Court Opinion

ID: 6333067
Source: CourtListenerOpinion
Date Created: 2022-04-19 22:02:23.571684+00
Date Added: 2024-06-11T09:23:25.398570
License: Public Domain

Filed 4/19/22 Johansen v. Bayview Loan Servicing LLC CA3
                                                NOT TO BE PUBLISHED
           California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.

                    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                            THIRD APPELLATE DISTRICT
                                                          (Sacramento)
                                                                 ----

    CARLA L. JOHANSEN,                                                                           C089085

                    Plaintiff and Appellant,                                         (Super. Ct. No. 34-2018-
                                                                                     00247038-CU-OR-GDS)
           v.

    BAYVIEW LOAN SERVICING LLC,

                    Defendant and Respondent.

         Under Code of Civil Procedure section 529,1 a court generally must require a party
who has obtained a preliminary injunction to post an undertaking in an amount
determined by the court. Courts set this amount based on their estimate of the harmful
effect the injunction is likely to have on the enjoined party, and in the event they later
conclude the injunction was wrongly issued, they may require some or all of this amount

1   Undesignated statutory references are to the Code of Civil Procedure.

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to be distributed to the enjoined party to compensate it for the harm it suffered. These
requirements provide a measure of protection to parties who are mistakenly enjoined.
       In this case, Carla L. Johansen sought to enjoin her loan servicer, Bayview Loan
Servicing LLC (Bayview), from foreclosing on her home. The trial court afterward
agreed to grant a preliminary injunction. But, relying on section 529, it conditioned the
grant of the injunction on her posting an undertaking in an amount that would, among
other things, cover the attorney fees that Bayview would likely incur as a result of the
injunction. On appeal, Johansen contends the trial court wrongly included these attorney
fees when it determined the amount of the undertaking. We affirm the court’s order.
                                      BACKGROUND
       In 2005, Johansen took out a loan for $260,000 and signed a deed of trust on her
home to secure the loan. Sometime later, after Johansen fell behind on her loan
payments, she and her loan servicer agreed to a loan modification. Sometime later still,
after she again fell behind on her loan payments, she sought a second loan modification
from her loan servicer. But she never obtained the loan modification that she believed
was appropriate.
       In 2018, Johansen sued Bayview, which was her loan servicer at the time, and
several other entities. Among other things, she alleged that Bayview threatened to
foreclose on her home unless she signed a loan modification agreement that artificially
inflated the amount of her loan and that Bayview, in violation of Civil Code section
2923.7, “failed to assign to [her] a designated [single point of contact] to assist her
through the loan modification process.” (See Civ. Code, § 2923.7, subd. (a) [“When a
borrower requests a foreclosure prevention alternative, the mortgage servicer shall
promptly establish a single point of contact and provide to the borrower one or more
direct means of communication with the single point of contact.”].)
       Two weeks after she filed her complaint, Johansen filed an application for a
temporary restraining order and an order to show cause why a preliminary injunction

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should not be issued. Johansen sought in her filing to restrain and enjoin Bayview and
the other defendants from foreclosing on her home.
       The trial court later agreed that a preliminary injunction was appropriate, finding
that Bayview likely violated Civil Code section 2923.7 and “that the balance of hardships
weighs heavily in favor of injunctive relief.” But, over Johansen’s objection, the court
conditioned the grant of the injunction on her posting an undertaking under section 529.
The court initially set the undertaking in the amount of $39,000 based on Bayview’s
representation that it would incur around $30,000 in attorney fees and would lose around
$9,000 in mortgage payments if the injunction were granted. But following oral
argument, the court reduced the undertaking amount to $20,000.
       Johansen timely appealed.
                                       DISCUSSION
       Sections 525 through 533 provide the primary statutory authority for injunctions
pending trial. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The
Rutter Group 2015) ¶ 9:501, p. 9(II)-2.) Under section 529, a court, on granting an
injunction, “must require an undertaking on the part of the applicant to the effect that the
applicant will pay to the party enjoined any damages, not exceeding an amount to be
specified, the party may sustain by reason of the injunction, if the court finally decides
that the applicant was not entitled to the injunction.” (§ 529, subd. (a).) “This rule serves
to afford compensation to parties who are ultimately found to have been wrongly
enjoined.” (Stevenson v. City of Sacramento (2020) 55 Cal.App.5th 545, 551
(Stevenson).)
       Considering the statute’s use of the word “must,” compliance with section 529’s
requirements is typically a necessary condition to obtain a preliminary injunction.
(Stevenson, supra, 55 Cal.App.5th at p. 551; see also Biasca v. Superior Court of
California (1924) 194 Cal. 366, 367 [an undertaking under section 529 is “definitely”
required in connection with a preliminary injunction]; Paiva v. Nichols (2008)

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168 Cal.App.4th 1007, 1024 [absent an exception, “the filing of an undertaking in
connection with the issuance of a preliminary injunction is required by statute”].) Several
statutes, however, expressly exempt certain parties from section 529’s undertaking
requirement (see, e.g., § 529, subd. (b)(3) [exempting public entities]), and another
statute grants courts discretion to exempt indigent parties from this requirement
(§ 995.240).
       In this case, Johansen challenges the amount of the injunction bond.2 As other
courts have explained, “[t]he amount of the bond is fixed by the judge, exercising sound
discretion, based on the probable damage that the enjoined party may sustain because of
the injunction.” (Greenly v. Cooper (1978) 77 Cal.App.3d 382, 390.) Attempting to
fulfill this requirement, the court here concluded that the bond amount should cover,
among other things, the attorney fees that Bayview would likely incur as a result of the
injunction. But in Johansen’s view, the court should have excluded these fees from the
bond amount. She bases her argument largely on section 9 of the deed of trust securing
her loan. In relevant part, that section states: “If (a) Borrower fails to perform the
covenants and agreements contained in this Security Instrument, [or] (b) there is a legal
proceeding that might significantly affect Lender’s interest in the Property and/or rights
under this Security Instrument . . ., then Lender may do and pay for whatever is
reasonable or appropriate to protect Lender’s interest in the Property and rights under this
Security Instrument. . . . Lender’s actions can include, but are not limited to[] . . . paying
reasonable attorneys’ fees to protect its interest in the Property and/or rights under this

2 We use the words “undertaking” and “bond” interchangeably. “Under the Bond and
Undertaking Law (CCP §§ 995.010-996.560), there is no significant legal distinction
between a bond and an undertaking. . . . Technically, a distinction between bonds and
undertakings still exists, although it has little legal significance: A bond is executed by
both principal and sureties (CCP § 995.140(a)), while an undertaking is executed by the
sureties alone (CCP §§ 995.140(b), 995.190).” (Cal. Real Prop. Remedies and Damages
(Cont. Ed. Bar 2020) § 13.100.)

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Security Instrument. . . . [¶] Any amounts disbursed by Lender under this Section 9 shall
become additional debt of Borrower secured by this Security Instrument.”
       According to Johansen, this provision shows that Bayview’s sole recourse, if it
turns out that it was wrongly enjoined, is to add the attorney fees it incurred to remove
the injunction to the loan debt, not to attempt to recover these fees on the injunction bond.
She reasons that this conclusion follows from Chacker v. JPMorgan Chase Bank, N.A.
(2018) 27 Cal.App.5th 351, 358 (Chacker). The court there considered an identical
provision in a deed of trust, though under different circumstances. It considered, in
particular, whether this provision served as a fee-shifting clause within the meaning of
Civil Code section 1717—a statute that allows a court to award attorney fees to the
prevailing party in an action on a contract “where the contract specifically provides that
attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded.”
The court found it did not. The deed of trust, the court concluded, “authorizes attorney
fees to be added to the loan amount; [it] does not provide for a separate award of attorney
fees” and so does not trigger Civil Code section 1717. (Chacker, supra, 27 Cal.App.5th
at p. 357; see also Hart v. Clear Recon Corp. (2018) 27 Cal.App.5th 322, 327 [finding
the same].)
       Attempting to mirror this reasoning, Johansen argues that the deed of trust in this
case authorizes attorney fees to be added to the loan amount; it does not provide “for
payment through recovery on a Bond.” In raising this argument, Johansen appears to
suppose that section 529 functions similarly to Civil Code section 1717 and applies only
when the relevant agreement triggers the statute. To the extent that Johansen holds this
belief, however, she is wrong. Section 529, unlike Civil Code section 1717, operates
even when the parties’ agreement is silent and even when the parties have no agreement
at all. So even if it is true that the deed of trust here did not itself require Johansen to post
a bond, as Johansen argues, it still remains true that section 529 did require Johansen to
post a bond. (§ 529, subd. (a) [a trial court, on granting an injunction, “must require an

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undertaking”].) Nothing in the Chacker decision suggests any differently. To the extent,
then, that some authority favors a limitation on the amount of the bond in this case, that
authority is not Chacker.
       Johansen next asserts that section 726, often called the “one form of action” rule,
also supports her position. “Under section 726, ‘there is only “one form of action” for the
recovery of any debt or the enforcement of any right secured by a mortgage or deed of
trust’; ‘[t]hat action is foreclosure, which may be either judicial or nonjudicial.’
[Citation.]” (Black Sky Capital, LLC v. Cobb (2019) 7 Cal.5th 156, 160.) According to
Johansen, should the preliminary injunction in this case be lifted, Bayview will recover
the attorney fees that it added to her debt “through the sale proceeds” following a
foreclosure sale, and it will then seek to recover these fees again “through a second action
on the Injunction Bond.” She then asserts: “Allowing a mortgage servicer to get paid
attorney fees both through nonjudicial foreclosure AND an action on the Injunction Bond
would be two actions to collect fees and therefore would violate” the “one form of
action” rule.
       We agree that, had Bayview already recovered its attorney fees through a
foreclosure sale, it could not then recover these same fees again through an action on the
injunction bond. If nothing else, that result would violate the rule against double
recovery. (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1158 [“Double or duplicative
recovery for the same items of damage amounts to overcompensation and is therefore
prohibited.”]; Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 625-626 [“Defendant cannot
use the injunction bond to obtain a double recovery of attorney fees already awarded and
paid.”].) But those are not the facts of our case. Because Johansen’s argument is
premised on anticipated future events that may or may not occur—namely, Bayview’s
adding its attorney fees to her debt, recovering these fees through a foreclosure sale, and
then seeking to recover these fees again through an action on the injunction bond—we
find her argument unripe for review at this time.

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       Johansen also suggests a third argument for reversal in her introduction, which she
titled “Statement of the Nature of the Action.” She suggests there that defendants who
anticipate incurring attorney fees as a result of an injunction cannot seek to safeguard
their ability to recover these fees through an injunction bond if they can potentially
recover these fees through some alternative means. But we find nothing in the text of
section 529 that imposes this limitation. Section 529 states that a court “must require an
undertaking” covering “any damages, not exceeding an amount to be specified, the
[enjoined] party may sustain by reason of the injunction”—not that a court “must require
an undertaking,” except when the enjoined party might be able to recover its damages
through some other means. In any event, because Johansen offers this argument only in
her introduction, and not “under a separate heading or subheading summarizing the
point,” we find this argument forfeited. (Cox v. Griffin (2019) 34 Cal.App.5th 440, 453-
454 [declining to consider an argument that was raised only in the appellant’s
introduction].)
       Finally, in her reply brief, Johansen argues that the trial court should have waived
the requirement of an injunction bond because she is indigent. Courts, it is true, can
exempt indigent parties from section 529’s bond requirement. (§ 995.240.) But because
Johansen raises this argument for the first time in her reply brief, without good cause, we
find the argument forfeited. (Neighbours v. Buzz Oates Enterprises (1990)
217 Cal.App.3d 325, 335, fn. 8.)

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                                         DISPOSITION
       The order granting a preliminary injunction and setting the amount of the bond is
affirmed. Bayview is entitled to recover its costs on appeal. (Cal. Rules of Court, rule
8.278(a).)

                                                     \s\                     ,
                                                 BLEASE, Acting P. J.

       We concur:

           \s\              ,
       HULL, J.

           \s\              ,
       ROBIE, J.

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