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Reinholtz v. Select Portofolio Servicing

February 4, 2009

JAMES REINHOLTZ, PLAINTIFF,
v.
SELECT PORTOFOLIO SERVICING; WELLS FARGO BANK, N.A., AS THE SUCCESSOR IN INTEREST OF THE LOAN ORIGINATED BY FIRST FRANKLIN, A DIVISION OF NATIONAL CITY BANK; FIRST AMERICAN LOANSTAR TRUSTEE SERVICES; AND DOES 1 TO 10, INCLUSIVE, DEFENDANT.



The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge

TEMPORARY RESTRAINING ORDER [Doc. No. 4]

Pending before the Court is Plaintiff's ex parte motion for temporary restraining order. [Doc. No. 4].

Background

In 2004, Plaintiff purchased his home on Geiger Court, in Chula Vista, Calif. The lender at the time was Downey Savings and Loan Association. Ex Parte Mot. for TRO [Doc. No. 4] at 4:6--13. In 2005, he refinanced his loan through Guaranty Bank, and got a loan in the sum of $805,000, and a revolving line of credit secured with the house from National City Bank, in the sum of $200,000. Id. In August of 2006, Plaintiff refinanced the loan on his house through First Franklin Bank, and was approved for a loan in the sum of $1,024,000. Id. At some point, Defendant SPS became the loan servicer. Id. at 2:14--17. Plaintiff discovered in December 2008, that First Franklin had either transferred or sold its interest in the loan to Wells Fargo Bank. Id. at 4:25--5:7. Plaintiff defaulted on the loan in mid-2008 and was served notice of default. Compl. [Doc. No. 1] at 5:14--20. In December 2008, Plaintiff arranged for a short-sale, in which the third-party buyer offered to pay $460,000 for the property. Wells Fargo, however, informed Plaintiff that it would not accept a short sale for less than $540,000. Ex Parte Mot. for TRO at 4:25--5:18.

On January 15, 2009, Plaintiff attempted to enter into a modification of the subject loan with SPS as Wells Fargo's representative, but SPS refused to consider a loan modification. Id. at 5:20--27. On January 16, 2009, Plaintiff received a letter from SPS indicating that it would be willing to accept $486,000 in lieu of the $1,060,050.64 owed to release "its" lien on the property. Ex. B to Ex Parte Mot. for TRO [Doc. No. 4] at 24. Plaintiff was unable to pay the amount set forth in the letter. Defendants have set a Trustee's sale for February 5, 2009, at 10 a.m. to foreclose on Plaintiff's home. Ex. A to Ex Parte Mot. for TRO [Doc. No. 4] at 23.

On January 28, 2009, Plaintiff filed a complaint alleging various violations under the Truth-In-Lending Act 15 U.S.C. § 1601, et seq., California's Business and Professions Code § 17200, et seq., and 12 U.S.C. § 2605, et seq.[Doc. No. 1]. Plaintiff also seeks relief for Fraudulent Omission and to Quiet Title. Id.

On February 3, 2009, Plaintiff filed its Ex Parte Motion for Temporary Restraining Order ("TRO"). [Doc. No. 4]. In the application, Plaintiff seeks to enjoin Defendants from foreclosing on his house, to compel production of various documents, and to compel Defendants to show cause why a preliminary injunction should not be granted in favor of Plaintiff, enjoining foreclosure or sale of Plaintiff's property during the pendency of this lawsuit. Ex Parte Mot. for TRO at 2:5--22.

On February 4, 2009 at 3:30 p.m., the Court held a hearing on Plaintiff's Ex Parte Motion for TRO.

Standard of Review

Rule 65(b) of the Federal Rules of Civil Procedure provides that a court may issue a TRO without notice to the adverse party where "specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant . . . ." FED. R. CIV. P. 65(b)(1)(A). The movant must also certify in writing any efforts made to give notice and the reasons why it should not be required. FED. R. CIV. P. 65(b)(1)(B). Although the restrictions imposed are stringent, these restrictions "reflect the fact that our entire jurisprudence runs counter to the notion of court action taken before reasonable notice and an opportunity to be heard has been granted both sides of a dispute." Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers, 415 U.S. 423, 438--39 (1974).

The standard for issuing a TRO is similar to the standard for issuing a preliminary injunction and requires that the party seeking relief show either "(1) a combination of likelihood of success on the merits and the possibility of irreparable harm, or (2) that serious questions going to the merits are raised and the balance of hardships tips sharply in favor of the moving party." Homeowners Against the Unfair Initiative v. Calif. Building Industry Assoc., Civil No. 06CV152 JAH (WMc), 2006 U.S. Dist. LEXIS 97023, *4 (S.D. Cal. Jan. 26, 2006) (citing Immigrant Assistance Project of the L.A. County of Fed'n of Labor v. INS, 306 F.3d 842, 873 (9th Cir. 2002)). "[T]hese two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Dep't Parks & Rec. of Calif. v. Bazaar Del Mundo, Inc., 448 F.3d 1118, 1123 (9th Cir. 2006) (citations omitted). The underlying purpose of a TRO is to preserve the status quo and prevent irreparable harm before a preliminary injunction hearing may be held. Granny Goose Foods, 415 U.S. at 439 (1974); see also Reno Air Racing Ass'n v. McCord, 452 F.3d 1126, 1130--31 (9th Cir. 2006).

Analysis

The Truth-In-Lending Act ("TILA"), which is contained in Title I of the Consumer Credit Protection Act, as amended (15 U.S.C. § 1601, et seq.), is intended to assure a meaningful disclosure of credit terms so that consumers can compare more readily various available terms and avoid the uninformed use of credit. 15 U.S.C. § 1601(a). TILA requires that creditors disclose to borrowers specific information, including finance charges, annual percentage rate, and the right to rescind a transaction. See, e.g., 15 U.S.C. §§ 1635, 1638. ...


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