Bellas v. Kahn et al

Filing 6

ORDER signed by Judge Richard F. Boulware, II on 2/7/2024, Granting #3 Motion for Temporary Restraining Order. Plaintiff is to immediately serve this Order on all parties as directed in the Order. Responses to the #4 Motion for Preliminary Injunction are due by 2/14/2024 with Replies due by 2/16/2024. A Motion Hearing is set for 2/20/2024 at 12:00 PM (noon) in LV Courtroom 7C before Judge Richard F. Boulware II. (Copies have been distributed pursuant to the NEF - DRS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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REATHA BELLAS,

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Plaintiff,

Case No. 2:24-cv-00245-RFB-MDC
ORDER

v.
ROBERT KAHN, et al.,
Defendants.

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Before the Court is Plaintiff Reatha Bellas’ Motion for a Temporary Restraining Order

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(“TRO”) (ECF No. 3). This matter was removed to this Court on February 5, 2023, from the

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Eighth Judicial District Court for Clark County, Nevada, the day before a hearing was to be held

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on Plaintiff’s state motion for a preliminary injunction. Bellas filed the TRO motion today,

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February 6, 2024. The motion is supported by points and authorities, the declaration of Mitchell

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S. Bisson, Esq., as well as various exhibits.

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In the Complaint, Bellas alleges the following. Bellas is over 60 years old and, in 2022,

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she found herself in a difficult financial situation. She sought assistance from Defendant Randy

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Santa and his employer Defendant North American Financial Corp, who assisted her with

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applying for a loan from Defendant Kahn. The loan was secured by her personal residence (“the

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Property”). On July 11, 2022, Bellas entered into a loan for $480,000. However, unknown to

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Bellas, the agreement stipulated a 9 percent interest rate, interest-only payments for 24-months, a

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payment of $483,600 due on August 2024, and, in the event of default, an increase in interest

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rate to 20 percent. Defendants collectively misrepresented and deceived Bellas, including to

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execute documents stating that the loan was for business purposes not personal purposes and that

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the residence securing the loan was not her primary residence but a business investment. In

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October 2023, Defendant Khan filed a Notice of Default and Election to sell against the

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Property. The foreclosure sale is set to take place on February 8, 2024, and is being conducted by

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Defendant Nevada Title Deed Services, LLC.

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The analysis for a temporary restraining order is “substantially identical” to that of a

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preliminary injunction. Stuhlbarg Intern. Sales Co, Inc. v. John D. Brush & Co., Inc., 240 F.3d

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832, 839 n.7 (9th Cir. 2001). To obtain a preliminary injunction, a plaintiff must establish four

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elements: “(1) a likelihood of success on the merits, (2) that the plaintiff will likely suffer

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irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in its

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favor, and (4) that the public interest favors an injunction.” Wells Fargo & Co. v. ABD Ins. &

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Fin. Servs., Inc., 758 F.3d 1069, 1071 (9th Cir. 2014), as amended (Mar. 11, 2014) (citing

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Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).

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The Court finds that, based on the facts alleged in the Complaint and the TRO Motion,

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there are “serious questions going to the merits” raised by the motion. Alliance for The Wild

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Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011); see also Clear Channel Outdoor,

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Inc. v. City of L.A., 340 F.3d 810 F.3d 310, 813 (9th Cir. 2023). Plaintiff alleges that Defendants

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violated the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-66j, and the Home Ownership

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and Equity Protection Act (“HOEPA”), 15 U.S.C. § 1639.

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Congress passed the TILA in 1966. As Congress itself states in its congressional findings,

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the purpose of the Act was to “assure a meaningful disclosure of credit terms so that the

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consumer will be able to compare more readily the various credit terms available to him and

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avoid the uninformed use of credit.” 15 U.S.C. § 1601. HOEPA was passed with the intent to

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protect vulnerable consumers from predatory mortgage lending practices. See S. Rep. No. 103-

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69, at 28 (1993) (referring to “the damage that can be caused by unscrupulous creditors making

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High Cost Mortgages”). HOEPA, among other things, prohibits or restricts disadvantageous

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prepayment penalties and balloon payments, as well as other certain acts or practices. 15 U.S.C.

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§ 1639. A party may allege TILA violations if they can show that there were required consumer

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disclosures that they did not receive. 15 U.S.C § 1640(a). In most cases, there is a one-year

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statute of limitation for TILA disclosure violations. 15 U.S.C. § 1640(e).

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In order to assert a HOEPA violation, a party must show that their loan is covered by

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HOEPA. 15 U.S.C. § 1602(bb). The HOEPA requires loans to meet three triggers in order to fall

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under the special protections of the law. 15 U.S.C. § 1602(bb). The first trigger is based on the

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annual percentage rate of the loan, the second on the total amount of points and fees charged, and

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the third the timing and amount of prepayment penalties built into the loan term. 15 U.S.C. §

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1602(bb). When any of these triggers are met, HOEPA protections are invoked.

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Bellas provides sufficient allegations to support “serious questions of the merits”

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concerning inter alia whether the loan at issue is properly covered by HOEPA, whether the

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loan’s $480,000 “balloon payment” qualifies as a prohibited payment structure, whether

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Defendants alleged failure to consider Plaintiff’s ability to pay violates TILA/HOEPA, and

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whether a 20% default interest rate exceeds limitations on interest rates after default.

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The Court further funds that Bellas will suffer irreparable harm if an injunction is not

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issued due to the loss of her primary residence. A preliminary injunction “may only be granted

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when the moving party has demonstrated a significant threat of irreparable injury.” Simula, Inc

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v. Autoliv, Inc., 175 F.3d 716, 725 (9th Cir. 1999). The harm must be imminent. Caribbean

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Marine Serv. Co., Inc. v. Baldridge, 844 F.2d 668, 674 (9th Cir. 1988). Plaintiff alleges a

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foreclosure sale of the Property is scheduled to occur within 24 hours and the natural result will

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be Bellas losing her primary residence. It is well-established that the loss of an interest in real

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property, and a primary residence in particular, is a textbook irreparable injury. See Park Vill.

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Apt. Tenants Ass’n v. Mortimer Howard Trust, 636 F.3d 1150, 1159 (9th Cir. 2011) (“It is well-

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established that the loss of an interest in real property constitutes an irreparable injury.”);

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Sundance Land Corp. v. Cmty. First Fed. Sav. & Loan Ass'n, 840 F.2d 653, 661 (9th Cir. 1988)

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(holding that threatened foreclosure of real property was an “immediate, irreparable injury”).

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Third, the Court further finds the balance of the equities weighs in Bellas’ favor. On one

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hand, issuance of the TRO would keep Bellas in her home. On the other hand, Defendants stand

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to have the foreclosure sale postponed. Defendants’ interest is further minimized as the tight

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timeline here is partially of Defendants own making, as a petition for removal could have been

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filed at an earlier date, allowing resolution before the scheduled foreclosure sale. Taken together,

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the Court concludes this factor leans in Bellas’ favor.

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Fourth, the Court finds that on these facts, the public interest weighs in favor of issuing a

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TRO. Courts in this circuit have repeatedly recognized that the public’s interest lies with keeping

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homeowners in their homes while they pursue what appears to be valid claims before they are

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evicted and foreclosed upon.

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In sum, the Court finds the balance of the factors weigh toward issuing a TRO. Because

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the Notice of Removal indicates that service has not been completed on any Defendants, the

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Court turns to whether it may issue a TRO without written or oral notice to Defendants. A TRO

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may be issued without notice to the adverse party only if the moving party: (1) provides a sworn

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statement clearly demonstrating “that immediate and irreparable injury, loss, or damage will

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result to the movant before the adverse party can be heard in opposition,” and (2) sets forth the

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efforts made to notify the opposing party and why notice should not be required. Fed. R. Civ. P.

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65(b)(1). TROs issued without notice “are no doubt necessary in certain circumstances, but

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under federal law they should be restricted to serving their underlying purpose of preserving the

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status quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no

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longer.” Reno Air Racing Ass'n v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006) (quoting

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Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423, 439 (1974)).

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The Court finds that Bellas has satisfied both requirements of Rule 65(b)(1). First, Bellas

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has provided both a verified complaint and the declaration of her counsel attesting to the facts

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supporting immediate and irreparable injury before the adverse parties could be heard. Second,

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the declaration of Bellas’ counsel attests to attempting to notify as well as meet and confer with

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opposing counsel on multiple occasions prior to the filing of the instant TRO Motion. Therefore,

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the Court finds that issuance of a TRO here would preserve the status quo and prevent

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irreparable hard just so long as necessary to hold a hearing. See McCord, 452 F.3d at 1131.

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Finally, federal Rule of Civil Procedure 65(c) provides that “The court may issue a . . .

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temporary restraining order only if the movant gives security in an amount the court considers

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

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enjoined or restrained.” A district court retains discretion “as to the amount of security required,

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if any.” Johnson v. Couturier, 572 F.3d 1067, 1086 (9th Cir. 2009) (internal quotation marks and

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citations omitted) (emphasis in original). The Court may dispense with the filing of a bond if

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“there is no realistic likelihood of harm to the defendant from enjoining his or her conduct.”

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Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2003). Accordingly, the Court finds that a de

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minimis bond of $100 will be required to be posted by Bellas.

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For the foregoing reasons, IT IS ORDERED that Plaintiff’s Motion for a Temporary

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Restraining Order is GRANTED. The Temporary Restraining Order will remain in force for the

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earlier of 14 days or until the Court issues a ruling on Bellas’ pending Motion for a Preliminary

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Injunction (ECF No. 4). Defendants and their successors, assigns and agents are enjoined from

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continuing foreclosure proceedings on real property located at 9739 Fox Estate Street, Las

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Vegas, Nevada 89141 (APN No. 176-25-514-035).

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IT IS FURTHER ORDERED that Plaintiff may edit or amend her pending Motion for a

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Preliminary Injunction to add additional points and authorities on or before Thursday, February

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8, 2024, at noon, using Notice of Corrected Image/Document event under the Notices category

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and link to the Motion for a Preliminary Injunction document (ECF No. 4). Opposition to the

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Motion for a Preliminary Injunction will be due on or before Wednesday, February 14, 2024, at

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noon. Plaintiff’s Reply, if any, will be due on or before Friday, February 16, 2024, at noon.

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IT IS FURTHER ORDERED that Plaintiff must furnish a bond of $100 with the Clerk

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of this Court no later than 5:00 p.m. on February 7, 2024, in the form of a bond, certified,

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cashier’s or attorney’s check, or cash to secure payment of such costs and damages as may be

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incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.

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IT IS FURTHER ORDERED that a hearing on Plaintiff’s Motion for a Preliminary

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Injunction will be held on Tuesday, February 20, 2024, at noon in Las Vegas Courtroom 7C

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before Judge Richard F. Boulware.

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IT IS FURTHER ORDERED that Plaintiff is directed to serve immediately serve all

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Parties by email and pursuant to Rule 4 of the Federal Rules with a copy of the Complaint, Ex

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Parte Motion for a Temporary Restraining Order, and Motion for Preliminary Injunction, and

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this Court's Order Granting the Ex Parte Motion for a Temporary Restraining Order.

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DATED: February 7, 2024.

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_______________________________
RICHARD F. BOULWARE, II
UNITED STATES DISTRICT JUDGE

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