Ray Mahboob, et al. v. Farmers and Merchants Bank of Long Beach, et al.

Case Number

25CV05048

Case Type

Hearing Date / Time

Wed, 10/15/2025 - 10:00

Nature of Proceedings

Motion For Preliminary Injunction

Tentative Ruling

For Plaintiffs Ray Mahboob and Gity Mahboob, on behalf of herself and Mohammad Mahboob: John J. Thyne III, Thyne Taylor Fox Howard, LLP

                                   

For Defendants Farmers & Merchants Bank of Long Beach and Farmers & Merchants Trust Company of Long Beach: Michael Leight, Law Offices of Michael Leight

RULING

For all reasons discussed herein, the motion of plaintiffs for a preliminary injunction is denied, without prejudice.

Background

On August 14, 2025, plaintiffs Ray Mahboob, individually, and Gity Mahboob, individually and on behalf of Mohammad Mahboob (collectively, Plaintiffs) filed a complaint against defendants Farmers and Merchants Bank of Long Beach (Farmers Bank) and Farmers and Merchants Trust Company of Long Beach (Farmers Trust) (collectively, Defendants), alleging three causes of action: (1) breach of contract (against Farmers Bank only); (2) slander of title (against Defendants); and (3) wrongful foreclosure (against Defendants). As alleged in the complaint:

Plaintiffs are the owners of real property (the Property) located at 29 East Cabrillo Boulevard in Santa Barbara, California. (Compl., ¶ 1.) On March 24, 2020, Plaintiffs entered into a promissory note (the Note) with Farmers Bank in the original principal amount of $6.5 million, under which Plaintiffs were obligated to repay the principal amount plus interest. (Compl., ¶ 12.) The Note included a provision that Plaintiffs were not to encumber the Property, which was pledged as security for repayment, without the prior written approval of Farmers Bank. (Ibid.) In the event of a breach of this provision, the Note provided for default interest, attorney fees, and costs to be charged to Plaintiffs. (Ibid.)

On March 24, 2020, Farmers Bank recorded in the official records of Santa Barbara County, a deed of trust securing repayment of the Note in which Farmers Bank named Farmers Trust as the Trustee. (Compl., ¶ 13.) That deed of trust describes a breach of the Note as an event of default and provides to Defendants the power to foreclose. (Ibid.)

Plaintiffs lease the Property to commercial tenants who, together with Plaintiffs, have expended funds in excess of $2 million to improve the Property. (Compl., ¶¶ 14-15.) Due to the non-payment of rents at another property owned by Plaintiffs, on December 10, 2021, and March 10, 2022, Plaintiffs were required to procure financing from SMS Financial Strategic Investments III, LLC (SMS), which was secured by another property owned by Plaintiffs. (Compl., ¶ 17.) SMS also required that Plaintiffs cross-collateralize their promissory notes to SMS against the Property. (Compl., ¶ 18.)

On December 10, 2021, SMS recorded against the Property, two deeds of trust, one for the principal amount of $3.3 million and the other for the principal amount of $1.8 million. (Compl., ¶ 18.) On March 10, 2022, SMS recorded another deed of trust against the Property in regard to a promissory note in the amount of $200,000. (Ibid.) These deeds of trust did not impair Farmers Bank’s security in the Property because Farmers Bank holds a senior deed of trust, and the Property had appreciated in value due to improvements to beyond the combined value of the Note and the additional security interests of SMS. (Compl., ¶ 19.)

For at least three years, Farmers Bank did not declare a default of the Note, did not declare any interest due at a default rate, and did not engage Farmers Trust to exercise any rights under any deed of trust. (Compl., ¶ 20.) Plaintiffs have paid all payments due under the Note. (Compl., ¶ 21.)

In 2025, Famers Bank contacted Plaintiffs and complained that Plaintiffs had, years earlier, caused junior liens to be recorded behind Farmers Bank’s deed of trust. (Compl., ¶ 23.) Plaintiffs believe that, because market interest rates had increased by 2025, Farmers Bank became interested in declaring a non-monetary breach of the Note and deed of trust in order to profit off of Plaintiffs. (Compl., ¶ 22.) Plaintiffs advised Farmers Bank that Plaintiffs would refinance the SMS loan in order to remove the junior liens from the Property, which plaintiffs did refinance. (Compl., ¶¶ 24-25.)

On June 18, 2025, Farmers Bank caused Farmers Trust to record a Notice of Default and Election to Sell Under Deed of Trust (the NOD). (Compl., ¶ 26.) This was unnecessary because Farmers Bank knew its security interest in the Property was not marginalized, had not acted upon this alleged breach for years, and had improper purposes. (Ibid.)

On July 3, 2025, Plaintiffs caused to be recorded three reconveyances of the SMS deeds of trust. (Compl., ¶ 27.) Notwithstanding Plaintiff’s curing of the alleged breach, which Farmers Bank ignored until lending conditions became more favorable, Farmers Bank has refused to withdraw the NOD unless Plaintiffs agree to pay default interest, attorney fees, and reinstatement and foreclosure fees, among other things. (Compl., ¶ 28.) This constitutes an effort to extract unnecessary expenses from Plaintiffs for the purpose of enriching Farmers Bank, who has informed Plaintiffs that it will not cease its efforts to foreclose against the Property. (Compl., ¶¶ 28-29.)

On August 20, 2025, Plaintiffs filed a motion for a preliminary injunction requiring Defendants to stay foreclosure efforts against the Property pending this litigation, which is made on the grounds that Defendants are actively pursuing foreclosure of the Property in bad faith and based on a de minimis breach which occurred years prior and was promptly cured.

Defendants oppose the motion.

Analysis

“[Code of Civil Procedure] [s]ections 525 through 533 provide the primary statutory authority for injunctions pending trial.” (Stevenson v. City of Sacramento (2020) 55 Cal.App.5th 545, 551.) “The purpose of a preliminary injunction is to preserve the status quo pending a determination on the merits of the claim.” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1418.)

The present motion is ostensibly made under subdivision (a)(2) of Code of Civil Procedure section 526, which provides that the Court may grant an injunction “[w]hen it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.” (Code Civ. Proc., § 526 subd. (a)(2); see Motion at p. 6.)

As a threshold matter, it is unclear to the Court which elements of the causes of action alleged in the complaint give rise to the request for an injunction asserted in the present motion.

For example, the complaint includes a first cause of action for breach of the Note, which Plaintiffs allege arises from a purported breach of the covenant of good faith and fair dealing by Farmers Bank in declaring a default. (Compl., ¶¶ 31-35.) “Without a contractual underpinning, there is no independent claim for breach of the implied covenant.” (Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1994) 21 Cal.App.4th 1586, 1599.) In addition, “[a]n injunction cannot be granted to prevent breach of a contract which is not specifically enforceable.” (Steinmeyer v. Warner Cons. Corp. (1974) 42 Cal.App.3d 515, 519.) Plaintiffs fail to explain, with reasoned argument, why the first cause of action shows that Plaintiffs are entitled to an injunction. (Code Civ. Proc., § 526, subd. (a)(1)-(2).)

The complaint also asserts a third cause of action for wrongful foreclosure. Though Plaintiffs allege that Defendants recorded the NOD, there are no allegations sufficient to show what, if any, efforts have been undertaken by Defendants to institute foreclosure proceedings. Instead, the complaint includes conclusory allegations regarding nonspecific efforts to foreclose based on the recording of the NOD and Defendants declaration of a breach of the Note and deed of trust described above. (See Compl., ¶¶ 43 & 45.)

“An injunction cannot issue in a vacuum based on the proponents’ fears about something that may happen in the future. It 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.) For all reasons discussed above, the motion fails to explain, with sufficient reasoned argument, why the complaint shows that Plaintiffs are entitled to an injunction as to the third cause of action alleged in the complaint.

Even if the Court were to assume without deciding that the complaint shows that Plaintiffs are entitled to an injunction, there exist, for all reasons discussed below, deficiencies which preclude the Court from determining whether an injunction may be granted under the circumstances present here.

To determine whether a preliminary injunction should be issued, the Court evaluates “ ‘two interrelated factors …. The first is the likelihood that the plaintiff will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm that the defendant is likely to suffer if the preliminary injunction were issued. [Citations.]’ [Citations.] ‘ “[B]y balancing the respective equities of the parties, [the trial Court] concludes that, pending a trial on the merits, the defendant should or that he should not be restrained from exercising the right claimed by him.” ’ [Citation.]” (Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286, fn. omitted.)

To support the points advanced in the motion, Plaintiffs submit a declaration of their counsel, John J. Thyne III (Thyne). The information provided in the Thyne declaration, which effectively repeats the allegations of the complaint, is identical, or nearly identical, to the information appearing in the complaint. (See, e.g., Thyne Decl., ¶¶ 2 & 5-12; cf. Compl., ¶¶ 1 & 12-19 [same allegations].) For these reasons, it is the Court’s understanding that Plaintiffs intend to rely on the allegations of the complaint to support their request for an injunction.

Though “[a] plaintiff may rely on a verified complaint to support an application for preliminary injunction...” (Coppinger v. Superior Court (1982) 134 Cal.App.3d 883, 887), the complaint filed by Plaintiffs in this action is not verified. Furthermore, “[w]here the compaint [sic] is the sole basis of the order, and the complaint is treated as an affidavit, its sufficiency must be tested by the same rules applicable to oral testimony.” (San Francisco, City and County Of, v. Market Street Ry.Co. (1950) 95 Cal.App.2d 648, 655.)

Paragraphs 2, 3, and 5 through 22 of the Thyne declaration include the same facts asserted by Plaintiffs in the complaint in regard to the Note, Plaintiffs’ obligations under the Note, the recording of a deed of trust by Farmers Bank on March 24, 2020, the contents of that deed of trust, the leasing of the Property by Plaintiffs, the expenditure of funds by Plaintiffs and their commercial tenants to improve the Property, Plaintiffs’ procuring of financing from SMS and SMS’ requirement that Plaintiffs cross-collateralize that financing, the recording of deeds of trust by SMS, the content of communications between Farmers Bank and Plaintiffs, Plaintiffs’ refinancing of the SMS loans and removal of encumbrances from the Property, and Farmers Bank’s purported assertion that it will not cease efforts to foreclose the Property, among other things. The Thyne declaration fails to provide any basis on which Thyne has personal knowledge of these matters, which, as noted above, are also alleged in the complaint.

For example, though Thyne states that “[i]f called upon as a witness, [Thyne] could and would competently testify” to the facts appearing in the Thyne declaration, this statement is insufficient, by itself, to show that Thyne has personal knowledge of these facts, and is conclusory. (Evid. Code, § 702; see also Osmond v. EWAP, Inc. (1984) 153 Cal.App.3d 842, 851.) For these reasons, the Court may disregard the matters and information appearing in the Thyne declaration. (Morrow v. Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1445 (Morrow) [Court’s evidentiary rulings striking declaration which lacked showing of personal knowledge was not an abuse of discretion]; see also Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1238 [general discussion].)

The Thyne declaration also fails to show Thyne’s personal knowledge of, and includes conclusory assertions regarding, the deeds of trust purportedly recorded by Defendants or SMS, whether these deeds of trust constitute senior or junior encumbrances, and whether any breach of the Note or deed of trust by Plaintiffs was trivial, “de minimus”, or cured, among other things. (Thyne Decl., ¶¶ 12, 19 & 21.) These general assertions, without more, are also “insufficient to sustain an application for injunction.” (Bank of America National Trust & Savings Ass’n v. Williams (1948) 89 Cal.App.2d 21, 23.) Moreover, as to legal arguments appearing in the Thyne declaration, “[t]he manner in which the law should apply to particular facts is a legal question....” (Morrow, supra, 149 Cal.App.4th at p. 1445.) For these additional reasons, the Thyne declaration is conclusory and insufficient to show sufficient grounds for issuing a preliminary injunction.

The examples provided herein are intended to be illustrative but not exhaustive of the deficiencies appearing in the motion. In support of their opposition to the motion, Defendants submit evidentiary objections which include an objection to the entire Thyne declaration, and objections to statements appearing in paragraphs 2, 3, and 5 through 22 of that declaration. These objections are made, in part, on the grounds that Plaintiffs have failed to show that Thyne has personal knowledge of the facts and matters stated in the Thyne declaration. (Def. Evid. Obj. at p. 2 [general objection] & nos. 2, 3 & 5-22.)

Defendants’ objections to the Thyne declaration on the grounds that Thyne lacks personal knowledge of the matters stated in that declaration, are, for all reasons discussed above, meritorious and will be sustained. As the Court will sustain the objections of Defendants to the Thyne declaration on the grounds stated above, the motion is without evidentiary support, fails to show a likelihood that Plaintiffs will prevail on the merits, and fails to show the interim harm that Plaintiffs are likely to sustain. Furthermore, the complaint is, for all reasons discussed above, insufficient by itself to support Plaintiffs’ request for injunction.

For all reasons discussed above, the Court will deny the motion, without prejudice to any future filing by Plaintiffs of a renewed motion for a preliminary injunction. Any such renewed motion that may be filed by Plaintiffs must demonstrate the elements of each cause of action intended to support Plaintiffs’ request for a preliminary injunction, must include sufficient evidentiary support, and be otherwise appropriate.