Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-02193/USCOURTS-casd-3_08-cv-02193-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1692 Fair Debt Collection Act

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1 08cv2193 BTM(AJB)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THOMAS FARNER; SHANNON

FARNER,

Plaintiffs,

CASE NO. 08cv2193 BTM(AJB)

ORDER DENYING MOTION FOR

PRELIMINARY INJUNCTION AND

VACATING TEMPORARY

RESTRAINING ORDER

vs.

COUNTRYWIDE HOME LOANS;

RECONTRUST COMPANY, and DOES

1 through 10, inclusive,

Defendants.

I. INTRODUCTION

Prior to the removal of this case, the Superior Court granted Plaintiffs’ application for

a temporary restraining order and Plaintiffs filed a motion for preliminary injunction. Upon

removal, this Court issued a temporary restraining order to maintain the status quo and

ordered Defendants to show cause why a preliminary injunction should not issue.

Defendants filed a response to the OSC. Plaintiffs have not filed any reply. Upon review of

the record, the Court finds that there is no need for an evidentiary hearing or oral argument

and decides the motion on the papers. 

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2 08cv2193 BTM(AJB)

II. DISCUSSION

A. Standard

To prevail on a motion for a preliminary injunction, the moving party must show either

“a) a probable success on the merits combined with the possibility of irreparable injury or b)

that [the moving party] has raised serious questions going to the merits, and that the balance

of hardships tips sharply in her favor.” Bernhart v. County of Los Angeles, 339 F.3d 920, 925

(9th Cir. 2003). These alternatives are “extremes of a single continuum,” thus, “the greater

the relative hardship to the moving party, the less probability of success must be shown.”

Id. (citations omitted). Courts will also consider the public interest when evaluating a request

for injunctive relief. Caribbean Marine Servs. Co. v. Baldridge, 844 F.2d 668, 674 (9th Cir.

1988).

B. Analysis

Plaintiffs contend that Defendants lack standing to foreclose on the property located

at 2246 1⁄2 Buena Creek Road, Vista, California (the “Property”), and seek to enjoin

Defendants from conducting nonjudicial foreclosure proceedings. For the reasons discussed

below, the Court denies Plaintiffs’ motion for preliminary injunction.

In May 2005, Plaintiffs obtained a $660,100 loan from Nationwide Lending Group.

(Ex. A to Razo Decl.) The note was secured by a Deed of Trust, which names Mortgage

Electronic Registration Systems, Inc. (“MERS”) as the beneficiary. (Ex. B to Razo Decl.) 

In October 2005, Countrywide Home Loans, Inc. (“Countrywide”) acquired the

servicing rights to the loan, including the right to collect payments and enforce the terms of

the Note and Deed of Trust. (Razo Decl. ¶ 7.) On May 19, 2008, at Countrywide’s direction,

ReconTrust Company (“ReconTrust”), acting as an agent for MERS, recorded a Notice of

Default and Election to Sell Under Deed of Trust (“Notice of Default”) in the San Diego

County Recorder’s Office. (Ex. E to Razo Decl.) On August 21, 2008, MERS substituted

ReconTrust as the trustee under the Deed of Trust. The Deed of Trust was recorded with

the San Diego County Recorder’s Office. (Ex. F to Razo Decl.) On August 26, 2008,

Case 3:08-cv-02193-BTM-AJB Document 15 Filed 01/26/09 Page 2 of 5
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1

 Cal. Civ. Code § 2923.6 provides:

(a) The Legislature finds and declares that any duty servicers may have to

maximize net present value under their pooling and servicing agreements is

owed to all parties in a loan pool, not to any particular parties, and that a

servicer acts in the best interests of all parties if it agrees to or implements a

loan modification or workout plan for which both of the following apply:

3 08cv2193 BTM(AJB)

ReconTrust, as trustee under the Deed of trust, recorded a Notice of Trustee’s sale with a

foreclosure sale date of September 11, 2008. (RJN, Ex. 8.) No foreclosure sale has yet

taken place. The amount due to reinstate the loan under the note is $98,409.93. (Razo

Decl. ¶ 13.) 

Under California law, nonjudicial foreclosure proceedings can be instituted by “the

trustee, mortgagee, or beneficiary, or any of their authorized agents” by filing a notice of

default with the office of the recorder. Cal. Civ. Code § 2924(a)(1). No less than three

months after the filing of the notice of default, a notice of sale may be given by “the

mortgagee, trustee, or other person authorized to take the sale.” Cal. Civ. Code §

2924(a)(3).

Here, the notice of default was filed by ReconTrust at the direction of Countrywide.

Both ReconTrust and Countrywide were acting as agents for MERS, the beneficiary under

the deed of trust. Subsequently ReconTrust, as trustee, recorded the Notice of Trustee’s

sale. ReconTrust and Countrywide had standing to perform the aforementioned actions, and

Plaintiffs have failed to produce evidence of any procedural impropriety with respect to the

nonjudicial foreclosure proceedings.

Plaintiffs suggest that Defendants must produce the original note in order to conduct

nonjudicial foreclosure proceedings. However, there does not appear to be any requirement

under California law that the original note be produced in order to render the foreclosure

proceedings valid. See Cal. Civ. Code §§ 2924, et seq.

Plaintiffs argue that the foreclosure proceedings would violate Cal. Civ. Code §

2923.6, which, according to Plaintiffs, requires Defendants to modify the terms of the loan.

However, nothing in Cal. Civ. Code § 2923.6 imposes a duty on servicers of loans to modify

the terms of loans or creates a private right of action for borrowers.1

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(1) The loan is in payment default, or payment default is

reasonably foreseeable.

(2) Anticipated recovery under the loan modification or workout

plan exceeds the anticipated recovery through foreclosure on a

net present value basis.

(b) It is the intent of the Legislature that the mortgagee, beneficiary, or

authorized agent offer the borrower a loan modification or workout plan if such

a modification or plan is consistent with its contractual or other authority.

(c) This section shall remain in effect only until January 1, 2013, and as of that

date is repealed, unless a later enacted statute, that is enacted before January

1, 2013, deletes or extends that date.

4 08cv2193 BTM(AJB)

Plaintiffs’ remaining causes of action for fraud and violations of the Rosenthal Fair

Debt Collection Practices Act (“RFDCPA”) and the Federal Fair Debt Collection Practices Act

(“FDCPA”) seek damages and do not have any bearing on Plaintiffs’ motion for preliminary

injunction. At any rate, Plaintiffs have not shown a likelihood of success on these claims.

Plaintiffs make general claims that Defendants engaged in conduct “which harassed,

oppressed, and abused” them (Decl. of Shannon Farner (RJN Ex. 2), ¶ 3), but do not specify

exactly what each Defendant did to violate the RFDCPA and/or FDCPA. As for the fraud

claim, it appears that the alleged fraud was committed by the lender. It is unclear under what

theory Plaintiffs seek to hold Defendants responsible for the lender’s actions.

Although the loss of Plaintiffs’ home may constitute an irreparable injury – see, e.g.,

Wrobel v. S.L Pope & Assoc., 2007 WL 2345036 (S.D. Cal. June 15, 2007) – Plaintiffs have

failed to show even a modest chance of success on the merits. Therefore, Plaintiffs are not

entitled to injunctive relief at this time.

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III. CONCLUSION

For the reasons discussed above, Plaintiffs’ motion for a preliminary injunction is

DENIED, and the temporary restraining order is VACATED. The hearing on the Order to

Show Cause is VACATED.

IT IS SO ORDERED.

DATED: January 26, 2009

Honorable Barry Ted Moskowitz

United States District Judge

Case 3:08-cv-02193-BTM-AJB Document 15 Filed 01/26/09 Page 5 of 5