Agraan et al v. Select Portfolio Servicing, Inc.
Filing
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ORDER signed by District Judge Kimberly J. Mueller on 12/5/2017 GRANTING 12 Motion for TRO; ORDERING a Preliminary Injunction Hearing set for 12/19/2017 at 01:30 PM in Courtroom 3 (KJM) before District Judge Kimberly J. Mueller. The Agraans shall file any additional brief with supporting declarations by 4 p.m. on 12/12/2017. SPS shall file any opposition briefing by 4 p.m. on 12/15/2017. (Washington, S)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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PETE AGRAAN, JR., ALICIA AGRAAN,
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Plaintiffs,
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No. 2:17-cv-02163-KJM-CKD
v.
ORDER
SELECT PORTFOLIO SERVICING, INC.
J.P. MORGAN CHASE BANK, N.A., and
DOES 1 through 50, inclusive,
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Defendants.
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Plaintiffs Pete Agraan and Alicia Agraan (“the Agraans” or “plaintiffs”),
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proceeding pro se, seek a temporary restraining order (“TRO”) against defendant Select Portfolio
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Services (“SPS”) preventing the trustee sale of the Agraans’ home. Ex Parte TRO Request, ECF
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No. 12; TRO Mem., ECF No. 12-1. The trustee sale is currently scheduled for tomorrow,
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December 6, 2017. TRO Mem. at 1. For the following reasons, the court GRANTS the request.
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I.
BACKGROUND
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SPS offered the Agraans a loan modification on June 22, 2017 and requested they
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begin making trial period payments. TRO Mem. at 3. Due to insufficient income at the time, the
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Agraans could not accept the offer. Id. Their financial circumstances changed “[s]hortly
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thereafter,” and they requested SPS reconsider their modification request, but because SPS’s prior
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modification offer “had lapsed, the loan modification was no longer offered.” Id.
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In September 2017, the Agraans again notified SPS of a change in financial
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circumstances and requested a loan modification. Id. SPS directed the Agraans to submit a new
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modification application, which the Agraans submitted on September 15, 2017. Id.
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On September 18, 2017, SPS sent the Agraans a letter stating no loss mitigation
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options were available and foreclosure would occur within the next 23 business days. Id.; Sept.
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18 Letter, ECF No. 12-3 at 7. This letter provided no substantive basis for the denial. See Sept.
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18 Letter. A week later, plaintiffs sent SPS a letter demanding an appeal of the denial. TRO
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Mem. at 3; Appeal Letter, ECF No. 12-3 at 9. The letter explains the Agraans submitted a
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modification application “as [they] were told,” and that the application “shows our circumstances
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have changed along with the supporting evidence.” Appeal Letter at 9. The Agraans offered to
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“submit additional documents that support our income now.” Id.
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On September 27, 2017, SPS sent the Agraans two letters. TRO Mem. at 3. The
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first stated SPS would send a written response to the Agraans’ “inquiry” within 30 days. ECF
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No. 12-3 at 11. The second letter noted SPS had “forwarded” the Agraans’ “correspondence to
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the appropriate department for handling.” ECF No. 12-3 at 13. To date, the Agraans represent
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they have not received further communication from SPS regarding their application or appeal.
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TRO Mem. at 4.
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The Agraans sued SPS and J.P. Morgan Chase Bank, N.A., on October 6, 2017 in
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Yolo County Superior Court alleging violations of the California Homeowner’s Bill of Rights
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(“HBOR”), negligence, and fraudulent and unfair business practices. Compl., Ex. A, ECF No.
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1-1. On October 10, 2017, that court issued a TRO restraining SPS from conducting a trustee sale
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of the Agraans’ property. See SPS Notice of TRO Expiration, ECF No. 10 at 4-5 (copy of
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Superior Court order). That court also ordered SPS to show cause why a preliminary injunction
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should not issue and set an October 26, 2017 hearing on the order to show cause. Id. at 5. One
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week after the state court issued the TRO, defendants removed the case to this court. See
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Removal Notice, ECF No. 1. Defendants’ notice stated, “[t]he removal of this action limits the
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duration of the Temporary Restraining Order issued in the State Action to 14 days following
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removal.” Id. at 4 (citing Fed. R. Civ. P. 65(b)). SPS then notified the Agraans that the trustee
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sale was postponed to December 6, 2017. ECF No. 12-3 at 16 (notice dated Oct. 19, 2017). On
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November 27, 2017, defendants filed their official notice here, confirming its position the TRO
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issued by the state court had expired under Federal Rule of Civil Procedure 65(b). SPS Notice of
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TRO Expiration.
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On December 2, 2017, Alicia Agraan contacted SPS’s foreclosure department “to
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stop the foreclosure sale.” Pls.’ Decl., ECF No. 12-2, at 2. As instructed, she then contacted
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SPS’s legal department on December 4 and contacted SPS’s attorney of record. Id. The Agraans
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filed this ex parte TRO application on December 4, 2017, requesting the court issue (1) an order
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temporarily restraining SPS from conducting a trustee sale of their property, and (2) an order to
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show cause to SPS as to why the court should not issue a preliminary injunction. Ex Parte TRO
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Request at 1.
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On December 5, 2017, SPS filed an opposition to the Agraans’ request. Opp’n,
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ECF No. 14. SPS argues that, rather than seeking a TRO now, the Agraans should have sought a
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preliminary injunction after defendants removed this case to federal court. Id. at 2. SPS further
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argues it “is fully within its rights to refuse to consider serial loan modification applications from
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Plaintiffs.” Id. at 2, 4. SPS does not substantively address the status of the Agraans’ appeal,
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suggesting that SPS’s September 27 letters to the Agraans “simply acknowledged . . . that more
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letters were received from Plaintiffs.” Id. at 5. Should the court issue a TRO, SPS requests the
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court condition the TRO on financial conditions, including a bond. Id. at 6. Finally, SPS’s
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attorney notes he has been contacted by a disbarred attorney, Pitor or Piotr Reysner, on several
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occasions on the Agraans’ behalf regarding this matter. Decl., ECF No. 14-1. ¶ 4
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II.
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LEGAL STANDARD
The purpose of a TRO is to preserve the status quo pending the complete briefing
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and thorough consideration contemplated by full proceedings pursuant to a preliminary
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injunction. See Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423, 438-39 (1974) (TROs
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“should be restricted to serving their underlying purpose of preserving the status quo and
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preventing irreparable harm just so long as is necessary to hold a hearing, and no longer”); see
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also Reno Air Racing Ass’n., Inc. v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006); Dunn v. Cate,
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No. CIV 08-873-NVW, 2010 WL 1558562, at *1 (E.D. Cal. April 19, 2010).
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Issuing a TRO is an extraordinary remedy, and plaintiffs have the burden of
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proving the propriety of such a remedy. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). In
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general, the showing required for a TRO and a preliminary injunction are the same. Stuhlbarg
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Int’l Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir. 2001). The
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party requesting preliminary injunctive relief must show that “he is likely to succeed on the
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merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the
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balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v.
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Natural Res. Defense Council, 555 U.S. 7, 20 (2008); Stormans, Inc. v. Selecky, 586 F.3d 1109,
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1127 (9th Cir. 2009) (quoting Winter). The propriety of a TRO hinges on a significant threat of
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imminent, irreparable injury. Caribbean Marine Serv. Co. v. Baldridge, 844 F.2d 668, 674 (9th
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Cir. 1988).
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Alternatively, courts may analyze a TRO request using a sliding scale approach
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through which the elements of the “test are balanced, so that a stronger showing of one element
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may offset a weaker showing of another.” Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127,
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1131 (9th Cir. 2011). This test requires plaintiffs to demonstrate the requisite likelihood of
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irreparable harm, show that an injunction is in the public interest, raise “serious questions” going
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to the merits, and show a balance of hardships that “tips sharply” in plaintiffs’ favor. Id.at 1131-
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injunctions remains viable after Winter).
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III.
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ANALYSIS
Applying the sliding scale approach, the court finds a TRO is appropriate here to
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preserve the status quo pending a hearing on the Agraans’ request for preliminary injunction. The
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Agraans have established a likelihood of irreparable harm, as they risk losing their home should
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the December 6, 2017 trustee sale proceed. See TRO Mem. at 8; see also Castellanos v.
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Countrywide Bank NA, No. 15-CV-00896-BLF, 2015 WL 914436, at *2 (N.D. Cal. Feb. 27,
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2015) (citing cases and noting “[c]ourts have repeatedly concluded that the loss of one’s home is
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sufficient to satisfy the element of irreparable injury”). A TRO is also in the public interest, as it
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will allow the court time to ensure compliance with home-protection laws designed to protect the
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public. See id. (“‘[I]t is in the public interest to allow homeowners an opportunity to pursue what
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appear to be valid claims before being displaced from their homes.’”) (quoting Sencion v. Saxon
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Mortg. Servs., LLC, 2011 WL 1364007, at *1 (N.D. Cal. Apr. 11, 2011)).
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The court also finds the balance of hardships tips sharply in the Agraans’ favor. A
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TRO merely prevents SPS from conducting a trustee sale until the court has determined whether
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such sale is appropriate in light of complete briefing and thorough consideration. While SPS
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complains that the sale is long overdue, see Opp’n at 5, this hardship does not overcome the
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Agraans’ potential loss of their home should the sale proceed, see Castellanos, 2015 WL 914436,
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at *2. Moreover, the court can act promptly to consider the merits more fully on an expedited
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schedule, set below.
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Finally, the court finds the Agraans have raised serious questions as to the merits
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of their HBOR dual-tracking claim. TRO Mem. at 5 (arguing they “are likely to prevail on their
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legal theory that no trustee sale can be had until SPS fully complies with its legal obligations.”).
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Under HBOR, “a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not
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record a notice of default or notice of sale, or conduct a trustee’s sale, while the [borrower’s]
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complete first lien loan modification application is pending.” Cal. Civ. Code § 2923.6(c). Doing
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so is referred to as “dual tracking.” Haltom v. NDEx W., LLC, No. 2:16–cv–00086–TLN–KJN,
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2016 U.S. Dist. LEXIS 5656, at *6 (E.D. Cal. Jan. 15, 2016). HBOR’s dual tracking protections
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persist until, as relevant here, “[t]he mortgage servicer makes a written determination that the
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borrower is not eligible for a first lien loan modification, and any appeal period pursuant to
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subdivision (d) has expired,” or “[t]he borrower does not accept an offered first lien loan
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modification within 14 days of the offer.” Cal. Civ. Code § 2923.6(c)(1)-(2). At that point, a
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servicer is not “obligated” to evaluate a borrower’s subsequent modification application “unless
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there has been a material change in the borrower’s financial circumstances since the date of the
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borrower’s previous application and that change is documented by the borrower and submitted to
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the mortgage servicer.” Cal. Civ. Code § 2923.6(g).
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Here, plaintiffs did not accept SPS’s June 22, 2017 modification offer. TRO Mem.
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at 3. Thus, the Agraans did “not accept an offered first lien loan modification,” see Cal. Civ.
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Code § 2923.6(c)(2), and SPS was “obligated” to consider their subsequent September 15, 2017
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application only if they documented and submitted to SPS a “material change in [their] financial
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circumstances since the date of [their] previous application[,]” see Cal. Civ. Code § 2923.6(g).
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The Agraans argue they informed SPS of their change in financial circumstances in September of
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2017, and SPS instructed them to submit a new modification application. TRO Mem. at 3. The
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Agraans did so on September 15, providing “all requested documentation.” Id. Thus, the
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Agraans argue SPS was obligated to consider their subsequent application under § 2923.6(g).
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The Agraans’ communications with SPS following their September application indicate they
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documented a material change in financial circumstances as § 2923.6(g) requires. For example,
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in their September 25, 2017 letter to SPS, the Agraans explain their application “shows our
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circumstances have changed” and provided “supporting evidence.” Appeal Letter. The Agraans
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requested SPS “[p]lease reconsider the [application,]” and offered to “submit additional
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documents that support our income now.” Id. SPS argues the Argaans have not substantively
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described their material financial change or provided a copy of their application. Opp’n at 4. The
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court notes, however, SPS also does not provide a copy of the Agraans’ modification application
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to show the Agraans did not document a material financial change. More importantly, SPS does
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not argue the application did not include such documentation. Rather, SPS argues only that it had
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no obligation to consider the Argaans’ repeated requests for modification. Id. at 2, 4. The
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parties’ competing arguments raise serious questions as to the merits of the Agraan’s dual
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tracking claim. See Vasquez v. Bank of Am. , N.A., No. 13-CV-02902-JST, 2013 WL 6001924, at
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*8 (N.D. Cal. Nov. 12, 2013) (holding plaintiff’s allegations that she informed defendant of her
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new employment and higher income, submitted a new modification application “including
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documentation of her increased income,” and later confirmed documents were being reviewed
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sufficiently alleged compliance with § 2923.6(g)).
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There is also a serious question regarding whether SPS’s September 18, 2017 letter
was a valid rejection of the Agraans’ September 15, 2017 application. See TRO Mem. at 7; see §
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2923.6(c)(1) (permitting trustee sale after servicer’s “written determination that the borrower is
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not eligible” and expiration of § 2923.6(d) appeal period). The Agraans argue denial of a valid
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modification application must comply with § 2923.6(f), which sets forth written denial
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requirements. Section 2923.6(f)(1) requires written notice of “[t]he amount of time from the date
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of the denial letter in which the borrower may request an appeal of the denial of the first lien loan
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modification and instructions regarding how to appeal the denial.” Here, SPS’s denial letter does
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not mention the Agraans’ right to appeal. TRO Mem. at 7. Further, SPS’s September 27
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response to the Agraans’ appeal indicated SPS would provide “a written response and resolution
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regarding this matter within 30 days from the date we received your inquiry[,]” ECF No. 12-3 at
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11. Yet another SPS letter sent that same day notified the Agraans their “correspondence” was
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“forwarded . . . to the appropriate department for handling.” Id. at 13. These letters send
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different messages and give rise to confusion about the process SPS followed, further supporting
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the conclusion that a serious question is raised as to whether SPS properly denied the Agraans’
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application. If not, the application remains pending and thus triggers HBOR’s dual tracking
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protections. SPS’s opposition does not clarify the post-appeal record. Rather, SPS attributes its
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post-appeal letters to “acknowledg[ment] . . . that more letters were received from Plaintiffs.”
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Opp’n at 5. This bare argument does not tip the balance in SPS’s favor. The court thus finds
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there is a serious question as to the merits of the Agraans’ claim.
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IV.
PRO SE STATUS
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In light of SPS’s representations that its counsel was contacted by someone who is
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not an attorney and who purported to be acting on the Agraans’ behalf, the Agraans are reminded
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that they each must be prepared to speak on his and her own behalf in the course of litigating this
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matter, including in any courtroom proceedings.
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V.
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CONCLUSION
For these reasons, the court GRANTS plaintiffs’ TRO application. No bond shall
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be required at this time. A preliminary injunction hearing is set for Tuesday, December 19, 2017
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at 1:30 p.m. The Agraans shall file any additional brief with supporting declarations by 4 p.m.
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on December 12, 2017. SPS shall file any opposition briefing by 4 p.m. on December 15, 2017.
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All briefing is subject to this court’s page limitations set forth in its standing order.
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SO ORDERED.
DATED: December 5, 2017.
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UNITED STATES DISTRICT JUDGE
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