Magana v. Wells Fargo Bank, N.A et al

Filing 42

ORDER GRANTING PRELIMINARY INJUNCTION AND ORDERING PAYMENT OF BOND. Signed by Judge Claudia Wilken on 10/18/2011. (Attachments: # 1 Certificate/Proof of Service)(ndr, COURT STAFF) (Filed on 10/18/2011)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 VICTORIA P. MAGANA, an individual, 8 9 United States District Court For the Northern District of California 10 11 ORDER GRANTING PRELIMINARY INJUNCTION AND ORDERING PAYMENT OF BOND Plaintiff, 6 7 No. C 11-03993 CW v. WELLS FARGO BANK, N.A.; LSI TITLE COMPANY, a California Corporation; and NDEX WEST LLC, a Delaware limited liability corporation, Defendants. ________________________________/ 12 13 On August 29, 2011, pursuant to the ex parte application of 14 Plaintiff Victoria P. Magana, the Court entered a temporary 15 restraining order (TRO) against Defendants Wells Fargo Bank, N.A., 16 and NDEx West LLC,1 preventing Defendants from proceeding with a 17 trustee’s sale of property located at 1113 Remington Court in 18 Sunnyvale, California. 19 injunction against Defendants. 20 motion was heard on October 6, 2011. 21 arguments and the papers submitted by the parties, the Court 22 GRANTS Plaintiff’s motion, on the condition that she posts a bond. 23 BACKGROUND 24 25 Plaintiff now seeks a preliminary Defendants oppose the motion. Having considered oral In March 2007, Plaintiff obtained a mortgage loan from Defendants secured by a deed of trust against her real property at 26 27 28 The 1 Plaintiff has voluntarily dismissed her claims against Defendant LSI Title Company. (Docket No. 14.) 1 1113 Remington Court in Sunnyvale, California. 2 records state that Plaintiff stopped making mortgage payments in 3 the spring of 2009. 4 of Default on the property. 5 recorded a Notice of Trustee’s Sale. 6 sale was subsequently scheduled for July 8, 2011. 7 a verified complaint in state court on July 7, 2011, the day 8 before the scheduled foreclosure sale. 9 court issued a TRO postponing the trustee’s sale until August 25, On May 26, 2010, Defendants recorded a Notice 10 United States District Court For the Northern District of California Defendants’ 2011. 11 On August 27, 2010, Defendants A non-judicial foreclosure Plaintiff filed On July 8, 2011, the state court on August 12, 2011. Defendant Wells Fargo filed a notice of removal to federal 12 13 LEGAL STANDARD “A plaintiff seeking a preliminary injunction must establish 14 that he is likely to succeed on the merits, that he is likely to 15 suffer irreparable harm in the absence of preliminary relief, that 16 the balance of equities tips in his favor, and that an injunction 17 is in the public interest.” 18 Inc., 129 S. Ct. 365, 374 (2008). 19 Winter v. Natural Res. Def. Council, Alternatively, “a preliminary injunction could issue where 20 the likelihood of success is such that serious questions going to 21 the merits were raised and the balance of hardships tips sharply 22 in plaintiff’s favor,” so long as the plaintiff demonstrates 23 irreparable harm and shows that the injunction is in the public 24 interest. 25 1127, 1131 (9th Cir. 2011) (citation and internal quotation and 26 editing marks omitted). 27 considering a plaintiff’s showing as to the likelihood of success 28 on the merits and the likelihood of irreparable harm. Alliance for the Wild Rockies v. Cottrell, 632 F.3d A court employs a sliding scale when 2 Id. “Under 1 this approach, the elements of the preliminary injunction test are 2 balanced, so that a stronger showing of one element may offset a 3 weaker showing of another.” 4 5 Id. DISCUSSION California Civil Code section 2923.5 “concerns the crucial 6 first step in the foreclosure process: The recording of a notice 7 of default as required by section 2924.” 8 185 Cal. App. 4th 208, 221 (2010). 9 may not file a notice of default until thirty days after it has Mabry v. Superior Court, Under section 2923.5, a lender United States District Court For the Northern District of California 10 contacted “the borrower by phone or in person to ‘assess the 11 borrower’s financial situation and explore options for the 12 borrower to avoid foreclosure.’”2 13 § 2923.5(a)(2)). 14 the borrower that the borrower may request additional meetings, 15 which the lender must schedule within fourteen days, and the 16 lender must provide the borrower with the toll-free telephone 17 number for the United States Department of Housing and Urban 18 Development (HUD) to find a HUD-certified housing counseling 19 agency. 20 complied with, then there is no valid notice of default, and 21 without a valid notice of default, a foreclosure sale cannot 22 proceed.” 23 section 2923.5 is “to postpone the sale until there has been 24 compliance with” the statute. 25 § 2924g(c)(1)(A)). Id. (quoting Cal. Civ. Code During this conversation, the lender must advise Cal. Civ. Code § 2923.5(a)(2). Id. at 223. “If section 2923.5 is not The remedy for a failure to comply with Id. (citing Cal. Civ. Code 26 2 27 28 Alternatively, a lender may comply with section 2923.5 by completing the due diligence requirements of subdivision (g) of the statute. Mabry, 185 Cal. App. 4th at 221. 3 1 Plaintiff’s declaration and verified complaint are sufficient 2 to demonstrate she is likely to succeed on the merits of her claim 3 under section 2923.5(a)(2). 4 records documenting some communications between the parties that 5 took place thirty days or more before the recording of the notice 6 of default, these records do not demonstrate that Defendants 7 complied with the requirements of section 2923.5(a)(2). 8 Specifically, these documents do not show that Defendants 9 initiated the requisite telephone calls or in-person meetings. Although Defendants have submitted United States District Court For the Northern District of California 10 These records also do not support that during these conversations 11 Defendants informed Plaintiff of her right to request a further 12 meeting in person or over the phone, to take place within fourteen 13 days, or of the HUD toll-free telephone number. 14 meet the obligations of section 2923.5(a)(2) by sending form 15 letters. Mabry, 185 Cal. App. 4th at 209-10. 16 Defendants cannot Further, because the Remington Court property is likely to be 17 sold at the foreclosure sale, Plaintiff has demonstrated that she 18 is likely to suffer irreparable harm. 19 tips in Plaintiff’s favor because, in the absence of preliminary 20 injunctive relief, she faces the sale of the Remington Court 21 property; in contrast, as explained above, preliminary injunctive 22 relief provided under section 2923.5 will only delay the 23 foreclosure sale to permit compliance with the statute. 24 the public interest favors vindicating the Legislature’s intent 25 “to have individual borrowers and lenders ‘assess’ and ‘explore’ 26 alternatives to foreclosure.” 27 28 The balance of equities Finally, Mabry, 185 Cal. App. 4th at 223. The Court, however, rejects Plaintiff’s argument that no bond at all should be posted. See Fed.R.Civ.P. 65(c) (providing that 4 1 “[t]he court may issue a preliminary injunction or a temporary 2 restraining order only if the movant gives security in an amount 3 that the court considers proper to pay the costs and damages 4 sustained by any party found to have been wrongfully enjoined or 5 restrained”). 6 but not limited to the fact that over the past two years, 7 Plaintiff has continued living at the real property at issue 8 without making any payments to Defendants, the Court finds that a 9 bond in the amount of $3,000 per month, the approximate fair Taking into account the circumstances, including United States District Court For the Northern District of California 10 rental value of the house and an amount that Plaintiff had 11 previously represented that she could afford to pay, is 12 appropriate. 13 Accordingly, the Court GRANTS Plaintiff’s motion for a 14 preliminary injunction on condition that she pay a bond of $3,000 15 per month, starting on October 20, 2011. 16 restraining order remains in effect until that date. 17 payment on the bond is timely provided, a preliminary injunction 18 will be entered as a separate document. 19 satisfied without a formal bond, by depositing the required 20 amounts in Defendants’ attorneys’ trust account. 21 injunction will be lifted if Plaintiff discontinues payment on the 22 bond. 23 24 25 The temporary If proof of The bond condition may be The preliminary IT IS SO ORDERED. Dated: 10/18/2011 CLAUDIA WILKEN United States District Judge 26 27 28 5

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