Davis v. Rama Capital Partners, LLC

Background

Stephanie Davis filed a foreclosure-related lawsuit against multiple defendants. She moved for a temporary restraining order, or TRO, seeking to stop the sale of certain real property in San Leandro, California. Davis was proceeding without a lawyer.

Legal standard

For temporary injunctive relief, a plaintiff generally must show a likely chance of success on the merits, likely irreparable harm without immediate relief, that the balance of hardships favors the plaintiff, and that an injunction serves the public interest. The court applied a sliding-scale approach: when the hardships strongly favor the plaintiff, the plaintiff may obtain relief by showing serious questions about the merits rather than proving a likely victory.

Court’s analysis

The court found an adequate showing of likely irreparable harm. It reasoned that, if the property were sold at a public auction, it might sell for substantially less than its market value and possibly for less than the amount owed to the lender. Because the promissory note contained a full-recourse provision, Davis could remain liable for the difference between the amount owed and the property’s sale value.

The court also found that the balance of hardships sharply favored Davis because the order would only briefly delay the sale. The court stated that many of Davis’s claims appeared weak, including claims under the Homeowner Bill of Rights and claims based on the assignment to the Rama Fund. But, based on additional information Davis provided at the hearing, the court found serious questions about her fraud-related claims. Davis alleged that she was initially promised an 8.75% interest rate, was later presented with a loan carrying a 10.875% rate, and was told that the loan would be refinanced in-house at the lower rate if she signed it that day. The court concluded that these allegations involved possible misrepresentation and reliance.

Ruling

The court granted Davis’s motion for a TRO. It enjoined the defendants, their officers, agents, employees, attorneys, and anyone acting with them from selling or otherwise moving forward with the foreclosure of the property. The TRO remained in place through the next hearing, scheduled for November 6, 2023, at 10:00 a.m. The court ordered the parties to file additional documents, including the document Davis referenced concerning the 8.75% interest rate, by October 24, 2023. The order disposed of Docket No. 11. Judge Edward M. Chen signed the order.