Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-01310/USCOURTS-casd-3_13-cv-01310-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LEE J. WARE, an individual, and

IRMA WARE, an individual,

Plaintiff,

CASE NO. 13-CV-1310 JLS (NLS)

ORDER DISSOLVING AUGUST 16,

2013 ORDER AND GRANTING EX

PARTE MOTION TO DISSOLVE

PRELIMINARY INJUNCTION

(ECF No. 26)

vs.

BAYVIEW LOAN SERVICING,

LLC, AZTEC FORECLOSURE

CORPORATION, and DOES 1-100,

inclusive,

Defendants.

Presently before the Court is Defendant Bayview Loan Servicing, LLC’s

(“Bayview”) ex parte motion to dissolve this Court’s August 16, 2013 Preliminary

Injunction Order. (ECF No. 26.) For the reasons stated below, the Court DISSOLVES

its August 16, 2013 Order and GRANTS Bayview’s request to dissolve the preliminary

injunction.

BACKGROUND

Plaintiffs Lee J. Ware and Irma Ware (“Plaintiffs”) bring this action against

Defendants Bayview and Aztec Foreclosure Corporation (“Defendants”) asserting four

causes of action: (1) violations of California Civil Code § 2923.6; (2) violations of

California Business and Professions Code § 17200 et seq.; (3) negligence; and (4)

accounting. (Compl., ECF No. 1-1.)

This action concerns the disputed ownership and loan status of the property at

8248 Rockview Drive, El Cajon, CA 92021 (the “Property”). Sometime in 2007,

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Plaintiffs entered into a written loan agreement for the sum of $330,000, secured by a

deed of trust to the Property. (ECF No. 4 at 9.) Subsequently in 2010, Plaintiffs failed

to make all payments required under the loan agreement. (Id. at 9-10.) Around this

time, Plaintiffs applied for a loan modification with Virtual Bank. (Id. at 11.) Plaintiffs

were allegedly informed that no foreclosure activity would take place while their

application was in review. (Id. at 10.) 

On or around April 4, 2011, Defendants allegedly executed a Notice of Default

and Election to Sell Under Deed of Trust (“NOD”) on the Property. (ECF No. 4-1.) 

At this time, Plaintiffs' loan modification was allegedly “in review.” (ECF No. 4 at 11.) 

Virtual Bank allegedly made representations to Plaintiffs at this time that the loan

modification was “imminent.” (Id.) 

In or around July 2011, Plaintiffs filed for Chapter 13 bankruptcy. (Id. at 12.) 

A Chapter 13 Plan was confirmed in or around February 2012. In or around October

2012, Sabadell United Bank, N.A., as Receiver for Virtual Bank, filed a motion for

relief from stay. (Id.) This motion was granted on or about February 12, 2013. (Id.)

On March 13, 2013, foreclosure trustee Aztec Foreclosure Corporation recorded

a Notice of Trustee's Sale (“NOS”), setting the foreclosure sale date for April 3, 2013. 

(ECF No. 4-3.) At this time, Virtual Bank allegedly advised Plaintiffs that a short sale

was Plaintiffs’ best option, and Plaintiffs submitted an application for a short sale on

or around March 18, 2013. (ECF No. 4 at 12-13.) 

On April 3, 2013, Plaintiffs received a letter informing them that Bayview, acting

as agent on behalf of Virtual Bank, would review Plaintiffs' request to be offered a

foreclosure alternative. On or about April 9, 2013, Plaintiffs received a letter from

Bayview stating that Plaintiffs were ineligible for their foreclosure prevention programs

because a short sale had not been approved by an investor or group of investors. (ECF

No. 4-4.) On or about April 15, 2013, Plaintiffs received a notice that the foreclosure

sale had been postponed to May 14, 2013. (ECF No. 4-5.) Plaintiffs were allegedly

unable to make any constructive contact with Defendants regarding their short sale

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denial or any potential alternative options to avoid foreclosure. (ECF No. 4 at 14.) On

May 8, 2013, Plaintiffs sent a letter to Defendants informing them of a material change

in their financial circumstances. (ECF No. 4-6.)

On May 9, 2013, Plaintiffs filed the underlying complaint. (ECF No. 1-1.) On

June 6, 2013, Defendants removed the action from the Superior Court of California for

the County of Los Angeles, alleging diversity jurisdiction. (ECF No. 1.) On June 13,

2013, Plaintiffs filed an ex parte motion for a temporary restraining order (“TRO”)

(ECF No. 4) enjoining Bayview from taking any steps to deprive Plaintiffs from

residing on the Property until the Court could hold a preliminary injunction hearing,

which this Court granted (ECF No. 8).

At the June 27, 2013 preliminary injunction hearing, the Court determined that

further briefing by both parties was necessary to address several issues, including

whether Plaintiffs’ 2011 loan modification application was still pending. (ECF No. 15.) 

Accordingly, the Court issued an Order continuing the hearing to August 15, 2013, and

setting a briefing schedule for supplemental briefing. (Id.) (ECF No. 22.)

Following the August 15, 2013 hearing, the Court issued an Order dissolving the

TRO and granting Plaintiffs’ request for a preliminary injunction. (ECF No. 25.) The

Court further ordered Plaintiffs to pay a $39,799.00 bond within seven days of the

docketing of the Order.1

 (Id.) On August 29, 2013, Bayview filed the present ex parte

motion to dissolve this Court’s Preliminary Injunction Order, on the grounds that

Plaintiffs had not paid the bond. (ECF No. 26). Plaintiffs have not opposed Bayview’s

motion, nor have they since posted their bond.

LEGAL STANDARD

“‘There is no dispute but that a sound judicial discretion may call for the

modification of the terms of an injunction decree if the circumstances, whether of law

or fact, obtaining at the time of its issuance have changed, or new ones have since

1

The Order was docketed on August 16, 2013, and therefore Plaintiffs were required to post their bond on or before August 23, 2013.

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arisen.’” Mariscal-Sandoval v. Ashcroft, 370 F.3d 851, 859 (9th Cir. 2004) (quoting

Sys. Fed’n No. 91, Ry. Emps.’ Dept. v. Wright, 364 U.S. 642, 647 (1961)). This

discretion to modify or dissolve a preliminary injunction is broad. Santos v. Reverse

Mortg. Solutions, Inc., No. 12-3296-SC, 2012 WL 4891597, at *7 (N.D. Cal. Oct. 12,

2012) (citing Mariscal-Sandoval, 370 F.3d at 859). While “[f]irmness and stability

must no doubt be attributed to continuing injunctive relief based on adjudicated facts

and law,” changed circumstances may nevertheless turn a preliminary injunction into

“‘an instrument of wrong.’” Sys. Fed’n No. 91, 364 U.S. at 647 (quoting United States

v. Swift & Co., 286 U.S. 106, 114-15 (1932). 

Under the Federal Rules of Civil Procedure, “[t]he court may issue a preliminary

injunction or temporary restraining order only if the movant gives security in an amount

that the court considers proper to pay the costs and damages sustained by any party

found to have been wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c); see also

Grady v. Bank of Elmwood, No. CV 11-2060-PHX-JAT, 2012 WL 1132578, at *3 (D.

Ariz. Apr. 4, 2012). Although the court may in its discretion decline to order the

payment of a bond (despite the seemingly mandatory nature of Rule 65(c)’s language),

Diaz v. Brewer, 656 F.3d 1008, 1015 (9th Cir. 2011), this Court has already ordered

Plaintiffs to pay a bond in the amount of $39,799.00 by August 23, 2013. (See ECF No.

25.) The failure to pay a bond required by court order has been found to constitute

changed circumstances meriting the dissolution of a preliminary injunction. See, e.g.,

Castillo v. Skoba, No. 10CV1838 BTM, 2011 WL 92991 (S.D. Cal. Jan. 7, 2011)

(Moskowitz, J.); Grady, 2012 WL 1132578.

ANALYSIS

The facts have changed since the issuance of the August 16, 2013 Preliminary

Injunction Order. This Court ordered Plaintiffs to post a bond, but the deadline by

which Plaintiffs were to have posted that bond has long passed. Moreover, Plaintiffs

have not bothered to respond to Bayview’s ex parte motion requesting dissolution of

the preliminary injunction with any justifications for this failing. In light of Plaintiffs’

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failure to comply with this Court’s Order, and without a bond to serve as security

should this Court ultimately determine that Bayview has been wrongfully enjoined, the

Court fears that its preliminary injunction has become an “instrument of wrong” by

enabling further delay in the resolution of this matter. Sys. Fed’n No. 91, 364 U.S. at

647. Accordingly, this Court GRANTS Bayview’s request to dissolve the Preliminary

Injunction Order.2

CONCLUSION

For the reasons stated above, the Court DISSOLVES its August 16, 2013 Order

and GRANTS Bayview’s request to dissolve the preliminary injunction.

IT IS SO ORDERED.

DATED: September 18, 2013

Honorable Janis L. Sammartino

United States District Judge

2

Of course, as of January 1, 2013, the Homeowner’s Bill of Rights (“HBOR”) provides that “if a borrower submits a complete application for a first lien loan modification . . . the mortgage servicer . . . shall not record a notice of default or notice

of sale, or conduct a trustee’s sale, while the complete first lien loan modification

application is pending.” Cal. Civ. Code § 2923.6(c). This Court’s concerns regarding Bayview’s failure to provide factual support that it denied Plaintiffs’ 2011 loan

modification application in accordance with the HBOR, expressed in the August 16, 2013 Preliminary Injunction Order, remain. (See ECF No. 25 at 6-8.) The Court cautions the parties that this dissolution of the preliminary injunction does not alter that fact. 

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