Opinion
E044050
7-9-2008
FREMONT INVESTMENT & LOAN, Plaintiff and Respondent, v. READY PRODUCTS CORPORATION, Defendant and Appellant.
Edward M. Murphy II for Defendant and Appellant. Marcus, Watanabe, Snyder & Dave, David M. Marcus and Amy J. Cooper for Plaintiff and Respondent.
Not to be Published
Ready Products Corporation (Ready Products) seeks reversal of an order issuing a prohibitory preliminary injunction against it. The injunction restrains Ready Products from selling a residential property pursuant to a deed of trust. Fremont Investment & Loan (Fremont Investment) sought to restrain Ready Products, because it claims Ready Productss lien against the residential property was paid in full via Ready Productss agent, Allied Corporate (Allied), at the time Fremont Investment refinanced the loans encumbering the property. Ready Products disputes that it was paid in full, because it contends Allied was not Ready Productss agent. Ready Products raises three issues on appeal. First, Ready Products argues that the court abused its discretion by issuing the injunction. Second, Ready Products essentially contends there is no statutory authority supporting the trial courts decision to issue the injunction. Third, Ready Products asserts that the amount of the bond imposed upon Fremont Investment is insufficient. We reverse the order issuing the preliminary injunction.
FACTS
On April 4, 2003, Joseph Ivy (Ivy) executed a promissory note secured by a deed of trust against his residential property on Alhambra Street in Norco (Alhambra property), in favor of Bank of America; this constituted the first deed of trust encumbering the Alhambra property. Also on April 4, 2003, Ivy obtained a line of credit from Bank of America secured by a second deed of trust against the Alhambra property.
On June 27, 2006, Ivy executed an installment note secured by a third deed of trust against the Alhambra property in favor of Allied. Sea View Financial Center (Sea View) was listed as the trustee on the third deed of trust. Joseph Anthony Veltre (Veltre) and Stephen Lee Margolin (Margolin) owned and operated both Allied and Sea View. Fremont Investment alleges that when Ivy executed the loan document with Allied, Veltre told Ivy that he would receive, by mail, information regarding where to send payments. Ivy told his wife, Karen, that they would be mailed information about where to send their payments.
On July 3, 2006, Allied assigned its beneficial interest in the third deed of trust to Ready Products. The assignment was recorded on July 5, 2006. Fremont Investment alleges that Ivy and Karen (the Ivys) were not mailed information about where to direct their payments. Several weeks after executing the installment note secured by the third deed of trust, Veltre directed Karen to send payments to Ready Products at an address in Irvine, California.
On September 13, 2006, Karen mailed a check for the first loan payment to Ready Products. On September 17, 2006, Karen discovered the check had not been cashed. On September 18, 2006, Karen contacted directory assistance and was informed that there was no telephone listing for Ready Products. Karen informed Ivy about the uncashed check. Ivy drove to Irvine and discovered the address where the Ivys had sent their check was an empty industrial building that was for sale. That same day, the Ivys sent to Allied, by certified mail, a check made payable to Allied for the amount of the August loan payment plus late charges for August and September, and interest payments for September, October, and November 2006. Karen contacted Veltre by e-mail and informed him that they would be sending all of their payments to Allied by certified mail until they received documents instructing them to do differently.
Near the end of September 2006, Veltre contacted the Ivys by telephone to inform them that the check they originally sent to Ready Products on September 13, 2006, would be returned to them uncashed. On October 5, 2006, Karen e-mailed Veltre to inquire about the uncashed check, because she had not received it. Fremont Investment alleges that Veltre did not respond to the e-mail. Also on October 5, 2006, the Ivys sent Allied a payment for their December loan installment. On October 11, 2006, the check the Ivys sent to Ready Products on September 13, 2006, was cashed. In November and December, the Ivys sent payments to Allied for their January and February loan installments.
In early January 2007, the Ivys refinanced the Alhambra property with Fremont Investment. The Ivys executed a promissory note in the amount of $450,000, secured by a deed of trust. After fully paying the other encumbrances on the Alhambra property, Fremont Investment would hold the first deed of trust encumbering the property. Peninsula Escrow handled the refinancing for Fremont Investment.
On January 5, 2007, Allied submitted a beneficiarys demand to Peninsula Escrow, with Veltre listed as the servicing agent and Ready Products listed as beneficiary. On January 18, 2007, escrow on the refinancing closed. Peninsula Escrow paid Bank of America in full. Peninsula Escrow then wired to Allied $75,873.99 to pay their demand in full, because Allied prepared the demand and the Ivys had been sending their payments to Allied. Also on January 18, 2007, Karen received a phone call from Gary D. Hunt (Hunt), who is the Chief Executive Officer of Ready Products. Hunt informed Karen that he had not received payments for December 2006 and January 2007. Hunt told Karen that he planned to sell the Alhambra property. Karen informed Hunt that the Alhambra property had been refinanced and the loan secured by the third deed of trust was paid in full.
On January 22, 2007, Hunt submitted a beneficiary demand for $79,936.06 to Peninsula Escrow for the loan secured by the third deed of trust. The only default payments listed in the demand were for December 2006 and January 2007. The demand listed Hunt as beneficiary and gave the same address in Irvine as the address Veltre had given the Ivys for Ready Products. In an accompanying e-mail, Hunt claimed that he never had an agreement with Allied regarding payment of the loan.
On January 29, 2007, the Ivys received a letter from Hunt informing them that the loan had been assigned to Ready Products and gave the same Irvine address given previously. In the letter, Hunt claimed the address was only for mailing purposes because the building was "a multi[-]tenant facility and any payments placed through the door etc. may not reach us." The letter also informed the Ivys that all payoff payments were to be made only to Ready Products.
On February 26, 2007, a notice of default and election to sell under the third deed of trust was recorded in the Riverside County Recorders Office against the Alhambra property. The Ivys were informed by letter that if they paid the default amount of $5,087.20 then their account would be reinstated.
In its lawsuit, Fremont Investment complains that when Allied took the loan payoff payment, it was acting as an agent for Ready Products, because (1) the Ivys made their payments to Allied; (2) Ready Products never contacted the Ivys about directing payments to Ready Products until six months after the assignment; (3) Ready Products never objected to the Ivys sending payments to Allied until after escrow closed; and (4) on Allieds beneficiarys demand, Veltre was listed as the loan servicing agent and Ready Products was the named beneficiary. Fremont Investment alleges that when it paid Allied $75,873.99 as Ready Productss agent, it paid the loan in full and Ready Products became obligated to reconvey the third deed of trust.
Fremont Investment argued in the trial court that Ready Productss action of commencing foreclosure proceedings against the property meant that Ready Products was essentially contending that it still held a valid deed of trust against the Alhambra property. In its complaint, Fremont Investment is asking the trial court, among other things, to declare (1) that Ready Products and Hunt must reconvey the third deed of trust; and (2) that Fremont Investment holds the first and only deed of trust encumbering the Alhambra property.
On July 16, 2007, Fremont Investment filed an application for an order to show cause why a preliminary injunction should not issue enjoining Ready Products and Hunt from exercising their alleged power to sell the Alhambra property. Ready Products opposed the application for an injunction. The trial court found Fremont Investment was likely to prevail on the merits of the suit, and that if the injunction were not issued Fremont Investment would be irreparably injured because the suit involved residential real property which is presumed to be unique. (Civ. Code, § 3387.)
It is difficult to decipher when the application was filed, due to the multiple dates on the document. The document lists the hearing date as June 14, 2007. The document is marked as fax filed on June 25, 2007. The document was receive-stamped July 16, 2007. The document was file-stamped July 16, 2007. Yet, the opposition to the motion was file-stamped June 21, 2007.
All further references to code sections will be to the Civil Code unless otherwise noted.
DISCUSSION
Ready Products essentially contends the trial court abused its discretion by issuing the injunction because (1) Ready Products is suffering greater harm due to the grant of the preliminary injunction than Fremont Investment would have suffered from its denial, because legal damages will make Fremont Investment whole if it prevails at trial; and (2) it is not reasonably probable that Fremont Investment will prevail at trial.
When a trial court exercises its discretion regarding whether or not to grant a preliminary injunction, two questions must be considered, which are "(1) whether the plaintiff is `likely to suffer greater injury from a denial of the injunction than the defendants are likely to suffer from its grant, and (2) whether there is `a reasonable probability that the plaintiffs will prevail on the merits. [Citation.]" (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 408; see also White v. Davis (2003) 30 Cal.4th 528, 554.) The inadequacy of legal remedies and the threat of irreparable injury are factors to be considered when evaluating Fremont Investments claim that it will suffer greater harm from denial of the injunction than Ready Products would suffer from its grant. (14859 Moorpark Homeowners Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1402.)
"Appellate review is limited to whether the trial courts decision was an abuse of discretion." (Butt v. State of California (1992) 4 Cal.4th 668, 678.) "A trial court will be found to have abused its discretion only when it has `"exceeded the bounds of reason or contravened the uncontradicted evidence." [Citations.]" (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69.)
Although the question of success on the merits and the question of irreparable harm are interrelated factors, the threat of an irreparable harm is an indispensible factor as to whether or not a preliminary injunction may issue. When the trial court has issued a preliminary injunction, its order may be reversed if it abused its discretion in evaluating the presence of irreparable harm, regardless of the likelihood the moving party will prevail on the merits, because "`[t]he ultimate goal of any test . . . used in deciding whether a preliminary injunction should issue is to minimize the harm which an erroneous interim decision may cause. [Citation.] [Citation.]" (White v. Davis, supra, 30 Cal.4th at p. 554.) Accordingly, it is not sufficient to merely determine that Fremont Investment is likely to prevail on the merits, it must also be determined if Fremont Investment is threatened with suffering an irreparable harm.
1.
IRREPARABLE INJURY
A. Presumption That Residential Real Property Is Unique
Before we are able to determine if the trial court abused its discretion in balancing the parties alleged harms, we must first determine what harm Fremont Investment would suffer if it were denied injunctive relief.
The trial court found Fremont Investment would suffer an irreparable injury if it were denied injunctive relief because the dispute involves residential real property, which is presumed to be unique; this presumption is codified in section 3387. When a dispute concerning breach of an agreement to transfer an interest in residential real property involves a party that intends to occupy the residence, the uniqueness presumption is conclusive; however, in all other cases involving a breach of an agreement to transfer an interest in real property the presumption is rebuttable. (§ 3387.) Although the trial court did not discuss which presumption in section 3387 it was applying in this matter, we infer the trial court applied the rebuttable presumption that residential real property is unique, because the homeowners are not a party to this lawsuit.
Ready Products does not argue that the trial court erred by failing to find that Ready Products successfully rebutted the presumption; rather, Ready Products argues that section 3387 is not applicable to this case. We disagree with the argument that section 3387 is not applicable, but conclude the trial court abused its discretion by finding that Ready Products did not successfully rebut the presumption.
Section 3387 provides: "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, this presumption is conclusive. In all other cases, this presumption is a presumption affecting the burden of proof."
Section 3387 is applicable in this matter, because Fremont Investment has complained that Ready Products breached an agreement to transfer the third deed of trust. When the Ivys executed the installment note and third deed of trust, they transferred an interest in the property to Allied, who later assigned that beneficial interest to Ready Products. (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 821 ["The borrower (trustor) executes a promissory note and deed of trust, thereby transferring an interest in the property to the lender (beneficiary) as security for repayment of the loan."].) Accordingly, Fremont Investments complaint that Ready Products has failed to reconvey the third deed of trust upon full payment of the installment note is essentially an allegation that Ready Products has breached an agreement to transfer an interest in real property. Consequently, section 3387 is applicable in this dispute.
Next, we must determine whether the trial court erred in determining that Ready Products did not successfully rebut the presumption that damages would be an inadequate remedy. In order "to rebut the presumption that damages are an inadequate remedy, the defendant [Ready Products] must come forward with evidence showing that damages will fully compensate the plaintiff [Fremont Investment] for the breach." (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 476.) At the trial court, and in its appellate briefs, Ready Products argued that damages would fully compensate Fremont Investment, because Fremont Investments interest in the Alhambra property is of a limited nature, i.e., Fremont Investment has only a financial interest in the Alhambra property. We agree.
At the outset, we must set forth two matters that are somewhat unique to the facts of this case. First, Fremont Investment is not claiming that Ready Products sale pursuant to the third deed of trust will harm an interest it has in the third deed of trust; rather, Fremont Investment argues that sale pursuant to the third deed of trust will harm its interest in the deed of trust securing the refinancing loan. Consequently, we must examine whether damages will fully compensate Fremont Investment in regards to not only how a sale pursuant to the third deed of trust would harm Fremont Investments alleged interest in the third deed of trust, but also how damages might be able to compensate a loss that Fremont Investment experiences related to the deed of trust securing the refinancing loan. Second, we note that Fremont Investment is not named as either trustee or beneficiary on the deed of trust securing the refinancing loan; however, because Fremont Investment is designated as the lender in the deed of trust and Mortgage Electronic Registration Systems, Inc. is named as the beneficiary, we will assume for purposes of this opinion, that Fremont Investment is the beneficiary of the deed of trust securing the refinancing loan.
Mortgage Electronic Registration Systems, Inc., or "MERS" "is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members interests to MERS. MERS is listed as the grantee in the official records maintained at county register of deeds offices. The lenders retain the promissory notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to investors without having to record the transaction in the public record. MERS is compensated for its services through fees charged to participating MERS members." (Mortg. Elec. Registration Sys. v. Nebraska Dept. of Banking & Fin. (2005) 270 Neb. 529, 530 .)
Pertinent to our analysis is the determination of whether or not a deed of trust provides a unique interest in property. A deed of trust is, in practical effect, a security instrument, typically executed for the purpose of securing a promissory note, and "`entitl[ing] the lender to reach some asset of the debtor if the note is not paid." (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1235.) "A security interest cannot exist without an underlying obligation, and therefore a . . . deed of trust is generally extinguished by either payment or sale of the property in an amount which satisfies the lien. [Citations.]" (Ibid.)
The trustee of a deed of trust has "only two duties with respect to the property." (Monterey S.P. Partnership v. W.L. Bangham, Inc. (1989) 49 Cal.3d 454, 460.) If the trustor has satisfied the debt secured by the deed of trust, then the trustee is "obligated to reconvey its interest in the property" to the trustor, in this case the Ivys. (Ibid.) However, if the trustor defaults on its obligation, then the trustee, upon request from the beneficiary, is required to exercise the power of sale contained in the deed of trust. (Ibid.) In sum, a deed of trust grants two very limited interests in real property, i.e., the power to reconvey the "title" to the trustor or the power to sell the property and collect the amount of money remaining on the lien.
The property interest granted by a deed of trust is of such a limited nature that the only harm that could come to Fremont Investment if Ready Products were to sell the Alhambra property pursuant to the third deed of trust is a financial harm. Fremont Investment cannot occupy the Alhambra property, improve upon it, or collect a profit beyond the value of the lien if it were to sell the property. (See Real Estate Analytics, LLC v. Vallas, supra, 160 Cal.App.4th at p. 476 [Investment potential and reasonableness of the contract price can make land unique].) In other words, Fremont Investments interest in the Alhambra property is a fixed sum of money determined by the value of the lien which the deed of trust secures, and therefore does not provide a unique interest. As such, any loss Fremont Investment is found to have sustained as a result of Ready Products selling the property pursuant to the third deed of trust could be fully compensated in damages.
Although not raised by the parties, we observe that in Chance v. Superior Court of Los Angeles County (1962) 58 Cal.2d 275, 285, our Supreme Court peripherally touched upon the issue of whether an interest in land granted by a deed of trust is unique. In Chance, individual plaintiffs, who each held a deed of trust for different parcels of land in a subdivision, were seeking to be certified as a class for the purpose of a dispute concerning "a lucrative investment scheme whereby individuals [the plaintiffs] were induced to deposit money with [Los Angeles Trust Deed and Mortgage] Exchange and thereby purchase notes secured by deeds of trust on real property, obtaining a promised and `secured overall return of 10 per cent per annum upon ones investment." (Id. at pp. 278-279, fn. omitted.) When examining whether there was a "common or general interest" among the potential class, the court noted that the fact that each plaintiffs deed of trust was secured by a different parcel of land "appear[ed]" to make their claims separate and distinct, but concluded that there were "a number of questions common to all of [the] owners of notes secured by trust deeds upon parcels in the . . . tract." (Id. at pp. 284-286.) Although it could be inferred that the Supreme Court found that a deed of trust grants a unique interest in land, the case provided no analysis as to that exact issue. Consequently, we find that our conclusion in the instant case does not violate the principle of stare decisis. (See Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 455.)
We find the case of Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454 (Jessen), to be helpful in illustrating our analysis. In Jessen, the appellate court reviewed the trial courts decision to deny injunctive relief. (Id. at p. 456.) Jessen and others sought injunctive relief to restrain Keystone Savings & Loan Association (Keystone) from foreclosing on condominium units. (Ibid.) Jessen had borrowed money from Keystone to finance construction of the condominiums, and the loans were secured by deeds of trust. (Ibid.) Two of the condominium units were priced and being openly marketed. (Ibid.) As to those two condominium units, the trial court denied Jessens request for injunctive relief, because it concluded Jessen "had only a marketing interest in the respective condominiums." (Id. at p. 457.)
The appellate court concluded the trial court was correct in finding Jessen had "no unique relationship" to those two condominiums, "other than their market price." (Jessen, supra, 142 Cal.App.3d at p. 457.) The reviewing court found that the loss of the two units that were being marketed for sale, "may be adequately compensated in damages and will create no great or irreparable harm." (Id. at p. 458.)
We find that a deed of trust is similar to an investment property that is priced for sale, in that both are essentially worth a fixed sum money. Fremont Investments interest in the Alhambra property could be no greater than a party who is interested in selling a condominium that is already priced for sale, because Fremont Investment only has the power to either (1) sell the Alhambra property and collect the amount of money that remains due on the lien; or (2) reconvey the title. We conclude that any harm that Fremont Investment might sustain due to Ready Products selling the Alhambra property would be adequately compensated in damages, similar to the plaintiff in Jessen. Accordingly, we conclude Ready Products successfully rebutted the presumption by showing that damages will fully compensate Fremont Investment for the alleged breach.
Fremont Investment argues that it will not simply lose money if Ready Products is allowed to sell the Alhambra property, because Fremont Investment will "lose its security and its senior position," which will require Fremont Investment to sue the Ivys, who will likely be insolvent after the loss of their home. Fremont Investments argument is unconvincing. If Ready Products sells the Alhambra property, and is found at trial to have breached an agreement to reconvey the third deed of trust, then Fremont Investment may recover damages from Ready Products. On the other hand, if Fremont Investment does not prevail at trial, then Fremont Investment could pay the amount remaining on the note secured by the third deed of trust and obtain its position as holder of the first and only deed of trust encumbering the Alhambra property, as originally contemplated in the alleged contract with Ready Products.
B. Rendering Fremont Investments Claim for Declaratory Relief Moot
Fremont Investment argues that it will suffer an irreparable harm if Ready Products is not enjoined because its request for declaratory relief will be rendered moot if the status quo is not maintained. Initially, we note this argument was not fully developed in Fremont Investments moving papers. Fremont Investment briefly mentioned, at the hearing on the order to show cause, that it was threatened with an irreparable harm by the impending sale of the Alhambra property because its claim for declaratory relief would be rendered moot; however, the trial court did not make a finding as to this claim because it had already concluded Fremont Investment would suffer an irreparable harm due to the fact that the dispute involved residential real property which is presumed to be unique.
Fremont Investment relies on the case of Weingand v. Atlantic Savings & Loan Assn. (1970) 1 Cal.3d 806 (Weingand), to support its argument that it will suffer an irreparable harm if Ready Products sells Fremont Investments security interest while proceedings are pending in this case. We do not find this authority persuasive. In Weingand, the trial court granted a preliminary injunction restraining Atlantic Savings and Loan Association (Atlantic) from foreclosing on a guest ranch pursuant to a deed of trust. (Id. at pp. 811-812.) Our Supreme Court concluded that the injunction was properly issued because the sale of the property would render the plaintiffs requests for declaratory relief moot and that pecuniary damages would likely be inadequate due to all the defendants, with the exception of Atlantic, being insolvent. (Id. at pp. 819-820.) The court noted that if the plaintiffs did not prevail in their claim against Atlantic, then the plaintiffs "only real redress" would be securing a return of the property. (Ibid.)
The instant case is distinguishable from Weingand, because Fremont Investment has not alleged that Ready Products is insolvent. Accordingly, there is nothing to support a conclusion that any injury Fremont Investment sustains would be irreparable, because any injury it is found to have sustained could be remedied by monetary damages.
C. Conclusion
We conclude that in balancing the harms, the trial court abused its discretion by finding Fremont Investment would suffer the greater harm, because there is nothing in the record to support a finding that any injury Fremont Investment suffers could not be relieved by an award of legal damages, if Fremont Investment were to prevail on the merits.
2.
PREVAILING ON THE MERITS
In its complaint, Fremont Investment essentially alleges that Allied, acting as Ready Products actual or ostensible agent, entered into a contract on behalf of Ready Products to transfer the third deed of trust to Fremont Investment. Fremont Investment complains that Ready Products has breached that contract.
An agency relationship can be either actual or ostensible. (§ 2298.) "Actual agency typically arises by express agreement." (Vant Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571.) "[T]he `formation of an agency relationship is a bilateral matter. Words or conduct by both principal and agent are necessary to create the relationship. [Citation.]" (Ibid.) Ostensible agency is created "when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him." (§ 2300.) "A principal is liable for the acts of an ostensible agent when third parties have justifiably relied on representations made by the principal. [Citation.] A principal is also liable when the principal knows the agent holds himself or herself out as clothed with certain authority and remains silent. [Citation.]" (Jacoves v. United Merchandising Corp. (1992) 9 Cal.App.4th 88, 103.)
In its complaint, Fremont Investment essentially alleges that Allied was Ready Productss actual agent because (1) Allied accepted the Ivys loan payments after Allieds beneficial interest in the deed of trust had been assigned to Ready Products; and (2) Allied submitted a beneficiarys demand to Peninsula Escrow on behalf of Ready Products. Fremont Investment did not allege that an express agency agreement existed between Allied and Ready Products. Fremont Investment also did not allege any actions on the part of Ready Products that would imply Ready Products created an agency relationship with Allied. Accordingly, we find Fremont Investment is not reasonably likely to prevail on its claim that Allied was Ready Productss actual agent.
Also in its complaint, Fremont Investment essentially alleges that Allied was Ready Productss ostensible agent because (1) the Ivys made their loan payments to Allied after Allieds beneficial interest in the deed of trust had been assigned to Ready Products; (2) Ready Products did not respond to the Ivys requests for information concerning their loan payments; (3) Ready Products did not object to Allied accepting payments from the Ivys until after escrow closed; and (4) Ready Products was listed as the beneficiary on the beneficiarys demand submitted by Allied.
Fremont Investment did not allege that Ready Products made representations which caused Fremont Investment to believe that Allied was Ready Productss agent. Fremont Investment alleges actions on the part of the Ivys and Allied; however, no actions or representations are alleged on the part of Ready Products. Further, Fremont Investment has not alleged that Ready Products was aware that Allied was holding itself out as Ready Productss agent. Fremont Investment has merely alleged that Ready Products failed to act in a timely manner. Fremont Investment makes no factual allegations regarding what Ready Products may or may not have known about Allieds actions. Fremont Investment speculates that Ready Products must have known Allied was accepting payments from the Ivys because approximately six months elapsed before Ready Products complained of missed payments, and in its election to sell pursuant to the deed of trust Ready Products only complained of two missed payments. Notably absent from this allegation is an exhibit in the complaint or other evidence in the record showing that the money from the first four months of payments was conveyed from Allied to Ready Products, so as to imply that Ready Products was aware that Allied was acting on its behalf in accepting payments from the Ivys. Fremont Investments allegations that Ready Products only claimed two defaulted payments rather than six on its notice of election to sell the Alhambra property and that Ready Products did not contact the Ivys in a timely manner, does not support a finding that Allied was Ready Productss agent.
Because Fremont Investment did not allege facts that would support a finding that Allied acted as Ready Productss actual or ostensible agent, we must conclude that it is not reasonably probable that Fremont Investment will prevail on the merits.
3.
CONCLUSION
We conclude the trial court abused its discretion by issuing the preliminary injunction because (1) Fremont Investment is not likely to suffer a greater injury from a denial of the injunction than Ready Products would suffer from its grant, because legal damages will adequately relieve any injury Fremont Investment is found to have sustained; and (2) it is not reasonably probable that Fremont Investment will prevail on the merits. Accordingly, the order issuing the preliminary injunction must be reversed.
Due to our conclusion that the order must be reversed, we decline to decide Ready Productss other contentions related to the preliminary injunction, i.e., whether there was a proper statutory basis for issuing the injunction and whether the amount of the bond was sufficient.
DISPOSITION
The order issuing the preliminary injunction is reversed. The trial court is directed to allow Fremont Investment leave to amend its complaint as to the first, second, and third causes of action, so that it may request legal damages from Ready Products.
Costs on appeal are awarded to Ready Products.
We concur:
Hollenhorst, Acting P.J.
Miller, J.