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Foster v. SCME Mortgage Bankers

April 6, 2010

GARY L. FOSTER, PLAINTIFF,
v.
SCME MORTGAGE BANKERS, INC. A CALIFORNIA CORPORATION; CLEVER KEY FINANCIAL, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; WEST COAST MORTGAGE, A BUSINESS ENTITY OF UNKNOWN FORM, HOMECOMING FINANCIAL, LLC, A DELAWARE LIMITED LIABILITY COMPANY F/K/A HOMECOMINGS FINANCIAL NETWORK, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. A DELAWARE CORPORATION; AURORA LOAN SERVICERS, LLC A DELAWARE LIMITED LIABILITY COMPANY; CAL-WESTERN RECONVEYANCE CORPORATION, A CALIFORNIA CORPORATION; FREDERICK WINSTON WILLIAMS II, AN INDIVIDUAL; AND DEBORAH DIAZ, AN INDIVIDUAL, DEFENDANTS.



ORDER RE: APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND MOTION FOR PRELIMINARY INJUNCTION

This matter came on for hearing on plaintiff's application for a temporary restraining order and motion for a preliminary injunction (Docket No. 3 ("TRO App.") at 2:00 p.m. on April 5, 2010. Plaintiff was represented by Robert A. Spanner. Counsel has failed to submit any declaration setting forth the manner in which notice was given, or attempted to be given, to any of the defendants and admitted at oral argument that he made no effort to serve any party other than Homecoming. Defendant Homecoming Financial, LLC ("Homecoming"), which disavows any interest in the allegedly threatened foreclosure, filed an Opposition to the motion for a temporary restraining order along with a series of documents related to plaintiff's mortgage. (Docket No. 15.)

I. Standard

In order to obtain a temporary restraining order or a preliminary injunction, the moving party "must establish 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. NRDC, --- U.S. ---, ---, 129 S.Ct. 365, 374 (2008).*fn1 As the Supreme Court has repeatedly recognized, injunctive relief is "an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Mazurek v. Armstrong, 520 U.S. 968, 972 (1997); see Winter, 129 S.Ct. at 375-76.

Further, "[i]n considering a motion for a temporary restraining order, the Court will consider whether the applicant could have sought relief by motion for preliminary injunction at an earlier date without the necessity for seeking last-minute relief by motion for temporary restraining order. Should the Court find that the applicant unduly delayed in seeking injunctive relief, the Court may conclude that the delay constitutes laches . . . and may deny the motion solely on [that] ground." E.D. Cal. R. 231(b).

II. Discussion

A. Undue Delay

Plaintiff "could have sought relief by motion for preliminary injunction at an earlier date without the necessity for seeking last-minute relief by motion for [a TRO]." E.D. Cal. R. 231(b). Plaintiff has been aware of defendants' desire to initiate foreclosure proceedings on his property, at a minimum, since July 9, 2009 when MERS recorded the Notice of Default.

(Request for Judicial Notice in Supp. of Opp'n to App. for TRO & Mot. for Prelim. Inj. ("RJN"), Ex. 1.) Yet plaintiff did not seek injunctive relief until March 3, 2010, five days before the scheduled sale date of his property. (Docket No. 3.) When plaintiff discovered that the sale was postponed until April 7, 2010, plaintiff moved for, and was granted, a continuance of his application for a temporary restraining order until April 5, 2010. (Docket Nos. 11, 14.) Plaintiff has not sufficiently demonstrated that his delay in seeking injunctive relief was justified. Accordingly, plaintiff's "undu[e] delay[]" "constitutes laches" and provides a basis for denying his TRO request.

B. Irreparable Harm and Likelihood of Success on the Merits

Plaintiff has not established a likelihood of success on the merits sufficient to warrant the extraordinary remedy of a temporary restraining order. Although plaintiff's Complaint consists of twelve causes of action, plaintiff only argues he is entitled to a temporary restraining order on the basis of the following four claims: (1) violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f, (2) violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617, (3) violations of Cal. Civ. Code section 2943, and (4) plaintiff's contention that defendants cannot foreclose upon the Deed of Trust because the substitution of trustee is void and therefore the notice of default is also void. Plaintiff bases his claim of irreparable harm on the fourth cause of action. While plaintiff failed to so much as mention his other causes of action in his motion for a temporary restraining order, out of caution the court will evaluate plaintiff's likelihood of success on all those claims for which plaintiff requests equitable relief in the Complaint.

1. TILA Claim

As a preliminary matter, the court notes that plaintiff does not request any equitable relief under TILA. Rather, plaintiff's first cause of action only seeks damages for the alleged disclosure failures that occurred during the origination of plaintiff's loan. (Compl. (Docket No. 2), at ¶¶ 36-42.) Nor does plaintiff's prayer for relief seek rescission of the loan. (Id. at 20.) Plaintiff has not alleged any facts to support a finding that the damages prayed for in the Complaint are insufficient to remedy the alleged TILA violations or that he will suffer irreparable harm related to his TILA claim in the absence of injunctive relief. Plaintiff's TILA claim therefore cannot provide the basis for alleging irreparable harm necessary to warrant injunctive relief. See Northern Cheyenne Tribe v. Norton, 503 F.3d 836, 843 (9th Cir. 2007).

Even if the court does construe plaintiff's TILA claim to allege a demand for rescission, it is time-barred. In a consumer credit transaction where the creditor acquires a security interest in the borrower's principal dwelling, TILA provides the borrower with "a three-day cooling-off period within which [he or she] may, for any reason or for no reason, rescind" the transaction. McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 421 (1st Cir. 2007) (citing 15 U.S.C. § 1635). A creditor must "clearly and conspicuously disclose" this right to the borrower along with "appropriate forms for the [borrower] to exercise his right to rescind." 15 U.S.C. § 1635(a). If a creditor fails to provide the borrower with the required notice of the right to rescind, the borrower has three years from the date of consummation to rescind the transaction. 15 U.S.C. § 1635(f); see 12 C.F.R. § 226.23(a)(3) ("If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation."). "[Section] 1635(f) completely extinguishes the right of rescission at the end of the 3-year period." Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, (1998); see also Miguel v. Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir. 2002) ("[S]section 1635(f) represents an 'absolute limitation on rescission actions' which bars any claims filed more than three years after the consummation of the transaction." (quoting King v. California, 784 F.2d 910, 913 (9th Cir. 1986))).

Plaintiff signed the deed of trust on April 1, 2006, and filed this action on March 3, 2010, more than three years after closing. Even if plaintiffs were legally entitled to equitable tolling of their claim, plaintiffs have not alleged any facts in the Complaint that would warrant tolling the statute of limitations. In his Reply brief, plaintiff argues that the one-year statute of limitations for his TILA damages claim should be tolled because he never received his TILA disclosures. (Reply Mem. in Supp. of TRO (Docket No. 17), at 4-5.) As previously stated, however, plaintiff's TILA damages claim does not provide support for a temporary restraining order because plaintiff will not suffer irreparable injury should injunctive relief not ...


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