Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_19-cv-00547/USCOURTS-cand-4_19-cv-00547-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-(Citizenship)

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MICHAEL PETERSON, et al.,

Plaintiffs,

v.

WELLS FARGO BANK, N.A., et al.,

Defendants.

Case No.19-cv-00547-HSG 

ORDER DENYING MOTION FOR 

TEMPORARY RESTRAINING ORDER 

AND DISSOLVING PREVIOUSLY 

IMPLEMENTED RESTRAINING 

ORDER

Re: Dkt. Nos. 19, 26

Pending before the Court is a motion for a temporary restraining order and order to show 

cause pending preliminary injunction filed by Plaintiffs Michael Peterson and Toni Peterson on 

March 12, 2019. Dkt. No. 19 (“Mot.”). Plaintiffs seek injunctive relief preventing Defendants 

Wells Fargo Bank, N.A., Wells Fargo Home Mortgage, and Clear Recon Corp “from selling 

Plaintiffs’ home, or attempting to sell it, or causing it to be sold, either under the power of sale in 

the trust deed or by foreclosure action; or any other conduct adverse to Plaintiffs regarding their 

long-time residence and real property.” Id. at 2. On March 19, 2019, Defendant Wells Fargo 

opposed Plaintiffs’ motion. Dkt. No. 32 (“Opp.”). The Court held a hearing on this motion on 

March 22, 2019. For the following reasons, the Court DENIES the motion and DISSOLVES the 

temporary restraining order dated March 12, 2019.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In December 2007, Plaintiffs obtained a $900,000 loan from Wells Fargo’s predecessor-ininterest, World Savings Bank, FSB, which was secured by a deed of trust recorded against 4442 

Arlington Ave, Santa Rosa, CA 95407-8306. Dkt. No. 14 (“FAC”) ¶ 19; FAC Ex. 1. In 2013, 

Plaintiffs first brought suit against Wells Fargo in connection with a loan modification. See 

Peterson v. Wells Fargo Bank, N.A., No. 13-cv-03392-MEJ, 2015 WL 3397385 (N.D. Cal. May 

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26, 2015). The court there granted summary judgment in favor of Wells Fargo in May 2015. Id. 

In 2017, Plaintiffs brought a second suit against Wells Fargo, which came before this Court, 

alleging in part that Wells Fargo negligently reviewed their application for a loan modification by 

arbitrarily and inaccurately appraising Plaintiffs’ application. See Peterson v. Wells Fargo Bank, 

N.A., No. 17-cv-05137-HSG, 2018 WL 1948895, at *3 (N.D. Cal. Apr. 25, 2018) (Peterson II). 

The Court dismissed without leave to amend Plaintiffs’ negligent review claim because Plaintiffs 

“failed to allege that Defendant owed a duty of care either because Defendant’s involvement in the 

loan transaction . . . exceed[ed] the scope of its conventional role as a mere lender of money, or 

because Defendant otherwise place[d] Plaintiffs in a position that created a need for their loan 

modification application.” Id. at *3 (internal quotation and citation omitted). The Court permitted 

other claims to proceed, however, and the parties ultimately reached a settlement in July 2018. 

See FAC ¶ 21, Ex. 2.

Under the terms of the settlement, Wells Fargo agreed to “conduct a new review of an 

application for a LOAN MODIFICATION REVIEW.” FAC Ex. 2, ¶ 4.1. The agreement stated

more than once that Wells Fargo promised nothing about the review’s outcome. Id. ¶ 4.3

(“PLAINTIFFS acknowledge that WELLS FARGO’S LOAN MODIFICATION REVIEW shall 

not constitute a promise, representation, or guarantee that any such review will receive final 

approval, and nothing in this Agreement shall be construed as a promise, representation, or 

guarantee of such an approval.”), ¶ 4.4 (“PLAINTIFFS acknowledge that, notwithstanding any 

conditional or final approval, WELLS FARGO makes no promise, representation, or guarantee 

whatsoever concerning the results of the LOAN MODIFICATION REVIEW including, but not 

limited to, the specific financial terms of any potential loan modification.”). The agreement 

further provided that no foreclosure sale would occur “until sixty (60) days after the date of 

denial.” Id. ¶ 4.5.

On August 13, 2018, Wells Fargo denied Plaintiffs a loan modification “based on the 

results of [Plaintiffs’] net present value (NPV) evaluation.” See Dkt. No. 17 Ex. A.1 On October 

 

1 The Court finds that it may incorporate Wells Fargo’s denial into the operative complaint by 

reference. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (explaining that under the 

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5, 2018, Plaintiffs’ counsel submitted a letter to Wells Fargo, seeking to “appeal the denial,” based 

on alleged miscalculations of the NPV. See FAC ¶ 45, Ex. 3. Wells Fargo responded on October 

30, 2018, acknowledged Plaintiffs’ counsel’s letter, but maintained that its findings and denial 

were accurate. See FAC ¶ 46, Ex. 4. On November 27, 2018, Wells Fargo sent Plaintiffs another 

letter, affirming its October 30, 2018 decision. See FAC ¶ 26, Ex. 6. Wells Fargo ultimately set a 

January 2, 2019 date for a trustee sale, which was later postponed to March 13, 2019. See FAC 

¶ 20.

Dissatisfied with the outcome, Plaintiffs filed this suit on December 28, 2018 in Sonoma 

County Superior Court, alleging that Wells Fargo’s loan modification review was negligent. See 

Dkt. No. 1-1. After Wells Fargo removed the case to federal court, see Dkt. No. 1, it moved to 

dismiss the initial complaint, in part, for “attempt[ing] to convert a contract claim to a tort claim.” 

See Dkt. No. 11 at 1. Plaintiffs thereafter filed an amended complaint, which added a claim for 

breach of the settlement agreement based on identical allegations that purportedly support their 

negligence claim. Compare FAC ¶¶ 18–39, with id. ¶¶ 40–61.

Although Plaintiffs knew well in advance of the planned March 13, 2019 trustee sale, they 

waited until the day before to file the pending motion for a temporary restraining order. Another 

court in this district “temporarily restrained” Defendants from proceeding with the trustee sale 

pending a hearing on Plaintiffs’ motion. See Dkt. No. 26. This Court subsequently related the 

case and held a hearing on Plaintiffs’ motion on March 22, 2019. See Dkt. No. 29 (“Order 

Relating Case”).

II. LEGAL STANDARD

The standard for issuing a temporary restraining order and issuing a preliminary injunction 

are substantially identical. Stuhlbarg Int'l Sales Co., Inc. v. John D. Brush & Co., 240 F.3d 832, 

839 n.7 (9th Cir. 2001). Either is an “extraordinary remedy” that the court should award only 

upon a clear showing that the party is entitled to such relief. See Winter v. Natural Res. Def. 

 

incorporation-by-reference doctrine, a court may “take into account documents whose contents are 

alleged in a complaint and whose authenticity no party questions, but which are not physically 

attached [to] the [plaintiff's] pleading” (citation omitted)).

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Council, Inc., 555 U.S. 7, 20 (2008). Plaintiffs seeking preliminary relief must establish: (1) that 

they are likely to succeed on the merits; (2) that they are likely to suffer irreparable harm in the 

absence of preliminary relief; (3) that the balance of equities tips in their favor; and (4) that an 

injunction is in the public interest. Id. Preliminary relief is “an extraordinary remedy that may 

only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Id. at 22. A 

court must find that “a certain threshold showing” is made on each of the four required elements. 

Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011). Under the Ninth Circuit’s sliding scale 

approach, a preliminary injunction may issue if there are “serious questions going to the merits” if 

“a hardship balance [also] tips sharply towards the [movant],” and “so long as the [movant] also 

shows that there is a likelihood of irreparable injury and that the injunction is in the public 

interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).

III. DISCUSSION

Plaintiffs fail not only to show a likelihood of success on the merits or serious questions 

going to the merits but also that the balance of equities tip in their favor. Each are independently 

sufficient reasons to deny Plaintiffs’ motion and dissolve the temporary restraining order. And 

because Plaintiffs’ requested injunctive relief fails on these grounds, the Court need not address 

the other Winter factors.

A. Likelihood of Success on the Merits

To determine whether Plaintiffs have made out a substantial case for relief on the merits, 

the Court engages in a claim-by-claim analysis of the causes of action brought in the operative 

complaint. Here, Plaintiffs bring claims for breach of the confidentiality agreement and negligent 

review of their loan modification application. 

1. Negligence

As to Plaintiffs’ negligence claim, their theory of negligence is identical to the theory they 

advanced—and this Court rejected—in Peterson II. There, as here, Plaintiffs argued that this 

Court should follow Alvarez v. BAC Home Loans Servicing, L.P., which found that lenders owe 

borrowers a “duty to exercise reasonable care in the review of their loan modification applications 

once they had agreed to consider them.” 176 Cal. Rptr. 3d 304, 306 (Ct. App. 2014). Compare 

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Peterson v. Wells Fargo Bank, N.A., No. 17-cv-05137-HSG, 2017 WL 6539743, at *4–5 (N.D. 

Cal. Dec. 21, 2017) (dismissing Plaintiffs’ negligence claim with leave to amend), and Peterson 

II, 2018 WL 1948895, at *3 (dismissing Plaintiffs’ negligence without leave to amend for 

advancing the same arguments as the prior complaint and failing to present contrary intervening 

authority), with Dkt. No. 34 at 8–9 (arguing in opposition to Wells Fargo’s pending motion to 

dismiss that Plaintiffs “believe the reasoning in Alvarez is persuasive”). But there, as here, the 

Court finds that the Ninth Circuit has limited Alvarez’s reach, and more important, “any harm to 

Plaintiffs is not primarily attributable to Defendant’s processing of Plaintiffs’ loan modification 

application. Rather, when the modification was necessarily due to the borrower’s inability to 

repay the loan, the borrower’s harm, suffered from denial of a loan modification, is not . . . closely 

connected to the lender’s conduct.” See Peterson, 2017 WL 6539743, at *5 (internal quotations 

and citations omitted); see also Saldana v. Wells Fargo Bank, N.A., No. 18-cv-01049-HSG (N.D. 

Cal. Feb. 8, 2019) (reaching the same conclusion). Last, there, as here, Plaintiffs have known the 

Court’s position on this cause of action but “fail to cite any intervening authority that would merit 

a different result.” Compare Peterson II, 2018 WL 1948895, at *3 (discussing Plaintiffs’ failure 

to address or distinguish the Court’s prior holding), with Dkt. No. 34 at 9 (advancing the same 

Alvarez claim without addressing or distinguishing the Court’s prior holdings).

The Court finds no reason—and more important, Plaintiffs present the Court with no 

reason—to reconsider its prior holdings on this issue. Accordingly, the Court finds that Plaintiffs 

have not demonstrated a likelihood of success on their negligence claim.

2. Breach of Contract

Plaintiffs allege two bases for a breach of the settlement agreement. First, Plaintiffs allege 

that Wells Fargo’s post-settlement loan modification review “was a sham.” FAC ¶ 23. Second, 

Plaintiffs allege that Wells Fargo initial scheduling of the trustee sale for January 2, 2019 was 

“within the agreed-upon sixty (60) day forbearance period” in the agreement. Id ¶ 22.

As to the alleged “sham” review, Plaintiffs’ claim rests entirely on their disagreement with 

Wells Fargo’s NPV calculation and outcome. But disagreeing with the outcome is not evidence of 

a breach, let alone a “sham,” particularly when the contract at issue disavowed any promises on an 

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outcome. As to the NPV calculation, Plaintiffs offers no explanation for why Defendants were 

obligated to adopt Plaintiffs’ computation, even if it were a reasonable alternative.

As to the initial trustee sale scheduled, it is not clear that Wells Fargo breached the 

forbearance provision. On this point, the parties dispute the agreement’s language. Plaintiffs

claim the agreement “provides that Wells Fargo will not conduct a foreclosure sale until sixty (60 

days after the final loan modification denial,” and that the January 2, 2019 trustee sale was less 

than 60 days after Wells Fargo’s November 27, 2018 letter. See FAC ¶ 21 (emphasis added). 

Wells Fargo responds that the agreement’s forbearance period in fact says “sixty (60) days after 

the date of denial,” which in Wells Fargo’s view referred to the date of the initial denial: August 

13, 2018. Opp. at 8. Whatever the agreement’s meaning, Wells Fargo moved the trustee sale date

and one has not happened to date. Even if, as Plaintiffs argue in opposition to Wells Fargo’s 

pending motion to dismiss, they are entitled to some damages for Wells Fargo initially setting the 

trustee sale on January 2, 2019, such damages would be monetarily compensable in a manner that 

does not require the extraordinary remedy of a temporary restraining order or preliminary 

injunction.2

B. Balance of Equities

Plaintiffs argue that “[w]hile it is true that Defendants will not be able to sell the Real 

Property immediately and will expend costs in further litigating this action, when balanced against 

Plaintiffs’ potential loss, Defendants’ harm is outweighed.” Mot. at 8. Wells Fargo responds that 

this Court should consider Plaintiffs’ delinquency on the loan. Opp. at 8–9.

The Court has no doubt that in many instances the balance of equities will tip in favor of a 

plaintiff facing the loss of what may be their most important and valuable possession over a large 

financial institution like Wells Fargo facing monetary ramifications. But there is no rule favoring 

plaintiffs in every context, and this case demonstrates why. Without dispute, Plaintiffs have made 

no payments on their loan—and thus have lived in their home payment-free—for six years. 

 

2 The Court in no way here opines on the merits of Plaintiffs’ damages theory; rather, the Court 

observes that any damages available under that theory would not warrant the extraordinary remedy 

of Plaintiffs’ desired injunctive relief.

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Numerous courts have found the balance of equities tip against plaintiffs who were far less 

delinquent than Plaintiffs here. See, e.g., Frias v. Wells Fargo Bank, No. C-13-00075 EDL, 2013

WL 321690, at *5 (N.D. Cal. Jan. 28, 2013) (finding the balance of equities tipped against a 

plaintiff who was more than two years late on payments); Vera v. Wells Fargo Bank, N.A., No. 

CV-10-01568-PHX-MHM, 2010 WL 11629099, at *3 (D. Ariz. Aug. 27, 2010) (finding the 

balance of equities tipped against a plaintiff who was less than one year late on payments); Alcarez

v. Wachovia Mortg. FSB, 592 F. Supp. 2d 1296, 1305–06 (E.D. Cal. 2009) (finding the balance of 

equities tipped against a plaintiff who was more than one year late on payments).

The Court is sympathetic to the plight of those facing foreclosure and in no way minimizes 

the difficulties foreclosures inflict and the ripple effect they have on lives. It cannot, however, 

find that the balance of equities tips in favor of persons who have not made mortgage payments in 

six years.

IV. CONCLUSION

Because the test for injunctive relief requires a showing of likelihood of success and that 

the balance of equities tip in favor of Plaintiffs, the Court does not reach the remaining Winter

factors. Plaintiffs’ pending motion is DENIED and the temporary restraining order dated March 

12, 2019 is HEREBY DISSOLVED.

IT IS SO ORDERED.

Dated:

HAYWOOD S. GILLIAM, JR.

United States District Judge

3/22/2019

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