McIntosh v. Wells Fargo Bank NA et al

Filing 19

ORDER denying 13 Defendants' Motion to Dissolve the TRO. Signed by Judge G Murray Snow on 8/31/12.(LSP)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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No. CV-12-1218-PHX-GMS

Wayne McIntosh,

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ORDER

Plaintiff,

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v.

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Wells Fargo Bank, N.A.; CitiBank, N.A.,

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Defendants.

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Pending before the Court is Defendant’s Motion to Dissolve the Temporary

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Restraining Order (“TRO”) in this matter. (Doc. 13). For the reasons discussed below, the

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motion is denied.

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BACKGROUND

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On January 12, 2007 Plaintiff executed a Deed of Trust (“DOT”) in connection

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with a loan that he used to purchase a house on 4901 East Butler Drive in Paradise Valley

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(“the Property”). (Doc. 12-1, Ex. A). On November 13, 2008, First American Title

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Insurance Company (“First American”), at that time the Trustee of the DOT, noticed a

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Trustee Sale of the Property. Defendants aver that the sale was continued to May 29,

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2012; nothing in the current record explains the underlying reason that that sale was

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continued or documents this fact. On March 26, 2010, Mortgage Electronic Registration

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Systems, Inc. (“MERS”) acting at that time as beneficiary to First American, assigned all

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beneficial interest in the Deed of Trust to Citibank, N.A. as successor Trustee to U.S.

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Bank National Association, as Trustee for MASTER Adjustable Rate Mortgages Trust

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2007-HF, Mortgage Pass-Through Certificates, Service 2007-HF1 (“Citibank”). (Doc. 12

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at 3; Doc. 12-1 at H).

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Plaintiff filed for bankruptcy in 2011, and in connection with his bankruptcy was

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informed that he had to obtain Citibank’s approval for a plan restructuring his mortgage.

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(Doc. 18).1 After Plaintiff contacted Citibank, a person purporting to be Citibank’s

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general counsel, Stephen M. Smith, wrote Plaintiff a letter stating that “I have not been

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able to find any evidence that Citi is the servicer or investor on your loan.” (Doc. 18-1).

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Plaintiff responded by sending Citibank a $5.00 check and a quitclaim deed for the

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property, which Citibank returned with a note stating that it could not cash the check

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“Due to You [sic] Account Has Been Paid in Full.” (Doc. 18-1).

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At some point prior to May 14, 2012, Wells Fargo, N.A. (“Wells Fargo”) and

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Citibank took some action in relation to the previously-noticed trustee’s sale. Plaintiff

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filed this action in Maricopa County Superior Court on May 14, 2012, and a TRO was

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issued on May 25, 2012, preventing the sale. (Doc. 1-1 at 56). Defendants removed to

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this Court on June 7, 2012. (Doc. 1). Defendants now seek dissolution of the TRO. (Doc.

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13).2
DISCUSSION

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I.

Legal Standard

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A plaintiff must establish four elements in order to be granted preliminary

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injunctive relief, including “that he is likely to succeed on the merits, that he is likely to

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suffer irreparable harm in the absence of preliminary relief, that the balance of equities

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tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res.

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Def. Council, 555 U.S. 7, 22 (2008), see FED. R. CIV. P. 65. (emphasis in original). The

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On April 9, 2012, Plaintiff’s bankruptcy was dismissed. (See BK-11-18706-RJH
Bankr. D. Ariz.).
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course.

There are other motions pending as well, upon which the Court will rule in due

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Ninth Circuit considers all of the elements except for irreparable injury using a sliding

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scale approach, where “the elements of the preliminary injunction test are balanced, so

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that a stronger showing of one element may offset a weaker showing of another.”

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Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). The

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element of irreparable injury is not subject to balance; the moving party must

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“demonstrate that irreparable injury is likely in the absence of an injunction.” Winter, 555

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U.S. at 23 (emphasis in original). Therefore, should the moving party demonstrate a very

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high likelihood of irreparable injury, the likelihood of success on the merits may be

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relaxed. In such cases, an injunction may be granted when “serious questions going to the

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merits were raised and the balance of hardships tips sharply in the plaintiff's favor.” Wild

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Rockies, 632 F.3d at 1134–35 (quoting The Lands Council v. McNair, 57 F.3d 981, 987

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(9th Cir. 2008)).

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“Serious questions are ‘substantial, difficult and doubtful, as to make them a fair

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ground for litigation and thus for more deliberative investigation.’” Republic of the

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Philippines v. Marcos, 862 F.2d 1355, 1362 (9th Cir. 1988) (en banc) (quoting Hamilton

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Watch Co. v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1952) (Frank, J.)). “Serious

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questions need not promise a certainty for success, nor even present a probability of

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success, but must involve a ‘fair chance of success on the merits.’” Republic of the

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Philippines, 862 F.2d at 1362 (quoting Nat’l Wildlife Fed’n v. Coston, 773 F.2d 1513,

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1517 (9th Cir. 1985)); see also Bernhardt v. L.A. County, 339 F.3d 920, 926-27 (9th Cir.

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2003).

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II.

Analysis

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Defendants allege that this is a run-of-the mill “show me the note” claim, and must

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therefore be dismissed. (Doc. 13 at 4). See Hogan v. Washington Mut. Bank, N.A. 277

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P.3d 781 (Ariz. 2012). Defendants are correct that “the deed of trust statutes impose no

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obligation on the beneficiary to ‘show the note’ before the trustee conducts a non-judicial

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foreclosure.” Id. at 783. Plaintiff here, however, is not demanding that Defendants

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produce the so-called “wet-ink” note. Plaintiff doubts that Citibank remained the trustee
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only because Citibank’s general counsel wrote him a letter stating affirmatively that the

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account has been paid in full and therefore would not affirm a negotiated restructuring of

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the loan worked out in Plaintiff’s bankruptcy. Hogan reaffirmed that “a deed of trust, like

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a mortgage, may be enforced only by, or in behalf of, a person who is entitled to enforce

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the obligation the mortgage secures.” Hogan, 277 P.3d at 782. Unlike many plaintiffs

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who seek relief under a show-me-the note theory, Plaintiff here did not seek to evade his

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obligation to pay his mortgage, but rather to refinance it through bankruptcy.

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The fact that Citibank’s general counsel affirmed that Citibank had no interest in

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Plaintiff’s loan in December, only months before Citibank and Wells Fargo re-initiated

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the trustee’s sale, presents “fair ground for litigation and thus for more deliberative

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investigation” regarding who owns the DOT. Republic of the Philippines, 862 F.2d at

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1362. The record here is incomplete—there are no documents regarding the continuance

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of the foreclosure sale or the notice of the May 29, 2012 sale, nearly four years after the

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sale was originally noticed. The Court notes that the Citibank letter is “just that; a letter,

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and nothing more,” and that Mr. Smith “does not declare that his statements are made

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under penalty of perjury.” In re Veal, 450 B.R. 897, 903 (9th Cir. BAP 2011).

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Nevertheless, the letter does serve to raise serious questions regarding the note, and

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therefore supports continuing the TRO.

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Regarding the other elements of the Winter test, it is well-established that losing a

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home qualifies as irreparable harm, and the public and private equities here weigh in

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favor of keeping the TRO in place while the underlying questions of this lawsuit are

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resolved.

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IT IS THEREFORE ORDERED that Defendants’ Motion to Dissolve the TRO
(Doc. 13) is denied.
Dated this 31st day of August, 2012.

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