Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-01237/USCOURTS-caed-2_14-cv-01237-1/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

GARY L. COOKSEY, et al., 

Plaintiffs, 

v. 

SELECT PORTFOLIO SERVICING, 

INC., et al., 

Defendants. 

No. 2:14-cv-1237 KJM KJN 

ORDER 

 On August 29, 2014, the court heard argument on plaintiffs’ motion for a 

preliminary injunction and on defendant Bank of America’s motion to dismiss. Eric Mercer 

appeared for plaintiffs; Monique Brewer-Jewett appeared for defendant Bank of America 

(BANA); Thomas Woods and Bryan Hawkins appeared for defendant Select Portfolio Servicing 

(SPS). After considering the parties’ arguments, the court GRANTS the motion to dismiss in part 

and DENIES it in part, and DENIES the motion for a preliminary injunction. 

I. BACKGROUND 

 On May 20, 2014, plaintiffs Gary and Carol Cooksey filed a complaint alleging 

generally they own and live in a home at 10434 Jalapa Way, La Grange, California. Compl., ECF 

No. 1 ¶ 12. In May 2006 they refinanced the home and made all their payments until 2012. Id. 

¶¶ 13-14. 

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 In February 2012, after the payment had been adjusted to $5,400.00 a month, 

plaintiffs sought a loan modification from BANA. Id. ¶ 15. They submitted Home Affordable 

Modification Program (HAMP) applications to BANA in February, July and September 2012, but 

BANA representatives never responded to the applications. Id. ¶¶ 16, 22, 29. 

 In a letter dated September 26, 2012, BANA informed plaintiffs that as of October 

15, 2012, servicing of the loan would be transferred to SPS. Id. ¶ 33. Plaintiffs’ contact at 

BANA said all the paperwork concerning the loan modification would be transferred to SPS. Id. 

SPS did not respond to plaintiffs’ September 4 loan modification application. Id. ¶ 35. 

 On November 13, 2012, plaintiffs submitted a loan modification application to 

SPS. Id. ¶ 37. SPS responded on December 14, 2012, claiming a document was missing from 

the application. Id. ¶ 39. 

 Plaintiffs submitted a new application for a loan modification on March 11, 2013. 

Id. ¶ 40. On March 30, 2013, an SPS representative told them they had been approved for a 

HAMP Tier One modification with a new monthly payment of $2,247.50. Id. ¶ 41. Plaintiffs 

never received the documents relating to the trial payment period (TPP). Id. 

 Over the next year plaintiffs attempted unsuccessfully to obtain the TPP 

documents. Id. ¶ 43. On April 29, 2014, plaintiffs received a Notice of Trustee Sale, setting the 

sale for May 22. Id. ¶ 44. 

 After finalizing their 2013 taxes and receiving an updated profit and loss statement 

for the first four months of 2014, they submitted a complete HAMP application to SPS on 

May 15, 2014. Id. ¶ 46. On May 19, an SPS representative told plaintiffs their application was 

complete. Id. ¶ 48. 

 The complaint contains three claims: (1) violations of the Equal Credit 

Opportunity Act, 15 U.S.C. § 1691(d) against both defendants; (2) a violation of the 

Homeowners’ Bill of Rights, Cal. Civ. Code § 2924.12 (HBOR), against both defendants; and 

(3) a violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. 

ECF No. 1. 

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 Plaintiffs also filed a motion for temporary restraining order. ECF No. 3. On 

May 21, 2014, the court granted the motion and enjoined defendants from taking any action to 

alter the status quo of the real property located at 10434 Jalapa Way, La Grange, California. ECF 

No. 6. 

 On May 28, 2014, plaintiffs filed a motion for a preliminary injunction. ECF No. 

7. After a hearing, the parties reset the hearing on the motion. ECF No. 11. SPS filed its 

opposition to the motion on July 24, 2014 and plaintiffs filed a reply. ECF Nos. 24, 30. 

 On July 2, 2014, BANA filed a motion to dismiss. ECF No. 20. Plaintiffs filed 

their opposition on August 8, 2014 and BANA filed its reply on August 15, 2014. ECF Nos. 26, 

29. 

II. THE MOTION TO DISMISS 

 A. Standard 

 Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to 

dismiss a complaint for “failure to state a claim upon which relief can be granted.” A court may 

dismiss “based on the lack of cognizable legal theory or the absence of sufficient facts alleged 

under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 

1990). 

 Although a complaint need contain only “a short and plain statement of the claim 

showing that the pleader is entitled to relief,” FED. R. CIV. P. 8(a)(2), in order to survive a motion 

to dismiss, this short and plain statement “must contain sufficient factual matter . . . to ‘state a 

claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something 

more than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or “‘labels and 

conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Id. (quoting 

Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss 

for failure to state a claim is a “context-specific task that requires the reviewing court to draw on 

its judicial experience and common sense.” Id. at 679. Ultimately, the inquiry focuses on the 

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interplay between the factual allegations of the complaint and the dispositive issues of law in the 

action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). 

 In making this context-specific evaluation, this court must construe the complaint 

in the light most favorable to the plaintiff and accept as true the factual allegations of the 

complaint. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). This rule does not apply to “‘a legal 

conclusion couched as a factual allegation,’” Papasan v. Allain, 478 U.S. 265, 286 (1986) (quoted 

in Twombly, 550 U.S. at 555), nor to “allegations that contradict matters properly subject to 

judicial notice” or to material attached to or incorporated by reference into the complaint. 

Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). A court’s 

consideration of documents attached to a complaint or incorporated by reference or matter of 

judicial notice will not convert a motion to dismiss into a motion for summary judgment. United 

States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003); Parks Sch. of Bus. v. Symington, 51 F.3d 

1480, 1484 (9th Cir. 1995); compare Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 

980 (9th Cir. 2002) (noting that even though court may look beyond pleadings on motion to 

dismiss, generally court is limited to face of the complaint on 12(b)(6) motion). 

 B. Requests for Judicial Notice 

 BANA has asked the court to take judicial notice of a number of documents 

relating to 10434 Jalapa Way recorded in Mariposa County, including a Notice of Default, 

recorded October 4, 2014; and a Notice of Trustee Sale, recorded January 8, 2014, setting the sale 

for February 6, 2014. Req. for Judicial Not., ECF No. 21. Plaintiffs do not oppose the request. 

 A court may take judicial notice of matters of public record. Lee v. City of 

Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). These documents were recorded in the Mariposa 

County Recorder’s Office and their accuracy may be readily determined. Fed. R. Evid. 201(b)(2). 

The request is granted. 

 Plaintiffs have asked the court to take judicial notice of portions of Supplemental 

Directives 09-01 and 09-08 of the HAMP Guidance and of portions of the Making Home 

Affordable (MHA) Handbook, version 1.0 of the HAMP Guidance. BANA does not object and 

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at the hearing stipulated the directives were in effect at the time of the events described in the 

complaint. 

 Courts in this circuit have taken judicial notice of documents readily available on 

government websites when neither party disputes the accuracy of the information. See, e.g., 

Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998-99 (9th Cir. 2010) (taking judicial notice of 

information on school district’s website when neither party disputed “the authenticity of the web 

sites or the accuracy of the information displayed therein”); Johnson v. Hologic, Inc., 

No. 2:14-cv-0794 LKK KJN (PS), 2014 WL 2581421, at *2 (E.D. Cal. Jun. 9, 2014) (same). 

The court grants this request as well. 

 C. Equal Credit Opportunity Act 

 The ECOA “makes it illegal ‘for any creditor to discriminate against any applicant, 

with respect to any aspect of a credit transaction . . . on the basis of race, color, religion, national 

origin, sex or marital status or age.’” Schlegel v. Wells Fargo Bank, 720 F.3d 1204, 1210 (9th 

Cir. 2013) (quoting 15 U.S.C. § 1691(a)(1)). Courts have found applications for loan 

modifications to be applications for credit under the ECOA. See, e.g., Vasquez v. Bank of Am., 

N.A., 3:13-cv-02902, 2013 WL 6001924, at *13 (N.D. Cal. Nov. 12, 2013) (“[T]he Federal 

Reserve has opined that loan modification requests under the Department of Treasury’s Making 

Home Affordable Modification Program (“HAMP”) do qualify as ‘credit applications’ under 

ECOA, and that loan modifications outside the HAMP should be analyzed using the same 

factors.”); Supplemental Directive 09-01, ECF No. 26-2 at 4; but see Nickerson-Reti v. Bank of 

Am., N.A, Civil No. 13-12316-FDS, 2014 WL 2945198, at *11 (D. Mass. Jun. 26, 2012) (“[T]he 

denial of a mortgage-loan modification does not constitute an ‘adverse action’ under ECOA 

because it does not include a denial or revocation of credit.”). There is no suggestion in this case 

that any of the actions about which plaintiffs complain were taken for a discriminatory purpose. 

 The ECOA also contains a notice requirement: “Each applicant against whom 

adverse action is taken shall be entitled to a statement of reasons for such action from the 

creditor.” 15 U.S.C. § 1691(d)(2). An “adverse action” is a “denial or revocation of credit, a 

change in the terms of existing credit arrangement, or a refusal to grant credit in substantially the 

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amount or on substantially the terms requested.” 15 U.S.C. § 1691(d)(6). When a creditor fails 

to give the required notice when taking an adverse action, the applicant may sue for a violation of 

the ECOA. Schlegel, 720 F.3d at 1210. 

 Although the Ninth Circuit in Schlegel did not explicitly say the ECOA notice 

provisions are distinct from the anti-discrimination provisions, some courts in the Ninth Circuit 

have found the notice provisions to give rise to a cause of action even with no accompanying 

claims of discrimination. Errico v. Pac. Capital Bank, N.A., 753 F. Supp. 2d 1034, 1042 (N.D. 

Cal. 2010); Vasquez, 2013 WL 6001924, at *11. This reading is supported by the regulations 

implementing the ECOA, which say in part, “The regulation prohibits creditor practices that 

discriminate on the basis of any of these [listed] factors. The regulation also requires creditors to 

notify applicants of action taken on their applications . . . .” 12 C.F.R. § 202.1(b). 

 BANA argues plaintiffs’ complaint shows they submitted only one complete loan 

modification to BANA just before servicing was transferred to SPS and so BANA could not have 

taken an adverse action. It also argues any claim based on the February 2012 application is 

barred by the statute of limitations. Mot. to Dismiss, ECF No. 20 at 7. 

 Plaintiffs argue the statute of limitations was amended in 2011; the complaint 

shows they never received any response to the applications submitted in February and July 2012; 

and BANA confirmed their September 4 application was complete but then did not respond to it 

before transferring servicing to SPS. Opp’n, ECF No. 26 at 8. 

 In reply, BANA says plaintiffs cannot state an ECOA claim because ECOA does 

not apply to applicants who are delinquent on their loans. Reply, ECF No. 29 at 3. 

 1. Statute of Limitations 

 Although the statute of limitations for the ECOA previously was two years, 

Omoregie v. Boardwalk Auto Ctr., Inc., No. C-07-3884 PJH, 2008 WL 3823697, at *3 (N.D. Cal. 

Aug. 13, 2008), the statute was amended in 2010, extending the time for filing an ECOA suit to 

five years. Mungai v. Wells Fargo Bank, No. C–14–00289 DMR, 2014 WL 2508090, at *9 (N.D. 

Cal. Jun. 3, 2014); 15 U.S.C. § 1691e(f). Plaintiffs’ claims are timely. 

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 2. Complete Application 

 BANA argues that the complaint shows only the September 2013 application was 

complete and because servicing was transferred to SPS less than thirty days after it received that 

application, it did not violate ECOA by any failure to respond. 

 Under 15 U.S.C. § 1691(d)(1), “[w]ithin thirty days . . . after receipt of a 

completed application for credit, a creditor shall notify the applicant of its action on the 

application.” An application is not complete until the creditor has received, through its exercise 

of reasonable diligence, the last piece of information regularly obtained in the modification 

process. Dufay v. Bank of Am., N.T. & S.A. of Oregon, 94 F.3d 561, 564 (9th Cir. 1996); Errico 

753 F. Supp. 2d at 1043; 12 C.F.R. § 202.2 (f). 

 Plaintiffs do not specifically allege they submitted complete applications in 

February, but they do say that in July 2012 they confirmed with BANA’s representative that the 

application was complete except for a profit or loss statement, and thereafter provided additional 

pages the representative said were missing; BANA then told them they had taken too long to 

comply. See ECF No. 1 ¶¶ 16, 22, 23, 27. They also allege they submitted their third application 

on September 4, 2012 and received confirmation that the application was complete on 

September 18. ECF No. 1 ¶¶ 29, 32. 

 The thirty-day period for notifying applicants about the action on their submission 

does not begin to run until the application is complete. Davis v. U.S. Bancorp, 383 F.3d 761, 

766-67 (8th Cir. 2004); Wright v. Suntrust Bank, No. Civ. 1:04-CV-2258, 2006 WL 2714717, at 

*4 (N.D. Ga. Sep. 18, 2006) (stating that the obligation to notify an applicant about any adverse 

action or approval did not arise until the application is complete). Plaintiffs have pleaded that on 

September 18, BANA told them the application was complete, but on October 15, less than thirty 

days later, servicing was transferred to SPS. Neither party has cited, and the court has not found, 

any cases discussing what impact a transfer of servicing has on the original creditor’s notice 

obligations under the ECOA. Nevertheless, it stands to reason that when an entity ceases to have 

responsibility for accepting or rejecting an application for a loan modification, its obligation to 

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notify the applicant also ceases. Plaintiffs have not pleaded an ECOA claim as to the September 

application. 

 As BANA argues, plaintiffs have not pleaded the February and July applications 

were complete and so plaintiffs have not pleaded an ECOA violation stemming from BANA’s 

failure to inform them of the action on these applications. In their opposition, plaintiffs argue 

BANA was required to provide them with a notice these applications were incomplete, a theory 

pleaded in their complaint. See ECF No. 26 at 12; ECF No. 1 ¶ 53. 

 As part of the ECOA notice requirements, a servicer must notify an applicant if the 

application is incomplete; failure to do so states a claim under the ECOA. Errico, 753 F. Supp. 

2d at 1043-44 (stating plaintiffs stated a claim under the ECOA based on allegations the lender 

failed timely to inform them of an incomplete application); Wright, 2006 WL 2714717, at *4; 12 

C.F.R. § 202.9(c) (“Within 30 days after receiving an application that is incomplete regarding 

matters that an applicant can complete, the creditor shall notify the applicant . . . [¶] If additional 

information is needed from an applicant, the creditor shall send a written notice . . . specifying the 

information needed, designating a reasonable time period for the applicant to provide the 

information, and informing the applicant that failure to provide the information requested will 

result in no further consideration being given to the application.”). 

 Plaintiffs do plead that BANA did not respond at all to their February application 

and that the bank initially told them their July application was incomplete, but then outside the 

thirty day window notified them documents were missing. ECF No. 1 ¶¶ 16, 23, 27. These 

allegations state an ECOA claim. 

 3. The Impact of Plaintiffs’ Default 

 In their reply, defendants argue that none of plaintiffs’ ECOA claims can survive 

because the ECOA does not apply to applicants who are in default. ECF No. 29 at 3; see 

15 U.S.C. § 1691(d)(6) (“[T]he term ‘adverse action’ means a denial or revocation of credit, a 

change in terms of an existing credit arrangement, or a refusal to grant credit in substantially the 

terms requested. Such term does not include a refusal to extend additional credit under an 

existing credit arrangement where the applicant is delinquent or otherwise in default . . . .”); 

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Vasquez, 2013 WL 6001924, at *12; Burton v. NationstarMortg. LLC., No. CV 1:13–0307 LJO 

GSA, 2013 WL 2355524, at *15 (E.D. Cal. May 29, 2013). The court “need not consider 

arguments raised for the first time in a reply brief.” Zamani v. Carnes, 491 F.3d 990, 997 (2007); 

Mitchell v. Cate, No. 2:08–CV–01196, 2014 WL 546338, at *30 (E.D. Cal. Feb. 11, 2014). 

Moreover, BANA does not address whether plaintiffs’ default bars an ECOA claim based on a 

failure to notify applicants about an incomplete application and the court declines to make this 

argument for it. Doubt v. NCR Corp., Case No: C-09-5917, 2014 WL 3897590, at *6 (N.D. Cal. 

Aug. 7, 2014) (“It is not the role of the Court . . . to make the party’s arguments for it.”). 

 D. Homeowners’ Bill of Rights (HBOR) 

 Plaintiffs allege they are victims of “dual tracking, whereby financial institutions 

continue to pursue foreclosure even while evaluating a borrower’s loan modification application.” 

Rockridge Trust v. Wells Fargo, N.A., 985 F. Supp. 2d 1110, 1149 (N.D. Cal. 2013). Under 

California’s HBOR, “[i]f a borrower submits a complete application for a first lien modification 

. . . a mortgage servicer . . . shall not record a notice of default, notice of sale, or conduct a 

trustee’s sale, while the complete first lien loan modification application is pending,” or during 

any appeal of a determination the borrower is not eligible for a modification. Cal. Civ. Code 

§ 2923.6 (c)-(f). 

 BANA argues the HBOR is not retroactive and BANA did not record either the 

Notice of Default or the Notice of Sale. ECF No. 20 at 8-9. At the hearing, plaintiffs stipulated 

the provisions are not retroactive but rather argued they have pleaded BANA’s participation as an 

aider and abettor or as part of a joint venture. ECF No. 26 at 13-15. In reply BANA argues these 

theories are not adequately pleaded. 

 1. Retroactivity 

 Courts have uniformly found the HBOR is not retroactive. See, e.g., Rockridge 

Trust, 985 F. Supp. 2d at 1152; Vasquez, 2013 WL 6001924, at *8. As noted, plaintiffs have not 

argued otherwise. 

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 2. Adequacy of the Pleading 

 In the complaint plaintiffs allege that the defendants “aided and abetted, 

encouraged, and rendered substantial assistance to the other Defendants in breaching their 

obligations to Plaintiff[s]” and each was “an agent, servant, employee, and/or joint venture of 

each of the remaining Defendants . . . .” ECF No. 1 ¶¶ 9-10. 

 In opposition to the motion to dismiss, plaintiffs argue that mortgage servicing can 

involve “complex relationships between entities in the servicing industry” and “there can be 

multiple servicers on the same loan . . . .” ECF No. 26 at 13-14. They also argue BANA might 

be a master servicer, with liability for the HBOR violations. Id. 

 In California, “liability for aiding and abetting depends on proof the defendant had 

actual knowledge of the specific primary wrong the defendant assisted.” Casey v. U.S. Bank 

Nat’l Ass’n, 127 Cal. App. 4th 1138, 1145 (2005). In addition, “‘[t]here are three basic elements 

of a joint venture: the members must have joint control over the venture (even though they may 

delegate it), they must share the profits of the undertaking, and the members must each have an 

ownership interest in the enterprise.’” Jeld-Wen, Inc. v. Sup. Ct., 131 Cal. App. 4th 853, 872 

(2005) (quoting Orosco v. Sun-Diamond Corp., 51 Cal. App. 4th 1659, 1666 (1997)). Each of 

these theories must be supported by sufficient facts to show either BANA’s knowledge of SPS’s 

HBOR violations or BANA’s profit-sharing, joint control and ownership of the undertaking. 

Fields v. Wise Media, LLC, No. C 12–05160 WHA, 2013 WL 5340490, at *3-4 (N.D. Cal. Sep. 

24, 2013); Uecker v. Wells Fargo Capital Fin. (In re Mortg. Fund ’08 LLC ), Bankruptcy Case 

No. 11–49803 RLE, Adv. Proc. No. 12–4137 RLE, 2014 WL 543685, at *6 (Bankr. N.D. Cal. 

Feb. 11, 2014). As defendant points out, the complaint is devoid of factual support for plaintiffs’ 

conclusory claims. The HBOR claim will be dismissed with leave to amend. 

 E. Unfair Competition Law 

 “To bring a UCL claim, a plaintiff must show either an (1) unlawful, unfair, or 

fraudulent business act or practice, or (2) unfair, deceptive, untrue or misleading advertising.” 

Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1043 (9th Cir. 2003) (internal 

quotation marks omitted); Gardner v. Am. Home Mortg. Servicing, Inc., 691 F. Supp. 2d 1192, 

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1201 (E.D. Cal. 2010). Because the statute is phrased in the disjunctive, a practice may be unfair 

or deceptive even if it is not unlawful, or vice versa. Lippitt, 340 F.3d at 1043. 

 An action is unlawful under the UCL and independently actionable if it constitutes 

a violation of another law, “be it civil or criminal, federal, state, or municipal, statutory, 

regulatory, or court-made.” Farmers Ins. Exchange v. Superior Court, 2 Cal. 4th 377, 383 

(1992); Saunders v. Superior Court, 27 Cal. App. 4th 832, 838–39 (1999). Because the statute 

borrows violations of other laws, a failure to state a claim under the “borrowed statute” translates 

to a failure to state a claim under the unlawful prong of the UCL. See Saunders, 27 Cal. App. 4th 

at 838–39. 

 An act is “unfair” under the UCL if it “significantly threatens or harms 

competition, even if it is not specifically proscribed by another law” or “is tethered to some 

legislatively declared policy . . . .” Cel–Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 

20 Cal. 4th 163, 180, 186–87 (1999); Swanson v. EMC Mortg. Corp., No. 09–1507, 2009 WL 

4884245, at *9 (E.D. Cal. Dec. 9, 2009). “[T]he ‘unfairness’ prong has been used to enjoin 

deceptive or sharp practices . . . .” Countrywide Fin. Corp. v. Bundy, 187 Cal. App. 4th 234, 257 

(2010) (internal citation and quotation marks omitted). In a federal court, an unfair business 

practice claim grounded in fraud must be pled with particularity under Rule 9(b). Vess v. CibaGeigy Corp., USA, 317 F.3d 1097, 1103 (9th Cir. 2003); Fed. R. Civ. P. 9. 

Defendant argues only that the UCL claim fails because plaintiffs’ underlying 

claims fail. As noted, plaintiffs have adequately alleged an ECOA violation, so their UCL claim 

based on a violation of that law survives. 

III. MOTION FOR A PRELIMINARY INJUNCTION 

A. Standard 

 Injunctive relief is an extraordinary remedy that may only be awarded upon a clear 

showing that the moving party is entitled to such relief. Winter v. Natural Res. Def. Council, Inc., 

555 U.S. 7, 22 (2008). As provided by Federal Rule of Civil Procedure 65, a court may issue a 

preliminary injunction to preserve the relative position of the parties pending a trial on the merits. 

Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981). The party seeking injunctive relief must 

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show it “is likely to succeed on the merits, . . . is likely to suffer irreparable harm in the absence 

of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the 

public interest.” Winter, 555 U.S. at 20. 

 Before the Winter decision, the Ninth Circuit employed a “sliding scale” or 

“serious questions” test, which allowed a court to balance the elements of the test “so that a 

stronger showing of one element may offset a weaker showing of another.” Alliance for the Wild 

Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citing Clear Channel Outdoor, Inc. v. 

City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 2003)). Recently, the Circuit has found that its 

“serious question” sliding scale test survived Winter: a court may issue a preliminary injunction 

when the moving party raises serious questions going to the merits and demonstrates that the 

balance of hardships tips sharply in its favor, so long as the court also considers the remaining 

two prongs of the Winter test. Cottrell, 632 F.3d at 1134-35. However, a court need not reach 

the other prongs if the moving party cannot as a threshold matter demonstrate a “fair chance of 

success on the merits.” Pimentel v. Dreyfus, 670 F.3d 1096, 1111 (9th Cir. 2012) (quoting 

Guzman v. Shewry, 552 F.3d 941, 948 (9th Cir. 2008)) (internal quotations omitted). 

 B. Analysis 

 Plaintiffs argue that the imminent sale of their home constitutes irreparable injury 

and they are likely to succeed on their HBOR claim. Mot. for Prelim. Inj., ECF No. 7 at 4. 

 SPS argues plaintiffs are not facing an immediate threat of irreparable harm 

because it has postponed the foreclosure while reviewing plaintiffs’ requests for modification and 

will continue to do so in light of a pending request for modification. Opp’n, ECF No. 24 at 5. It 

also argues plaintiff cannot show a likelihood of success on the merits of their HBOR claim 

because they have not pleaded and have not otherwise shown that their subsequent requests for 

modification were supported by proof of a change in their financial circumstances; they are not 

entitled to a review of an incomplete application; and no application was pending at the times 

either the Notice of Default or the Notice of Sale were recorded, among other things. Opp’n, 

ECF No. 24 at 13-15. SPS also argued plaintiffs had not alleged an ability to tender the amount 

of the mortgage, but at hearing conceded that tender was not required. 

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 If the sale of plaintiffs’ home proceeds, plaintiffs will permanently lose ownership 

of the property, their principal residence. This constitutes irreparable harm. Kilgore v. Wells 

Fargo Home Mortg., No. 1:12–CV–00899 AWI, 2012 WL 2195656, at *1 (E. D. Cal. June 13, 

2012) (citing Park Vill. Apartment Tenants Ass'n v. Mortimer Howard Trust, 636 F.3d 1150, 1159 

(9th Cir. 2011)) (“With respect to irreparable injury, a plaintiff’s loss of her residence is usually 

sufficient to satisfy this element.”); Wrobel v. S.L. Pope & Assocs., No. 07-CV-1591 IEG (BLM), 

2007 WL 2345036, at *1 (S. D. Cal. Aug. 15, 2007) (“Losing one’s home through foreclosure is 

an irreparable injury.” (citation omitted)). 

 Although SPS disputes whether plaintiffs have submitted a complete application 

and whether either the Notice of Default or Notice of Trustee’s Sale were recorded while a 

complete application was pending, SPS represents it will not conduct a foreclosure sale while 

reviewing plaintiffs’ latest application. Opp’n, ECF No. 24 at 10. Although plaintiffs dispute the 

claim that their application was incomplete, on the date of the hearing they discussed the state of 

their application with SPS’s counsel. In a status report filed on September 2, at the court’s 

invitation, counsel for SPS represents that he provided a list of missing information to plaintiffs’ 

counsel and gave plaintiffs until September 11 to provide the necessary information. Status 

Report, ECF No. 33 at 2 & Exs. A-D. The September 2 status report is the last filing on the 

court’s docket. 

 To secure the issuance of an injunction, a party must show the threatened injury is 

both likely and immediate. Winter, 555 U.S. at 22 (stating that “plaintiffs seeking preliminary 

relief [must] demonstrate that irreparable injury is likely in the absence of an injunction”) 

(emphasis in original); Caribbean Marine Servs. Co., Inc. v. Baldridge, 844 F.2d 668, 674 (9th 

Cir. 1988) (“A plaintiff must do more than merely allege imminent harm sufficient to establish 

standing; a plaintiff must demonstrate immediate threatened injury as a prerequisite to 

preliminary injunctive relief.”). “[E]stablishing a threat of irreparable harm in the indefinite 

future is not enough.” Amylin Pharm, Inc. v. Eli Lilly and Co., 456 F. App’x 676, 679 (9th Cir. 

2011) (unpublished). 

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 Counsel’s representation in the opposition and the September 2 status report show 

that SPS is continuing to work with plaintiffs in considering the possibility of a loan modification 

and, based on this and on counsel’s representation that SPS will not undertake a trustee’s sale 

while the modification process is continuing, the court does not find plaintiffs are facing an 

immediate threat of irreparable injury. 

 IT IS THEREFORE ORDERED THAT: 

 1. Defendant BANA’s motion to dismiss, ECF No. 20 is granted without leave to 

amend insofar as plaintiffs premise their claim on the September 2013 application for a loan 

modification, and granted with leave to amend their allegations that BANA is liable for HBOR 

violations based on its liability as an aider and abettor or part of a joint venture; 

 2. Plaintiffs’ amended complaint is due within twenty-one days of the date of this 

order; and 

 3. Plaintiffs’ motion for a preliminary injunction, ECF No. 7, is denied without 

prejudice. 

DATED: September 17, 2014. 

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