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McCallum v. Bank of America Corp.

April 20, 2010


The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court


Presently before the Court is Plaintiff's Ex Parte Motion for Temporary Restraining Order ("TRO Motion"), filed on April 9, 2010, seeking this Court's order enjoining Defendant from proceeding with a foreclosure sale. (Doc. No. 3.) The foreclosure sale is set for April 22, 2010 at 10:00 a.m.*fn1 Having considered both parties' arguments, and for the reasons set forth below, the Court DENIES Plaintiff's TRO Motion.


The following facts are drawn from Plaintiff John McCallum's ("Plaintiff") Complaint unless otherwise noted. (Doc. No. 1.) In early 2005, Plaintiff sought financing to purchase property, located at 816 27th Street #13, San Diego, CA 92102. Plaintiff applied for a loan from Countrywide Financial ("Countrywide"). A Countrywide employee, Barry Varshay, collected Plaintiff's information for the loan application over the telephone. Plaintiff informed Varshay that he earned $66,019.00 from a sales job in 2004, as well as $5,666.00 from occasional acting/modeling work. Plaintiff also informed him that he was currently unemployed. According to Plaintiff, Varshay recorded in the loan application that Plaintiff had been a "self-employed actor" for two years, with a monthly income of $6,000.00. Plaintiff was not provided a copy of the loan application for his review and signature. Plaintiff does not recall seeing the loan application until he requested a forensic audit of the transaction. (McCallum Decl. ¶ 9.) Subsequently, his application was approved for a loan in the amount of $260,000.00, and the loan closed on June 29, 2005.

According to Plaintiff, he was sold a loan he could not afford, based on untruthful and inaccurate income figures on his application. Plaintiff also alleges failure to provide mandatory disclosures and failure to make good faith efforts to avoid foreclosure.


On March 11, 2010, Plaintiff filed this diversity action against Defendant Bank of America Corporation ("BAC"), which currently owns the loan at issue.*fn2 Plaintiff's Complaint sets forth nine causes of action: (1) set aside trustee sale, (2) violation of the Perata Mortgage Relief Act, California Civil Code § 2923.5, (3) unfair business practices in violation of California Business and Professions Code § 17200, (4) quiet title, (5) declaratory relief, (6) injunctive relief, (7) intentional misrepresentation, (8) negligent misrepresentation, and (9) rescission.

On April 9, 2010, Plaintiff filed the instant TRO Motion seeking this Court's order enjoining BAC from proceeding with the foreclosure sale. (Doc. No. 3.) Plaintiff's counsel filed a declaration stating that the Summons, Complaint, and TRO Motion were served on BAC's registered agent for service on April 9, 2010. (Hewell Decl. ¶¶ 4-5.)

On April 13, 2010, the Court issued an Order giving BAC the opportunity to file a response to the TRO Motion. (Doc. No. 5.) Pursuant to the Court's Order, Plaintiff served a copy of the Order on BAC and filed a proof of service. (Doc. No. 6.) On April 19, 2010, BAC filed a response. (Doc. No. 7.)


Rule 65 of the Federal Rules of Civil Procedure authorizes the Court to issue a preliminary injunction or a TRO upon a proper showing. Fed. R. Civ. P. 65. A party seeking a temporary restraining order must demonstrate: (1) the likelihood of success on the merits; (2) the likelihood of irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest. See Winter v. Nat. Res. Def. Council, Inc., - U.S. -, 129 S.Ct. 365, 374 (2008).


Plaintiff has failed to show the requisite likelihood of success on the merits to warrant equitable relief.

Plaintiff seeks rescission of the loan agreement and to quiet title against BAC.*fn3 However, as BAC argues, Plaintiff has not demonstrated that he is likely to succeed, because the Complaint fails to allege tender. Under California law, "[i]n obtaining rescission or cancellation, the rule is that the complainant is required to do equity, as a condition to his obtaining relief, by restoring to the defendant everything of value which the plaintiff has received in the transaction. Fleming v. Kagan, 11 Cal. Rptr. 737, 740 (Ct. App. 1961); see also Karlsen v. Am. Sav. & Loan Assn., 92 Cal. Rptr. 851, 854 (Ct. App. 1971) ("A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust.") "The rule applies although the plaintiff was induced to enter into the contract by the fraudulent representations of the ...

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