Gray v. Central Mortgage Company et al

Filing 21

ORDER RE: 8 LIFTING TEMPORARY RESTRAINING ORDER AND DENYING MOTION FOR PRELIMINARY INJUNCTION. Signed by Judge Richard Seeborg on 04/14/2010. (rslc2, COURT STAFF) (Filed on 4/14/2010)

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*E-Filed 4/14/10*

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

United States District Court

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NO. C 10-00483 RS ORDER

For the Northern District of California

DORIAN W. GRAY, Plaintiff,

No. C 10-00483 RS ORDER LIFTING TEMPORARY RESTRAINING ORDER AND DENYING MOTION FOR PRELIMINARY INJUNCTION

v.

CENTRAL MORTGAGE COMPANY, d/b/a CENTRAL MORTGAGE LOAN SERVICING COMPANY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; PATRIOT FINANCIAL CORPORATION; MTC FINANCIAL INC., d/b/a TRUSTEE CORPS; and ALVIN BROWN, Defendants. ____________________________________/

This case concerns a dispute over a promissory note signed by plaintiff Dorian W. Gray. As security for the note, he executed a deed of trust on his home, located at 5753 Oakmont Drive, Richmond, California. The Court issued a temporary restraining order ("TRO") enjoining foreclosure of the home. For the reasons stated herein, that order is dissolved and Gray's subsequent motion for a preliminary injunction is denied. I. BACKGROUND

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According to the complaint and accompanying exhibits and declarations, Gray purchased his home in December 2005. Shortly thereafter, in early January 2006, he signed an adjustable rate promissory note for $638,910.00. The lender was Downey Savings and Loan ("Downey"). See Adjustable Rate Note, Exh 1. to Complaint. The loan was secured by a deed of trust on the residence and was brokered by defendant Alvin Brown, an employee of defendant Patriot Financial Corp. Under the terms of the note, Gray's monthly payment was set at $2,361.54. Id. at 2. Allegedly, the loan documents did not contain a servicing notice, as required by RESPA, 12 U.S.C. § 2605(a). After about a year, the adjustable rate kicked in, and the amount due on Gray's monthly payments nearly doubled, to an amount Gray was unable to afford. At this time, Gray sought and obtained copies of all his original loan documents, many of which, he alleges, had not been provided to him when he signed the promissory note. Gray claims to have found significant discrepancies when he reviewed these documents. For example, there was a letter describing the nature of Gray's business and purporting to bear his signature, which he alleges he never signed. Exh. 2 to Gray Declaration. Also troubling was a letter from an individual named Gregory Hoofkin of Precise Business Services, who stated that he was Gray's accountant and that he had completed Gray's tax returns for seven years. Exh. 3 to Gray Declaration. Gray, however, states that he has never met this individual nor engaged his services as an accountant. Both letters were addressed "To Whom It May Concern," and appear to have been forwarded by Patriot, the mortgage broker, to Downey, the lender, as inducements to grant Gray's loan application. By February 10, 2009, three years after he had signed the original promissory note, Gray was told he was $37,468.33 in arrears. In May 2009, he received a notice of default from defendant Trustee Corps, who represented that it was acting to secure obligations in favor of Downey. Notice of Default, Exh. 3 to Complaint. During the course of these events, Gray's promissory note was being passed from lender to lender. In November 2006, Downey assigned the Deed of Trust to defendant Mortgage Electronic Registration Systems, Inc. ("MERS"). See Assignment of Deed of Trust, Exh. 2 to Complaint. In
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September 2009, MERS assigned the Deed of Trust to defendant Central Mortgage Company ("Central"), and substituted DSL Service Company as Trustee. Exh. 4 to Complaint. On the same day in September, Central re-substituted Trustee Corps as trustee. Exh. 5 to Complaint. On October 15, 2009, Trustee Corps scheduled a trustee sale for November 11, 2009. Notice of Trustee's Sale, Exh. 6 to Complaint. On both November 5, 2009, and December 4, 2009, Gray sent Central a Qualified Written Request ("QWR") pursuant to RESPA, 12 U.S.C. § 2605(e). RESPA requires Central, as loan servicer, to "provide a written response acknowledging receipt of the correspondence within 20 days" and to respond substantively within 60 days. 12 U.S.C. § 2605(e)(1)(A) and (e)(2). Central, however, responded to neither of the two QWRs. Moreover, according to Gray, during this time Central began notifying consumer credit agencies of his arrearages, which severely impacted Gray's credit score. In February 2010, Gray filed a complaint alleging violations of the Real Estate Settlement Procedures Act ("RESPA") and applied for a TRO and a preliminary injunction to prevent the foreclosure of his residence. On March 31, 2010, the Court granted the request for a TRO. The TRO has now expired, and Gray now moves for a preliminary injunction. The motion was heard on April 14, 2010. II. LEGAL STANDARD Injunctive relief, whether temporary or permanent, is an "extraordinary remedy, never awarded as of right." Winter v. Natural Res. Defense Council, 129 S. Ct. 365, 376 (2008); Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982). "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter 129 S. Ct. at 374). Moreover, "[a] preliminary injunction is generally only available if injunctive relief is appropriate in the first instance." Chung v. NBGI, Inc., No. 09-04878 MHP, 2010 WL 841297 (N.D. Cal. Mar. 10, 2010); see Amoco Production Co. v. Village of Gambell, AK, 480 U.S. 531, 546
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n. 12, (1987) ("The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success."); Sims Snowboards, Inc. v. Kelly, 863 F.2d 643, 647 (9th Cir. 1988) (in case involving diverse parties and state law claims, holding that preliminary injunction could not be granted if such remedy was not available under state law). Therefore, the question before the Court is not only whether Gray is likely to succeed in proving that the defendants violated RESPA, but whether he is likely to receive injunctive relief as a remedy for any such violation. III. DISCUSSION The Winter factors were considered in the TRO. That order concluded all four factors weighed in Gray's favor, and no new argument or documentation has been submitted in the ensuing time period that would prompt the Court to change its mind. See Temporary Restraining Order at 2-3. More questionable at this juncture, however, is whether Gray's RESPA claims, even if he succeeded on them, would entitle him to enjoin foreclosure and stay in his home. 12 U.S.C. § 2605, which is the section of RESPA upon which Gray relies, contains its own damages and costs section. 12 U.S.C. § 2605(f). That section provides that individuals damaged by a RESPA violation are entitled to receive actual damages, as well as any additional damages the court may allow "in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000." 12 U.S.C. § 2605(f)(1)(A) & (B). Costs and reasonable attorney fees are also available to successful RESPA plaintiffs. 12 U.S.C. § 2605(f)(3). None of these remedies, however, would permit an injunction against foreclosure. Numerous district courts have denied preliminary injunctions to RESPA plaintiffs on this basis. E.g., Chung, 2010 WL 841297 at *3; Montes v. Quality Loan Service Corp., No. CV 09-5864 PSG (RCx), 2010 WL 114485, at *2 (C.D. Cal. Jan. 5, 2010); Pettie v. Saxon Mtg. Servs., No. C08-5089RBL, 2009 WL 1325947, at *3 (W.D. Wash. May 12, 2009). For this reason, Gray's motion for a preliminary injunction is ultimately not viable. IV. CONCLUSION

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Gray's motion for a preliminary injunction is accordingly denied. The temporary restraining order entered March 31, 2010, is hereby dissolved.

IT IS SO ORDERED.

Dated: 4/14/2010

RICHARD SEEBORG

UNITED STATES DISTRICT JUDGE

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