Gryglak v. HSBC Bank USA, N.A., et al

Filing 127

ORDERED that HSBC Bank USA, N.A.,as trustee for Wells Fargo Home Equity Asset-Backed Certificates, Series 2006-3, by its Attorney in- fact Wells Fargo Bank, N.A.; Wells Fargo Bank, N.A.; and Wells Fargo Asset Securities Corporations 111 motion to execute on bond is GRANTED.Plaintiffs 115 motion for partial summary judgment on defendants claim for wrongful injunction, and plaintiff's 113 & 116 Motions for release of bond obligation, (ECF Nos. 113 & 116), are DENIED as moot.IT IS FURTHER ORDERED that the entire 100 bond amount of $159,129.04, plus any accrued interest, be executed in defendants favor. Signed by Judge James C. Mahan on 7/6/2020. (Copies have been distributed pursuant to the NEF; cc: Finance- DRS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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EDYTA GRYGLAK,

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Plaintiff(s),

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Case No. 2:17-CV-1514 JCM (NJK)
ORDER

v.
HSBC BANK USA, N.A., et al.,

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Defendant(s).

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Presently before the court is defendants HSBC Bank USA, N.A., as trustee for Wells Fargo

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Home Equity Asset-Backed Certificates, Series 2006-3, by its Attorney-in-fact Wells Fargo Bank,

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N.A.; Wells Fargo Bank, N.A.; and Wells Fargo Asset Securities Corporation’s (collectively,

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“Wells Fargo”) motion to execute on bond. (ECF No. 111). Plaintiff Edyta Gryglak filed a

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response (ECF No. 112), to which defendants replied (ECF No. 117).

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Also before the court is plaintiff’s motion for partial summary judgment on defendant’s

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claim for wrongful injunction. (ECF No. 115). Defendants responded (ECF No. 121), to which

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plaintiff replied (ECF No. 125).

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Also before the court is plaintiff’s motion for release of bond obligation. (ECF Nos. 113

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& 116). Defendants responded (ECF No. 122), and plaintiff replied (ECF No. 126).

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I.

Background

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This action arises from plaintiff’s home loan from Wells Fargo in the amount of $748,000

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for the purchase of real property located at 1938 Grey Eagle Street, Henderson, Nevada 89074 (the

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“property”). (ECF No. 1). Plaintiff eventually defaulted on her loan obligations and filed for

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Chapter 11 bankruptcy in March 2011. (Id.). Her bankruptcy plan implemented a “cram down,”

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valuing the property at $360,000 and providing for monthly payments of $1,824.07, consisting of

James C. Mahan
U.S. District Judge

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principal and interest. (ECF No. 47). Wells Fargo asserts that it never received payments from

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plaintiff, and initiated foreclosure proceedings against the property in January 2016. (Id.).

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Plaintiff initiated the instant suit in May 2017, alleging five causes of actions. (ECF No.

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1). In February 2018, this court dismissed all of plaintiff’s claims except one—breach of contract,

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asserting that Wells Fargo refused to accept her monthly mortgage payments in violation of her

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bankruptcy’s reorganization plan. (ECF No. 25). A foreclosure sale was scheduled for October

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2, 2019, and then December 6, 2019. (ECF No. 111). Defendant moved for summary judgment

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on the remaining claim, (ECF No. 45), and plaintiff moved for a preliminary injunction of the

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scheduled foreclosure sale, (ECF No. 74). This court denied both. (ECF No. 86). Upon plaintiff’s

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interlocutory appeal, the Ninth Circuit panel stayed the foreclosure sale while the court of appeals

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reached the question of preliminary injunction. (ECF No. 89). On limited remand—and again on

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reconsideration—this court determined that the instant amount in bond was appropriate based on

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plaintiff’s representations. (ECF Nos. 94 & 101). Plaintiff did not offer the appropriate amount

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in bond until the Ninth Circuit informed her that it would lift the stay on December 5, one day

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before the sale. (ECF No. 111). Her ultimate compliance with this order stopped the December 6

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sale until the Ninth Circuit ruled on this court’s denial of preliminary injunction. On May 13,

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2020, the Ninth Circuit affirmed this court. (ECF Nos. 107 & 108).

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Defendants move to execute on bond, (ECF No. 111), and plaintiff moves for partial

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summary judgment on the issue of wrongful injunction and release of bond, (ECF Nos. 115 &

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116).

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II.

Legal Standard

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Federal Rule of Civil Procedure 65 provides that a district court “may issue a preliminary

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injunction or a temporary restraining order only if the movant gives security in an amount that the

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court considers proper to pay the costs and damages sustained by any party found to have been

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wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c) (emphasis added). This same principle

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applies when a party “has been enjoined in order to preserve the status quo pending appeal.” Glob.

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Naps, Inc. v. Verizon New England, Inc., 489 F.3d 13, 21 (1st Cir. 2007); see also Nintendo of

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Am., Inc. v. Lewis Galoob Toys, Inc., 16 F.3d 1032, 1036 (9th Cir. 1994).

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U.S. District Judge

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To execute on a bond, an enjoined party must establish (1) that it was wrongfully enjoined,

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and (2) that it suffered injury as a result of the injunction. See Matek v. Murat, 862 F.2d 720, 733

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(9th Cir. 1988). “[A] party has been wrongfully enjoined within the meaning of Rule 65(c) when

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it turns out the party enjoined had the right all along to do what it was enjoined from

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doing.” Nintendo, 16 F.3d at 1036. After it is determined that the moving party was wrongfully

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enjoined, the court must next find that party is “entitled to have the bond executed in its

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favor.” Id. “An improperly enjoined party may not demand damages on the bond simply because

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the injunction was improperly granted.” Matek, 862 F.2d at 733. The injury must be proximate

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to the injunction. Id.

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III.

Discussion

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Wells Fargo argues that it was substantially injured by the stay of its foreclosure sale

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pending plaintiff’s unsuccessful appeal. This court agrees and executes bond in full for the

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following reasons. In light of this decision, plaintiff’s motion for partial summary judgment, (ECF

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No. 115), and release of bond, (ECF No. 116), are denied as moot.

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A. Wrongful Injunction

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This court finds that Wells Fargo was wrongfully stayed from conducting its foreclosure.

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Indeed, a party is wrongfully enjoined when it had a right all along to do what it was enjoined from

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doing. See Nintendo, 16 F.3d at 1036. This reasoning is quite simply applied here. This court

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determined that an injunction on Wells Fargo’s foreclosure sale was unnecessary, (ECF No. 86),

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and the Ninth Circuit affirmed that decision, (ECF No. 107 & 108). The stay in question

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appropriately occurred, because the parties litigated this question. However, ultimately, Wells

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Fargo was correct and entitled to conduct its foreclosure sale in December. Bond exists for the

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very reason of ameliorating any damage that occurred in light of these delays.

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B. Suffered Injury

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This court finds that Wells Fargo suffered injury as a result of the stay on its foreclosure

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sale. “[T]here is a rebuttable presumption that a wrongfully enjoined party is entitled to have the

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bond executed and recover provable damages up to the amount of the bond.” Nintendo, 16 F.3d at

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1036–37.

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U.S. District Judge

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Defendant claims that it was specially harmed by the delay due to its inability to “foreclose

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on the [p]roperty within the strict time limitations set under Nevada law for consummating a

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foreclosure sale.” (ECF No. 112). Indeed, Wells Fargo is now unable to simple reschedule, but

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instead, must restart the foreclosure proceedings by filing a new notice of default. Defendant

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contends that this additional delay is particularly costly due to the continued payment of “insurance

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premiums, property taxes, and HOA dues” that Wells Fargo must conduct. Even as plaintiff

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continues to live on the property, Wells Fargo must expend considerable funds to maintain its

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property interest until it may conduct its sale. In practice, plaintiff has achieved the long delay in

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foreclosure that she was looking for. Wells Fargo has offered calculations that the total amount

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owed by plaintiff for this measure is $212,912.24, which far exceeds the amount in bond. (ECF

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Nos. 112; 122). Plaintiff fails to adequately refute these numbers, which the court is persuaded

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are relevant to Wells Fargo’s instant injury. (ECF Nos. 112, 115, & 116).

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Plaintiff argues that “a delay in a foreclosure sale” does not cause damages to the

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foreclosing bank as a matter of law. (ECF No. 112). In asserting this claim, plaintiff misrepresents

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the District of Arizona’s reasoning in asserting this claim. (Id.). There, the court reasoned through

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the categories of damages and facts of the case to conclude that the alleged damages were not

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proximate to the injunction. Carmichael Real Estate, LLC v. First Citizens Bank & Tr. Co., No.

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CV-13-00793-PHX-ROS, 2014 WL 12558246, at *1 (D. Ariz. May 20, 2014). It makes no

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statements as a matter of law, let alone any that bind this court. Id. The damages stated by Wells

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Fargo are not simply those that will be recovered on foreclosure nor are they expenses incurred in

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litigating this matter. Plaintiff rightfully notes that she is not responsible for additional delays due

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to the COVID-19 pandemic or under Nevada law, but she is very much responsible for the halted

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October and December sale dates. Ultimately, defendant would have proceeded with its sale in

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December if it were not for the stay.

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Upon examining the record, an execution on bond in the full amount is appropriate.

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“Although damages need not be proved to a mathematical certainty, ‘sufficient facts must be

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introduced so that a court can arrive at an intelligent estimate without speculation or

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conjecture.’” Harmsen v. Smith, 693 F.2d 932, 945 (9th Cir. 1982). Sufficient facts exist in the

James C. Mahan
U.S. District Judge

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record to corroborate the injury alleged due to the wrongful delay of Wells Fargo’s sale. This

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court finds with reasonable certainty that the wrongful injunction damages exceed the amount in

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bond—$159,129.04. Accordingly, Wells Fargo has demonstrated that it is presumptively entitled

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to disbursement of the entire bond amount. See Nintendo, 16 F.3d at 1036.

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IV.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that HSBC Bank USA, N.A.,

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as trustee for Wells Fargo Home Equity Asset-Backed Certificates, Series 2006-3, by its Attorney-

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in-fact Wells Fargo Bank, N.A.; Wells Fargo Bank, N.A.; and Wells Fargo Asset Securities

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Corporation’s motion to execute on bond, (ECF No. 111), be, and the same hereby is, GRANTED.

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IT IS FURTHER ORDERED that plaintiff’s motion for partial summary judgment on

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defendant’s claim for wrongful injunction, (ECF No. 115), and plaintiff’s motion for release of

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bond obligation, (ECF Nos. 113 & 116), be, and the same hereby are, DENIED as moot.

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IT IS FURTHER ORDERED that the entire bond amount of $159,129.04, plus any accrued
interest, be executed in defendants’ favor.
DATED July 6, 2020.
__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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