preliminary injunction win 26 pages dual tracking calfornia-hobr-5!9!2013
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Preliminary Injunction Win 26 Pages Dual Tracking CALFORNIA-HOBR-5!9!2013TRANSCRIPT
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Aldon L. Bolanos, Esq., SBN. 233915 Law Offices of Aldon L. Bolanos, Esq. Sacramento, CA 95814 PH. 916.446.2800 FX. 916.446.2828 www.aldonlaw.com
Attorneys for Plaintiff Kevin SINGH
United States District Court
Eastern District of California
Kevin SINGH,
Plaintiff,
vs.
Bank of America, N.A.,Recontrust Company, N.A.,
Defendants.
Case No. 2:13-CV-00729-MCE-AC Application for Preliminary Injunction Date: April 29, 2013 Time: 10:00 a.m. Ctrm: 7
1. Prefatory Statement
Plaintiff Kevin Singh, through his counsel, hereby
applies for a preliminary injunction to prevent the
sale of his home during the pendency of this action.
The basis for this application is that defendant
is engaging in wrongful foreclosure proceedings in
violation of the California Homeowners Bill of Rights.
Specifically, Mr. Singh is the victim of “dual
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tracking” in which a lender engages in loan
modification negotiations while at the same time moving
toward a non-judicial foreclosure sale.
Previously the Court granted a temporary
restraining order to prevent the sale of the home,
which had been scheduled for April 22, 2013. Now, the
home sale has been rescheduled for May 20, 2013. See
Bolanos Declaration, concurrently filed.
In light of the above, immediate judicial
intervention is required in order to preserve the
status quo pending Mr. Singh’s case being decided on
its merits.
2. Legal Standard
In determining whether the grant a preliminary
injunction, the court balances the respective equities
of the parties and concludes that pending trial on the
merits, the defendant should or should not be
restrained from exercising the right claimed by him.
Continetal Banking v. Katz, 68 Cal. 2d 512, 528. The
general purpose of such an injunction is preservation
of the status quo until a final determination of the
merits of the action. Id., citing Stewart v. Superior
Court, (1893) 100 Cal. 543, 545. Thus, the court
examines all of the material before it in order to
consider whether a greater injury will result to the
defendant from granting the inunction than to the
plaintiff from refusing it. Id.
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In making that determination the court will
consider the probability of the plaintiff’s ultimately
prevailing in the case and will deny the preliminary
injunction unless there is a reasonable probability
that plaintiff will be successful in the assertion of
his rights. Id. “In the last analysis, the trial
court must determine which party is the more likely to
be injured by the exercise of its discretion. Id.,
citing Family Record Plan, Inc. v. Mitchell (1959) 172
Cal. App. 2d 235, 242.
Here, the court looks to the law at issue:
California’s Homeowners’ Bill of Rights. That law
provides that “It is the intent of the Legislature that
the mortgage servicer offer the borrower a loan
modification or workout plan if such a plan is
consistent with its authority.” California Civil Code
§ 2923.6(b). If a borrower submits financials toward a
loan modification effort, then the
servicer/beneficiary/bank shall not conduct a trustee’s
sale while the application is pending and the servicer
must make a written determination that the borrower is
ineligible. Civil Code § 2923.6(c).
Also under this new law, the mortgage servicer
must establish a single point of contact and provide
one or more direct means of communication with the
single point of contact. Civil Code § 2923.7(a). That
contact shall be responsible for communicating the
process for foreclosure prevention alternatives and
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coordinating receipt of all documents associated with
same. Id. at (b)(1). Further, that point of contact
shall have access to all current information and timely
provide same to adequately inform the borrower. Id.,
(b)(2) and (3).
Finally, the lender/servicer is required to inform
the borrower in writing that the modification proposal
has been rejected or is no longer being considered
before it may proceed with foreclosure. Civil Code
§2923.6(b).
The principles of equity apply to foreclosure
sales. Equity does not allow one to take advantage of
his own wrong nor will it assist in perpetration of
fraud on another or the public. Bowman v Bowman, 125
Cal. App. 602 (1932). A party cannot take advantage of
his own fault or wrong. Archibald Estate v. Matteson,
5 Cal. App. 441 (1907) Courts may set aside a
foreclosure sale when there has been fraud, when the
sale has been improperly, unfairly, or unlawfully
conducted, or when there has been such a mistake that
it would be inequitable to let stand. Bank of America
Nat. Tmst & Savings Ass'n v. Reidy, 15 Cal 2d 243, 248
(1940); Whitman v. Transtate Titie Co. , 165 Cal.App.3d
312, 322-323 (1985).
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3. Legal Analysis
As stated in the concurrently-filed declaration of
Mr. Singh, as well as the Verified Complaint herein,
Mr. Singh has been residing at his home with his wife
and three children since 2005. He initially defaulted
on his loan during the fallout from the Great Recession
of 2008. Subsequently, Mr. Singh sought bankruptcy
protection under Chapter 7. That bankruptcy was
discharged on December 14, 2012.
A. Plaintiff is Likely to Prevail On The Merits
Regardless, during approximately the past year,
Mr. Singh and Bank of America have been actively
involved in loan modification negotiations. These
essentially took the form of requests for information
by Bank of America, timely responses by Mr. Singh
providing the requested information, then a period of
inaction, then follow-up communications from Mr. Singh,
then any one of a litany of excuses from the bank for
why the papers were not “processed” or the information
needed to be resubmitted. Then the cycle would begin
anew.
Most importantly, Mr. Singh was never provided
with anything in writing from Bank of America that it
had ceased considering him for a modification, or that
it had rejected or denied the modification. This runs
categorically afoul of the Homeowners Bill of Rights,
codified at California Civil Code §2923.6(b).
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Under these facts, and as set forth in the
California law quoted above, the bank’s actions are
clearly violative of the Homeowners’ Bill of Rights.
This is because they constitute “dual tracking” by
utilizing the deceptive shell game tactic of providing
a borrower with multiple points of contact and
proceeding with foreclosure without first informing the
borrower that modification efforts have proven
fruitless. Thus, under the clear meaning of
California law and the facts presented, plaintiff has
demonstrated a clear probability of prevailing on the
merits.
B. The Balance of Equities Tips Sharply Toward
Plaintiff
In this matter the relative hardship to Ms. McVey
- losing his family home - represents irreparable
injury, decreasing Ms. McVey’s requirement of showing a
probability of success on the merits. The loss
of one's property due to foreclosure unquestionably
constitutes an irreparable injury. Demarest v
Quick Loan Fund, Inc. 2009 WL 940377 (CD. Cal 2009);
Wrobel v. S.L. Pope & Associates, 2007 WL 2345036 at 1
(S.D. Cal 2007) ("Losing one's home through foreclosure
is an irreparable injury."), Bland v Carone Family
Trust, 2007 WL 951344, at 2 (S.D. Cal.2007).
Numerous courts have found this injury enough by itself
to mandate preliminary injunctive relief See, e.g.
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Nichols v. Deutsche Bank Nat. Trust Co., 2007 WL
4181111, at 2 (S.D. Cal.2007); United Church of Med.
Ctr. v. Med Ctr. Comm. 'n, 689 F 2d 693, 701 (7"" Cir.
1982); Johnson v. U.S. Dept. of Agriculture, supra, at
789.
Here, the balance of equities tips heavily in
favor of Mr. Singh. This is due in no small part to
the fat that the Great Recession also threatened to
claim a number of banks, including Bank of America.
However, our federal government provided Bank of
America with $45 billion dollars to prevent it from
sliding into insolvency. Since thirty-three cents of
every dollar Kevin Singh earned went to our federal
government in the form of tax, it stands to reason that
in a very real sense, Mr. Singh paid to save Bank of
America when our economy experienced turbulence.
Moreover, if plaintiff fails to receive an
injunction and his home is sold, it will be an
unmitigated disaster for himself and his family. Mr.
Singh, his wife, and their three young children would
be rendered homeless. Also, Mr. Singh runs his
painting business through the garage of his home.
Thus, if he is ejected it would spell the end of the
business and the only means by which Mr. Singh can
support himself and his family. See Singh Declaration,
concurrently filed.
C. No Bond Should Be Required
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Courts have broad discretion in determining the
amount of a bond. See Connecticut Gen. Life Ins Co. v.
New Images of Beverly Hills, 321 F.3d 878, 882 (9th
Cir.2003). The Court may dispense with the filing of a
bond when it concludes there is no realistic likelihood
of harm to the Defendant from enjoining his or her
conduct." Jorgensen v. Cassidy, 320 F.3d 906, 919 (9th
Cir. 2003).
Here, there is no realistic harm to Defendants
from a restraint of the foreclosure proceedings and
trustee’s sale. If the Defendants' position that the
loans were valid correct, then the loans are adequately
by the very property in question; additional security
if neither appropriate nor warranted. Phleger v.
Countrywide Home Loans, Inc., 2007 WL 4105672 at 6
(N.D. Cal. 2007). A bond is neither necessary nor
required in this case. If a bond is necessary, Mr.
Singh prays that the bond be set at one dollar ($1.00).
D. Notice
With respect to notice, as detailed in the
accompanying declaration of Aldon L. Bolanos, Esq.,
exhaustive efforts were made to put the bank on notice
of these proceedings. This included hand-delivering
the documents to the local branch manager, several
blocks from the federal courthouse. They also include
providing the documents to opposing counsel at the
Bryan Cave law firm, which telephoned plaintiff’s
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counsel and stated it represented Bank of America in
these proceedings. Finally, the documents were faxed
to the “Home Loan Team” at Bank of America’s Houston
office, using a fax number provided again in the bank’s
own correspondence to Mr. Singh. Thus, it is clear
that all reasonable and diligent efforts were made to
ensure that the bank was on notice of this proceeding.
4. Conclusion
Mr. Singh has shown irreparable harm and a
likelihood of prevailing on the merits, given what
appears to be a clear violation of California law.
Additionally, he has made exhaustive efforts to inform
the defendant of this hearing. For this reason, it is
respectfully submitted that he has met his burden and
satisfied the requirements for a Temporary Restraining
Order as set forth in the applicable case law and this
court’s own local rules.
Respectfully Submitted,
Law Offices of Aldon L. Bolanos
Dated: April 24, 2013
By: /s/ Aldon L. Bolanos, Esq.
Attorney for Plaintiff
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1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA
KEVIN SINGH,
Plaintiff,
v.
BANK OF AMERICA, N.A., RECONTRUST COMPANY,
Defendant.
No. 2:13-cv-00729-MCE-AC
MEMORANDUM AND ORDER
On April 16, 2013, Kevin Singh (“Plaintiff”) filed an “Application for Temporary
Restraining Order” (“TRO”) seeking a Court order preventing Bank of America
(“Defendant”) from selling Plaintiff’s home on April 22, 2013. (ECF No. 5.) Prior to the
TRO hearing, the Court ordered Plaintiff’s counsel to notify all other parties of the
hearing and file proof of notice. (ECF No. 7.) Plaintiff’s counsel complied and filed a
Notice of Hearing, but Defendants failed to appear at the April 17, 2013, hearing. (ECF
No. 8.) In open court and on the record, the Court granted Plaintiff’s request for a TRO,
which will remain in effect until the date of the hearing for a Preliminary Injunction which
is set for April 29, 2013 at 10:00 AM. The Court granted Plaintiff’s Request for the TRO
for the reasons described below.
///
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2
STANDARD
The purpose of a temporary restraining order is to preserve the status quo
pending the complete briefing and thorough consideration contemplated by full
proceedings pursuant to a preliminary injunction. See Granny Goose Foods, Inc. v.
Teamsters, 415 U.S. 423, 438-39 (1974) (temporary restraining orders “should be
restricted to serving their underlying purpose of preserving the status quo and preventing
irreparable harm just so long as is necessary to hold a hearing, and no longer”); see also
Reno Air Racing Ass’n., Inc. v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006); Dunn v.
Cate, No. CIV 08-873-NVW, 2010 WL 1558562, at *1 (E.D. Cal. April 19, 2010).
Issuance of a temporary restraining order, as a form of preliminary injunctive
relief, is an extraordinary remedy, and Plaintiffs have the burden of proving the propriety
of such a remedy. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). In general,
the showing required for a temporary restraining order and a preliminary injunction are
the same. Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 839
n.7 (9th Cir. 2001).
The party requesting preliminary injunctive relief must show that “he is likely to
succeed on the merits, that he is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his favor, and that an injunction is in
the public interest.” Winter v. Natural Resources Defense Council, 555 U.S. 7, 20
(2008); Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009) (quoting Winter).
The propriety of a TRO hinges on a significant threat of irreparable injury that must be
imminent in nature. Caribbean Marine Serv. Co. v. Baldridge, 844 F.2d 668, 674 (9th
Cir. 1988).
///
///
///
///
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3
Alternatively, under the so-called sliding scale approach, as long as the Plaintiffs
demonstrate the requisite likelihood of irreparable harm and show that an injunction is in
the public interest, a preliminary injunction may issue so long as serious questions going
to the merits of the case are raised and the balance of hardships tips sharply in Plaintiffs’
favor. Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-36 (9th Cir. 2011)
(concluding that the “serious questions” version of the sliding scale test for preliminary
injunctions remains viable after Winter).
ANALYSIS
Plaintiff owns real property and improvements thereon located in West
Sacramento, California, which is located within the Eastern District of California
(hereinafter referred to as “the property” unless specified otherwise). The property was
purchased by Plaintiff with a loan obtained through Defendant and evidenced by a
promissory note. (ECF No. 5-2.) The promissory note is secured by a deed of trust
which is recorded against the property. Plaintiff defaulted on the loan in 2008. (Id.) In
2012, Plaintiff and Defendant began negotiating a modification of the loan that would
allow plaintiff to remain current on his obligation. (Id.) During the negotiations, Plaintiff
provided Defendant detailed information about Plaintiff’s financial situation in exchange
for the possibility of a lower monthly payment and interest rate. As stated in open court
at the TRO hearing, Defendant has not made a written determination as to whether
Plaintiff qualifies for a loan modification. (Id.) Instead, Defendant has repeatedly failed
to respond to Plaintiffs inquiries about the status of the loan modification with “passing
the buck by bank representatives, who transferred his calls repeatedly to different people
in different departments within the bank.” (ECF No. 1.) Even though Plaintiff and
Defendant were negotiating a loan modification, Defendant went ahead with the
foreclosure process.
///
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4
Defendant and other lenders’ practice of negotiating with homeowners in default
on their loans for a loan modification while simultaneously advancing the foreclose
process is commonly referred to as “dual tracking.” Dual tracking has been heavily
criticized by both state and federal legislators. In July 2012, California passed legislation
referred to as “The California Homeowner Bill of Rights” which prohibits dual tracking.
As of January 1, 2013, “The California Homeowner Bill of Rights went into effect and it
offers homeowners greater protection during the foreclosure process. Cal. Civ. Code
§ 2923.6(b) (2013). Section 2923.6(b) states “it is the intent of the legislature that the
mortgage servicer offer the borrower a loan modification or work out a plan if such a
modification or plan is consistent with its contractual or other authority.” The statute
further provides that “if a borrower submits a complete application for a first lien loan
modification . . . the mortgage servicer . . . shall not record a notice of default or notice of
sale, or conduct a trustee’s sale, while the complete first lien loan modification
application is pending.” Cal. Civ. Code § 2923.6(c) (2013).
At the hearing, the Court inquired of Plaintiff’s counsel whether Defendant ever
responded to Plaintiff’s complete application for a first lien loan modification. Plaintiff
submitted a Declaration which stated in part, “I never received written notice or
confirmation or anything whatsoever to state or indicate that I did not qualify for a loan
modification.” (ECF No. 10.) Because Defendant has failed to respond to Plaintiff’s
application for a first lien loan modification after January 1, 2013, section 2923.6 applies
to this case and prevents Defendant from conducting a trustee’s sale while Plaintiff’s
application for a first lien loan modification is pending.
Accordingly, Plaintiff has adequately shown he is likely to succeed on the merits
in light of California’s new Homeowners’ Bill of Rights. Plaintiff has also met the
remaining factors of the TRO standard. Plaintiff has demonstrated that Plaintiff will
suffer “irreparable harm” if he loses his home because “[he] and [his] family will have
nowhere to go and nowhere to stay. . . [his] children will need to leave their schools.”
(ECF No. 5-2.)
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5
Further, the balance of equities tips in Plaintiffs’ favor as a TRO merely delays
Defendant’s right to foreclose. Finally, an injunction is in the public’s interest as it
enforces a recently enacted law designed to protect the public.
CONCLUSION
Accordingly, to preserve the status quo until the hearing on Plaintiff’s Motion for
Preliminary Injunction can be had, the Court now orders Defendant to cancel the sale
scheduled to take place on April 22, 2013. A hearing on Plaintiff’s Motion for Preliminary
Injunction is hereby scheduled at 10:00 AM on Monday, April 29, 2013, in Courtroom 7
before Chief Judge Morrison C. England, Jr. Plaintiff’s Motion shall not be filed later than
April 24, 2013 and Defendant’s Opposition shall be filed not later than April 25, 2013.
Any reply shall be filed not later than April 26, 2013.
IT IS SO ORDERED.
DATE: April 24, 2013
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Aldon L. Bolanos, Esq., SBN. 233915 Law Offices of Aldon L. Bolanos, Esq. Sacramento, CA 95814 PH. 916.446.2800 FX. 916.446.2828 www.aldonlaw.com
Attorneys for Plaintiff Kevin SINGH
United States District Court
Eastern District of California
Kevin SINGH,
Plaintiff,
vs.
Bank of America, N.A.,Recontrust Company, N.A.,
Defendants.
Case No. Verified Complaint for Damages and Injunctive Relief Jury Trial Demanded
1. Plaintiff Kevin SINGH (“Plaintiff or Mr. Singh”)
brings this complaint for damages due to “dual
tracking” and other violations of the California
Homeowners’ Bill of Rights by defendants Bank of
America N.A., (“Bank of America”) and Recontrust
Company, N.A. (“Recontrust”). Jurisdiction is proper
because this case involves an amount at issue greater
than seventy-five thousand dollars, and there exists
complete diversity as between the parties to this suit.
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2. Plaintiff Mr. Singh took out a loan from Bank of
America on October 24, 2005. The loan is secured by a
promissory note and deed of trust against his home at
2544 Pheasant Hollow Drive, West Sacramento, Count of
Yolo, State of California, APN 045-751-006, within this
judicial district.
3. Plaintiff defaulted on this loan when his business
faltered after the Great Recession of 2008.
4. Beginning on September 13, 2012, Bank of America
initiated negotiations with Mr. Singh toward a loan
modification. By letter written on that date, the bank
requested certain specific information and provided a
deadline to provide that information.
5. Mr. Singh provided the requested information
within the specified timeframe. However, he never
received any confirmation from the bank regarding the
next step in the negotiations. Instead, his repeated
inquiries were met with “passing the buck” by bank
representatives, who transferred his calls repeatedly
to different people in different “departments” within
the bank. Ultimately, the response he would receive
was that he needed to resubmit the requested
information, as it had gotten stale by the passage of
time.
6. Then again on December 7, 2012, a day that will
live in infamy, Bank of America continued negotiations
with Mr. Singh toward a modification of the home loan.
Indeed, in a letter from bank representative Larry Hall
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written on that date, the bank states that “We are
pleased to let you know that you meet the criteria
required…for a new modification program recently
announced as a result of the U.S. Department of Justice
and State Attorneys General national settlement.”
7. The letter goes on to detail what information is
needed from Mr. Singh and the deadline to receive the
information. Again, Mr. Singh provided all the
required information within the stated timeframes and
again, no response or progress was made, and yet again
his numerous entreaties and pleas for information were
met with the functional equivalent of stonewalling and
the classic “run around” until he was ultimately
informed that the information provided, which was time-
sensitive, had again become stale, requiring him to
resubmit same.
8. Mr. Singh participated in the charade of “re-
submitting” the same information requested by the bank
no fewer than seven times.
9. In response, all he received were excuses and
statements that the information had been lost,
misplaced, or was being handled by someone else in a
different department who would ultimately respond once
the “paperwork was ready.”
10. Of course the paperwork never would be “ready.”
Instead, on March 29, 2013, defendant, through its
third party agent and wholly-owned subsidiary
Recontrust Company, N.A. (“Recontrust”), caused to be
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delivered by certified mail a Notice of Trustee’s Sale.
The Notice of Trustee’s Sale states the home will be
sold at auction on April 22, 2013.
11. The real property, like all real property, is
unique and special to plaintiff such that money damages
and legal remedies will be insufficient to compensate
him for the loss of his home.
12. Mr. Singh is informed and believes and based
thereon alleges that the bank and its wholly-owned
subsidiary Recontrust have been at all times engaged in
a shell game. The game essentially involved stringing
Mr. Singh along with promises of
refinance/modification, and requests for information,
all the while moving intently and purposefully toward a
foreclosure on his family home.
13. Mr. Singh relied to his detriment on this shell
game in the sense that he did not seek alternatives to
refinancing with Bank of America, such as short sale,
refinancing elsewhere, or the like. Regardless, as set
forth below defendant Bank and its agent Recontrust had
and have a duty under California law to negotiate in
good faith and to not engage in the prohibited and
deceitful practice of “dual tracking” the home loan
modification process with foreclosure proceedings.
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First Cause of Action: Violations of the
Homeowners’ Bill of Rights
14. The recently-enacted California law called the
Homeowners Bill of Rights States: “It is the intent of
the Legislature that the mortgage servicer offer the
borrower a loan modification or workout plan if such a
plan is consistent with its authority.” California
Civil Code § 2923.6(b). If a borrower submits
financials toward a loan modification effort, then the
servicer/beneficiary/bank shall not conduct a trustee’s
sale while the application is pending and the servicer
must make a written determination that the borrower is
ineligible. Civil Code § 2923.6(c).
15. Here, Mr. Singh has been actively engaged in loan
modification negotiations with the bank while the bank
and its third party wholly-owned subsidiary have been
taking the necessary steps to conduct a trustee’s sale.
This is in direct violation of the California
Homeowners’ Bill of Rights.
16. Also under this new law, the mortgage servicer
must establish a single point of contact and provide
one or more direct means of communication with the
single point of contact. Civil Code § 2923.7(a). That
contact shall be responsible for communicating the
process for foreclosure prevention alternatives and
coordinating receipt of all documents associated with
same. Id. at (b)(1). Further, that point of contact
shall have access to all current information and timely
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provide same to adequately inform the borrower. Id.,
(b)(2) and (3).
17. Here, one of Mr. Singh’s primary problems is that
he cannot obtain a straight answer from any of the
bank’s myriad number of purported representatives.
Instead he has been shuttled from one “department”
within the monolithic corporate structure to the next,
and invariably the path of communication leads to a
wall of frustration. This is a primary wrong that the
new California law was meant to right.
Second Cause of Action:
Declaratory Relief
18. Under California law, it is well-settled that real
property is unique and that the legal remedy of money
damages would be insufficient to compensate Mr. Singh
if his home is taken from him. Stockton vs. Newman
(1957) 148 CA 2d 558, and Daniels vs. Williams, 125 CA
2d 310.
19. Here, Mr. Singh is in danger of being deprived of
his home by foreclosure sale on April 22, 2013.
Therefore, immediate action is required to prevent this
harm. He respectfully requests an injunction
preventing the sale of his home until such time as his
case is heard and adjudicated on its merits.
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PRAYER FOR RELIEF
WHEREFORE, Plaintiff prays judgment against
defendant as follows:
1. For General damages according to proof;
2. For Special damages according to proof;
3. For declaratory relief that Plaintiff is
entitled to title in the property free from any
security interest;
4. For an equitable accounting of the alleged
indebtedness;
5. For prejudgment interest as allowed by law;
6. For attorney’s fees;
7. For costs of suit;
8. For such other and further relief as the court
may deem proper.
Dated: April 11, 2013 Law Offices of Aldon L. Bolanos, Esq. /s/ Aldon L. Bolanos, Esq. Aldon L. Bolanos, Esq.
Attorney for Plaintiff Kevin Singh
Verification
I, Kevin Singh, am the plaintiff in this action. I
have read and reviewed this complaint for damages and
injunctive relief and know it to be true of my own
personal knowledge. I have provided my attorney with
an original of my signature which he has in his
possession. I declare same on penalty of perjury under
the laws of the United States.
/s/ Kevin Singh
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1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA
KEVIN SINGH,
Plaintiff,
v.
BANK OF AMERICA, N.A., RECONTRUST COMPANY,
Defendant.
No. 2:13-cv-00729-MCE-AC
MEMORANDUM AND ORDER
On April 15, 2013, Kevin Singh (“Plaintiff”) filed this action against Bank of
America (“BoA”) and ReconTrust. Plaintiff’s Complaint alleges BoA engaged in loan
modification discussions with Plaintiff while ReconTrust simultaneously advanced the
foreclosure process in contravention of California’s Homeowners Bill of Rights. On
April 17, 2013, the Court granted Plaintiff’s Application for Temporary Restraining Order
(“TRO”) preventing Defendant from selling Plaintiff’s home on April 22, 2013. (ECF
Nos. 9, 11). On April 29, 2013, the Court held a preliminary injunction hearing. At issue
was whether Defendant should be enjoined from foreclosing on Plaintiff’s home
throughout the litigation. At the hearing, the Court orally GRANTED Plaintiff’s
Application for a Preliminary Injunction for the reasons described below. (ECF No. 14.)
///
///
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2
BACKGROUND
ReconTrust is a subsidiary of BoA. ReconTrust provides mortgage default
services to BoA. Plaintiff owns real property and improvements thereon located in West
Sacramento, California, which is located within the Eastern District of California
(hereinafter referred to as “the property” unless specified otherwise). The property was
purchased by Plaintiff with a loan obtained through BoA and evidenced by a promissory
note. (ECF No. 5-2.) The promissory note is secured by a deed of trust which is
recorded against the property. Plaintiff defaulted on the loan in 2008. (Id.) In 2012,
Plaintiff and BoA began negotiating a modification of the loan that would allow plaintiff to
remain current on his obligation. (Id.) During the negotiations, Plaintiff provided BoA
detailed information about Plaintiff’s financial situation in exchange for the possibility of a
lower monthly payment and interest rate. BoA has not made a written determination as
to whether Plaintiff qualifies for a loan modification. (ECF No. 10.) Even though Plaintiff
and BoA were negotiating a loan modification, ReconTrust went ahead with the
foreclosure process.
ANALYSIS
A preliminary injunction is an extraordinary remedy, and Plaintiffs have the burden
of proving the propriety of such a remedy by clear and convincing evidence. See
Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S.
423, 442 (1974). The party requesting preliminary injunctive relief must show that “he is
likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence
of preliminary relief, that the balance of equities tips in his favor, and that an injunction is
in the public interest.” Winter v. Natural Resources Defense Council, 555 U.S. 7, 20
(2008); Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009) (quoting Winter).
///
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3
Plaintiff’s Complaint alleges that the Court has diversity jurisdiction. In
Defendant’s Opposition, Defendant argues the Court does not have jurisdiction to hear
this suit because the parties are not completely diverse. (ECF No. 16.) Under 28 U.S.C.
§ 1332(a), diversity jurisdiction exists where the amount in controversy exceeds $75,000
and no defendant party shares citizenship in the same state as Plaintiff. Exxon Mobil
Corp. v. Allapattah Servs., Inc. 545 U.S. 546, 553 (2005) (citing Strawbridge v. Curtiss,
3 Cranch 267, 2 L. Ed. 435 (1806)). Article III courts are courts of limited jurisdiction,
and are presumptively without jurisdiction over civil actions. Kokkonen v. Guardian Life
Ins. Co. of Am., 511 U.S. 375, 377 (1994). The burden of establishing the contrary rests
upon the party asserting jurisdiction. Id. In BoA’s Opposition and at the hearing, BoA’s
counsel asserted that ReconTrust is a citizen of California which destroys the complete
diversity citizenship requirement under 28 U.S.C., section 1332(a). At the hearing, the
Court expressed concern over BoA’s lack of admissible proof that ReconTrust’s “main
office” is located in California. Regardless, Plaintiff agreed to dismiss Defendant
ReconTrust within two days of the hearing to prevent the Court from dismissing the
entire case for lack of subject matter jurisdiction. On April 30, 2013, Plaintiff filed a
Notice of Voluntary Dismissal. (ECF No. 21.) Now, Bank of America, a citizen of North
Carolina, is the remaining Defendant and it is diverse from Plaintiff, a citizen of
California. Thus, the Court has diversity jurisdiction to hear this case.
BoA and other lenders’ practice of negotiating with homeowners in default on their
loans for a loan modification while simultaneously advancing the foreclose process is
commonly referred to as “dual tracking.” Dual tracking has been heavily criticized by
both state and federal legislators. In July 2012, California passed legislation referred to
as “The California Homeowner Bill of Rights” which prohibits dual tracking. As of
January 1, 2013, “The California Homeowner Bill of Rights went into effect and it offers
homeowners greater protection during the foreclosure process. Cal. Civ. Code
§ 2923.6(b) (2013).
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4
Section 2923.6(b) states “it is the intent of the legislature that the mortgage servicer offer
the borrower a loan modification or work out a plan if such a modification or plan is
consistent with its contractual or other authority.” The statute further provides that “if a
borrower submits a complete application for a first lien loan modification . . . the
mortgage servicer . . . shall not record a notice of default or notice of sale, or conduct a
trustee’s sale, while the complete first lien loan modification application is pending.” Cal.
Civ. Code § 2923.6(c) (2013).
At the preliminary injunction hearing, Plaintiff maintained that BoA never
responded to Plaintiff’s complete application for a first lien loan modification. BoA does
not dispute Plaintiff’s assertion. Neither Plaintiff nor BoA provided the Court with any
new evidence at the preliminary injunction hearing. Because BoA has failed to respond
to Plaintiff’s application for a first lien loan modification after January 1, 2013, section
2923.6 applies to this case and prevents BoA from conducting a trustee’s sale while
Plaintiff’s application for a first lien loan modification is pending.
Accordingly, Plaintiff has adequately shown he is likely to succeed on the merits
in light of California’s new Homeowners’ Bill of Rights. Plaintiff has also met the
remaining factors of the preliminary injunction standard. Plaintiff has demonstrated that
Plaintiff will suffer “irreparable harm” if he loses his home because “[he] and [his] family
will have nowhere to go and nowhere to stay. . . [his] children will need to leave their
schools.” (ECF No. 5-2.) Further, the balance of equities tips in Plaintiffs’ favor as a
TRO merely delays Defendant’s right to foreclose. Finally, an injunction is in the public’s
interest as it enforces a recently enacted law designed to protect the public.
BoA asked the Court to order Plaintiff to make $2,700 monthly bond payments if
the Court granted Plaintiff’s Application for a Preliminary Injunction. (ECF No. 16.)
Federal Rule of Civil Procedure 65(c) states “the court may issue a preliminary injunction
order…only if the movant gives security in an amount that the court considers proper to
pay costs and damages sustained by any party found to have been wrongfully enjoined
or restrained.” (Emphasis added.)
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In light of Rule 65, the Court orders Plaintiff to post a $1,000 bond within seven days of
the date of the preliminary injunction hearing.
CONCLUSION
Accordingly, the Court GRANTS Plaintiff’s Application for a Preliminary Injunction
and orders Plaintiff to pay $1,000 bond by Monday, May 6, 2013. (ECF No. 14.)
Pursuant to Plaintiff’s filing, ReconTrust is dismissed and no longer a Defendant in this
case. (ECF No. 21.)
IT IS SO ORDERED.
DATE: May 1, 2013
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