Di Loreto et al v. Chase Manhattan Mortgage Corporation et al

Filing 31

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS, GRANTING MOTION FOR PRELIMINARY INJUNCTION, AND CONTINUING CASE MANAGEMENT CONFERENCE by Judge Claudia Wilken. Amended Pleadings due by 12/11/2017. Joint Case Management Statement due by 2/20/2018. Initial Case Management Conference set for 2/27/2018 02:30 PM. (dtmS, COURT STAFF) (Filed on 11/20/2017)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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GREGORY P. DI LORETO and
THERESA A. DI LORETO,
Plaintiffs,

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v.

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United States District Court
Northern District of California

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CHASE MANHATTAN MORTGAGE
CORPORATION; SPECIALIZED LOAN
SERVICING, LLC; NBS DEFAULT
SERVICES, LLC; and DOES 1
through 20, inclusive,

Case No. 17-cv-05187-CW
ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS, GRANTING MOTION FOR
PRELIMINARY INJUNCTION, AND
CONTINUING CASE MANAGEMENT
CONFERENCE
(Dkt. Nos. 10, 16, 16-1, 174, 20)

Defendants.

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Defendants Specialized Loan Servicing LLC (SLS) and Chase
Manhattan Mortgage Corporation (Chase) (collectively, Defendants)
move to dismiss the complaint filed by Plaintiffs Gregory and
Theresa Di Loreto.1

Plaintiffs move for a preliminary injunction

against foreclosure of the real property at issue in this case.
Each side opposes the other’s motion and each has filed a reply.
After considering the parties’ submissions and oral argument, the
Court grants in part and denies in part Defendants’ motion to
dismiss and grants Plaintiffs’ motion for a preliminary
injunction.
The Court also grants the unopposed requests for judicial

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At the hearing, Plaintiffs represented that prior to
removal, the third named Defendant, NBS Default Services (NBS),
filed a disclaimer of interest in the action and consent to be
bound by any nonmonetary judgment issued. The Court ordered
Plaintiffs to file in this Court proof of service on NBS and the
declaration of nonmonetary status or other disclaimer filed by
NBS. Plaintiffs shall file these documents in this Court within
seven days after the date of this order.

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notice filed by all parties, and takes judicial notice of the

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uncontested public documents submitted.

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however, take judicial notice of the disputed inferences the

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parties seek to draw from the documents or the parties’

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respective characterization of those documents.

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Court make any finding about whether other evidence exists

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regarding the disputed issues.

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United States District Court
Northern District of California

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The Court does not,

Nor does the

BACKGROUND
Plaintiffs own real property in Contra Costa County,

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California.

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refinance loan from originating lender Chase.

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loan by a deed of trust.

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obtained a $500,000 home equity line of credit from non-party JP

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Morgan Chase Bank N.A. (JPMorgan).

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Plaintiffs transferred title to the subject property into their

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family trust.

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title back to Plaintiffs and Gregory Di Loreto transferred his

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interest to Theresa Di Loreto.

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Gregory Di Loreto ¶ 2 & Ex. A.

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In December 2004, Plaintiffs obtained a $1,350,000
They secured the

Around the same time, Plaintiffs also

Shortly thereafter,

In October 2015, the trust then transferred the

Oct. 11, 2017 Supp. Decl. of

In November 2015, Chase assigned its beneficial interest in

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the refinance loan to non-party U.S. Bank National Association,

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as Trustee for J.P. Morgan Mortgage Trust 2006-A3 (U.S. Bank).

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“Approximately two years” before Plaintiffs filed this

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action, Plaintiffs submitted an application for loan modification

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to Chase and/or SLS.

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additional information, which Plaintiffs attempted to provide.

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The application was still pending in July 2017, when SLS advised

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Plaintiffs in writing that their loan modification application

Complaint ¶ 11.

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Defendants requested

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was “currently under review.”

Complaint ¶ 14 & Ex. E.

SLS

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informed Plaintiffs that they needed to submit a “Request for

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Mortgage Assistance Form” but also listed numerous other required

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documents that it deemed “complete” with no further action

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needed.

Id.

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Meanwhile, in January 2017, NBS caused to be recorded a

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notice of default and election to sell the subject property.

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July 2017, NBS caused to be recorded a notice of Trustee’s Sale.
On August 1, 2017, Plaintiffs filed the complaint in this

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United States District Court
Northern District of California

In

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action in Contra Costa Superior Court.

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claims seeking: (1) declaratory relief against all Defendants;

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(2) injunctive relief against Defendants Chase and SLS;

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(3) accounting against Defendants Chase and SLS; (4) relief under

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the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.

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§ 1692, against Defendant SLS; and (5) relief under the

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California Homeowner Bill of Rights (HBOR), Cal. Civil Code

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§§ 2923.6, 2924.12, 2924.18, against Defendants Chase and SLS.

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On August 10, 2017, the Superior Court entered an order to show

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cause why the court should not issue a preliminary injunction

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prohibiting the sale of the subject property as well as a

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temporary restraining order prohibiting sale of the property

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pending the hearing on the order to show cause.

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2017, Defendants Chase and SLS filed a notice of removal.

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They enumerated separate

On September 8,

LEGAL STANDARD
I.

Motion to Dismiss
A complaint must contain a “short and plain statement of the

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claim showing that the pleader is entitled to relief.”

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Civ. P. 8(a).

Fed. R.

The plaintiff must proffer “enough facts to state
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a claim to relief that is plausible on its face.”

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Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

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Twombly, 550 U.S. 544, 570 (2007)).

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12(b)(6) for failure to state a claim, dismissal is appropriate

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only when the complaint does not give the defendant fair notice

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of a legally cognizable claim and the grounds on which it rests.

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Twombly, 550 U.S. at 555.

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the plaintiff pleads factual content that allows the court to

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United States District Court
Northern District of California

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draw the reasonable inference that the defendant is liable for

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the misconduct alleged.”

Ashcroft v.

On a motion under Rule

A claim is facially plausible “when

Iqbal, 556 U.S. at 678.

In considering whether the complaint is sufficient to state

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a claim, the court will take all material allegations as true and

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construe them in the light most favorable to the plaintiff.

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Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049,

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1061 (9th Cir. 2008).

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of the complaint, materials incorporated into the complaint by

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reference, and facts of which the court may take judicial notice.

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Id. at 1061.

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conclusions, including threadbare “recitals of the elements of a

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cause of action, supported by mere conclusory statements.”

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Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

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The court’s review is limited to the face

However, the court need not accept legal

When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no

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request to amend the pleading was made, unless amendment would be

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futile.

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Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).

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whether amendment would be futile, the court examines whether the

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complaint could be amended to cure the defect requiring dismissal

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv.

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In determining

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“without contradicting any of the allegations of [the] original

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complaint.”

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th

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Cir. 1990).

The court’s discretion to deny leave to amend is

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“particularly broad” where the court has previously granted

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leave.

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2002).

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II.

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United States District Court
Northern District of California

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Chodos v. West Publ’g Co., 292 F.3d 992, 1003 (9th Cir.

Standing
In order to satisfy Article III’s standing requirements,

plaintiffs must allege that: (1) they suffered an “injury in

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fact” that is (a) concrete and particularized and (b) actual or

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imminent, not conjectural or hypothetical; (2) that the injury is

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fairly traceable to the defendants’ challenged conduct; and

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(3) that it is likely, as opposed to merely speculative, that the

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injury will be redressed by a favorable decision.

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Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

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Lujan v.

The Court evaluates a motion to dismiss for lack of Article

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III standing under Federal Rule of Civil Procedure 12(b)(1).

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Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011); White

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v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).

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question of whether plaintiffs have standing is distinct from,

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and precedes, analysis of the merits of their claims.

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658 F.3d at 1068.

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each claim he seeks to press and for each form of relief that is

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sought.”

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(internal quotations omitted).

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See

The threshold

Maya,

A “plaintiff must demonstrate standing for

Davis v. Fed. Election Comm’n, 554 U.S. 724, 734 (2008)

A motion to dismiss under Rule 12(b)(1) may be “facial or

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factual.”

White, 227 F.3d at 1242.

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facial attack on jurisdiction, the court takes the factual
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Where a defendant makes a

allegations of the complaint as true, and construes them in the

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light most favorable to the plaintiffs.

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749 F.3d 1117, 1121 (9th Cir. 2014).

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factual attack, however, the court “need not presume the

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truthfulness of the plaintiffs’ allegations” and, where the

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jurisdictional question is separable from the merits of the case,

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may resolve factual disputes without converting the motion into

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one for summary judgment.

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United States District Court
Northern District of California

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Thornhill Publ’n Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730,

Leite v. Crane Co.,

Where a defendant makes a

White, 227 F.3d at 1242; see also

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733 (9th Cir. 1979).

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proving by a preponderance of the evidence that each of the

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requirements for subject-matter jurisdiction has been met.”

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Leite, 749 F.3d at 1121.

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III. Motion for Preliminary Injunction

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The plaintiff then “bears the burden of

“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,

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

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injunction is in the public interest.”

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Def. Council, Inc., 555 U.S. 7, 20 (2008).

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preliminary injunction could issue where the likelihood of

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success is such that serious questions going to the merits were

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raised and the balance of hardships tips sharply in plaintiff’s

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favor,” so long as the plaintiff demonstrates irreparable harm

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and shows that the injunction is in the public interest.

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Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131

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(9th Cir. 2011) (citation and internal quotation and editing

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marks omitted).
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Winter v. Natural Res.
Alternatively, “a

A court employs a sliding scale when considering a

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plaintiff’s showing as to the likelihood of success on the merits

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and the likelihood of irreparable harm.

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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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United States District Court
Northern District of California

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Id.

“Under this

Id.
DISCUSSION

I.

Motion to Dismiss
A.

Untimely Opposition

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Defendants contend that the Court should disregard

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Plaintiffs’ untimely opposition brief and grant the motion to

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dismiss as unopposed.

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September 26, 2017.

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10, 2017.

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Plaintiffs had not opposed the motion.

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filed a “Memorandum of Points and Authorities in Opposition to

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Defendant’s Motion to Strike,” which, despite the title,

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generally appears to respond to Defendants’ motion to dismiss.

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Plaintiffs’ memorandum was not accompanied by a request for leave

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to file an untimely opposition.

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Defendants’ motion to dismiss was filed on
Plaintiffs’ opposition was due on October

On October 17, 2017, Defendants filed a notice that
That same day, Plaintiffs

In the exercise of discretion, the Court construes

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Plaintiffs’ memorandum as requesting leave to file an untimely

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opposition, and grants the motion.

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however, that in the future they must seek leave to alter

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deadlines set by the Court.

The Court warns Plaintiffs,

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B.

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Defendants move to dismiss Plaintiffs’ claims for lack of

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Standing

standing because Plaintiffs bring this action in their individual
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capacities even though public records reflect that shortly after

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the origination of the refinance loan, Plaintiffs conveyed their

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interest in the property to their family trust.

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RJN Ex. 3.

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action in their capacities as trustees of the family trust, not

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in their individual capacities.

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that their family trust conveyed the property back to them in

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their individual capacities in October 2015.

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United States District Court
Northern District of California

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Decl. of Gregory Di Loreto ¶ 2 & Ex. A.2

See Defendants’

Defendants argue that Plaintiffs must bring the

In response, Plaintiffs contend

Oct. 11, 2017 Supp.

The Interspousal Grant

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Deed submitted by Plaintiffs in support of this argument,

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however, indicates not only that the trust conveyed its interest

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to Plaintiffs but also that Gregory Di Loreto conveyed his

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interest to Theresa Di Loreto as her “sole and separate

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property.”

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argued that the property is now the couple’s community property,

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but did not cite any law supporting this proposition in light of

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the language of the Interspousal Grant Deed.

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Id. Ex. A.

At the hearing, Plaintiff’s counsel

It appears on the present record that only Plaintiff Theresa

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Di Loreto has standing.

The Court will dismiss Plaintiff Gregory

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Di Loreto’s claims, but will permit Mr. Di Loreto leave to amend

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to plead facts and set forth legal authority supporting his claim

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of standing.

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The Court rejects Defendants’ argument that it should not
consider the “extrinsic evidence” submitted by Plaintiffs.
First, as discussed, the Court may consider such evidence in
connection with Defendants’ standing argument. Second, the Court
may properly consider matters subject to judicial notice without
converting the motion to dismiss into a motion for summary
judgment. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th
Cir. 2001). Third, the Court may consider the material submitted
by Plaintiffs to determine whether Defendants’ request for
judicial notice is subject to reasonable dispute. Id. at 689-90.
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C.

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United States District Court
Northern District of California

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Claims Against Chase

Defendants allege that the four claims against Chase must be
dismissed because Chase assigned its beneficial interest in
Plaintiffs’ loan to U.S. Bank in 2015, before SLS commenced the
foreclosure proceedings against Plaintiffs that allegedly violate
HBOR.

Plaintiffs respond that Chase was their originating

lender, and had no authority to assign away its interest in
Plaintiffs’ loan in November 2015, because in July 2015, it had
surrendered its right to transact intrastate business in the
State of California.

Oct. 10, 2017 Plaintiffs’ RJN.

However,

Plaintiffs offer no legal authority in support of their
contention that Chase’s July 2015 Certificate of Surrender of
Right to Transact Intrastate Business renders void its assignment
of its interest in Plaintiffs’ loan to U.S. Bank.

Defendants,

however, have provided authority that similar transfers may be
“within the permissible scope for an unregistered foreign
corporation.”

Baidoobonso-Iam v. Bank of Am. (Home Loans),

No. 10-cv-09171-CAS, 2011 WL 5870065, at *4 (C.D. Cal. Nov. 22,
2011).
Moreover, although Plaintiffs plead facts supporting their
contention that Chase was the originating lender for their loan,
they do not plead any facts in support of a claim that Chase
participated in the 2017 foreclosure of Plaintiffs’ real
property.

Plaintiffs plead group allegations, such as that

“Defendants, and each of them have improperly recorded the Notice
of Default.”

Complaint ¶ 17.

These allegations are

contradicted, however, by the notice of default document attached
to the complaint and incorporated into it by reference.

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See

Complaint Ex. C (notice of default that does not name Chase); see

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also Complaint ¶¶ 7-8 (alleging that NBS caused to be recorded

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the notice of default and election to sell and notice of

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trustee’s sale and that SLS as nominal beneficiary elected to

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sell, but not alleging any involvement by Chase).

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dismiss all claims against Chase, but will grant Plaintiffs leave

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to amend to plead facts supporting their claims against Chase.

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If Plaintiffs cannot presently plead facts supporting a claim

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United States District Court
Northern District of California

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against Chase, they may seek leave to amend if they obtain such

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The Court will

facts during discovery.
In addition, as discussed at the hearing, the parties must

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meet and confer in an attempt to reach a stipulation regarding

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whether Chase retains any interest in Plaintiffs’ loan.

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D.

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In their fifth cause of action, Plaintiffs claim that

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Defendants violated the HBOR’s prohibition on “dual-tracking,”

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the practice of a mortgage servicer continuing to pursue

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foreclosure of a property while a complete loan modification

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application is pending.

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Defendants argue that this claim should be dismissed because

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Plaintiffs do not adequately allege that they had submitted a

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complete loan modification application at the time that

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Defendants proceeded with the foreclosure process.

Dual Tracking Claim

See Cal. Civ. Code ¶ 2923.6(c).

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Section 2923.6(c) protects a borrower who “submits a

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complete application for a first lien loan modification.”

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Civ. Code § 2923.6(c).

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this section, an application shall be deemed ‘complete’ when a

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borrower has supplied the mortgage servicer with all documents

Cal.

The statute provides, “For purposes of

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required by the mortgage servicer within the reasonable

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timeframes specified by the mortgage servicer.”

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§ 2923.6(h).

Cal. Civ. Code

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In the complaint, Plaintiffs allege:

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11. Approximately two years ago, Plaintiffs made and
submitted a completed application for a loan
modification of the loan referred to in Paragraph 5
herein. At the time of the initial submittal,
Plaintiffs provided each and every document and all
information initially required of them by CHASE for
consideration of such loan application. At the time of
the submittal, the loan modification fully complied
with all of the requirements of Defendants CHASE and
SLS and was complete.

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United States District Court
Northern District of California

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12. Thereafter, and over the course of the next two
years, Defendants CHASE and SLS made repeated demands
for further and additional information in support of
Plaintiffs [sic] previously completed application,
often requesting information and documentation that had
been previously provided. . . .
Complaint ¶¶ 11-12; see also id. ¶¶ 13-16.
Defendants argue that Plaintiffs do not adequately allege

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that their loan modification application was complete because

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they also allege that Defendants later informed them that they

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needed additional documents to complete their application.

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other words, Defendants contend that the determination of when an

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application is complete does not depend on when the borrower

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submits all the documentation required in advance by the

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servicer, but rather, is left to the servicer’s “after-the-fact

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discretion.”

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941, 946 (N.D. Cal. 2017).

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In

Mace v. Ocwen Loan Servicing, LLC, 252 F. Supp. 3d

Section 2923.6(h) does not support Defendants’ position.

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“The statutory language does not permit a mortgage servicer to

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create a moving target so borrowers have no way of knowing

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whether a loan modification application is complete until the
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mortgage servicer tells them so.”

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implication of section 2923.6(h) is that a mortgage servicer must

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tell the borrowers in advance what documents are required and

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specify ‘reasonable timeframes’ for the submission of those

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documents.”

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“borrower has supplied the mortgage servicer with all documents

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required by the mortgage servicer within the reasonable

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timeframes specified by the mortgage servicer,” then the

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United States District Court
Northern District of California

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Id.

Rather, “the clear

application is complete.

Id. (quoting Cal. Civ. Code § 2923.6(h)).

Cal. Civ. Code § 2923.6(h).

If the

Plaintiffs

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have clearly alleged that they had provided all documents

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required by Defendants for a complete application both at the

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time of their initial submittal and at the time when Defendants

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commenced foreclosure proceedings, with sufficient detail to

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state a claim.

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Although Defendants do not raise this issue, the Court notes

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that Plaintiffs do not allege in the complaint that the subject

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real property is their home, much less that it is their principal

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residence.

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section 2923.6 of the HBOR, the dual-tracking provision at issue

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here, applies “only to first lien mortgages or deeds of trust

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that are secured by owner-occupied residential real property

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containing no more than four dwelling units.”

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§ 2924.15.

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means that the property is the principal residence of the

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borrower and is security for a loan made for personal, family, or

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household purposes.”

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allege that the subject property is owner-occupied as a principal

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residence to state a HBOR claim.

California Civil Code section 2924.15 provides that

Cal. Civ. Code

Further, “[f]or these purposes, ‘owner-occupied’

Id.

Courts have held that a plaintiff must

See, e.g., Mulato v. Wells
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Fargo Bank, N.A., 76 F. Supp. 3d 929, 957 (N.D. Cal. 2014)

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(citing cases).

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that the real property is Plaintiffs’ principal residence.

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any amended Complaint, Plaintiffs must allege whether the real

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property was, at all relevant times, their principal residence.

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At the hearing, Plaintiffs’ counsel represented
In

Defendants further contend that Plaintiffs’ dual-tracking
claim fails because they seek monetary damages, but no

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foreclosure has yet occurred.

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United States District Court
Northern District of California

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borrower may claim injunctive relief before a trustee’s sale has

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occurred, but may only claim monetary damages after a trustee’s

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sale has occurred.

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Plaintiffs have not alleged that a trustee’s deed upon sale has

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been recorded, they have not stated a claim for damages.

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have, however, stated a claim for injunctive relief, which they

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request in their prayer for relief.

Under the HBOR, a prevailing

Cal. Civ. Code § 2923.12(a).

Because

They

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E.

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Plaintiffs’ fourth cause of action seeks relief against SLS

Fair Debt Collection Practices Act

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under the FDCPA.

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Defendants’ motion to dismiss this claim, and agree to dismiss it

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voluntarily.

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15 U.S.C. § 1692.

Plaintiffs do not oppose

Accordingly, the Court will dismiss this claim.

In their opposition to the motion to dismiss, Plaintiffs

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contend that because the FDCPA claim was the only basis for

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Defendants’ removal of this action, the Court should decline to

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exercise supplemental jurisdiction and remand this case to

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California Superior Court.

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Defendants do not address this contention.

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See 28 U.S.C. §1367.

In reply,

The Court declines to remand based on Plaintiffs’ request in
the opposition brief.

However, this denial is without prejudice
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to Plaintiffs promptly filing a motion to remand.
F.

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Defendants move to dismiss Plaintiffs’ cause of action for

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an accounting, which claims that the “amount of money Plaintiff

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[sic] owes to defendants CHASE and SLS, or, alternatively, the

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amount of money owed to Plaintiffs by defendants CHASE and SLS is

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unknown to Plaintiffs and cannot be determined without an

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accounting.”

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United States District Court
Northern District of California

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plead no facts in support of this claim.

Accounting

Complaint ¶ 26.

Defendants argue that Plaintiffs
In particular,

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Defendants contend that Plaintiffs do not plead that Defendants

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owe Plaintiffs any money, that the parties are in a fiduciary

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relationship or that Plaintiffs cannot make the accounting by

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reference to their own records.

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recently acknowledged an unspecified error in the servicing of

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Plaintiffs’ loan, which makes an accounting necessary.

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2017 Gregory Di Loreto Declaration in Opposition ¶ 3 & Ex. B.

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The facts concerning this error are not plead in the complaint,

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however.

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accounting, but will grant Plaintiffs leave to amend to plead

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facts supporting all elements of this claim.

Plaintiffs respond that Chase

Oct. 17,

The Court will dismiss Plaintiffs’ claim for an

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G.

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Defendants move to dismiss Plaintiffs' claims for

Declaratory and Injunctive Relief

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declaratory and injunctive relief because they seek only remedies

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and do not constitute independent theories of recovery.

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Plaintiffs do not oppose dismissal of their free-standing claim

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for injunctive relief, but respond that a claim for declaratory

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relief is a recognized cause of action under California law.

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However, because this action is redundant of Plaintiffs’ “fully
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matured” HBOR claims, it is unnecessary as a separate cause of

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action.

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909-10 (2013).

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relief as remedies, not independent claims.

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II.

Jolley v. Chase Home Fin., LLC, 213 Cal. App. 4th 872,
Plaintiffs may pursue declaratory and injunctive

Motion for Preliminary Injunction

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A.

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Plaintiffs move for a preliminary injunction against the

Winter Factors

foreclosure sale of their property pending this action.

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United States District Court
Northern District of California

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The

first factor to be considered is Plaintiffs’ likelihood of

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success on the merits.

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stated a dual-tracking claim under the HBOR.

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motion for preliminary injunction, the Court also considers the

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additional evidence submitted by the parties.

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The Court has found that Plaintiffs have
In ruling on the

The Court finds that Plaintiff Theresa Di Loreto has made a

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strong showing of likelihood of success on the merits of her HBOR

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claim against Defendant SLS.

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completeness of Plaintiffs’ application for a loan modification,

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Plaintiffs have submitted declarations and evidence that the

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application was complete when submitted, and that SLS initiated

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foreclosure proceedings while the application was pending.

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Cal. Civil Code § 2923.6(c)(1)-(3).3

On the disputed question of the

Defendants contend that

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See

This section provides:

(c) If a borrower submits a complete application
for a first lien loan modification offered by, or
through, the borrower's mortgage servicer, a mortgage
servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not record a notice of default
or notice of sale, or conduct a trustee's sale, while
the complete first lien loan modification application
is pending. A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent shall not record a
notice of default or notice of sale or conduct a
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Plaintiffs never completed their loan modification application,

2

and that documents submitted earlier became “stale” while

3

Plaintiffs delayed in submitting missing documents.

4

although Defendants submit evidence regarding demands for

5

additional information from Plaintiffs, see, e.g., October 3,

6

2017, Decl. of Cynthia Wallace, they do not submit any evidence

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of what information they required Plaintiffs to submit in their

8

initial loan modification application, how Plaintiffs knew what

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Northern District of California

1

was required, or what information Plaintiffs submitted in their

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However,

initial application.
Plaintiffs, on the other hand, submit Mr. Di Loreto’s

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declaration, under penalty of perjury, that at the time

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Plaintiffs submitted their initial loan modification some time

14

during or before August 2015, they “provided each and every

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document and all information initially required by CHASE for

16

consideration” of the application and that the application “fully

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complied with all the requirements of Defendants [sic] CHASE and

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was complete.”

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¶ 8.

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declaration.

September 19, 2017 Decl. of Gregory Di Loreto

The Court overrules Defendants’ objections to this
Mr. Di Loreto’s testimony regarding the submission

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trustee's sale until any of the following occurs:
(1) The mortgage servicer makes a written
determination that the borrower is not eligible for a
first lien loan modification, and any appeal period
pursuant to subdivision (d) has expired.
(2) The borrower does not accept an offered first
lien loan modification within 14 days of the offer.
(3) The borrower accepts a written first lien loan
modification, but defaults on, or otherwise breaches
the borrower's obligations under, the first lien loan
modification.
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1

of the loan modification application is within his personal

2

knowledge.

3

additional information in support of the application is not

4

sufficient to overcome Plaintiffs’ showing that their application

5

was legally complete because, when filed, it included all the

6

documents previously required by Defendants.4

Defendants’ evidence that they later demanded

Defendants contend that Plaintiffs’ earlier applications

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were denied as incomplete via a telephone call due to Plaintiffs’

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failure to provide requested documents.

Wallace Decl. ¶ 12.

But

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Defendants do not contend that they satisfied any of the

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conditions of California Civil Code section 2923.6(c)(1)-(3),

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such as a compliant written denial, before conducting foreclosure

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proceedings.

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in favor of a preliminary injunction.

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Accordingly, the first Winter factor weighs heavily

With regard to the remaining factors to be considered, a

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foreclosure sale would impose immediate and irreparable injury

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because Plaintiffs would lose unique real property and would be

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deprived of a meaningful opportunity to be considered for loss

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mitigation options.

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No. 16-cv-05840 CW, 2016 WL 9275406, at *4 (N.D. Cal. Dec. 29,

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2016).

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they have shown that there is strong public interest in

See Mace v. Ocwen Loan Servicing, LLC,

The balance of the harms tips sharply in their favor and

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4

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At the hearing, Plaintiffs relied heavily on a July 6, 2017
letter from SLS providing a list of “complete” items of
information, with “no action needed,” provided by Plaintiffs to
SLS. This letter, in and of itself, is not persuasive, however,
because Plaintiffs mention only the list of complete documents
and ignore the text at the beginning of the letter stating “Core
Documents Needed: Request for Mortgage Assistance Form.” On the
other hand, the fact that SLS required an additional form in July
2017 also does not mean that Plaintiffs’ initial application was
not complete when filed.
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preventing unlawful foreclosures.

Id.

Plaintiffs have satisfied

2

their burden of showing that the Winter factors are met.

3

B.

4

Defendants request that the Court either impose a bond in

Bond

the amount of $200,000.00 to cover reasonable rental value, lost

6

interest, attorneys’ fees and depreciation in the value of the

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property, or require Plaintiffs to submit monthly bond payments

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to Defendants in the amount of the monthly payment on the loan

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Northern District of California

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for the pendency of the injunction.

Plaintiffs respond that the

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value of the property is sufficiently higher than the loan amount

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that no further security should be required and that they should

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not be required to pay any arrearages.

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In lieu of posting a bond, the Court orders Plaintiffs to

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make monthly payments of $6500.00 per month.

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represented at the hearing that this amount is approximately the

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same as the monthly payments on the loan.

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shall be sent by Plaintiffs to their counsel who shall forward

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them to Defendants’ counsel by the first business day of each

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month, beginning December 1, 2017.

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The parties

The monthly payments

CONCLUSION
The Court grants the unopposed requests for judicial notice
filed by all parties (Docket Nos. 16-1, 17-4, 20).
Within seven days after the date of this order, Plaintiffs

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shall file in this Court proof of service on NBS, or waiver of

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service by NBS, and any declaration of nonmonetary status or

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other disclaimer filed by NBS.

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The Court GRANTS IN PART AND DENIES IN PART Defendants’
motion to dismiss (Docket No. 16).
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The Court DISMISSES all

1

claims brought by Gregory Di Loreto; dismisses all claims against

2

Chase; dismisses Plaintiffs’ separate claims for an accounting

3

and for declaratory and injunctive relief; and dismisses

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Plaintiffs’ fourth cause of action under the FDCPA.

5

DENIES the motion to dismiss Theresa Di Loreto’s HBOR claim for

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injunctive and declaratory relief against SLS.

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The Court

The Court ORDERS the parties to meet and confer in an
attempt to reach a stipulation regarding whether Chase retains

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Northern District of California

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any interest in Plaintiffs’ loan.

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The Court GRANTS Plaintiffs’ motion for a preliminary

11

injunction (Docket No. 10).

Defendants Chase and SLS, their

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officers, agents, employees, partners, successors,

13

representatives and all other persons acting in concert or

14

participating with them, are hereby restrained and enjoined from

15

taking any further action in pursuit of a foreclosure sale of

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Plaintiffs’ real property located at 1155 Redfern Court, Contra

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Costa County, California, Contra Costa County Assessor's Parcel

18

Number 121-190-019-4.

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upon Plaintiffs making monthly payments of $6500.00 per month.

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If Defendants believe that Plaintiffs have breached this

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condition, they must first ask the Court to lift the injunction

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before taking any action related to the property.

This preliminary injunction is conditioned

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The Court having dismissed Plaintiffs’ FDCPA claim,

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Plaintiffs may file a properly-noticed motion to remand.

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filing of a motion to remand shall not, however, stay any other

26

deadline absent further Court order.

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The Court grants leave to amend the dismissed claims.

The

Any

amended complaint is due within twenty-one days after the date of
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1

this order, and must be accompanied by a redline version showing

2

all changes made in the amended complaint.

3

In any amended Complaint, Plaintiffs must allege whether the

4

subject real property was, at all relevant times, their principal

5

residence.

6

All Defendants that have been served shall respond to any
amended complaint within twenty-one days after it is filed.

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Defendants file a further motion to dismiss, the motion should be

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United States District Court
Northern District of California

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noticed for February 27, 2018, at 2:30 p.m.

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If

The Court CONTINUES the initial case management conference

11

currently scheduled for December 19, 2017 to February 27, 2018 at

12

2:30 p.m.

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February 20, 2018.

The joint case management statement is now due

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If Plaintiffs do not timely file an amended complaint,

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Defendants’ answer to Theresa Di Loreto’s HBOR claim in the

16

current complaint shall be due within forty-two days after the

17

date of this order.

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IT IS SO ORDERED.

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Dated: November 20, 2017
CLAUDIA WILKEN
United States District Judge

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