Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01537/USCOURTS-casd-3_08-cv-01537-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 15:1601 Truth in Lending

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 A joint response was filed by Defendants Chase Home Finance, LLC and Mortgage

Electronic Registration Systems, Inc. The remaining defendant, First American Loanstar

Trustee Services, has not yet made an appearance in the case.

1 08cv1537 BTM(RBB)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOEL HARRINGTON,

Plaintiff,

CASE NO. 08cv1537 BTM(RBB)

ORDER DENYING APPLICATION

FOR TEMPORARY RESTRAINING

ORDER

vs.

CHASE HOME FINANCE, LLC, et al.

Defendants.

I. INTRODUCTION

On November 20, 2008, Plaintiff filed an ex parte application for a temporary

restraining order and OSC re: preliminary injunction (“TRO Application”). In an order filed

on that same day, the Court denied Plaintiff’s TRO Application without prejudice because

Plaintiff had not given notice of the application to any of the Defendants and had not

established why he should be excused from giving notice. The Court ordered Plaintiff to give

notice to each of the Defendants and ordered Defendants to show cause why a temporary

restraining order should not issue. Upon review of Defendants’ response to the Order to

Show Cause,1

 Plaintiff’s TRO application, and the verified First Amended Complaint, the

Court concludes that Plaintiff has not shown that he is entitled to a temporary restraining

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order.

II. DISCUSSION

A. Standard

The standard for issuing a preliminary injunction is the same as the standard for

issuing a temporary restraining order. See Dumas v. Gommerman, 865 F.2d 1093, 1095 (9th

Cir.1989). To prevail on a motion for a preliminary injunction, the moving party must show

either “a) a probable success on the merits combined with the possibility of irreparable injury

or b) that [the moving party] has raised serious questions going to the merits, and that the

balance of hardships tips sharply in her favor.” Bernhart v. County of Los Angeles, 339 F.3d

920, 925 (9th Cir. 2003). These alternatives are “extremes of a single continuum,” thus, “the

greater the relative hardship to the moving party, the less probability of success must be

shown.” Id. (citations omitted). Courts will also consider the public interest when evaluating

a request for injunctive relief. Caribbean Marine Servs. Co. v. Baldridge, 844 F.2d 668, 674

(9th Cir. 1988).

B. Analysis

1. Background Facts

Plaintiff’s claims arise out of a $378,300.00 loan he obtained from Duxford Financial,

Inc. (“Duxford”) in February 2006. The loan is secured by a deed of trust (“DOT”) on

Plaintiff’s home at 10448 Shelborne St. # 29, San Diego, CA 92127 (the “Property”). (Def.’s

RJN, Ex. 2.) The DOT identifies Duxford as the lender, Mortgage Electronic Registration

Systems, Inc. (“MERS”) as the nominee beneficiary, and Chicago Title Company as the

trustee. The DOT was recorded on February 24, 2006, with the San Diego County

Recorder’s office. 

On that same day, a second deed of trust securing a loan by Plaintiff in the sum of

$98,900.00 was recorded. (Def.’s RJN, Ex. 3). This deed of trust identifies JP Morgan

Chase Bank, N.A. as the beneficiary. 

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Also recorded on February 24, 2006, was a Condominium Grant Deed. (Def.’s RJN,

Ex. 1.) This Grant Deed transferred the Property at issue to Plaintiff.

On May 8, 2008, a Notice of Default and Election to Sell Under Deed of Trust was

recorded with the San Diego County Recorder’s Office. (Def.’s RJN, Ex. 5.) According to

this notice, as of May 8, 2008, Plaintiff was $32,857.01 in arrears on his repayment of the

Duxford loan. The notice also indicates that Plaintiff should contact Chase if he wishes to

arrange for payment to stop the foreclosure. Chase explains that at this time, it was the

servicer of the Duxford loan. 

 In June 2008, First American Loanstar Trustee Services (“First American Loanstar”)

was substituted in as the trustee under the DOT (Def.’s RJN, Ex. 6), and all beneficial

interest in the DOT was assigned to Chase. (Def.’s RJN, Ex. 7.) 

On August 13, 2008, a Notice of Trustee’s Sale was recorded with the San Diego

County Recorder’s Office. (Def.’s RJN, Ex. 8.) 

2. Plaintiff’s Allegations

In his FAC, Plaintiff alleges that Defendants represented to him that the loan was a

30-year fixed rate loan with a fixed interest rate of 7.884% and not an “ARM” loan. (FAC ¶

17.) Plaintiff alleges that he was “baited” with the 30-year fixed rate mortgage only to be

switched to a three-year “ARM” loan. (FAC ¶ 18.) Plaintiff claims that he discovered on or

about January 1, 2008, that the loan was due to reset on or about October 1, 2008. (FAC,

¶ 15.) On or about February 22, 2008, Plaintiff sent a Notice of Rescission to Chase. 

Plaintiff also alleges that Defendants falsified employment and income information and

forged Plaintiff’s name to subsequent escrow documents without Plaintiff’s knowledge or

authorization. (FAC ¶ 20.) In addition, Plaintiff alleges that Defendants failed to provide the

necessary disclosure statements required under the Truth In Lending Act, 15 U.S.C. §1601,

et seq., including, but not limited to, copies of Plaintiff’s right to rescind and an ARM

disclosure. (FAC ¶ 21.) Plaintiff also disputes that any of Defendants have a legal right to

pursue foreclosure proceedings. (FAC ¶ 41.)

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The FAC includes the following claims: (1) Rescission under the Federal Truth in

Lending Act (“TILA”); (2) violation of the Fair Debt Collection Practices Act; (3) Predatory

Lending Practices; (4) Fraud; and (5) Declaratory Relief. As discussed below, Plaintiff has

not established a likelihood of success on any of these claims. 

3. Merits of Claims

Plaintiff seeks to enjoin Defendants from performing any act to deprive him of

ownership or possession of the Property, including, but not limited to, instituting, prosecuting,

or maintaining foreclosure or sale proceedings on the Property or recording any deeds or

mortgages regarding the Property. However, Plaintiff has not shown that he is likely to

prevail on any of his claims.

Plaintiff seeks rescission under the TILA, 15 U.S.C. § 1635. Defendants argue that

the remedy of rescission is unavailable to Plaintiff because the loan at issue was not a

“refinance” loan, as alleged by Plaintiff, but, rather, a purchase loan. It seems that

Defendants are correct.

Section 1635 does not apply to “a residential mortgage transaction as defined in

section 1602(w) of this title.” 15 U.S.C. § 1635(e)(1). Section 1602(w), in turn, defines a

residential mortgage transaction as:

[A] transaction in which a mortgage, deed of trust, purchase money security

interest arising under an installment sales contract, or equivalent consensual

security interest is created or retained against the consumer's dwelling to

finance the acquisition or initial construction of such dwelling.

(Emphasis added.)

According to documents that were filed with the San Diego County Recorder’s Office,

the loan was for purposes of financing the acquisition of the property at 10448 Shelborne

Street, # 29, San Diego, CA 92127. (Def.’s RJN, Exs. 1-3.) The Condominium Grant Deed

and the two deeds of trust securing the loans to Plaintiff were recorded on the very same

day. Although Plaintiff alleges that the loan was a “refinance loan,” Plaintiff has not

presented any evidence that this is so. 

First mortgages are “residential mortgage transactions” and are exempt from the right

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 It seems that Plaintiff is also seeking statutory damages for violation of the TILA. 

(FAC ¶ 26.) The Court need not analyze the merits of Plaintiff’s claim for statutory damages,

because even if Plaintiff is likely to succeed on this claim, the proper relief is monetary

damages, not rescission.

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 The Court also notes that it appears that there is no private right of action under the

Federal Trade Commission Act. See Alfred Dunhill Ltd. v. Interstate Cigar Co., Inc., 499 F.2d

232, 237 (2d Cir. 1974). As for the HOEPA claim, it appears that HOEPA’s additional

disclosure requirements do not apply because Plaintiff’s loan was a residential mortgage

transaction. See 15 U.S.C. § 1602(aa)(1).

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to rescission provided by § 1635. Turczynski v. Friedman, 2007 WL 4556923 (E.D. Cal. Dec.

20, 2007). Therefore, it appears that Plaintiff has no claim for rescission under the TILA. 2

Plaintiff also asserts a fraud claim against Chase. Plaintiff alleges that Chase

fraudulently represented that the mortgage had a fixed-interest rate, with the intention to

induce Plaintiff to sign the note at an excessive rate and unfair terms. (FAC ¶¶ 34-39.)

However, Chase was not the lender. Duxford, who is not named as a defendant in the FAC,

was the lender. Chase became an assignee beneficiary of the DOT in June of 2008. Plaintiff

has not come forward with evidence showing that Chase was actually involved in making

representations regarding the loan to Plaintiff and setting the terms of the loan. Accordingly,

Plaintiff has not shown that he has a chance of succeeding on his fraud claim against Chase.

Plaintiff also asserts a claim of “predatory lending practices” in violation of the Home

Ownership and Equity Protection Act (“HOEPA”) and the Federal Trade Commission Act and

a claim under the Fair Debt Collection Practices Act. It is unclear exactly what provisions of

these acts Defendants allegedly violated and whether rescission would be a remedy.3

Moreover, once again, Plaintiff fails to specify exactly what each Defendant allegedly did.

Vague accusations of unfair lending and collection practices are insufficient to warrant

injunctive relief. 

In his declaratory relief claim, Plaintiff contends that none of the Defendants has a

legal right to foreclose on the DOT. However, Defendants have come forward with evidence

showing that Chase is the assignee beneficiary and First American Loanstar is the assignee

trustee. Accordingly, it appears that Chase and First American Loanstar are entitled to

commence nonjudicial foreclosure proceedings pursuant to the terms of the DOT and Cal.

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 Plaintiff also indicates that he “contests the validity of the Note” (FAC ¶ 42) and

contests the authenticity of the signatures on the note (Harrington Decl. dated 11/19/08, ¶

5.) It appears that Plaintiff’s objection to the authenticity of the note is a form of evidentiary

objection. Although Plaintiff claims that Defendants’ notary forged his signature on various

documents, Plaintiff does not deny that he in fact signed the note. Indeed, in his fraud claim,

Plaintiff states that he was induced into signing the note. (FAC ¶ 37.) 

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Civ. Code §§ 2924-2924i. Plaintiff has not presented evidence showing that these

assignments were invalid or that subsequent assignments have been made. 4

Although the loss of Plaintiff’s home may constitute an irreparable injury – see, e.g.,

Wrobel v. S.L Pope & Assoc., 2007 WL 2345036 (S.D. Cal. June 15, 2007) - Plaintiff has

failed to show even a fair chance of success on the merits. Therefore, Plaintiff is not entitled

to injunctive relief.

III. CONCLUSION

For the reasons discussed above, Plaintiff’s application for a temporary restraining

order and an OSC re: preliminary injunction is DENIED.

IT IS SO ORDERED.

DATED: December 8, 2008

Honorable Barry Ted Moskowitz

United States District Judge

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