Gwendolyn Button v. GreenPoint Mortgage Funding Inc et al

Filing 49

ORDER that plaintiff Buttons Motion for Preliminary Injunction is DENIED 7 .Further, Defendants Motion to Strike 29 is DENIED AS MOOT by Judge Otis D Wright, II (lc). Modified on 9/11/2012 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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GWENDOLYN BUTTON,

Case No. 2:12-cv-5528-ODW(VBKx)

Plaintiff,

ORDER DENYING PLAINTIFF’S
MOTION FOR PRELMINARY
INJUNCTION [7]

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v.

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GREENPOINT MORTGAGE FUNDING,
INC.; AURORA LOAN SERVICES LLC;
U.S. BANK; MORTGAGE ELECTRONIC
REGISTRATION SYSTEM, INC.; and
QUALITY LOAN SERVICE CORP.,
Defendants.

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Pending before the Court is Plaintiff Gwendolyn Button’s Motion for

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Preliminary Injunction. (ECF No. 7.) Button asks the Court to enjoin Defendants

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from foreclosing on her home, located at 19422 Jacobs Avenue, Cerritos, CA 90703,

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until this Court renders a judgment on the merits. Specifically, Button moves to

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enjoin Defendants based on her claims for: fraud; elder financial abuse; conversion;

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Truth In Lending Act (“TILA”) violations; Unlawful, Unfair, and Fraudulent Business

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Practices Act (“UCL”) violations; and wrongful foreclosure.1

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Having considered the papers filed in support of and in opposition to this motion, the Court deems
the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

I.

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BACKGROUND

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Button is the owner of real property located at 19422 Jacobs Avenue, Cerritos,

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CA 90703. (Compl. ¶ 1.) On April 21, 2007, Button executed an adjustable-rate note

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for $608,000 in favor of Defendant GreenPoint Mortgage Funding, Inc. (Id. ¶ 15.)

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The note was secured by a Deed of Trust executed on the same day, and was recorded

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on April 30, 2007. (Id.) Button negotiated the transaction with the help of her son,

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Richard Button, who was present at the signing and was a real-estate professional.

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(Opp’n 1–2.)

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Shortly after closing, Button defaulted on her payments. (Hall Decl. ¶¶ 5–7.)

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Significant efforts were made by Aurora Loan Services LLC to restructure the loan;

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but Button continued to miss scheduled payments. (Id. ¶¶ 11, 12, 18, 19, 23–26.)

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Button was offered three workout agreements to reduce her monthly payment,

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including a payment plan that reduced her monthly payment to $1,377.50. (Id. ¶ 24.)

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On July 23, 2010, after three years of attempts to avoid foreclosing on Button’s

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residence, Quality Loan Service Corporation recorded a notice of default and an

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election to sell, as an agent for the beneficiary. (Opp’n 2.) The notice included a

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declaration by Aurora evidencing the steps taken to contact Button prior to recording.

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(Id.) A foreclosure sale was scheduled for July 19, 2012. (Id.) Button then filed her

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Complaint on June 25, 2012. (ECF No. 1.) The foreclosure sale scheduled for July

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19, 2012, was stayed because of the Temporary Restraining Order issued by the Court.

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(ECF No. 11.)

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II.

LEGAL STANDARD

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A preliminary injunction is an extraordinary remedy never awarded as of right.

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Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). A plaintiff seeking a

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preliminary injunction must establish that: (1) it is likely to succeed on the merits;

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(2) it is likely to suffer irreparable harm in the absence of preliminary relief; (3) the

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balance of equities tips in its favor; and, (4) an injunction is in the public interest. Id.

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at 20; Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 979 (9th Cir. 2011). In each

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case, a court “must balance the competing claims of injury and must consider the

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effect on each party of the granting or withholding of the requested relief.” Amoco

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Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 542 (1987). Further, courts of equity

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should pay particular regard for the public consequences in employing the

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extraordinary remedy of injunction. Weinberger v. Romero-Barcelo, 456 U.S. 305,

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312 (1982).
III.

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A.

DISCUSSION

Likelihood of success on the merits

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Button’s Complaint alleges unlawful acts that fall into two categories: those

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relating to the origination of the loan; and those relating to the foreclosure of the loan.

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The Court divides the likelihood-of-success analysis into those two categories.

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1.

Origination-based claims – statute of limitations

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Defendants argue that Button’s origination-based claims fail because they are

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time barred. (Opp’n 5–6.) To be valid, a claim must be asserted within the time

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allotted by statute. Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 806 (2005).

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The statute of limitations applies to Button’s claims as follows:

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 Fraud claims – Three years. Cal Civ. Proc. Code § 338(d);

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 Elder Abuse – Four years. Cal. Welf. & Inst. Code § 15657.7;

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 Conversion – Three years. Cal. Civ. Proc. Code § 338(b);

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 TILA claim – One year. 15 U.S.C. § 1640(e). The one-year period in

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§ 1640(e) runs from the date of the consummation of the credit transaction at

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issue. See King v. California., 784 F.2d 910, 913 (9th Cir. 1986);

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 UCL claim – Four years. Cal. Bus. & Prof. Code § 17208;

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 Rescission – Four years. Cal. Civ. Proc. Code § 337(3);

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 Reformation – Three years. Cal. Civ. Proc. Code § 338(d); Hal Roach

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Studios, Inc., v. Richard Feiner and Co., 896 F.2d 1542, 1547 (9th Cir.

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1989).

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These claims arise from the origination of the note signed by Button on April

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21, 2007. (Compl. ¶ 15). Defendants argue that accrual of the statute of limitations

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should begin on the closing date, April 30, 2007. (Opp’n 6.) The Court agrees.

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Unless there is an exception, the statute of limitations runs from the date of

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consummation of Button’s transaction. See King, 784 F.2d at 915. And because

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Button filed her Complaint on June 25, 2012, all of the above claims are time barred.

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But one exception to the statute of limitations is the discovery rule, which

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allows for a delay in the accrual of a cause of action until a plaintiff “discovers or has

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reason to discover, the cause of action.” Fox, 35 Cal. 4th at 807. Button argues that

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her claims are timely because she did not learn of the cause of action until August

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2011. (Compl. ¶¶ 32, 110–11.)

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To warrant a delayed accrual under the discovery rule, a plaintiff “must

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specifically plead facts to show (1) the time and manner of discovery and (2) the

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inability to have made earlier discovery despite reasonable diligence.” Fox, 35 Cal.

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4th at 808. Furthermore, the plaintiff must show that diligence was exercised, but

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“conclusory allegations will not withstand demurrer.” Id.

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Here, Button fails to show she exercised due diligence prior to the running of

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the statute of limitations. Button alleges several irregularities: a rushed, eight-minute

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signing of loan documents; a notary fee when a notary was not present; Defendants’

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failure to provide all of the legally required disclosures; and Defendants’ failure to

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provide Button with a copy of the executed loan documents. (Compl. ¶ 27.) But in

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spite of these misgivings, Button failed to bring suit until June 2012—five years after

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the close of the loan occurred.

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More importantly, Button fails to show that prior to 2011, she attempted to

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garner copies of the documents she signed.

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conclusory allegations as to why she was unable to discover the causes of action. (See

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Compl. ¶¶ 32, 110–11.) The Court finds it implausible that Button, after recognizing

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the irregularities (and alleged fraud) committed against her in 2007, has not lifted a

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Button’s Complaint only contains

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finger to investigate (or pursue those claims) until 2011. And it was only on June

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2012 that she filed a Complaint, days before her home was scheduled for foreclosure.

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Because the plaintiff bears the burden to show diligence—but has not done so—the

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Court finds the discovery-rule exception to the statute of limitations cannot apply.

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Thus, these time-barred origination-based claims have no likelihood of success on the

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merits.

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Foreclosure-based claims

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For Button’s foreclosure-based claims, she alleges that Aurora had no beneficial

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interest in the deed of trust at the time Aurora filed the notice of default; and therefore,

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cannot foreclose on her home. (Compl. ¶ 40.) Thus, Button contends that the notice

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is “void ab initio” because it was improperly recorded. (Id.) But this theory lacks

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merit.

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Under California Civil Code section 2924(a)(1), a “trustee, or any duly

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authorized agent,” may initiate a foreclosure action. Cal. Civ. Code § 2924(a). In a

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similar case, Button’s theory was flatly rejected. See Yau v. Duetsche Bank Nat. Trust

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Co. Ams., No. SACV 11-00006-JVS(RNBx), 2011 U.S. Dist. LEXIS 138584 (C.D.

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Cal. 2011). In Yau, the court explains that by statute, “a substitution of trustee may be

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filed after a notice of default is recorded so long as proper notice is given.” Id. at *23.

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Because a substitution can occur after a notice is recorded and the note was

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secured by a deed of trust, Button’s arguments fail to show a likelihood of success on

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the merits regarding the wrongful foreclosure causes of action.

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Button also alleges that the threatened foreclosure is wrongful because it was

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procured by fraud. But because any fraud by Defendants is precluded by the statute of

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limitations, as discussed above, this allegation is entirely without merit.
And since Button has not shown a likelihood of success on any of her claims,

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this factor weighs in favor of denying the preliminary injunction.

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B.

Irreparable harm

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To warrant preliminary injunctive relief, Button must show that irreparable

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harm is likely, absent such relief. Winter, 555 U.S. at 22. Injunctive relief should not

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be granted if irreparable harm is absent and there exists an adequate remedy at law.

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O’Shea v. Littleton, 414 U.S. 488, 499 (1974). But irreparable harm may not be

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presumed. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d

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1197, 1215 (C.D. Cal. 2007). Issuing a preliminary injunction based only on a

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possibility of irreparable harm is “inconsistent with our characterization of injunctive

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relief as an extraordinary remedy that may only be awarded upon a clear showing that

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the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22.

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Button argues that injunctive relief is necessary because without the

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extraordinary relief requested, her property will be wrongfully foreclosed, and no

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pecuniary damages will be able to rectify the damages suffered. (Mot. 5.)

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The Court is sympathetic to this 80-year-old widow’s claims, and agrees that a

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claim for wrongful foreclosure would rise to the level of irreparable harm. There is no

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damage as great as the ousting of one from her home. Thus, this factor weighs in

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Button’s favor.

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C.

Balance of the equities

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In ruling on Button’s Motion, the Court must also consider the effect that

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granting injunctive relief would have on Defendants. Amoco Prod. Co. v. Vill. of

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Gambell, 480 U.S. 531, 542 (1987). The Court must balance the parties’ competing

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claims of injury prospectively resulting from granting or withholding the requested

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relief. Id.

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Button argues that the prospective harm to her, if the preliminary injunction is

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denied, is greater than harm to Defendants if the Motion is granted. (Mot. 6.) Button

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reasons Defendants would suffer no injury if the sale is delayed pending this action,

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whereas she would lose her home. (Id.) Yet Button submits no rationale for why

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Defendants would not be harmed by an order enjoining the foreclosure sale.

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The Court finds that Defendants have not received payments on their loan for a

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considerable time—at least since 2009. (Hall Decl. ¶ 21–22.) Although the amount

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owed may be a substantial amount, this harm pales in comparison to expelling Button

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from her home—assuming Button’s claims are meritorious. Accordingly, the Court

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finds that this factor favors Button.

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D.

Public interest

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Finally, a plaintiff seeking an injunction must establish that the injunction is in

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the public interest. Internet Specialties West, Inc. v. Milon-Digiorgio Enters., 559

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F.3d 985, 993 (9th Cir. 2009). When an injunction is narrowly tailored and affects

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only the parties to suit, “the public interest will be at most a neutral factor in the

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analysis.” Stormans, Inc., v. Selecky, 586 F.3d 1109, 1139 (9th Cir. 2009). Here, the

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action is limited to the parties involved and does not have an impact on the public.

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Therefore, the public interest factor is neutral and favors neither party.
IV.

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CONCLUSION

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Upon balancing the foregoing factors, the Court finds that Button has failed to

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demonstrate that she is entitled to preliminary injunctive relief. In particular, the

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Court notes that Button has little likelihood of prevailing on the merits of her

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Complaint. Accordingly, Button’s Motion for Preliminary Injunction is DENIED.

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Further, Defendants’ Motion to Strike (ECF. No. 29) is DENIED AS MOOT.

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IT IS SO ORDERED.

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September 11, 2012

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___________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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