Singh v. Bank of America, N.A. et al

Filing 22

MEMORANDUM and ORDER signed by Chief Judge Morrison C. England, Jr on 5/1/13: Plaintiff is order to pay $1,000 bond by Monday, May 6, 2013 14 . Pursuant to Plaintiff's filing, ReconTrust is dismissed and no longer a Defendant in this case. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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KEVIN SINGH,
Plaintiff,

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v.

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No. 2:13-cv-00729-MCE-AC

MEMORANDUM AND ORDER

BANK OF AMERICA, N.A.,
RECONTRUST COMPANY,
Defendant.

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On April 15, 2013, Kevin Singh (“Plaintiff”) filed this action against Bank of

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America (“BoA”) and ReconTrust. Plaintiff’s Complaint alleges BoA engaged in loan

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modification discussions with Plaintiff while ReconTrust simultaneously advanced the

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foreclosure process in contravention of California’s Homeowners Bill of Rights. On

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April 17, 2013, the Court granted Plaintiff’s Application for Temporary Restraining Order

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(“TRO”) preventing Defendant from selling Plaintiff’s home on April 22, 2013. (ECF

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Nos. 9, 11). On April 29, 2013, the Court held a preliminary injunction hearing. At issue

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was whether Defendant should be enjoined from foreclosing on Plaintiff’s home

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throughout the litigation. At the hearing, the Court orally GRANTED Plaintiff’s

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Application for a Preliminary Injunction for the reasons described below. (ECF No. 14.)

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BACKGROUND

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ReconTrust is a subsidiary of BoA. ReconTrust provides mortgage default

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services to BoA. Plaintiff owns real property and improvements thereon located in West

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Sacramento, California, which is located within the Eastern District of California

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(hereinafter referred to as “the property” unless specified otherwise). The property was

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purchased by Plaintiff with a loan obtained through BoA and evidenced by a promissory

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note. (ECF No. 5-2.) The promissory note is secured by a deed of trust which is

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recorded against the property. Plaintiff defaulted on the loan in 2008. (Id.) In 2012,

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Plaintiff and BoA began negotiating a modification of the loan that would allow plaintiff to

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remain current on his obligation. (Id.) During the negotiations, Plaintiff provided BoA

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detailed information about Plaintiff’s financial situation in exchange for the possibility of a

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lower monthly payment and interest rate. BoA has not made a written determination as

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to whether Plaintiff qualifies for a loan modification. (ECF No. 10.) Even though Plaintiff

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and BoA were negotiating a loan modification, ReconTrust went ahead with the

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foreclosure process.

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ANALYSIS

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A preliminary injunction is an extraordinary remedy, and Plaintiffs have the burden

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of proving the propriety of such a remedy by clear and convincing evidence. See

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Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S.

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423, 442 (1974). The party requesting preliminary injunctive relief must show that “he is

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likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence

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of preliminary relief, that the balance of equities tips in his favor, and that an injunction is

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in the public interest.” Winter v. Natural Resources Defense Council, 555 U.S. 7, 20

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(2008); Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009) (quoting Winter).

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Plaintiff’s Complaint alleges that the Court has diversity jurisdiction. In

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Defendant’s Opposition, Defendant argues the Court does not have jurisdiction to hear

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this suit because the parties are not completely diverse. (ECF No. 16.) Under 28 U.S.C.

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§ 1332(a), diversity jurisdiction exists where the amount in controversy exceeds $75,000

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and no defendant party shares citizenship in the same state as Plaintiff. Exxon Mobil

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Corp. v. Allapattah Servs., Inc. 545 U.S. 546, 553 (2005) (citing Strawbridge v. Curtiss,

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3 Cranch 267, 2 L. Ed. 435 (1806)). Article III courts are courts of limited jurisdiction,

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and are presumptively without jurisdiction over civil actions. Kokkonen v. Guardian Life

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Ins. Co. of Am., 511 U.S. 375, 377 (1994). The burden of establishing the contrary rests

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upon the party asserting jurisdiction. Id. In BoA’s Opposition and at the hearing, BoA’s

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counsel asserted that ReconTrust is a citizen of California which destroys the complete

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diversity citizenship requirement under 28 U.S.C., section 1332(a). At the hearing, the

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Court expressed concern over BoA’s lack of admissible proof that ReconTrust’s “main

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office” is located in California. Regardless, Plaintiff agreed to dismiss Defendant

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ReconTrust within two days of the hearing to prevent the Court from dismissing the

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entire case for lack of subject matter jurisdiction. On April 30, 2013, Plaintiff filed a

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Notice of Voluntary Dismissal. (ECF No. 21.) Now, Bank of America, a citizen of North

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Carolina, is the remaining Defendant and it is diverse from Plaintiff, a citizen of

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California. Thus, the Court has diversity jurisdiction to hear this case.
BoA and other lenders’ practice of negotiating with homeowners in default on their

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loans for a loan modification while simultaneously advancing the foreclose process is

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commonly referred to as “dual tracking.” Dual tracking has been heavily criticized by

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both state and federal legislators. In July 2012, California passed legislation referred to

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as “The California Homeowner Bill of Rights” which prohibits dual tracking. As of

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January 1, 2013, “The California Homeowner Bill of Rights went into effect and it offers

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homeowners greater protection during the foreclosure process. Cal. Civ. Code

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§ 2923.6(b) (2013).

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Section 2923.6(b) states “it is the intent of the legislature that the mortgage servicer offer

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the borrower a loan modification or work out a plan if such a modification or plan is

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consistent with its contractual or other authority.” The statute further provides that “if a

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borrower submits a complete application for a first lien loan modification . . . the

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mortgage servicer . . . shall not record a notice of default or notice of sale, or conduct a

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trustee’s sale, while the complete first lien loan modification application is pending.” Cal.

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Civ. Code § 2923.6(c) (2013).

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At the preliminary injunction hearing, Plaintiff maintained that BoA never
responded to Plaintiff’s complete application for a first lien loan modification. BoA does

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not dispute Plaintiff’s assertion. Neither Plaintiff nor BoA provided the Court with any

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new evidence at the preliminary injunction hearing. Because BoA has failed to respond

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to Plaintiff’s application for a first lien loan modification after January 1, 2013, section

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2923.6 applies to this case and prevents BoA from conducting a trustee’s sale while

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Plaintiff’s application for a first lien loan modification is pending.

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Accordingly, Plaintiff has adequately shown he is likely to succeed on the merits

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in light of California’s new Homeowners’ Bill of Rights. Plaintiff has also met the

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remaining factors of the preliminary injunction standard. Plaintiff has demonstrated that

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Plaintiff will suffer “irreparable harm” if he loses his home because “[he] and [his] family

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will have nowhere to go and nowhere to stay. . . [his] children will need to leave their

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schools.” (ECF No. 5-2.) Further, the balance of equities tips in Plaintiffs’ favor as a

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TRO merely delays Defendant’s right to foreclose. Finally, an injunction is in the public’s

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interest as it enforces a recently enacted law designed to protect the public.

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BoA asked the Court to order Plaintiff to make $2,700 monthly bond payments if

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the Court granted Plaintiff’s Application for a Preliminary Injunction. (ECF No. 16.)

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Federal Rule of Civil Procedure 65(c) states “the court may issue a preliminary injunction

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order…only if the movant gives security in an amount that the court considers proper to

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pay costs and damages sustained by any party found to have been wrongfully enjoined

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or restrained.” (Emphasis added.)
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In light of Rule 65, the Court orders Plaintiff to post a $1,000 bond within seven days of

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the date of the preliminary injunction hearing.

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CONCLUSION

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Accordingly, the Court GRANTS Plaintiff’s Application for a Preliminary Injunction

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and orders Plaintiff to pay $1,000 bond by Monday, May 6, 2013. (ECF No. 14.)

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Pursuant to Plaintiff’s filing, ReconTrust is dismissed and no longer a Defendant in this

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case. (ECF No. 21.)

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IT IS SO ORDERED.
DATE: May 1, 2013
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MORRISON C. ENGLAND, JR., CHIEF JUDGE
UNITED STATES DISTRICT COURT

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