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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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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VICTORIA P. MAGANA, an
individual,

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United States District Court
For the Northern District of California

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ORDER GRANTING
PRELIMINARY
INJUNCTION AND
ORDERING PAYMENT
OF BOND

Plaintiff,

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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.
________________________________/

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On August 29, 2011, pursuant to the ex parte application of

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Plaintiff Victoria P. Magana, the Court entered a temporary

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restraining order (TRO) against Defendants Wells Fargo Bank, N.A.,

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and NDEx West LLC,1 preventing Defendants from proceeding with a

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trustee’s sale of property located at 1113 Remington Court in

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Sunnyvale, California.

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injunction against Defendants.

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motion was heard on October 6, 2011.

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arguments and the papers submitted by the parties, the Court

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GRANTS Plaintiff’s motion, on the condition that she posts a bond.

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BACKGROUND

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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

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The

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Plaintiff has voluntarily dismissed her claims against
Defendant LSI Title Company. (Docket No. 14.)

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1113 Remington Court in Sunnyvale, California.

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records state that Plaintiff stopped making mortgage payments in

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the spring of 2009.

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of Default on the property.

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recorded a Notice of Trustee’s Sale.

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sale was subsequently scheduled for July 8, 2011.

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a verified complaint in state court on July 7, 2011, the day

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before the scheduled foreclosure sale.

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court issued a TRO postponing the trustee’s sale until August 25,

On May 26, 2010, Defendants recorded a Notice

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United States District Court
For the Northern District of California

Defendants’

2011.

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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

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LEGAL STANDARD
“A plaintiff seeking a preliminary injunction must establish

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that he is likely to succeed on the merits, that he is likely to

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suffer irreparable harm in the absence of preliminary relief, that

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the balance of equities tips in his favor, and that an injunction

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is in the public interest.”

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Inc., 129 S. Ct. 365, 374 (2008).

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Winter v. Natural Res. Def. Council,

Alternatively, “a preliminary injunction could issue where

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the likelihood of success is such that serious questions going to

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the merits were raised and the balance of hardships tips sharply

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in plaintiff’s favor,” so long as the plaintiff demonstrates

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irreparable harm and shows that the injunction is in the public

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interest.

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1127, 1131 (9th Cir. 2011) (citation and internal quotation and

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editing marks omitted).

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considering a plaintiff’s showing as to the likelihood of success

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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

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Id.

“Under

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this approach, the elements of the preliminary injunction test are

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balanced, so that a stronger showing of one element may offset a

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weaker showing of another.”

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Id.
DISCUSSION

California Civil Code section 2923.5 “concerns the crucial

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first step in the foreclosure process: The recording of a notice

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of default as required by section 2924.”

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185 Cal. App. 4th 208, 221 (2010).

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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

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contacted “the borrower by phone or in person to ‘assess the

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borrower’s financial situation and explore options for the

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borrower to avoid foreclosure.’”2

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§ 2923.5(a)(2)).

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the borrower that the borrower may request additional meetings,

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which the lender must schedule within fourteen days, and the

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lender must provide the borrower with the toll-free telephone

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number for the United States Department of Housing and Urban

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Development (HUD) to find a HUD-certified housing counseling

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agency.

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complied with, then there is no valid notice of default, and

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without a valid notice of default, a foreclosure sale cannot

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proceed.”

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section 2923.5 is “to postpone the sale until there has been

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compliance with” the statute.

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§ 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

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2

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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.
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Plaintiff’s declaration and verified complaint are sufficient

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to demonstrate she is likely to succeed on the merits of her claim

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under section 2923.5(a)(2).

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records documenting some communications between the parties that

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took place thirty days or more before the recording of the notice

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of default, these records do not demonstrate that Defendants

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complied with the requirements of section 2923.5(a)(2).

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Specifically, these documents do not show that Defendants

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initiated the requisite telephone calls or in-person meetings.

Although Defendants have submitted

United States District Court
For the Northern District of California

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These records also do not support that during these conversations

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Defendants informed Plaintiff of her right to request a further

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meeting in person or over the phone, to take place within fourteen

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days, or of the HUD toll-free telephone number.

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meet the obligations of section 2923.5(a)(2) by sending form

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letters. Mabry, 185 Cal. App. 4th at 209-10.

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Defendants cannot

Further, because the Remington Court property is likely to be

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sold at the foreclosure sale, Plaintiff has demonstrated that she

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is likely to suffer irreparable harm.

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tips in Plaintiff’s favor because, in the absence of preliminary

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injunctive relief, she faces the sale of the Remington Court

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property; in contrast, as explained above, preliminary injunctive

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relief provided under section 2923.5 will only delay the

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foreclosure sale to permit compliance with the statute.

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the public interest favors vindicating the Legislature’s intent

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“to have individual borrowers and lenders ‘assess’ and ‘explore’

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alternatives to foreclosure.”

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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
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“[t]he court may issue a preliminary injunction or a temporary

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restraining order only if the movant gives security in an amount

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that the court considers proper to pay the costs and damages

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sustained by any party found to have been wrongfully enjoined or

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restrained”).

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but not limited to the fact that over the past two years,

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Plaintiff has continued living at the real property at issue

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without making any payments to Defendants, the Court finds that a

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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

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rental value of the house and an amount that Plaintiff had

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previously represented that she could afford to pay, is

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appropriate.

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Accordingly, the Court GRANTS Plaintiff’s motion for a

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preliminary injunction on condition that she pay a bond of $3,000

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per month, starting on October 20, 2011.

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restraining order remains in effect until that date.

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payment on the bond is timely provided, a preliminary injunction

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will be entered as a separate document.

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satisfied without a formal bond, by depositing the required

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amounts in Defendants’ attorneys’ trust account.

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injunction will be lifted if Plaintiff discontinues payment on the

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bond.

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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

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