Filed 8/26/26 Castelan v. 716 Yale Terrace CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
NINSI CASTELAN, B346210
Plaintiff and Respondent, (Los Angeles County
v. Super. Ct. No.
25STCV05369)
716 YALE TERRACE, L.P., et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Gary D. Roberts, Judge. Affirmed.
Park & Lim, S. Young Lim and Jessie Y. Kim for
Defendants and Appellants.
Irell & Manella, Morgan Chu, Bruce Wessel, Eli Levinson,
Woongki Park, Jennifer Keute, Ke Yang; Public Counsel,
Raymond Fang, Ritu Mahajan, Alisa Randell, Lucas Oppenheim
and Kaho Maeda for Plaintiff and Respondent.
Plaintiff and respondent Ninsi Castelan is a tenant in an
apartment building for low-income individuals and families in
Los Angeles. The building was developed with government
financial assistance in exchange for the recordation of a covenant
limiting the rents that can be charged. Defendant and appellant
716 Yale Terrace, L.P. owns the apartment building; defendant
and respondent GRCLA-Affordable Holding, LLC is the
administrative general partner of the owner. We shall refer to
these two parties collectively as “defendants.”
After defendants increased plaintiff’s rent, she sued them
and others for allegedly charging excessive rents in breach of the
covenant. In March of 2025, plaintiff sought a preliminary
injunction prohibiting defendants from charging rents higher
than they charged in early 2024 pending resolution of the
litigation. The trial court granted the motion, and defendants
appealed.
On appeal, defendants advance five arguments in favor of
reversal: (1) circumstances have changed since the issuance of
the preliminary injunction; (2) plaintiff failed to establish a
likelihood of success on the merits; (3) plaintiff failed to establish
irreparable harm sufficient to justify injunctive relief; (4) the
balance of harms and equities does not support the injunction;
and (5) the preliminary injunction improperly extends relief to
nonparty tenants. We reject these contentions and affirm.
BACKGROUND
Since 2012, plaintiff has been a tenant at the Yale Terrace
Apartments, located in the Chinatown neighborhood of Los
Angeles. She lives there with her mother and two adult brothers.
The Yale Terrace apartment building was developed as
affordable housing. In 2005, the City of Los Angeles sold the land
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on which the building was built to the original developer for “no
cash.” To finance the project, the Community Redevelopment
Agency of the City of Los Angeles issued two 55-year loans
totaling about $5 million. In exchange for the favorable loan
terms, the original developer agreed to an affordability covenant
which required all rental units at the property be reserved for
low-income households and each unit was subject to limits on the
maximum rent levels based on median incomes published by the
U.S. Department of Housing and Urban Development (HUD) (the
Original Affordability Covenant).
The covenant was amended and re-recorded in 2021 (the
Amended Affordability Covenant). Like the original covenant,
the amended covenant requires all units in Yale Terrace be
reserved for low-income households. For each of these units, the
Amended Affordability Covenant limits the rents that can be
charged to the maximum rent levels set out in the CRA-HCD
(1991) Rent Schedule, which is published by the Los Angeles
Housing Department (LAHD) (the CRA-HCD Rent Schedule).
The Amended Affordability Covenant also provides, in section
2(c)(2), that annual rent increases exceeding the annual
percentage increase in Area Median Income (AMI) for Los
Angeles County are prohibited.
In early 2024, plaintiff was paying $1,999 in rent per
month. In July 2024, tenants of Yale Terrace Apartments
received a rent increase notice of 16.4%, effective November 2024.
Plaintiff’s rent increased to $2,328, which she paid in November
and December 2024. This rent increase was later rescinded by
defendants in December 2024 and replaced with a new 9.9%
increase, effective February 2025. Plaintiff paid the new rent of
$2,198 in February 2025. At the end of February, defendants
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again rescinded the 9.9% increase to be replaced by a new 8.9%
increase, effective April 2025.1
On February 26, 2025, plaintiff filed a complaint against
defendants for breach of contract and recorded covenant,
unlawful and unfair business practices or acts, and collection and
retention of excess rents.2 The following month, plaintiff moved
for a preliminary injunction to enjoin defendants from charging
rents higher than the pre-increase early 2024 status quo rents
pending resolution of the litigation.3 Plaintiff argued that:
(1) any increase in her rent in 2024 was prohibited by section
2(c)(2) of the Amended Affordability Covenant because there was
no increase in AMI that year; and (2) both the status quo rent
and the proposed new rent were above the maximum rent levels
allowed by the CRA-HCD Rent Schedule. Defendants opposed
the motion, arguing that the property is governed by the federal
rent schedule (CRA-HUD) because the amended covenant
improperly changed the applicable rent schedule from CRA-HUD
to the state rent schedule (CRA-HCD). According to defendants,
under the CRA-HUD Rent Schedule, a 10% rent increase for the
year was permitted beginning on July 1, 2024.
1 According to plaintiff, defendants “promised to refund the
overpayments and ultimately did so for all tenants.”
2 The complaint also named Triumph Residential Services, Inc.
(the property manager) and JK Affordable Holdings, LLC (a limited
partner of 716 Yale Terrace, L.P.) as defendants, but they are not
parties to this appeal.
3 On March 21, 2025, while the preliminary injunction motion
was pending, defendants suspended the 8.9% rent increase that was
scheduled for April.
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After a hearing, the trial court granted the motion. The
court found plaintiff demonstrated a likelihood of success on the
merits. First, the court noted defendants “are charging rents at
rates exceeding the maximum rent levels set out in the CRA-
HCD Rent Schedule.” It then acknowledged defendants’
contention that the property is governed by the CRA-HUD Rent
Schedule, not the CRA-HCD Rent Schedule, because the original
loan documents referenced HUD and the Amended Affordability
Covenant “improperly changed the applicable rent schedule from
CRA-HUD to CRA-HCD.” The court did not need to squarely
address this contention, however, based on its conclusion that
section 2(c)(2) of the Amended Affordability Covenant prohibited
any rent increase in 2024.
The trial court explained: “Section 2(c)(2) of the [Amended
Affordability Covenant] prohibits annual rent increases
exceeding the annual percentage increase in [AMI] for Los
Angeles County. This rent increase limit is completely
independent of any rent schedule because it is linked only to the
change in County AMI. Because there was no AMI change in
Los Angeles County in 2024 . . . , rent increases are not allowed
under any rent schedule, whether it be pursuant to HUD or HCD.
This alone is sufficient to demonstrate that [p]laintiff has a
likelihood of succeeding on the merits.” The court further found
the balance of equities tilts in plaintiff’s favor because plaintiff
“has shown that she will be irreparably harmed if the injunction
is not granted” and defendants “have not asserted whether they
will be irreparably harmed if an injunction is issued.”
The court entered the preliminary injunction on April 16,
2025. Defendants timely appealed.
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DISCUSSION
I. General Principles and Standard of Review
The grant or denial of a preliminary injunction is not an
adjudication of the ultimate rights in controversy. (Law School
Admission Council, Inc. v. State of California (2014) 222
Cal.App.4th 1265, 1280.) Rather, “ ‘[t]he general purpose of a
preliminary injunction is to preserve the status quo pending a
determination on the merits of the action.’ ” (Ibid.) The “status
quo” is defined as “ ‘ “ ‘ “the last actual peaceable, uncontested
status which preceded the pending controversy.” ’ ” ’ ” (Integrated
Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6
Cal.App.5th 1178, 1184 (Integrated Dynamic Solutions).)
“[W]hether a preliminary injunction should be granted
involves two interrelated factors: (1) the likelihood that the
plaintiff will prevail on the merits, and (2) the relative balance of
harms that is likely to result from the granting or denial of
interim injunctive relief.” (White v. Davis (2003) 30 Cal.4th 528,
554.) “ ‘The more likely it is that plaintiffs will ultimately
prevail, the less severe must be the harm that they allege will
occur if the injunction does not issue. This is especially true
when the requested injunction maintains, rather than alters, the
status quo.’ ” (Right Site Coalition v. Los Angeles Unified School
District (2008) 160 Cal.App.4th 336, 342.)
We review a trial court’s issuance of a preliminary
injunction for an abuse of discretion. (Integrated Dynamic
Solutions, supra, 6 Cal.App.5th at p. 1184.) The trial court’s
underlying factual determinations must be accepted if supported
by substantial evidence, but questions of law are considered de
novo. (People ex rel. Feuer v. FXS Management, Inc. (2016) 2
Cal.App.5th 1154, 1159.)
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II. The Trial Court Did Not Abuse Its Discretion By
Issuing a Preliminary Injunction
A. Changed Circumstances
Defendants contend the preliminary injunction order must
be reversed because the premise of the court’s ruling—that AMI
did not increase from 2023 to 2024 and thus, any increase in rent
was improper—no longer exists. In support of their argument,
defendants request we take judicial notice of information on AMI
published by LAHD effective July 1, 2025, that indicates AMI
increased from 2024 to 2025 by 8.55%. These documents,
however, were never presented to the trial court. While we
acknowledge the documents did not exist until a few months after
the trial court’s ruling, defendants could have moved the trial
court to modify or dissolve the injunction under Code of Civil
Procedure section 533.4 They did not do so. We therefore decline
defendants’ invitation to review new evidence on appeal that is
irrelevant to the issue before us, namely whether the trial court
abused its discretion by issuing the preliminary injunction based
on the record before it. (See Ojjeh v. Brown (2018) 43
Cal.App.5th 1027, 1037, fn. 3 [“It has long been the general rule
that an appellate court reviews the correctness of the decision at
the time of its rendition”].) Defendants may submit this new
evidence to the trial court in support of a motion to modify or
dissolve the injunction. We express no opinion, however, on the
merits of such a motion.
4 Code of Civil Procedure section 533 provides, in relevant part:
“[T]he court may on notice modify or dissolve an injunction . . . upon a
showing that there has been a material change in the facts upon which
the injunction . . . was granted.”
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B. Likelihood of Prevailing on the Merits
Next, defendants contend plaintiff failed to establish a
likelihood of success on the merits. They argue the trial court
granted preliminary injunctive relief based on its incorrect
conclusion that section 2(c)(2) of the Amended Affordability
Covenant prohibits any rent increase in a year where AMI did
not increase. Section 2(c)(2), governing rent restrictions,
provides: “No qualified tenant in the Eligible Household shall
have an annual rent increase in excess of the percentage increase
in the county median income for the applicable year in which the
rent increase is being considered, nor shall there be an
accumulation of rental increases from year to year for those years
in which the Owner chooses not to increase rents by the
percentage allowed herein.”
As a preliminary matter, we note that defendants forfeited
their argument that an increase in rent in 2024, a flat-AMI year,
was not prohibited by section 2(c)(2). Despite plaintiff’s
argument in their papers below regarding section 2(c)(2),
defendants’ opposition to the motion fails to even mention that
section. Rather, defendants focused solely on the applicable rent
schedule. Defendants, therefore, forfeited this argument on
appeal by not raising it below. (See Ochoa v. Pacific Gas &
Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3 [arguments
not asserted below are forfeited on appeal].)
Even if not forfeited, we are unpersuaded by defendants’
new theory. Defendants argue, in general terms, that section
2(c)(2) “read in context, does not purport to override the
remainder of the Covenant or independently resolve every
question concerning when rent may increase.” They fail to
explain, however, why in this case, the plain language of section
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2(c)(2) prohibiting rent increases in flat-AMI years would not
apply. Rather, in support of their argument that the Amended
Affordability Covenant expressly contemplates circumstances in
which rent may be adjusted for reasons other than a change in
AMI, they point to section 2(e)(i), which indisputably does not
apply here. That section provides that when a household ceases
to qualify as an “Eligible Household” (i.e., no longer low-income
tenants), rent may be adjusted to 30% of household income.
Defendants do not contend plaintiff or any other tenant of the
building is no longer a low-income tenant. Nor do defendants
point to any other provision in the Amended Affordability
Covenant that would permit them to raise plaintiff’s rent in a
flat-AMI year. They merely argue, again in general terms, that
“regulatory frameworks may require recalculation or correction of
rents to ensure ongoing compliance, even where AMI itself has
not increased.” On this record, we conclude the trial court
correctly determined that plaintiff has a likelihood of succeeding
on the merits based on its conclusion that section 2(c)(2)
prohibited defendants from increasing plaintiff’s rent in 2024
when there was no change in AMI in Los Angeles County that
year.
C. Irreparable Harm
Defendants argue plaintiff failed to establish irreparable
harm sufficient to justify injunctive relief. We disagree.
Defendants first contend that, at the time of the hearing on
the motion, they had suspended the challenged rent increase and,
therefore, plaintiff faced no imminent eviction, rent increase, or
any concrete injury that could not be addressed through
monetary damages. This argument is simply a variation of
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defendants’ mootness argument made below, which the trial
court correctly rejected.
“Voluntary cessation of allegedly wrongful conduct” renders
an action moot only when there is no “reasonable expectation the
allegedly wrongful conduct will be repeated.” (Center for Local
Government Accountability v. City of San Diego (2016) 247
Cal.App.4th 1146, 1157.) Plaintiff’s position that defendants will
attempt to raise her rent absent a preliminary injunction is
reasonable. Indeed, defendants clarified in the trial court that
“the suspension of the increase in rent was until the decision
from the [trial court] on the merits of this preliminary
injunction.” Thus, the temporary suspension of the challenged
rent increase neither renders this action moot, nor supports a
finding of no harm.
Defendants next argue that “subsequent events”
demonstrate the injunction restrains conduct based on the
speculative possibility of future harm. Defendants again rely on
the LAHD 2025 Rent Schedules. But as discussed above, we
decline to take judicial notice of this information that has not
been presented to the trial court. (See e.g. Lent v. California
Coastal Com. (2021) 62 Cal.App.5th 812, 854 [an appellate court
may properly decline to take judicial notice of a matter which
should have been presented to the trial court for its consideration
in the first instance].)
We also reject defendants’ assertion that any rent
overcharges are readily calculable and refundable and, therefore,
money damages are an adequate remedy. Substantial evidence
supports the trial court’s finding that plaintiff demonstrated she
would be irreparably harmed if the preliminary injunction was
not granted. Plaintiff submitted a declaration in support of her
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motion in which she declared that after the series of rent
increases, her family spends “approximately 42% of [their]
monthly household income towards rent” and they have had to
“forgo paying for certain necessities and choose between paying
for food and paying for rent in order to make the increased rent
payments.” She further declared that if she is priced out of her
home because of rent increases, “it will be difficult or impossible”
to find comparable housing that she can afford. She elaborated
that her apartment is located in Chinatown, which is “located a
short distance from [her] mother’s health care facility that she
must visit regularly to receive treatment for her chronic illness”
and if she has to move, she will be “forced to leave Chinatown
and will lose access” to key medical, employment, and public
transit resources. Thus, the record demonstrates the trial court’s
finding that “damages at the conclusion of potential years of
litigation is inadequate” is not, as defendants contend, based only
on speculative or hypothetical harm.
D. Balance of Harms and Equities
Defendants argue the trial court failed to properly weigh
the comparative harms to the parties. Without citation to the
record, defendants claim they face “substantial operational and
financial constraints” because the preliminary injunction applies
to the entire property. Once again, defendants forfeited this
argument by not raising it below. As noted in the trial court’s
order, “Defendants have not asserted whether they will be
irreparably harmed if an injunction is issued but rather only
argue that Plaintiff will not be irreparably harmed if an
injunction is not issued.” Accordingly, defendants cannot raise
this argument based on disputed facts for the first time on
appeal. (See In re H.D. (2024) 99 Cal.App.5th 814, 818 [a
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reviewing court has discretion to consider forfeited claims only
when those claims “do not involve disputed facts as such a claim
could reoccur”]; see also People v. Uber Technologies, Inc. (2020)
56 Cal.App.5th 266, 273 [balancing the respective equities of the
parties rests in the sound discretion of the trial court].)
E. Scope of the Preliminary Injunction
Defendants lastly argue the injunction is “independently
defective” because it grants relief to nonparty tenants who were
not certified as part of a class. This argument ignores sections 9
and 11 of the Amended Affordability Covenant.
Plaintiff sued under sections 9 and 11 of the Affordability
Covenant, which expressly grant plaintiff the right to enforce the
Covenant’s terms. Specifically, section 9 provides that “[a]ll
conditions, covenants and restrictions contained in this
Agreement shall be running with the land and shall be
enforceable against Owner or any subsequent Owner . . . [¶] [by
a] resident of any of the Affordable Units.” Section 11 states that
the “City and those listed in Section 9 shall have the right, in the
event of any breach of any such agreement or covenant, to
exercise all the rights and remedies, and to maintain any actions
at law or suit in equity . . . to enforce the curing of such breach of
agreement or covenant.” Pursuant to those sections, plaintiff
properly sought injunctive relief against defendants to enforce
the Covenant’s terms regarding permitted rent increases for
tenants of the building.
Defendants’ insistence that plaintiff was required to seek
class certification before obtaining injunctive relief that applies to
all tenants at the building is unavailing. The Amended
Affordability Covenant does not require class certification before
a tenant can enforce the Covenant’s terms applicable to all
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tenants. Instead, it gives the City and current, former, and
prospective tenants the right to sue and enforce the rent
restrictions, which apply to all tenants. Thus, the trial court
properly issued a preliminary injunction enjoining defendants
from charging rents to any of the low-income tenants that is
higher than the pre-increase early 2024 status quo rents pending
resolution of the litigation.
DISPOSITION
The order is affirmed. Plaintiff Ninsi Castelan is awarded
her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
TAMZARIAN, J.
We concur:
ZUKIN, P. J.
DAUM, J.
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