Automated Summary
Transaction Type
Loan Agreement secured by a Deed of Trust
Key Facts
The case involves a multi-family property at 2601 Lazy Hollow Drive, Houston, Texas 77063, owned by Plaintiffs Fercan E. Kalkan and Piney Point 2023 LLC, secured by a $73,893,000 loan with Fannie Mae. Fannie Mae accelerated the loan in May 2024 due to defaults. Piney Point filed bankruptcy in January 2025, but the automatic stay was lifted on November 15, 2025, allowing Fannie Mae to proceed with foreclosure. A December 15, 2025 notice set a January 6, 2025 foreclosure sale. Plaintiffs filed a late TRO motion on January 4, 2025, which was denied due to failure to establish likelihood of success, irreparable harm, or public interest in delaying foreclosure.
Issues
- Plaintiffs did not establish a substantial threat of irreparable injury. Counsel conceded that if the notice was deficient, the foreclosure would be void, allowing legal remedies. The lack of sufficient notice doesn't prove irreparable harm since it could be cured. The claim about tenant eviction is not the plaintiffs' harm, and their argument about losing an insurance claim was rejected, as Fannie Mae is entitled to it post-foreclosure.
- The balance of harms favors denying the TRO because preventing foreclosure would harm Fannie Mae's interests more than allowing it would harm plaintiffs. Plaintiffs had no firm purchase offers to satisfy the debt. Denying the TRO aligns with public interest in protecting lenders' rights to recourse on defaulted loans.
- Plaintiffs did not demonstrate a substantial likelihood of success on the merits. They admitted default, and their force majeure defense was based on events occurring after the initial default notices. No prior material breach by Fannie Mae was shown, and there was no evidence of wrongful withholding of escrow funds. Additionally, arguments about the Notice of Foreclosure's technical requirements pertain to future claims, not the current TRO.
Holdings
- Plaintiffs did not show a substantial threat of irreparable injury. Counsel conceded that deficient foreclosure notice would allow legal remedies, and the insurance claim argument was unpersuasive as Fannie Mae would succeed to it post-foreclosure. The risk of tenant eviction was speculative and not Plaintiffs' direct harm.
- Plaintiffs failed to establish a substantial likelihood of success on the merits. They admitted default, their force majeure defense was invalid (events occurred post-default), and they did not assert prior material breach by Fannie Mae or provide evidence of withheld repair funds. Arguments about Notice of Foreclosure technicalities pertain to a future wrongful foreclosure claim, not the current TRO.
- The balance of harms and public interest favor denying the TRO. Preventing foreclosure would harm Fannie Mae's contractual rights and the declining property value. Plaintiffs offered no evidence of a firm purchase commitment to satisfy their debt, and the public interest supports protecting lenders' recourse in default cases.
Contract Value
73893000.00
Legal Principles
- The court applied the four elements required for granting a temporary restraining order (TRO): (1) substantial likelihood of success on the merits; (2) substantial threat of irreparable injury; (3) the injury outweighs harm to the defendant; and (4) the injunction serves the public interest. Plaintiffs failed to meet any of these criteria, leading to the denial of the TRO.
- Plaintiffs bore the burden to prove the necessity of the TRO but presented no evidence to establish their claims, including the timing of foreclosure notices or the existence of a valid force majeure defense. The court emphasized that the burden of proof was not met.
Key Disputed Contract Clauses
- Plaintiffs argued that force majeure events occurring after the initial default and acceleration notices could excuse their non-payment. However, the court found this defense invalid as the force majeure events did not precede the defaults.
- The plaintiffs contested the validity of Fannie Mae's Notice of Foreclosure, arguing it failed to meet technical requirements. The court determined this issue pertained to a future wrongful foreclosure claim, not the current TRO motion, and plaintiffs provided no evidence to support their notice argument.
Precedent Name
- Douglass v. United Servs. Auto. Ass'n
- Granny Goose Foods, Inc. v. Bhd. of Teamsters and Auto Truck Drivers Loc. No. 70 of Alameda Cnty.
- Enrique Bernat F., S.A. v. Guadalajara, Inc.
- Moore v. Brown
Cited Statute
Title 28 of the United States Code (Judicial Administration)
Judge Name
Christina A. Bryan
Passage Text
- Plaintiffs' claim of irreparable harm caused by potential eviction of any current tenants after foreclosure is not harm to Plaintiffs, but rather to those tenants.
- The Court therefore RECOMMENDS that Plaintiffs' Motion for a Temporary Restraining Order (ECF 98) be DENIED.
- Plaintiffs have admitted default. ECF 101-1 at 4. As noted in this Court's prior Order Appointing Receiver, Fannie Mae has a right to foreclose on the Deed of Trust.