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

Filing 27

ORDER by Judge Hamilton denying 13 Motion for Preliminary Injunction (pjhlc2, COURT STAFF) (Filed on 4/22/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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HEDDI LINDBERG,

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For the Northern District of California

United States District Court

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Plaintiff,
v.

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ORDER DENYING MOTION FOR
PRELIMINARY INJUNCTION

WELLS FARGO BANK N.A., et al.,

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No. C 13-0808 PJH

Defendants.
_______________________________/

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Plaintiff’s motion for a preliminary injunction came on for hearing before this court on

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April 17, 2013. Plaintiff Heddi Lindberg appeared through her counsel, John Holman.

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Defendant Wells Fargo Bank N.A. (“Wells Fargo”) appeared through its counsel, Kenneth

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Franklin. Having read the parties’ papers and carefully considered their arguments and the

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relevant legal authority, and good cause appearing, the court hereby DENIES the motion

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as follows.

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An injunction is a matter of equitable discretion and is “an extraordinary remedy that

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may only be awarded upon a clear showing that the plaintiff is entitled to such relief.”

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Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008); see also Munaf

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v. Geren, 553 U.S. 674, 689-90 (2008). A preliminary injunction “should not be granted

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unless the movant, by a clear showing, carries the burden of persuasion.” Mazurek v.

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Armstrong, 520 U.S. 968, 972 (1997) (per curiam) (citation omitted).

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A plaintiff seeking a preliminary injunction must establish that she is likely to succeed
on the merits, that she is likely to suffer irreparable harm in the absence of preliminary

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relief, that the balance of equities tips in her favor, and that an injunction is in the public

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interest. Winter, 555 U.S. at 20. Alternatively, the plaintiff may demonstrate that the

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likelihood of success is such that “serious questions going to the merits were raised and

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that the balance of hardships tips sharply in the plaintiff's favor,” so long as the other two

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elements of the Winter test are met. Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127,

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1131-32 (9th Cir. 2011). A “serious question” is one on which the plaintiff “has a fair

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chance of success on the merits.” Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d

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1415, 1421 (9th Cir. 1984).

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In her complaint, plaintiff alleges sixteen causes of action: (1) declaratory relief, (2)
temporary, preliminary, and permanent injunction, (3) intentional infliction of emotional

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For the Northern District of California

United States District Court

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distress, (4) negligent infliction of emotional distress, (5) quiet title, (6) breach of implied

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covenant of good faith and fair dealing, (7) deceit - promise made without intent to perform,

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(8) deceit - intentional misrepresentation, (9) fraud and deceit - suppression of material

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fact, (10) fraud and deceit - negligent misrepresentation, (11) promissory estoppel, (12)

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negligence, (13) elder abuse, (14) wrongful foreclosure, (15) violation of Cal. Bus. & Prof.

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Code § 17200, and (16) cancellation of instruments. However, in her motion for preliminary

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injunction, plaintiff presents “likelihood of success” arguments as to only ten of these

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causes of action: (1) declaratory relief; (2) intentional infliction of emotional distress; (3)

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negligent infliction of emotional distress; (4) quiet title; (5) breach of implied covenant of

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good faith and fair dealing; (6) fraud and deceit - promise made without intent to perform;

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(7) fraud and deceit - negligent misrepresentation; (8) promissory estoppel; (9) negligence;

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and (10) violation of Cal. Bus. & Prof. Code § 17200. Although plaintiff does not expressly

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discuss the likelihood of success of her wrongful foreclosure claim, the court will consider

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whether the arguments made in the motion and at the hearing (which do relate to that

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cause of action) establish a likelihood of success on that claim.

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Plaintiff seeks a preliminary injunction halting the scheduled non-judicial foreclosure

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sale of her residential property. The court finds that the motion must be DENIED, because

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plaintiff has failed to demonstrate either a likelihood of success on the merits, or a “serious
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question” going to the merits of her claims.
The facts are as follows. Plaintiff entered into a loan agreement with World Savings

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bank (the predecessor-in-interest to Wells Fargo1) in March 2007, for $475,000. Plaintiff

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was having trouble making the mortgage payments, and in 2012, she sought a loan

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modification from Wells Fargo. Plaintiff alleges that this loan modification process was

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“protracted” and “endless,” and that she was told to submit the same documents “over and

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over again.” Plaintiff also alleges that, while the modification process was ongoing, Wells

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Fargo was simultaneously initiating foreclosure proceedings. On February 1, 2013, plaintiff

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received a letter from Patrick Finnegan at Wells Fargo, asking for additional information
and documents to be provided before February 4, 2013. On February 4, plaintiff contacted

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For the Northern District of California

United States District Court

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Mr. Finnegan by phone, and after first saying that he did not have authorization to discuss

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the requests, Mr. Finnegan ultimately maintained that the documents needed to be

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submitted by the end of the day. Plaintiff contends that Wells Fargo was “hoping that

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plaintiff would not be vigilant with her foreclosure,” and would thus render moot her

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modification application. Plaintiff also argues that, aside from any irregularities in the loan

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modification process, Wells Fargo lacks authority to foreclose, because Wells Fargo lost its

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interest in the loan during the securitization process, because the note has been separated

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from the deed of trust, because the chain of title in the note has been broken, and because

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plaintiff’s debt has become unsecured. Wells Fargo counters by arguing that plaintiff’s note

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ownership and loan modification claims are preempted by the Home Owners Loan Act

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(“HOLA”), and that they lack merit in any case. As to plaintiff’s note ownership claims, the

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court agrees with Wells Fargo. See, e.g., Ahmed v. Wells Fargo Bank, 2011 WL 1751415

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(N.D. Cal. May 9, 2011) (finding note ownership claims preempted by HOLA); Hafiz v.

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Greenpoint Mortgage Funding, Inc., 652 F.Supp.2d 1039, 1043 (N.D. Cal. 2009) (original

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note is not required in order to foreclose). The court further finds that plaintiff’s chain of title

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argument is without merit, based on the evidence presented by Wells Fargo that the loan

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In December 2007, World Savings changed its name to Wachovia Mortgage, FSB, and
Wachovia was then merged with Wells Fargo.
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was never actually subject to an assignment, and instead, the lender merely changed its

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name (from World Savings to Wachovia) and then merged into Wells Fargo. See Dkt. 18.2

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The court also finds that plaintiff has not presented any support for her securitization

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argument.

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However, the court cannot so easily reject plaintiff’s arguments regarding loan

that plaintiff’s house would not be foreclosed upon during the loan modification process,

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and (2) California has now outlawed the practice of “dual tracking,” where a lender initiates

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foreclosure proceedings while the loan modification is ongoing. If these allegations have

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merit, then it would appear that Wells Fargo has engaged in conduct that exceeded the

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For the Northern District of California

modification. Specifically, plaintiff alleges that (1) Wells Fargo made false representations

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United States District Court

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bounds of mere “processing” and “servicing” of mortgages, which would preclude

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preemption of plaintiff’s claims, to the extent they are premised on irregularities in the

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modification process. Thus, the court will evaluate plaintiff’s loan modification arguments to

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determine whether they establish a likelihood of success on the merits of any of plaintiff’s

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claims.

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Plaintiff alleges that Wells Fargo “reassured and convinced her” that “there would be

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no foreclosure so long as [she] worked with Wells Fargo toward a loan modification.” Dkt.

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22-3, ¶ 4. Wells Fargo counters this allegation by claiming that plaintiff withdrew her loan

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modification application on April 17, 2012, and that since then, she has not submitted a

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complete loan modification application. Dkt. 17-1, ¶ 16. Plaintiff responds with generalized

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allegations that she was told to send “additional documents and the same documents over

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and over again” and that Wells Fargo “kept asking for documents, this document, that

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document.” Dkt. 22-3, ¶ 3, 4. Wells Fargo points to a specific letter sent via overnight

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delivery on January 22, 2013, which included a checklist of documents that needed to be

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submitted by January 28, 2013, in order to continue with the loan modification process.

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Dkt. 17-3, Ex. A. Critically, the letter states that “[a]ll items must be dated within the last 30

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Wells Fargo’s request for judicial notice, which contains the referenced chain of title
evidence, is GRANTED.
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days.” Id. At the hearing, plaintiff’s counsel admitted that plaintiff was unable to submit

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these documents in time, thereby admitting that plaintiff did not submit a completed loan

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modification application in response to this letter. Thus, even if plaintiff is correct that Wells

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Fargo represented that there would be no foreclosure during the modification review

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process, without a completed application, Wells Fargo could not begin the modification

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process. And even if plaintiff is correct that she had already submitted the documents

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requested by Wells Fargo, she does not allege that she submitted those documents within

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the previous 30 days, and in fact, does not allege that she submitted the documents after

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she allegedly withdrew her modification application in April 2012. Because of plaintiff’s
failure to show that she submitted a completed loan application, she cannot show a

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For the Northern District of California

United States District Court

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likelihood of success on any claim that is based on modification-related allegations.

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Plaintiff then argues that a newly-enacted California law prohibits the practice of

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“dual tracking,” where the lender forecloses even though the borrower is seeking a loan

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modification. See Cal. Civ. Code § 2923.6 (effective Jan. 1, 2013). However, plaintiff’s

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arguments here fail for the same reasons described above. Section 2923.6 provides only

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that a lender may not foreclose if the borrower “submits a complete application for loan

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modification.” Cal. Civ. Code § 2923.6(c). Because plaintiff cannot establish that she

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submitted a completed modification application, this argument fails.

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Plaintiff’s failure to submit a completed loan modification application precludes her

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from establishing a likelihood of success on the merits of most of her claims. Plaintiff’s

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claims for fraud, promissory estoppel, intentional and negligent infliction of emotional

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distress, breach of implied covenant of good faith and fair dealing, negligence, and violation

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of section 17200 are premised on alleged irregularities in the modification process.

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Because Wells Fargo presents meritorious defenses to each of these claims, plaintiff

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cannot establish a likelihood of success on the merits as to any of them. Plaintiff’s

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emotional distress claims fail for the additional reason that she fails to allege the “extreme”

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and “outrageous” conduct needed to prevail on such claims. And to the extent that plaintiff

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argues that she is likely to succeed on her wrongful foreclosure claim (again, plaintiff did
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not address this claim in her papers, but did so at the hearing), her arguments are based

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on the same alleged irregularities in the modification process that were considered and

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rejected above.

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Nor can plaintiff show that she is likely to succeed on the remaining claims

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addressed in her motion, her declaratory relief and quiet title claims. She admits that her

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declaratory relief claim is based on “the unclear chain of title, and not a foreclosure statute,”

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and thus fails for the reasons described above, that Wells Fargo has made an adequate

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showing that there was no break in the chain of title. Finally, plaintiff’s quiet title claim is

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doomed by her failure to tender the amount owed.
Accordingly, the court finds that plaintiff has failed to establish either a likelihood of

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For the Northern District of California

United States District Court

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success on the merits of her claims, or that there are clear questions going to the merits,

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and that the motion for a preliminary injunction must be DENIED.

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IT IS SO ORDERED.

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Dated: April 22, 2013
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______________________________
PHYLLIS J. HAMILTON
United States District Judge

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