Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-02078/USCOURTS-cand-3_10-cv-02078-5/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MICHAEL R. OUELLETTE, et al.,

Plaintiffs,

 v.

JP MORGAN CHASE BANK, N.A., et al.,

Defendants.

 /

No. C 10-02078 JSW

ORDER DENYING PLAINTIFFS’

MOTION FOR PRELIMINARY

INJUNCTION

Now before the Court is motion for preliminary injunction filed by plaintiffs Michael R.

Ouellette (“Ouellette”), Kelly M. Wilson (“Wilson”), and Karrie E. Rennick (“Rennick”)

(collectively, “Plaintiffs”). Having considered the parties’ arguments, the relevant legal

authority, and having had the benefit of oral argument, the Court DENIES Plaintiffs’ motion for

a preliminary injunction.

BACKGROUND

Plaintiffs filed a complaint challenging the mortgage servicing practices of defendants

JP Morgan Chase Bank, N.A., as the successor in interest from the Federal Deposit Insurance

Corporation as receiver for Washington Mutual Bank (“JP Morgan”) and EMC Mortgage

Corporation (“EMC”) (collectively, “Defendants”). Plaintiffs now move to enjoin the pending

trustee sale of the property located at 1764 Scott Street, St. Helena, California. The Court will

address additional specific facts as required in the analysis. 

Case 3:10-cv-02078-JSW Document 39 Filed 06/10/10 Page 1 of 4
United States District Court

For the Northern District of California

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ANALYSIS

A. Applicable Legal Standards.

 To prevail on a motion for a preliminary injunctive relief, Plaintiffs “must establish that

[they are] likely to succeed on the merits, that [they are] likely to suffer irreparable harm in the

absence of preliminary relief, that the balance of equities tips in [their] favor, and that an

injunction is in the public interest.” Winter v. Natural Resources Defense Council, 129 S. Ct.

365, 374 (2008) (citations omitted). The Winter court also noted that because injunctive relief

is “an extraordinary remedy” it “may only be awarded upon a clear showing that the plaintiff is

entitled to such relief.” Id. at 375-76 (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)

(per curiam)). Thus “[i]n each case, courts ‘must balance the competing claims of injury and

must consider the effect on each party of the granting or withholding of the requested relief.’ 

Id. at 376 (citing Amoco Production Co. v. Gambell, 480 U.S. 531, 542 (1987)). “‘In exercising

their sound discretion, courts of equity should pay particular regard for the public consequences

in employing the extraordinary remedy of injunction.’” Id. at 376-77 (citing Weinberger v.

Romero-Barcelo, 456 U.S. 305, 312 (1982)).

B. Plaintiffs’ Motion for Preliminary Injunction.

In order to obtain a preliminary injunction, Plaintiffs must show the possibility of

irreparable harm. Sampson v. Murray, 415 U.S. 61, 88 (1974) (“[t]he basis of injunctive relief

in the federal courts has always been irreparable harm and inadequacy of legal remedies”)

(quoting Beacon Theaters, Inc. v. Westover, 359 U.S. 500, 506-507 (1959)). “[F]oreclosure

under certain circumstances may constitute irreparable harm.” Mandrigues v. World Savings,

Inc., 2009 WL 160213 at *3 (N.D. Cal. Jan. 20, 2009). For example, a court has found that a

plaintiff made a showing of irreparable harm where the defendants intended to foreclose upon

his primary residence, his father was severely ill and resided with him, and where foreclosure

would eliminate his right to rescind the loan transaction. See Nichols v. Deutsche Bank Nat.

Trust Co., 2007 WL 4181111 at *2 (S.D. Cal. Nov. 7, 2007) (citing Sundance Land Corp. v.

Comty First Fed. Sav. & Loan Ass’n, 840 F.2d 653, 661 (9th Cir. 1988)). In contrast, other

courts have concluded that a plaintiff could not show irreparable harm where the “record

Case 3:10-cv-02078-JSW Document 39 Filed 06/10/10 Page 2 of 4
United States District Court

For the Northern District of California

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suggests that [the plaintiff] sought a loan beyond her financial means and expectation of job

loss,” Alcaraz v. Wachovia Mortgage FSB, 2009 WL 30297 at *4 (E.D. Cal. Jan. 6, 2009), or

where a plaintiff has not taken the opportunity to mitigate the risk of foreclosure by accepting

remedies offered by the lender. See Parker v. U.S. Dep’t of Agriculture, 879 F.2d 1362, 1367-

68 (6th Cir. 1989).

In this case, Ouellette, the only plaintiff who resides at the property at issue, conceded at

the hearing on this motion, that he does not allege any claims that would entitle him to maintain

the property as a remedy. In fact, as Plaintiffs state in their reply brief, Ouellette’s underlying

debt on the property has been discharged in bankruptcy. (Reply at 9.) Therefore, even if

Ouellette were financially capable of bringing the loan out of default and making current

payments on the mortgage, it appears as though Ouellette would not be entitled to make such

payments. The mortgage debt has already been discharged. Moreover, the bulk of Ouellette’s

claims challenge Defendants’ accounting practices and misapplication of Ouellette’s payments

to penalties and fees, ahead of interest and principal on the loan. Ouellette can be compensated

for such claims through monetary damages. 

The Court provided the parties a tentative ruling and questions before the hearing and

made clear that the Court was inclined to find that Plaintiffs failed to demonstrate that they will

suffer any harm that could not be compensated by monetary damages. At the hearing on this

motion, Plaintiffs failed to provide any authority or even argument to demonstrate that Ouellette

was entitled to the equitable relief of enjoining the foreclosure on the property. 

With respect to Wilson and Rennick, Plaintiffs had argued in their briefs that they would

be irreparably harmed by the foreclosure if the starting bidding price were wrongfully inflated. 

According to Plaintiffs, people or entities might be dissuaded from bidding on the property and

then the property might be sold for less than it otherwise would. The Court indicated that it

found this contention speculative and provided Plaintiffs an opportunity to demonstrate why it

was not speculative. Plaintiffs declined this offer and, instead, argued a different theory of

irreparable harm at the hearing on the motion. According to Plaintiffs, as junior lien holders,

Wilson and Rennick are entitled to the equitable relief of superceding the senior lien holder. 

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United States District Court

For the Northern District of California

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 Plaintiffs also argued at the hearing that Baypoint Mortgage Corp. v. Crest Premium

Real Estate Investments Retirement Trust, 168 Cal. App. 3d 818 (1985) provides supports for

their proposition that courts may enjoin a foreclosure where the amount alleged to be in

default was inflated. In Baypoint, the defendant sought to foreclose on 23 deeds of trust

where the evidence showed the plaintiff was not in default. Id. at 825. Here, it is undisputed

that Ouellette is in default on his mortgage. Therefore, Plaintiffs’ reliance on Baypoint

Mortgage is misplaced.

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This would be an opportunity that they would lose if the property were sold at a foreclosure

sale. However, the authority upon which Plaintiffs rely does not support the proposition that

Wilson and Rennick are entitled to such equitable relief. See Gluskin v. Altantic Savings &

Loan Assn., 32 Cal. App. 3d 307 (1973); Lennar Northeast Partners v. Buice, 49 Cal. App. 4th

1576 (1996). In both Gluskin and Lennar, the courts addressed the applicability of an equitable

remedy where the senior lien holder modified a loan to the detriment of the junior lien holder

without the junior lien holder’s prior consent. See Gluskin, 32 Cal. App. 3d at 315; Lennar

Northeast Partners, 49 Cal. App. 4th at 1589. Here, Plaintiffs have not alleged that Defendants

modified the mortgage. In fact, Plaintiffs challenge Defendants’ failure to modify Ouellette’s

loan.1 Therefore, the Court finds that Plaintiffs have not made a sufficient showing of

irreparable injury. Accordingly, the Court DENIES Plaintiffs’ motion for a preliminary

injunction.

CONCLUSION

For the foregoing reasons, the Court DENIES Plaintiffs’ motion for a preliminary

injunction. The Court FURTHER ORDERS that the previous injunction issued by the Court

enjoining the trustee sale of 1764 Scott Street, St. Helena, California until June 16, 2010 is

VACATED. 

IT IS SO ORDERED.

Dated: June 10, 2010 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

Case 3:10-cv-02078-JSW Document 39 Filed 06/10/10 Page 4 of 4