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Villarreal v. Onewest Bank

April 8, 2010

PHILLIP AND VICTORIA VILLARREAL, PLAINTIFFS,
v.
ONEWEST BANK, FSB, REGIONAL SERVICES TRUSTEE CORPORATION, AND DOES 1-50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING IN PART PLAINTIFFS' APPLICATION FOR A TEMPORARY RESTRAINING ORDER

Plaintiffs re-filed an application for a temporary restraining order ("TRO") on April 5, 2010, which was previously filed on April 2, 2010 and denied since it failed to comply with the notice requirements in Federal Rule of Civil Procedure 65(b)(1) and Local Rule 231(a). Plaintiffs' second TRO application is identical to their initial application, except that Plaintiffs' represent they have complied with the above referenced notice requirements. Following receipt of Plaintiffs' second TRO application, the Court scheduled a hearing on Plaintiffs' application for a TRO and provided Defendants with an opportunity to file an opposition before the scheduled hearing. Plaintiffs' TRO application was heard on April 7, 2010, commencing at 1:30 p.m.; Defendants did not appear at the hearing and did not file an opposition to Plaintiffs' TRO application. Plaintiffs seek to enjoin the imminent sale of their home at a trustee's sale, currently scheduled to occur on April 9, 2010. For the reasons stated below, Plaintiffs' TRO application is GRANTED IN PART.

I. LEGAL STANDARD

"Requests for temporary restraining orders are governed by the same general standards that govern the issuance of a preliminary injunction." Bouyer v. IndyMac Fed. Bank, No. C-08-05582 EDL, 2009 WL 1765668, at *1 (N.D. Cal. June 18, 2009). Therefore, a plaintiff seeking a TRO 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 a[] [TRO] is in the public interest." Am. Trucking Ass'n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter v. Natural Res. Def. Council, Inc., 129 S.Ct. 365, 374 (2008)).

II. BACKGROUND

Plaintiffs' complaint and TRO application do not contain factual allegations that provide a clear picture of the events giving rise to Plaintiffs' claims.*fn1 The below stated background reflects what the court deciphers from Plaintiffs' filings.

Plaintiffs purchased the real property located at 9274 Marlemont Circle in Elk Grove, California using funds acquired through a loan from Defendants." (Compl. 3:25-28.)*fn2 Plaintiffs allege "when the loan was consummated," Defendants violated the federal Truth In Lending Act ("TILA") by failing to provide "the Truth in Lending Disclosure Statement... and the required number of copies of the Notice of Right to Cancel." (Id. 5:14-20.)

Plaintiffs further allege that "[o]n or about December 26, 2009, Defendants served a Notice of Default on Plaintiffs." (Id. 5:19-20.) Plaintiffs also allege that a Notice of Trustee's Sale was sent to Plaintiffs on March 22, 2010 which states that defendant Regional Trustee Services Corporation intends to sell Plaintiffs' property at a trustee's sale scheduled to occur on April 9, 2010, at 9:30 a.m. (Id. 5:19-24; TRO Application Ex. B.) Plaintiffs allege under a claim labeled "Breach of Statutory Duties," Defendants violated provisions of the California Civil Code by "not giving proper notice of the [April 9, 2010 trustee's] sale." (Compl. 11:7-9.)

III. DISCUSSION

A. Likelihood of Success on the Merits

Plaintiffs argue they are entitled to a TRO enjoining the trustee's sale because they have a right to rescind their loan under TILA and Defendants have provided them with "defective notices" of the trustee's sale, in violation of various provisions of the California Civil Code.

1. Right to Rescind Under TILA

Plaintiffs argue they did not receive either the "preliminary disclosures" or two accurately dated notices of the right to cancel in violation of TILA's requirements, and as a result, they have "the right to rescind [their] loan." (TRO Application 4:22-5:9.)

Plaintiffs' complaint, however, does not seek to rescind their loan; rather, Plaintiffs only allege that they are entitled to "damages" as a result of Defendants' alleged violations of TILA. Further, since Plaintiffs allege they "purchased [their] property... using funds acquired through a loan from Defendants," TILA's rescission remedy is not applicable to their loan transaction.*fn3 (Compl. 3:25-28); see also 15 U.S.C. § 1635(e)(1) (providing that the right of rescission does not apply to residential mortgage transactions); 15 U.S.C. § 1602(w) (defining "residential mortgage transaction" as one in which a "security interest is created or retained against the consumer's dwelling to finance the acquisition... of such dwelling."); Saldate v. Wilshire Credit Corp., ---F.R.D. ----, No. CV F 09-2089 LJO SMS, 2010 WL 582069, at *5 (E.D. Cal. Feb. 12, 2010) (stating "[t]here is no statutory right of rescission where the loan at issue involves the creation of a first lien to finance the acquisition of a dwelling in which the customer resides"). Lastly, at the hearing, Plaintiffs' counsel stated that Plaintiffs consummated their loan transaction in January 2007. This concession indicates that any TILA rescission claim would be barred by the three-year limitations period in 15 U.S.C. 1635(f). See Miguel ...


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