Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-04384/USCOURTS-cand-4_06-cv-04384-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1601 Truth in Lending

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JANET WHERRY,

Plaintiff,

 v.

ALL CALIFORNIA FUNDING, CLINTON

STEFAN, DBA STEFAN FINANCIAL, KEN

MILLER, and DOES 1-100, 

Defendants. /

No. C 06-4384 SBA

ORDER

[Docket No. 3]

This matter comes before the Court on Plaintiff's Application for Temporary Injunctive Relief

and Request for Order Shortening Time ("TRO Application") [Docket No. 3]. Having read and

considered the papers submitted by Plaintiff Janet Wherry and Defendants All California Funding and

Ken Miller, the Court finds this matter appropriate for disposition without a hearing. 

Federal Rule of Civil Procedure 65(b) provides the district court with the authority to enter a

temporary restraining order. The court may grant such injunctive relief if the plaintiff has established:

(1) a likelihood of success on the merits and the possibility of immediate irreparable injury, or (2) the

existence of serious questions going to the merits and that the balance of hardships tips sharply in its

favor. Metro Publishing, Ltd. v. San Jose Mercury News, 987 F.2d 637, 639 (9th Cir. 1993); see also

Southwest Voter Registration Education Project v. Shelley, 344 F.3d 914 (9th Cir. 2003). The two

components of this test sit on a kind of sliding scale or "continuum," Southwest Voter, 344 F.3d at 918;

thus, "the less certain the district court is of the likelihood of success on the merits, the more plaintiffs

must convince the district court that the public interest and balance of hardships tip in their favor." Id.

In this case, Plaintiff seeks interim and permanent relief restraining and enjoining Defendants

All California Funding, Clinton Stefan and Ken Miller from proceeding or continuing with the sale,

disposition, transfer and taking any action with respect to the property located at 11650 San Mateo

Road, Half Moon Bay, California 94109. Plaintiff alleges that Defendants will foreclose on the property
United States District Court

For the Northern District of California

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1

 While Plaintiff brings other state law claims, Plaintiff neither argues that she will likely

succeed on the merits on the state law claims, nor even mentions them in her TRO Application. 

2

 The Court takes judicial notice of the orders and pleadings in the Bankruptcy Court referenced

herein. See U.S. v. Southern California Edison Co., 300 F.Supp.2d 964, 974 (E.D. Cal. 2004); Kent v.

DaimlerChrysler Corp., 200 F.Supp.2d 1208 (N.D. Cal. 2002) (taking judicial notice of two state court

decisions and a legal memorandum filed in a state court action on the grounds that they are public

documents). 

2

at issue on July 20, 2006 based on the loan agreement between Plaintiff and Defendant All California

Funding. Plaintiff asserts that Defendants violated certain provisions of The Home Ownership and

Equity Protection Act of 1994 (HOEPA) and Truth in Lending Act (TILA) by, inter alia, failing to

provide her with the necessary disclosures in relation to the loan, and including prohibited balloon

payment and prepayment penalty provisions in the loan agreement.1

 Plaintiffs seeks damages and

rescission. 

Defendants All California Funding and Ken Miller (collectively, "ACF Defendants") oppose

Plaintiff's TRO Application. ACF Defendants argue that Plaintiff's TRO Application should be denied

because the Bankruptcy Court has exclusive jurisdiction over the property at issue. Plaintiff filed a

bankruptcy petition in the Northern District of California , Case Number 05-33658, on October 4, 2005.

On or about January 13, 2006, All California Funding filed a motion for relief from the automatic stay

in that action. On March 20, 2006, Bankruptcy Judge Carlson entered an Order Vacating the Automatic

Stay and allowing All California Funding to conduct foreclosure of Plaintiff's property at issue in the

instant case on or after April 26, 2006. On February 23, 2006, Plaintiff's husband filed a bankruptcy

petition, Case Number 06-50254. On or about April 21, 2006, All California Funding filed a motion

for relief from the automatic stay in Plaintiff's husband's action. On June 30, 2006, Bankruptcy Judge

Carlson entered an Order Vacating the Automatic Stay and allowing All California Funding to conduct

foreclosure of the property at issue in the instant action on or after July 20, 2006. On July 14, 2006,

Plaintiff filed an adversary proceeding in her husband's bankruptcy case against All California Funding,

Clinton Stefan and Ken Miller. At the same time, Plaintiff applied for a TRO. Plaintiff's pleadings and

relief requested in the adversary proceeding in the Bankruptcy Court are identical to the ones in the

instant action. The Bankruptcy Court has not ruled on Plaintiff's TRO yet.2

Because the property at issue is in the bankruptcy estate, the Bankruptcy Court has exclusive
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For the Northern District of California

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3

 It also appears that dismissal is proper under the first-to-file rule. The first-to-file rule allows

a district court to "transfer, stay, or dismiss an action when a similar complaint has already been filed

in another federal court[.]" Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d, 622, 623 (9th Cir. 1991).

A bankruptcy court is a unit of a district court. See 28 U.S.C. § 151. The rule may be invoked when

a complaint involving the same parties and issues has already been filed in another court. Alltrade, 946

F.2d at 625. Here, Plaintiff's adversary proceeding and TRO Application were filed in the Bankruptcy

Court four days prior to the instant action and involve the same parties and issues as the instant action.

3

jurisdiction over it. Accordingly, this Court cannot hear the claims asserted in Plaintiff's TRO

Application and Complaint. The Court therefore DENIES Plaintiff's TRO Application without prejudice

and DISMISSES the above-captioned action.3

 

Even if the Court were to find that the Bankruptcy Court does not have exclusive jurisdiction

over the property at issue, the Court would nevertheless deny the TRO Application because Plaintiff has

failed to demonstrate a likelihood of success on the merits on any of her claims. Plaintiff's Application

is wholly deficient in this respect. First, Plaintiff has failed to set forth the elements that apply to each

cause of action she is asserting. Second, she has not provided any legal authority in support of her

claims. Plaintiff has not cited a single case in her TRO Application. Instead, Plaintiff only cited certain

provisions of the HOEPA and TILA in her Complaint. However, before Plaintiff can rely on these

provisions, she must demonstrate that the HOEPA and TILA apply to the loan Plaintiff obtained from

Defendants. She has not done so. Plaintiff simply alleges that "this is a clear case of violation of the

provisions of HOEPA and TILA by the defendants" and that the Note Secured by a Deed of Trust that

Defendants coerced her into signing "speaks for itself." However, Plaintiff has failed to attach the Note

or any other relevant documents. Without seeing the documents, the Court cannot evaluate whether the

HOEPA and TILA apply to Plaintiff's transaction, whether or not the note Plaintiff signed includes the

prohibited balloon payment and prepayment penalty provisions as Plaintiff alleges, and whether or not

it provides adequate disclosures. The ACF Defendants, on the other hand, submitted declarations

rebutting Plaintiff's naked allegations and showing that the HOEPA does not apply to Plaintiff's case

because the HOEPA applies only to transactions secured by the consumer's principal dwelling and the

property at issue is not Plaintiff's primary residence. See Declaration of William Schumer, ¶ 9 ("At all

times during the loan application process, Plaintiff and her husband John Wherry represented to [All

California Funding] that they did not intend to occupy the property as their principal residence."). See
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For the Northern District of California

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4

 Plaintiff's TRO Application is also deficient because she has not served all Defendants. 

Plaintiff provided a proof of service showing that she served only Defendants All California Funding

and Ken Miller. Plaintiff has not explained her failure to serve Defendant Clinton Stefan, nor styled her

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also 15 U.S.C. § 1602 (aa) (stating that HOEPA applies to "a consumer credit transaction that is secured

by the consumer's principal dwelling"). Furthermore, ACF Defendants attached a part of the Financial

Statement that Plaintiff submitted with her loan application to All California Funding, in which Plaintiff

and her husband represented that their primary residence was 851 Railroad Avenue, Half Moon Bay,

California. 

Moreover, even if the Court were to conclude that the HOEPA and TILA apply to the loan

Plaintiff obtained from Defendants, from the face of Plaintiff's complaint, it appears that Plaintiff's

action for damages for violations of the HOEPA and TILA is barred by the statute of limitations. An

action for damages under HOEPA or TILA must be brought within one year of the violation. See 15

U.S.C. § 1640(e); 12 C.F.R. § 226.23; In re Community Bank of Northern Virginia, 418 F.3d 277, 305

(3d Cir. 2005); McMaster v. CIT Group/Consumer Finance, Inc., 2006 WL 1314379, at *4 (E.D. Pa.

May 11, 2006). "A violation occurs when a 'consumer becomes contractually obligated on a credit

transaction.'" McMaster, 2006 WL 1314379, at *4. Plaintiff alleges that she signed the loan documents

with All California Funding on March 22, 2005. Plaintiff filed this action on July 18, 2006.

Accordingly, Plaintiff's action for damages for violations of HOEPA and TILA appears to be barred by

the statute of limitations. 

For the foregoing reasons, Plaintiff has failed to make a clear showing of the likelihood of

success on the merits. See In re Cobb, 122 B.R. at 26 (dismissing claimant's TILA claim because he

has provided no evidence that there has been a TILA violation). See also Johnson v. Holway, 329

F.Supp.2d 12, 15 (D.D.C. 2004) (a TRO "is an extraordinary form of relief that should not be granted

absent a clear and convincing showing by the moving party."); Sierra Club v. Hickel, 433 F.2d 24, 33

(9th Cir. 1970) ("'The grant of a preliminary injunction is the exercise of a very far reaching power never

to be indulged except in a case clearly warranting it.'"); Clairol Inc. v. Gillette Co., 389 F.2d 264, 265

(2d Cir. 1968) ("The award of a preliminary injunction is an extraordinary remedy, and will not be

granted except upon a clear showing of probable success and possible irreparable injury.").4
United States District Court

For the Northern District of California

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application as an ex-parte application. Under Federal Rule of Civil Procedure 65(b), a TRO "may be

granted without written or oral notice to the adverse party . . . only if (1) it clearly appears . . . that

immediate and irreparable injury, loss, or damage will result to the applicant before the adverse party

or that party's attorney can be heard in opposition, and (2) the applicant's attorney certifies to the court

in writing the efforts, if any, which have been made to give the notice and the reasons supporting the

claim that notice should not be required. Every [TRO] granted without notice shall . . . define the injury

and state why it is irreparable and why the order was granted without notice." Fed. R. Civ. P. 65(b).

In Granny Goose Foods, Inc. v. Teamster, 415 U.S. 423 (1974), the Supreme Court explained that an

ex parte TRO can be issued only in extremely limited circumstances: "[O]ur entire jurisprudence runs

counter to the notion of court action taken before reasonable notice and an opportunity to be heard has

been granted both sides of a dispute." Id. at 438-439. Thus, courts have recognized very few

circumstances justifying the issuance of an ex parte TRO. See Reno Air Racing, Ass'n., Inc. v. McCord, __F.3d __, 2006 WL 1867632, at * 4-5 (9th Cir. July 7, 2006). Here, Plaintiff's attorney neither certified

in writing the efforts, if any, which have been made to give notice to Defendant Clinton Stefan nor

explained why the notice should not be required. Accordingly, if the Court did not deny Plaintiff's TRO

Application for the reasons previously discussed, it would have denied the Application against

Defendant Clinton Stefan on the ground of Plaintiff's failure to serve him. See Reno Air Racing, at *5

(TRO was not properly granted ex parte without notice where the only evidence of why notice should

not be required was a single conclusory statement by counsel in a declaration). 

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Accordingly,

IT IS HEREBY ORDERED THAT Plaintiff's Application for Temporary Injunctive Relief and

Request for Order Shortening Time [Docket No. 3] is DENIED. 

IT IS FURTHER ORDERED THAT the above-captioned action is DISMISSED. The Clerk is

instructed to close the file and terminate all pending matters. 

IT IS SO ORDERED.

Dated: 7/20/06 SAUNDRA BROWN ARMSTRONG

United States District Judge