The opinion of the court was delivered by: Audrey B. Collins Chief United States District Judge
ORDER RE: PRELIMINARY INJUNCTION
Pending before the Court is Claimant Optional Capital Inc.'s Request for a Preliminary Injunction barring East West Bank from proceeding with a trustee sale of the real property at 924 N. Beverly Drive, Beverly Hills, California ("Motion"). On July 1, 2011, the Court issued a temporary restraining order pending resolution of the request for preliminary injunction, and an order to show cause ("OSC") establishing a briefing schedule. On July 6, 2011, Optional and Intervenor Eric Honig each filed a Response to the OSC. On July 11, 2011, East West Bank filed an Opposition to the Issuance of a Preliminary Injunction. On July 13, 2011, Optional and Honig filed Replies. The matter came on for hearing on Monday, July 18, 2011.
Upon consideration of the materials submitted by the parties, argument of counsel, and the case file, the Court hereby GRANTS the Motion.
This Order assumes familiarity with the background of this case. As such, the Court will set forth only as much background as is relevant to the disposition of this Motion.
This matter started out as a forfeiture case filed in May 2005 in which the United States sought the forfeiture of certain assets in possession of the Kim Claimants. The Government seized various Kim assets located in the United States, including the residence at 924 N. Beverly Drive ("property"). Erica Kim purchased that property in 2002 using a $1.1 million loan provided by United Commercial Bank. East West Bank is UCB's successor in interest as to that loan and holds the Promissory Note and Deed of Trust.
On March 13, 2007, the Court granted the Kim Claimants' summary judgment motion against the Government's forfeiture case; the Ninth Circuit affirmed that decision on October 3, 2008. The Government's forfeiture case was therefore extinguished. Following additional litigation, the Court found that the other claimants' claims had also been adjudicated and were therefore extinguished. The Ninth Circuit reversed and, by its mandate issued January 28, 2011, remanded the matter to this Court for it to adjudicate the competing claims of all claimants to the seized properties. These competing claims to the property have yet to be adjudicated.
Claimant East West Bank ("EWB") issued a Notice of Trustee Sale ("NTS") indicating that it would sell the property on July 7, 2011; the sale was postponed to July 20, 2011. EWB states that it is entitled to foreclose on the property and conduct a trustee's sale because Erica Kim has been in default on her loan since March 2008 and has been living at the property without paying property taxes or any other costs. As of June 30, 2011, with accrued unpaid payments, late charges, and fees, Erica Kim's current outstanding unpaid loan balance is approximately $1,471,461.95. Optional and Honig seek to enjoin EWB's planned trustee sale on the ground that such a sale jeopardizes their claims to the property. Those claims include Optional's putative interest in the property as asserted through its claim to the property based on Erica Kim's alleged conversion of Optional's assets, and a judgment lien for the 37 billion Korean won judgment it obtained in a related case. Honig also has a charging lien for attorney's fees. The Court issued a TRO to maintain the status quo pending briefing on the preliminary injunction.
"A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of hardships tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Defense Council Inc., 129 S.Ct 365, 374 (2008). While Winter expressly rejected the view that a mere "possibility" of irreparable harm could be sufficient to justify a preliminary injunction in some instances, it did not otherwise reject the so-called "sliding scale" approach, and the "serious questions" formulation in particular, employed in a number of circuits, including the Ninth Circuit. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-1133 (9th Cir. 2011) (holding that the sliding scale approach remains viable after Winter, as long as it is applied as part of the four-element Winter test). Thus, under the "serious questions" variation of the sliding scale approach,
(1) "serious questions going to the merits," and (2) a balance of hardships that tips sharply towards the movant can support issuance of a preliminary injunction, so long as the movant also shows that there is (3) a likelihood of irreparable injury and (4) that the injunction is in the public interest. Alliance for the Wild Rockies, 632 F.3d at 1135.
The Court finds that a preliminary injunction is warranted under the "serious questions" approach. In summary, EWB's submission opposing a preliminary injunction has not dissuaded the Court from the ...