Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-04878/USCOURTS-cand-3_09-cv-04878-0/pdf.json

Parties Involved:
Grace Ji Yun Chung
Plaintiff
ETS Services, LLC
Defendant
GMAC Mortgage, LLC
Defendant
NBGI, Inc
Defendant

Document Text:

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

GRACE JI YUN CHUNG,

Plaintiff,

 v.

NBGI, INC., GMAC MORTGAGE, LLC, and

ETS SERVICES, LLC,

Defendants. /

No. C 09-04878 MHP

MEMORANDUM & ORDER

Re: Plaintiff’s Motion for Preliminary

Injunction

Plaintiff Grace Ji Yun Chung (“plaintiff”) filed this action against defendants NBGI, Inc.

(“NBGI”), GMAC Mortgage LLC (“GMAC”) and ETS Services LLC (“ETS”) (collectively

“defendants”) alleging multiple violations of federal and state law for failing to make proper

disclosures in connection with the refinance of her home. In the instant motion, plaintiff has

requested a preliminary injunction to prevent defendants from foreclosing on her home and selling

the home at a trustee’s sale. Plaintiff has also moved to have defendants enjoined from providing

any derogatory credit information to credit reporting agencies. Having considered the parties

arguments and submissions and for the reasons set forth below, the court enters this memorandum

and order. 

BACKGROUND

On January 24, 2006, plaintiff refinanced her home and executed a promissory note

promising to pay NBGI $999,999.00. Docket No. 1 (Compl.) ¶ 13. In order to secure this note, a

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deed of trust was recorded against the property located at 1564 Meadow Lane, Burlingame,

California, 94109. Id., Exh. C (Deed of Trust). In November 2008, plaintiff’s business slowed

down and she was no longer able to make her mortgage payments. Docket No. 9 (Mot.) at 5. On

December 15, 2008, plaintiff received a notice of default via certified mail. Id. In an attempt to

obtain a modification of her loan, plaintiff sent a letter to the loan servicer, GMAC, on April 22,

2009. Id. The letter was written and sent by plaintiff’s attorney and stated that it was a “Qualified

Written Request” (“QWR”). Compl., Exh. D (“Letter”). It stated that the letter was “in regards to

an investigation into certain questionable activities” relating to the loan and it requested “a complete

and accurate copy of [plaintiff’s] entire loan file . . . .” Id.

On May 6, 2009, plaintiff received a faxed letter from GMAC responding to the request. 

Compl. ¶ 27. This letter acknowledged receipt of plaintiff’s April 22d letter and stated that

“Unfortunately, it is difficult for GMAC Mortgage LLC to identify any specific concern(s) you have

regarding the servicing of the account based upon the correspondence received. Nevertheless, in an

effort to be responsive to your request, copies of pertinent documentation GMAC Mortgage LLC has

in its records are enclosed.” Mot., Exh. B (“Response”). The response contained the promissory

note, the deed of trust, and a settlement statement. Id.

After receiving the information from GMAC, plaintiff realized that NBGI had not provided

her with two signed copies of a notice of her right to rescind the loan within three days at the time

that she consummated the transaction. Mot. at 6. Additionally, she discovered that the finance

charge on the Truth in Lending statement provided to her by NBGI was listed as $1,842,726.96

when the actual amount was $1,845,131.96. Compl. ¶ 32. 

Plaintiff alleges that after she sent her QWR, she continued to receive collection notices from

GMAC and that GMAC has been assigned NBGI’s rights under the loan. Mot. at 6. Plaintiff further

alleges that GMAC continued to report derogatory information to credit reporting agencies. Id. 

Plaintiff filed this action on October 14, 2009. The case was reassigned to this court on

October 21, 2009. Plaintiff claims that the defendants are liable under a number of state and federal

laws including: (1) the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.; (2) California Civil

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Code § 1670.5; (3) the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.; 

(4) the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.; (5) the Fair Debt Collection Practices

Act, 15 U.S.C. § 1692 et seq.; (6) California Civil Code § 1632; and (7) the Real Estate Settlement

Procedures Act (“RESPA”), 12 U.S.C. §§ 2601, et seq.

On November 5, 2009, GMAC and ETS filed a joint motion to dismiss plaintiff’s complaint. 

Docket No. 15. Thereafter, plaintiff failed to oppose the motion. Accordingly, on December 11,

2009, the court dismissed GMAC and ETS from this action. Docket No. 20. NBGI still remains as

a defendant. 

In the instant motion, plaintiff seeks the issuance of a preliminary injunction that would (1)

bar the holder of the subject loan and the trustee of the deed of trust from foreclosing on the subject

loan, pending resolution of the claims, and (2) prevent defendants from continuing to report

derogatory credit information. 

 

LEGAL STANDARD

A preliminary injunction is a provisional remedy, the purpose of which is to preserve the

status quo and to prevent irreparable loss of rights prior to final disposition of a litigation. Sierra

On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984); see Fed. R. Civ. P.

65(a). “A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on

the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that

the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Johnson

v. Couturier, 527 F.3d 1067, 1076 (9th Cir. 2009) (citing Winter v. Natural Resources Defense

Council, Inc., --- U.S. ---, 129 S. Ct. 365, 374 (2008)). A preliminary injunction 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. This “clear showing” requires plaintiff to show more than a mere

“possibility” of irreparable harm, but instead she must “demonstrate that irreparable injury is likely

in the absence of an injunction.” Id. at 375 (emphasis in original).

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DISCUSSION

In her request for a preliminary injunction, plaintiff claims that she has a probability of

succeeding on the merits of her RESPA claim, her TILA claim and her claim under California Civil

Code section 1632. 

 A preliminary injunction is generally only available if injunctive relief is appropriate in the

first instance. See Amoco Production Co. v. Village of Gambell, AK, 480 U.S. 531, 546 n.12 (1987)

(“The standard for a preliminary injunction is essentially the same as for a permanent injunction

with the exception that the plaintiff must show a likelihood of success on the merits rather than

actual success.”); Sims Snowboards, Inc. v. Kelly, 863 F.2d 643 (9th Cir. 1988). Therefore, the

question before the Court is not whether plaintiff is likely to succeed in proving that defendants

violated these statutes, but whether she is likely to succeed on her claim for injunctive relief as a

remedy for any such violation.

Not all of plaintiff’s claims would entitle her to injunctive relief. Even if plaintiff was

successful on her RESPA claim or her TILA claim under section 1640, she would not be entitled to

an injunction preventing the sale of her home. Rather, she would only be entitled to the monetary

amount of damages prescribed by the statutes. See 12 U.S.C. § 2605; 15 U.S.C. § 1640. On the

other hand, because the remedy of rescission would negate any security interest that defendants have

in plaintiff’s home, precluding foreclosure, a successful claim for rescission would entitle her to

keep possession of the residence. Additionally, if plaintiff is successful in showing that defendants

continue to report credit information in violation of RESPA section 2605, she would be entitled to

an injunction preventing such reporting. 

Therefore, the court only addresses plaintiff’s claims for rescission under TILA and

California Civil Code section 1632 and to prevent the unlawful reporting to credit reporting agencies

under RESPA.

I. Rescission under TILA

Plaintiff alleges that she has a likelihood of success on the merits of her claim for rescission

under TILA, 15 U.S.C. § 1635, because NBGI failed to provide her with two signed copies of the

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Notice of Right to Rescind, and because NBGI misstated the finance charge on her Truth in Lending

Disclosure Statement. This claim, however, is time-barred.

The “right to rescission. . . expire[s] three years after the date of consummation of the

transaction or upon sale of the property, whichever occurs first.” 15 U.S.C. § 1635(f). This threeyear time limit may not be equitably tolled because it applies “notwithstanding the fact that the

information and forms required under this section or any other disclosures required under this part

have not been delivered to the obligor.” Id.; see Graves v. Downey Sav. and Loan Assoc., No. C

09-02666 JF, 2009 WL 3335335, at *4 (N.D. Cal. Oct. 14, 2009) (Fogel, J.) (“Unlike § 1640(e),

Chapter 15 U.S.C. § 1635(f) is not subject to equitable tolling.”). 

Plaintiff’s loan was executed on January 24, 2006. Plaintiff’s letter claiming to be a notice of

rescission was not sent until April 22, 2009. Therefore, even assuming that plaintiff was entitled to

rescind her mortgage under TILA, plaintiff provided notice of her intent to rescind outside of the

three-year time limit. Accordingly, this claim has no probability of succeeding.

II. California Civil Code Section 1632

Plaintiff also alleges that defendants violated California Civil Code section 1632 by not

providing her with a translated version of the loan agreement. Section 1632 requires that where

certain contracts and agreements are negotiated in foreign languages, the business that negotiates the

contract must provide the consumer with a translation of the agreement. 

Section 1632(b)(2) of the statute specifically excludes loans secured by real property, like the

type of loan at issue in this case. Cal. Civ. Code § 1632(b)(2); Reyes v. Premier Home Funding,

Inc., No. C 08-04606 JW, 2009 WL 1704574, at *6 (N.D. Cal. June 17, 2009) (Ware, J.). However,

section 1632(b)(4) contains an exception, which provides that section 1632 applies to “a loan or

extension of credit for use primarily for personal, family or household purposes where the loan or

extension of credit is subject to the provision of Article 7 (commencing with Section 10240) of

Chapter 3 of Part I of Division 4 of the Business and Professions Code . . . .” Cal. Civ. Code

§ 1632(b)(4); Reyes, 2009 WL 1704574, at *6. Article 7 of the California Business and Professions

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Code, in turn, applies to certain loans secured by real property that are negotiated by a real estate

broker. See id.; Cal. Bus. & Prof. Code, § 10240.

Here plaintiff has failed to allege several necessary elements to establish a claim under this

statute. Firstly, in order for this loan to be covered under section 1632(b)(4), it must be used

“primarily for personal, family, or household purposes.” Plaintiff fails to allege that the loan had

any such purpose. Additionally, the loan must be negotiated by a broker and negotiated in a

language other than English. Plaintiff has not alleged that the loan was negotiated by a broker, and,

even if she had, she has also failed to allege that it was negotiated in a language other than English.1 

Given these deficiencies, plaintiff has not shown a probability of succeeding on the merits of this

claim. 

III. RESPA

Plaintiff alleges a violation of section 605 of RESPA, 12 U.S.C. § 2605. Specifically,

plaintiff alleges that she sent a QWR to GMAC as part of a letter that was sent on April 22, 2009,

and that GMAC failed to respond in a manner that satisfied its legal duties under section 2605(e)(2). 

Because of this alleged deficient response, plaintiff alleges that GMAC should be enjoined from

reporting derogatory credit information about plaintiff to credit reporting agencies.

As mentioned above, since the filing of this motion for a preliminary injunction, GMAC has

been dismissed from this action. Accordingly, the RESPA claims asserted against GMAC are

dismissed as moot. 

CONCLUSION

Because plaintiff has not demonstrated a likelihood of success on the merits of any of her

claims that would entitle her to the requested injunctive relief, her motion for a preliminary

injunction is DENIED.

IT IS SO ORDERED.

Dated: 3/10/2010 

MARILYN HALL PATEL

United States District Court Judge

Northern District of California

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1. Plaintiff has alleged that she can only speak Korean. However, she does not provide any facts as to

the negotiation of the loan including whether she negotiated the loan herself. 

ENDNOTES

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