Coleman, et al v. GMAC Mortgage, et al

Filing 5

ORDER signed by District Judge Kimberly J. Mueller on 8/24/11 DENYING 3 Motion for TRO. (Donati, J)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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DWIGHT DAVID COLEMAN and
MILDRED R. COLEMAN,

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Plaintiffs,
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Civ. No. 11-2226 JAM GGH (PS)

vs.
GMAC MORTGAGE, et al.,

ORDER

Defendants.
/
This is one of the many cases this court faces as a result of the implosion of the

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mortgage industry. Like many others, plaintiffs allege they are the victims of predatory lending

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and through a series of missteps and misrepresentations lost the ability to modify the terms of

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their loan. Plaintiffs’ motion for a temporary restraining order was assigned to the undersigned

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given her availability when the motion was filed.

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The complaint includes thirteen state-law causes of action: (1) violation of

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California Financial Code § 50505; (2) accounting; (3) violation of California Commercial Code

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§ 9313; (4) violation of California Civil Code § 2932.5; (5) fraud and embezzlement; (6) slander

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of title; (7) cancellation of the cloud on title; (8) quiet title; (9) wrongful foreclosure and

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trustee’s sale; (10) rescission under California Civil Code § 1688; (11) violation of California

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Business and Professions Code § 17200, et seq. (unfair competition law); (12) civil conspiracy;
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and (13) injunctive relief. Plaintiffs have also filed a document called “Motion For Order To

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Removal [sic] Temporary Restraining Order.” ECF No. 3. They ask to remove Sacramento

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County Superior Court case number 11UD05069 to this court. Id. Although plaintiffs do not

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clearly identify the Sacramento County case as an unlawful detainer action, they have attached a

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Trustee’s Deed Upon Sale to their complaint, showing that their home was sold at public auction

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on March 30, 2011. ECF No. 1 at 76-77. They allege that the trustee’s sale occurred during the

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time they were attempting to negotiate a HAMP modification of their loan. ECF No. 3 at 1. In

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the TRO checklist required by this court, they aver that during a state court hearing this week,

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they notified defendants they would seek a TRO from this court. ECF 3-1 at 1.

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To the extent plaintiffs are attempting to remove an unlawful detainer action to

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this court, they have not followed the proper steps for removal: they have not filed the proper

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notice of removal identifying the grounds for removal or provided anything the court can

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identify as copies of the moving papers from the Superior Court action. 28 U.S.C. § 1446.

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Although at the time of their filing here plaintiffs were proceeding pro se, plaintiffs nevertheless

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are held to the rules of procedure applicable in this court. King v. Atiyeh, 814 F.2d 565, 567 (9th

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Cir. 1987) (“Pro se litigants must follow the same rules of procedure that govern other

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litigants.”).

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To the extent plaintiffs are seeking to restrain the unlawful detainer action in state

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court, they have not shown a sufficient likelihood of success on the merits. A temporary

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restraining order may be issued upon a showing “that immediate and irreparable injury, loss, or

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damage will result to the movant before the adverse party can be heard in opposition.” FED. R.

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CIV. P. 65(b)(1)(A). The purpose of such an order is to preserve the status quo and to prevent

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irreparable harm “just so long as is necessary to hold a hearing, and no longer.” Granny Goose

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Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439 (1974). In determining whether to

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issue a temporary restraining order, a court applies the factors that guide the evaluation of a

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request for preliminary injunctive relief: whether the moving party “is likely to succeed on the
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merits, . . . likely to suffer irreparable harm in the absence of preliminary relief, . . . the balance

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of equities tips in [its] favor, and . . . an injunction is in the public interest.” Winter v. Natural

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Resources Defense Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 374 (2008); see Stuhlbarg Int’l.

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Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir. 2001) (analyses for

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temporary restraining order and preliminary injunction “substantially identical”).

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Many of plaintiffs’ causes of action would, if successful, entitle them to damages

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but not prevent their eviction from the foreclosed property. See, e.g., Canales v. Federal Home

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Loan Mortg. Corp., 2011 WL 3320478, at *8 (C.D. Cal. Aug. 1, 2011) (describing elements of

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equitable claim for accounting); Lippitt v Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1043

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(9th Cir. 2003) (elements of claim for violation of unfair competition law).
To the extent plaintiffs contend that the foreclosure itself was wrongful, they base

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this claim largely on the argument that defendant MERS had no authority to act as the

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beneficiary under the Deed of Trust and thus had no authority to substitute the trustee or to

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transfer the Deed of Trust to subsequent beneficiaries. See, e.g., ECF No. 1 at 36-40. A majority

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of courts considering the role of MERS to date have concluded that MERS has all the rights of a

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beneficiary, from foreclosing on the property, to assigning its beneficial interest, to substituting a

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new trustee. See, e.g., Pantoja v. Countrywide Home Loans, 640 F.Supp.2d 1177, 1188-89

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(N.D. Cal. 2009) (foreclosing); Hensley v. Bank of New York Mellon, 2011 WL 2118810, at *2

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(E.D. Cal. May 27, 2011) (assigning beneficial interest). Given the current state of the law, this

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court believes these decisions are correct, meaning it must conclude plaintiffs have not

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demonstrated a likelihood of success on the claims that might allow them to stay in their home.

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Finally, to the extent plaintiffs seek to restrain the Sacramento County Superior

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Court from proceeding with the unlawful detainer action, they have not explained why this court

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should not abstain from entering such an order. Wadhwa v. Aurora Loan Services, LLC, 2011

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WL 2681483, at *3 (E.D. Cal. 2011) (Younger abstention counsels against interference in state

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unlawful detainer action); Scherbenske v. Wachovia Mortg., FSB, 626 F.Supp.2d 1052, 1056
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(E.D. Cal. 2009) (Colorado River abstention is appropriate in unlawful detainer proceedings).

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This brief order responds only to the questions plaintiffs have presented for

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expedited determination. It does not and cannot address the very real human cost of the

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foreclosure crisis, which is apparent in many of the cases currently before the court. Unless or

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until future filings call for additional determinations by this tribunal, it is for the defendants to

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determine whether to pursue the unlawful detainer action, a question beyond the scope of these

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proceedings.

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IT IS THEREFORE ORDERED that plaintiffs’ motion for a temporary
restraining order (ECF No. 3) is denied.
DATED: August 24, 2011.

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UNITED STATES DISTRICT JUDGE

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