Gilmore v. Wells Fargo Bank, N.A.

Filing 17

ORDER GRANTING 12 APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE AND SETTING PRELIMINARY INJUNCTION HEARING. Signed by Judge Claudia Wilken on 6/5/2014. (ndr, COURT STAFF) (Filed on 6/5/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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KEVIN E. GILMORE,

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No. C 14-2389 CW

Plaintiff,
v.

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WELLS FARGO BANK NA, a national
bank; NDEX WEST LLC, a Delaware
limited liability company;

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Defendants.

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United States District Court
For the Northern District of California

ORDER GRANTING
APPLICATION FOR A
TEMPORARY
RESTRAINING ORDER
AND ORDER TO SHOW
CAUSE AND SETTING
PRELIMINARY
INJUNCTION HEARING
(Docket No. 12)

________________________________/

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On May 7, 2014, Plaintiff Kevin Gilmore filed an Alameda

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County superior court action, alleging that Defendants Wells Fargo

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Bank NA and NDEX West LLC wrongly initiated foreclosure

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proceedings against him in violation of the California Homeowner

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Bill of Rights (HBOR).

The superior court granted a temporary

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restraining order (TRO) barring foreclosure of Gilmore’s property
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and set a preliminary injunction hearing for June 5, 2014.

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Defendants removed the action to federal court.

On June 3, 2014,

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Gilmore filed an ex parte application to extend the superior

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court’s TRO.

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injunction hearing.

The Court GRANTS the TRO and sets a preliminary

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BACKGROUND

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Unless otherwise noted, the facts are taken from Gilmore’s
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accompanying declaration.

See Docket No. 12-3.

Gilmore inherited

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the property from his grandfather.

On June 21, 2007, he took out

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a promissory note in the principal sum of $375,000 to World

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Savings Bank, FSB.

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his loan was transferred to Wachovia and then to Wells Fargo.

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Wells Fargo asked Gilmore several times to provide proof of hazard

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insurance on the property, but because of several transfers of his

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Through a series of mergers, the servicing of

loan, Gilmore did not know where he should send proof.

As a

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result, Gilmore’s loan servicer force-placed insurance on the
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United States District Court
For the Northern District of California

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property.
Due in part to the force-placed insurance, as well as other

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financial obligations, Gilmore became delinquent on his loan.

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or about March 21, 2012, Wells Fargo recorded and served a Notice

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of Default.

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On

Gilmore applied for a loan modification but was

rejected because he had excessive financial obligations.

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In early 2014, Gilmore had a material change in his financial
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circumstances -- his income increased and his financial
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obligations decreased by about $1,000 a month.

He submitted a

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first lien loan modification application to Wells Fargo,

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documenting these changes.

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letter from Wells Fargo acknowledging receipt of his application.

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Gilmore Decl., Ex. A.

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On March 24, 2014, he received a

He responded requesting the status of his

loan and, on April 21, 2014, received another letter from Wells

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Fargo stating:
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As of the date of this letter, your mortgage loan is due for
the December 15, 2010, through April 15, 2014 monthly
installments. Foreclosure is active and a foreclosure sale
date is currently scheduled for May 19, 2014. However, your
mortgage loan is currently being reviewed for possible
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payment assistance, and you will want to continue working
with Sarah Nuncio during the review process.
Gilmore Decl., Ex. B (emphasis added). Gilmore alleges he wishes

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to obtain a loan modification so he can complete loan payments but

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has not been given a fair chance to do so.

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LEGAL STANDARD
To obtain either a TRO or a preliminary injunction under

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Federal Rule of Civil Procedure 65, the moving party must
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demonstrate “(1) a likelihood of success on the merits; (2) a

United States District Court
For the Northern District of California

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significant threat of irreparable injury; (3) that the balance of

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hardships favors the applicant; and (4) whether any public

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interest favors granting an injunction.”

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F.3d 1222, 1227 (9th Cir. 2003); see also Winter v. Natural Res.

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Raich v. Ashcroft, 352

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

The Ninth Circuit

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has recognized that an injunction could issue if “serious
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questions going to the merits were raised and the balance of

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hardships tips sharply in plaintiff’s favor,” so long as the

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plaintiff demonstrates irreparable harm and shows that the

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injunction is in the public interest.

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Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citation

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and internal quotation marks omitted).

Alliance for the Wild

Injunctive relief is “an

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extraordinary remedy that may only be awarded upon a clear showing
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that the plaintiff is entitled to such relief.”
at 22.

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Winter, 555 U.S.

DISCUSSION

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The Homeowner Bill of Rights prohibits a mortgage servicer

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from engaging in what is known as “dual-tracking.”

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submits a complete application for a first lien loan modification

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offered by, or through, the borrower’s mortgage servicer, a

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“If a borrower

mortgage servicer . . . or authorized agent shall not record a

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notice of default or notice of sale, or conduct a trustee’s sale,
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while the complete first lien loan modification application is

United States District Court
For the Northern District of California

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pending.”

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of default or conducting a trustee’s sale, the mortgage servicer

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must first make a written determination that the borrower is not

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eligible for a loan modification.

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Cal. Civ. Code § 2923.6(c).

Id.

Before recording a notice

Denial of the loan

modification triggers a thirty-day appeal period.

Cal. Civ. Code

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§ 2923.6(d).

If a loan modification is offered, but the borrower

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either rejects the offer or accepts the offer but breaches the
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loan modification agreement, then the mortgage servicer may
initiate foreclosure proceedings.

Cal. Civ. Code § 2923.6(c).

It appears that Wells Fargo did not provide Gilmore with a

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final disposition of his most recent loan modification application

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before initiating foreclosure proceedings.

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Wells Fargo’s letter

to Gilmore plainly states that its review of his application is

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ongoing, yet a foreclosure sale has already been scheduled.
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The fact that Gilmore previously applied for but was denied a

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loan modification is not determinative.

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material change in the borrower’s financial circumstances since
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Where “there has been a

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the date of the borrower’s previous application and that change is

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documented by the borrower and submitted to the mortgage

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servicer,” there is an exception to the general rule that a

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mortgage servicer is not obliged to evaluate applications from

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borrowers who “have already been evaluated or afforded a fair

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opportunity to be evaluated for a first lien loan modification

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prior to January 1, 2013.”

Cal. Civ. Code § 2923.6(g).

Here,

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Gilmore experienced substantial improvement in his financial

United States District Court
For the Northern District of California

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circumstances and documented this with his mortgage servicer,

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which was the reason for his second application for loan

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modification.

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Wells Fargo also is not likely to be exempt in this case from
the HBOR.

Under section 2924.12(g), a signatory to the consent

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judgment entered in the case United States of America et al. v.
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Bank of America Corporation et al., Case No. 1:12-cv-00361 RMC,
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“that is in compliance with the relevant terms of the Settlement

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Term Sheet of the consent judgment with respect to the borrower

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who brought the action pursuant to this section while the consent

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judgment is in effect shall have no liability for a violation” of

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section 2923.6.

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While Wells Fargo is a signatory to that consent

judgment, Gilmore asserts that Wells Fargo has not provided it

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with an online portal that would allow him to check the status of
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his loan modification, which is required by the Settlement Term

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Sheet.

Gilmore Decl. ¶ 22; Pivtorak Decl., Ex. A (Settlement Term

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Sheet) at A-25.

Gilmore’s complaint also alleges that Wells Fargo
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engaged in dual-tracking, which is barred by the Settlement Term

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Sheet.

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appears that Wells Fargo is not exempt from the HBOR with regards

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to Gilmore’s claims.

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likely to succeed on the merits of his claim.

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Settlement Term Sheet at A-17-A-21.

Accordingly, it

Gilmore has therefore established that he is

The other factors also weigh in favor of granting a TRO.

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Gilmore would suffer immediate and irreparable injury if the
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superior court’s TRO, due to expire tomorrow, were not extended.

United States District Court
For the Northern District of California

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Wells Fargo or its authorized agent could initiate foreclosure

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proceedings as soon as the TRO expires.

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property, which is always considered unique, and that loss would

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constitute irreparable injury.

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Gilmore would lose real

See Sundance Land Corp. v. Cmty.

First Fed. Sav. & Loan Ass'n, 840 F.2d 653, 661 (9th Cir. 1988).

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Gilmore’s property is particularly unique to him because it is his
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childhood home.

Because the possible injury is severe, the

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balance of hardships weighs in Gilmore’s favor.

A TRO would delay

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possible foreclosure for only a short period of time, and so the

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potential harm to Wells Fargo would not be substantial.

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of the “adverse impact foreclosures have on households and

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communities,” there is a “strong public interest in preventing

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unlawful foreclosures.”

Because

Sharma v. Provident Funding Associates,

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LP, 2010 WL 143473, at *2 (N.D. Cal.).
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CONCLUSION

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The Court GRANTS Gilmore’s application for a TRO, which has
issued in a separate order.
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The Court has further set a preliminary injunction hearing
and briefing schedule by separate order.
IT IS SO ORDERED.

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Dated: 6/5/2014

CLAUDIA WILKEN
United States District Judge

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United States District Court
For the Northern District of California

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