Nelson LAC v. Nationstar Mortgage LLC

Filing 149

ORDER signed by District Judge Kimberly J. Mueller on 8/7/2017 DENYING 123 Stipulated Request to Vacate 24 , 41 , 54 , 61 , 104 Interlocutory Orders. (Michel, G.)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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Plaintiff,

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No. 2:15-cv-00523-KJM-DB

NELSON LAC,

ORDER

v.
NATIONSTAR MORTGAGE, LLC,

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Defendant.

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On December 8, 2016, the court heard argument on the parties’ stipulated request

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filed on September 29, 2016, to vacate five of the court’s prior orders. Roger G. Kosla appeared

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for plaintiff Nelson Lac, and Jered T. Ede appeared telephonically for defendant Nationstar.

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After considering the reasoning contained within the stipulation as well as the parties’ arguments

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at hearing, the court DENIES the request.

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I.

BACKGROUND1
This case concerns a dispute over the propriety of foreclosure proceedings that

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began in 2010. In 2006, Lac obtained a mortgage loan with a principal amount of $480,000, and

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Because the parties attached no filings to the pending stipulated request for vacatur, the
court draws on documents in the record to supply the background.
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the loan was secured by a deed of trust recorded against his home on Citrus Avenue in

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Sacramento, California. See Req. for Judicial Notice (“RJN”) Ex. L, ECF No. 67.2 In 2008,

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Lac’s construction business closed, and he fell behind on his mortgage payments. Lac Decl. ¶ 3,

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ECF No. 56-2. In November 2010, a notice of default was recorded, RJN Ex. M, and a few

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months later, a notice of trustee’s sale was recorded, id. Ex. N. For reasons not disclosed by the

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record, the sale did not go forward.

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Nationstar began servicing Lac’s loan in July 2013 and is the loan’s current

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servicer. Janati Decl. ¶¶ 2, 5, ECF No. 66-1. On July 1, 2014, Lac’s attorney at the time, Aldon

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Bolanos, sent Nationstar two letters requesting Nationstar consider a loan modification. Bolanos

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Decl. Ex. 1 at 3–4, ECF No. 56-4. On July 31, Nationstar sent Bolanos a letter inviting Lac to

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apply for payment assistance options, apologizing that it had forgotten to forward an application

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for a loan modification as Bolanos had previously requested, and providing details to guide Lac in

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his response. Janati Decl. Ex. A. Nationstar received no response from Bolanos or Lac. Janati

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Decl. ¶ 9.

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On October 21, 2014, Bolanos sent Nationstar another letter. Bolanos Decl. Ex. 1,

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at 6. In this letter, Bolanos claimed Nationstar had not responded to his request for a loan

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modification application. Id. Nationstar wrote back on October 28, 2014, explaining it had

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previously sent the loan modification package for Lac to fill out and return, and attaching a new

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copy of the application package to that letter. Janati Decl. Ex. B. Bolanos and Lac again did not

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respond. Janati Decl. ¶ 12.

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A. Complaint

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Lac filed a complaint in this court on March 9, 2015, represented by Bolanos.

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ECF No. 1. Among other things, Lac’s complaint alleged Nationstar ignored the letters Bolanos

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sent in July and October 2014. Id. ¶¶ 3–6. Consequently, Lac alleged the foreclosure

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proceedings against his property were commenced in violation of California Civil Code § 2923.6

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The court’s prior orders took judicial notice of this document and the other matters of
public record cited in this order. See Fed. R. Evid. 201 (governing judicial notice).
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and § 2923.7. Id. Lac requested damages, declaratory relief, an equitable accounting, interest,

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attorneys’ fees and costs. Id. at 7–8.

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Nationstar did not timely file a responsive pleading to Lac’s complaint, so in

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September 2015, Lac moved for the entry of Nationstar’s default. ECF No. 12. On November

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18, 2015, the court instructed the Clerk’s Office to enter Nationstar’s default. ECF No. 30.

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Because the matter before the court is a request to vacate five prior interlocutory
orders, the court briefly reviews the background and nature of each order.

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B. Three Temporary Restraining Orders

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Based on the premise that the scheduled foreclosure in this case was being

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conducted in violation of California Civil Code § 2923.6 and § 2923.7, Bolanos filed three ex

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parte requests for temporary restraining orders (“TRO”) on Lac’s behalf. ECF Nos. 13, 38, 49.

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Nationstar did not oppose the first request, and in fact stipulated to a sixty-day suspension of

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foreclosure proceedings. Mins., ECF No. 23. Nationstar opposed the second and third TRO

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requests, but only to explain the absence of any emergency due to its voluntary postponement of

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the date of foreclosure proceedings. ECF Nos. 39, 52. Nationstar did not refute the factual basis

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of any TRO request. See ECF No. 52. The court granted all three requests for TROs and

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temporarily barred the foreclosure sales. Order Oct. 14, 2015, ECF No. 24; Order Dec. 29, 2015,

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ECF No. 41; Order Mar. 7, 2016, ECF No. 54.

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C. Order Granting Attorneys’ Fees

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After the court granted the first TRO, Bolanos filed requests for an award of

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attorneys’ fees for obtaining the TRO on Lac’s behalf. ECF Nos. 34, 36. At the time, Nationstar

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was in default, so it filed no opposition. The court awarded attorneys’ fees of $6,660. See ECF

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No. 61 at 6–8 (citing Cal. Civ. Code § 2924.12 and Monterossa v. Superior Court of Sacramento

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Cty., 237 Cal. App. 4th 747, 753, 757 (2015)). In the same order, the court set aside Nationstar’s

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default after finding the default was inadvertent, Nationstar’s defense was potentially meritorious,

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and the decision to set aside default would not prejudice Lac’s case. Id. at 4–6.

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D. Order Denying Motion to Reconsider

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Nationstar then moved for reconsideration of the fee award, arguing the court’s

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order granting attorneys’ fees was “clearly erroneous” because California law limits attorneys’

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fee awards to preliminary injunctions, not temporary restraining orders. Mot. Recons. 5–9, ECF

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No. 69. The court denied Nationstar’s request for reconsideration, explaining at length why

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Nationstar’s distinction between TROs and preliminary injunctions was irrelevant for purposes of

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awarding attorneys’ fees. ECF No. 104.

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II.

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STIPULATED REQUEST TO VACATE PRIOR ORDERS
On September 9, 2016, the court suspended Bolanos from practice in this district

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for conduct in this case, namely authorizing other attorneys to use his credentials to electronically

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file documents he signed on his client’s behalf while he was suspended from practice. ECF No.

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120; see also Order Aug. 17, 2016, ECF No. 8, at 2 (stating findings upon which later suspension

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order was based). Soon thereafter, Lac retained his current attorney, Roger Kosla. Substitution

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Notice, ECF No. 112. On September 29, 2016, Mr. Kosla and counsel for Nationstar submitted a

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stipulated request to vacate the three orders granting Lac’s ex parte TRO requests, the court’s

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order granting attorneys’ fees in connection with obtaining the first TRO and the court’s order

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denying Nationstar’s motion to reconsider the attorneys’ fee award. ECF No. 123. The parties

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base their request to vacate on an assertion that Bolanos misrepresented the foundational facts to

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the court, and that the court’s orders were therefore wrongly decided. Id. at 2.

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A. Legal Standard

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There are several methods by which a party may request that a court alter its prior

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orders, including a request to reconsider, reverse, strike or vacate. In a motion to reconsider or

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reverse, the party is asking the court to reconsider a prior decision and come to an alternative

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conclusion. In a motion to strike or vacate, the party is requesting that the court eliminate its

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prior order from the record entirely. The latter method, vacatur, is what the parties request in this

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case. See generally 56 Am. Jur. 2d Motions, Rules, and Orders § 40.

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“As long as a district court has jurisdiction over [a] case, then it possesses the
inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen
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by it to be sufficient.” City of L.A. v. Santa Monica BayKeeper, 254 F.3d 882, 885 (9th Cir.

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2001) (citation, quotation marks, and emphasis omitted). Rule 54(b) of the Federal Rules of Civil

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Procedure expressly authorizes courts to revise “any order or other decision . . . that adjudicates

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fewer than all the claims or the rights and liabilities of fewer than all the parties . . . at any time

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before the entry of a judgment adjudicating all the claims and all the parties’ rights and

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liabilities.” Fed. R. Civ. P. 54(b).

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Relief from a prior judgment or order is appropriate where it is necessary to

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correct clear error or prevent manifest injustice, where new evidence has become available, or

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where there has been an intervening change in controlling law. Cachil Dehe Band of Wintun

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Indians v. California, 649 F. Supp. 2d 1063, 1069 (E.D. Cal. 2009) (citing Sch. Dist. No. 1J

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Multnomah Cty. v. AC&S Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). “To succeed [on such a

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request], a party must set forth facts or law of a strongly convincing nature to induce the court to

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reverse its prior decision.” Knight v. Rios, No. 09-00823, 2010 WL 5200906, at *2 (E.D. Cal.

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Dec. 15, 2010).

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The Supreme Court has emphasized the importance of considering the public

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interest when contemplating the equitable remedy of vacatur: “Judicial precedents are

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presumptively correct and valuable to the legal community as a whole. They are not merely the

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property of private litigants and should stand unless a court concludes that the public interest

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would be served by a vacatur.” U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18,

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26–27 (1994) (“Bonner Mall”) (quoting Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips

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Corp., 510 U.S. 27, 40 (1993) (Stevens, J., dissenting)). Thus, “quite apart from any

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considerations of fairness to the parties,” vacatur disturbs the “orderly operation of the federal

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judicial system” by deviating from the primary route Congress has prescribed for parties who

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seek relief from the legal consequences of court judgments: appeal as of right and certiorari. Id.

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at 27.

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In American Games, Inc. v. Trade Products, Inc., the Ninth Circuit distinguished

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Bonner Mall in holding that district courts, due to the “fact-intensive nature of the inquiry

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required,” enjoy “greater equitable discretion when reviewing [their] own judgments than do
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appellate courts operating at a distance.” 142 F.3d 1164, 1170 (9th Cir. 1998). Therefore, a

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district court in this circuit may vacate one of its own judgments absent exceptional

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circumstances. See id. at 1167–68. The proper approach is to apply an “equitable balancing

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test,” which balances the hardships of the parties and the public interests at stake. Id. at 1166;

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Zinus, Inc. v. Simmons Bedding Co., No. C 07-3012 PVT, 2008 WL 1847183, at *1 (N.D. Cal.

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Apr. 23, 2008). Some district courts have said that in applying this balancing test, a court should

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consider “the parties’ desire to avoid any potential preclusive effect; the parties’ interest in

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conserving their resources; the public interest in the orderly operation of the federal judicial

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system; and the potential to conserve judicial resources.” White v. Shen, No. C09-0989 BZ, 2011

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WL 2790475, at *1 (N.D. Cal. Jul. 13, 2011) (citation omitted); see also Ohio Willow Wood Co.

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v. Thermo–Ply, Inc., 769 F.Supp.2d 1065 (E.D. Tex. 2011); White v. Shen, No. C09-0989 BZ,

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2011 WL 2790475, at *1 (N.D. Cal. July 13, 2011); Cisco Sys., Inc. v. Telcordia Tech., Inc., 590

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F. Supp. 2d 828, 831 (E.D. Tex. 2008) (analyzing these same factors in equitable balancing test).

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In both Bonner Mall and American Games, the questions presented related to

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requests to vacate judgments rather than orders. The instant case has not reached the judgment

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stage and the parties are asking the court to vacate interlocutory orders. In a situation such as

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this, as provided by Rule 54(b), “[a] court has complete power over interlocutory orders . . . and

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has authority to revise them when it is ‘consonant with equity’ to do so.” De La O v. Arnold-

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Williams, Nos. CV-04-0192 EFS, CV-05-0280 EFS, 2008 WL 4192033, at *1 (E.D. Wash.

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Aug. 27, 2008) (quoting Simmons v. Brier Bros. Co., 258 U.S. 82 (1922)); see also Persistence

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Software, Inc. v. The Object People, Inc., 200 F.R.D. 626, 627 (N.D. Cal. 2001) (standard for

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vacatur of nonfinal orders under Rule 54(b) less rigid than for vacatur of final judgment under

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Rule 60(b)).

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The court should consider several factors when determining if vacatur is

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appropriate. Such factors, as relevant here, include “whether all the parties involved in the

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ruling(s) request and agree to vacatur as a condition of a proposed settlement of the action; . . .

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whether a former party to the action would be adversely affected by a vacatur; and whether the

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costs of continuing the action with uncertain results are outweighed by the benefits of the
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proposed settlement of the action.” De La O, 2008 WL 4192033, at *1; cf. RE2CON, LLC v.

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Telfer Oil Co., 2:10-CV-00786-KJM, 2013 WL 1325183 (E.D. Cal. Mar. 29, 2013). However the

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court assesses a party’s request, it must be guided by equitable considerations in resolving it.

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Cuviello v. Cal Expo, 2014 WL 1379873, at *3 (E.D. Cal. Apr. 8, 2014).

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B. Discussion

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In urging the court to vacate five prior orders, the parties cite no case law and

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provide no evidence to support their request. See ECF No. 123. They also do not engage in any

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equitable balancing of interests, and instead they argue the TROs were based on erroneous facts.

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They assert plaintiff’s new counsel, Mr. Kosla, recently discovered Nationstar did, in fact,

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respond to Lac’s letters requesting a loan modification, and that Mr. Bolanos did not reply to

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Nationstar’s letters, did not contact Nationstar prior to filing this lawsuit, and did not submit any

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loan modification application to Nationstar despite being presented with the opportunity. Id. at 2.

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Based on this new information, Lac now agrees Nationstar did not violate California law

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justifying a TRO; he agrees no TRO should have issued. Id. Because the TROs were based on

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erroneous facts, they say, the court’s order granting attorneys’ fees in connection with the first

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TRO request was similarly unsupported. The parties’ stipulation offers no support for these

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blanket assertions or any proof of the facts Mr. Kosla says he recently discovered.

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Even if the parties’ request were supported, balancing the equities weighs against

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vacatur. Not one of the prior orders has an ongoing impact in the case. No order made legal or

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factual determinations that bind the parties or establish law of the case. The last TRO expired in

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June of 2016. Regarding the attorneys’ fees award, the parties stipulate that Lac may retain the

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fees awarded. Id. at 3.

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Moreover, vacatur is not a condition of any proposed settlement of this action. See

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Bonner Mall, 513 U.S. 26 (settlement conditioned on vacatur weighed in favor of granting request

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to vacate). Vacatur also would not alter the case factually so as to advance settlement

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negotiations or avoid needless motions on the merits in the future. Thus, the general judicial

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policy favoring settlement is not implicated. See Major League Baseball Props., Inc. v. Pac.

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Trading Cards, Inc., 150 F.3d 149, 152 (2d Cir. 1998) (circumstances surrounding motion and

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settlement so exceptional that vacatur was appropriate).

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The court also notes the negative impact vacatur would have on the orderly

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progress of this litigation. One order covered by the parties’ stipulation is an order for which the

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court previously denied a request to reconsider. To vacate that order now would signal that any

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court order is fair game after the fact. Cf. Bonner Mall, 513 U.S. at 27 (“To allow a party who

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steps off the statutory path [of appeal following an unfavorable judgment] to employ the

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secondary remedy of vacatur as a refined form of collateral attack on the judgment would . . .

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disturb the orderly operation of the federal judicial system.”); Philip Servs. Corp. v. City of

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Seattle, Civil Action No. H-06-2518, 2007 WL 3396436 (S.D. Tex. Nov. 17, 2007) (quoting

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Cater v. Rosenberg & Estis, No. 95 CIV. 10439(DLC), 1999 WL 13036, at *3 (S.D.N.Y. 1999)

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(“there is a ‘systemic’ interest in preserving district court judgments because ‘they play a

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significant role in the development of decisional law by providing guidance to private parties with

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respect to the availability of remedies and to litigation strategy,’ and they ‘can also be useful to

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the courts of appeals in rendering decisions.”). The public interest in the orderly progress of a

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case weighs against vacatur here.

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III.

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CONCLUSION
For the foregoing reasons, the court DENIES the parties’ stipulated request to

vacate five interlocutory orders of the court (ECF Nos. 24, 41, 54, 61, 104) in its entirety.

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This resolves ECF No. 123.

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IT IS SO ORDERED.

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DATED: August 7, 2017.

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UNITED STATES DISTRICT JUDGE

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