Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_10-cv-01931/USCOURTS-caed-2_10-cv-01931-0/pdf.json

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

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

KELLY HESTER and ERIC HESTER, )

)

Plaintiffs, ) 2:10-cv-01931-GEB-DAD

v. ) 

) ORDER DENYING PLAINTIFFS’

PHH MORTGAGE; REAL TIME ) EX PARTE APPLICATION FOR A

RESOLUTIONS, INC.; NDEX WEST, LLC; ) TEMPORARY RESTRAINING ORDER

and DOES 1 through 100, inclusive )

)

Defendants. )

___________________________________)

Plaintiffs filed an ex parte application for a temporary

restraining order (“TRO”) on July 21, 2010, in which they seek to

enjoin Defendants “from engaging in or performing any act to deprive

[them] of ownership or possession of the real property located at 225

La Loma Court, Roseville, CA . . ., [and] in particular, from

proceeding with the foreclosure sale of the Property now scheduled for

July, 27, 2010.” (TRO Application 1:17-27.)

I. LEGAL STANDARD

“Temporary restraining orders are governed by the same

standard applicable to preliminary injunctions.” Pimentel v. Deutsche

Bank Nat. Trust Co., 2009 WL 3398789,*1 (S.D. Cal. 2009); see also

Stuhlbarg Intern. Sales Co., Inc. v. John D. Brushy and Co., Inc., 240

F.3d 832, 839 n.7 (9th Cir. 2001) (stating the standards for issuing a

TRO are “substantially identical” to those for issuing a preliminary

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Plaintiffs’ complaint includes the allegations that subject 1

matter jurisdiction exists under both 28 U.S.C. § 1331 and § 1332.

However, Plaintiffs’ diversity jurisdiction allegation that Defendants

are “based in” states other than California “is insufficient without an

allegation as to the state in which [Defendants are] incorporated and

that state in which [they have their] principal place of business.”

Veeck v. Commodity Enter., Inc., 487 F.2d 423, 426 (9th Cir. 1973)

(citing 28 U.S.C. § 1332). 

Plaintiffs’ complaint does not comply with Federal Rule of 2

Civil Procedure 10(b), which requires “numbered paragraphs, each limited

as far as practicable to a single set of circumstances.” This Court has

apprised Plaintiffs’ counsel of this Federal Rule at least once. See

Gumbs v. Litton Loan Servicing, 2:09-cv-01159-GEB-GGH, Docket No. 32,

2:17-3:11.

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injunction). Therefore, “[a] plaintiff seeking a [TRO] must establish

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.” Am. Trucking Ass’n, Inc. v. City of Los

Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter v.

Natural Res. Def. Council, Inc., --- U.S. ----, 129 S. Ct. 365, 374,

(2008)). A TRO is “an extraordinary remedy that may only be awarded

upon a clear showing that the plaintiff is entitled to such relief.” 

Winter, 129 S. Ct. at 376.

II. BACKGROUND

Plaintiffs’ complaint and TRO application do not contain

factual allegations that clearly explain the events underlying

Plaintiffs’ claims. Plaintiffs allege they “purchased the [Roseville 1

property] and became the owners of legal title to the property using

funds acquired through a loan from Defendants.” (Compl. 4:1-2. ) 2

While Plaintiffs do not allege when they purchased the Roseville

property, the Notice of Trustee’s Sale that is attached to Plaintiffs’

TRO application indicates that Plaintiffs executed a deed of trust

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securing their loan on May 5, 2005. Plaintiffs allege they “became 90

days late on the loan,” but do not allege precisely when this default

occurred. (Id. 4:9.) Plaintiffs’ other allegations suggest they

defaulted on their loan some time in 2009 since they allege: “prior to

becoming late, Plaintiffs contacted Defendant PHH MORTGAGE

CORPORATION, to discuss a short sale. Multiple offers were submitted

to PHH in 2009. PHH continually refused to respond to requests for

assistance from Plaintiffs and failed to approve the short sale. [PPH]

refused to explain its position to Plaintiffs and why it refused [to]

respond to Plaintiffs’ numerous requests.” (Id. 3:2-5, 4:9-13.) 

Plaintiffs further allege that “[e]ventually, on June 21, 2010,

[Defendant] PHH did approve a short sale with a projected closing date

of July 28, 2010. However, on July 10, 2010, Plaintiffs received a

Notice of Trustee’s Sale from [Defendant] NDEX West with a sale date

of July 27, 2010.” (Id. 4:15-17.) 

III. DISCUSSION

A. Likelihood of Success on the Merits

Plaintiffs argue they are entitled to a TRO enjoining the

trustee’s sale because the notice of default and notice of trustee’s

sale were “defective” and Defendant PPH did not comply with California

Civil Code section 2943(c)(2).

1. “Defective Notices” Claim

Plaintiffs argue the “time frames” provided by California

Civil Code section 2924(a) (“section 2924(a)”) were not complied with

and the notice of trustee’s sale was not properly served under

California Civil Code section 2924f (“section 2924f”).

“[T]he power of sale exercised by the trustee on behalf of

the lender/creditor in nonjudicial foreclosures is a right authorized

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solely by the contract between the lender and trustor as embodied in

the deed of trust.” Garfinkle v. Superior Court, 21 Cal. 3d 268, 277

(1978) (citations omitted). However, the California legislature has

established “certain minimum standards for conducting nonjudicial

foreclosures . . . .” Id. at 278. California Civil Code sections

2924 through 2924k “provide a comprehensive [statutory] framework for

the regulation of a nonjudicial foreclosure pursuant to a power of

sale contained in a deed of trust.” Moeller v. Lien, 25 Cal. App. 4th

822, 830 (1994). The Moeller court described this statutory scheme as

follows:

Upon default by the trustor, the beneficiary may

declare a default and proceed with a nonjudicial

foreclosure sale. The foreclosure process is

commenced by the recording of a notice of default

and election to sell by the trustee. After the

notice of default is recorded, the trustee must

wait three calendar months before proceeding with

the sale. After the 3-month period has elapsed, a

notice of sale must be published, posted and mailed

20 days before the sale and recorded 14 days before

the sale. The trustee may postpone the sale at any

time before the sale is completed. If the sale is

postponed, the requisite notices must be given.

Id. (citations omitted). 

Plaintiffs argue “the Notice of Default was not properly

served” since the “time frames” provided in California Civil Code

section 2924(a) “were not met.” (TRO Application 4:5-9.) 

Section 2924(a)(2) requires that the trustee wait three

months from the “filing of the notice of default” before proceeding

with the foreclosure and providing the notice of sale. The three

month period commences when the notice of default is recorded. See

Knapp v. Doherty, 123 Cal. App. 4th 76, 91 (2004) (stating “after the

notice of default is recorded, the trustee must wait three calendar

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months before proceeding with the sale” (quoting Moeller, 25 Cal. App.

4th 830). 

Here, Plaintiffs have not provided the date on which the

notice of default was recorded nor otherwise explained how Defendants

violated the timing requirements imposed by section 2924(a). 

Plaintiffs’ conclusory statement that the “time frames were not met”

is insufficient to demonstrate that Plaintiffs are likely to succeed

on the merits of their section 2924(a) claim.

Plaintiffs also argue the notice of trustee’s sale was not

served on Plaintiffs twenty days prior to the trustee’s sale as

required by section 2924f. Plaintiffs provide the declaration of

Plaintiff Kelly Hester in support of this argument, in which she

declares “[t]he Notice [of Trustee’s Sale] was not served on me until

July 10, 2010.” (Hester Decl. ¶ 6.) 

Section 2924f requires that “at least 20 days before the

date of sale,” the “notice of the sale . . . shall be . . . post[ed]

 . . . in one public place in the city where the property is to be

sold, . . . [published] in a newspaper of general circulation . . . [,

and] posted in a conspicuous place on the property to be sold . . . .” 

Cal. Civ. Code § 2924f(b). 

Plaintiffs have provided no authority supporting their

argument that they should have been personally served with the notice

of sale twenty days prior to the sale; nor have Plaintiffs shown that

Defendants otherwise failed to comply with section 2924f when they

provided the notice of trustee’s sale. Accordingly, Plaintiffs have

not shown that they are likely to succeed on the merits of their

section 2924f claim.

//

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2. California Civil Code Section 2943

Lastly, Plaintiffs argue they are entitled to a TRO since

Defendants violated California Civil Code section 2943(c)(2) (“section

2943(c)(2)”) by not properly responding to their “short sale package”

within 21 days. Specifically, Plaintiffs argue Defendants “did not

approve the short sale” within the required time. (TRO Application

3:16-17 (emphasis added).)

Section 2943(c)(2) provides:

[A] beneficiary, or his or her authorized agent,

shall, upon receipt of a short-pay request, prepare

and deliver a short-pay demand statement to the

person requesting it within 21 days of the receipt

of the short-pay request. A beneficiary, or his or

her authorized agent that elects not to proceed

with the transaction that is the subject of the

short-pay request may refuse to provide a short-pay

demand statement for that transaction, but shall

provide a written statement to the person

requesting it, indicating that the beneficiary

elects not to proceed with the proposed

transaction, within 21 days of the receipt of the

short-pay request . . . .

Cal. Civ. Code. § 2943(c).

Plaintiffs, however, have not provided the specific date or

dates on which the “short sale package” was submitted to Defendants

nor have Plaintiffs pointed to any requirement in section 2943(c)(2)

which requires approval of the short sale package within 21 days;

section 2943(c)(2) merely requires either a “short-pay demand

statement” or a “written statement” refusing the short-pay request if

the beneficiary “elects not to proceed with the transaction that is

the subject of the short-pay request.” Cal. Civ. Code § 2943(c)(2). 

Plaintiffs’ counsel’s vague declaration that an “approval was not

issued” within 21 days is insufficient to make a “clear showing” that

Plaintiffs are likely to succeed on their section 2943(c)(2) claim. 

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Winter, 129 S. Ct. at 376. Further, Plaintiffs concede they received

“requests for updated information” in response to their “qualified

offers to purchase the property on a short sale basis,” but fail to

explain the precise content of this response and why this response was

insufficient under section 2943(c)(2). Accordingly, Plaintiffs have

not demonstrated a likelihood of success on their section 2943 claim. 

B. Irreparable Harm

Plaintiffs argue they will suffer irreparable harm absent

the issuance of a TRO since “HESTER will lose her home,” and “she may

face liability to a second mortgage that would have been wiped out

with approval of a short sale.” (TRO Application 5:3-7.) “Clearly,

loss of a home is a serious injury.” Alcaraz v. Wachovia Mortg. FSB,

592 F. Supp. 2d 1296, 1301 (E.D. Cal. 2009). “However, whether a

particular foreclosure constitutes irreparable harm turns in part on

the reasons for foreclosure.” Mandrigues v. World Sav., Inc., No. C

07-4497 JF (RS), 2009 WL 160213, at *3 (N.D. Cal. 2009) (citing Parker

v. United States Dep’t of Agric., 879 F.2d 1362, 1367-68 (6th Cir.

1989)).

Here, Plaintiffs have not clearly explained the

circumstances that led to their present predicament, nor why they

failed to file a duly noticed motion for a preliminary injunction. 

Further, Eastern District Local Rule 231(b) states: 

In considering a motion for a temporary restraining

order, the Court will consider whether the

applicant could have sought relief by motion for

preliminary injunction at an earlier date without

the necessity for seeking last-minute relief by

motion for temporary restraining order. Should the

Court find that the applicant unduly delayed in

seeking injunctive relief, the Court may conclude

that the delay constitutes laches or contradicts

the applicant's allegations of irreparable injury

and may deny the motion solely on either ground.

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Since Plaintiffs have not explained why they did not seek relief by

motion for preliminary injunction at an earlier date, “the [C]ourt

concludes the delay contradicts [P]laintiff[s’] allegations of

irreparable injury . . . .” Mammoth Specialty Lodging, LLC v.

We-Ka-Jassa Inv. Fund, LLC, No. CIV S-10-0864 LKK/JFM, 2010 WL

1539811, at *2 (E.D. Cal. Apr. 16, 2010).

C. The Balance of Equities and the Public Interest

“The final two inquiries germane to an analysis of a TRO

request are whether the balance of equities tips in Plaintiff[s’]

favor and whether the public interest will benefit from the proposed

injunction. These factors may be viewed together.” Saba v. Caplan,

No. C 10-02113 SBA, 2010 WL 2681987, at *5 (N.D. Cal. July 6, 2010)

(citing Independent Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 572

F.3d 644, 657-58 (9th Cir. 2009)).

Plaintiffs argue the balance of equities and the public

interest favor issuance of a TRO because “Defendants are still assured

of recouping their principal” if a TRO is issued, and since there are

“serious doubts as to the validity of the deed of trust,” “the public

interest is served by the protection of the borrower’s home.” (TRO

Application 5:11-26.)

Plaintiffs’ argument concerning the validity of the deed of

trust is conclusory and not supported by facts. Further, while “the

potential loss of Plaintiff[s’] home through foreclosure generally

presents a hardship that weighs in [Plaintiffs’] favor[,] . . . in the

instant case, the equities that might otherwise favor [Plaintiffs] are

significantly counterbalanced by [Plaintiffs’] ostensibly conscious

decision to delay” seeking relief. Saba, 2010 WL 2681987, at *6; see

also Charles Alan Wright, et al., Federal Practice and Procedure §

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2946 (2d ed. 1995) (stating “the venerable maxim that ‘equity aids the

vigilant, not those who slumber on their rights’”). Moreover,

Plaintiffs have failed to explain why the public interest favors

injunctive relief which would halt a trustee’s sale that appears to

comply with the applicable statutory framework. Plaintiffs,

therefore, have not shown that either the balance of equities or the

public interest tips in their favor.

IV. Conclusion

Since Plaintiffs have not shown that injunctive relief is

warranted, Plaintiffs’ application for an ex parte TRO is DENIED.

Dated: July 23, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

Case 2:10-cv-01931-GEB-DAD Document 8 Filed 07/26/10 Page 9 of 9