deed of Trust is unconscionable.

While Plaintiffs’ declarations demonstrate the Deed of Trust was adhesive, “the ‘adhesive aspect’ of a contract is not dispositive on the issue of unconscionability.” (O’Donoghue v. Superior Court (2013) 219 Cal.App.4th 245, 259.)

Thus, as Plaintiffs failed to discuss or demonstrate the Deed of Trust suffers from both procedural and substantive unconscionability, or to demonstrate a claim arising therefrom, the request for a preliminary injunction must be DENIED.

The Court declines to consider the merits of the remainder of Plaintiffs’ claims, as Plaintiffs sought an injunction based only on the claim arising from the Deed of Trust.

Finally, the Court GRANTS Plaintiffs’ Request for Judicial Notice of the Deed of Trust. The Request is DENIED, as to the remainder, for lack of a basis under Evidence Code section 452.

Defendant’s Request for Judicial Notice is GRANTED, in its entirety, with the exception that the Court notices only that Declarations were filed; the Court does not take judicial notice of the truth of the matters stated therein.

An injunction may be granted where it appears by the Complaint or Declaration that the commission or continuance of some act during litigation would produce great or irreparable injury to a party in the action. (Code Civ. Proc., §526(a)(2).) The general purpose of a preliminary injunction is to preserve the status quo until the merits of the action are determined, and in doing so, the court considers who will bear the greater injury should the preliminary injunction be granted and whether a reasonable probability exists the Plaintiff will prevail. (State Bd. Of Barber Examiners v. Star (1970) 8 Cal.App.3d 736, 738.) A 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 to support an injunction. (Butt v. State of California (1992) 4 Cal.4th 668, 678.) “Of course, the scope of available preliminary relief is necessarily limited by the scope of the relief likely to be obtained at trial on the merits.” (Id.) “A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the Plaintiff would ultimately prevail on the merits of the claim.” (Id.) Finally, the burden is on the party seeking the injunction to show all elements necessary to support its issuance. (O’Connel v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

Here, the Court is inclined to DENY Plaintiffs’ request for a Preliminary Injunction, on the grounds Plaintiffs have failed to demonstrate a probability of prevailing on the merits.

Initially, while the First Amended Complaint asserts five causes of action, Plaintiffs address only one claim within their motion: The claim for Violation of Civil Code section 1670. (The Complaint references section 1670, however, it is undisputed and agreed by all that Plaintiff is referring to section 1670.5. This is logical as section 1670 deals with arbitration concerning construction contracts with a public agency.)

Civil Code section 1670.5(a) provides: “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract…” Additionally, section 1670.5(b) states: “When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.” Defendants correctly note section 1670.5 “does not create an affirmative cause of action but merely codifies the defense of unconscionability.” (Dean Witter Reynolds, Inc. v. Superior court (1989) 211 Cal.App.3d 758, 766); however, as the Court in Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, entertained a claim arising from allegations “the trustee’s sale was void because the underlying loan and deed of trust was unconscionable,” this distinction may lack meaning in this context. (Id. at 636 [The claim asserted in Lona was a COA to Set Aside Trustee’s Sale, based on unconscionability. Indeed, in Lona, the Court cited Civil Code section 1670.5 and made no reference to its limitations as a defense].) Nonetheless, Plaintiffs fail to demonstrate the Deed of Trust is unconscionable; rather, Plaintiffs provide only the following testimony, in support of their claim:

“The Deed of Trust was drafted by the Defendants and the weaker or adhering party, the Plaintiffs had no ability to negotiate its terms. Defendants being the party with superior bargaining power drafted the contracts and presented them to Plaintiffs, the party with the weaker bargaining power or the adhering party, on a ‘take-it-or-leave-it’ basis.”

(¶3 of Cossavella Declarations.) Plaintiffs offer no evidence concerning the “commercial setting, purpose and effect” of the Deed of Trust, as requested in Civil Code section 1670.5(b). Additionally, Plaintiffs fail to address or discuss the relevant elements of unconscionability; rather, Plaintiffs’ Declarations indicate only that the Deed of Trust was adhesive; however, “the ‘adehesive aspect’ of a contract is not dispositive on the issue of unconscionability.” (O’Donoghue v. Superior Court (2013) 219 Cal.App.4th 245, 259.)

Similar to the testimony offered by Plaintiffs, the Defendant in O’Donoghue asserted they: “(1) were presented with the agreements in a take-it-or-leave it manner; (2) felt they had no option but to sign the agreements to obtain the loan; and (3) believed the terms of the agreements were not negotiable.” (Id. at 259.) Nonetheless, the Court in O’Donoghe found this testimony “does not carry the day for defendants…” (Id.) As the Court further stated: “Even if we do assume an imbalance in bargaining power, and that…the stronger party…prepared the agreements with an eye to its own advantage, and even if we also assume that [the stronger party] would not have countenanced the striking of the…reference provisions, [defendants] have nevertheless only shown a low level of procedural unconscionability because…the elements of surprise or…misrepresentation…are not present.” (Id.)

Similarly, no evidence has been offered to demonstrate “surprise” or “misrepresentation” concerning the terms of the Deed of Trust. Further, Plaintiffs offer no evidence or discussion, demonstrating the Deed of Trust is substantively unconscionable. Pursuant to Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89:

“[U]nconscionability has both a “procedural” and a “substantive” element,’ the former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on ‘ “overly harsh” ’ or ‘ “one-sided” ’ results. [Citation.] ‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’”

(Id. at 109 [The Court in Lona DENIED a MSJ brought by Citibank; however, it did so only because “Citibank and EMC failed to address all of the allegations of the complaint regarding the alleged unconscionability of the loans and failed in their burden to show that Lona did not have any evidence to support his claims…” (Id. at 112). Here, the burden on this motion is on Plaintiffs.].) Given the evidence offered by Plaintiffs is insufficient alone to demonstrate unconscionability and given Plaintiffs’ failure to address substantive unconsionability, the Motion must be DENIED.

Plaintiffs have not met their burden of demonstrating a probability of prevailing on the merits.