Lazaro Coyotzi, et al v. Countrywide Financial Corporation et al

Filing 14

ORDER ON MOTION FOR TEMPORARY RESTRAINING ORDER signed by District Judge Lawrence J. O'Neill on August 11, 2009. (Lira, I)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Defendants. 16 17 18 19 20 21 22 23 24 25 26 27 28 / INTRODUCTION Plaintiffs Lazaro S. Coyotzi and Seyla Coyotzi (collectively "plaintiffs") seek a temporary restraining order ("TRO") to enjoin an August 14, 2009 unlawful detainer trial in Stanislaus County Superior Court following the trustee's sale of their Modesto home. Plaintiffs allege 14 tort, breach of contract and related claims arising from their home loan, default and foreclosure. For the reasons discussed below, this Court DENIES plaintiffs a TRO to enjoin the unlawful detainer trial. DISCUSSION Younger Abstention The abstention doctrine under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746 (1971), precludes plaintiffs' requested injunctive relief. Younger abstention is proper where (1) there are ongoing state judicial proceedings, (2) that implicate important state interests, and (3) there is an adequate opportunity in the state proceedings to raise federal questions. Middlesex County Ethics Comm. v. Garden State Bar 1 vs. COUNTRYWIDE FINANCIAL CORPORATION, et al., LAZARO S. COYOTZI, et al., Plaintiffs, CASE NO. CV F 09-1036 LJO SMS ORDER ON MOTION FOR TEMPORARY RESTRAINING ORDER (Doc. 9.) IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

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Ass'n, 457 U.S. 423, 432, 102 S.Ct. 2515, 2521 (1982); Confederated Salish v. Simonich, 29 F.3d 1398, 1405 (9th Cir. 1994). The "policy objective behind Younger abstention is to avoid unnecessary conflict between state and federal governments." United States v. Morros, 268 F.3d 695, 707 (9th Cir. 2001). Younger permits "state courts to try state cases free from interference by federal courts," particularly where the party to the federal case may fully litigate his claim before the state court. Hicks v. Miranda, 422 U.S. 332, 349, 95 S.Ct. 2281 (1975) (quoting Younger, 401 U.S. at 43, 91 S.Ct. 746). Younger "contemplates the outright dismissal of the federal suit, and the presentation of all claims, both state and federal, to the state courts." Gibson v. Berryhill, 411 U.S. 564, 577, 93 S.Ct. 1689 (1973); Beltran v. State of California, 871 F.2d 777, 782 (9th Cir. 1988). "Younger generally directs federal courts to abstain from granting injunctive or declaratory relief that would interfere with pending state judicial proceedings." Martinez v. Newport Beach City, 125 F.3d 777, 781 (9th Cir. 1997), overruled on other grounds, Green, 255 F.3d 1086. Plaintiffs' requested injunctive relief would interfere with underlying state court proceedings. Younger directs this Court to abstain from doing so. The state court proceedings provide plaintiffs an adequate opportunity to address issues raised in their papers seeking injunctive relief. This Court is not in a position to interject into ongoing state court proceedings. Injunction Merits As to the merits, plaintiffs fail to demonstrate that they are entitled to injunctive relief. The purpose of a preliminary injunction is to preserve the status quo if the balance of equities so heavily favors the moving party that justice requires the court to intervene to secure the positions until the merits of the action are ultimately determined. University of Texas v. Camenisch, 451 U.S. 390, 395 (1981). A preliminary injunction is available to a plaintiff who "demonstrates either (1) a combination of probable success and the possibility of irreparable harm, or (2) that serious questions are raised and the balance of hardship tips in its favor." Arcamuzi v. Continental Air Lines, Inc., 819 F. 2d 935, 937 (9th Cir. 1987). Under either approach the plaintiff "must demonstrate a significant threat of irreparable injury." Arcamuzi, 819 F.2d at 937. Also, an injunction should not issue if the plaintiff "shows no chance of success on the merits." Arcamuzi, 819 F.2d at 937. At a bare minimum, the plaintiff "must demonstrate a fair chance of success of the merits, or questions serious enough to require litigation." 2

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Arcamuzi, 819 F.2d at 937. When a government agency is involved, it must "be granted `the widest latitude in the dispatch of its own internal affairs,'" Gomez v. Vernon, 255 F.3d 1118, 1128 (9th Cir. 2001) (quoting Rizzo v. Goode, 423 U.S. 362, 378-79, 96 S.Ct. 598, 608 (1976)), and "[w]hen a state agency is involved, these considerations are, if anything, strengthened because of federalism concerns," Gomez, 255 F.3d at 1128. "[A]ny injunctive relief awarded must avoid unnecessary disruption to the state agency's `normal course of proceeding.'" Gomez, 255 F.3d at 1128 (quoting O'Shea v. Littleton, 414 U.S. 488, 501, 94 S.Ct. 669, 679 (1974)). Plaintiffs fail to demonstrate probable success on their claims or significant threat of irreparable injury, especially given that the underlying state proceedings apparently continue. Plaintiffs make a meaningless attempt to demonstrate a fair chance of success on the merits or the existence of serious questions to require litigation. In essence, plaintiffs claim they were unqualified for their home loan and that defendants breached fiduciary and related duties. "The relationship between a lending institution and its borrower-client is not fiduciary in nature." Nymark v. Heart Fed. Savings & Loan Assn, 231 Cal.App.3d 1089, 1093, n. 1, 283 Cal.Rptr. 53 (1991) (citing Price v. Wells Fargo Bank, 213 Cal.App.3d 465, 476-478, 261 Cal.Rptr. 735 (1989)). A commercial lender is entitled to pursue its own economic interests in a loan transaction. Nymark, 231 Cal.App.3d at 1093, n. 1, 283 Cal.Rptr. 53(citing Kruse v. Bank of America, 202 Cal.App.3d 38, 67, 248 Cal.Rptr. 217 (1988)). Absent "special circumstances" a loan transaction is "at arms-length and there is no fiduciary relationship between the borrower and lender." Oaks Management, 145 Cal.App.4th at 466, 51 Cal.Rptr.3d 561 ("the bank is in no sense a true fiduciary"). This Court is familiar with plaintiffs' claims which many prior defaulted borrowers have pursued unsuccessfully. Plaintiffs offer nothing to suggest a fair chance of success on the merits. Plaintiffs' TRO request appears as a further delay tactic given its belated filing mere days before the unlawful detainer trial. Plaintiffs face a pending motion to dismiss to cast further doubt on probable success of their claims. Furthermore, equitable remedies are "unavailable absent a showing of irreparable injury, a requirement that cannot be met where there is no showing of any real or immediate threat that the 3

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plaintiff will be wronged again ­ a `likelihood of substantial and immediate irreparable injury.'" City of Los Angeles v. Lyons, 461 U.S. 95, 111, 103 S.Ct. 1660, 1670 (1983) (quoting O'Shea, 414 U.S. at 502, 94 S.Ct. at 679). In this instance, plaintiffs allege no identifiable, potentially repeatable wrongs, especially given completion of the trustee's sale. If plaintiffs prevail, their injury will not go unrecompensed because they have an adequate remedy at law. Lyons, 461 U.S. at 111, 103 S.Ct. at 1670. Plaintiffs are not entitled to equitable relief because there is no allegation that they will be wronged again. CONCLUSION

For the reasons discussed above, this Court DENIES plaintiffs a TRO to enjoin the unlawful detainer trial. IT IS SO ORDERED. Dated: 66h44d August 11, 2009 /s/ Lawrence J. O'Neill UNITED STATES DISTRICT JUDGE

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