Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-02892/USCOURTS-casd-3_12-cv-02892-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1640 Truth in Lending

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SOPHIA F. LUDYJAN-WOODS,

Plaintiff,

CASE NO. 12cv2892-LAB (WMC)

ORDER DENYING EX PARTE

APPLICATION FOR TEMPORARY

RESTRAINING ORDER OR

PRELIMINARY INJUNCTION

vs.

AMERICAN MORTGAGE EXPRESS

CORP. dba AMERICAN MORTGAGE

EXPRESS FINANCIAL, et al.,

Defendants.

Plaintiff filed her complaint on December 4, 2012. As part of that complaint, she

requested issuance of a temporary restraining order (TRO). The Court on December 5

denied the request, noting that it was not filed as a motion and did not address the standards

for issuance of preliminary injunctive relief.

On January 30, Plaintiff electronically filed an ex parte application seeking a TRO or,

alternatively, a preliminary injunction (the “Application”). The Application asks the Court to

enjoin a foreclosure sale of Plaintiff’s home, scheduled for the next morning, and not to

require Plaintiff to post a bond. 

Legal Standards

The Application goes through the analysis discussed in Granny Goose Foods, Inc.

v. Bhd. of Teamsters, 415 U.S. 423, 438–39 (1974) and Winter v. Natural Res. Def. Council,

Inc. 555 U.S. 7, 20–24 (2008). Although the Application does not discuss it, Plaintiff could

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also have relied on the formulation approved in Alliance for the Wild Rockies v. Cottrell, 632

F.3d 1127, 1131 (9 Cir. 2011). th

It is worth remembering that neither analysis governs the process of issuing or

denying a TRO. The Court exercises its discretion to grant or deny a TRO in conjuntion with

principles of equity. See Inland Steel v. United States, 306 U.S. 153 (1939); and Stanley v.

Univ. of Southern Cal., 13 F.3d 1313 (9th Cir.1994). The Court also applies Fed. R. Civ. P.

65(b), which governs how and under what circumstances a TRO may be issued. Issuance

of a TRO is an extraordinary remedy, and Plaintiff bears the burden of making a clear

showing that it should issue. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997).

Under the standard the Application relies on, Plaintiff must show (1) a likelihood of

success on the merits; (2) likelihood of irreparable injury if preliminary relief is not granted;

(3) the balance of hardships tips in her favor; and (4) granting relief would be in the public

interest. See Winter, 555 U.S. at 20–24. The Court examines all four on a flexible

“continuum.” Leiva–Perez v. Holder, 640 F.3d 962, 964–70 (9th Cir.2011). But, by the same

token, Plaintiff must make a showing on all four prongs. See Alliance for Wild Rockies, 632

F.3d at 1135. Even though a stronger showing on one element can offset a weaker showing

of another, Leiva-Perez, 640 F.3d at 964, all four must be shown in at least some degree.

Under the alternate formulation of Alliance for Wild Rockies, Plaintff would have to

show (1) “serious questions going to the merits” and (2) the balance of hardships tips sharply

towards her.

Likelihood of Success on the Merits

Plaintiff’s position is that she is likely to prevail because Defendant American

Mortgage Express took advantage of her when it gave her a subprime loan in October of

2005 to buy her house. She wants to modify the loan, and has tendered a settlement, but

says Defendants have refused. 

Plaintiff’s federal claim is that Defendants failed to make disclosures required under

TILA and RESPA. Her supplemental state claims are that lenders’ representatives misled

her into taking out a sub-prime loan “that was almost guaranteed to fail” (Application,

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6:14–16); and also that Defendant Midland Mortgage has violated Cal. Civ. Code §§ 2923.5

et seq. by refusing to provide loan counseling, foreclosure alternatives, or mitigation options,

and by arbitrarily denying her a loan modification. 

The Application argues that even though the relevant statutes of limitations under

TILA, RESPA, and state law have passed, she is entitled to equitable tolling “[b]ecause

counsel for Plaintiff recently discovered the misrepresentations and other improper conduct

of [lenders] in the origination of the Loan . . . .“ (Application, 6:23–25.)

This argument for tolling fails. The availability of equitable tolling does not depend on

the date a plaintiff actually discovers alleged fraud, but on the date when it could reasonably

be discovered through investigation of sources open to her, had she exercised all due

diligence. See Sarantapoulas v. Bank of America, N.A., 2012 WL 4761900, slip op. at *4

(N.D. Cal., Oct. 5, 2012) (citing Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1109 (1998); and

Santa Maria v. Pacific Bell, 202 F.3d 1170, 1178 (9 Cir. 2000)). The argument here is that

th

Plaintiff was presented with the terms of her loan in 2005 but didn’t understand them. The

disclosures and other information she says she didn’t get could also have been discovered

in 2005. See Hubbard v. Fid. Fed. Bank, 91 F.3d 75, 79 (9 Cir. 1996) (plaintiff was not th

entitled to equitable tolling of TILA claim, because nothing prevented her from examining her

loan contract and the lender’s disclosures in light of applicable legal requirements). It is very

likely, then, that all of Plaintiff’s claims are time-barred.

As for § 2923.5, it merely creates a procedural safeguard for borrowers by requiring

mortgagees (or their agents) to contact mortgagors in order to explore options to prevent

foreclosure; it does not require that mortgagors actually “provide loan counseling or

foreclosure alternatives, [or] mitigation options” (Application, 6:18–20), nor does it create any

right to a loan modification. See Mabry v. Superior Court, 185 Cal. App. 4 208, 214 (Cal. th

App. 4 Dist., 2010). Plaintiff’s allegations don’t suggest that Defendants refused to talk to her

about possible loan modification; rather, the Application alleges they denied her requests.

These arguments do not establish any likelihood of success on the merits, nor even

serious questions going to the merits.

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Irreparable Harm

Plaintiff has made out a prima facie case for irreparable harm, since she faces loss

of her home in a foreclosure sale. See Frias v. Wells Fargo Bank, 2013 WL 321690, slip op.

at *1 (N.D.Cal., Jan. 28, 2013) (citations omitted). 

At the same time, her lengthy delay in filing the Application could suggest a lack of

irreparable harm. See Miller ex rel. NLRB v. Cal. Pac. Med. Ctr., 991 F.2d 536, 544 (9th Cir.

1993) (“Plaintiff's long delay before seeking a preliminary injunction implies a lack of urgency

and irreparable harm.”) (internal quotation marks and citation omitted). There could be

reasons why loss of a home would not constitute irreparable harm. For example, it might be

clear to a homeowner that she could not afford to keep the house anyway and was only

seeking to delay the inevitable.

The Court finds this factor weighs in Plaintiff’s favor, though not as strongly as if she

had timely filed the Application.

Balance of Harms

The discussion merely gives the points in Plaintiff’s favor without addressing obvious

problems and counterarguments. For example, it emphasizes how Plaintiff would suffer if

the TRO were denied, while minimizing Defendants’ harms if it were granted as temporary

and minimal. This is clearly not the whole story, though. Defendants, for example, would

face increased expense if they had to reschedule the trustee sale. It is unknown whether

they would ultimately receive a better price now or later, but if the TRO were granted it is

certain they would face delay in getting paid. It is not at all clear, as Plaintiff argues, that their

security interest in the property is adequate protection, particularly if the property value is

declining. 

The Application also doesn’t discuss why Defendants’ position wouldn’t be harmed

if they were forced to give her a loan modification rather than foreclosing. This is an

important point, and fairly raised even by Plaintiff’s own argument. It is obvious they were

presented with her proposals for modification, and denied them, opting instead to sell the

house at a trustee’s sale. Defendants obviously thought they would be better off proceeding

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with the foreclosure, and Plaintiff doesn’t show why they were wrong, or why the benefit to

them would be only slight.

Public Interest

The discussion consists of a prediction that the house will be sold for an under-market

price and left vacant as a blight on the neighborhood. It isn’t based on evidence, but mere

speculation. See Brewer v. Landrigan, 131 S.Ct. 445 (2010) (affirming district court’s denial

of temporary restraining order where application was not adequately supported by evidence).

While it is possible this might happen, it is also possible the house might be profitably sold

to someone who lives in it and keeps it well-maintained. This argument falls far short of the

standard.

Winter and Cottrell Analysis

Under either standard, Plaintiff has clearly not met her burden of clearly showing that

a TRO is appropriate. She has hardly presented any evidence at all, but relies primarily on

speculation. Of the four Winter factors, the only one that weighs in her favor is irreparable

harm. She is unlikely to succeed on the merits, and has presented no evidence or even

convincing argument on the other two factors. She likewise fails the Cottrell two-factor test.

Her showing of irreparable harm is fairly strong, though not overwhelmingly so, but she has

demonstrated no serious questions going to the merits.

Other Considerations

Notice

Another serious obstacle to the issuance of a TRO is that Defendants were not given

adequate notice of it. It is possible, in fact, that they don’t even know about the lawsuit at all.

No proof of service of process has been filed in the docket, and Defendants have not

appeared. Therefore, it is unclear whether they have yet been served with the summons and

complaint. Plaintiff’s counsel represents that there have been ongoing discussions with

them, but that is not the same as service.

Even if Defendants have been served, no attorney has made an appearance for them

and therefore they not receiving electronic notices of documents filed in the docket. The

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Application was filed the afternoon of January 30 at 1:55 p.m. The proof of service, however,

claims that the Application was served by postal mail on November 27, 2012, before the

complaint was even filed. (Docket no. 6-5 at 1–2.) This might refer to pre-filing

communication between Plaintiff’s and Defendants’ counsel. But whatever it refers to, it

could not possibly have been the Application that is now before the Court, because the

Application refers to events after November 27 and was not even signed until January 29.

Nothing in the Application gives any reason to believe Defendants have been sent, shown,

or told about the Application.

Under Fed. R. Civ. P. 65(b)(1), the Court can issue a TRO without notice only under

limited circumstances. Those circumstances are absent here, which also requires that the

Application be denied.

Delay and Last-Minute Filing

Plaintiff waited until the afternoon before the foreclosure sale to file this Application,

even though she knew on December 5 that her earlier request had been denied and the

foreclosure sale was imminent. (See Application, Decl. of Lennie Ann Alzate, Esq., ¶ 3

(declaring that since August 30, 2012, her office has been calling Defendants asking them

to postpone the January 31 foreclosure sale).) There might be a good and reasonable

explanation for her decision to wait so long but if there is, the Application doesn’t give it.

Waiting until the last possible moment to seek a TRO is strongly discouraged,

particularly where, as here, it would prevent the opposing parties from presenting their side

of the argument. Even assuming Defendants had been served with the Application, they

wouldn’t have had time to read it, then draft and file a meaningful opposition before the

scheduled foreclosure sale. Such brinksmanship is unfair to opposing parties and the Court,

and only adds to the reasons why the TRO must be denied. See Lydo Enterprises v. City of

Las Vegas, 745 F.2d 1211, 1213 (9 Cir. 1984) (“A delay in seeking a preliminary injunction th

is a factor to be considered in weighing the propriety of relief.”) Compare Stanchart

Securities Int’l, Inc. v. Gavaldon, 2012 WL 5286952, slip op. at *3 (S.D.Cal., Oct. 24, 2012)

(filing for TRO two days before event to be enjoined did not give reasonable notice).

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Conclusion

Because the foreclosure sale is to take place immediately, denial of a TRO renders

any preliminary injunction moot. For these reasons, the Application is DENIED. Plaintiff’s

counsel is ORDERED to file proof of service in the docket no later than the close of business

on February 1, 2013. See Fed. R. Civ. P. 4(l)(1).

IT IS SO ORDERED.

DATED: January 30, 2013

HONORABLE LARRY ALAN BURNS

United States District Judge

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