Salinas et al v. Wachovia Mortgage et al

Filing 26

ORDER signed by Judge John A. Mendez on 7/26/2011 DENYING 10 plaintiffs' Motion for Preliminary Injunction. (Reader, L)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 17 MAMERTO Q. and MINDA C. SALINAS, ) ) Plaintiffs, ) ) v. ) ) WACHOIVIA MORTGAGE, a division ) of WELLS FARGO BANK, N.A.; CAL- ) WESTERN RECONVEYANCE ) CORPORATION; and DOES 1-50, ) inclusive, ) ) Defendants. ) Case No. 2:11-CV-01220 JAM-DAD ORDER DENYING PLAINTIFFS‟ MOTION FOR PRELIMINARY INJUNCTION This matter comes before the Court on Plaintiffs Mamerto Q. 18 19 Salinas and Minda C. Salinas‟s (“Plaintiffs”) Motion for a 20 Preliminary Injunction (Doc. # 10). 21 division of Wells Fargo Bank, N.A. (“Defendant”) opposes the motion 22 (Doc. # 17).1 Defendant Wachovia Mortgage, a 23 I. 24 On or about March 1, 2007, Plaintiffs obtained a $548,000.00 25 26 FACTUAL AND PROCEDURAL BACKGROUND adjustable rate loan from Defendant for a property in Stockton, 27 1 28 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for July 20, 2011. 1 1 California. 2 May 2010, the parties entered into a written forbearance agreement. 3 Plaintiffs defaulted on that agreement and Defendants recorded a 4 notice of default on October 27, 2010. 5 By 2010, Plaintiffs began to default on the loan so in Plaintiffs filed the instant action alleging eleven causes of 6 action in the California Superior Court in the County of San 7 Joaquin. 8 Act, 15 U.S.C. § 1601, et seq. (“TILA”) and ten violations of 9 California state law. Plaintiffs alleged a violation of the Truth in Lending Defendant removed the action to this Court 10 and filed a Motion to Dismiss the Complaint. Plaintiffs also filed 11 this Motion for a Preliminary Injunction, requesting that the Court 12 enjoin Defendant from a foreclosure sale on Plaintiffs‟ property.2 13 14 II. 15 A. 16 Legal Standard 1. 17 OPINION Preliminary Injunction “A plaintiff seeking a preliminary injunction must establish 18 that he is likely to succeed on the merits, that he is likely to 19 suffer irreparable harm in the absence of preliminary relief, that 20 the balance of equities tips in his favor, and that an injunction 21 is in the public interest.” 22 v. City of Los Angeles, 559 F.3d 1046, 1052. (9th Cir. 2009), 23 quoting Winters v. Natural Resources Defense Council, Inc., 55 U.S. 24 20, 374 (2008). 25 /// 26 /// American Trucking Associations, Inc. 27 2 28 Defendant claims the foreclosure sale will occur on July 27, 2011; in correspondence to the Court, Plaintiff claims the foreclosure sale will occur on July 28, 2011. 2 1 B. 2 3 Claims for Relief 1. Likelihood of Success on the Merits Plaintiffs are unlikely to succeed on the merits. Plaintiffs‟ 4 TILA claim lacks legal support. Plaintiffs argue that Defendant 5 failed to clearly communicate the risks of the loan, but TILA does 6 not require the lender to do so. 7 Additionally, the TILA claim is time barred. 8 limitations is one year if the plaintiff seeks damages and three 9 years if the plaintiff seeks a rescission of the loan. See, e.g., 15 U.S.C. § 1637(a). The statute of See 15 10 U.S.C. §§ 1640(e), 1635(f). 11 2007, so the TILA claim should have been asserted no later than 12 March 2008 for a damages claim or March 2010 for the rescission 13 claim. 14 Plaintiffs‟ TILA claim is time-barred. 15 Here, Plaintiffs‟ loan closed in March Plaintiffs filed their Complaint on April 4, 2011. Thus, Plaintiffs‟ ten state law claims are also unlikely to succeed 16 because they are all preempted by the Home Owners‟ Loan Act, 12 17 U.S.C. § 1461, et seq. (“HOLA”). 18 entirely based on the origination of Plaintiffs‟ mortgage loan and, 19 to a lesser extent, Defendant‟s subsequent servicing of the loan. 20 HOLA regulation 12 C.F.R. §§ 560.2(b)(4), (9), and (10) preempt 21 claims based on the “origination,” the “terms of credit,” or 22 “disclosure” regarding mortgage loans. 23 §§ 560.2(b)(5), (10), and (4) preempt the servicing of the loan and 24 pertain to “loan-related fees [and] charges”, “processing [or] 25 servicing” and the extent the fees and charges were authorized by 26 the loan‟s “terms of credit.” 27 Complaint fall within one of the categories listed under 12 C.F.R. 28 § 560.2(b), “the analysis will end there; the law is preempted.” The claims in the Complaint are HOLA regulation 12 C.F.R. When allegations within the 3 1 Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 1005 (9th Cir. 2 2008). 3 In addition to being preempted, the fraud claim and the 4 Section 2923.5 claim are legally defective. The statute of 5 limitations for fraud is three years, so Plaintiffs‟ fraud claim 6 became time-barred as of March 2010. 7 § 338(d). 8 Defendant did not owe Plaintiffs any duty of care or disclosure. 9 Under California law, a financial institution owes no duty of care See Code of Civil Procedure Furthermore, the fraud claim will not succeed because 10 to a borrower when the institution‟s involvement in the loan 11 transaction does not exceed the scope of its conventional role as a 12 mere lender of money. 13 Assn., 231 Cal.App.3d 1089, 1096 (Cal. Ct.App.3d 1991). 14 the violation of Civil Code § 2923.5 claim fails because Plaintiffs 15 have not alleged a credible offer to tender. 16 law, „[i]n obtaining rescission or cancellation, the rule is that 17 the complainant is required to do equity, as a condition to [her] 18 obtaining relief, by restoring to the defendant everything of value 19 which the plaintiff has received in the transaction.‟” 20 Countrywide Home Loans Inc., No. 09-CV-2694, 2010 WL 2925440, *3 21 (S.D. Cal. July 23, 2010), citing Fleming v. Kagan, 189 Cal.App.2d 22 791 (Cal.App.2d. 1961). 23 2. 24 Nymark v. Heart Federal Savings & Loan Finally, “Under California Davidson v. Irreparable Harm Clearly, the loss of a home is a serious injury. However, “it 25 is appropriate to deny an injunction where there is no showing of 26 reasonable probability of success, even though the foreclosure will 27 create irreparable harm, because there is no justification in 28 delaying that harm where, although irreparable, it is also 4 1 inevitable.” 2 03490, 2010 WL 2923300, *8 (E.D. Cal. July 26, 2010), quoting 3 Jessen v. Keystone Savings & Loan Ass‟n., 142 Cal.App.3d 454, 459 4 (Cal. Ct.App.4d 1983). 5 probability of success on the merits, as discussed above. 6 Additionally, although foreclosure will create irreparable harm, 7 foreclosure is inevitable because Plaintiffs have not repaid the 8 loan nor alleged their ability to repay the loan. 9 10 3. Linder v. Aurora Loan Servicing, LLC, No. 2:09-CV- Plaintiffs have not shown a reasonable Balance of the Equities While denying the injunction would cause Plaintiffs to lose 11 their home, Defendant would conversely be injured if the 12 preliminary injunction were granted because it would be forced to 13 hold onto a depreciating security interest, without any ability to 14 stop or slow its ongoing losses. 15 unlikely to succeed and that foreclosure is inevitable, the balance 16 of the equities tips towards the Defendant which should not be 17 forced to hold on to depreciating property while Plaintiffs attempt 18 to delay the inevitable foreclosure. 19 4. Given that Plaintiffs‟ claims are Public Interest 20 Plaintiffs, who bear the burden of demonstrating an injunction 21 is in the public interest, Winter, 129 S.Ct. at 374, do not provide 22 a persuasive argument that granting the injunction would further 23 the public interest. 24 accurately resolving ownership of real property and preventing 25 improper non-judicial foreclosures, Plaintiffs do not allege that 26 Defendant does not properly hold the Note or that the foreclosure 27 would be improper. 28 and servicing of the loan. While there is a strong interest in Plaintiffs‟ allegations concern the origination Plaintiffs‟ claims are unlikely to 5 1 succeed, as a matter of law. Therefore, Plaintiffs fail to 2 demonstrate how delaying the foreclosure would serve the public 3 interest. 4 5 III. ORDER 6 For the reasons set forth above, 7 Plaintiffs‟ Motion for a Preliminary Injunction is DENIED. 8 IT IS SO ORDERED. 9 Dated: July 26, 2011 ____________________________ JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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