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)

Download PDF
1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 GREGORY P. DI LORETO and THERESA A. DI LORETO, Plaintiffs, 6 v. 7 8 United States District Court Northern District of California 9 10 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. 11 12 13 14 15 16 17 18 19 20 21 22 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 23 24 1 25 26 27 28 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. 1 notice filed by all parties, and takes judicial notice of the 2 uncontested public documents submitted. 3 however, take judicial notice of the disputed inferences the 4 parties seek to draw from the documents or the parties’ 5 respective characterization of those documents. 6 Court make any finding about whether other evidence exists 7 regarding the disputed issues. 8 United States District Court Northern District of California 9 The Court does not, Nor does the BACKGROUND Plaintiffs own real property in Contra Costa County, 10 California. 11 refinance loan from originating lender Chase. 12 loan by a deed of trust. 13 obtained a $500,000 home equity line of credit from non-party JP 14 Morgan Chase Bank N.A. (JPMorgan). 15 Plaintiffs transferred title to the subject property into their 16 family trust. 17 title back to Plaintiffs and Gregory Di Loreto transferred his 18 interest to Theresa Di Loreto. 19 Gregory Di Loreto ¶ 2 & Ex. A. 20 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 21 the refinance loan to non-party U.S. Bank National Association, 22 as Trustee for J.P. Morgan Mortgage Trust 2006-A3 (U.S. Bank). 23 “Approximately two years” before Plaintiffs filed this 24 action, Plaintiffs submitted an application for loan modification 25 to Chase and/or SLS. 26 additional information, which Plaintiffs attempted to provide. 27 The application was still pending in July 2017, when SLS advised 28 Plaintiffs in writing that their loan modification application Complaint ¶ 11. 2 Defendants requested 1 was “currently under review.” Complaint ¶ 14 & Ex. E. SLS 2 informed Plaintiffs that they needed to submit a “Request for 3 Mortgage Assistance Form” but also listed numerous other required 4 documents that it deemed “complete” with no further action 5 needed. Id. 6 Meanwhile, in January 2017, NBS caused to be recorded a 7 notice of default and election to sell the subject property. 8 July 2017, NBS caused to be recorded a notice of Trustee’s Sale. On August 1, 2017, Plaintiffs filed the complaint in this 9 United States District Court Northern District of California In 10 action in Contra Costa Superior Court. 11 claims seeking: (1) declaratory relief against all Defendants; 12 (2) injunctive relief against Defendants Chase and SLS; 13 (3) accounting against Defendants Chase and SLS; (4) relief under 14 the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 15 § 1692, against Defendant SLS; and (5) relief under the 16 California Homeowner Bill of Rights (HBOR), Cal. Civil Code 17 §§ 2923.6, 2924.12, 2924.18, against Defendants Chase and SLS. 18 On August 10, 2017, the Superior Court entered an order to show 19 cause why the court should not issue a preliminary injunction 20 prohibiting the sale of the subject property as well as a 21 temporary restraining order prohibiting sale of the property 22 pending the hearing on the order to show cause. 23 2017, Defendants Chase and SLS filed a notice of removal. 24 25 26 They enumerated separate On September 8, LEGAL STANDARD I. Motion to Dismiss A complaint must contain a “short and plain statement of the 27 claim showing that the pleader is entitled to relief.” 28 Civ. P. 8(a). Fed. R. The plaintiff must proffer “enough facts to state 3 a claim to relief that is plausible on its face.” 2 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 3 Twombly, 550 U.S. 544, 570 (2007)). 4 12(b)(6) for failure to state a claim, dismissal is appropriate 5 only when the complaint does not give the defendant fair notice 6 of a legally cognizable claim and the grounds on which it rests. 7 Twombly, 550 U.S. at 555. 8 the plaintiff pleads factual content that allows the court to 9 United States District Court Northern District of California 1 draw the reasonable inference that the defendant is liable for 10 11 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 12 a claim, the court will take all material allegations as true and 13 construe them in the light most favorable to the plaintiff. 14 Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 15 1061 (9th Cir. 2008). 16 of the complaint, materials incorporated into the complaint by 17 reference, and facts of which the court may take judicial notice. 18 Id. at 1061. 19 conclusions, including threadbare “recitals of the elements of a 20 cause of action, supported by mere conclusory statements.” 21 Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). 22 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 23 required to grant the plaintiff leave to amend, even if no 24 request to amend the pleading was made, unless amendment would be 25 futile. 26 Inc., 911 F.2d 242, 246-47 (9th Cir. 1990). 27 whether amendment would be futile, the court examines whether the 28 complaint could be amended to cure the defect requiring dismissal Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. 4 In determining 1 “without contradicting any of the allegations of [the] original 2 complaint.” Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th 3 Cir. 1990). The court’s discretion to deny leave to amend is 4 “particularly broad” where the court has previously granted 5 leave. 6 2002). 7 II. 8 United States District Court Northern District of California 9 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 10 fact” that is (a) concrete and particularized and (b) actual or 11 imminent, not conjectural or hypothetical; (2) that the injury is 12 fairly traceable to the defendants’ challenged conduct; and 13 (3) that it is likely, as opposed to merely speculative, that the 14 injury will be redressed by a favorable decision. 15 Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). 16 Lujan v. The Court evaluates a motion to dismiss for lack of Article 17 III standing under Federal Rule of Civil Procedure 12(b)(1). 18 Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011); White 19 v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). 20 question of whether plaintiffs have standing is distinct from, 21 and precedes, analysis of the merits of their claims. 22 658 F.3d at 1068. 23 each claim he seeks to press and for each form of relief that is 24 sought.” 25 (internal quotations omitted). 26 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 27 factual.” White, 227 F.3d at 1242. 28 facial attack on jurisdiction, the court takes the factual 5 Where a defendant makes a allegations of the complaint as true, and construes them in the 2 light most favorable to the plaintiffs. 3 749 F.3d 1117, 1121 (9th Cir. 2014). 4 factual attack, however, the court “need not presume the 5 truthfulness of the plaintiffs’ allegations” and, where the 6 jurisdictional question is separable from the merits of the case, 7 may resolve factual disputes without converting the motion into 8 one for summary judgment. 9 United States District Court Northern District of California 1 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 10 733 (9th Cir. 1979). 11 proving by a preponderance of the evidence that each of the 12 requirements for subject-matter jurisdiction has been met.” 13 Leite, 749 F.3d at 1121. 14 III. Motion for Preliminary Injunction 15 The plaintiff then “bears the burden of “A plaintiff seeking a preliminary injunction must establish 16 that he is likely to succeed on the merits, that he is likely to 17 suffer irreparable harm in the absence of preliminary relief, 18 that the balance of equities tips in his favor, and that an 19 injunction is in the public interest.” 20 Def. Council, Inc., 555 U.S. 7, 20 (2008). 21 preliminary injunction could issue where the likelihood of 22 success is such that serious questions going to the merits were 23 raised and the balance of hardships tips sharply in plaintiff’s 24 favor,” so long as the plaintiff demonstrates irreparable harm 25 and shows that the injunction is in the public interest. 26 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 27 (9th Cir. 2011) (citation and internal quotation and editing 28 marks omitted). 6 Winter v. Natural Res. Alternatively, “a A court employs a sliding scale when considering a 1 2 plaintiff’s showing as to the likelihood of success on the merits 3 and the likelihood of irreparable harm. 4 approach, the elements of the preliminary injunction test are 5 balanced, so that a stronger showing of one element may offset a 6 weaker showing of another.” 7 8 United States District Court Northern District of California 9 Id. “Under this Id. DISCUSSION I. Motion to Dismiss A. Untimely Opposition 10 Defendants contend that the Court should disregard 11 Plaintiffs’ untimely opposition brief and grant the motion to 12 dismiss as unopposed. 13 September 26, 2017. 14 10, 2017. 15 Plaintiffs had not opposed the motion. 16 filed a “Memorandum of Points and Authorities in Opposition to 17 Defendant’s Motion to Strike,” which, despite the title, 18 generally appears to respond to Defendants’ motion to dismiss. 19 Plaintiffs’ memorandum was not accompanied by a request for leave 20 to file an untimely opposition. 21 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 22 Plaintiffs’ memorandum as requesting leave to file an untimely 23 opposition, and grants the motion. 24 however, that in the future they must seek leave to alter 25 deadlines set by the Court. The Court warns Plaintiffs, 26 B. 27 Defendants move to dismiss Plaintiffs’ claims for lack of 28 Standing standing because Plaintiffs bring this action in their individual 7 capacities even though public records reflect that shortly after 2 the origination of the refinance loan, Plaintiffs conveyed their 3 interest in the property to their family trust. 4 RJN Ex. 3. 5 action in their capacities as trustees of the family trust, not 6 in their individual capacities. 7 that their family trust conveyed the property back to them in 8 their individual capacities in October 2015. 9 United States District Court Northern District of California 1 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 10 Deed submitted by Plaintiffs in support of this argument, 11 however, indicates not only that the trust conveyed its interest 12 to Plaintiffs but also that Gregory Di Loreto conveyed his 13 interest to Theresa Di Loreto as her “sole and separate 14 property.” 15 argued that the property is now the couple’s community property, 16 but did not cite any law supporting this proposition in light of 17 the language of the Interspousal Grant Deed. 18 Id. Ex. A. At the hearing, Plaintiff’s counsel It appears on the present record that only Plaintiff Theresa 19 Di Loreto has standing. The Court will dismiss Plaintiff Gregory 20 Di Loreto’s claims, but will permit Mr. Di Loreto leave to amend 21 to plead facts and set forth legal authority supporting his claim 22 of standing. 23 2 24 25 26 27 28 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. 8 C. 1 2 3 4 5 6 7 8 United States District Court Northern District of California 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 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. 28 9 See Complaint Ex. C (notice of default that does not name Chase); see 2 also Complaint ¶¶ 7-8 (alleging that NBS caused to be recorded 3 the notice of default and election to sell and notice of 4 trustee’s sale and that SLS as nominal beneficiary elected to 5 sell, but not alleging any involvement by Chase). 6 dismiss all claims against Chase, but will grant Plaintiffs leave 7 to amend to plead facts supporting their claims against Chase. 8 If Plaintiffs cannot presently plead facts supporting a claim 9 United States District Court Northern District of California 1 against Chase, they may seek leave to amend if they obtain such 10 11 The Court will facts during discovery. In addition, as discussed at the hearing, the parties must 12 meet and confer in an attempt to reach a stipulation regarding 13 whether Chase retains any interest in Plaintiffs’ loan. 14 D. 15 In their fifth cause of action, Plaintiffs claim that 16 Defendants violated the HBOR’s prohibition on “dual-tracking,” 17 the practice of a mortgage servicer continuing to pursue 18 foreclosure of a property while a complete loan modification 19 application is pending. 20 Defendants argue that this claim should be dismissed because 21 Plaintiffs do not adequately allege that they had submitted a 22 complete loan modification application at the time that 23 Defendants proceeded with the foreclosure process. Dual Tracking Claim See Cal. Civ. Code ¶ 2923.6(c). 24 Section 2923.6(c) protects a borrower who “submits a 25 complete application for a first lien loan modification.” 26 Civ. Code § 2923.6(c). 27 this section, an application shall be deemed ‘complete’ when a 28 borrower has supplied the mortgage servicer with all documents Cal. The statute provides, “For purposes of 10 1 required by the mortgage servicer within the reasonable 2 timeframes specified by the mortgage servicer.” 3 § 2923.6(h). Cal. Civ. Code 4 In the complaint, Plaintiffs allege: 5 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. 6 7 8 United States District Court Northern District of California 9 10 11 12 13 14 15 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 16 that their loan modification application was complete because 17 they also allege that Defendants later informed them that they 18 needed additional documents to complete their application. 19 other words, Defendants contend that the determination of when an 20 application is complete does not depend on when the borrower 21 submits all the documentation required in advance by the 22 servicer, but rather, is left to the servicer’s “after-the-fact 23 discretion.” 24 941, 946 (N.D. Cal. 2017). 25 In Mace v. Ocwen Loan Servicing, LLC, 252 F. Supp. 3d Section 2923.6(h) does not support Defendants’ position. 26 “The statutory language does not permit a mortgage servicer to 27 create a moving target so borrowers have no way of knowing 28 whether a loan modification application is complete until the 11 mortgage servicer tells them so.” 2 implication of section 2923.6(h) is that a mortgage servicer must 3 tell the borrowers in advance what documents are required and 4 specify ‘reasonable timeframes’ for the submission of those 5 documents.” 6 “borrower has supplied the mortgage servicer with all documents 7 required by the mortgage servicer within the reasonable 8 timeframes specified by the mortgage servicer,” then the 9 United States District Court Northern District of California 1 Id. Rather, “the clear application is complete. Id. (quoting Cal. Civ. Code § 2923.6(h)). Cal. Civ. Code § 2923.6(h). If the Plaintiffs 10 have clearly alleged that they had provided all documents 11 required by Defendants for a complete application both at the 12 time of their initial submittal and at the time when Defendants 13 commenced foreclosure proceedings, with sufficient detail to 14 state a claim. 15 Although Defendants do not raise this issue, the Court notes 16 that Plaintiffs do not allege in the complaint that the subject 17 real property is their home, much less that it is their principal 18 residence. 19 section 2923.6 of the HBOR, the dual-tracking provision at issue 20 here, applies “only to first lien mortgages or deeds of trust 21 that are secured by owner-occupied residential real property 22 containing no more than four dwelling units.” 23 § 2924.15. 24 means that the property is the principal residence of the 25 borrower and is security for a loan made for personal, family, or 26 household purposes.” 27 allege that the subject property is owner-occupied as a principal 28 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 12 1 Fargo Bank, N.A., 76 F. Supp. 3d 929, 957 (N.D. Cal. 2014) 2 (citing cases). 3 that the real property is Plaintiffs’ principal residence. 4 any amended Complaint, Plaintiffs must allege whether the real 5 property was, at all relevant times, their principal residence. 6 At the hearing, Plaintiffs’ counsel represented In Defendants further contend that Plaintiffs’ dual-tracking claim fails because they seek monetary damages, but no 8 foreclosure has yet occurred. 9 United States District Court Northern District of California 7 borrower may claim injunctive relief before a trustee’s sale has 10 occurred, but may only claim monetary damages after a trustee’s 11 sale has occurred. 12 Plaintiffs have not alleged that a trustee’s deed upon sale has 13 been recorded, they have not stated a claim for damages. 14 have, however, stated a claim for injunctive relief, which they 15 request in their prayer for relief. Under the HBOR, a prevailing Cal. Civ. Code § 2923.12(a). Because They 16 E. 17 Plaintiffs’ fourth cause of action seeks relief against SLS Fair Debt Collection Practices Act 18 under the FDCPA. 19 Defendants’ motion to dismiss this claim, and agree to dismiss it 20 voluntarily. 21 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 22 contend that because the FDCPA claim was the only basis for 23 Defendants’ removal of this action, the Court should decline to 24 exercise supplemental jurisdiction and remand this case to 25 California Superior Court. 26 Defendants do not address this contention. 27 28 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 13 1 to Plaintiffs promptly filing a motion to remand. F. 3 Defendants move to dismiss Plaintiffs’ cause of action for 4 an accounting, which claims that the “amount of money Plaintiff 5 [sic] owes to defendants CHASE and SLS, or, alternatively, the 6 amount of money owed to Plaintiffs by defendants CHASE and SLS is 7 unknown to Plaintiffs and cannot be determined without an 8 accounting.” 9 United States District Court Northern District of California 2 plead no facts in support of this claim. Accounting Complaint ¶ 26. Defendants argue that Plaintiffs In particular, 10 Defendants contend that Plaintiffs do not plead that Defendants 11 owe Plaintiffs any money, that the parties are in a fiduciary 12 relationship or that Plaintiffs cannot make the accounting by 13 reference to their own records. 14 recently acknowledged an unspecified error in the servicing of 15 Plaintiffs’ loan, which makes an accounting necessary. 16 2017 Gregory Di Loreto Declaration in Opposition ¶ 3 & Ex. B. 17 The facts concerning this error are not plead in the complaint, 18 however. 19 accounting, but will grant Plaintiffs leave to amend to plead 20 facts supporting all elements of this claim. Plaintiffs respond that Chase Oct. 17, The Court will dismiss Plaintiffs’ claim for an 21 G. 22 Defendants move to dismiss Plaintiffs' claims for Declaratory and Injunctive Relief 23 declaratory and injunctive relief because they seek only remedies 24 and do not constitute independent theories of recovery. 25 Plaintiffs do not oppose dismissal of their free-standing claim 26 for injunctive relief, but respond that a claim for declaratory 27 relief is a recognized cause of action under California law. 28 However, because this action is redundant of Plaintiffs’ “fully 14 1 matured” HBOR claims, it is unnecessary as a separate cause of 2 action. 3 909-10 (2013). 4 relief as remedies, not independent claims. 5 II. Jolley v. Chase Home Fin., LLC, 213 Cal. App. 4th 872, Plaintiffs may pursue declaratory and injunctive Motion for Preliminary Injunction 6 A. 7 Plaintiffs move for a preliminary injunction against the Winter Factors foreclosure sale of their property pending this action. 9 United States District Court Northern District of California 8 The first factor to be considered is Plaintiffs’ likelihood of 10 success on the merits. 11 stated a dual-tracking claim under the HBOR. 12 motion for preliminary injunction, the Court also considers the 13 additional evidence submitted by the parties. 14 The Court has found that Plaintiffs have In ruling on the The Court finds that Plaintiff Theresa Di Loreto has made a 15 strong showing of likelihood of success on the merits of her HBOR 16 claim against Defendant SLS. 17 completeness of Plaintiffs’ application for a loan modification, 18 Plaintiffs have submitted declarations and evidence that the 19 application was complete when submitted, and that SLS initiated 20 foreclosure proceedings while the application was pending. 21 Cal. Civil Code § 2923.6(c)(1)-(3).3 On the disputed question of the Defendants contend that 22 3 23 24 25 26 27 28 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 15 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 7 of what information they required Plaintiffs to submit in their 8 initial loan modification application, how Plaintiffs knew what 9 United States District Court Northern District of California 1 was required, or what information Plaintiffs submitted in their 10 However, initial application. Plaintiffs, on the other hand, submit Mr. Di Loreto’s 11 12 declaration, under penalty of perjury, that at the time 13 Plaintiffs submitted their initial loan modification some time 14 during or before August 2015, they “provided each and every 15 document and all information initially required by CHASE for 16 consideration” of the application and that the application “fully 17 complied with all the requirements of Defendants [sic] CHASE and 18 was complete.” 19 ¶ 8. 20 declaration. September 19, 2017 Decl. of Gregory Di Loreto The Court overrules Defendants’ objections to this Mr. Di Loreto’s testimony regarding the submission 21 22 23 24 25 26 27 28 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. 16 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 8 were denied as incomplete via a telephone call due to Plaintiffs’ 9 United States District Court Northern District of California 7 failure to provide requested documents. Wallace Decl. ¶ 12. But 10 Defendants do not contend that they satisfied any of the 11 conditions of California Civil Code section 2923.6(c)(1)-(3), 12 such as a compliant written denial, before conducting foreclosure 13 proceedings. 14 in favor of a preliminary injunction. 15 Accordingly, the first Winter factor weighs heavily With regard to the remaining factors to be considered, a 16 foreclosure sale would impose immediate and irreparable injury 17 because Plaintiffs would lose unique real property and would be 18 deprived of a meaningful opportunity to be considered for loss 19 mitigation options. 20 No. 16-cv-05840 CW, 2016 WL 9275406, at *4 (N.D. Cal. Dec. 29, 21 2016). 22 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 23 4 24 25 26 27 28 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. 17 1 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 7 property, or require Plaintiffs to submit monthly bond payments 8 to Defendants in the amount of the monthly payment on the loan 9 United States District Court Northern District of California 5 for the pendency of the injunction. Plaintiffs respond that the 10 value of the property is sufficiently higher than the loan amount 11 that no further security should be required and that they should 12 not be required to pay any arrearages. 13 In lieu of posting a bond, the Court orders Plaintiffs to 14 make monthly payments of $6500.00 per month. 15 represented at the hearing that this amount is approximately the 16 same as the monthly payments on the loan. 17 shall be sent by Plaintiffs to their counsel who shall forward 18 them to Defendants’ counsel by the first business day of each 19 month, beginning December 1, 2017. 20 21 22 23 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 24 shall file in this Court proof of service on NBS, or waiver of 25 service by NBS, and any declaration of nonmonetary status or 26 other disclaimer filed by NBS. 27 28 The Court GRANTS IN PART AND DENIES IN PART Defendants’ motion to dismiss (Docket No. 16). 18 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 4 Plaintiffs’ fourth cause of action under the FDCPA. 5 DENIES the motion to dismiss Theresa Di Loreto’s HBOR claim for 6 injunctive and declaratory relief against SLS. 7 The Court The Court ORDERS the parties to meet and confer in an attempt to reach a stipulation regarding whether Chase retains 9 United States District Court Northern District of California 8 any interest in Plaintiffs’ loan. 10 The Court GRANTS Plaintiffs’ motion for a preliminary 11 injunction (Docket No. 10). Defendants Chase and SLS, their 12 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 16 Plaintiffs’ real property located at 1155 Redfern Court, Contra 17 Costa County, California, Contra Costa County Assessor's Parcel 18 Number 121-190-019-4. 19 upon Plaintiffs making monthly payments of $6500.00 per month. 20 If Defendants believe that Plaintiffs have breached this 21 condition, they must first ask the Court to lift the injunction 22 before taking any action related to the property. This preliminary injunction is conditioned 23 The Court having dismissed Plaintiffs’ FDCPA claim, 24 Plaintiffs may file a properly-noticed motion to remand. 25 filing of a motion to remand shall not, however, stay any other 26 deadline absent further Court order. 27 28 The Court grants leave to amend the dismissed claims. The Any amended complaint is due within twenty-one days after the date of 19 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. 8 Defendants file a further motion to dismiss, the motion should be 9 United States District Court Northern District of California 7 noticed for February 27, 2018, at 2:30 p.m. 10 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. 13 February 20, 2018. The joint case management statement is now due 14 If Plaintiffs do not timely file an amended complaint, 15 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. 18 IT IS SO ORDERED. 19 20 Dated: November 20, 2017 CLAUDIA WILKEN United States District Judge 21 22 23 24 25 26 27 28 20

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?