Campos et al v. O'Neal

Filing 10

ORDER signed by Chief District Judge Kimberly J. Mueller on 5/10/2024 GRANTING #4 Ex Parte Application for a Temporary Restraining order. Defendant and its agents are ENJOINED by this temporary restraining order from conducting a trustee sale of Plaintiffs' residence at 2495 Paseo Del Sol, Turlock, CA 95382. The temporary restraining order GRANTED here shall expire at 5:00 p.m. on 5/23/2024, absent further order of this court. A hearing on a Motion for a Preliminary Injunction is SET for 2:30 p.m. on 5/23/2024. The hearing will proceed by videoconference. The courtroom deputy will contact the parties with further information no later than twenty- four hours before the hearing. Any opposition, must be filed no later than 4:30 p.m. on 5/17/2024. Plaintiffs may file a reply by 4:30 p.m. on 5/21/2024. Plaintiffs' counsel shall promptly serve a copy of this order on defendant, who has not yet appeared in this action, and file a declaration on the docket of this action confirming service has been completed. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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Julio Campos and Miriam Campos,

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Plaintiffs,

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No. 2:24-cv-01317-KJM-DB
ORDER

v.
Dyck O’Neal, Inc., et al.,

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Defendants.

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Plaintiffs Julio Campos and Miriam Campos apply ex parte for a temporary restraining

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order barring a foreclosure sale of real property in Turlock, California. For the reasons in this

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order, the ex parte application is granted, and a hearing on a motion for a preliminary

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injunction is set for 2:30 p.m. May 23, 2024.

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I.

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BACKGROUND
According to a declaration filed alongside the pending ex parte application, plaintiff Julio

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Campos owns the real property at 2495 Paseo Del Sol, Turlock, CA 95382. Campos Decl. ¶ 3,

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ECF No. 4-2. He has owned that property since 2006, and it has been his family’s primary

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residence. Id. ¶ 4. He and his wife financed the purchase with two loans: one for 80 percent of

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the purchase price, and one for the remaining 20 percent. Id. ¶ 5. This action concerns the

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second loan. Plaintiffs made payments on that loan until 2009, then filed a Chapter 7 bankruptcy

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petition in 2012. Id. ¶¶ 6–7. The second loan was a scheduled debt. See id. ¶ 7. The bankruptcy

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proceedings closed later the same year, and for the next eleven years, plaintiffs received no

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account statements, no letters, no calls and no communications of any kind. Id. ¶¶ 8–9. They

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thought they owed nothing more. See id. ¶ 9.

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In 2023, however, Mr. and Ms. Campos received a notice of default stating they owed

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nearly $200,000 and warning that if they did not repay in full, the property would be sold in a

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foreclosure sale. Id. ¶ 10. They also learned defendant Dyck O’Neal, Inc., had become the loan’s

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servicer. Id. ¶ 11. They attempted to contact Dyck O’Neal to resolve the matter “informally,”

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but their attempts were unsuccessful, as was their attempt to obtain a loan modification. Id.

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¶¶ 13–15. Julio Campos describes Dyck O’Neal as “extremely unhelpful.” Id. ¶ 15. A notice of

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a trustee’s sale was then recorded. Id. ¶ 16. A sale is currently scheduled for May 17, 2024. Id.

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¶ 20.

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Mr. and Ms. Campos filed this action on May 7, 2024 and applied ex parte for a

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temporary restraining order the next day. See generally Compl, ECF No. 1; Ex Parte Appl., ECF

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No. 4. Their complaint asserts claims under federal law for violation of the Truth in Lending Act

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and Fair Debt Collections Practices Act, federal regulations, California contract law, and the

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California Unfair Competition Law. See Compl. ¶¶ 33–68. They also seek declaratory relief. Id.

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¶¶ 69–73.

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After plaintiffs filed this action, their counsel contacted Dyck O’Neal by email to inform it

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of the case and their plan to request a temporary restraining order on an ex parte basis. See

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Brewer Decl. ¶¶ 1–2, ECF No. 4-3. Dyck O’Neal has not appeared and has not responded to the

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pending ex parte application.

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II.

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LEGAL STANDARD
A court may issue a temporary restraining order “without written or oral notice to the

adverse party” only if
(A) specific facts in an affidavit or a verified complaint clearly show
that immediate and irreparable injury, loss, or damage will result to
the movant before the adverse party can be heard in opposition; and

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(B) the movant’s attorney certifies in writing any efforts made to give
notice and the reasons why it should not be required.

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Fed. R. Civ. P. 65(b)(1). “Every temporary restraining order issued without notice must state the

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date and hour it was issued; describe the injury and state why it is irreparable; state why the order

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was issued without notice; and be promptly filed in the clerk’s office and entered in the record.”

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Fed. R. Civ. P. 65(b)(2).

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The purpose of a temporary restraining order is to preserve the status quo and to prevent

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irreparable harm “just so long as is necessary to hold a hearing, and no longer.” Granny Goose

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Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423, 439 (1974). In determining whether to issue a

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temporary restraining order, a court relies on the factors that guide the evaluation of a request for

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preliminary injunctive relief: whether the moving party “is likely to succeed on the merits, . . .

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likely to suffer irreparable harm in the absence of preliminary relief, . . . the balance of equities

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tips in [its] favor, and . . . an injunction is in the public interest.” Winter v. Natural Res. Def.

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Council, Inc., 555 U.S. 7, 20 (2008); see also Stuhlbarg Int’l. Sales Co. v. John D. Brush & Co.,

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240 F.3d 832, 839 n.7 (9th Cir. 2001) (stating the analysis for temporary restraining orders and

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preliminary injunctions is “substantially identical”). Alternatively, courts within this circuit may

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consider a request for a temporary restraining order using a “sliding scale” test in which “a

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

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Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). For example, a stronger showing of

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irreparable harm might offset a lesser showing of likely success on the merits. Id.

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This District’s local rules also impose specific requirements on those who request a

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temporary restraining order. See E.D. Cal. L.R. 231. Among other things, these rules require

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“actual notice to the affected party and/or counsel” except in “the most extraordinary of

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circumstances.” E.D. Cal. L.R. 231(a). “Appropriate notice would inform the affected party

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and/or counsel of the intention to seek a temporary restraining order, the date and time for hearing

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to be requested of the Court, and the nature of the relief to be requested.” Id. A party who moves

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for a temporary restraining order must also confirm it has complied with local rules by filing the

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checklist available on this court’s website.1

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When deciding whether to issue a temporary restraining order, the court may rely on

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declarations, affidavits, and exhibits, among other things, and this evidence need not conform to

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the standards that apply at summary judgment or trial. See Johnson v. Couturier, 572 F.3d 1067,

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1083 (9th Cir. 2009); see also Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984)

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(“The trial court may give even inadmissible evidence some weight, when to do so serves the

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purpose of preventing irreparable harm before trial”).

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III.

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DISCUSSION
At the outset, the court recognizes plaintiffs have not strictly complied with this District’s

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local rules governing applications for temporary restraining orders, given that counsel has not

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filed a completed checklist describing plaintiffs’ efforts to contact defendant or its counsel,

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whether plaintiffs’ ex parte application could have been filed sooner and the need for an

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expedited hearing. That said, their filings include the majority of the information required by the

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local rules, including a complaint, a motion or application, a brief explaining “all relevant legal

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issues,” “an affidavit in support of the existence of an irreparable injury,” “an affidavit detailing

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the notice or efforts to effect notice to the affected parties or counsel or showing good cause why

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notice should not be given,” and a proposed order. E.D. Cal. L.R. 231(c)(1)–(8). The court

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therefore exercises its discretion to excuse plaintiffs’ noncompliance.

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On this record, plaintiffs are entitled to a temporary restraining order under the “sliding
scale” test of Alliance for the Wild Rockies, 632 F.3d at 1131.

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First, plaintiffs have established an irreparable injury is likely absent a temporary

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restraining order: their primary residence will likely be sold. “It is well-established that the loss

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of an interest in real property constitutes an irreparable injury.” Park Vill. Apartment Tenants

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Ass’n v. Mortimer Howard Tr., 636 F.3d 1150, 1159 (9th Cir. 2011).

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United States District Court, Eastern District of California, Temporary Restraining Order
Procedures, https://www.caed.uscourts.gov/CAEDnew/index.cfm/cmecf-e-filing/temporaryrestraining-order-tro-procedures
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Second, the balance of hardships tips sharply in favor of an injunction. Defendant would

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be forbidden from conducting a sale for a few days or weeks. In light of the many years the debt

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has been outstanding—and the many years of silence described in Julio Campos’s declaration—

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an additional delay of a few days or weeks is a negligible harm. See, e.g., Alvarez v. Wells Fargo

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Bank, N.A., No. 15-00943, 2019 WL 4734757, at *4 (E.D. Cal. Sept. 27, 2019) (“The hardship of

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an additional delay to allow further briefing . . . pales in comparison to the possibility that

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Plaintiff could wrongfully lose his home.”).

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Third, the public interest favors a temporary restraining order. “[A] decision in

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[plaintiffs’] favor will serve the public interest by allowing time for this matter to be resolved on

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the merits, either confirming a foreclosure sale is lawful or precluding a sale as unsupported by

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the applicable law and factual record.” Bermudez v. SN Servicing Corp., No. 22-01246, 2022 WL

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3083711, at *2 (E.D. Cal. Aug. 3, 2022) (citing Sencion v. Saxon Mortg. Servs., LLC, No. 10-

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3108, 2011 WL 1364007, at *3 (N.D. Cal. Apr. 11, 2011)).

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Fourth, the complaint raises serious questions about defendant’s liability under California

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Business and Professions Code section 17200, also known as the Unfair Competition Law or

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“UCL,” which prohibits “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus.

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& Prof. Code § 17200. Each of these three prongs—unlawful, unfair and fraudulent—provides

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for “a separate and distinct theory of liability.” Lozano v. AT&T Wireless Servs., Inc., 504 F.3d

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718, 731 (9th Cir. 2007). At this early stage, plaintiffs’ complaint and affidavit raise serious

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questions under the “unlawful” and “unfair” prongs.

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For “unlawful” acts or practices, “the UCL borrows violations of other laws and treats

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them as unlawful practices that the unfair competition law makes independently actionable.”

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Alvarez v. Chevron Corp., 656 F.3d 925, 933 n.8 (9th Cir. 2011) (alterations and citations

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omitted). “Virtually any law—federal, state or local—can serve as a predicate for an action under

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[the UCL].” Hadley v. Kellogg Sales Co., 243 F. Supp. 3d 1074, 1094 (N.D. Cal. 2017)

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(alteration in original) (quoting Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal. App. 4th 700,

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718 (2001)). Here there are serious questions whether defendant acted unlawfully under the UCL

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by failing to transmit statements required by the Truth in Lending Act. See Mem. at 7, ECF No.

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4-1 (citing 15 U.S.C. § 1637(b)).

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For “unfair” acts of practices, the court must determine whether the practice “violates

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established public policy” or “is immoral, unethical, oppressive or unscrupulous and causes injury

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to consumers which outweighs its benefits.” McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457,

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1473 (2006). On this record, it is a serious question whether a lender or servicer acts “unfairly”

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under this standard by allowing interest to accrue on a mortgage loan for many years without

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notice, then demanding immediate repayment in full under threat of a foreclosure sale.

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The court emphasizes the preliminary nature of the conclusions above. Plaintiffs have

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shown only that there are sufficiently serious questions about defendant’s liability under one of

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their claims, and only with respect to their request for a temporary restraining order that delays a

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foreclosure sale for a few days or weeks. Defendant has not been heard in response. It may very

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well be that defendant has violated no law and has acted fairly under the UCL. But on this

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record, plaintiffs have shown they are entitled to the limited restraining order they request.

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Finally, Federal Rule of Civil Procedure 65(c) provides that “[t]he court may issue a

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temporary restraining order . . . only if the movant gives security in an amount that the court

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considers proper to pay the costs and damages sustained by any party found to have been

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wrongfully . . . restrained.” District courts have “wide discretion in setting the amount of the

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bond, and the bond amount may be zero if there is no evidence the party will suffer damages from

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the injunction.” Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 321 F.3d 878, 882 (9th

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Cir. 2003) (citation omitted). Plaintiffs need not post a bond here. There is no evidence in the

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record showing defendant will suffer damages as a result of a modest delay in the foreclosure

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sale. See Sencion, 2011 WL 1364007, at * 3.

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IV.

CONCLUSION

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For the reasons above, the ex parte application for a temporary restraining order is

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granted. The court grants the application on an ex parte basis to avoid the irreparable harm that

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would likely come to plaintiffs if the foreclosure sale occurs before this court can consider

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whether to issue a preliminary injunction.
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Defendant and its agents are enjoined by this temporary restraining order from

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conducting a trustee sale of plaintiffs’ residence at 2495 Paseo Del Sol, Turlock, CA 95382. The

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temporary restraining order granted here shall expire at 5:00 p.m. on May 23, 2024, absent

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further order of this court.

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A hearing on a motion for a preliminary injunction is set for 2:30 p.m. on May 23, 2024.

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The hearing will proceed by videoconference. The courtroom deputy will contact the parties

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with further information no later than twenty-four hours before the hearing. Any opposition,

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which must not exceed ten pages, excluding any attachments, must be filed no later than 4:30

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p.m. on May 17, 2024. Plaintiffs may file a reply of no more than ten pages, excluding any

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attachments, by 4:30 p.m. on May 21, 2024.
Plaintiffs’ counsel shall promptly serve a copy of this order on defendant, who has not yet

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appeared in this action, and file a declaration on the docket of this action confirming service has

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been completed.

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This order resolves ECF No. 4.

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IT IS SO ORDERED.

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DATE AND TIME: May 10, 2024 at 2:47 p.m.

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