Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. 6290102
Marchiano, P.J.
Defendants Brian M. Carter and Laure Kelley appeal an order granting a preliminary injunction in favor of plaintiffs, Steven P. Scagliotti and Elaine L. Scagliotti (the Scagliottis), in the latter’s action to quiet title to their residential property in Pleasanton (the subject property). As discussed below, we find no abuse of discretion and affirm the order.
Background
On December 17, 1991, the county recorder’s office recorded a trust deed (the 1991 Trust Deed) against the subject property at the request of the trustee, Chicago Title Insurance Company (Trustee Company). The trust deed named Harvey Gabel (Gabel) and Kathleen Gabel as trustors and Kelley as the beneficiary. The stated purpose of the deed was to secure payment of a principal sum of $50,000, with interest, and to that end it granted the trustee a power of sale.
The facts are drawn from declarations and documents submitted to the trial court in connection with the Scagliottis’ request for a preliminary injunction.
According to two declarations executed by Kelley, she had loaned the Gabels that sum at their request, and the trust deed secured payment of that loan pursuant to a promissory note executed on December 10, 1991. Less than two months later, on February 4, 1992, Kelley went to the office of the Trustee Company and there executed a beneficiary demand and request for reconveyance. The documents were needed for the Gabels to refinance the original purchase-money loan on the subject property. On that date Kelley surrendered her original promissory note and trust deed to the Trustee Company, who never returned them.
At some time before the completion of the refinance escrow—Kelley’s declarations are inconsistent on this point—Gabel represented to her that the subject property was in danger of being sold pursuant to the senior trust deed securing his original purchase-money loan, and the proceeds from such a sale would not be sufficient to pay off her promissory note. Thus, he needed her cooperation in reconveying the 1991 trust deed because the new lender would not agree to a refinance loan with her senior trust deed on record. Gabel himself averred that he made these representations “before and during the refinancing process.”
In May 1992, the Gabels signed a statement to the effect that Kelley’s reconveyance of the 1991 trust deed was for “refinance purposes only,” and “will be recorded back on the property upon the completion of the refinance.”
The trust deed securing the Gabels’ refinance loan (Refinance Trust Deed) was recorded at 8:30 a.m. on June 10, 1992. Some two hours later, a new trust deed (the 1992 Trust Deed) was recorded that conveyed title to the subject property to the Trustee Company, named Kelley as beneficiary, and secured payment of a principal sum of $53,576.96, with interest.
Several months later, in October 1992, Kelley received a notice that Gabel had filed a petition in bankruptcy court, seeking a Chapter 7 liquidation and discharge of indebtedness. Kelley averred that the resulting discharge of indebtedness occurred in February 1993 and “operated to block” her from collecting from Gabel, in personam, on her loan of $50,000 plus accrued interest. Kelley also averred that the Gabels’ refinance lender sold the subject property pursuant to the Refinance Trust Deed’s power of sale in late March 1994. This effectively extinguished the junior 1992 Trust Deed.
On January 1, 1994, Gabel executed a third promissory note in Kelley’s favor. This note, which was unsecured, essentially revived his promise to repay Kelley’s discharged loan in the amount of $54,030.24, with interest. The note required payments of $1,000 “per month or more.” Some 18 months later, on August 14, 1995, he executed another unsecured note (1995 Promissory Note), which promised to pay Kelley the sum of $54,900, with interest, with interest only monthly payments of $300 for five years, to be followed by a balloon payment of the principal sum and any unpaid interest.
In February 1996, Kelley initiated an action in the Alameda County Superior Court (the superior court) to recover from Gabel under the 1995 Promissory Note. In May 1996 she obtained a default judgment in that action in the amount of $ 58,779.84. Kelley averred that she thereafter made an unsuccessful attempt to enforce the default judgment by writ of execution, but afterward “did nothing else to enforce the judgment until November 2005,” over nine years after entry of the judgment. (Italics added.) On November 17, 2005, she assigned the default judgment to Carter, the sole proprietor of Discovery Judgment Recovery.
Meanwhile, in May 2001, the Scagliottis purchased the subject property from individuals who either had purchased the subject property at the 1993 trustee sale or were the successors in interest of the purchaser. The Scagliottis averred they had no “actual knowledge” of the 1991 Trust Deed, from the time of their purchase until July 2006, over five years later.
Soon after Kelley’s assignment to Carter in November 2005, Carter recorded an abstract of the default judgment against a new property owned by the Gabels, and levied an execution on their bank account, and began garnishing Gabel’s wages. As a result, Gabel filed a motion in the bankruptcy court on December 16, 2005, seeking to reopen his bankruptcy proceeding in order to “prosecute [Carter] for violating the discharge injunction.” In an order filed February 27, 2006, the bankruptcy court filed an order declaring the default judgment to be “null and void,” enjoining Kelley and Carter from further collection efforts, and directing them to return to Gabel the funds Carter had obtained. Two months later, the Gabels, Kelley, and Carter entered into a settlement and release agreement, which Kelley and Carter signed on April 20, 2006. Under this agreement Kelley and Carter agreed not to take any further action against the Gabels, but reserved the right to “seek relief from any third parties.”
On this same date Kelley recorded against the subject property a document appointing Discovery Judgment Recovery (Carter) as her attorney-in-fact.
Despite the bankruptcy court’s order, and only days after signing the settlement agreement, Carter filed an application in the superior court to renew the default judgment, and the clerk of that court entered the renewal. Approximately one month after entry of the renewal, the parties filed a stipulation with the superior court, and pursuant to that stipulation the court vacated both the 1996 default judgment and the clerk’s recent renewal of that default judgment.
Meanwhile, the Gabels filed a motion in the bankruptcy court seeking a contempt order on Carter’s unsuccessful attempt to renew the default judgment in further violation of the discharge injunction. In an order signed June 29, 2006, the bankruptcy court denied the motion, stating also that “nothing in this order shall operate to enjoin or restrain [Carter] from exercising [his] right to enforce any debt in rem against Debtor Harvey Gabel or his spouse . . . to the extent not enjoined by Bankruptcy Code § 524(a).” (See 11 U.S.C. § 524(a)(3).)
Some two weeks later on July 11, 2006, Carter recorded—against the subject property—a notice of default and election to sell the property under the power of sale in the 1991 Trust Deed. As noted above, the Scagliottis averred that it was only when they received this notice that they acquired actual knowledge of the 1991 Trust Deed executed by the Gabels.
On September 21, 2006, the Scagliottis initiated this action. Their verified complaint against Kelley and Carter alleged causes of action for quiet title, declaratory relief, and injunctive relief. Three months later, the Scagliottis filed an application for a temporary restraining order (TRO) and an order to show cause regarding a preliminary injunction to restrain exercise of the power of sale under the 1991 Trust Deed during the pendency of their action. That same day, the trial court issued a TRO and set the matter for a hearing on whether to grant a preliminary injunction.
Additional named defendants, who are not part of this appeal, are the Trustee Company and Placer Foreclosure, Inc., the latter of which Carter had substituted as the new trustee of the 1991 Trust Deed.
After a hearing held January 23, 2007, the trial court granted a preliminary injunction in favor of the Scagliottis. This appeal from that order followed. (See Code Civ. Proc., § 904.1, subd. (a)(6).)
Discussion
An order granting or denying a preliminary injunction is one that rests in the sound discretion of the trial court. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69 (IT Corp.).) In exercising that discretion, the trial court considers two interrelated questions: (1) whether the plaintiffs are likely to suffer harm—if the injunction is denied—greater than the harm defendants are likely to suffer if it is granted; and (2) whether there is a reasonable probability that the plaintiffs will prevail on the merits. (Robbins v. Superior Court (1985) 38 Cal.3d 199, 206 (Robbins).) Our review is a deferential one. That is, it is limited to consideration whether the trial court abused its discretion in that its decision exceeded the bounds of reason, or contravened uncontradicted evidence. (IT Corp., supra, 35 Cal.3d at p. 69.)
If the court below had denied the preliminary injunction, the Scagliottis would have been forced, prior to a determination of the merits of their action—either to suffer the loss of their residence through the very sale they are attempting to forestall with their action, or to avoid that sale by paying off a considerable debt which they neither incurred nor assumed. That debt was incurred by the Gabels, against whom Kelley and Carter may no longer proceed. The Gabels’ personal liability has been discharged in bankruptcy. The bankruptcy court, as we have noted above, stated that Kelley and Carter were not necessarily barred from seeking to enforce the debt by an in rem action “against . . . Gabel or his spouse.” (Italics added.) But equitable title to the subject property has long since passed to successors in interest, ultimately the Scagliottis. By contrast, even if we assume the truth of Kelley’s declarations, she effectively declared the Gabels to be in default as early as April 1992—when she sent a letter demanding full payment—and was on notice as early as June 1992 that she was not going to be paid from the proceeds of their refinance loan. Yet Kelley and Carter waited until July 2006—14 years later—before attempting to seek recourse against the Gabels’ default through the power of sale included in the 1991 Trust Deed. If Kelley and Carter remain enjoined from exercising that power during the pendency of this action, and if Kelley and Carter prevail on the merits, they will have suffered the loss of use of the proceeds due to them only for such additional period of time as it may take for the judgment in this action to become final. Under these circumstances we have no difficulty in concluding there was no abuse of discretion in the trial court’s implicit determination that the Scagliottis were likely to suffer the greater harm if it did not grant a preliminary injunction. “If the denial of an injunction would result in great harm to the plaintiff, and the defendants would suffer little harm if it were granted, then it is an abuse of discretion to fail to grant the preliminary injunction.” (Robbins, supra, 38 Cal.3d at p. 205, italics added.)
The arguments presented by Kelley and Carter boil down to the position that the trial court abused its discretion because there was “absolutely no reasonable probability that [the Scagliotti’s] will prevail” in this action, as there is “no legally cognizable theory on which the [1991 Trust Deed] can be challenged.” We disagree.
Kelley avers she never intended for the 1991 Trust Deed to be replaced by the 1992 Trust Deed, nor subordinated to the Refinance Trust Deed. Gabel’s declaration, however, indicates that Kelley may well have decided to cooperate with Gabel’s refinance efforts because she feared she would have no security if there was a foreclosure on the subject property under the trust deed securing the Gabels’ original purchase-money loan—a trust deed senior to the 1991 Trust Deed. We deem this evidence, when combined with that summarized above—particularly Kelley’s execution of a request for reconveyance in February 1992—to be sufficient to raise a disputed factual issue as to whether Kelley intended a novation resulting in the extinction of the 1991 Trust Deed. The arguments of Kelley and Carter to the contrary, set out in their opening brief, are unpersuasive in the context of this appeal from a grant of preliminary injunctive relief. In many instances their propositions include no citation to supporting authority whatever. Whenever they have cited to authority, we find that it fails to provide direct support for the proposition to which it is linked.
We note further that, by July 2006, not only had the original obligation secured by the 1991 Trust Deed been discharged in bankruptcy, but more than fours years had passed since Kelley first demanded full payment in April 1992. (See Code Civ. Proc., § 337, subd. (1).) A lien is extinguished by the lapse of time under which an action may be brought on the principal obligation. (Civ. Code, § 2911, subd. (1); see also Legis. Com. com., 1982 Addition, 7 West’s Ann. Code Civ. Proc. (2007) foll. § 882.020, p. 437.)
We conclude the trial court did not “exceed the bounds of reasons” by its implicit determination that there was a reasonable probability that the Scagliottis would prevail on the merits.
Disposition
The order granting preliminary injunctive relief is affirmed.
We concur: Swager, J., Margulies, J.