Sosa v. The Bank of New York Mellon Trust Company, N.A.

Filing 61

ORDER by Magistrate Judge Laurel Beeler:denying 56 Motion for Bond. (ls, COURT STAFF) (Filed on 9/17/2012)

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UNITED STATES DISTRICT COURT

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Northern District of California

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San Francisco
MARIA G. SOSA, an individual,

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For the Northern District of California

UNITED STATES DISTRICT COURT

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No. C 12-00144 LB

Plaintiff,

ORDER

v.
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BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.; and DOES 1 through 20,
inclusive,

[ECF No. 56]

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Defendants.
_____________________________________/

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I. INTRODUCTION
Plaintiff Maria Sosa filed this action against Defendant Bank of New York Mellon Trust

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Company, N.A. (“BNYM”) accusing BNYM of instituting wrongful foreclosure proceedings against

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her property. See Notice of Removal, ECF No. 1. During the course of the proceedings, the court

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enjoined BNYM from conducting a deed of trust sale or foreclosing on her home on the condition

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that Sosa post a monthly $3,000 bond payments. Plaintiffs have now voluntarily dismissed their

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claims, and BNYM requests that the bond payments be released to it because Sosa has allegedly

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failed to make any of her monthly mortgage payments. Upon consideration of the papers and

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arguments submitted, the court DENIES BNYM’s motion.1

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The court finds this matter to be suitable for determination without oral argument and
vacates the September 20, 2012 hearing. See Civil Local Rule 7-1(b).

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ORDER

II. BACKGROUND

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Sosa alleges that she obtained a $544,000 mortgage loan secured by her residence, which is

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located at 475 Bell street, East Palo Alto, California. Second Am. Compl. (“SAC”), ECF No. 33 at

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2, ¶¶ 2, 20.2 The loan was secured by a trust deed. Id. ¶ 20. BNYM allegedly was assigned the

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rights and interests to the promissory note on or about October 5, 2010 and again on or about

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September 9, 2011. Id. at 6, ¶¶ 25, 28. For reasons that are no longer relevant to the instant dispute,

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Ms. Sosa alleged that the September 9, 2011 assignment is “misleading, invalid, and void.” Id. ¶ 29.

February 2, 2012, after a hearing attended by both parties, the court entered a temporary restraining

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order that enjoined BNYM (as well as its officers, agents, servants, employees, attorneys, and other

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persons who are in active concert or participation with them) from conducting a deed of trust sale of

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For the Northern District of California

A foreclosure sale had been scheduled for February 3, 2012. Application, ECF No. 13 at 1. On

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or foreclosing upon Ms. Sosa residence. 2/2/2012 Order, ECF No. 17. The temporary restraining

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order also required Sosa to post a bond of $3,000 per month and stated that “[i]f Sosa fails to post

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any of the bonds, the temporary restraining order will expire.” Id. at 8.

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On January 31, 2012, two days before the hearing, BNYM assigned its interest under the note

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and the deed of trust to Sosa’s home to USA Residential . See Mot. for Voluntary Dismissal Ex. A,

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ECF No. 54-1. This Assignment was recorded on February 2, 2012. Id. at 1. It appears that BNYM

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failed to disclose this information at the February 2, 2012 hearing.

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BNYM briefly mentioned the assignment in its opposition to Sosa’s motion for preliminary

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injunction. See 2/14/12 Opp’n, ECF No. 22 at 2 (“On January 30, [sic] 2012, BNYM assigned its

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interest in the deed of trust to USA Residential Properties, LLC.” (“USA Residential”)); see also

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BNYM’s Request for Judicial Notice Ex. D, ECF No. 22-1 at 2, 32-33 (attaching the January 31,

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2012 Assignment). On March 27, 2012, the court entered a preliminary injunction with the same

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conditions as the temporary restraining order. 3/27/2012 Order, ECF No. 29 at 2.

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The case docket contains entries indicating that Sosa made $3,000 bond payments on February 7,

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Citations are to the Electronic Case File (“ECF”), with pin cites to the court-generated page
numbers at the top of the document.

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ORDER

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March 1, March 30, and May 1, 2012. See Docket. The docket does not indicate any bond

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payments after May 1, 2012. Id.

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On August 2, 2012, Sosa filed a document titled “Plaintiff’s Notice of Voluntary Dismissal

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Without Prejudice Pursuant to FRCP Rule 41(a)(2),” which was really a motion for voluntary

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dismissal. See ECF No. 49. Shortly thereafter, Defendant Bank of New York Mellon Trust

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Company, N.A. (“BNYM”) filed an application for an Order requesting the court to release Sosa’s

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bond payments to it. See ECF No. 52. The Court denied both motions without prejudice and

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ordered the parties to submit them as noticed motions under Civil Local Rule 7-2. See Order

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Denying Requested Relief, ECF No. 53.

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On August 3, 2012, Sosa refiled her motion for voluntary dismissal without prejudice. ECF No.
54. Though BNYM’s motion for the bond funds was no longer pending, Plaintiffs made a number

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of arguments preemptively opposing it. See id. On August 9, 2012, BNYM refiled its motion

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requesting the bond payments. ECF No. 56. The court held a case management conference on

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August 9, 2012 that Sosa’s counsel failed to attend, but at which BNYM stated that it did not oppose

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Sosa’s motion for voluntary dismissal. See, 8/9/2012 Order, ECF No. 58. Accordingly, the court

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granted Sosa’s motion for voluntary dismissal. Id. Thus, all that remains before the court is

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BNYM’s motion for bond payments, which Sosa opposes.

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III. LEGAL STANDARDS
Federal Rule of Civil Procedure 65(c) requires district courts to condition temporary injunctions

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on payment of a bond. “The Court may issue a preliminary injunction or a temporary restraining

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order only if the movant gives security in an amount that the court considers proper to pay the costs

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and damages sustained by any party found to have been wrongfully enjoined or restrained.” Fed. R.

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Civ. P. 65(c). In some mortgage foreclosure cases, courts in this district have structured injunction

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bonds to require a resident to pay an amount equivalent to the approximate fair rental value of the

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property to the court or even directly to the trust fund maintained by the lender’s counsel. See, e.g.,

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Magana v. Wells Fargo Bank, N.A., No. C 11-03993 CW, 2011 WL 4948674 (N.D. Cal. Oct. 18,

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2011). Still, the enjoined party may only record damages when it has been improperly enjoined and

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injured as a consequence. See Matek v. Murat, 862 F.2d 720, 734 (9th Cir. 1988), abrogated on

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other grounds by Koch v. Hankins, 928 F.2d 1471, 1477-78 (9th Cir. 1991).

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III. DISCUSSION

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Throughout their briefs, the parties trade accusations of malfeasance and inequitable conduct.

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Both parties make numerous side arguments of tangential relevance. The court confines its analysis

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to the relevant points.

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A. Equitable Arguments

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BNYM’s primary argument sounds in equity. BNYM argues that the beneficiary of the mortgage

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note should receive Sosa’s bond payments because Sosa has lived in the property for 26 months

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without making any of her $3,343.02 monthly mortgage payments. 8/9/2012 Mot., ECF No. 56 at 3-

addition to her $92,056.30 in arrears. See id. at 5. Sosa does not address the merits of BNYM’s

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4. In addition, BNYM points out that Sosa received $144,617.03 in cash out of the mortgage, in

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equitable argument. Instead, Sosa unconvincingly accuses BNYM of violating the preliminary

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injunction. See 8/23/2012 Opp’n, ECF No. 59 at 4-5.

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B. Standing

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Sosa’s primary arguments are that BNYM lacks standing to recover the bond payments and was

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not wrongfully enjoined. See, e.g., 8/23/2012 Opp’n, ECF No. 59 at 3. Sosa claims that BNYM

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“relinquished its rights, interests, and obligations under the Deed of Trust and Note as of January 31,

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2012.” Id. Thus, Sosa claims, BNYM has not been the real party in interest since that time and lacks

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standing to claim entitlement to Sosa’s bond payments. See 8/23/2012 Opp’n, ECF No. 59 at 3.

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BNYM responds that Sosa has had notice that USA Residential Properties, LLC – not BNYM –

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was the beneficiary of her loan since February 14, 2012. See 8/9/2012 Mot., ECF No. 56 at 5;

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8/30/2012 Reply, ECF No. 60 at 3-4 (citing ECF No. 22-2 at 3 (acknowledging assignment )).

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BNYM argues that Sosa should be estopped from asserting that USA Residential should not receive

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the bond payments because it is not a party to this lawsuit. 8/9/2012 Mot., ECF No. 56 at 5. The

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court does not follow the logic of BNYM’s argument and, therefore, rejects it.

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Finally, BNYM argues that it has standing because “BNYM’s counsel has asserted under penalty

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of perjury that the current beneficiary – USA Residential – will receive the bond payments released

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by the Court.” 8/9/2012 Mot., ECF No. 56 at 4 (citing Williams Decl., ECF no. 56-1, ¶ 7); see also

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8/30/2012 Reply, ECF No. 60 at 4 (“BNYM’s counsel has declared that she would ensure that the

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released bond payments will be given to USA Residential, thereby undermining Plaintiff’s

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argument.”).

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While the court does not doubt the integrity of BNYM’s counsel, BNYM cites no authority for

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the proposition that a party can establish representative standing in this manner. USA Residential has

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not attempted to intervene in the suit to recover the bond payments and has certainly not proven that

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it was damaged. And even assuming that the BNYM itself had been wrongfully enjoined, it has not

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established that it was damaged as a consequence. Accordingly, the court DENIES BNYM’s motion.

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IV. CONCLUSION

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bond and orders the clerk to disburse the bond to Plaintiff’s counsel.

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For the Northern District of California

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For the reasons previously stated, the court DENIES Defendant’s motion to recover the injunction

This disposes of ECF No. 56.

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IT IS SO ORDERED.

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Dated: September 17, 2012
_______________________________
LAUREL BEELER
United States Magistrate Judge

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