330 F. Supp. 3d 356
D.C. Cir.2018Background
- Shvartser (plaintiff) and Lekser (defendant) are co-owners (father and daughter) of a D.C. property purchased in 2008.
- In 2015 Lekser allegedly forged a power of attorney to refinance the property, obtaining an $800,000 loan from SnowPoint and SP Funding (lender defendants); Shvartser claims the proceeds were misappropriated.
- Lender defendants initiated foreclosure after Lekser defaulted; Shvartser sued and obtained a TRO (Mar 1) that the court converted to a preliminary injunction enjoining foreclosure.
- The district court granted the preliminary injunction based on likelihood of success on quiet-title grounds (a deed of trust is void if procured by a forged power of attorney), irreparable harm to Shvartser’s property rights, balance of equities, and public interest.
- Lender defendants moved for reconsideration arguing (1) the court should have held an evidentiary hearing to test Shvartser’s credibility and (2) even if the power of attorney were forged, the lenders could still foreclose on Lekser’s one-half interest.
- The court applied the Rule 54(b) interlocutory-reconsideration standard and denied reconsideration for reasons explained below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an evidentiary hearing was required before granting the preliminary injunction | Shvartser relied on his sworn statement and documentary doubts about the POA; no hearing was necessary to find likelihood of success | Lender defendants said Shvartser’s testimony was contested and credibility determinations require an evidentiary hearing under Cobell | Denied: defendants failed to raise genuine factual disputes on credibility in their opposition, so they may not demand a hearing on reconsideration |
| Whether a deed of trust procured by a forged power of attorney can still encumber the forger’s one-half ownership interest | Shvartser: forged-POA deed is void; allowing foreclosure would divest his property rights and upset partition/status quo | Lenders: even if POA forged, precedent from other jurisdictions allows lien on forger’s ownership interest; alternatively equitable subrogation | Denied: under D.C. law a deed procured by forgery is void; even if lenders could foreclose on Lekser’s half, foreclosure would interfere with Shvartser’s core property rights and the court’s partition order, so injunction remains appropriate |
| Proper standard for reconsideration of the preliminary injunction | Implicitly: court should use a standard that permits correction of errors | Lenders assumed Rule 59(e) applies | Court applied Rule 54(b) (interlocutory) standard (as justice requires) and found no basis for reconsideration |
Key Cases Cited
- Smith v. Wells Fargo Bank, 991 A.2d 20 (D.C. 2010) (deed of trust is void if obtained by a forged power of attorney)
- Cobell v. Norton, 391 F.3d 251 (D.C. Cir. 2004) (credibility disputes may require an evidentiary hearing before granting preliminary relief)
- Leidos, Inc. v. Hellenic Republic, 881 F.3d 213 (D.C. Cir. 2018) (standards for Rule 59(e) relief)
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (purpose of preliminary injunction is to preserve relative positions until trial)
- United States v. Sec. Indus. Bank, 459 U.S. 70 (1982) (secured-party rights are a smaller subset of ownership rights)
- Horne v. Dep't of Agriculture, 576 U.S. 350 (2015) (discussing the bundle of rights inherent in property ownership)