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Chen v. PMC Bancorp.

February 16, 2010


The opinion of the court was delivered by: Hayes, Judge


The Matter before the Court is the Ex Parte Application for Temporary Restraining Order ("Application for TRO") filed by Plaintiffs Yueh Chen and Chen C. Wu. (Doc. # 18).

I. Background

On December 3, 2009, Plaintiffs initiated this action by filing a Complaint in this Court. (Doc. # 1).

A. Allegations of the Complaint

The Complaint, which is verified by Plaintiff Chen C. Wu, alleges that on December 13, 2006, Plaintiffs refinanced their primary residence, located at 1088 Camino Del Sol, San Marcos, California ("Property"), through a loan in the amount of $500,000. Plaintiffs financed the Property by signing a note in the principal amount of $500,000, secured by a deed of trust from Defendant PMC Bancorp ("PMC"), the originating lender. During the loan application process, Plaintiffs accurately provided their yearly income. "Defendants did not show Plaintiffs what exact amounts were eventually stated with respect to their income in the loan application." (Doc. # 1 ¶ 9). Defendants "Homeloan and PMC submitted [an] inflated stated income amount" in order to secure approval of the loan. (Doc. # 1 ¶ 11).

"[D]uring the course of the loan application process, two copies of the Notice of Right to Cancel, as required under [the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.], that stated a transaction date and the expiration date of the rescission period, were not provided in the closing packet. In addition, Plaintiffs were not provided with the initial disclosure and final disclosure documents including those required by [the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2605 et seq.], [and] TILA...." (Doc. # 1 ¶ 12).

"The initial Notice of Default filed by Defendant [NDEX West, LLC ("NDEX")] on August 28, 2009, was flawed and failed to comply with California Civil Code § 2924. When the Notice of Default was prematurely filed by NDEX, it was not the trustee on the Deed of Trust, as [Defendant] National Fidelity Title Company was still the Trustee on the Deed of Trust. NDEX was not substituted as trustee on the Deed of Trust until November 3, 2009, nearly two months after the original Notice of Default was already filed, in clear violation of § 2924." (Doc. # 1 ¶ 13).

The Complaint alleges eight claims: (1) intentional misrepresentation; (2) breach of fiduciary duty; (3) quiet title; (4) violations of TILA; (5) violation of RESPA; (6) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200; (7) violation of California Civil Code § 1632; and (8) violation of California Civil Code § 2924.

On December 3, 2009, Plaintiffs filed a Notice of Pendency of Action, also known as a lis pendens, stating that this action "alleges a real property claim affecting title and right of possession of" the Property at issue. (Doc. # 3 at 2).

B. Application for TRO

On February 12, 2010, Plaintiffs filed the Application for TRO. (Doc. # 18). Plaintiffs move the Court for "a Temporary Restraining Order restraining, enjoining and preventing Trustee NDEX West, LLC ... and Defendant One West Bank, F.S.B. ... and their agents ... from selling Plaintiffs' house at Trustee's Sale currently set for February 17, 2010 at 10:00 a.m. at the entrance to the East County Regional Center ..., El Cajon, CA." (Doc. # 18 at 1).

The Application for TRO contains two exhibits, both of which were referenced in the Complaint. The first exhibit is a Notice of Default and Election to Sell under Deed of Trust ("Notice of Default"), which was filed in the San Diego County Recorder's Office on August 28, 2009. (Doc. # 18-2). The Notice of Default notified Plaintiffs that their account was in default by an amount of $11,726.68 as of August 27, 2009, and it contains an affidavit which states: "The mortgagee, beneficiary or authorized agent has contacted the borrower to discuss the borrower's financial situation and to explore options for the borrower to avoid foreclosure in compliance with Cal. Civ. Code Section 2923.5. Thirty days or more have elapsed since the borrower was contacted." (Doc. # 18-2 at 3). The Notice of Default was signed by "NDEX WEST, LLC as Agent for Beneficiary." (Doc. # 18-2 at 2).

The second exhibit attached to the Application for TRO is a "Substitution of Trustee," which states that, on October 21, 2009, the beneficiary under the Deed of Trust, Defendant Deutsche Bank National Trust Company, substitutes NDEX as trustee under the Deed of Trust. (Doc. # 18-3 at 2). The Substitution of Trustee was filed with the San Diego County ...

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