Alvarez v. Wells Fargo Bank, N.A. ( 2019 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 JOHN ALVAREZ, No. 2:15-cv-00943-TLN-DB 12 Plaintiff, 13 v. ORDER 14 WELLS FARGO BANK, N.A., 15 Defendant. 16 17 Presently before the Court is Plaintiff’s Motion for Temporary Restraining Order 18 (“TRO”), filed September 24, 2019. (ECF No. 60.) Defendant Wells Fargo Bank, N.A. (“Wells 19 Fargo”) filed an opposition on September 26, 2019. (See ECF No. 60-1.) For the reasons set 20 forth below, Plaintiff’s Motion is GRANTED. 21 I. FACTUAL AND PROCEDURAL BACKGROUND 22 Plaintiff filed the underlying complaint in this action on April 30, 2015, seeking injunctive 23 relief, declaratory relief, and damages, all arising from the allegedly wrongful foreclosure of 24 Plaintiff’s residence. (ECF No. 1.) According to the Complaint, Plaintiff resides at 7625 Zilli 25 Drive Tracy, California 95304, the real property at issue in this matter (“the Property”). (ECF 26 No. 1 at ¶ 1.) On April 14, 2008, Plaintiff executed a Deed of Trust whereby Plaintiff obtained a 27 mortgage loan through Wells Fargo. (ECF No. 1 at ¶ 7.) In March 2010, Plaintiff applied for and 28 obtained a loan modification. (ECF No. 1 at ¶ 8.) Plaintiff claims he executed the loan 1 modification agreement on April 8, 2010, and sent the agreement to Wells Fargo. (ECF No. 1 at 2 ¶ 8.) Plaintiff further states that he received confirmation that Wells Fargo received the signed 3 agreement from Plaintiff, that Wells Fargo signed the agreement and sent a copy back to Plaintiff. 4 (ECF No. 1 at ¶ 8.) In May 2010, however, Plaintiff received notice from Wells Fargo that his 5 loan modification was cancelled because Wells Fargo believed he never returned the signed 6 modification agreement. (ECF No. 1 at ¶ 8.) 7 In September 2011, Plaintiff lost his job and was no longer able to make his mortgage 8 payments. (ECF No. 1 at ¶ 9.) Plaintiff applied for assistance from Keep Your Home California 9 (“KYHC”) which paid six mortgage payments for Plaintiff in 2011 and 2012. (ECF No. 1 at ¶ 9.) 10 When Plaintiff obtained employment in October 2013, he applied for assistance from KYHC’s 11 Mortgage Repayment Assistance Program (“MRAP”). (ECF No. 1 at ¶ 10.) 12 Wells Fargo asserts, and Plaintiff does not deny, that Wells Fargo offered another load 13 modification in June 2012, but Plaintiff rejected the terms thereof. (ECF No. 46-1 at 4.) 14 Plaintiff alleges that in March 2014, he attended a workshop sponsored by Wells Fargo for 15 homeowners needing assistance in modifying their mortgages. (ECF No. 1 at ¶ 11.) At the 16 workshop, Wells Fargo employees informed Plaintiff that he would be able to submit a mortgage 17 loan modification application with supporting documents that would include participation by 18 KYHC. (ECF No. 1 at ¶ 11.) Plaintiff alleges he met with three Wells Fargo employees who 19 reviewed Plaintiff’s application and supporting documents, and informed Plaintiff that his loan 20 modification application was complete, and Plaintiff would receive a decision on the application 21 as soon as a file for Plaintiff’s participation in KYHC was opened and reviewed. (ECF No. 1 at ¶ 22 11.) However, within three days, Wells Fargo contacted Plaintiff and stated it would not consider 23 Plaintiff’s participation in KYHC and that additional documents were necessary for Plaintiff’s 24 loan modification application. (ECF No. 1 at ¶ 11.) Plaintiff questioned the need for additional 25 documents and apparently never submitted anything further. In May 2014, Plaintiff’s loan 26 modification application was denied. (ECF No. 1 at ¶ 11.) Wells Fargo’s denial letter provided 27 the reason for cancellation of his loan modification application was that he had failed to submit 28 necessary documentation. (ECF No. 1 at ¶ 11.) 1 Plaintiff does not dispute that he submitted another request for mortgage assistance on 2 July 28, 2015. (ECF No. 50 at 5.) On September 16, 2014, and October 6, 2014, Wells Fargo 3 sent Plaintiff mailings which contained a loan modification agreement (Deed of Trust) with 4 accompanying letters via FedEx overnight delivery. (ECF No. 1 at ¶ 13.) Plaintiff asserts that the 5 September 2014 mailing was not delivered to Plaintiff, and instead was delivered to an absentee 6 neighbor’s residence, who delivered the mailing to Plaintiff in November 2014. (ECF No. 1 at ¶ 7 13.) The October 6, 2014, mailing contained a letter dated August 13, 2014, advising Plaintiff 8 that in order to complete his loan modification, he was required to return the signed loan 9 modification agreement to Wells Fargo within fifteen days of August 13, 2014, or Wells Fargo 10 would cancel the agreement. (ECF No. 1 at ¶ 13.) Plaintiff alleges that he was prevented from 11 responding to the August mailing because he did not receive it until after the deadline for return 12 of the signed loan modification agreement had passed. (ECF No. 1 at ¶ 13.) Wells Fargo counters 13 that Plaintiff told a Wells Fargo employee on a telephone call in October 2014 that he received 14 the agreement and did not know when he would send the documents back. (ECF No. 50 at 7.) 15 The loan modification was cancelled in November of that year because Plaintiff did not return the 16 signed agreement. (ECF No. 50 at 7.) 17 Plaintiff alleges that in early December 2014, Wells Fargo’s Home Preservation 18 Specialist, Brian Kent, requested that Plaintiff submit another mortgage loan modification 19 application. (ECF No. 1 at ¶ 14.) On December 5, 2014, Plaintiff submitted yet another completed 20 mortgage loan modification application with supporting documents via facsimile transmission 21 and via email. (ECF No. 1 at ¶ 14.) Shortly thereafter, Brian Kent contacted Plaintiff by telephone 22 and told Plaintiff that Wells Fargo would not consider Plaintiff’s mortgage loan modification 23 application because Plaintiff had not signed the documents that were sent to him in the September 24 and October mailings. (ECF No. 1 at ¶ 14.) Plaintiff alleges in his complaint that Wells Fargo did 25 not provide any written explanation for refusing to consider the loan modification application 26 (ECF No. 1 at ¶ 14), but then asserts in the present TRO that Wells Fargo did in fact respond in 27 writing on December 10, but that response was insufficient under the Homeowner Bill of Rights. 28 (ECF No. 61 at 2-3.) More specifically, Plaintiff contends Wells Fargo failed to identify the 1 purportedly missing documents, failed to advise Plaintiff of his right to appeal the denial, and 2 failed to advise Plaintiff of a timeline for submission of additional documentation, all in violation 3 of the Homeowner Bill of Rights. (ECF No. 1 at ¶ 14; ECF No. 61 at 2-3.) The parties dispute 4 whether this loan modification application was in fact complete. 5 On January 8, 2015, Defendant Quality Loan Service Corporation conducted a Trustee’s 6 Sale of the subject property at 10:00 a.m. at the San Joaquin County Superior Court. (ECF No. 1 7 at ¶ 15.) Wells Fargo took title to the subject property on January 15, 2015, and recorded the 8 Trustee’s Deed Upon Sale on January 20, 2015. (ECF No. 1 at ¶ 15.) 9 Plaintiff filed the instant action on April 30, 2015. (ECF No. 1.) After an order from this 10 Court issued March 23, 2016, granting in part and denying in part Defendant’s motion to dismiss 11 (ECF No. 20), Plaintiff has viable wrongful foreclosure claims remaining under California Civil 12 Code §§ 2923.6 or 2924.18, California’s Homeowner Bill of Rights. The parties are in agreement 13 that Well Fargo thereafter obtained an eviction judgment and Plaintiff moved out of the Property 14 in May 2016. In December 2016, Wells Fargo then rescinded the January 2015 sale; Plaintiff’s 15 attorney was informed of the rescission in February 2017, and Plaintiff moved back in. Plaintiff 16 presently resides in the home, and now seeks to enjoin a second foreclosure sale set for 17 September 30, 2019. (ECF No. 60.) 18 II. STANDARD OF LAW 19 A temporary restraining order is an extraordinary remedy. The purpose of a temporary 20 restraining order is to preserve the status quo pending a fuller hearing. See Fed. R. Civ. P. 65. In 21 general, “[t]emporary restraining orders are governed by the same standard applicable to 22 preliminary injunctions.” Aiello v. One West Bank, No. 2:10-cv-0227- GEB-EFB, 2010 WL 23 406092 at *1 (E.D. Cal. Jan. 29, 2010) (internal citations omitted); see also L.R. 231(a). 24 Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear 25 showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 555 26 U.S. 7, 22 (2008) (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam)). “The 27 purpose of a preliminary injunction is merely to preserve the relative positions of the parties until 28 a trial on the merits can be held.” Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981); see also 1 Costa Mesa City Emps. Ass’n v. City of Costa Mesa, 209 Cal. App. 4th 298, 305 (2012) (“The 2 purpose of such an order is to preserve the status quo until a final determination following a 3 trial.”); GoTo.com, Inc. v. Walt Disney, Co., 202 F.3d 1199, 1210 (9th Cir. 2000) (“The status quo 4 ante litem refers not simply to any situation before the filing of a lawsuit, but instead to the last 5 uncontested status which preceded the pending controversy.”). 6 “A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed 7 on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, 8 [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” 9 Winter, 555 U.S. at 20. A plaintiff must “make a showing on all four prongs” of the Winter test 10 to obtain a preliminary injunction. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 11 (9th Cir. 2011). In evaluating a plaintiff's motion for preliminary injunction, a district court may 12 weigh the plaintiff's showings on the Winter elements using a sliding-scale approach. Id. A 13 stronger showing on the balance of the hardships may support issuing a preliminary injunction 14 even where the plaintiff shows that there are “serious questions on the merits . . . so long as the 15 plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the 16 public interest.” Id. Simply put, Plaintiff must demonstrate, “that [if] serious questions going to 17 the merits were raised [then] the balance of hardships [must] tip[ ] sharply in the plaintiff's favor,” 18 in order to succeed in a request for preliminary injunction. Id. at 1134–35 (emphasis added). 19 III. ANALYSIS 20 As a preliminary matter, Defendant argues Plaintiff’s request should be denied as Plaintiff 21 has waited until the eleventh hour to file the pending application. (ECF No. 65 at 1.) Local Rule 22 231(b) provides that “the Court will consider whether the applicant could have sought relief by 23 motion for preliminary injunction at an earlier date without the necessity for seeking last-minute 24 relief by motion for temporary restraining order.” Should the Court find such a delay, the Court 25 may deny the requested TRO on those grounds alone. L.R. 231(b). 26 Defendant is correct, of course, that Plaintiff has been aware of the allegations underlying 27 his complaint since well before the September 30, 2019, sale date. But the Court is not convinced 28 that Plaintiff would have had grounds to seek an injunction of the pending foreclosure before he 1 received the Notice of Trustee Sale, recorded August 29, 2019. Plaintiff’s counsel contends that 2 on September 3, Wells Fargo rejected counsel’s request to continue the sale date. Therefore, the 3 requested relief could not have been sought—practically speaking—before September 4, 2019. 4 The Court finds Plaintiff’s minor delay insubstantial, and therefore declines to deny the requested 5 TRO on the grounds of delay and instead considers the merits of Plaintiff’s request.1 6 As for the merits of Plaintiff’s request, the Court finds that issuance of a TRO is 7 appropriate at this time because Plaintiff has made a showing on all four prongs of the Winter test 8 articulated above. Plaintiff has established a likelihood of irreparable harm to the extent that the 9 trustee’s sale of his home is scheduled for September 30, 2019. This harm is imminent as it is 10 neither remote nor speculative, and Defendant does not dispute that the sale of Plaintiff’s home 11 would be an irreparable harm. The Court further finds that the balance of hardships tips sharply 12 in Plaintiff’s favor because if the sale is not enjoined, Plaintiff will lose his primary residence. 13 The Court acknowledges that Plaintiff has been in default on his loan for some time, and 14 recognizes that further postponement places some hardship on Defendant. The hardship of an 15 additional delay to allow further briefing on the matter, however, pales in comparison to the 16 possibility that Plaintiff could wrongfully lose his home. Similarly, to the extent it is being used 17 to ensure compliance with laws designed to protect the public, a TRO in this case is in the 18 public’s interest. 19 Wells Fargo seems to concede as much, and focuses its opposition on the argument that 20 Plaintiff has failed to establish a likelihood of success on the merits of his complaint. More 21 specifically, Defendant points to its pending Motion for Summary Judgment (“MSJ”) (ECF No. 22 46) in which it argues Plaintiff has failed to establish any genuine issue of material fact that Wells 23 Fargo violated sections 2923.6 and/or 2924.18 of the HBOR.2 24 California Civil Code §§ 2923.6(c) and 2924.18(a)(1) prohibit the recordation of a notice 25 1 Local Rule 231(c) also outlines several specific documents that a plaintiff must file when seeking a TRO. Plaintiff here has met those requirements, and Defendant does not dispute otherwise. 26 2 Wells Fargo’s MSJ seeks summary judgment of Plaintiff’s wrongful foreclosure claims stemming from 27 Wells Fargo’s denial of Plaintiff’s March 12, 2014 loan modification application, and his December 5, 2014 loan modification application. Because Plaintiff’s TRO only seeks injunctive relief based on the activities surrounding the 28 December application, the Court does not address the March application here. 1 of trustee’s sale or the conducting of a trustee’s sale while a complete first lien loan modification 2 application is pending. Cal. Civ. Code §§ 2923.6(c), 2924.18(a)(1). Further, § 2923.6(c)(1) 3 requires the servicer to provide a written determination that the borrower is not eligible for 4 modification before proceeding with foreclosure activities. Cal. Civ. Code § 2923.6(c)(1). 5 Without ruling on the merits of the parties’ pending motions for summary judgment, and based on 6 the limited briefing before the Court, the Court finds Plaintiff has at least raised serious questions 7 as to the merits of his remaining claims, as further described below. 8 First, it appears there is a material dispute concerning whether Plaintiff’s December 5, 9 2014 loan modification application was in fact complete, such that the protections of § 2923.6 10 would be triggered. 11 Second, to the extent Wells Fargo contends completeness is irrelevant because it was not 12 obligated to review the application pursuant to California Civil Code § 2923.6(g) (ECF No. 46-1 13 at 12), the Court finds additional material disputes raising serious questions here as well. 14 Specifically, California Civil Code § 2923.6(g) provides, “the mortgage servicer shall not be 15 obligated to evaluate applications from borrowers who have already been evaluated or afforded a 16 fair opportunity to be evaluated for a first lien loan modification prior to January 1, 2013, or who 17 have been evaluated or afforded a fair opportunity to be evaluated consistent with the 18 requirements of this section, unless there has been a material change in the borrower’s financial 19 circumstances since the date of the borrower’s previous application and that change is 20 documented by the borrower and submitted to the mortgage servicer.” Here, Plaintiff contends 21 his 2010 loan modification was cancelled because Wells Fargo believed he never returned the 22 executed agreement. It is thus questionable whether Plaintiff was “afforded a fair opportunity to 23 be evaluated for a first lien loan modification prior to January 1, 2013.” Cal. Civ. Code § 24 2923.6(g). And while Wells Fargo asserts Plaintiff was additionally evaluated for a loan 25 modification and offered such modification in August 2014, Plaintiff claims he did not receive 26 that offer until it was too late to accept it. The Court finds these conflicts in the record are 27 sufficient to raise serious questions going to the merits of Plaintiff’s claims under the HBOR. 28 Consequently, Plaintiff’s motion is GRANTED. 1 Lastly, no bond shall be required. See Fed. R. Civ. Pro. 65(c) (requiring movant to post 2 security); People of Cal. v. Tahoe Reg’l Planning Agency, 766 F. 2d 1319, 1325–26 (9th Cir. 1985) 3 (providing that “courts have discretion to excuse the bond requirement”). First, the Court finds 4 Defendant is adequately protected by its security interest in the subject property. See Jorgensen v. 5 Cassiday, 320 F. 3d 906, 919 (9th Cir. 2003) (“The district court may dispense with the filing of a 6 bond when it concludes there is no realistic likelihood of harm to the defendant from enjoining his or 7 her conduct.”); Ticketmaster L.L.C. v. RMG Techs., Inc., 507 F. Supp. 2d 1096, 1116 (C.D. Cal. 2007) 8 (“A bond may not be required, or may be minimal, when the harm to the enjoined party is slight or 9 where the movant has demonstrated a likelihood of success.”). 10 IV. CONCLUSION 11 For the reasons set forth above, Plaintiff’s Motion for TRO (ECF No. 60) is GRANTED. 12 Defendant and its agents are hereby enjoined from conducting a trustee’s sale, attempting to 13 auction, or otherwise causing to be sold the real property at issue in this action. Plaintiff is 14 ordered to notice and file a motion for preliminary injunction not later than fourteen (14) days 15 from the date of electronic filing of this order. If Plaintiff fails to notice and file such a motion 16 within fourteen (14) days, the TRO shall automatically be lifted. No bond shall be required. 17 IT IS SO ORDERED. 18 DATED: September 27, 2019 19 20 21 22 23 24 25 26 27 28