Santos v. Reverse Mortgage Solutions, Inc. et al

Filing 55

Order by Hon. Samuel Conti denying 35 Motion for Civil Contempt Sanctions.(sclc1, COURT STAFF) (Filed on 7/22/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

United States District Court

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ISABEL SANTOS, individually and as ) Case No. 12-3296-SC
trustee and beneficiary of the
)
Yolanda Maria Santos Trust,
) ORDER DENYING MOTION FOR
) CIVIL CONTEMPT SANCTIONS
Plaintiff,
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v.
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REVERSE MORTGAGE SOLUTIONS, INC.; )
NDEX WEST, LLC; and DOES 1 through )
20,
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Defendants.
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)

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I.

INTRODUCTION
Now before the Court is Plaintiff Isabel Santos's

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("Plaintiff") motion for civil contempt sanctions.

ECF No. 53

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("Mot.").

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Solutions, Inc. ("RMS") and NDEX West, LLC ("NDEX") (collectively,

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"Defendants") violated a preliminary injunction enjoining the sale

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of Plaintiff's home by, inter alia, sending Plaintiff sixty-four

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separate notices of sale in the last several months.

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fully briefed, ECF Nos. 49 ("Opp'n"), 53 ("Reply"), and appropriate

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for determination without oral argument per Civil Local Rule 7-

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1(b).

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However, the Court orders Defendants to cease and desist much of

Santos asserts that Defendants Reverse Mortgage

The Motion is

For the reasons set forth below, the Motion is DENIED.

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the conduct described below.

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II.

BACKGROUND

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In June 2009, Plaintiff's mother, the late Yolanda Maria

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Santos, took out a federally insured reverse mortgage loan secured

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by her residence at 930 Santa Cruz Drive, Pleasant Hill, California

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(the "Property").

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Santos died.

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she continually attempted to enter into a payment plan that would

On or around February 7, 2011, Yolanda Maria

Plaintiff alleges that, following her mother's death,

United States District Court

For the Northern District of California

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pay off the reverse mortgage loan and allow her to purchase the

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Property.

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permit her to purchase the Property and instead insisted that the

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Property either be foreclosed or sold to some third party.

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began foreclosure proceedings in February 2012.

Plaintiff further alleges that RMS unlawfully refused to

NDEX

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On June 8, 2012, three days before the scheduled trustee's

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sale of the Property, Plaintiff filed a complaint in the California

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Superior Court by and for Contra Costa County - Martinez (the

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"state court"), asserting four causes of action: (1) breach of

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contract, (2) declaratory relief, (3) slander of title, and (4)

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cancellation of written instruments pursuant to California Civil

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Code section 3412.

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tentative ruling granting Plaintiff's motion for a preliminary

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injunction.

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state court affirmed its tentative ruling and issued a preliminary

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injunction, which provided: "Defendants and their employees,

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agents, and persons acting with them or on their behalf are

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enjoined and restrained from selling, transferring any ownership

On June 26, 2012, the state court issued a

ECF No. 18-5 at 1.

Two days later, on June 28, the

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interest in or further encumbering the property . . . ."

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2.

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Id. at 1-

On June 26, the same day the state court issued its tentative

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ruling, Defendants filed a notice of removal in federal court.

ECF

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No. 1.

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did not file a copy of the notice of removal with the clerk of the

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state court until July 3, 2012.

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Defendants moved for the Court to dissolve the preliminary

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injunction entered by the state court.

The Court takes judicial notice of the fact that Defendants

Soon after the case was removed,

ECF No. 12.

That motion

United States District Court

For the Northern District of California

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was denied on October 12, 2012.

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Court concluded: "By failing to identify any relevant change in law

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or circumstance, Defendants fail to persuade the Court that it

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should reconsider the state court's earlier entry of a preliminary

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injunction, including the state court's decision to do so without

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requiring a bond."

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ECF No. 25 ("Oct. 12 Order").

The

Id. at 15-16.

Plaintiff now claims that Defendants engaged in a pattern of

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harassment after the state court entered the preliminary injunction

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and this Court refused to dissolve it.

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September 13, 2012, when Plaintiff was contacted by an appraiser

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whom RMS sent to do an interior appraisal of the house.

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("Pl.'s Decl.") ¶ 8.

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("Hanecak"), subsequently informed Defendants that they should

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contact him before attempting to inspect or appraise the Property.

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ECF No. 43 ("Hanecak Decl.") ¶ 4, Ex. 1.

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ignored this request, as Plaintiff was contacted by another

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appraiser on February 20, 2013, and, on June 30, 2013 a man visited

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Plaintiff's home at 8:45 p.m. to take photos for "the bank."

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Decl. ¶ 12; ECF No.53-1 ("Pl.'s Supp. Decl.") ¶ 3.

This pattern began on

ECF No. 36

Plaintiff's counsel, Daniel J. Hanecak

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Defendants apparently

Pl.'s

Defendants have also sent Plaintiff a deluge of notices in the

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last several months.

On January 11, 2013, Plaintiff received

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sixteen notices of postponement of the trustee's sale from NDEX.

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The notices were addressed to her deceased mother and stated:

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You are hereby notified that the . . . Trustee's Sale
has been postponed to 02/11/2013 . . . . YOU MAY NOT
RECEIVE WRITTEN NOTICE OF POSTPONEMENT EACH TIME THE
TRUSTEE'S SALE IS POSTPONED . . . . UNLESS YOU TAKE
ACTION TO PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A
PUBLIC SALE WITHOUT FURTHER NOTICE.

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United States District Court

For the Northern District of California

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On February 11, 2013, Plaintiff received another sixteen notices of

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postponement, stating that the trustee's sale had been postponed

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another month, to March 11, 2013.

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February 11, notices were identical to the January 11 notices.

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NDEX continued to send notices in March and April 2013.

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months, Plaintiff received sixty-four notices of postponement from

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Defendant.

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requested that Defendants cease and desist.

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2.

Other than the listed dates, the

In four

The letters continued even after Plaintiff's counsel
See Hanecak Decl. Ex.

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Additionally, Plaintiff complains that she continues to

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receive phone calls from interested buyers because the sale of her

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home is listed as "active" on foreclosureradar.com.

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states that buyers call on a weekly basis and sometimes drive by

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the house and take photographs.

Plaintiff

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III. LEGAL STANDARD
Federal courts "have inherent power to enforce compliance with

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their lawful orders through civil contempt."

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States, 493 U.S. 265, 276 (1990) (quotations omitted).

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Spallone v. United
The party

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moving for sanctions "has the burden of showing by clear and

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convincing evidence that the contemnors violated a specific and

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definite order of the court."

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Francisco, 968 F.2d 850, 856 n.9 (9th Cir. 1992).

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shifts to the contemnors to demonstrate why they were unable to

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comply. . . .

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comply."

Stone v. City & Cnty. of San
"The burden then

They must show they took every reasonable step to

Id. (internal citations omitted).

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United States District Court

For the Northern District of California

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IV.

DISCUSSION
Plaintiff argues that Defendants violated the state court's

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preliminary injunction, as well as the Court's Order declining to

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dissolve the preliminary injunction, by (1) sending Plaintiff

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sixty-four letters noticing a sale of the Property over the course

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of four months, (2) calling Plaintiff to schedule interior

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appraisals of the Property on multiple occasions, and (3) listing

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the sale of the Property as active on foreclosureradar.com.

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Defendants respond that the state court had no jurisdiction to

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issue the preliminary injunction, reasoning that the case was

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removed before the injunction could take effect.

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argument lacks merit.

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June 26 and entered a final order on the preliminary injunction on

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June 28.

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court on June 26 (the same day as the tentative order), they did

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not file a copy of the notice of removal with the state court until

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July 3.

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Opp'n at 7.

This

The state court issued a tentative ruling on

While Defendants filed a notice of removal in federal

The removal statute provides that "promptly" after filing the

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notice of removal, a defendant "shall give written notice thereof

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to all adverse parties and shall file a copy of the notice with the

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clerk of such State court, which shall effect the removal and the

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State court shall proceed no further unless and until the case is

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remanded."

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court retained concurrent jurisdiction over the action until

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Defendants (1) filed the notice of removal in federal court, (2)

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gave notice to Plaintiff, and (3) gave notice to the state court.

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See Gutierrez v. Empire Mortgage Corp., CVF10-0079 AWI GSA, 2010 WL

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1644714, at *2 (E.D. Cal. Apr. 21, 2010); Miller v. Aqua Glass,

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Inc., CIV. 07-3088-CL, 2008 WL 2854125, at *2 (D. Or. July 21,

United States District Court

For the Northern District of California

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28 U.S.C. § 1446(d).

Pursuant to § 1446(d), the state

2008).
Thus, the preliminary injunction took effect six to eight days

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before state court was divested of jurisdiction.

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that Defendants removed to avoid the state court's preliminary

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injunction, they have engaged in improper (and unsuccessful) forum

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shopping.

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court's preliminary injunction remained in force, it was resolved

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by the Court's October 12 Order, which denied Defendants' motion to

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dissolve the injunction.

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To the extent

If there was any ambiguity about whether the state

Defendants further argue that Plaintiff's motion for sanctions

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is untimely.

Opp'n at 6.

This argument is also unavailing.

The

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evidence shows that Plaintiff's counsel attempted to resolve this

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matter informally, before appealing to the Court for relief.

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was good sense, not delay.

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filed on May 14, 2013, only one month after Plaintiff received

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foreclosure notices forty-nine through sixty-four.

This

In any event, Plaintiff's motion was

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Finally, Defendants contend that they did not violate the

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preliminary injunction since the injunction only prohibits the sale

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of the Property.

Id. at 5.

Defendants argue that they merely

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California Civil Code section 2924g(c)(1)(A), which provides that

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the "trustee shall postpone the sale . . . [u]pon the order of any

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court of competent jurisdiction."

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they were required to provide Plaintiff's deceased mother with

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written notices of the postponements pursuant to the Civil Code

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section 2924(a)(5).

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sale is postponed for a period of at least ten days, written notice

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shall be provided to the borrower.

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United States District Court

maintained the status quo by postponing the sale pursuant to

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For the Northern District of California

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Defendants have a point.

Id.

Defendants also argue that

Section 2924(a)(5) provides that whenever a

Nothing in the preliminary

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injunction expressly prohibits them from postponing the sale or

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noticing that postponement.

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Plaintiff's motion for civil contempt sanctions.

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Defendants may have complied with the letter of the law, they

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appear to have done so in a manner calculated to harass Plaintiff.

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Even if Defendants were required to send Plaintiff's deceased

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mother a notice of postponement, there was no reason for Defendants

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to send sixteen notices per month, month after month.

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Court see any purpose in postponing the trustee's sale from month

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to month when the trial in this matter is set for November 18,

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2013.

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For that reason, the Court DENIES
However, while

Nor does the

To avoid any further harassment of Plaintiff, the Court ORDERS

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Defendants to postpone the trustee's sale of the Property to

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sometime after December 1, 2013.

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postponed again if the trial in this matter is continued.

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Defendants may notify Plaintiff (or attempt to notify her deceased

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mother) of the postponement in a manner consistent with their

The trustee's sale shall be

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obligations under California law; however, they shall not send any

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more notifications than are necessary.
The Court further ORDERS that Defendants and their employees,

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agents, and persons acting with them or on their behalf shall not

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visit the Property for any purpose without first coordinating with

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Plaintiff's counsel.

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preliminary injunction shall remain in effect during the pendency

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of this action or until the injunction is dissolved by the Court,

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and any attempt by Defendants to sell, transfer, or encumber the

As discussed above, the state court's

United States District Court

For the Northern District of California

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Property in the meantime shall constitute a violation of that

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injunction.

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injunction, or any future attempts to harass Plaintiff in

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connection with the threatened foreclosure of the Property will

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result in sanctions.

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have any control over foreclosureradar.com, the Court declines to

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issue an order relating to the website.

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Failure to comply with this Order or the preliminary

Since there is no indication that Defendants

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V.

CONCLUSION
For the foregoing reasons, Plaintiff Isabel Santos's motion

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for civil contempt sanctions is DENIED.

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that Defendants shall postpone the trustee sale of the Property to

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some date after December 1, 2013.

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Defendants and their employees, agents, and persons acting with

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them or on their behalf shall not visit the Property for any

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purpose without first coordinating with Plaintiff's counsel.

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Defendants shall also comply with the other requirements set forth

United States District Court

For the Northern District of California

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The Court hereby ORDERS

The Court further ORDERS that

in Section IV supra.

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IT IS SO ORDERED.

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Dated: July 22, 2013
UNITED STATES DISTRICT JUDGE

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