Bermudez v. SN Servicing Corporation

Filing 24

ORDER signed by Chief District Judge Kimberly J. Mueller on 9/14/2022 SUBMITTING without oral argument, and VACATING hearing on Plaintiff's Motion for preliminary injunction. DENIED Motion for a preliminary injunction to stop the foreclosure sale of plaintiff's residence located at xxx Oak Lane, Rio Linda, CA 95673. The Status Pretrial Scheduling Conference is SET for 11/4/2022 at 10:00 AM in Courtroom 3, and will be heard together with 23 the Motion to Dismiss.(Reader, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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Omar Bermudez,

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Plaintiff,

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No. 2:22-cv-01246-KJM-DB
ORDER

v.
SN Servicing Corporation,

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Defendant.

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This court granted plaintiff Omar Bermudez’s motion for a temporary restraining order to

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stop the planned foreclosure sale of his residence. The court now considers Bermudez’s motion

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for a preliminary injunction. As explained below, the court denies the motion.1

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I.

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BACKGROUND
SN services the mortgage loan for Bermudez’s single-family home. Bermudez Decl. Mot.

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TRO ¶¶ 3–5, ECF No. 8-1. In late December 2021, Bermudez received a letter from SN

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indicating he was approved for a loan modification and he would soon receive a formal offer,

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which he must accept within 14 days of receiving the offer. Id. ¶ 8. On January 3, 2022,

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Bermudez received the formal offer with a modified payment plan; the plan’s effective date was
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The court grants SN’s request for judicial notice of numerous bankruptcy filings and
other matters of public record. See RJN, ECF No. 13-1; Reyn’s Pasta Bella, LLC v. Visa USA,
Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (courts may take judicial notice of court filings and
similar matters of public record).
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identified as February 1, 2020, but also required Bermudez to have made an initial good faith

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payment of $2,948.17 by no later than December 31, 2021, three days before plaintiff received

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the offer. Id. ¶ 9 & Ex. B at 1–2.

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In response, Bermudez proposed a different payment plan that he could afford, and in

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accordance with his counteroffer, he sent a post-dated check for $2,498.17 as his first good faith

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payment. Fogleman Decl. Opp’n TRO Ex. 3 at 1–3, ECF No. 11-1. Soon after, Dani Coe, an

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asset manager employed by SN, emailed Bermudez that “the terms offered are not negotiable”

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and returned Bermudez’s post-dated check. Bermudez Decl. Mot. TRO Ex. C. Coe also told

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Bermudez the “offer [has] already defaulted” and she would check with SN to see if the original

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offer might still be available to him. Id.
During January 2022, Bermudez continued to contact SN in an effort to get it to accept his

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counteroffer. Fogleman Decl. Opp’n TRO ¶ 11. SN’s employee Jeff Harrison sent a letter to

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Bermudez stating SN would not grant a loan modification. Bermudez Decl. Mot. TRO Ex. D.

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Harrison then sent Bermudez a second letter stating SN could not grant the loan modification, this

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time checking a box indicating Bermudez’s withdrawal of his request or “non-acceptance of

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offer.” Id. Ex. E. Coe also notified Bermudez that he must submit an appeal letter to SN if he

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wanted to see if SN’s original offer could be “resurrected.” Id. ¶ 14. Since January 2022,

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Bermudez has not tendered the payments that would have been due under the terms of SN’s

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original offer, and he never provided SN with a signed copy of SN’s offer. Fogleman Decl.

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Opp’n TRO ¶ 14. A foreclosure sale of Bermudez’s home originally was scheduled for

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February 18, 2022. Id. Ex. 5 at 4.

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In February 2022, Bermudez sent a “Notice of Error” letter to SN regarding its denial of

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his loan modification application. See generally id. SN responded to this letter explaining

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Bermudez’s application was denied based on his rejection of SN’s offer. Id. Ex. 7 at 1–2. SN

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reset the foreclosure sale for March 22, 2022. Id. ¶ 17. On March 22, 2022, Bermudez filed a

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petition for bankruptcy, and although his petition was dismissed, the foreclosure sale was further

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postponed, to August 4, 2022. See Suppl. Shapero Decl. Mot. TRO Ex. B, ECF No. 10.

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On May 23, 2022, Bermudez commenced this action in state court, alleging claims for

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breach of contract and accounting, and claims under the California Homeowners’ Bill of Rights

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(HBOR), the California Unfair Business Practices Act (UBPA), and the federal Real Estate

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Settlement Procedures Act (RESPA). See generally Not. Removal, ECF No. 1. SN removed the

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case to this court. Id.

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On August 2, 2022, Charles Enabulele, a co-trustee of Bermudez’s home, filed for

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bankruptcy. RJN Exs. 27 & 28.2 On the same day, Bermudez filed a motion for a temporary

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restraining order to stop the foreclosure sale of his home. Mot. TRO, ECF No. 8. As the court

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was finalizing and issuing its order granting Bermudez’s request for a TRO, SN filed an

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opposition to the TRO, which the court then construed as an opposition to a preliminary

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injunction. Order at 1 n.1, ECF No. 12. SN then supplemented its opposition. Suppl. Opp’n,

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ECF No. 13. Bermudez has replied. Reply, ECF No. 22. On the court’s own motion, under

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Local Rule 230(g), the court submits the matter without hearing.

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II.

LEGAL STANDARD

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Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear

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showing” that the moving party is entitled to this relief. Winter v. Natural Res. Def. Council, Inc.,

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555 U.S. 7, 22 (2008). As provided by Federal Rule of Civil Procedure 65, a court may issue a

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preliminary injunction to preserve the relative position of the parties pending a trial on the merits.

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Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981). The party seeking injunctive relief must

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show it “is likely to succeed on the merits, . . . is likely to suffer irreparable harm in the absence

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of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the

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public interest.” Winter, 555 U.S. at 20.

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Before the Winter decision, the Ninth Circuit employed a “sliding scale” or “serious

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questions” test, which allowed a court to balance the elements of the test “so that a stronger

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showing of one element may offset a weaker showing of another.” All. for the Wild Rockies v.

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Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citing Clear Channel Outdoor, Inc. v. City of Los
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The court stayed this case until the dismissal and resolution of Enabulele’s bankruptcy.
Status Report at 2, ECF No. 20; Min. Order, ECF No. 21.
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Angeles, 340 F.3d 810, 813 (9th Cir. 2003)). The Circuit has found its “serious question” sliding

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scale test survived Winter. A court may issue a preliminary injunction when the moving party

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raises serious questions going to the merits and shows the balance of hardships tips sharply in its

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favor, so long as the court also considers the remaining two prongs of the Winter test. Cottrell,

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632 F.3d at 1134–35. Yet a court need not reach the other prongs if the moving party cannot

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demonstrate a “fair chance of success on the merits” to begin with. Pimentel v. Dreyfus, 670 F.3d

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1096, 1111 (9th Cir. 2012) (quoting Guzman v. Shewry, 552 F.3d 941, 948 (9th Cir. 2008))

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(internal quotations omitted). “[L]ikelihood of success on the merits is ‘the most important’

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factor; if a movant fails to meet this ‘threshold inquiry,’ [a court] need not consider the other

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factors.” California v. Azar, 911 F.3d 558, 575 (9th Cir. 2018) (citing Disney Enters., Inc. v.

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VidAngel, Inc., 869 F.3d 848, 866 (9th Cir. 2017)). The “relevant inquiry” of whether plaintiffs

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have shown a likelihood of success on the merits is “whether they are likely to prevail on the

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causes of action they assert in their complaint.” Timbisha Shoshone Tribe v. Salazar,

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697 F. Supp. 2d 1181, 1187 (E.D. Cal. 2010).

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III.

ANALYSIS

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Bermudez seeks to enjoin the foreclosure sale of his residence. As Bermudez does not

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meet the threshold requirement of likely success on the merits, the court reaches its conclusion

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without considering the parties’ other arguments.

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Bermudez has not shown he will likely prevail on his breach of contract, accounting,

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HBOR, and UBPA claims. Those four claims are premised on Bermudez’s allegation that SN

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prevented him from accepting SN’s loan modification offer. See First Am. Compl. (FAC) ¶¶ 21–

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53, ECF No. 7. As is now evident from SN’s filings, however, Bermudez did not attempt to

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accept SN’s offer and instead proposed different terms for his loan modification. See Fogleman

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Decl. Opp’n TRO Ex. 3 at 1–3. He also did not seek a retroactive extension of the deadline for

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the good-faith payment that was due on December 31, 2022; he instead sent a post-dated check

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with an amount that was $450 less than what was required under the terms of SN’s offer. Id.

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While Bermudez continued to contact SN in an effort to get it to accept his counteroffer, he never

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tendered any payments under the terms of SN’s offer, nor did he provide SN with a signed copy
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of SN’s offer. Id. ¶¶ 11, 14. Bermudez thus rejected SN’s offer, “regardless of his continued

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hope that [SN] would change its mind and offer him different terms.” Billesbach v. Specialized

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Loan Servicing LLC, 63 Cal.App.5th 830, 850 (2021); see also Landberg v. Landberg, 24 Cal.

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App. 3d 742, 750 (1971) (a “qualified acceptance” constitutes “a new proposal or counteroffer”

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and “a rejection terminating the [original] offer”). While the court understands Bermudez was

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seeking a payment plan that he felt he could afford, SN “was not under the obligation to rewrite a

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mortgage loan and there is no right under the [HBOR] to a loan modification.” Young v.

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Deutsche Bank Nat. Trust Co., 2013 WL 4853701, at * 2 (E.D. Cal. Sept. 10, 2013) (citation

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omitted). Indeed, Bermudez identifies no authority for his entitlement to unilaterally revive SN’s

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original offer to him—after he countered and rejected the offer. See generally Reply.
Bermudez also has not shown he will likely succeed on his RESPA claim. RESPA

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requires a mortgage servicer to acknowledge and respond to inquiries from a borrower. See

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12 U.S.C. § 2605(e). Bermudez’s RESPA claim here is based on his “Notice of Error” letter

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regarding SN’s denial of his loan modification application. FAC ¶¶ 54–60. But SN responded

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to this letter, explaining SN denied Bermudez’s application based on his counteroffer. See

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Fogleman Decl. Opp’n TRO Exs. 5–7. Nothing before the court supports the conclusion that SN

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did not respond to the issues Bermudez raised in his letter. See FAC ¶¶ 54–60; Mem. Mot. TRO

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at 10, ECF No. 8-3; Reply at 10.
For the reasons above, Bermudez does not meet the threshold requirement of likely

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success on the merits.

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IV.

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CONCLUSION
Plaintiff’s motion for preliminary injunction is submitted without oral argument, and the

motion hearing on October 7, 2022 is vacated.
The motion for a preliminary injunction to stop the foreclosure sale of plaintiff’s residence
located at 864 Oak Lane, Rio Linda, California 95673 is denied.

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In light of this order and in the interests of judicial economy, the Status (Pretrial

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Scheduling) Conference set for October 7, 2022 is vacated and reset for November 4, 2022 at

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10:00 A.M. in Courtroom 3, and will be heard together with the motion hearing for defendant’s

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motion to dismiss, ECF No. 23.

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IT IS SO ORDERED.

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DATED: September 14, 2022.

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