Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-00471/USCOURTS-casd-3_11-cv-00471-1/pdf.json

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

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOHN K. CRUZ,

Plaintiff,

CASE NO. 11CV471 DMS (POR)

ORDER GRANTING PLAINTIFF’S

APPLICATION FOR A

TEMPORARY RESTRAINING

ORDER

vs.

WASHINGTON MUTUAL BANK, et al.,

Defendants.

This case comes before the Court on Plaintiff’s application for a temporary restraining order

(“TRO”) and preliminary injunction preventing Defendants from engaging in any act to deprive

Plaintiff of ownership or possession of his real property, including proceeding with a non-judicial

foreclosure sale. For the reasons set forth below, Plaintiff’s application for a TRO is granted.

I.

BACKGROUND

This case involves the refinance of a loan obtained by Plaintiff from Washington Mutual Bank

on or around March 14, 2005, which is secured by a Deed of Trust on his property. A foreclosure sale

of the property is currently scheduled for March 18, 2011. On March 8, 2011, Plaintiff filed a

Complaint against Defendants Washington Mutual Bank (“WAMU”), Chase Bank, and Mortgage

Electronic Registration Services. (Doc. 1.) It does not appear that the Complaint has been served on

any Defendants. The Complaint sets forth fourteen claims for relief: (1) violation of the Truth in

Case 3:11-cv-00471-DMS-POR Document 5 Filed 03/14/11 Page 1 of 5
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Plaintiff provided proofs of service indicating his TRO motion had been served on 1

Defendant WAMU by hand and on Defendants Chase Bank and Mortgage Electronic Registration

Services by mail. The Court notes it has been unable to reach any of Defendants at the phone numbers

provided by Plaintiff and it is unclear whether Defendants have received actual notice of Plaintiff’s

motion. However, even assuming Plaintiff has not provided actual notice of his motion to Defendants,

the Court may nonetheless grant it. Federal Rule of Civil Procedure 65(b) provides that the Court may

issue a TRO without written or oral notice to the adverse party if “(A) specific facts in an affidavit or

a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to

the movant before the adverse party can be heard in opposition; and (B) the movant’s attorney certifies

in writing any efforts made to give notice and reasons why it should not be required.” Here, Plaintiff

has indicated the foreclosure sale on his home is scheduled for March 18, 2011 and has shown the

injury resulting from such a sale would be irreparable. Plaintiff has further provided proof of his

attempts to provide notice to Defendants. Accordingly, the Court may properly grant the TRO motion.

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Lending Act, (2) violation of the Fair Debt Collection Practices Act, (3) violation of the Real Estate

Settlement Procedures Act, (4) to set aside and vacate the trustee’s sale and cancel the trustee’s deed,

(5) unjust enrichment, (6) promissory estoppel, (7) accounting, (8) violation of the Consumers Legal

Remedies Act, (9) disgorgement under California Business and Professions Code § 17200, (10)

violation of California Business and Professions Code § 17200, (11) fraud, (12) negligence, (13)

declaratory relief, and (14) application for a TRO. Plaintiff included an application for a TRO and an

order to show cause why a preliminary injunction should not be issued as a claim for relief in his

Complaint. On March 9, 2011, the Court issued an Order denying Plaintiff’s motion for a TRO. (Doc.

3.) On March 11, 2011, Plaintiff filed the instant motion for a TRO and a preliminary injunction,

seeking this Court’s order enjoining the foreclosure sale. 

1

II.

LEGAL STANDARD

The purpose of a TRO is to preserve the status quo before a preliminaryinjunction hearing may

be held; its provisional remedial nature is designed merely to prevent irreparable loss of rights prior

to judgment. See Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers, 415

U.S. 423, 439 (1974)(noting a temporary restraining order is restricted to its “underlying purpose of

preserving the status quo and preventing irreparable harm justso long asis necessary to hold a hearing,

and no longer”). Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear

showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 555 U.S.

7, 129 S. Ct. 365, 376 (2008). The standard for issuing a temporary restraining order is identical to

the standard for issuing a preliminary injunction. Lockheed Missile & Space Co., Inc. v. Hughes

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Aircraft Co., 887 F. Supp. 1320, 1323 (N.D. Cal. 1995). A party seeking injunctive relief under

Federal Rule of Civil Procedure 65 must show “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'ns v. City of Los

Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009)(quoting Winter, 129 S. Ct. at 374). With respect to the

showing a plaintiff must make regarding his chances of success on the merits, the Ninth Circuit applies

a sliding scale approach. See Alliance for Wild Rockies v. Cottrell, 622 F.3d 1045, 1049 (9th Cir.

2010). Under the sliding scale approach, the elements of the preliminary injunction test are balanced

and, where a plaintiff can make a stronger showing of one element, it may offset a weaker showing

of another. Id. “Therefore, ‘serious questions going to the merits’ and a hardship balance that tips

sharply towards the plaintiff can support issuance of an injunction, so long as the plaintiff also shows

a likelihood of irreparable injury and that the injunction is in the public interest.” Id. at 1053. 

III.

DISCUSSION

The primarybasisfor Plaintiff’s motion is that hewas fraudulentlyinduced to enter into default

in order to obtain a modification of his loan. Plaintiff claims “that, around February 15, 2009, a

representative of WAMU instructed him to cease making the scheduled payments and to default on

his loan, and that if Plaintiff complied, WAMU would restructure his loan.” (TRO Memo. at 5, 6.)

Plaintiff alleges he immediately stopped making payments and submitted a loan modification

application to WAMU after being in default for 90 days, as instructed. (Id. at 2.) Plaintiff alleges he

was subsequently informed by a WAMU representative that his application was missing and he

submitted a second application. (Id.) Plaintiff contacted WAMU 30 days later and discovered that

Defendant Chase Bank had assumed all of WAMU’s assets and liabilities. (Id. at 3.) He then

contacted Chase and was told by a representative that his application was missing and he needed to

submit a third application. (Id.) Aftersubmitting his third application, Plaintiff obtained a conditional

loan modification and resumed making monthly payments on his loan. (Id.) However, when he

subsequently inquired about the status of his property insurance and taxes, he was told he would have

to submit a fourth loan modification application. (Id.) He did so and it was quickly denied. (Id.; see

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also Complaint ¶¶ 21-33.) 

In his motion for a TRO, Plaintiff argues he has shown a likelihood of success on the merits

of his claims for violation of California Business and Professions Code § 17200 and promissory

estoppel. The Court interprets Plaintiff’s argument regarding his claim for promissory estoppel as

applying to his claim for fraud. The elements of a fraud claim are false representation, knowledge of

falsity, intent to defraud, justifiable reliance, and damages. Vess v. Ciba-Geigy Corp. USA, 317 F.3d

1097, 1106 (9th Cir. 2003). Plaintiff alleges in a verified Complaint and in his motion for a TRO that

a WAMU representative made a knowingly false statement to him with the intent to defraud, upon

which he justifiably relied, causing damages. Accordingly, Plaintiff has at least raised serious

questions going to the merits with respect to his fraud claim. 

Plaintiff has also shown the balance of hardships tips sharply towards him. If the TRO is not

issued, Plaintiff is likely to lose possession of his home through a judicial foreclosure sale. In contrast,

if the TRO is issued, Defendants will merely be required to delay the foreclosure sale. Their interest

in Plaintiff’s property will remain secured and, should this Order be dissolved or judgment be entered

in favor of Defendants in this action, they will be able to proceed with the foreclosure sale at such

time. 

Plaintiff has shown a probability of irreparable harm in the potential loss of his residence

through an impending non-judicial foreclosure sale. Finally, as Plaintiff has argued, there is an interest

in accurately resolving disputes over ownership ofreal property and it is in the public interest to permit

homeowners the opportunity to pursue what appear to be valid claims before their homes are sold

pursuant to a foreclosure sale. Accordingly, Plaintiff’s motion for a TRO is granted.

Under Rule 65, “[t]he court may issue a preliminary injunction or a 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). In light of the hearing to be held on Plaintiff’s motion for a preliminary injunction in short

order, as discussed below, the Court does not require Plaintiff to post a bond at this time.

//

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IV.

CONCLUSION

For the foregoing reasons, Plaintiff’s application for a TRO is granted. Defendants and their

agents, employees, representatives, successors, partners, assigns, attorneys, and any and all acting in

concert or participation with them are enjoined from engaging in or performing any act to deprive

Plaintiff of ownership or possession of Plaintiff’s real property located at 919 Brass Way, Encinitas,

California 92024, including, but not limited to, proceeding with the non-judicial foreclosure sale

scheduled for March 18, 2011 and recording any deeds relating to the property. Defendants are

ordered to show cause, on or before March 22, 2011, why a preliminary injunction should not be

issued enjoining Defendants from taking such actions until termination of this case. A hearing shall

be held on Plaintiff’s motion for a preliminary injunction on March 24, 2011 at 2:30 p.m. in

Courtroom 10. This temporary restraining order shall remain in place for 14 days or until this Court

issues an Order on Plaintiff’s motion for a preliminary injunction, whichever shall first occur. The

Court notes, pursuant to Federal Rule of Civil Procedure 65(a)(1), the Court “may issue a preliminary

injunction only on notice to the adverse party.” Furthermore, the Court points out a TRO is binding

only upon parties and their officers, agents, and employees or those acting in concert with them “who

receive actual notice of [the TRO] by personal service or otherwise.” Fed. R. Civ. P. 65(d)(2).

Accordingly, Plaintiff shall forthwith serve a copy of this Order upon all Defendants. 

IT IS SO ORDERED.

DATED: March 14, 2011

HON. DANA M. SABRAW

United States District Judge

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