Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_16-cv-01189/USCOURTS-caed-2_16-cv-01189-5/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GENET HABTEMARIAM,

Plaintiff,

v.

VIDA CAPITAL GROUP, LLC; US 

MORTGAGE RESOLUTION; PNC 

BANK; NATIONAL ASSOCIATION; 

and DOES 1 to 50, inclusive,

Defendants.

No. 2:16-cv-01189-MCE-GGH

MEMORANDUM AND ORDER

In bringing this lawsuit, Plaintiff Genet Habtemariam alleges that her real property 

at 7 Shipman Court, Sacramento, California was wrongfully subjected to foreclosure 

proceedings on a Second Deed of Trust that had been cancelled some five years 

previously by the owner of the note, Defendant PNC Bank, N.A. Despite that 

cancellation, Plaintiff alleges the note was sold and ultimately assigned by PNC to 

Defendant Vida Capital Group who proceeded with the foreclosure. Plaintiff seeks to 

clear title to her property and further alleges various improprieties against both 

Defendants. After the resolution of two motions to dismiss from PNC, Plaintiff filed a 

Second Amended Complaint (“SAC”) on July 25, 2017. ECF No. 44. The next day, she 

also filed a Motion for Temporary Restraining Order in which she seeks to enjoin an 

Case 2:16-cv-01189-DC-AC Document 51 Filed 07/31/17 Page 1 of 6
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impending August 3, 2017 foreclosure sale by the holder of a promissory note secured 

by a first priority Deed of Trust by Defendant Gateway Bank, FSB (“Gateway DOT”). 

ECF No. 45. For the reasons provided below, that motion is GRANTED and a temporary 

injunction is issued pending a hearing for a preliminary injunction.

BACKGROUND1

In 2001, Plaintiff obtained a purchase money loan to buy a house located at 

7 Shipman Court in Sacramento, California (“the subject property”). Then, in April of 

2007, she refinanced her initial loan through Gateway Bank FSB and took out a second 

mortgage from National City Bank, an entity which later merged into PNC. Plaintiff’s 

second mortgage was secured by a Second Deed of Trust (“SDOT”) recorded on 

April 17, 2007.

Some three years later, PNC notified Plaintiff by mail that its SDOT was 

discharged, apparently due to a settlement agreement PNC had reached with various 

agencies of the United States government. PNC effectuated that cancellation by 

sending a 1099-C form approved by the Internal Revenue Service for cancelling a debt. 

Plaintiff received the Form 1099-C on or about June 29, 2010. According to Plaintiff, 

because the Form 1099-C cancelled the amount she owed on the second mortgage, she 

believed it legally released her from any further obligation to pay the debt. Plaintiff 

accordingly reported the debt cancellation as income to the Internal Revenue Service for 

the 2010 calendar year.

Unbeknownst to Plaintiff, PNC never recorded a release of lien as to its SDOT 

and in fact assigned its purported interest in the loan to Defendant US Mortgage 

Resolution (“UMR”) in approximately March of 2012. UMR, who made no attempt to 

foreclose on the loan, then sold the SDOT to Vida sometime in 2014. When Vida 

 

1 Unless otherwise noted, the following recitation of facts is taken, sometimes verbatim, from the 

allegations contained in Plaintiff’s SAC.

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contacted Plaintiff in early 2015 in an attempt to collect on the instrument, Plaintiff 

responded by providing Vida with a copy of the Form 1099-C and asserting that the debt 

had been cancelled and was not collectable. Vida nonetheless recorded a Notice of 

Default on the subject property on September 22, 2015, and directed the trustee to 

transfer title to Vida itself through non-judicial foreclosure proceedings which culminated 

in title transfer to Vida by a deed recorded on February 16, 2016.

Plaintiff responded by commencing this action in state court on April 19, 2016.

PNC removed Plaintiff’s lawsuit to this Court the same day, citing diversity of citizenship. 

On May 11, 2016, Vida filed an unlawful detainer action against Plaintiff, and Plaintiff 

was given a three-day notice to quit the premises. Rather than comply with that notice,

Plaintiff removed that second case to this Court and moved to consolidate it with the suit 

she had commenced. The Court granted the motion.

Gateway has now posted a Notice of Trustee Sale, which sets a sale date of 

August 3, 2017. Pl.’s Br. in Supp. of Mot. for TRO, ECF No. 45, at 3. No payments have 

been made on the Gateway DOT since February 2016 when Vida conducted a trustee 

sale and title to the property passed to Vida. Decl. of Cathy Devlin, ECF No. 46-1, ¶ 4. 

Plaintiff contends that “[o]nce V[ida] foreclosed as a second lien holder, it was required 

to service G[ateway]’s first mortgage.” Pl.’s Br. in Supp. of Mot. for TRO, at 5. 

Furthermore, Plaintiff states that she “did not make payments on the G[ateway] 

mortgage . . . as Plaintiff [is] no longer on the title to the property.” Id. Plaintiff and 

Gateway also apparently entered into an agreement by which Gateway would 

“postpo[]ne filing recording, and/or publishing a Notice of Trustee’s sale on the 

7 Shipman Court, Sacramento, California property until at least ten days after the 

Court . . . issues its ruling on the Defendants’ Motion to Dismiss.” Decl. of Patricia H. 

Lyon, Ex. A, ECF No. 46-2, at 5. The Court ruled on that motion on February 14, 2017.

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STANDARD

The purpose of a temporary restraining order is to preserve the status quo 

pending the complete briefing and thorough consideration contemplated by full

proceedings pursuant to a preliminary injunction. See Granny Goose Foods, Inc. v. Bhd. 

of Teamsters, 415 U.S. 423, 438–39 (1974) (“[Temporary restraining orders] should be

restricted to serving their underlying purpose of preserving the status quo and preventing

irreparable harm just so long as is necessary to hold a hearing, and no longer.”); accord

Reno Air Racing Ass’n., Inc. v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006); Dunn v. 

Cate, No. CIV 08-873-NVW, 2010 WL 1558562, at *1 (E.D. Cal. Apr. 19, 2010).

Issuance of a temporary restraining order, as a form of preliminary injunctive

relief, is an extraordinary remedy, and Plaintiff has the burden of proving the propriety of

such a remedy. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). In general, the

showing required for a temporary restraining order and a preliminary injunction are the

same. Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 

2001).

The party requesting preliminary injunctive relief must show that “he is likely to

succeed on the merits, that he is likely to suffer irreparable harm in the absence of

preliminary relief, that the balance of equities tips in his favor, and that an injunction is in

the public interest.” Winter v. Nat. Res. Def. Council, 555 U.S. 7, 20 (2008); accord

Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009). The propriety of a TRO 

hinges on a significant threat of irreparable injury that must be imminent in nature. 

Caribbean Marine Serv. Co. v. Baldridge, 844 F.2d 668, 674 (9th Cir. 1988).

Alternatively, under the so-called sliding scale approach, as long as Plaintiff

demonstrates the requisite likelihood of irreparable harm and shows that an injunction is

in the public interest, a preliminary injunction can still issue so long as serious questions

going to the merits are raised and the balance of hardships tips sharply in Plaintiff’s

favor. All. for Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-36 (9th Cir. 2011)

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(concluding that the “serious questions” version of the sliding scale test for preliminary

injunctions remains viable after Winter).

ANALYSIS

Gateway argues that Plaintiff cannot demonstrate a likelihood of success on the 

merits because “Plaintiff has not alleged any claims against Gateway in the Complaint 

and has not submitted any evidence to support a claim against Gateway.” Gateway’s 

Opp’n, ECF No. 46, at 5 (emphasis removed). However, Plaintiff has raised serious 

questions concerning the rights and responsibilities of the parties, which supports the 

issuance of a temporary restraining order under the sliding scale approach. 

Furthermore, Plaintiff has demonstrated a likelihood of irreparable harm by alleging that 

she will lose her primary residence if Gateway’s trustee’s sale goes forward.

Plaintiff has also demonstrated that an injunction is in the public interest, and that 

the balance of hardships tips sharply in her favor. An injunction is in the public interest 

because as it is being used to ensure compliance with an alleged settlement entered into 

by the federal government for the benefit of the public and to ensure compliance with 

state foreclosure law intended to protect the public. The balance of equities tips sharply 

in Plaintiff’s favor as the temporary restraining order merely delays Gateway’s right to 

pursue a trustee’s sale until all parties have been given an opportunity to be fully heard 

on the relative positions of the parties vis-à-vis the Gateway DOT. Similarly, though Vida 

complains that “it has been deprived of any rental income from Plaintiff,” Vida’s Opp’n, 

ECF No. 50, at 3, Vida does not explain how forestalling a foreclosure by Gateway will 

harm Vida.

Finally, Vida asks the Court to order Plaintiff to put up a bond for the rental value 

of the property. See id. at 4. However, because of uncertainties in the record, the Court

declines to order a bond prior to a hearing on the matter. Though Plaintiff maintains the 

fair market rental value of the property is $2,000 per month, see Pl.’s Br. in Supp. of Mot. 

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for TRO, at 7, the evidence she provides in support is contested, see Gateway’s Opp’n, 

at 6–7. Furthermore, both Gateway and Vida argue that a temporary restraining order 

would deprive them of their right to collect rent from the property, but Vida argues that 

any bond be made payable to it. See Vida’s Opp’n, at 5.

CONCLUSION

For the reasons provided, the Court GRANTS Plaintiff’s Motion for Temporary 

Restraining Order. ECF No. 45. Pending the Court’s determination regarding a 

preliminary injunction, Gateway is hereby enjoined from engaging in or performing, 

directly or indirectly, any of the following acts: advertising, selling, transferring, 

conveying, foreclosing upon, evicting, or any other conduct adverse to Plaintiff regarding 

the real property located at 7 Shipman Court in Sacramento, California 95823. No bond 

shall be required.

Furthermore, Plaintiff is hereby ordered to file a motion for preliminary injunction 

on or before August 3, 2017. Defendants shall file a written response on or before

August 10, 2017, and any reply from Plaintiff shall be filed on or before August 15, 

2017. A hearing on this matter will take place on August 17, 2017, at 11:00 a.m. in 

Courtroom 7.

IT IS SO ORDERED.

Dated: July 28, 2017

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