Williams v. Wells Fargo Bank, N.A. et al
Filing
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Order granting 14 Motion for Preliminary Injunction. Signed by Hon. Edward J. Davila on 9/30/2013.(ejdlc3, COURT STAFF) (Filed on 9/30/2013)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
United States District Court
For the Northern District of California
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ELIZABETH ANN WILLIAMS,
Plaintiff,
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v.
WELLS FARGO BANK, N.A., ET AL.,
Defendants.
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Case No.: 5:13-CV-03387-EJD
ORDER GRANTING PLAINTIFF’S
MOTION FOR PRELIMINARY
INJUNCTION
[Re: Docket Item No. 14]
Plaintiff Elizabeth Ann Williams (“Plaintiff”) initiated the present action in state court on
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June 27, 2013. See Docket Item No. 1. Defendants Wells Fargo Bank, N.A., et al. (collectively
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“Wells Fargo” or “Defendant”) removed the case to this court on July 19, 2013. Id. Presently
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before this court is Plaintiff’s Motion for Preliminary Injunction Against Trustee Sale, filed August
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16, 2013, to enjoin Defendant from initiating a foreclosure sale on her home. See Docket Item No.
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14. Defendant filed its opposition to the motion on August 30, 2013. See Docket Item No. 18.
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The hearing was held on September 20, 2013. Having considered the parties’ briefs and
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accompanying submissions, as well as the oral argument, the Court hereby GRANTS Plaintiff’s
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request for preliminary injunctive relief.
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Case No.: 5:13-CV-03387-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
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I. BACKGROUND
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This action stems from two loans which Plaintiff obtained from predecessors of Wells
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Fargo Bank. The first was a mortgage from World Savings Bank obtained on or about December
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27, 2000 and the second was a home equity line of credit (“HELOC”) obtained on or about April 6,
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2006.
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From December 2000 until approximately May 2007, Plaintiff paid both of her mortgage
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payments via automatic bank withdrawals. In or around May 2007 Plaintiff opened a new bank
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account. Plaintiff informed Wachovia Corporation (Defendant’s predecessor) that she had a new
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bank account and directed them to withdraw monthly payments for both her mortgage and the
United States District Court
For the Northern District of California
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HELOC. However, HELOC payments were not automatically deducted, although mortgage
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payments continued. Plaintiff called Defendant, but the situation was not corrected.
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After several months, Defendant requested that Plaintiff pay late fees due on the
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uncollected HELOC payments. In December 2007, Defendant filed a Notice of Default on the
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HELOC. Plaintiff claims she attempted to contact Defendant to arrange payment of all late fees
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and arrears, however Defendant did not respond.
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In September or October 2008, Plaintiff was served with eviction and foreclosure notices,
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stemming from the default on the HELOC. Plaintiff engaged the help of an attorney, who sent a
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letter to Defendant requesting a reinstatement amount and stating that Plaintiff was willing and able
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to pay the reinstatement figure with certified funds. The trustee’s deed upon sale was rescinded on
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or about October 14, 2008 and around January 2009 Defendant reinstated the HELOC after
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Plaintiff paid fees and expenses.
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In the meantime, Defendant stopped automatically withdrawing payments for Plaintiff’s
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mortgage in October 2008. In March 2009, Plaintiff received a statement indicating that she was
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five months late on payments for her mortgage and requesting fees to cure her default. Plaintiff
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contacted Defendant to inquire about repaying her mortgage, but was told that there was no record
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of her loan. In March 2009, Plaintiff met with a bank representative to pay the full amount of her
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loan payments, but was told that she would be required to pay fees and penalties in addition to the
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arrears, which she refused to pay. Defendant’s employee refused to accept any payment that did
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Case No.: 5:13-CV-03387-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
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not include the fees and penalties. On August 6, 2009, Defendant recorded a Notice of Default on
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the mortgage. Starting in October 2009, Plaintiff submitted a number of loan modification
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applications, which were each denied.
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II. LEGAL STANDARD
A preliminary injunction is “an extraordinary remedy that may only be awarded upon a
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clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc.,
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555 U.S. 7, 22 (2008). “The proper legal standard for preliminary injunctive relief requires a party
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to demonstrate ‘that he is likely to succeed on the merits, that he is likely to suffer irreparable harm
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in the absence of preliminary relief, that the balance of equities tips in his favor, and that an
United States District Court
For the Northern District of California
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injunction is in the public interest.” Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009)
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(quoting Winter, 555 U.S. at 20).
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As a corollary to this test, the Ninth Circuit has also found that, “ ‘serious questions going
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to the merits’ and a balance of hardships that tips sharply towards the plaintiff can support issuance
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of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of
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irreparable injury and that the injunction is in the public interest.” Alliance for the Wild Rockies v.
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Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).
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III. DISCUSSION
A. Likelihood of Success on the Merits / Serious Questions Going to the Merits
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Plaintiff’s Second Amended Complaint (Docket Item No. 29) contains five causes of
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action: (1) violation of California Business and Professions Code §§17200 et seq., (2) breach of the
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covenant of good faith and fair dealing, (3) anticipatory breach of contract, (4) declaratory relief,
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and (5) injunctive relief.
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Without addressing all the claims, the Court analyzes Plaintiff’s claim that Defendant has
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breached the covenant of good faith and fair dealing. In California, a covenant of good faith and
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fair dealing is implied in every contract. Carma Dev. (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2
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Cal. 4th 342, 371–72 (1992). Its purpose is to ensure that “neither party will do anything which
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will injure the right of the other to receive the benefits of the agreement.” Kransco v. Am. Empire
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Case No.: 5:13-CV-03387-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
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Surplus Lines Ins. Co., 23 Cal. 4th 390, 400 (2000) (quoting Comunale v. Traders & Gen. Ins. Co.,
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50 Cal. 2d 654, 658 (1958)).
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“[T]he factual elements necessary to establish a breach of the covenant of good faith and
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fair dealing are: (1) the parties entered into a contract; (2) the plaintiff fulfilled his obligations
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under the contract; (3) any conditions precedent to the defendant's performance occurred; (4) the
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defendant unfairly interfered with the plaintiff's rights to receive the benefits of the contract; and
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(5) the plaintiff was harmed by the defendant’s conduct.” Rosenfeld v. JPMorgan Chase Bank,
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N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010). An implied covenant claim requires the plaintiff
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to “show that the conduct of the defendant, whether or not it also constitutes a breach of a
United States District Court
For the Northern District of California
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consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities,
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prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and
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deliberate act, which unfairly frustrates the agreed common purposes and disappoints the
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reasonable expectations of the other party thereby depriving that party of the benefits of the
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agreement.” Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1395 (1990).
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Plaintiff alleges that it was Defendant’s conscious and deliberate actions that caused non-
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payment of the loan, because Defendant actively hindered Plaintiff’s obligation to pay her loans.
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See Cockrell v. Wells Fargo Bank, N.A., No. 13-CV-2072, 2013 WL 3830048, at *4 (N.D. Cal.
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July 23, 2013). There is no doubt that a contract existed between the parties whereby Plaintiff
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agreed to pay Defendant monthly mortgage payments and that it was Defendant who stopped
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collecting monthly payments.
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Defendant argues that Plaintiff’s claim is time-barred, however Plaintiff contends that the
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breach of contract occurred either in August 2009 when the Notice of Default was recorded or in
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July 2013 when the trustee sale was scheduled. Both of these dates fall within the four-year time
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period before the complaint was filed. The Court determines that Plaintiff has, at the very least,
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raised “serious questions” on the merits of her claim.
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B. Likelihood of Irreparable Harm
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“Irreparable injury has been defined as that injury which is certain and great.” Planet
Coffee Roasters, Inc. v. Hung Dam, 2010 WL 625343, at *6 (C.D. Cal. Feb. 18, 2010) (quoting
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Case No.: 5:13-CV-03387-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
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Coffee Dan’s Inc. v. Coffee Don’s Charcoal Broiler, 305 F. Supp. 1210, 1216 (N.D. Cal. 1969)).
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The Ninth Circuit has noted that a “loss of an interest in real property constitutes an irreparable
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injury.” Park Vill. Apartment Tenants Ass’n v. Mortimer Howard Trust, 636 F.3d 1150, 1159 (9th
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Cir. 2010). It is highly likely that if the trustee sale were to proceed, Plaintiff would lose her real
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property and, as a result, would suffer irreparable injury.
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C. Balance of the Hardships
The balance of the hardships between the parties tips in Plaintiff’s favor because this case
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involves the sale of Plaintiff’s home. See Naderski v. Wells Fargo Bank, N.A., No. 11-CV-1783,
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2011 WL 1627161, at *2 (C.D. Cal. Apr. 25, 2011) (concluding that “the balance of hardships tips
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United States District Court
For the Northern District of California
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sharply in plaintiff’s favor: if the trustee’s sale is not enjoined plaintiff is likely to forever lose his
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home, whereas defendants will only experience a temporary delay in earning income from their
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investment”). While the Court must be mindful that Plaintiff’s loans have not been paid, it was as
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a result of Defendant’s actions that loan payments were not deducted from her bank account.
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D. Public Interest
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Numerous courts have indicated that “it is in the public interest to allow homeowners an
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opportunity to pursue what appear to be valid claims before being displaced from their homes.”
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Sencion v. Saxon Mortg. Servs., LLC, No. 10-CV-3108, 2011 WL 1364007, at *3 (N.D. Cal. Apr.
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11, 2011); see also Naderski, 2011 WL 1627161, at *2 (noting that “[t]he public interest . . . weighs
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in favor of preventing the wrongful foreclosure of individuals’ property”).
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Because there are at least serious questions going to the merits and the case involves the
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sale of Plaintiff’s home, the public interest weighs in favor of a preliminary injunction.
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E. Bond
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In the event, as here, that the court grants a preliminary injunction, it may also require
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movant to post a bond. See Fed. R. Civ. P. 65(c) (providing that “[t]he court may issue a
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preliminary injunction or a temporary restraining order only if the movant gives security in an
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amount that the court considers proper to pay the costs and damages sustained by any party found
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to have been wrongfully enjoined or restrained”). The Court determines that because Plaintiff has
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not paid her debt to Defendant, it is proper to order a bond of six months’ mortgage payments.
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Case No.: 5:13-CV-03387-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
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