2018-00242585-CU-BC

3230 Broadway, LLC vs. Vicki A. Pfingst

Nature of Proceeding: Motion for Preliminary Injunction

Filed By: Vu, Jacqueline N.

Plaintiff 3230 Broadway, LLC’s (“Plaintiff”) motion for preliminary injunction is DENIED.

This action arises from the sale of commercial real property located at 3230 Broadway, Sacramento, California 95817. The property consists of a two-story, multi-tenant building with five commercial units and four residential apartments.

On July 13, 2017, Plaintiff and defendants Vicki A. Pfingst and Angela Saldivia (collectively, “Defendants”) entered into a Commercial Property Purchase Agreement for the sale of commercial real property located at 3230 Broadway for $775,000. In order to finance the purchase, Plaintiff executed an Installment Note as well as a deed of trust in favor of Defendants covering the property to secure the Note.

Pursuant to the terms of the Note, Plaintiff agreed to make an initial payment of

$77,500 to Defendants on March 11, 2018, and then to pay $4,053.86 per month from April 11, 2018, through February 11, 2023, until the balance was paid in full. Pursuant to the terms of the Purchase Agreement, Defendants were required to disclose to Plaintiff all known material defects affecting the property.

After completing the sale, Plaintiff alleges it discovered Defendants were aware, but failed to disclose, that methamphetamine had been used, manufactured, and sold by former occupants of the property, that the property was contaminated with asbestos, and that the property only had 100 amps of electricity despite Defendants’ representation that the property contained 800 amps of total electricity. Plaintiff stopped making payments to Defendants after it discovered the foregoing defects.

Plaintiff attempted to informally resolve the alleged defect issues with Defendants, but was unsuccessful.

On October 2, 2018, Plaintiff received a Notice of Trustee’s Sale, which scheduled a foreclosure sale of the property for October 23, 2018. (Compl. ¶ 65.)

Plaintiff then filed its complaint October 16, 2018, alleging causes of action for fraud, negligent misrepresentation, breach of contract, breach of the implied duty of good faith and fair dealing, failure to disclose in violation of Civil Code § 1102, and violation of Business & Professions Code § 17200.

On October 19, 2018, Plaintiff applied for and was granted a temporary restraining order by this Court enjoining the pending trustee’s sale.

Plaintiff now seeks a preliminary injunction to enjoin Defendants from selling, foreclosing, or transferring the property pending a final adjudication of the merits of this case.

Legal Standard

“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[s]. [Citation.]” (White v. Davis (2003) 30 Cal.4th 528, 554.) “The purpose of such an order ‘is to preserve the status quo . . . .

It ‘does not constitute a final adjudication of the controversy.’ [Citation.]” (Costa Mesa City Employees Assn v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 305.)

“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 v. Davis (2003) 30 Cal.4th 528, 554

[emphasis added]; see generally Code Civ. Proc. § 426, subd. (a)(2) [a preliminary injunction “may be granted . . . [w]hen it appears . . . that the commission or continuance of some act during the litigation would produce . . . great or irreparable injury . . . to a party to the action].)

“‘[T]he extraordinary remedy of injunction’ cannot be invoked without showing the likelihood of irreparable harm. [Citation.]” (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1352.) The threat of “irreparable harm” must be imminent. “An injunction cannot issue in a vacuum based on the proponents’ fears about something that may happen in the future.[..i]t must be supported by actual evidence that there is a realistic prospect that the party enjoined intends to engage in the prohibited activity.” (Korean Philadelphia Presbyterian Church v. California Presbytery (2000) 77 Cal.App.4th 1069, 1084.) The showing must be strong enough to “support the exercise of the rather extraordinary power to restrain the defendant’s actions prior to a trial on the merits.” ( Tahoe Keys Property Owners’ Ass’n v. State Water Resources Control Bd. (1994) 23 Cal.App.4th 1459, 1471.)

“If the threshold requirement of irreparable injury is established, then [the court] must examine two interrelated factors to determine whether . . . a preliminary injunction should be [issued]: ‘(1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or non-issuance of the injunction.’ [Citation.]” (Costa Mesa City Employees Assn., supra, 209 Cal.App.4th at 306 [emphasis added].) The greater the showing on one factor, the lesser the showing must be on the other. (Butt v. State of California (1992) 4 Cal.4th 668, 678.) However, a preliminary injunction may not be granted, regardless of the balance of interim harm, 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 party seeking injunctive relief bears the burden of showing all elements necessary to support issuance of a preliminary injunction. (O’Connell v. Super. Ct. (2006) 141 Cal.App.4th 1452, 1481.)

“The ultimate goal of any test to be used in deciding whether a preliminary injunction should issue is to minimize the harm which an erroneous interim decision may cause.” (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 73.)

Moreover, it bears repeating that courts will deny a preliminary injunction unless there is a reasonable probability that the plaintiff will be successful in his or her assertion of rights. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) A preliminary injunction will not be issued simply to prevent the possibility of some remote future injury. Issuing a preliminary injunction based only on a possibility of irreparable harm is inconsistent with courts’ characterization of injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. (Winter v. NRDC, Inc., (2008) 555 U.S. 7, 22.)

Discussion

Here, Plaintiff contends it will suffer irreparable harm if the preliminary injunction is not issued because it will lose ownership of this particular piece of property. Plaintiff argues that all real property is unique and, therefore, Plaintiff will suffer irreparable harm. However, as in Jessen v. Keystone Sav. & Loan Ass’n (1983) 142 Cal.App.3d

454, 458, the property at issue is a multi-unit investment property. Jessen found that where real property consists of condominium units being held for investment purposes, and having an established market price, damages are an adequate remedy warranting denial of injunctive relief. (Jessen, supra, 142 Cal.App.3d at 458.)

While plaintiff recites the legal maxim that real property is unique and adds that the loss of real property through foreclosure proceedings cannot be adequately compensated by money damages, this typical justification for equitable relief has no true application to the present case. Indeed, Civil Code section 3387 states “It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation. In the case of a single family dwelling which the party seeking performance intends to occupy, the presumption is conclusive. In all other cases, the presumption is a presumption affecting the burden of proof.” Here, however, the commercial property at issue was acquired for the purpose of generating rental income. Thus, unlike the property on which a plaintiff personally resides, the potential or threatened loss of purely rental property intended to do nothing more than generate income for Plaintiff does not give rise to any “irreparable harm” which might otherwise justify the injunctive relief sought here.

The potential harm is purely financial. If the property is wrongly foreclosed upon, money damages would provide a sufficient remedy for the lost investment. Injunctions of any kind (even prohibitory) will rarely be granted where a suit for damages provides a clear remedy. (Thayer Plymouth Center, Inc. v. Chrysler Motors (1967) 255 Cal.App.2d 300, 307; Pacific Decision Sciences Corp v. Superior Court (2004) 121 Cal.App.4th 1100, 1110.) “An injunction will not issue where ‘only money is involved'” because “there is no threat of irreparable harm, because monetary losses are compensable in damages.” (Rutter Group, Civil Procedure Before Trial, 9:524; Doyka v. Superior Court (1991) 233 Cal.App.3d 1134, 1136.) To obtain a preliminary injunction Plaintiff must demonstrate that monetary damages would not be an adequate remedy for the alleged wrongdoing. (Code Civ. Proc. § 526(a)(4) [injunction may be granted (4) When pecuniary compensation would not afford adequate relief.]; Estes v. Rowland (1993) 14 Cal.App.4th 508, 535 [“There is no right to equitable relief or an equitable remedy when there is an adequate remedy at law.” (11 Witkin, Summary of Cal. Law (9th ed. 1990) Equity, § 3, p. 681 italics in original); Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410 [there must be an injury that “cannot be compensated by an ordinary damage award”].) Plaintiff has failed to demonstrate monetary damages would not be an adequate remedy at law. Indeed, in common law, injunctions are rarely granted where a suit for damages provides a clear remedy. (See Thayer Plymouth Ctr. Inc v Chrysler Motors Corp (1967) 255 Cal.App.2d 300, 307.)

The Court must be presented with evidence that great or irreparable harm is imminent unless an injunction issues and Plaintiff has failed to meet this burden. The court may deny a preliminary injunction either (1) on its finding irreparable injury will not result to the party seeking the injunction, or (2) that the party has failed to demonstrate a reasonable probability of success on the merits. (People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 21; Forde v. Bank of Finance (1982) 136 Cal.App.3d 38, 42; Merandette v. City and County of San Francisco (1979) 88 Cal.App.3d 105, 111.)

Further, even assuming the imminent foreclosure of the commercial property did constitute irreparable harm, and assuming Plaintiff established a likelihood of success on the merits, the balancing of the harms appears to be evenly balanced, which would

also warrant denial of the motion. Plaintiff contends it will be harmed because it will be deprived of rental income and it will be costly to remediate the discovered defects in the property. Defendant contends it will be harmed because it will lose money as Plaintiff continues to refuse to make payments on the Note. Essentially, both parties contend their harm is the economic loss of money and these harms appear to be evenly balanced. Further, there is no showing that the defendant is unable to respond in damages, e.g. is insolvent. Where the evidence is evenly balanced, the decision must be against the party who bears the burden on the issue. Plaintiff, as the moving party, bears the burden.

Based on the foregoing, the motion is DENIED.

This minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.