Bhandari et al v. Capital One, N.A. et al

Filing 46

ORDER DENYING PLAINTIFFS' MOTION FOR INJUNCTION PENDING APPEAL by Judge Paul S. Grewal denying 37 Motion for Preliminary Injunction (psglc1, COURT STAFF) (Filed on 12/3/2012)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 United States District Court For the Northern District of California 8 SAN JOSE DIVISION 11 12 NARPAT BHANDARI AND CHANDRA BHANDARI, Plaintiffs, 13 v. 14 15 CAPITAL ONE, N.A., et al., Defendants. 16 ) ) ) ) ) ) ) ) ) ) ) Case No.: C 12-04533 PSG ORDER DENYING PLAINTIFFS’ MOTION FOR INJUNCTION PENDING APPEAL (Re: Docket No. 37) 17 In this mortgage foreclosure action, Plaintiffs Narpat Bhandari and Chandra Bhandari 18 (collectively, “Plaintiffs”) move for an injunction pending appeal of an order denying their motion 19 for preliminary injunction. Defendants Capital One, N.A., Chevy Chase Bank FSB, and Mortgage 20 Electronic Registration Systems, Inc. (collectively, “Defendants”) oppose the motion. On 21 November 30, 2012, the parties appeared for a hearing scheduled on shortened time. Having 22 reviewed the papers and considered the arguments of counsel, Plaintiffs’ motion for injunction is 23 DENIED. 24 On November 26, 2012, after full briefing and an extended hearing, the court denied 25 Plaintiffs’ motion for preliminary injunction. 1 Plaintiffs had sought to prevent foreclosure of real 26 27 28 1 See Docket No. 36. A more complete recitation of the facts underlying the parties’ dispute is provided in the November 26 order, as well as the court’s August 31, 2012 order granting Plaintiffs a temporary restraining order. See Docket No. 11. 1 Case No.: C 12-04533 PSG ORDER 1 property located at 14530 Deer Park Court, Los Gatos, California (the “Property”). Based on the 2 court’s order, Defendants have now scheduled a Trustee’s Sale of the Property to be held on 3 December 5, 2012. Plaintiffs intend to appeal the November 26 order and therefore move for 4 injunction barring any trustee’s sale pending appeal. 2 According to Plaintiffs, failing to enjoin the 5 sale will irreparably harm them because they will have lost their home, approximately $3-4 million 6 in equity, and any improvements they have made. Plaintiffs note that real property is unique and 7 money damages would be inadequate to make them whole in the event they prevail on appeal. 3 8 Plaintiffs also note that California’s non-judicial foreclosure statutes would make it exceedingly 9 difficult for them to set aside a trustee’s sale. 4 United States District Court For the Northern District of California 10 Defendants respond that Plaintiffs have not met the requirements for the court to grant an 11 injunction. Because the November 26, 2012 order relies essentially on factual findings, the Ninth 12 Circuit would apply a “clearly erroneous” standard of review. Plaintiffs have not even identified 13 what it considers to be clearly erroneous in the court’s November 26 order and instead focus 14 exclusively on the alleged irreparable harm that would follow from the sale. This deficiency alone 15 is fatal to Plaintiffs’ motion for injunction. Even if this were not so, none of the other requirements 16 for an injunction have been met either. First, Plaintiffs will not be irreparably harmed because they 17 may simply reinstate the loan by paying the deficiency in payments totaling $407,701.20. 18 Plaintiffs’ bank records reflect that they have at least $1.4 million in cash. Second, the balance of 19 equities favor Defendants. Plaintiffs’ 2008 appraisal report suggesting they have $3-4 million in 20 equity that would be lost in the sale is no longer valid. The market conditions in the real estate 21 market have since changed substantially since 2008 and a more recent appraisal of the Property 22 prepared on February 17, 2012 values the Property at $5,472,750. In fact, Plaintiffs themselves 23 have conceded that their home is worth no more than $4 million, probably less. Plaintiffs’ 24 2 25 26 At the time of their motion and hearing on the motion, Plaintiffs had yet to file their Notice of Appeal, but have since done so. See Docket No. 44. The court will proceed to address the merits of the pending motion without deciding whether a notice was in fact required in advance. 3 27 See Sundance Land Corp. v. Community First Federal Sav. And Loan Ass’n, 840 F.2d 653, 661 (9th Cir. 1988). 28 4 See Cal. Civ. Code Section 2924. 2 Case No.: C 12-04533 PSG ORDER 1 argument that they should be permitted to sell their Property in excess of the debt to preserve their 2 equity is therefore unfounded. Third, Plaintiffs do not even address the public interest in their 3 motion. 4 The court agrees with Defendants. Before issuing an injunction pending appeal pursuant to 5 Fed. R. App. P. 8(a), trial courts in the Ninth Circuit must consider the following factors: (1) a 6 strong likelihood of success on the merits; (2) the balance of irreparable harm and (3) the public 7 interest in granting the injunction. 5 As to the first factor – likelihood of success on the merits – the 8 court addressed this factor at length in the November 26 order and concluded that Plaintiffs could 9 not establish a likelihood of success on any of their claims. 6 Significantly, either in their papers or United States District Court For the Northern District of California 10 at the hearing on November 30, Plaintiffs did not identify even one legal or factual error in the 11 November 26 order. Nor did Plaintiffs identify any previous instance of the Ninth Circuit or any 12 trial court issuing any injunction pending appeal in the absence of any demonstration of error in the 13 underlying order’s analysis. As to the second factor – whether the balance of irreparable harm 14 favors movants – the court also addressed this factor in the November 26 order and concluded that 15 if Defendants foreclosed, Plaintiffs may suffer irreparable harm in that they might lose their initial 16 equity in the form of their down payment and the value of any improvements they have made on 17 their home. But in response to Defendants’ evidence that any such equity no longer exists, based on 18 the substantial decline in the value of the property, Plaintiffs offered no response. As to the third 19 factor – whether the public interest favors granting the injunction – the court previously found that 20 even if Plaintiffs could establish irreparable harm, Plaintiffs had not established that any other 21 factors weighed in their interest. Having again considered the merits of Plaintiffs’ motion for 22 preliminary injunction and determined again that they cannot establish a likelihood of success on 23 their claims, the court must once again conclude that the public’s interest does not favor granting 24 an injunction and further delaying foreclosure proceedings. 25 5 27 See Warm Springs Dam Task Force v. Gribble, 565 F.2d 549, 551 (9th Cir. 1977). See also Digital Communications Network, Inc. v. AB Cellular Holding LLC dba AT&T Wireless Services, No. 99-5418 CM (AJWX), 1999 WL 1044234, at *3 (C.D. Cal. Aug. 19, 1999) (referring to two standards, the standard for granting a stay pending appeal and the standard for issuance of an injunction pending appeal, to evaluate a motion for injunction pending appeal). 28 6 26 See Docket No. 36 at 8-14. 3 Case No.: C 12-04533 PSG ORDER 1 In sum, all of the factors mandated by the Ninth Circuit when considering an injunction 2 pending appeal weigh in Defendants’ favor. No matter the unfortunate effect of the proposed sale, 3 these factors must be respected. Based on the record presented to the court, an injunction simply is 4 not warranted. 5 IT IS SO ORDERED. 6 Dated: _________________________________ PAUL S. GREWAL United States Magistrate Judge 12/3/2012 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 Case No.: C 12-04533 PSG ORDER

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