Cunningham v. Select Portfolio Servicing, Inc. ( 2019 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 JOSEPH CUNNINGHAM, JR.; and No. 2:19-cv-01096-TLN-DB KATHY CUNNINGHAM, 12 Plaintiffs, 13 MEMORANDUM AND ORDER v. 14 SELECT PORTFOLIO SERVICING, 15 INC.; and DOES 1-10, inclusive, 16 Defendants. 17 18 Plaintiffs Joseph Cunningham, Jr., and Kathy Cunningham (collectively “Plaintiffs”) 19 bring this action against Defendant Select Portfolio Servicing, Inc. (“Defendant”) alleging 20 violations of California’s Homeowner Bill of Rights (“HBOR”), as well as negligence in the 21 handling of Plaintiffs’ loan modification application. (ECF No. 1 at 10.) Plaintiffs filed a 22 Complaint in state court on May 20, 2019, and Defendant removed the action to this Court on 23 June 14, 2019. (ECF No. 1 at 1.) Presently before the Court is Plaintiffs’ Ex Parte Application 24 for Temporary Restraining Order (“TRO”). (ECF No. 13.) For the reasons set forth below, that 25 application is DENIED. 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 On March 22, 2005, Plaintiffs purchased the subject property with a loan obtained through 3 Washington Mutual Bank FA. (ECF No. 1 at 12, ¶ 8.) Defendant is the mortgage servicer of 4 Plaintiffs’ loan. (ECF No. 1 at 11.) Plaintiffs fell behind on mortgage payments in April 2018. 5 (ECF No. 1 at 13, ¶ 13.) In the fall of 2018, Plaintiffs applied for a loan modification, and 6 Defendant offered Plaintiffs a 12-month “Repayment Plan.” (ECF No. 1 at 13, ¶ 14.) Defendant 7 retorts that Plaintiffs rejected the Repayment Plan offer. (ECF No. 14 at 3.) On January 11, 8 2019, Defendant recorded a Notice of Default against Plaintiffs’ interest in the subject property. 9 (ECF No. 1 at 13, ¶ 15.) 10 On April 12, 2019, Plaintiffs submitted another application for loan modification. (ECF 11 No. 1 at 13, ¶ 17.) Plaintiffs allege they never received a written denial of their application. 12 (ECF No. 1 at 14, ¶ 20; ECF No. 13 at 3.) In opposition, Defendant asserts it sent a letter on 13 April 19, 2019, effectively denying Plaintiffs’ application. (ECF No. 14-1 at 2.) Defendant 14 issued a Notice of Trustee’s Sale on April 24, 2019, with a sale date scheduled for May 23, 2019. 15 (ECF No. 13 at 3.) 16 On May 20, 2019, Plaintiffs filed this action in the Superior Court of California for the 17 County of Sacramento. (ECF No. 1 at 10.) Plaintiffs brought claims based on violations of the 18 HBOR, as well as negligence in the handling of Plaintiffs’ loan modification application. (ECF 19 No. 1 at 10.) On May 22, 2019, Plaintiffs appeared ex parte before the state court seeking a TRO 20 to enjoin the foreclosure sale on grounds that Defendant violated California Civil Code section 21 2923.6(c). (ECF No. 13 at 3.) The state court granted Plaintiffs’ ex parte application for TRO. 22 (ECF No. 1 at 66; ECF No. 13 at 3.) The court set the hearing for Plaintiffs’ motion for 23 preliminary injunction for June 28, 2019. (ECF No. 1 at 66–67; ECF No. 13 at 3.) 24 On June 14, 2019, Defendant filed a Notice of Removal with the Eastern District of 25 California. (ECF No. 1.) Plaintiffs allege that at some point Defendant rescheduled the sale date 26 of the subject property to occur on September 19, 2019. (ECF No. 13 at 4.) Plaintiffs filed the 27 present application for TRO on September 16, 2019, to enjoin the foreclosure sale. (ECF No. 13.) 28 Defendant filed a response on September 17, 2019. (ECF No. 14.) 1 II. STANDARD OF LAW 2 A temporary restraining order is an extraordinary remedy. The purpose of a temporary 3 restraining order is to preserve the status quo pending a fuller hearing. See Fed. R. Civ. P. 65. In 4 general, “[t]emporary restraining orders are governed by the same standard applicable to 5 preliminary injunctions.” Aiello v. One West Bank, No. 2:10-cv-0227- GEB-EFB, 2010 WL 6 406092 at *1 (E.D. Cal. Jan. 29, 2010) (internal citations omitted); see also L.R. 231(a). 7 Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear 8 showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 9 U.S. 7, 22 (2008) (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam)). “The 10 purpose of a preliminary injunction is merely to preserve the relative positions of the parties until 11 a trial on the merits can be held.” Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981); see also 12 Costa Mesa City Emps. Ass’n v. City of Costa Mesa, 209 Cal. App. 4th 298, 305 (2012) (“The 13 purpose of such an order is to preserve the status quo until a final determination following a 14 trial.”); GoTo.com, Inc. v. Walt Disney, Co., 202 F.3d 1199, 1210 (9th Cir. 2000) (“The status quo 15 ante litem refers not simply to any situation before the filing of a lawsuit, but instead to the last 16 uncontested status which preceded the pending controversy.”). 17 “A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed 18 on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, 19 [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” 20 Winter, 555 U.S. at 20. A plaintiff must “make a showing on all four prongs” of the Winter test 21 to obtain a preliminary injunction. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th 22 Cir. 2011). In evaluating a plaintiff’s motion for preliminary injunction, a district court may 23 weigh the plaintiff’s showings on the Winter elements using a sliding-scale approach. Id. A 24 stronger showing on the balance of the hardships may support issuing a preliminary injunction 25 even where the plaintiff shows that there are “serious questions on the merits . . . so long as the 26 plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the 27 public interest.” Id. Simply put, Plaintiffs must demonstrate, “that [if] serious questions going to 28 the merits were raised [then] the balance of hardships [must] tip[ ] sharply” in Plaintiffs’ favor in 1 order to succeed in a request for preliminary injunction. Id. at 1134–35. 2 III. ANALYSIS 3 Defendant argues that the Court should deny Plaintiffs’ TRO application because 4 Plaintiffs “created the instant crisis” by waiting too late to seek relief. (ECF No. 14 at 5.) 5 Eastern District of California Local Rule 231(b) provides that “the Court will consider 6 whether the applicant could have sought relief by motion for preliminary injunction at an earlier 7 date without the necessity for seeking last-minute relief by motion for temporary restraining 8 order.” Should the Court find such a delay, the Court may deny the requested TRO on those 9 grounds alone. L.R. 231(b). 10 Here, Plaintiffs were aware that Defendant recorded a Notice of Default against Plaintiffs’ 11 interest in the subject property on January 11, 2019. (ECF No. 1 at 13, ¶ 15.) Plaintiffs were also 12 aware that Defendant issued a Notice of Trustee’s Sale on April 24, 2019, which listed the initial 13 sale date as May 23, 2019. (ECF No. 13 at 3; ECF No. 13-2 at 21–22.) Moreover, Plaintiffs note 14 that Defendant rescheduled the sale at least once before, to July 18, 2019. (ECF No. 13 at 4.) Yet 15 Plaintiffs did not seek a TRO until September 16, 2019, only two business days before the current 16 sale date. 17 Plaintiffs’ counsel states, “Plaintiffs did not see the need to again seek injunctive relief 18 because there was no sale scheduled to occur in August of 2019.” (ECF No. 13-3 at 2; ECF No. 19 15 at 2.) Nowhere in the record is there any information about when Defendant gave Plaintiffs 20 notice of the current sale date of September 19, 2019. However, California law requires that such 21 notice be given at least 21 days in advance of the sale, and there is no indication that Defendant 22 failed to give Plaintiffs such notice. See Cal. Civ. Code § 2924.8. 23 Indeed, Plaintiffs do not claim inadequate notice of the current sale date, nor do they claim 24 that they were somehow prevented from seeking a preliminary injunction earlier. Plaintiffs 25 mention previous attempts to postpone the scheduled sale, and a paralegal for Plaintiffs’ counsel 26 submitted a declaration stating that he spoke to Defendant’s counsel and requested a voluntary 27 postponement of the sale on September 10, 2019. (ECF No. 13-1 at 1; ECF No. 13-5 at 2, ¶ 3.) 28 However, Plaintiffs’ efforts to convince Defendant to postpone the sale do not excuse their failure 1 to seek a preliminary injunction sooner. For the foregoing reasons, the Court exercises its 2 discretion under Local Rule 231(b) to deny Plaintiffs’ application for last-minute relief. See 3 Mammoth Specialty Lodging, LLC v. We-Ka-Jassa Inv. Fund, LLC, No. CIV-S10-0864-LKK- 4 JFM, 2010 WL 1539811, at *2 (E.D. Cal. Apr. 16, 2010) (denying a TRO application solely 5 based on Local Rule 231(b) because “plaintiff did not file the motion until four business days 6 before the scheduled foreclosure sale”); Avila v. Citi Mortg. Inc., No. 1:17-cv-1581-LJO-BAM, 7 2017 WL 5871473, at *1 (E.D. Cal. Nov. 29, 2017) (finding it appropriate to deny plaintiff’s 8 TRO request under Local Rule 231(b) because plaintiff received ample notice of foreclosure sale 9 and failed to “explain why he waited until the last possible moment to attempt to block the sale.”) 10 Therefore, the Court DENIES Plaintiffs’ Application for TRO. (ECF No. 13.) 11 IV. CONCLUSION 12 For the reasons set forth above, Plaintiffs’ Ex Parte Application for Temporary 13 Restraining Order, (ECF No. 13), is DENIED. 14 IT IS SO ORDERED. 15 Dated: September 18, 2019 16 17 18 19 20 21 22 23 24 25 26 27 28