Yeota Christie v. Morgan Stanley Mortgage Capital Holdings LLC et al

Filing 20

ORDER by Judge Otis D Wright, II: denying 15 Plaintiffs Ex Parte Application for temporary restraining orde rand suspend the November 2 trustees sale. (lc) Modified on 10/30/2012 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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YEOTA CHRISTIE,
v.

Case No. 8:12-cv-01584-ODW(JPRx)

Plaintiff,

MORGAN STANLEY MORTGAGE
CAPITAL HOLDINGS, LLC et al.,

ORDER DENYING EX PARTE
APPLICATION FOR TEMPORARY
RESTRAINING ORDER [15]

Defendants.

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I.

INTRODUCTION

Plaintiff Yeota Christie moves ex parte for a temporary restraining order to stay

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a trustee’s sale on her home scheduled for November 2, 2012. The Court finds this

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matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; Local

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Rule 7-15. Upon review, the Court finds that Christie fails to demonstrate the

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likelihood of success on the merits required for a temporary restraining order.

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Accordingly, Christie’s request for a temporary restraining order is DENIED.

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II.

BACKGROUND

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On September 19, 2007, Christie obtained an adjustable-rate home refinance

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loan from Wells Fargo Bank in the amount of $787,500.00. (Compl. Ex. C.) This

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loan was secured by a deed of trust naming Wells Fargo as the lender and beneficiary

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and Fidelity National Title Insurance Company as the trustee under the deed of trust.

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(Compl. Ex. D.)

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Christie alleges that on November 13, 2009, she received an unsigned letter

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from an unidentified person or entity informing her that her loan had been assigned,

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sold, or transferred to Morgan Stanley Mortgage Capital Holdings, LLC, effective

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October 14, 2009. (Compl. ¶ 4.)

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On July 22, 2010, after falling behind on her mortgage payments, Christie

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entered into a Loan Modification Agreement with Saxon Mortgage Services Inc.,

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which Christie insists asserted that it was the lender on her loan. (Compl. ¶ 5 &

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Ex. C.) Christie contends that during the period from July 2010 to February 2012, she

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paid Saxon $54,481.11 in mortgage payments under the modified terms of her loan.

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(See Compl. ¶ 6.) Christie does not state in her Complaint or her TRO application

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what her monthly payments were during this period or that she consistently made

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those payments in full and on time, nor does she contend that the aggregate

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$54,481.11 in payments that she made during this period were improperly applied to

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her loan.

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On July 5, 2012, a Notice of Default and Election to Sell was recorded,

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indicating that Christie was in default on her mortgage in the amount of $51,319.25.

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(Compl. Ex. H.)

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On August 17, 2012, the Law Offices of Les Zieve recorded an Assignment of

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Deed of Trust purporting to transfer Christie’s deed of trust from Wells Fargo Bank to

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FV-1, Inc. in trust for Morgan Stanley. (Compl. Ex. I.)

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Christie alleges that by this time, she was “at a loss . . . of whom is [sic] the

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actual lender/creditor, since Mortgage Stanley [sic], Saxon and FV-1 all claiming [sic]

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to be the lender.” (Appl. 5.) Finding herself “having no other alternative,” Christie

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filed this action in this Court on September 20, 2012. Subsequently, on October 11,

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2012, Christie received a Notice of Trustee’s sale alerting her that a foreclosure sale

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would proceed on November 2, 2012.

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Christie’s Complaint alleges eight claims, styled as follows: (1) declaratory

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relief under 28 U.S.C. §§ 2201–2202; (2) negligence; (3) negligent infliction of

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emotional distress; (4) “negligence – unfair debt collection [15 U.S.C. §2605]”;

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(5) unfair business practices under California’s unfair competition law, Cal. Bus. &

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Prof. Code § 17200; (6) accounting; (7) cancellation of written instrument under

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California Civil Code section 3412; and (8) quiet title. The crux of Christie’s

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contentions is that it is unclear who owns the note to her home and thus who is

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entitled to enforce the note through foreclosure.

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III.

LEGAL STANDARD

A temporary restraining order may be issued upon a showing “that immediate

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and irreparable injury, loss, or damage will result to the movant before the adverse

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party can be heard in opposition.” Fed. R. Civ. P. 65(b)(1)(A). The purpose of such

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an order is to preserve the status quo and to prevent irreparable harm “just so long as

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is necessary to hold a hearing, and no longer.” Granny Goose Foods, Inc. v.

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Brotherhood of Teamsters, 415 U.S. 423, 439 (1974).

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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

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

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issuing a preliminary injunction). A plaintiff seeking a preliminary injunction must

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establish that: (1) he is likely to succeed on the merits; (2) he is likely to suffer

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

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

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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

Having reviewed Christie’s Application, the Court does not find that the

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circumstances or evidence justify the issuance of a temporary restraining order, ex

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parte or otherwise. In particular, Christie has failed to show that she is likely to

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succeed on the merits, or that there are even serious questions going to the merits.

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Christie’s Application fails to address the merits of any one particular claim in her

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Complaint, but the thrust of the argument is that foreclosure upon the property is

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improper because various assignments of her deed of trust are either invalid or have

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not been properly recorded, which destroy any party’s ability to foreclose on her

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home. But Christie provides absolutely no evidence to support these contentions.

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Moreover, even if Christie had produced some evidence, Christie’s foreclosure claims

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are deficient because she does not contend that she has made all of her mortgage

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payments or allege or show that she can or has tendered the outstanding balance on

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her loan. Because Christie has failed to demonstrate that there are serious questions

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going to the merits of her claims, or provide any evidence supporting her claims, the

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Application must be denied.

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Initially, the Court notes that Plaintiff has not alleged tender. California courts

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have held that a party seeking to quiet title to a property on which he owes a debt must

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first offer payment in full on that debt. Ferguson v. Avelo Mortgage LLC, 195 Cal.

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App. 4th 1618, 1623, (2011) (“To bring an action to quiet title a plaintiff must allege

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he or she has paid any debt owed on the property.”); Rosenfeld v. JPMorgan Chase

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Bank, N.A., 732 F. Supp. 2d 952, 975 (N.D. Cal. 2010); Miller v. Provost, 26 Cal.

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App. 4th 1703, 1707 (1994). Further, recent California law unequivocally establishes

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that a Plaintiff seeking to set aside a foreclosure sale must tender the full amount

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arrearages before attacking the sale. Stebley v. Litton Loan Servicing, LLP, 202 Cal.

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App. 4th 522, 526 (2011) (“A full tender must be made to set aside a foreclosure sale,

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based on equitable principles.”) Although Christie seeks to enjoin an impending

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foreclosure sale, rather than set aside a foreclosure sale, her failure to allege tender is

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nevertheless fatal to her claims seeking to avoid the sale on the same equitable

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principles. See Alicea v. GE Money Bank, No. C 09-00091 SBA, 2009 WL 2136969,

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at *3 (N.D. Cal. July 16, 2009) (“When a debtor is in default of a home mortgage

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loan, and a foreclosure is either pending or has taken place, the debtor must allege a

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credible tender of the amount of the secured debt to maintain any cause of action for

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wrongful foreclosure.”). But see Chan v. Bank of Am., N.A., No. SACV 11-2048

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DOC (DTBx), 2012 WL 960373, at *4–7 (C.D. Cal. Mar. 19, 2012) (discussing the

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application of the tender rule when a foreclosure sale is pending and declining to

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follow Alicea “where Plaintiffs have alleged a facially plausible violation of

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California’s foreclosure statutes”).

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Regarding the substantive assertions in Christie’s TRO application, Christie

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argues first that multiple Defendants have failed to properly record an assignment of

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her loan and therefore lack the power to conduct the trustee’s sale. (Appl. 11.) But

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California courts have routinely held that a transfer of assignment of a debt does not

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need to be recorded. See, e.g., Herrera v. Fed. Nat’l Mortg. Assn., 205 Cal. App. 4th

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1495, 1506 (2012); Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 271–

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72 (2011). This argument is therefore unlikely to succeed on the merits.

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Next, Christie argues that Morgan Stanley and FV-1 lack authority to enforce

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her deed of trust because Edward G. Olsen (who signed the August 17, 2012

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Assignment of Trust transferring the deed of trust from Wells Fargo to FV-1 as trustee

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for Morgan Stanley) has a Linked In page indicating he is an Operations Analyst at

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Wells Fargo, not the Vice President of Loan Documentation as the Assignment

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represented. According to Christie, “It is clear that Edward G. Olsen’s title was

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changed as to deceive the public, including Ms. Christie, so as to represent that Mr.

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Olsen had authority to sign the assignment of the ‘DOT.’ . . . As such, the invalid

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signature to the assignment of the ‘DOT’ invalidates the assignment.” (Appl. 5.) This

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line of argument fails for at least two reasons.

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First, because Christie has not identified any facts plausibly supporting her

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theory that the Assignment to FV-1 was fraudulently executed, the Court needs not

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accept Christie’s bare conclusion of fraud. Further, Christie “do[es] not allege that

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any third party has ever come forward attempting to enforce the debt, making [her]

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claim yet more implausible.” Bernardi v. JPMorgan Chase Bank, N.A., No. C-111-

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04543 RMW, 2012 WL 33894, at *2 (N.D. Cal. Jan. 6, 2012).

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Second, because Christie does not allege that she was a party to the assignment,

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she lacks standing to challenge its validity. See Bleavins v. Demarest, 196 Cal. App.

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4th 1533, 1542 (2011) (“Someone who is not a party to a contract has no standing to

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challenge the performance of the contract . . . .” (internal quotation marks and

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alterations omitted)); see also Velasco v. Sec. Nat’l Mortg. Co., No. 10-00239 DAE

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KSC, 2011 WL 4899935, at *4 (D. Haw. Oct. 14, 2011) (“[A]s strangers to the

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Assignment and without any evidence or reason to believe that they are intended

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beneficiaries of that contract, Plaintiffs may not dispute the validity of the

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Assignment.”); Livonia Prop. Holdings, L.L.C. v. 12840–12976 Farmington Road

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Holdings, LLC, 717 F. Supp. 2d 724, 737 (E.D. Mich. 2010) (holding that a plaintiff

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who was not and is not a party to any assignments or Pooling and Servicing

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Agreement at issue “lacks standing to challenge their validity or the parties’

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compliance with those contracts”).

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Christie also appears to contend that various shortcomings in the assignments of
her loan have impermissibly separated her note from her deed of trust, and thus “the

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defendants are unable to conduct the trustee’s sale because they lack the power and

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right to do so.” (Appl. 16.) This argument is meritless, as California law does not

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require a foreclosing party to hold the note in order to foreclose under the power of

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sale contained in the deed of trust; it merely requires foreclosing parties to comply

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with certain statutory procedures. California Civil Code section 2924(a)(1) provides

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that a “trustee, mortgage or beneficiary or any of their authorized agents” may conduct

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the foreclosure process. Under California Civil Code section 2924(b)(4), a “person

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authorized to record the notice of default or the notice of sale” includes “an agent for

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the mortgagee or beneficiary, an agent of the named trustee, any person designated in

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an executed substitution of trustee, or an agent of that substituted trustee.” Because

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Christie does not contend that the party named in the Notice of Trustee’s Sale (a party

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so far unidentified in Christie’s pleadings) is not an agent of Wells Fargo, Saxon,

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Morgan Stanley, or FV-1, Christie does not establish that the foreclosing party does

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not have the power to conduct a foreclosure sale.

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Finally, the overarching theme of Christie’s entire Complaint and TRO is that

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she cannot ascertain who has the authority to conduct the trustee’s sale at issue. (See

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Appl. 7 (“This only raises the questions: ‘Who is actually the lender?’ and ‘Who is the

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proper person to be conducting the trustee’s sale?”).) Unfortunately for Christie,

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California’s comprehensive framework for the regulation of nonjudicial foreclosure

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sales in the state, set forth in Civil Code sections 2924 through 2924k, does not

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“provide for a judicial action to determine whether the person initiating the

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foreclosure process is indeed authorized.” Gomes v. Countrywide Home Loans, Inc.,

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192 Cal. App. 4th 1149, 1155 (2011). This is because allowing such suits “would

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fundamentally undermine the nonjudicial nature of the process and introduce the

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possibility of lawsuits filed solely for the purpose of delaying valid foreclosures.” Id.

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In sum, the Court concludes that Christie has not shown a likelihood of success

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on the merits of her action. Because Christie has not established a likelihood of

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success on the merits, the Court does not reach the remaining injunctive-relief factors.

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Cf. Winter, 555 U.S. 7, 22 (2008) (“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.” (emphasis added)).
V.

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CONCLUSION

Because Christie has not established a likelihood—or even possibility—of

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success on the merits, the Court is powerless to grant Christie’s temporary restraining

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order and suspend the November 2 trustee’s sale. Christie’s TRO Application is

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DENIED.

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IT IS SO ORDERED.
October 30, 2012
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HON. OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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