Gerth et al v. American Mortgage Express Financial et al

Filing 5

ORDER Denying 3 Ex Parte Motion for Temporary Restraining Order: Plaintiffs failed to make a sufficient showing of their likelihood of success on the merits and the possibility of imminent irreparable harm. Their motion for a TRO is therefore DENIED. Signed by Judge M. James Lorenz on 11/5/2009. (mjj) (jrl).

1 2 3 4 5 6 7 8 9 10 11 ROBERT GERTH and JUDITH GERTH, ) ) ) Plaintiffs, 12 ) ) 13 v. ) ) 14 AMERICAN MORTGAGE EXPRESS ) FINANCIAL, et al., ) 15 ) Defendants. ) 16 17 Civil No. 09cv2475-L(RBB) ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

On November 4, 2009 Plaintiffs filed a complaint and a Motion for Ex parte Request for a

18 Temporary Restraining Order to Stop the Trustee Sale of the Property Scheduled for November 19 5, 2009 ("TRO"). Pursuant to 28 U.S.C. § 1331, the court has subject matter jurisdiction over 20 the case, because the complaint alleges causes of action under the Truth in Lending Act, 15 21 U.S.C. § 1601 et seq. ("TILA"), and Real Estate Settlement Procedures Act, 12 U.S.C. § 2605 et 22 seq. ("RESPA"). For the reasons which follow, Plaintiffs' motion for a TRO is DENIED. 23 Plaintiffs allege they entered into two loan transactions secured by a residence. They

24 assert RESPA violations, violations of California Civil Code Section 2943, rescission of the loan 25 made by Bank of America, N.A. ("Bank of America"), quiet title under California law, 26 declaratory relief,1 and violation of California Business and Professions Code § 17200 et seq. 27 28
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Plaintiffs do not specify what declaratory relief they seek. (Compl. at 7.)
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1 They request damages and injunctive relief. In their TRO motion, Plaintiffs allege that Bank of 2 America initiated non-judicial foreclosure proceedings scheduled for November 5, 2009, which 3 Plaintiffs seek to enjoin based on their rescission of the underlying loan.2 4 A party seeking preliminary injunctive relief, including a TRO, must show either (1) a

5 combination of probable success on the merits and the possibility of irreparable harm, or (2) that 6 serious questions going to the merits are raised and the balance of hardships tips sharply in the 7 moving party's favor. Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1119 (9th Cir. 8 1999). "These two formulations represent two points on a sliding scale in which the required 9 degree of irreparable harm increases as the probability of success decreases." Roe v. Anderson, 10 134 F.3d 1400, 1402 (9th Cir. 1998). Furthermore, the moving party must show that the 11 threatened irreparable harm is imminent. Sardi's Rest. Corp. v. Sardi, 755 F.2d 719, 725 (9th 12 Cir. 1985); Caribbean Marine Servs., Co. v. Baldridge, 844 F.2d 668, 674 (9th Cir. 1988). 13 Plaintiffs claim that they have rescinded the Bank of America loan pursuant to 15 U.S.C.

14 § 1635 based on the lender's failure to make the requisite disclosures. Under section 1635(a), 15 the borrower has a right to rescind if, among other things, the loan is secured by the "property 16 which is used as the principal dwelling of the person to whom credit is extended." Plaintiffs 17 neither allege nor declare that the property securing the loan is their principal dwelling. 18 In addition, Plaintiffs do not affirmatively state that they did not receive the requisite

19 disclosures. Instead, the evidence regarding disclosures consists of Robert Gerth's statement 20 that he does "not recall receiving being [sic] meaningfully informed or receiving pertinent 21 written notices of required disclosures." (Plaintiff's Decl.) Moreover, Mr. Gerth is only one of 22 the two Plaintiffs in this case. Plaintiffs did not file a declaration of Judith Gerth to indicate 23 whether she received the disclosures.3 24 25 26 The complaint and documents filed in support of the TRO include references to various exhibits, however, the exhibits were not provided to the court. 27 3 The corresponding allegations in the complaint ambiguously refer to "Plaintiff" 28 and cite to Mr. Gerth's declaration. (Compl. at 4.)
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Furthermore, one of requirements for rescission under 15 U.S.C. § 1635 is the borrower's

1 return of money received from the lender, less interest, finance charges and similar items. 2 Unless the lender acquiesces in the rescission, the rescission is not automatic. Yamamoto v. 3 Bank of New York, 329 F.3d1167, 1172 (9th Cir. 2003). If rescission were automatic, "a 4 borrower could get out from under a secured loan simply by claiming TILA violations, whether 5 or not the lender had actually committed any." Id. (emphasis in original). A court "may impose 6 conditions on rescission that assure that the borrower meets [his or] her obligations once the 7 creditor has performed its obligations." Id. at 1173. If the borrower cannot comply with the 8 obligations, i.e., lacks capacity to pay back what he or she received from the lender, the court 9 may decide not to enforce the rescission. Id. Although Plaintiffs assert in a conclusory fashion 10 that their counsel rescinded the Bank of America loan, they do not state that Bank of America 11 acquiesced or specify whether they offered to repay the loan amount or are able to make such an 12 offer. 13 Last, although Plaintiffs allege that a trustee sale is scheduled for November 5, 2009, they

14 do not include this fact in any declaration or attach any document supporting this allegation. 15 The only declaration addressing the trustee sale states that, "Plaintiff's counsel contacted Trustee 16 in writing on October 29, 2009 regarding Servicer's assertions that no sale date was pending;" 17 and "Plaintiff contacted Trustee by phone on November 1, 2009 regarding Servicer's assertions 18 that no sale was pending."4 (Keane Decl. ¶ 13 (emphases added).) 19 The record before the court does not show that the property allegedly subject to sale is

20 Plaintiffs' principal dwelling, that the requisite TILA disclosures were not made, that Plaintiffs 21 are capable of performing their own rescission obligations, or whether the sale will take place. 22 / / / / / 23 / / / / / 24 / / / / / 25 / / / / / 26 The affidavit does not specify which one of the two Plaintiffs contacted the Trustee. Although Mr. Gerth's declaration was filed, it does not contain any reference to the 28 pending sale or to the telephone call to the Trustee. Plaintiffs did not file Mrs. Gerth's declaration. 27
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1 Plaintiffs failed to make a sufficient showing of their likelihood of success on the merits and the 2 possibility of imminent irreparable harm. Their motion for a TRO is therefore DENIED. 3 4 5 DATED: November 5, 2009 6 7 8 COPY TO: M. James Lorenz United States District Court Judge IT IS SO ORDERED.

HON. RUBEN B. BROOKS 9 UNITED STATES MAGISTRATE JUDGE 10 ALL PARTIES/COUNSEL 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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