Farren et al. v. Select Portfolio Servicing, Inc. et al.

Filing 16

ORDER signed by District Judge John A. Mendez on 7/8/2016 DENYING 13 Motion for TRO. (Donati, J)

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1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 EASTERN DISTRICT OF CALIFORNIA 11 12 BETTINA L. FARREN; STEVE FARREN, individuals, No. 2:16-cv-01077-JAM-EFB 13 Plaintiffs, 14 v. 15 16 17 18 SELECT PORTFOLIO SERVICING, INC.; US BANK AS TRUSTEE ON BEHALF OF THE HOLDERS OF THE WAMU MORTAGAGE PASSTHROUGH CERTIFICATES, SERIES 2007HY6; JPMORGAN CHASE BANK, N.A.; QUALITY LOAN SERVICE CORPORATION; and DOES 1 through 50, inclusive, ORDER DENYING PLAINTIFFS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER 19 Defendants. 20 Bettina Farren (“Mrs. Farren”) and Steve Farren (“Mr. 21 22 Farren”) (collectively “Plaintiffs”) applied ex parte for a 23 temporary restraining order (“TRO”) (Doc. #13). 1 24 below, Plaintiffs are not likely to succeed on the merits of As explained 25 1 26 27 28 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). No hearing was scheduled. Although no opposition to this Application was filed by any of the Defendants, the Court is still required to and has considered the merits of this Application. 1 1 their claims. 2 TRO. 3 4 Thus, the Court denies Plaintiffs’ motion for a I. FACTUAL ALLEGATIONS In March 2007, Plaintiffs added Mrs. Farren’s brother, 5 Steven Hinrichs, and Mr. Hinrichs’ wife to the title of real 6 property located at 2045 Salmon Falls Road in El Dorado Hills, 7 California (“Subject Property”). 8 (“Mrs. Farren Decl.”) ¶ 8. 9 and secured by the Subject Property. Compl. ¶ 12. 10 signed the Deed of Trust. But, Plaintiffs did not 11 sign the Adjustable Rate Note (the “Note”). 12 Request for Judicial Notice (Doc. #9). 13 Hinrichs signed the Note. 14 Declaration of Bettina Farren A $1,464,000.00 loan was taken out Id. ¶ 16. Plaintiffs Exh. A to SPS’s Only Mr. and Mrs. Id. In December 2008, JP Morgan Chase Bank (“Chase”) issued a 15 notice of default against the Subject Property. Compl. ¶ 18. 16 In January 2016, Quality Loan Service Corporation (“Quality”) 17 became the trustee of the Deed of Trust. 18 2016, Quality recorded a Notice of Trustee’s Sale for the 19 Subject Property for April 14, 2016. Id. ¶ 24. In March Id. ¶ 25. 20 On April 8, 2016, Mrs. Farren submitted a complete loan 21 modification application to Defendant Select Portfolio Servicing 22 (“SPS”). 23 any acknowledgement of the receipt of her application and has 24 not received notice about whether the application has been 25 denied. 26 SPS to discuss modification of the loan. 27 Luna, an SPS representative, told Mrs. Farren that SPS could not 28 postpone the foreclosure sale because Mrs. Farren’s name was not Mrs. Farren Decl. ¶ 11. Id. ¶¶ 11, 12. Mrs. Farren has not received Mrs. Farren also made several calls to 2 Id. ¶¶ 48-50. Alison 1 2 on the Note. Id. ¶ 50. On April 14, 2016, Plaintiffs obtained a TRO in El Dorado 3 Superior Court which enjoined Defendants from conducting the 4 trustee’s sale of the Subject Property. 5 Judicial Notice (Doc. #3). 6 removed the case to federal court (Doc. #1). 7 sale is now set for July 11, 2016. 8 Plaintiffs submitted a motion for a TRO on July 6, 2016 to 9 enjoin the foreclosure sale scheduled for July 11 (Doc. #13). 10 Exh. 7 to Request for On May 19, 2016, Defendant Chase The foreclosure Mrs. Farren Decl. ¶ 4. Defendants did not file an opposition. 11 12 II. OPINION 13 A. Legal Standard 14 Federal Rule of Civil Procedure (“Rule”) 65 provides 15 authority to issue either preliminary injunctions or TROs. 16 plaintiff seeking a preliminary injunction must demonstrate that 17 he is “[1] likely to succeed on the merits, [2] that he is likely 18 to suffer irreparable harm in the absence of preliminary relief, 19 [3] that the balance of equities tips in his favor, and [4] that 20 an injunction is in the public interest.” 21 City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting 22 Winter v. Natural Res. Def. Council, 555 U.S. 7, 20 (2008)). 23 requirements for a TRO are the same. 24 v. John D. Brush & Co., 240 F.3d 832, 839 n. 7 (9th Cir. 2001). 25 A party seeking an ex parte TRO must “clearly show that immediate 26 and irreparable injury, loss, or damage will result to the movant 27 before the adverse party can be heard in opposition” and “the 28 movant's attorney [must] certif[y] in writing any efforts made to 3 A Am. Trucking Assn’s v. The Stuhlbarg Int’l Sales Co. 1 give notice and the reasons why it should not be required.” 2 R. Civ. P. 65(b). 3 necessary to prevent irreparable harm and should be imposed only 4 “so long as is necessary to hold a hearing.” 5 Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70 of 6 Alameda Cty., 415 U.S. 423, 439 (1974). Fed. Ex parte TROs are appropriate only when Granny Goose Foods, 7 Local Rule 231(b) states that courts “will consider whether 8 the applicant could have sought relief by motion for preliminary 9 injunction at an earlier date without the necessity of seeking 10 last-minute relief by motion for temporary restraining order.” 11 If the Court finds that the movant unduly delayed in seeking 12 injunctive relief, “the Court may conclude that the delay 13 constitutes laches or contradicts the applicant’s allegations of 14 irreparable injury and may deny the motion solely on either 15 ground.” 16 B. 17 Local Rule 231(b). Analysis 1. 18 Undue Delay Defendants removed this case to federal court on May 19, 19 2016. Plaintiffs did not file their TRO until nearly six weeks 20 later and only five days before the scheduled trustee’s sale. 21 Plaintiffs’ attorney states that he received notice on June 24, 22 2016 from defense counsel stating that SPS would not postpone the 23 trustee’s sale. 24 waited almost two weeks to file the application for a TRO. 25 Plaintiffs’ counsel’s excuse for this delay is that he has “at 26 the same time these past two weeks been working on pre exiting 27 [sic] deadlines on numerous other cases.” 28 in filing the TRO is of concern to the Court. Declaration of John Sargetis ¶ 4. 4 Id. Plaintiffs Plaintiffs’ delay However, 1 Plaintiffs’ TRO application will not be denied on this ground. 2 2. 3 Likelihood of Success on the Merits Plaintiffs argue that they are likely to succeed on the 4 merits of their claims on two grounds. 5 they are likely to succeed on their second cause of action for 6 violation of California Civil Code § 2923.6(c). 7 Authorities in support of Motion for TRO (“Mot. for TRO”) at 5. 8 Second, Plaintiffs argue that Defendants are not authorized to 9 conduct foreclosure proceedings. 10 a. 11 First, Plaintiffs argue Points and Id. at 7. Violation of California Civil Code § 2923.6(c) 12 California Civil Code section 2923.6(c) states “[i]f a 13 borrower submits a complete application for a first lien loan 14 modification offered by, or through, the borrower's mortgage 15 servicer, a mortgage servicer, mortgagee, trustee, beneficiary, 16 or authorized agent shall not . . . conduct a trustee's sale, 17 while the complete first lien loan modification application is 18 pending.” 19 modification to SPS on Friday, April 8, 2016. 20 ¶ 11. Mrs. Farren states that she submitted a loan Mrs. Farren Decl. 21 The issue here, however, is whether Mrs. Farren is even 22 legally able to obtain a modification on this loan since her 23 signature is not on the Adjustable Rate Note itself. 24 argue that they are parties to the loan because they signed the 25 Deed of Trust, even though they do not have documentary proof 26 that they signed the Note. 27 that “[t]he terms of the subject Deed of Trust were such that 28 plaintiffs signature on that document operated as a ratification Mot. for TRO at 6. 5 Plaintiffs Plaintiffs state 1 of the Note obligation.” 2 cases to support their argument: Rakestraw v. Rodrigues, 8 Cal. 3 3d 67 (1972) and Stegeman v. Vandeventer, 57 Cal. App. 2d 753 4 (1943). 5 ratification of a forged signature, it does not discuss whether a 6 signature on a Deed of Trust indicates that a person is also a 7 party to a promissory note. 8 Stegeman concerns whether a wife could be liable for fraud when 9 she was “not a party to any of the fraudulent representations 10 which her husband made to plaintiff” but she “signed the deed 11 conveying the property to plaintiff. 12 at 758-59. 13 Id. Id. Plaintiffs cite to two California Both cases are inapplicable. Rakestraw concerns Rakestraw, 8 Cal. 3d at 73-75. Stegeman, 57 Cal. App. 2d Plaintiffs cite to no other authority indicating that 14 signing a Deed of Trust makes an individual a party to a Note he 15 did not sign. 16 Adjustable Rate Note that has been submitted in this case are Mr. 17 and Mrs. Hinrichs. 18 Note that contains their signatures and absent such proof they 19 are not entitled to modify the loan arrangement. 20 finds that Plaintiffs are unlikely to succeed on their 21 § 2923.6(c) claim. 22 23 24 The only people who appear to have signed the b. Plaintiffs have not produced a copy of the Thus, the Court Defendants’ Authorization to Conduct Foreclosure Sale Plaintiffs next argue that “conducting of the foreclosure 25 trustee’s sale is wrongful as these defendants do not legally own 26 the Note and Deed of Trust as the Assignment to them of these 27 documents are void in violation of law.” 28 Mot. for TRO at 7. Plaintiffs state that they have standing to challenge the 6 1 sufficiency of an assignment of a loan. 2 Plaintiffs cite to Yvanova v. New Century Mortgage Co., 62 Cal. 3 4th 919 (2016) and Lundy v. Selene Finance, LP, 2016 WL 1059423 4 (N.D. Cal. Mar. 17, 2016), both of which held that a third party 5 has standing to challenge the validity of assignment. 6 plaintiffs in neither Yvanova nor Lundy had the problem of not 7 being a signatory on the promissory note which has been assigned. 8 Plaintiffs have a completely different standing problem here than 9 the ones addressed in Yvanova and Lundy. Mot. for TRO at 7-8. But, the Plaintiffs cannot prove 10 that they are likely to succeed on the merits of their claims 11 because they cannot prove that they are parties to the Note. 12 discussed above, a TRO is an extraordinary remedy that the Court 13 can only grant if Plaintiffs meet each of the four required 14 elements. 15 first element, their Application for a TRO is denied and the 16 Court declines to and need not address the remaining elements. As Since Plaintiffs are not likely to prevail on the 17 18 19 20 21 22 III. ORDER Plaintiffs’ ex parte application for a temporary restraining order is DENIED. IT IS SO ORDERED. Dated: July 8, 2016 23 24 25 26 27 28 7

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