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

Filing 11

Order by Hon. Lucy H. Koh denying 9 Ex Parte Application for TRO; Ordering Plaintiff to Serve Defendants; and Ordering Defendants to Respond to Motion for Preliminary Injunction.(lhklc3S, COURT STAFF) (Filed on 5/23/2012)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

United States District Court
For the Northern District of California

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ESTERLITA CORTES TAPANG,

)
)
Plaintiff,
)
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v.
)
)
WELLS FARGO BANK, N.A., successor by
)
merger to Wells Fargo Bank Minnesota, N.A., as )
Trustee f/k/a Northwest Bank Minnesota, N.A., )
as Trustee for the registered holders of
)
Structured Asset Securities Corporation,
)
Amortizing Residential Collateral Trust,
)
Mortgage Pass-Through Certificates, Series
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2002-BC9; STRUCTURED ASSET
)
SECURITIES CORPORATION, Amortizing
)
Residential Collateral Trust, Mortgage Pass)
Through Certificates, Series 2002-BC9;
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STRUCTURED ASSET SECURITIES
)
CORPORATION; OCWEN LOAN
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SERVICING, LLC; FINANCE AMERICA,
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LLC; WESTERN PROGRESSIVE, LLC;
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MORTGAGE ELECTRONIC REGISTRATION )
SYSTEMS, INC.; and DOES 1 through 500,
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INCLUSIVE,
)
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Defendants.
)
)

Case No.: 12-CV-02183-LHK
ORDER DENYING EX PARTE
APPLICATION FOR A TEMPORARY
RESTRAINING ORDER; ORDERING
PLAINTIFF TO SERVE DEFENDANTS;
AND ORDERING DEFENDANTS TO
RESPOND TO PLAINTIFF’S MOTION
FOR PRELIMINARY INJUNCTION

Before the Court is Plaintiff Esterlita Cortes Tapang’s (“Plaintiff”) second emergency ex

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parte application for a temporary restraining order (“TRO”) and an order to show cause re:

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preliminary injunction to prevent the sale upon foreclosure of her home in Sunnyvale, California.

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See ECF No. 9. On May 1, 2012, Plaintiff, through her counsel, filed an ex parte TRO application
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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO

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on the eve of a trustee’s sale scheduled to take place on May 2, 2012, at 11:00 a.m. Plaintiff’s

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application sought to enjoin a trustee’s sale on the property located at 1724 Noranda Drive,

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Sunnyvale, CA 94087 (the “Property”). See ECF No. 1. Because Plaintiff failed to file a

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complaint along with her first TRO application, in violation of Civil Local Rule 65-1(a)(1), the

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Court was unable to determine what causes of action Plaintiff was asserting nor whether she

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demonstrated a likelihood of success on the merits of those claims. Accordingly, the Court denied

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Plaintiff’s application without prejudice. See ECF No. 5. Evidently, the trustee’s sale on the

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Property did not take place on May 2, 2012. On May 22, 2012, Plaintiff, through her counsel, filed

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a second TRO, again on the eve of a trustee’s sale, this time scheduled to take place on May 23,

United States District Court
For the Northern District of California

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2012, at 11:00 a.m.

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I.

BACKGROUND

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Plaintiff brings this action against Defendants Wells Fargo Bank, N.A., successor by

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merger to Wells Fargo Bank Minnesota, N.A., as Trustee f/k/a Norwest Bank Minnesota, N.A., as

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Trustee for the registered holders of Structured Asset Securities Corporation, Amortizing

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Residential Collateral Trust, Mortgage Pass-Through Certificates, Series 2002-BC9 (“WFB

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Trustee”); Structured Asset Securities Corporation, Amortizing Residential Collateral Trust,

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Mortgage Pass-Through Certificates, Series 2002-BC9 (“SASC Trust”); Structured Asset

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Securities Corporation (“SASC”); Finance America, LLC (“FAL”); Ocwen Loan Servicing, LLC

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(“Ocwen”); Mortgage Electronic Registration Systems, Inc. (“MERS”); and Western Progressive,

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LLC (“Western Progressive”) (collectively “Defendants”), asserting fifteen causes of action. See

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Complaint, ECF No. 6 (“Compl.”). Specifically, Plaintiff asserts, inter alia, a claim for wrongful

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foreclosure in violation of California Civil Code § 2932.5, as well as claims for violations of the

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Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 (“RICO”); California Civil

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Code §§ 2934a(a)(4)(e) and 2924F(b)(1); the Real Estate Settlement Procedures Act, 12 U.S.C. §

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2605 (“RESPA”); the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”); the

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Rosenthal Act, California Civil Code § 1788(e) and (f); California Financial Code § 50505;

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California Civil Code § 2923.6, and a variety of common law claims. Id.

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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO

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Plaintiff has owned the Property at 1724 Noranda Drive, Sunnyvale, California 94087 since
1994. She refinanced the Property on September 11, 2002. Id. ¶ 21. A Deed of Trust was

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recorded on September 18, 2002, identifying Plaintiff as “Borrower;” Finance America, LLC

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(“FAL”) as Lender; Karen H. Cornell, Esq. as “Trustee;” and MERS as “Beneficiary.” Id. ¶ 23 &

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Ex. 1. On March 29, 2011, a Notice of Default and Election to Sell Under Deed of Trust was

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recorded on the Property by Western Progressive as agent for the beneficiary FAL. Id. ¶ 25 & Ex.

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3. On May 20, 2011, an Assignment of Deed of Trust was recorded whereby MERS granted to

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SASC Trust all its rights to the Property. Id. ¶ 26 & Ex. 4. On June 15, 2011, a second, nearly

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identical Assignment of Deed of Trust was recorded on the Property. Id. ¶ 27 & Ex. 5. On July 6,

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United States District Court
For the Northern District of California

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2011, a Substitution of Trustee was recorded on the Property, substituting Western Progressive as

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trustee. On July 6, 2011, a Notice of Trustee’s Sale was recorded on the Property by Western

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Progressive. Id. ¶ 29 & Ex. 7.

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II.

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The standard for issuing a TRO is identical to the standard for issuing a preliminary

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injunction. Brown Jordan Int’l, Inc. v. Mind’s Eye Interiors, Inc., 236 F. Supp. 2d 1152, 1154 (D.

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Haw. 2002); Lockheed Missile & Space Co., Inc. v. Hughes Aircraft Co., 887 F. Supp. 1320, 1323

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(N.D. Cal. 1995). “A plaintiff seeking a preliminary injunction must establish that he is likely to

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succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary

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relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

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Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The party seeking the injunction

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bears the burden of proving these elements. Klein v. City of San Clemente, 584 F.3d 1196, 1201

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(9th Cir. 2009). The issuance of a preliminary injunction is at the discretion of the district court.

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Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011).

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III.

LEGAL STANDARD

DISCUSSION

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A. Plaintiff Is Not Entitled to a TRO Before Defendants Can Be Heard

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Plaintiff, through her counsel, has applied for TROs on the eve of a morning trustee’s sale

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of the Property twice. See ECF Nos. 1 & 9. Each time Plaintiff claims that she must receive relief

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before Defendants can be heard in opposition. Id. Because of Plaintiff’s first TRO application, the
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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO

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trustee’s sale of the Property appears to have been postponed from May 2, 2012 to May 23, 2012.

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Plaintiff fails to explain why she waited until the eve of May 22, 2012 to seek to enjoin the May

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23, 2012 trustee’s sale. See ECF No. 9. Plaintiff has known for some time that the Property would

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be subject to a trustee’s sale. A Notice of Default and Election to Sell Under Deed of Trust was

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recorded on the Property on March 29, 2011, nearly fourteen months ago. Compl. ¶ 25. On July 6,

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2011, nearly eleven months ago, a Notice of Trustee’s Sale was recorded on the Property. Id. ¶ 29

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& Ex. 7. Plaintiff’s pattern of waiting until the eve of two trustee’s sales of the Property before

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filing her TRO applications suggests that she seeks to preclude any response from Defendants for

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tactical reasons. Contrary to Federal Rule of Civil Procedure 65(b)(1)(A), Plaintiff has failed to

United States District Court
For the Northern District of California

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provide specific facts in her attorney’s affidavit that clearly show that immediate injury will result

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before the adverse party can be heard in opposition. See Fed. R. Civ. P. 65(b)(1) (court may issue a

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temporary restraining order without notice to the opposing party “only if: (A) specific facts in an

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affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or

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damage will result to the movant before the adverse party can be heard in opposition”).

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Accordingly, Plaintiff has failed to show that a TRO must issue before Defendants can be heard in

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opposition.

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Moreover, Plaintiff failed to give adequate notice of her TRO application to Defendants.

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Although Plaintiff’s attorney submits a declaration stating that he gave notice to Defendants

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Western Progressive, Ocwen, and Wells Fargo Bank, as Trustee, by calling them on May 22, 2012,

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Plaintiff’s method of providing “notice” was insufficient under the local rules. See Civil L.R. 65-

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1(b) (unless relieved by the Court for good cause shown, “on or before the day of an ex parte

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motion for a temporary restraining order, counsel applying for the temporary restraining order must

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deliver notice of such motion to opposing counsel or party”); see also Civil L.R. 5-5(a)(2)

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(“Service by mail may not be used if a Local Rule requires delivery of a pleading or paper.”).

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Furthermore, Plaintiff has provided no indication that she provided notice, in any form, about her

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TRO application to the other Defendants in this action. Even more significantly, there is no

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evidence that Plaintiff has served the summons and complaint on any of the Defendants in this

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case.
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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO

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Furthermore, as will be discussed below, Plaintiff has failed to demonstrate likelihood of

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success on the merits of her numerous, complex causes of action against Defendants, and the Court

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questions whether it even has subject matter jurisdiction over this case. Thus, the Court cannot

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grant a TRO without hearing from Defendants in opposition.

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B. Plaintiff Has Failed to Demonstrate Likelihood of Success on the Merits
The Court recognizes that loss of a home can constitute irreparable harm. See, e.g., Perry v.

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Nat’l Default Servicing Corp., No. 10-cv-03167-LHK, 2010 WL 3325623, at *6 (N.D. Cal. Aug.

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20, 2010). However, Plaintiff has failed to carry her burden of showing a likelihood of success on

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the merits of her claims, and thus the Court cannot grant her request for a TRO. Plaintiff claims

United States District Court
For the Northern District of California

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that Defendants are not entitled to enforce the security interest on the deed of her trust and that the

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foreclosure sale will be void as a matter of law. See Mot. at 12. Plaintiff argues that her claims are

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“hardly farfetched” because “every day we hear in the news how banks nationwide are engaging in

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foreclosure proceedings without establishing—and without being able to establish when

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challenged—its right to enforce any security interest on the subject property.” Id. (emphasis in

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original). Plaintiff also points to a New York Supreme Court decision finding Christina Carter, the

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signatory on the May 20, 2011 Assignment of Deed of Trust, to be a “robosigner,” and on that

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basis alleges fraud in the assignment. Id. at 7-9, 12. While Plaintiff raises questions about the

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chain of title to the Property, her allegations do not rise to the level of showing a likelihood of

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success on the merits of her claims. For example, although Plaintiff argues that the fraudulent

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assignment in violation of California Civil Code § 2932.5 renders Defendants’ attempt to foreclose

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on the Property void as a matter of law, it is not apparent that § 2932.5 even applies to deeds of

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trust. See, e.g., Roque v. Suntrust Mortg., Inc., No. C-09-00040 RMW, 2010 WL 546896, at *7

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(N.D. Cal. Feb. 9, 2010) (“Section 2932.5 applies to mortgages, not deeds of trust. It applies only

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to mortgages that give a power of sale to the creditor, not to deeds of trust which grant a power of

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sale to the trustee.”).

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Furthermore, Plaintiff makes no attempt to establish a likelihood of success on any of her

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federal causes of action, and thus this Court has serious doubts as to whether it even has subject

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matter jurisdiction over this case. For example, Plaintiff alleges violation of the FDCPA, 15
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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO

U.S.C. § 1692 et seq., which proscribes certain conduct in connection with the collection of a debt.

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See 15 U.S.C. §§ 1692e, 1692f, 1692g. However, courts within this Circuit have concluded that a

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non-judicial foreclosure does not constitute “debt collection” as defined by the statute. See, e.g.,

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Tang v. Cal. Reconveyance Co., No. 10-cv-03333-LHK, 2010 WL 5387837, at *4 (N.D. Cal. Dec.

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22, 2010) (“[T]o the extent their FDCPA claims are based on the initiation of a foreclosure

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proceeding, Plaintiffs fail to state a claim.”); Deissner v. Mortg. Elec. Registration Sys., 618 F.

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Supp. 2d 1184, 1189 (D. Ariz. 2009) (“[T]he activity of foreclosing on [a] property pursuant to a

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deed of trust is not collection of a debt within the meaning of the FDCPA.”) (internal quotations

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omitted), aff’d, 384 F. App’x 609 (9th Cir. June 17, 2010); Landayan v. Wash. Mut. Bank, No. C

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United States District Court
For the Northern District of California

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09-0916 RMW, 2009 WL 3047238, at *3 (N.D. Cal. Sept. 18, 2009) (“A claim cannot arise under

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FDCPA based upon the lender enforcing its security interest under the subject deed of a trust

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because foreclosing on a mortgage does not constitute an attempt to collect a debt for purposes of

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the FDCPA.”). Thus, unless Plaintiff can show that Defendants’ debt-collection activities

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exceeded the scope of the ordinary foreclosure process, Plaintiff cannot state a claim under the

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FDCPA, let alone show a likelihood of success on the merits of that claim.

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Plaintiff also alleges violation of the federal RICO statute, which makes it illegal for “any

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person employed by or associated with any enterprise engaged in, or the activities of which affect,

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interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of

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[an] enterprise’s affairs through a pattern of racketeering activity” or to conspire to do so. 18

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U.S.C. §§ 1692(c), (d). To state a claim for a violation of this section, a plaintiff must plead: “(1)

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conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate

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acts’) (5) causing injury to the plaintiff’s business or property.” Living Designs, Inc. v. E.I. Dupont

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de Nemours & Co., 431 F.3d 353, 361 (9th Cir. 2005). As with other claims of fraud, a RICO

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claim must be pled with particularity pursuant to Federal Rule of Civil Procedure 9(b). See Moore

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v. Kayport Package Exp., Inc., 885 F.2d 531, 541 (9th Cir. 1989). Accordingly, Plaintiff must

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“identify the time, place, and manner of each fraud plus the role of each defendant in each

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scheme.” Id. (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401

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(9th Cir. 1986)) (internal quotation marks omitted). Here, Plaintiff has made only general,
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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO

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conclusory allegations of unlawful racketeering activities. Plaintiff has failed to plead with

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sufficient particularity under Rule 9(b), and has failed to demonstrate a likelihood of prevailing on

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the merits of her RICO claim.

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Finally, although Plaintiff pleads that Defendants violated RESPA, 12 U.S.C. § 2605(e)(2),

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“by failing and refusing to provide a written explanation or response to Plaintiff’s Qualified

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Written Request not later than 60 days after receipt of the request,” Compl. ¶ 104, Plaintiff has not

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supported this bare allegation in any way and has failed to demonstrate a likelihood of prevailing

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on the merits of this claim.

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In short, Plaintiff has not attempted to show a likelihood of success on the merits of any of

United States District Court
For the Northern District of California

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her federal claims, giving this Court serious doubts as to whether Plaintiff has even adequately

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stated a federal cause of action that would support federal question jurisdiction under 28 U.S.C. §

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1331. Plaintiff has not alleged diversity jurisdiction. See Compl. ¶ 1. Federal courts are courts of

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limited jurisdiction, and without a source of federal jurisdiction, the Court lacks any basis for

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exercising supplemental jurisdiction over Plaintiff’s state law causes of action.

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IV.

CONCLUSION

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Accordingly, Plaintiff’s second ex parte application for a TRO is DENIED. However, in

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light of the questions raised, and in order to prevent yet a third ex parte TRO application that again

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deprives Defendants of an opportunity to respond, the Court hereby ORDERS Plaintiff to file a

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proof of service of the summons, complaint, TRO application, and this Order on all Defendants by

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Friday, May 25, 2012. The Court further ORDERS Defendants to file a response by June 7, 2012

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to Plaintiff’s TRO application, which will be treated as a motion for a preliminary injunction.

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Plaintiff may file a reply by no later than June 13, 2012. A hearing on Plaintiff’s motion for a

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preliminary injunction will be held on Thursday, June 21, 2012, at 1:30 p.m.

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IT IS SO ORDERED.

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Dated: May 23, 2012

_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 12-cv-02183-LHK
ORDER DENYING APPLICATION FOR TRO