Jose A. Valdovinos vs. DD Investments, LLC et al

“The decision to grant a preliminary injunction rests in the sound discretion of the trial court .... [B]efore the trial court can exercise its discretion the applicant must make a prima facie showing of entitlement to injunctive relief. The applicant must demonstrate a real threat of immediate and irreparable injury.” Triple A Machine Shop, Inc. v. State of Cal. (1989) 213 Cal.App.3d 131, 138. “[A]n injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff,” and the party seeking injunctive relief bears the burden to prove its absence. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist. (1992) 8 Cal.App.4th 1554, 1564-1565.

Likelihood of Plaintiff Prevailing on the Merits

A preliminary injunction may not issue unless it is “reasonably probable that the moving party will prevail on the merits.” San Francisco Newspaper Printing Co., Inc. v. Superior Court (1985) 170 Cal.App.3d 438, 442; see Costa Mesa City Employees’ Association v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 309 (no injunction may issue unless there is at least “some possibility” of success).

At bar, Plaintiff’s complaint is verified. Additionally, Plaintiff filed a March 24, 2026, declaration in support of his application, including certain exhibits. Defendants, in opposition, filed declarations of Kerri Labosky and Thomas F. Donnell, as well as multiple exhibits.

Plaintiff argues he has demonstrated a probability of success on his cause of action for wrongful foreclosure. Per Plaintiff’s initial motion, Defendants’ foreclosure of his property is wrongful because the foreclosure proceeding is based upon a materially overstated debt. Specifically, Plaintiff contends: (1) the payoff demand issued by Placer Foreclosure incorporates an alleged $250,000 principal balance derived from a forged 2024 promissory note which Plaintiff alleges he never executed and for which no funds were advanced to him and (2) the payoff demand incorporates a balance on the 2019 Promissory Note which does not take into consideration a cashier’s check Plaintiff alleges he tendered to Defendants. Motion, 5:21-6:18.

The basic elements of a tort cause of action for wrongful foreclosure are the same as those to set aside a foreclosure sale: “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale...was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.”

Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1184-1185. If the trustor or mortgagor can establish that there was no breach of condition or failure or performance on the mortgagor’s or trustor’s part which would have authorized the foreclosure, an action for the tort of wrongful disclosure is appropriate. Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408. “Mere technical violations of the foreclosure process will not give rise to a tort claim; the foreclosure must have been entirely unauthorized on the facts of the case.

Id.at 409.

In support of Plaintiff’s request for a preliminary injunction based on wrongful foreclosure, Plaintiff provided the declaration of Plaintiff Jose Valdovinos, which provides, among other things, that:

7. Following the maturity of the 2019 Promissory Note, I sold a separate property and applied the net sale proceeds as a principal paydown on the loan. On March 30, 2022, I remitted a Wells Fargo cashier's check in the amount of $300,000.00, payable to D&K Investments, which Defendants accepted. ...

8. Following this payment, the remaining principal balance on the 2019 Promissory Note, as modified, could not lawfully exceed $200,000.00, plus any legitimately accrued interest, fees, and costs.

9. On May 31, 2024, an alleged Promissory Note in the principal amount of $250,000.00, bearing interest at 5% per annum, was purportedly executed in favor of Defendant THOMAS F. DONNELL, referencing the Deed of Trust and purporting to require monthly interest payments of $5,000.00 beginning July 1, 2024, with principal due on or before May 31, 2025 (the "DD Note"). ...

10. I never executed, signed, authorized, or received any funds pursuant to the DD Note, and the signature appearing on that document is not my signature. 9

...

14. On May 30, 2025, I tendered a cashier's check in the amount of $30,000.00, payable to DONNELL, as payment of the full annual interest on the legitimate loan obligation. Notwithstanding this tender, Defendants continued their foreclosure efforts. ... ...

16. On or about January 9, 2026, PLACER FORECLOSURE issued a Payoff Demand setting forth an alleged unpaid principal balance of $510,266.64 and a total payoff amount as of January 21, 2026 of $538,271.22, figures that incorporate both the disputed DD Note obligation and a principal balance on the D&K Note that is irreconcilable with the $300,000.00 paydown Plaintiff tendered and Defendants accepted.

3/24/26 Valdovinos Decl.

In opposition, Defendants assert there were two series of loans made to Plaintiff. First, D&K Investments, LLC (“D&K”) loaned $300,000 to Plaintiff on February 8, 2019, which was secured by a Deed of Trust that encumbered Plaintiff’s real property (“Subject Property”). Labosky Decl., ¶ 3, Ex. A. On August 1, 2019, D&K advanced another $200,000 also secured by the Deed of Trust, raising Plaintiff’s loan obligation to $500,000, and which was reflected in an executed Promissory Note Modification. Labosky Decl., ¶ 4, Exs.

B, K. On July 22, 2021, D&K advanced an additional $100,000 to Plaintiff which he repaid on August 18, 2021, keeping the principal balance at $500,000. Labosky Decl., ¶ 6, Ex. K. On November 11, 2021, D&K advanced another $100,000, increasing the principal loan balance to $600,000, evidenced by another Promissory Note and secured by the Deed of Trust on the Subject Property. Labosky Decl., ¶ 7, Exs. C, K. On March 16, 2022, Plaintiff paid $20,000 in principal reduction, resulting in a balance of $580,000, and on April 1, 2022, Plaintiff paid $300,000 in principal reduction resulting in a balance of $280,000 on the principal.

Labosky Decl., ¶¶ 8-9, Ex. K. On June 1, 2024, Plaintiff and D&K acknowledged the unpaid balance of $280,000 in a promissory note modification. Labosky Decl., ¶ 10, Exs. E, K. In October 2024, D&K referred the Deed of Trust to Placer Foreclosure due to Plaintiff’s default of interest payments, and Placer Foreclosure recorded a Notice of Default on October 4, 2024 and a Notice of Trustee’s Sale on February 7, 2025. Labosky Decl., ¶¶ 11-12, Exs. F, G. Defendant DD Investments, LLC subsequently purchased the interest in the D&K Note and Deed of Trust on March 24, 2025.

Labosky Decl., ¶ 13, Exs. I, K.

The second series of loans was between Defendant Thomas F. Donnell (“Donnell”) and Plaintiff. Donnell agreed to loan Plaintiff $135,000 in exchange for a repayment of $150,000 by the end of June 2024. Donnell Decl., ¶ 7. Donnell indicates he was aware Plaintiff owed Defendant Scott Denty $100,000 for two separate loans, and Denty suggested combining the loans into a single promissory note for Plaintiff (“Combined Loan”). Donnell Decl., ¶¶ 9-10. On May 31, 2024, Plaintiff signed the promissory note for the Combined Loan of $250,000, which contained a May 31, 2025, maturity date (even though Plaintiff made an oral promise to repay the loan by June 2024), and references a Deed of Trust (but no Deed of Trust was associated with the note at the time). Donnell Decl., ¶¶ 11, 15-16; Ex. D. Donnell declares Plaintiff failed to repay any amount 10

by March 2025, when Donnell learned the Subject Property was scheduled for a foreclosure sale due to Plaintiff’s default on a loan obligation to D&K. Donnell Decl., ¶¶ 20-21. As principal and owner of DD Investments, Donnell purchased the D&K Note and Deed of Trust on March 20, 2025, which were assigned to DD Investments. Donnell Decl., ¶ 24. Per Donnell, Plaintiff asked Donnell to postpone the March 26, 2025 foreclosure sale for 90 days in exchange for signing a new promissory note for the Combined Loan, including making the promissory note subject to and secured by the same deed of trust securing the D&K Note, and to pay $30,000 towards the accrued interest on the D&K Note, which was summarized in a written acknowledgement of the agreement.

Donnell Decl., ¶¶ 25, Ex. M. Donnell asserts Plaintiff signed the new promissory note in late March 2025 in the presence of himself and witnesses Scott Denty and Richard Denty, and used his left hand to sign such. Donnell Decl., ¶¶ 28-29, Ex. H. Despite Donnell postponing the foreclosure sale as agreed, Plaintiff only paid $30,000 toward accrued interest on the D&K Note on May 30, 2025. Donnell Decl., ¶ 31. Donnell asserts Plaintiff offered to pay another $30,000 toward the balance of the Combined Loan in exchange for another postponement of the foreclosure, to which Donnell agreed, but Plaintiff only paid $21,000 in cash and never paid the remainder.

Donnell Decl., ¶¶ 31-35. Donnell indicates he assigned the Combined Loan promissory note to DD Investments, LLC (“DD”) on February 17, 2026. Donnell Decl., ¶ 36, Ex. J.

On January 9, 2026, Placer Foreclosure provided Donnell with a Payoff Demand for the foreclosure on the D&K Loan and the Combined Loan, which reflected the total amount due on both loans as of January 21, 2026, and took into account: - Plaintiff’s May 30, 2025 $30,000 cashier’s check towards interest on the D&K Loan, Donnell Decl., ¶ 38, Ex. L; and - Plaintiff’s payment of $21,000 in cash for the Combined Loan, Donnell Decl., ¶ 39, Ex. L.

In summary, the record as it currently stands, suggests that Plaintiff is unlikely to prevail on a claim that he was not properly credited for his payment of $300,000.00. Moreover, the record is in relative equipoise as to the $250,000 Combined Loan: Defendants (via one witness) contends there was a valid secured note, Ex. H; Plaintiff contends (via one witness) the note was a forgery.

That said, it appears, at the very least, that Plaintiff is some reasonable possibility to prevail on a claim that the amount demanded for payoff is in excess of the amount owed, even if, arguendo, the latter $250,000 loan is considered valid. Defendants’ January 9, 2026, payoff demand identifies an “Unpaid Principal Balance” of $510,266.64 and separately itemizes interest accruing at two distinct rates: “10% for $260,266.64” and “5% for $250,000.” Ex. L. Defendants’ exhibits D and H show two materially different promissory notes, both dated May 31, 2024, both in the amount of $250,000, and both attributed to Plaintiff.

See Exs. D, H. Exhibit D purports to be a May 31, 2024, promissory note payable to Thomas Donnell, and states that interest accrues “at the rate of 0% percent per annum,” while simultaneously requiring payments of “$5000.00 per month.” In contrast, Exhibit H, also dated May 31, 2024, but reportedly executed March 2025 per defendant Donnell, expressly provides for interest “at the rate of 5% percent per annum,” requires monthly installments of $5,000 commencing July 1, 2024, and, includes detailed language purporting to secure the obligation against the subject property.

Of importance, the January 9, 2026, payoff demand then calculates interest on the $250,000 component at 5% from May 31, 2024. By Defendants’ own evidence, thus, Defendants seek to charge interest for approximately 11

nine to ten months before the Exhibit H note was executed. Plaintiff, thus, has provided persuasive evidence that a foreclosure under these circumstances would be illegal and a reasonable possibility of success on the merits of his wrongful foreclosure cause of action.1

Irreparable Harm

Plaintiff argues the balance of hardships overwhelmingly favors Plaintiff because he will lose his home permanently and irreparably. Defendants argue comparative hardship due to Donnell suffering a medical condition and treatment, which would be exacerbated by prolonging repayment of Plaintiff’s obligations.

On balance, both sides face significant potential harm in this case from an injunction or its absence as the case may be. That noted, Plaintiff has demonstrated the risk of significant and irreparable harm if an injunction does not issue. Where a piece of real property is under threat of sale under a deed of trust, “such damage may be considered irreparable for in equity each parcel of real property is considered unique.” Stockton v. Newman (1957) 148 Cal.App.2d 558, 564.

Conclusion

In summary, on the current record, the Court grants the motion for a preliminary injunction. Plaintiff has demonstrated at least a reasonable possibility of prevailing on the merits. In addition, and of significance, the interim harm the Plaintiff is likely to sustain if the injunction is denied is greater than the harm the Defendants are likely to suffer if the Court grants a preliminary injunction.

The Court is required to set an undertaking under Code of Civil Procedure section 529. See Bring Back the Kern v. City of Bakersfield (2025) 110 Cal.App.5th 322, 360-361; Maier v Luce (1923) 61 Cal.App. 552, 557. In the exercise of its discretion the Court requires the posting of an undertaking in the amount of $66,335.10 (corresponding to two years of daily interest ($90.87 per day)) for any damage Defendants may sustain by reason of wrongful issuance of an injunction.

1 The Court need not address the other claims for relief. 12