Robert De Vico v. U S Bank N A et al, No. 2:2012cv08440 - Document 32 (C.D. Cal. 2012)
Court Description: PRELIMINARY INJUNCTION ORDER by Judge Margaret M. Morrow: Based on its finding that plaintiff had demonstrated a likelihood of success on the merits of his claim that defendants violated California Civil Code § 2923.5, and the possibility of irr eparable harm, the court granted plaintiff's motion for a preliminary injunction to enjoin defendants from foreclosing on his home. FINDINGS OF FACT AND CONCLUSIONS OF LAW: Pursuant to Rules 52 and 65 of the Federal Rules of Civil Procedure, the court adopts as the findings of fact and conclusions of law supporting its entry of a preliminary injunction its order granting plaintiffs' motion for a preliminary injunction dated October 29, 2012. A copy of the courts October 29, 2012 order is attached hereto as Exhibit "A," and incorporated herein as though fully set forth. PRELIMINARY INJUNCTION: In accordance with the courts findings of fact and conclusions of law, IT IS HEREBY ORDERED that during the pendency of this acti on, defendants are enjoined from foreclosing on plaintiff's house. This injunction is effective immediately upon proof that by 10:00 a.m. on October 30, 2012, plaintiff has placed $3,000 in the trust account of defendants' attorney. Plaintiff must place $3,000 in the trust account on the first of every month thereafter, beginning December 1, 2012, until this matter is resolved. (bm)
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Robert De Vico v. U S Bank N A et al Doc. 32 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 12 13 14 15 16 17 ROBERT DE VICO, an individual, Plaintiff, vs. U.S. BANK, a corporation; GMAC MORTGAGE U.S.A. CORPORATION, a corporation; ETS SERVICES, LLC, a limited liability company, and Does 1-10, inclusive, Defendants. 18 19 20 21 ) CASE NO. CV 12-08440 MMM (FFMx) ) ) PRELIMINARY INJUNCTION ORDER ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 22 23 24 25 26 27 28 On October 9, 2012, plaintiff Robert De Vico filed an ex parte application for a temporary restraining order, seeking to enjoin defendants U.S. Bank, GMAC Mortgage U.S.A. Corporation, ETS Services, and certain fictitious defendants from foreclosing on his house. The parties stipulated to postpone the sale of De Vico’s home until October 30, 2012, allowing defendants time to oppose the application. Defendants filed an opposition on October 16, 2012, and the matter was heard on October 29, 2012. Dockets.Justia.com 1 Based on its finding that plaintiff had demonstrated a likelihood of success on the merits 2 of his claim that defendants violated California Civil Code § 2923.5, and the possibility of 3 irreparable harm, the court granted plaintiff’s motion for a preliminary injunction to enjoin 4 defendants from foreclosing on his home. 5 FINDINGS OF FACT AND CONCLUSIONS OF LAW 6 7 Pursuant to Rules 52 and 65 of the Federal Rules of Civil Procedure, the court adopts as 8 the findings of fact and conclusions of law supporting its entry of a preliminary injunction its order 9 granting plaintiffs’ motion for a preliminary injunction dated October 29, 2012. A copy of the 10 court’s October 29, 2012 order is attached hereto as Exhibit “A,” and incorporated herein as 11 though fully set forth. 12 PRELIMINARY INJUNCTION 13 14 In accordance with the court’s findings of fact and conclusions of law, IT IS HEREBY 15 ORDERED that during the pendency of this action, defendants are enjoined from foreclosing on 16 plaintiff’s house. 17 This injunction is effective immediately upon proof that by 10:00 a.m. on October 30, 18 2012, plaintiff has placed $3,000 in the trust account of defendants’ attorney. Plaintiff must place 19 $3,000 in the trust account on the first of every month thereafter, beginning December 1, 2012, 20 until this matter is resolved. 21 22 DATED: October 29, 2012 MARGARET M. MORROW UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 2 1 2 3 4 5 EXHIBIT A 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 ROBERT DE VICO, an individual, Plaintiff, 12 13 14 15 16 vs. U.S. BANK, a corporation; GMAC MORTGAGE U.S.A. CORPORATION, a corporation; ETS SERVICES, LLC, a limited liability company, and Does 1-10, inclusive Defendants. 17 ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. CV 12-08440 MMM (FFMx) ORDER GRANTING PLAINTIFFS’ APPLICATION FOR PRELIMINARY INJUNCTION 18 19 Robert De Vico filed this action on October 2, 2012 against U.S. Bank, N.A., GMAC 20 Mortgage, ETS Services, and several fictitious defendants.1 The complaint alleges claims for 21 wrongful foreclosure, slander of title, and violation of 12 U.S.C. § 2605(e).2 That same day, 22 plaintiff filed an application for temporary restraining order seeking to prevent defendants from 23 24 25 26 27 28 1 Complaint Against Defendants U.S. Bank NA, GMAC Mortgage Corp., ETS Services LLC, and Does 1 to 10, Inclusive (“Complaint”), Docket No. 1 (Oct. 2, 2012). 2 Id. at 1. 1 foreclosing on his house.3 Because De Vico had not filed proofs of service, his application was 2 denied without prejudice.4 Plaintiff thereafter submitted proofs of service on U.S. Bank,5 3 GMAC6, and ETS,7 and refiled his application for a restraining order.8 The parties stipulated to 4 postpone the sale of De Vico’s house until October 30, 2012, allowing defendants time to oppose 5 the application. 6 As noted, De Vico alleges claims for wrongful foreclosure; slander of title; and violation 7 of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(e). He seeks 8 preliminary and permanent injunctive relief, a judgment canceling various loan instruments, and 9 an order quieting title to his property. 10 I. BACKGROUND 11 12 De Vico received title to property located at 3380 Deronda Drive, Los Angeles, California 13 90038 (“the subject property”) on January 9, 2001.9 On November 3, 2005, he obtained a loan 14 15 16 3 Ex Parte Application for Temporary Restraining Order (“Application”), Docket No. 2 (Oct. 2, 2012). 4 17 18 19 20 Minutes Order Denying Ex Parte Application for Temporary Restraining Order, Docket No. 7 (Oct. 5, 2012). 5 Proof of Service on U.S. Bank, Docket No. 15 (Oct. 5, 2012). 6 Proof of Service on GMAC, Docket No. 13 (Oct. 5, 2012). 7 21 22 Proof of Service on ETS, Docket No. 12, (Oct. 4, 2012). 8 Ex Parte Application for Temporary Restraining Order (“Application”), Docket No. 17 (Oct. 9, 2012). 23 9 24 25 26 27 28 Defendants’ Request for Judicial Notice (“RJN”), Exh. A, Docket No. 24 (Oct. 16, 2012). A court can take judicial notice of “matters of public record.” Lee v. City of Los Angeles , 250 F.3d 668, 688-89 (9th Cir. 2001) (“[A] court may take judicial notice of ‘matters of public record’”). See also FED.R.EVID. 201(b) (“A judicially noticed fact must be one not subject to reasonable dispute in that it is . . . capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned”). Certified copies of public records are self-authenticating. See FED.R.EVID . 902(4). Here, the records that defendants have submitted are certified by the Los Angeles County Recorder’s Office. Therefore, the court takes judicial 2 1 from T.J. Financial, which was secured by a deed of trust on the subject property.10 The deed of 2 trust was recorded and named MERS as the beneficiary, acting solely as the nominee for the 3 lender.11 4 On December 12, 2011, an assignment of the deed of trust was recorded, which transferred 5 all beneficial interest in the deed of trust to U.S. Bank as trustee “for RMFSI 2005S9.”12 Two 6 days later, a substitution of trustee was recorded, pursuant to which ETS became the trustee under 7 the deed of trust.13 On October 1, 2012, ETS recorded a notice of default and election to sell the 8 property under the deed of trust.14 On March 16, 2012, a notice of trustee’s sale was recorded 9 in the Los Angeles County Recorder’s Office.15 10 De Vico asserts that the loan was improperly transferred to U.S. Bank, and thus that 11 defendants have no authority to foreclose on the property.16 He also contends that defendants 12 failed to fulfill their obligation to communicate with De Vico regarding his default under 13 California Civil Code § 2923.5.17 14 II. DISCUSSION 15 16 A. Standard Governing Preliminary Injunctive Relief 17 A “preliminary injunction is an extraordinary and drastic remedy.” Munaf v. Geren, 553 18 19 notice of the records. 20 10 21 11 22 12 23 RJN, Exh. B. Id. Id., Exh. C. 13 Id., Exh. D. 24 14 25 Id., Exh. E. 15 26 27 28 Id., Exh. F. 16 Complaint, ¶¶ 90, 91 17 Id., ¶¶ 77-79. 3 1 U.S. 674, 676 (2008). Thus, a district court should enter a preliminary injunction only “upon a 2 clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Resources Defense 3 Council, Inc., 555 U.S. 7, 22 (2008). 4 likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of 5 preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the 6 public interest.” Winter, 555 U.S. at 20. See Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 7 (9th Cir. 2009) (“Under Winter, plaintiffs seeking a preliminary injunction must establish that 8 (1) they are likely to succeed on the merits; (2) they are likely to suffer irreparable harm in the 9 absence of preliminary relief; (3) the balance of equities tips in their favor; and (4) a preliminary 10 injunction is in the public interest”). See also Stormans, Inc. v. Selecky, 586 F.3d 1109, 1138 11 (9th Cir. 2009) (“To qualify for injunctive relief, the plaintiffs must establish that the balance of 12 equities tips in [their] favor”); American Trucking Associations, Inc. v. City of Los Angeles, 559 13 F.3d 1046, 1052 (9th Cir. 2009) (“A plaintiff seeking a preliminary injunction must establish that 14 he is likely to succeed on the merits,” citing Winter, 555 U.S. at 20); Timbisha Shoshone Tribe 15 v. Kennedy, 687 F.Supp.2d 1171, 1182 (E.D. Cal. 2009) ( “Pursuant to Winter, [p]laintiffs must 16 make a ‘clear showing’ that they are ‘likely to succeed on the merits,’” quoting Winter, 555 U.S. 17 at 22). Interpreting Winter, the Ninth Circuit has held that its pre-Winter “sliding scale” test for 18 preliminary injunctions remains valid. So long as plaintiff satisfies the remaining Winter factors, 19 it is appropriate to grant preliminary injunctive relief if the plaintiff demonstrates that there are 20 serious questions going to the merits and that the balance of hardships tips sharply in plaintiff’s 21 favor. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011); see 22 also McCormack v. Hiedman, 694 F.3d 1004, 1016 n. 7 (9th Cir. 2012) (stating that the “sliding 23 scale” approach remains valid); Farris v. Seabrook, 677 F.3d 858, 864 (9th Cir. 2012) (quoting 24 Cottrell). Such a showing requires that plaintiff establish he “is 25 “[P]reliminary injunctive relief is available only if plaintiffs ‘demonstrate that irreparable 26 injury is likely in the absence of an injunction.’” Johnson v. Couturier, 572 F.3d 1067, 1081 (9th 27 28 4 1 Cir. 2009) (quoting Winter,555 U.S. at 22).18 If the harm to plaintiff is merely monetary, it “will 2 not usually support injunctive relief.” American Trucking, 559 F.3d at 1057. See also California 3 Pharmacists Association v. Maxwell-Jolly, 563 F.3d 847, 851-52 (9th Cir. 2009) (“Typically, 4 monetary harm does not constitute irreparable harm. . . . Economic damages are not traditionally 5 considered irreparable because the injury can later be remedied by a damage award” (emphasis 6 original)). In addition, harm that is “merely speculative” will not support injunctive relief, 7 “although a loss of goodwill and reputation can do so.” American Trucking, 559 F.3d at 1057. 8 “A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter, 9 555 U.S. at 55. “In each case, a court must balance the competing claims of injury and must 10 consider the effect on each party of the granting or withholding of the requested relief.” Amoco 11 Production Co. v. Village of Gambell, Alaska, 480 U.S. 531, 542 (1987). “In exercising their 12 sound discretion, courts of equity should pay particular regard for the public consequences in 13 employing the extraordinary remedy of injunction.” Weinberger v. Romero-Barcelo, 456 U.S. 14 305, 312 (1982).19 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 Prior to the Supreme Court’s decision in Winter, the Ninth Circuit had held that to prevail on a motion for preliminary injunction, a plaintiff must demonstrate either: “either: (1) a likelihood of success on the merits and the possibility of irreparable injury; or (2) that serious questions going to the merits were raised and the balance of hardships tips sharply in its favor. These two alternatives represent extremes of a single continuum, rather than two separate tests. Thus, the greater the relative hardship to the party seeking the preliminary injunction, the less probability of success must be shown.” Stormans, 586 F.3d at 1126-27 (quoting Clear Channel Outdoor Inc. v. City of L.A., 340 F.3d 810, 813 (9th Cir. 2003) (emphasis original)). The Winter Court “definitively refuted” the Ninth Circuit’s “possibility of irreparable injury” standard. Id. It held that “the Ninth Circuit’s ‘possibility’ standard is too lenient. Our frequently reiterated standard requires plaintiffs seeking preliminary relief to demonstrate that irreparable injury is likely in the absence of an injunction.” Winter, 555 U.S. at 22 (emphasis original). Following Winter, the Ninth Circuit has held that “[t]o the extent that our cases have suggested a lesser standard, they are no longer controlling, or even viable.” American Trucking, 559 F.3d at 1052 (footnote omitted). 19 The Winter Court cautioned that “‘consideration of the public interest’ is mandatory ‘in assessing the propriety of any injunctive relief.’” Nelson v. National Aeronautics and Space 5 1 “The public interest analysis for the issuance of a preliminary injunction requires [the 2 court] to consider ‘whether there exists some critical public interest that would be injured by the 3 grant of preliminary relief.’” Maxwell-Jolly, 572 F.3d at 659 (quoting Hybritech Inc. v. Abbott 4 Laboratories, 849 F.2d 1446, 1458 (Fed. Cir. 1988)). “When the reach of an injunction is 5 narrow, limited only to the parties, and has no impact on non-parties, the public interest will be 6 ‘at most a neutral factor in the analysis rather than one that favor[s] [granting or] denying the 7 preliminary injunction.’” Stormans, 586 F.3d at 1138-39 (quoting Bernhardt v. L.A. County, 339 8 F.3d 920, 931 (9th Cir. 2003)). “If, however, the impact of an injunction reaches beyond the 9 parties, carrying with it a potential for public consequences, the public interest will be relevant 10 to whether the district court grants the preliminary injunction.” Id. at 1139 (citing Sammartano 11 v. First Judicial District Court, 303 F.3d 959, 965 (9th Cir. 2002)). See also Sierra Forest 12 Legacy, 577 F.3d at 1022 (“When deciding whether to issue a narrowly tailored injunction, 13 district courts must assess the harms pertaining to injunctive relief in the context of that narrow 14 injunction”). “[When] an injunction is asked which will adversely affect a public interest . . . the 15 court may in the public interest withhold relief until a final determination of the rights of the 16 parties, though the postponement may be burdensome to the plaintiff.” Weinberger, 456 U.S. at 17 312-13. 18 “The plaintiffs bear the initial burden of showing that [issuance of an] injunction is in the 19 public interest.” Stormans, 586 F.3d at 1139. The district court, however, “need not consider 20 public consequences that are ‘highly speculative.’” Id. (quoting 21 Association v. City & County of San Francisco, 512 F.3d 1112, 1126 (9th Cir. 2008)). “In other 22 words, the court should weigh the public interest in light of the likely consequences of the 23 injunction. Such consequences must not be too remote, insubstantial, or speculative and must be 24 supported by evidence.” Id. “The likelihood of confusion to consumers is [a] critical factor in 25 our consideration” of harm to the public, as “[t]he public has an interest in avoiding confusion Golden Gate Restaurant 26 27 28 Administration, 568 F.3d 1028, 1050 (9th Cir. 2009) (Kleinfeld, J., dissenting from denial of rehearing en banc) (quoting Winter, 555 U.S. at 32 (emphasis original)). 6 1 between two companies’ products.” Internet Specialties West, Inc. v. Milon-DiGiorgio 2 Enterprises, Inc., 559 F.3d 985, 995 n. 5 (9th Cir. 2009).20 3 B. 4 De Vico asserts claims, inter alia, for wrongful foreclosure, slander of title, cancellation 5 of instruments, quiet title and declaratory relief. These claims are based on the underlying 6 premise that defendants lack the authority to initiate foreclosure proceedings due to an improper 7 transfer of De Vico’s loan. De Vico asserts that he had “reasonable confusion over the identity 8 of the holder in due course [of the note],” and is therefore excused from repaying the loan.21 In 9 essence, De Vico contends that he “has the right to know which if any of said entities are entitled 10 De Vico’s Likelihood of Success on the Merits to receive and retain payments on the subject loan.”22 i. 11 De Vico’s Claim under Civil Code § 2923.5 12 Although De Vico’s complaint asserts that defendants lacked authority to foreclose, his 13 motion for preliminary injunction focuses primarily on his allegation that defendants violated 14 California Civil Code § 2923.5.23 That statute provides, in pertinent part: 15 “A mortgagee, beneficiary, or authorized agent shall contact the borrower in person 16 17 18 19 20 21 22 23 24 20 After Winter, a district court cannot take an “an all-or-nothing approach to assessing the harms.” Sierra Forest Legacy, 577 F.3d at 1022. Instead, the court must “address[ ] the options actually on the table.” Id. In Winter, this meant addressing whether, given the fact that four restrictions on defendant’s conduct were already in place, irreparable injury was likely to occur absent an injunction that included two additional restrictions. Winter, 555 U.S. at 23. In Sierra Forest Legacy, the Ninth Circuit reversed a district court’s analysis and application of the nonmerits injunctive relief factors that “boiled down to a choice between” allowing the Forest Service to move ahead with a framework developed in 2004 or requiring that it take no action at all with respect to fire prevention. The Ninth Circuit held that the district court erred by failing to consider whether a narrower injunction, such as one allowing the Forest Service to proceed under an unchallenged framework developed in 2001, would have served to prevent otherwise likely irreparable injury. Sierra Forest Legacy, 577 F.3d at 1022-23. 25 21 26 22 27 23 28 Complaint, ¶¶ 72, 92 Id., ¶ 92. Application at 7. Notably, defendants omit any discussion of § 2923.5 from their opposition brief. 7 1 or by telephone in order to assess the borrower’s financial situation and explore 2 options for the borrower to avoid foreclosure. During the initial contact, the 3 mortgagee, beneficiary, or authorized agent shall advise the borrower that he or she 4 has the right to request a subsequent meeting and, if requested, the mortgagee, 5 beneficiary, or authorized agent shall schedule the meeting to occur within 14 6 days.” CAL. CIV. CODE § 2923.5(a)(2) 7 “If section 2923.5 is not complied with, then there is no valid notice of default and, without a 8 valid notice of default, a foreclosure sale cannot proceed. The available, existing remedy is found 9 in the ability of a court in section 2924g, subdivision (c)(l)(A), to postpone the sale until there has 10 been compliance with section 2923.5.” Skov v. U.S. Bank Nat’l Assn., 207 Cal.App.4th 690, 698 11 (2012). 12 De Vico alleges that defendants failed to comply with Civil Code § 2923.5, which requires 13 that a lender contact a delinquent borrower to explore options for avoiding foreclosure.24 He 14 asserts that defendants did not have an actual dialogue with him to explore alternatives to 15 foreclosure before taking steps to hold a foreclosure sale.25 He contends defendants failed to 16 provide him with information they were required to provide, such as the Housing and Urban 17 Development telephone number.26 De Vico has adduced evidence concerning these allegations in 18 the form of his declaration, in which he states that “[a]t no time did any GMAC, or any other 19 defendant or entity for that matter, contact me at any time to explore ‘alternatives to foreclosure’ 20 as required by section 2923.5.”27 21 De Vico attached to his motion the notice of default and election to sell under deed of trust 22 prepared by ETS Services. This document notified De Vico of his rights and obligations while 23 24 24 25 Id. 25 26 27 28 Id. 26 Id. 27 Declaration of Robert De Vico (“De Vico Decl.”), Docket No. 17 (Oct. 9, 2012). 8 1 his property was in foreclosure and informed him of the amount remaining on his mortgage.28 At 2 the end of the document is the following statement: “The undersigned declares that the beneficiary 3 or its authorized agent has declared that they have complied with California Civil [C]ode Section 4 2923.5 by making contact with the borrower or tried with due diligence to contact the borrower 5 as required by California Civil Code Section 2923.5.”29 The document is signed by Jennifer 6 Esteban, an agent for ETS Services.30 This suggests that defendants fulfilled their obligations 7 under § 2923.5 prior to initiating foreclosure proceedings. 8 In Tamburri v. Suntrust Mortgage, Inc., 2011 WL 2654093 (N.D. Cal. July 6, 2011), the 9 court addressed a similar conflict in the evidence in the context of a preliminary injunction 10 motion.. Id. at *3. Plaintiff had submitted a declaration stating: “Suntrust never contacted me 11 in person or by telephone to explore my options to avoid foreclosure prior to the recordation of 12 [the] Notice of Default.” Suntrust, conversely, argued that the plaintiff “was in fact contacted in 13 accordance with § 2923.5(a) – pointing to the § 2923.5 declaration attached to the notice of 14 default.” Id. The court determined that “[w]hile the declarations arguably are in equipoise, the 15 failure of Suntrust to provide anything beyond the declaration (which simply tracks the language 16 of the statute) is problematic.” Id at *4. Accordingly, it determined that plaintiff “ha[d] raised 17 at least a serious question whether Suntrust violated § 2923.5,” and entered a preliminary 18 injunction postponing the foreclosure sale. Id. at *4. 19 The situation here mirrors that in Tamburri; De Vico proffers a declaration stating that he 20 was not contacted prior to receiving the notice of default; the only evidence to the contrary is the 21 declaration included in the notice of default that recites compliance with § 2923.5. Based on the 22 language of the declaration, the individual who signed it offered only a hearsay report that the 23 beneficial owner or its agent had made contact with De Vico. Defendants proffer no other 24 evidence that they contacted De Vico as required by § 2923.5 prior to initiating foreclosure. As 25 28 26 27 28 Id., Exh. D. 29 Id. 30 Id. 9 1 a result, De Vico has raised serious questions as to whether defendants failed to satisfy their 2 obligation under § 2923.5. See Pey v. Wachovia Motrg. Corp., No. 11-2922 SC, 2011 U.S. Dist. 3 LEXIS 131699, *27 (N.D. Cal. Nov. 15, 2011) (“whether Defendants attached a declaration to 4 the Notice of Default as required by section 2923.5(b) has no bearing on whether they actually 5 complied with the requirements of section 2923.5(a) by contacting Pey or exercising due diligence 6 in an attempt to contact him. Defendants cannot prove compliance with § 2923.5 simply by 7 pointing to a declaration on the Notice of Default”); Paik v. Wells Fargo Bank, N.A., No. C 8 10–04016 WHA, 2011 WL 109482 (N.D. Cal. Jan. 13, 2011) (finding a likelihood of success on 9 the merits of a § 2923.5 claim because “the dearth of evidence from defendant, in the face of 10 plaintiff’s clear statement to the contrary that defendants did not contact her to notify her of her 11 rights prior to the recording of the notice of default, speaks volumes”). Consequently, the court 12 finds that De Vico satisfied his burden of showing a likelihood of success on the merits of his 13 claim that defendants violated § 2923.5.31 14 C. 15 A plaintiff seeking a preliminary injunction must show more than the “possibility” of 16 irreparable injury; she must demonstrate that irreparable injury is “likely” in the absence of 17 preliminary relief. Winter, 555 U.S. at 22; Am. Trucking Ass’n, Inc. v. City of Los Angeles, 559 18 F.3d 1046, 1052 (9th Cir. 2009) see also 11A C. Wright, A. Miller, & M. Kane, Federal Practice 19 and Procedure § 2948.1, p. 139 (2d ed.1995) (an applicant must demonstrate that in the absence 20 of preliminary relief, she “is likely to suffer irreparable harm before a decision on the merits can 21 be rendered”). 22 The Likelihood That Plaintiff Will Suffer Irreparable Harm It is not enough that the claimed harm be irreparable; it must be imminent as well. 23 24 25 26 27 28 31 As De Vico shown a sufficient likelihood of success on the merits of his § 2923.5 claim, and as this claim was the primary focus of his application, the court declines to address his likelihood of success on the remaining claims in his complaint. Tamburri, 2011 WL 2654093 at *3 (“While Ms. Tamburri has raised various claims in her complaint, her papers focus on only two claims – i.e., the claims for violation of California Civil Code § 2923.5 and for violation of § 2932.5. Accordingly, the Court shall consider only those claims in determining whether a preliminary injunction should issue”). 10 1 Caribbean Marine Servs. Co., Inc. v. Baldrige, 844 F.2d 668, 674 (9th Cir.1988); Los Angeles 2 Mem’l Coliseum v. Nat’l Football League, 634 F.2d 1197, 1201 (9th Cir. 1980). “[E]stablishing 3 a threat of irreparable harm in the indefinite future is not enough.” Amylin Pharm., Inc. v. Eli 4 Lilly and Co., 456 Fed. Appx. 676, *3 (9th Cir. Oct. 31, 2011) (Unpub. Disp.); see also Cal. 5 Dump Truck Owners Ass’n v. Nichols, No. 11–cv–00384–MCE–GGH, 2012 WL 273162, *3 6 (E.D. Cal. Jan. 30, 2012) (quoting Amlyin). Speculative injury does not constitute irreparable 7 injury sufficient to warrant granting a preliminary injunction. Carribean Marine Servs., 844 F.2d 8 at 674 (citing Goldie’s Bookstore, Inc. v. Super. Ct., 739 F.2d 466, 472 (9th Cir.1984)). 9 “A plaintiff must do more than merely allege imminent harm . . . ; a plaintiff must 10 demonstrate immediate threatened injury as a prerequisite to preliminary injunctive relief.” 11 Caribbean Marine Servs., 844 F.2d at 674 (9th Cir.1988) (emphasis original). She must do so 12 by presenting probative evidence. Am. Passage Media Corp. v. Cass Commc’ns, Inc., 750 F.2d 13 1470, 1473 (9th Cir.1985) (reversing the entry of a preliminary injunction because the movant 14 failed to proffer evidence of irreparable harm); Bell Atl. Bus. Sys., Inc. v. Storage Tech. Corp., 15 No. C–94–0235, 1994 WL 125173, *3 (N.D. Cal. Mar. 31, 1994) (denying a motion for 16 preliminary injunction because the movant failed to adduce sufficient evidence of the threat of 17 irreparable harm). Conclusory affidavits are insufficient to demonstrate irreparable harm. Am. 18 Passage Media Corp., 750 F.2d at 1473. 19 De Vico has sufficiently demonstrated the threat of imminent, irreparable injury, since his 20 house is scheduled to be sold on the day after the hearing on this motion.32 Several courts have 21 determined that the loss of one’s residence through foreclosure constitutes irreparable injury. See 22 Demarest v. Quick Loan Funding, Inc, No. CV09-01687 MMM (SSx), 2009 WL 940377, *9 23 (C.D. Cal. April 6, 2009) (“The loss of one’s personal residence due to foreclosure constitutes 24 irreparable injury”); Nichols v. Deutsche Bank Nat. Trust Co., No. 07cv2039-L(NLS), 2007 WL 25 4181111, *3 (S.D. Cal. Nov. 21, 2007) (“The imminent foreclosure of Plaintiff’s residence 26 27 28 32 Application at 3. Defendants do not dispute that De Vico faces a threat of irreparable harm. 11 1 presents a threat of irreparable harm”). Because defendants will almost certainly proceed with 2 the trustee’s sale if not enjoined, and the sale is scheduled to occur immediately, De Vico has 3 demonstrated a likelihood of imminent and irreparable harm. 4 D. The Balance of Hardships 5 In balancing the equities, the court must evaluates the interim harm defendants are likely 6 to sustain if the injunction is granted, and compare it with the harm plaintiff is likely to suffer if 7 an injunction does not enter. Winter, 555 U.S. at 24. Although De Vico does not address the 8 balance of hardships in his application, it is clear that this factor weighs in his favor. He has 9 established that he will suffer imminent, irreparable injury if the injunction is denied in that he will 10 lose his residence. While defendants will be unable to recoup any of the debt allegedly owed them 11 if enjoined from selling the residence, that harm does not outweigh, or begin to approach, the type 12 of harm De Vico would suffer if the sale proceeds. Moreover, given the narrow basis for the 13 finding of likelihood of success, as soon as defendants comply with § 2923.5, or adduce evidence 14 that they have previously complied, the court will lift the injunction.33 Thus, any delay may be 15 short-lived. Consequently, the court finds that the balance of hardships tips sharply in De Vico’s 16 favor. See Demarest, 2009 WL 940377 at *9 (“In addition, the balance of hardships strongly 17 favors plaintiff. Plaintiff will lose her home if an injunction does not issue. By contrast, 18 defendants identify no serious hardship they will suffer if the trustee’s sale is delayed until 19 resolution of this matter”). 20 E. The Public Interest 21 Neither party addresses whether entry of an injunction would be in the public interest. 22 There are sound reasons public policy reasons for issuing or declining to issue an injunction. See 23 Wonderland Shopping Center Venture Ltd. Partnership v. CDC Mortg. Capital, Inc., 274 F.3d 24 1085, 1097-98 (6th Cir. 2001) (“Plaintiff suggests that public policy seeks to protect consumers 25 from wrongful foreclosures on property, and that the public interest favors the integrity of 26 27 28 33 This would not, of course, preclude De Vico from seeking a further injunction on other grounds. 12 1 securities markets. Allowing Defendants to take a position contrary to the representations of the 2 offering circular could, Plaintiff argues, contravene the public interest in the securities markets. 3 Defendants contend that public policy favors the enforcement of contracts according to their terms. 4 Defendants further contend that enjoining foreclosure would destabilize faith in mortgage notes 5 creating security interests in real estate financing. We agree with the district court that all of these 6 policy arguments are valid and strong, and that, overall, the arguments favor neither Plaintiff nor 7 Defendants”). 8 In the specific context of this case, however, the court finds that it is in the public interest 9 to allow the borrower an opportunity to be heard. See Paik, 2011 WL 109482 at *5 (“This would 10 not be the first time that a bank shirked its legal responsibilities to aid a struggling borrower trying 11 to pay back her loan. It is in the public interest to allow such borrowers a full and fair opportunity 12 to show that they were not given all the benefits that the law afforded when they make a 13 preliminary showing that something was amiss”); Sencion v. Saxon Mortg. Servs., LLC, No. 14 5:10–cv–3108 JF, 2011 WL 1364007, *3 (N.D. Cal. Apr. 11, 2011) (“[I]t is in the public interest 15 to allow homeowners an opportunity to pursue what appear to be valid claims before being 16 displaced from their homes”); Naderski v. Wells Fargo Bank, N.A., No. CV 11–1783 CAS 17 (CWx), 2011 WL 1627161, *2 (C.D. Cal. Apr. 25, 2011) (noting that “[t]he public interest . . . 18 weighs in favor of preventing the wrongful foreclosure of individuals’ property”); Dumas v. First 19 Northern Bank, No. CIV. S–10–1523 LKK/DAD, 2011 WL 567358, *2 (E.D. Cal. Feb. 15, 20 2011) (stating that “[i]t is in the public interest to require lenders to comply with the California 21 statutes enacted to protect homeowners from unnecessary foreclosures”). The public is benefitted 22 by ensuring that banks honor their statutory obligations and explore options to avoid foreclosure 23 with borrowers as required by § 2923.5. Because, as noted, there are at least serious questions 24 going to the merits of De Vico’s arguments under § 2923.5, the public interest favors entry of a 25 preliminary injunction. 26 F. Conclusion Regarding Preliminary Injunction 27 De Vico has established that there are serious questions concerning the merits of his 28 allegations regarding § 2923.5. He has also shown that he will suffer imminent and irreparable 13 1 injury in the absence of an injunction. The balance of hardships tips strongly in his favor, and the 2 public interest favors entry of an injunction here. Consequently, the court will enter an injunction 3 precluding defendants from proceeding with the sale at foreclosure of De Vico’s residence until 4 such time as they proffer evidence that they have actually complied with Civil Code § 2923.5. 5 G. Bond 6 The final issue the court must address is whether De Vico should be required to post a 7 bond, and, if so, in what amount. See FED.R.CIV.PROC. 65(c) (“The court may issue a 8 preliminary injunction or a temporary restraining order only if the movant gives security in an 9 amount that the court considers proper to pay the costs and damages sustained by any party found 10 to have been wrongfully enjoined or restrained”). Defendants assert that De Vico should be 11 required to post a bond of “no less that $589,648.46, which is equal to the amount of the unpaid 12 balance” and their foreclosure expenses.34 This is excessive. Rather, the court concludes that De 13 Vico should be required to post a bond equal to the fair market rental value of his property. See 14 Tamburri, 2011 WL 2654093 at *6 (“The Court finds that a bond in the amount of $2,000 per 15 month [is] appropriate. It approximates the fair rental value of the property as well as a fair rate 16 of return on $525,000, the current value of the property”). Bond is particularly appropriate here 17 as De Vico has been living in his residence without making payments since November 2010,35 and 18 has represented that he has the ability to tender the full amount of his debt once the beneficial 19 owner of the note is determined.36 See Magana v. Wells Fargo Bank, N.A., No. C 11–03993 CW, 20 2011 WL 4948674, *2 (N.D. Cal. Oct. 18, 2011) (“Taking into account the circumstances, 21 including but not limited to the fact that over the past two years, Plaintiff has continued living at 22 the real property at issue without making any payments to Defendants, the Court finds that a bond 23 in the amount of $3,000 per month, the approximate fair rental value of the house and an amount 24 that Plaintiff had previously represented that she could afford to pay, is appropriate”). 25 34 26 27 28 Opposition at 12-13. 35 Complaint, ¶ 51. 36 Id., ¶ 94. 14 1 Consequently, the court grants De Vico’s request for a preliminary injunction on the condition that 2 he must pay a bond in the amount of $3,000 per month, beginning on October 30, 2012. 3 III. CONCLUSION 4 5 For the reasons stated, plaintiff’s application for a preliminary injunction is granted 6 provided that he pays, no later than October 30, 2012, and on the first of each month thereafter, 7 a bond in the amount of $3,000. This bond condition can be satisfied by depositing the required 8 amount in the trust account of defendants’ attorneys. The first payment must be made on or 9 before 10:00 a.m. on October 30, 2012. If the $3,000 payment is made prior to that time, and 10 De Vico so advises the court, it will enter a preliminary injunction. If the payment is not made, 11 the court will not enter an injunction. 12 Once defendants provide proof that they have complied with Civil Code § 2923.5, the court 13 will dissolve the preliminary injunction. The injunction will also be dissolved upon submission 14 of evidence that De Vico has not made a required payment on the bond. Such proof must describe 15 specifically the nature of the contact with De Vico and the manner in which the parties’ discussion 16 explored options to avoid foreclosure. 17 18 DATED: October 29, 2012 MARGARET M. MORROW UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 15
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