Wendy Carroll v. Nationstar Mortgage LLC et al

Filing 7

ORDER DENYING EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE: PRELIMINARY INJUNCTION 4 by Judge Otis D. Wright, II. (lc). Modified on 6/21/2013. (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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WENDY CARROLL,
v.

Case No. 2:13-cv-4490-ODW(PJWx)

Plaintiff,

NATIONSTAR MORTGAGE, LLC; and
Does 1 to 10, inclusive,

ORDER DENYING EX PARTE
APPLICATION FOR TEMPORARY
RESTRAINING ORDER AND
ORDER TO SHOW CAUSE RE:
PRELIMINARY INJUNCTION [4]

Defendants.

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I.

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INTRODUCTION

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Plaintiff Wendy Carroll applies to the Court ex parte for a temporary restraining

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order enjoining Defendant Nationstar Mortgage, LLC from (1) selling the property;

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(2) recording the trustee’s deed upon sale; and (3) evicting Carroll from the property.

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(ECF No. 4.) For the reasons that follow, the Court DENIES Carroll’s application.

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II.

FACTUAL BACKGROUND

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In 2007, Carroll refinanced her home with a first trust deed loan in the amount

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of $997,500. (Ex Parte Appl. 4.) On November 2, 2010, a Notice of Default was

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recorded on the property. (Id.) Nationstar later acquired this loan. (Id.)

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Carroll alleges that since June 2012, she has tried to obtain a loan modification,

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evidenced by her submission of several such applications and supporting documents.

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(Id. at 5.) She further alleges that though Nationstar confirmed receiving her loan-

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modification application and the required supporting documents, Nationstar ultimately

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refused to modify her loan. (Id. at 6, 11.) Throughout the loan-modification process,

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Carroll complains that Nationstar gave her the run-around, including requiring her to

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update her application and supporting documents, informing her that it has not

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received the requested documents, verbally notifying her that she is ineligible for a

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loan modification, changing the single point of contact assigned to her, suggesting that

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she attempt to short-sell her home, and setting up her home for a foreclosure sale

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while ignoring her loan-modification application, i.e., dual tracking. (Id. at 5–10.)

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On May 6, 2013, a Notice of Trustee’s Sale was recorded. (Compl. Ex. E.) On

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June 3, 2013, Nationstar foreclosed the property. (Ex Parte Appl. 10.) Then Carroll

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received on June 10, 2013, a three-day Notice to Quit. (Id.) As of June 17, 2013, the

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trustee’s deed upon sale has not yet been recorded. (Id.) Carroll filed her Complaint

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on June 20, 2013.

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III.

LEGAL STANDARD

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The purpose of a temporary restraining order is to preserve the status quo and to

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prevent irreparable harm “just so long as is necessary to hold a hearing, and no

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longer.” Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423, 439 (1974).

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Thus, a TRO may be issued only upon a showing “that immediate and irreparable

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injury, loss, or damage will result to the movant before the adverse party can be heard

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in opposition.” Fed. R. Civ. P. 65(b)(1)(A).

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“The standard for issuing a temporary restraining order is identical to the

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

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Hughes Aircraft Co., 887 F. Supp. 1320, 1323 (N.D. Cal. 1995); see also Stuhlbarg

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Intern. Sales Co., Inc. v. John D. Brushy and Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir.

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2001) (standards for issuing a TRO are “substantially identical” to those for issuing a

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preliminary injunction). A plaintiff seeking a preliminary injunction must establish:

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(1) a likelihood of succeed on the merits; (2) a likelihood that plaintiff will suffer

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irreparable harm in the absence of preliminary relief; (3) that the balance of equities

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tips in his favor; and (4) that an injunction is in the public interest. Winter v. Natural

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Res. Def. Council, 555 U.S. 7, 20 (2008).

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The Ninth Circuit employs a “sliding scale” approach to Winter’s four-element

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test. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).

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Under this approach, a preliminary injunction may issue if the plaintiff raises “serious

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questions going to the merits” and demonstrates that “the balance of hardship tips

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sharply towards the plaintiff’s favor,” but only so long as the plaintiff also

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demonstrates that irreparable harm is likely—not just possible—and the injunction is

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in the public interest. Id. (internal quotation marks omitted).

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Finally, “a preliminary injunction is an extraordinary remedy never awarded as

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of right.” Winter, 555 U.S. at 24. Thus, a district court should enter preliminary

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injunctive relief only “upon a clear showing that the plaintiff is entitled to such relief.”

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Id. at 22.
IV.

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DISCUSSION

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Carroll contends she has fallen victim to dual tracking—a relatively common

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process by which the lender negotiates a loan modification with a borrower in default

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while simultaneously pressing forward with the foreclosure process. The result of this

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tactic “is that the borrower does not know where he or she stands, and by the time

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foreclosure becomes the lender’s clear choice, it is too late for the borrower to find

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options to avoid it.” Jolley v. Chase Home Fin., LLC, 213 Cal. App. 4th 872, 904

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(2013).

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To combat this maneuver, and to encourage mortgage servicers to offer loan

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modifications, the California legislature passed the California Homeowner Bill of

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Rights. See Cal. Civ. Code § 2923.6(b). The Homeowner Bill of Rights became

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effective on January 1, 2013. As is relevant here, the Homeowner Bill of Rights

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explicitly prohibits dual tracking: “If a borrower submits a complete application for a

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first lien loan modification . . . [the] mortgage servicer, mortgagee, trustee,

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beneficiary, or authorized agent shall not record a notice of default or notice of sale,

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or conduct a trustee’s sale, while the complete first lien modification is pending.” Id.

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§ 2923.6(c) (emphasis added). Then, once the borrower submits the modification

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application, a foreclosure sale cannot occur until (1) the “mortgage servicer makes a

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written determination that the borrower is not eligible” for the modification and the

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30-day appeal period expires; or (2) the borrower does not accept an offered

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modification within 14 days; or (3) the borrower accepts a modification but later

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defaults under the modified terms. Id. § 2923.6(c)–(d).

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The Homeowners Bill of Rights also requires lenders to a designate a “single

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point of contact” for borrowers to request foreclosure alternatives and provide the

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borrower one or more direct means of communicating with that point of contact. Id.

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§ 2923.7. Like the dual-tracking provision, the single-point-of-contact provision “is

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intended to prevent borrowers from being given the run around, being told one thing

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by one bank employee while something entirely different is being pursued by

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another.” Jolley, 213 Cal. App. 4th at 904–05.

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Even so, there are several problems with Carroll’s ex parte request. First, the

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only provision she may prevail on is the one requiring a mortgage servicer to give a

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borrower written notice that she is ineligible for a loan modification and to allow 30

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days to pass before commencing the foreclosure sale: the other two provisions do not

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apply here. But Carroll’s allegations only superficially support her contention that she

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properly applied for a loan modification—there is no real evidence that she did so.

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And despite her claims to the contrary, correspondence from Nationstar dated June 14,

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2013, suggests that Carroll failed to provide all required documents. (Compl. Ex. H.)

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Second, there is only so much that the Court can do at this stage: the foreclosure

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sale has already occurred. (Ex Parte Appl. 10.) The Court could enjoin Nationstar

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from recording the trustee’s deed upon sale and evicting Carroll from the property.

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But the recording is just a formality; and Carroll presents no evidence that Nationstar

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has taken any further steps to evict her, such as filing an unlawful-detainer complaint.

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Finally, the emergency presented here is of Carroll’s own doing. A party

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seeking ex parte relief must establish that she “is without fault in creating the crisis

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that requires ex parte relief, or that the crisis occurred as a result of excusable

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neglect.” Mission Power Eng’g Co. v. Cont’l Casualty Co., 883 F. Supp. 488, 492

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(C.D. Cal. 1995). The Notice of Trustee’s Sale was recorded on May 6, 2013, and

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Carroll received notice of it shortly thereafter. (Compl. Ex. E.) Yet Carroll did not

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act by filing a Complaint then. Instead, she waited until June 20, 2013—two weeks

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after Nationstar’s June 3, 2013 foreclosure on her property—to file her Complaint.

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(Ex Parte Appl. 10.)
V.

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CONCLUSION

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The Court concludes that the only factor in Carroll’s favor is irreparable harm.

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Even if the Court grants this TRO, it merely delays Defendants’ right to foreclosure.

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This ex parte application is also inappropriate because Carroll’s lack of diligence

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created this emergency where she is now facing eviction from her home. Therefore,

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Carroll’s Ex Parte Application is hereby DENIED.

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Nevertheless, Carroll may file a regularly noticed motion for preliminary

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injunction if she believes that she is entitled to equitable relief—despite the Court’s

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concerns expressed here—under the California Homeowner Bill of Rights.

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IT IS SO ORDERED.

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June 21, 2013

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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