Wells v. CAM XI Trust et al

Filing 9

ORDER GRANTING SECOND APPLICATION FOR TEMPORARY RESTRAINING ORDER AND SETTING SCHEDULE by Hon. Jon S. Tigar granting 8 Ex Parte Application.Response due by 1/5/2017 at 5:00 p.m. Reply due by 1/9/2017 at 5:00 p.m. Motion Hearing set for 1/11/2017 08:30 AM in Courtroom 7, 19th Floor, San Francisco before Hon. Jon S. Tigar.(whalc1, COURT STAFF) (Filed on 12/30/2016)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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ROBERT N. WELLS,

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For the Northern District of California

United States District Court

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Case No. 16-cv-07380 JST

Plaintiff,

ORDER GRANTING SECOND
APPLICATION FOR
TEMPORARY RESTRAINING
ORDER AND SETTING
SCHEDULE

v.
CAM XI TRUST, et al.,

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Defendants.

Re: ECF No. 8
/

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Plaintiff has filed an application for an ex parte temporary restraining order. ECF No. 8.
For the reasons stated below, the application is GRANTED.

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I. BACKGROUND

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A. Factual History

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Plaintiff Robert N. Wells is the mortgagor and resident of a home located at 151

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Northcreek Circle, Walnut Creek, CA 94598. Non-party American Brokers Conduit was the

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original lender on Wells’ mortgage loan, and defendant CAM XI Trust purports to have

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acquired an interest in the loan based on a chain of assignments that began in June 2011.

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American Brokers Conduit, however, ceased operations and closed on or before November 30,

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2010.

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In August 2016, CAM XI recorded a notice of default, which stated Wells owed

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$213,453.17. Wells acknowledges that he stopped paying his mortgage in June 2015, and he

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admits that he was “in arrears for approximately $29,400.00” but denies he owes the full
amount of $213,453.17. ECF No. 8-4 ¶ 9.

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In December 2016, Wells received a notice of trustee’s sale, which set the date of sale
for January 3, 2017, at 9:00 a.m. Id., Exh. A.

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B. Procedural History
On December 29, 2016, Wells filed a complaint against CAM XI and another defendant,

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BSI Financial Services, which is the purported servicer of his loan, alleging wrongful

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foreclosure, breach of contract, and related claims, and seeking cancellation of the loan against

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his home and related relief. Wells asserts that American Brokers Conduit lacked authority to

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assign his loan in June 2011, which assignment began the chain of assignments ending with

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CAM XI, inasmuch as American Brokers Conduit had ceased operations prior to that date.
Thus, he argues, the initial purported assignment and each subsequent assignment, was void,

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For the Northern District of California

United States District Court

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depriving defendants of authority to foreclose. ECF. No. 1.

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The same day, Wells also filed an Ex Parte Application for Temporary Restraining

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Order to enjoin the pending foreclosure of his home, with a trustee’s sale scheduled for

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January 3. An order denied that first application because Wells failed to allege any effort to

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give defendants notice of his TRO application or any reason why notice should not be required,

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pursuant to Rule 65(b)(1) and Civil Local Rule 65-1(b). That denial was without prejudice to a

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renewed motion that satisfied those requirements. ECF No. 7.

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On December 30, Wells filed the instant second motion for a TRO, in which he alleged

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his counsel had faxed and emailed a letter to defendants containing the TRO papers. ECF

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No. 8-2.

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For the reasons stated below, Wells’s motion is GRANTED. Defendants are
temporarily enjoined from conducting a trustee’s sale of Wells’s home.
II. LEGAL STANDARD
The same legal standard applies to a motion for a temporary restraining order and a

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motion for a preliminary injunction. See Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240

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F.3d 832, 839 n.7 (9th Cir. 2001). A plaintiff seeking either remedy “must establish that he is

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likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of

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preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the
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public interest.” Am. Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052

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(9th Cir. 2009) (quoting Winter v. Nat. Resources Defense Council, 555 U.S. 7, 20 (2008)). The

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purpose of such 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).

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III. DISCUSSION
This order finds that Wells has met his burden in requesting a temporary restraining

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order. On the present record, Wells is likely to succeed on the merits of his claim that the initial

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assignment from American Brokers Conduit was void, he is likely to suffer irreparable harm,
and the balance of equities and the public interest favor granting a temporary restraining order,

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For the Northern District of California

United States District Court

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at least where a bond is posted.

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This order first takes judicial notice of certain facts that are necessary to Wells’s motion,
but absent from the sworn record. It then addresses the Winter factors.

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A. Judicial Notice

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Wells did not submit a sworn statement supporting his contention that American

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Brokers Conduit, the original lender for the mortgage at issue here, ceased all operations and

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closed on November 30, 2010. Nevertheless, the undersigned takes judicial notice of the fact

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that American Home Mortgage Corporation did business as American Brokers Conduit, and

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that American Home Mortgage Corporation was liquidated on or before November 30, 2010

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pursuant to a plan of bankruptcy. See In re American Home Mortgage Holdings, Inc., et al.,

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No. 07-11047 (Bankr. D.Del. Feb. 23, 2009) (Dkt. No. 7042); id. (Bankr. D.Del. Nov. 30, 2010)

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(Dkt. No. 9519).

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B. Success on the Merits
The present record supports Wells’s contention that CAM XI never acquired a valid

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interest in his mortgage and thus lacks authority to foreclose, inasmuch as the first assignment

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in that sequence occurred after the initial lender, American Brokers Conduit, had ceased

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operations and shut down. Under Yvanova v. New Century Mortgage Corporation, a mortgagor

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may challenge a foreclosure based on allegations that assignments of the loan were void. 62
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Cal. 4th 919, 939 (2016). Although Yvanova was limited to post-foreclosure claims, the

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undersigned has previously concluded that the California Supreme Court will likely extend

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Yvanova to pre-foreclosure claims. See Lundy v. Selene Fin., LP, 15-CV-05676-JST, 2016 WL

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1059423, at *10 (N.D. Cal. Mar. 17, 2016). This order likewise assumes, solely for the sake of

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assessing the likelihood of success on the merits on this application for a temporary restraining

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order, that the California Supreme Court would extend Yvanova to pre-foreclosure challenges.

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For the avoidance of any doubt, this issue may be revisited at subsequent proceedings, including

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at the hearing following this order.

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Accordingly, Wells has demonstrated a sufficient likelihood of success on the merits
that the initial assignment of his loan was void. This order declines to address the merits of the

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For the Northern District of California

United States District Court

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balance of Wells’s causes of action.

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C. Irreparable Harm

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Wells has provided a declaration stating that he will suffer irreparable harm if an

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injunction is not granted. He avers that absent a temporary restraining order, he will lose his

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home. Although Wells has not stated that he would be homeless if forced out of this particular

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home, “[i]t is well-established that the loss of an interest in real property constitutes an

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irreparable injury.” Park Village Apt. Tenants Ass’n v. Mortimer Howard Trust, 636 F.3d 1150,

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1159 (9th Cir. 2011). Wells has satisfied this factor.

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D. Balance of the Equities and the Public Interest
This temporary restraining order will delay the trustee sale of the property for a short

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period of time, until the court can hold a hearing on a motion for a preliminary injunction,

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which will occur in less than two weeks. This brief delay of the sale for the purpose of allowing

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consideration of the issues herein with the benefit of full briefing does not overcome the

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irreparable harm that will occur if Wells loses his home.

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This order acknowledges, however, that Wells filed his initial motion without giving

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notice to defendants on Thursday, December 29, and he filed the instant motion on Friday,

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December 30, effectively guaranteeing that defendants could not be heard either in writing or at

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a noticed hearing before the scheduled trustee’s sale on Tuesday, January 3 (particularly given
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that January 2 is a court holiday). Wells knew of the trustee’s sale, however, weeks earlier.

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Ordinarily, a “long delay before seeking a preliminary injunction implies a lack of urgency and

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irreparable harm.” Oakland Tribune, Inc. v. Chronicle Publ’g Co., 762 F.2d 1374, 1377 (9th

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Cir. 1985). To offset any imbalance, this order will require Wells to post a bond in the amount

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of $29,400, which is the amount he admits is owed on his loan.

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CONCLUSION

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For the reasons stated above and to the extent stated above, Wells’s application for a

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temporary restraining order is GRANTED. The order will not take effect unless and until a bond

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in the amount of $29,400 is posted with the Court registry by January 3, 2017 at 11:00 a.m.
This order sets the following briefing schedule. Defendants shall respond to Wells’s

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For the Northern District of California

United States District Court

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opening brief by January 5, 2017 at 5:00 p.m. Wells may reply by January 9, 2017 at 5:00

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p.m The motion will be heard in Courtroom 7 on the 19th Floor at the Federal Courthouse at

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450 Golden Gate Ave., San Francisco, on January 11, 2017 at 8:30 a.m.

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IT IS SO ORDERED.

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Dated:

December 30, 2016
JON S. TIGAR

UNITED STATES DISTRICT JUDGE

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