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Dennly R. Becker; the Becker Trust v. Wells Fargo Bank

March 16, 2011

DENNLY R. BECKER; THE BECKER TRUST
PLAINTIFFS,
v.
WELLS FARGO BANK, N.A., INC.; WACHOVIA MORTGAGE CORPORATION; DOES 1-20, DEFENDANTS.



The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge

ORDER

DATED MARCH 25, 1991,

This order addresses plaintiff Dennly Becker's "Ex Parte Motion For: 1) Order To Show Cause Why Defendants Should Not Be Held In Contempt And Sanctioned, 2) Order For Rescission of NOS ("notice of sale"), 3) Order For Written Instructions Stopping Foreclosure, and 4) Court Approval Of Lis Pendens" (plaintiff's "Motion"). (Dkt. No. 24.)*fn1 Defendants Wells Fargo Bank, N.A., and Wachovia Mortgage Corporation ("defendants") opposed the motion (Defendants' Opposition, ("Oppo."), Dkt. No. 31). Plaintiff*fn2 replied by filing a "response" in support of his motion. (Plaintiff's Reply ("Reply"), Dkt. No. 35.) Plaintiff also filed a request for judicial notice ("RJN") supporting his Motion. (Dkt. No. 36.)*fn3

The court heard oral arguments on the Motion on March 3, 2011. Plaintiff, who is proceeding without counsel, appeared on his own behalf. Attorney Gene Wu appeared on behalf of defendants. During that hearing, the undersigned also heard oral arguments on several other motions*fn4 pending in this case.

The undersigned has considered the briefs, oral arguments, and the record in this case and, for the reasons that follow, orders that plaintiff's Motion is denied. For the reasons stated below, the undersigned denies plaintiff's request that defendants be sanctioned and held in contempt for violating the court's December 13th Order. The undersigned also denies plaintiff's requests for an Order of "Rescission of NOS" and an Order for "Written Instructions Stopping Foreclosure," as plaintiff has conceded that these two requests were rendered moot by defendants' opposition (Dk. No. 31) and the declarations attached thereto. Further, plaintiff has indicated that he is willing to wait until the complaint surpasses the pleading stage before seeking to record any lis pendens. Therefore plaintiff's request that the undersigned approve his nine lis pendens is denied, without prejudice to later refiling.

I. BACKGROUND

Plaintiff has alleged various claims against defendants in connection with plaintiff's mortgage loans, potential modification of those loans, representations made during the modification application process, and defendants' steps to foreclose upon three of plaintiff's properties. (FAC, Dkt. No. 19.)

The relevant procedural history is as follows. On November 29, 2010, plaintiff filed his verified FAC. (Dkt. No. 19.) On November 12, 2010, plaintiff filed a motion for a preliminary injunction. (Dkt. No. 14.) Plaintiff sought to enjoin foreclosure sales of three properties, which plaintiff represented were scheduled to occur on December 23, 2010. The three properties were located at 865 Shelborne Drive, Tracy, CA ("Shelborne property"), 2416 Third Street, Lincoln, CA ("Third Street property"), and 1896 Larkflower Way, Lincoln, CA ("Larkflower property").

On December 13, 2010, Senior Judge Lawrence K. Karlton granted plaintiff's motion for a preliminary injunction (the "December 13th Order"). (December 13th Order, Dkt. No. 21.) The December 13th Order enjoined the foreclosure sales of the three properties described in plaintiff's motion for a preliminary injunction. (Id.) On January 3, 2011, plaintiff filed the pending Motion. (Motion, Dkt. No. 24.)*fn5 On January 21, 2011, Judge Karlton referred plaintiff's pending Motion (Dkt. No. 24) to the undersigned. (Dkt. No. 34)

Plaintiff's pending Motion was prompted by Cal-Western Reconveyance Corporation's recording of a notice of trustee sale ("Notice of Sale" or "NOS") for the Third Street property-one of the three properties embraced by the December 13th Order-on December 29, 2010. (Motion at 1.) Plaintiff declares that the trustee's sale was scheduled for January 19, 2011. (Plaintiff's Declaration, Dkt. No. 24 at 2.) According to plaintiff, the December 13th Order enjoined foreclosure sale of plaintiff's Shelborne, Larkflower, and Third Street properties and in violation of that order, defendants' trustee recorded a NOS for the Third Street property 16 days after that order was issued. (Motion at 4, 12.) Plaintiff's Motion therefore requests "(1) [an] order to show cause why defendants should not be held in contempt and sanctioned, (2) [an] order for rescission of [the notice of trustee sale on the Third Street property], (3) order for written instructions stopping foreclosure, and (4) court approval*fn6 of lis pendens."

Defendants do not dispute that Cal-Western Reconveyance Corporation ("Cal-Western") improperly recorded a NOS upon the Third Street property, but contend that because no trustee's sale has actually "taken place," the December 13th Order was never violated. (Oppo. at 2.) Defendants explain that immediately after issuance of the Preliminary Injunction, they notified LPS Default Solutions, Inc. ("LPS"), the agent for the trustee Cal-Western, to cease all foreclosure activity as to plaintiff's properties. (Id.; Declaration of Michael Barnas, Vice- President of Loan Documentation for Wachovia, ¶ 3 and Exh. A thereto.) The written instructions to LPS stated: "Preliminary Injunction was granted. Please place file on hold. (Id.) Defendants explain that LPS acknowledged the written instructions to place all foreclosure activity on hold. (Id.) According to defendants, LPS normally communicates this sort of "hold" information to counsel for Cal-Western via "intercom message," but in this instance, the typical communication from LPS to Cal-Western did not occur. (Id.) Defendants argue that this was the result of mere oversight on the part of LPS, and note that defendants themselves did not play a role in the communication breakdown. (Id. at 2-3.) Ultimately, LPS's failure to make its typical communication to Cal-Western resulted in the posting and recording of the Third Street NOS. (Id.)

Defendants acknowledge that the recordation of the Third Street NOS was improper and done by mistake. (Id.) Defendants also argue, however, that sanctions and contempt are inappropriate because since learning of the NOS, they have "taken every measure to ensure that no foreclosure will take place." (Id.) Specifically, defendants "took immediate action by contacting Cal-Western and request[ing] written reassurance that all foreclosure activity would be terminated." (Id. at 3.) Further, Cal-Western "caused to be recorded a Notice of Withdrawal of Notice of Trustee's Sale." (Id. at 3; Declaration of Pamela Campbell, Assistant Vice President for Cal-Western, ¶ 6 and Exh. B thereto).)

Defendants argue that plaintiff's request for an "Order of Rescission" and an order for "Written Instructions Stopping Foreclosure" are unnecessary given the declarations filed with defendants' opposition. Those declarations confirm that the Third Street NOS has been withdrawn and the foreclosure process halted. (Id. at 4.) As to plaintiff's request for approval of lis pendens, defendants argue that the court should not give its approval because plaintiff's claims are insufficiently pleaded. (Oppo. at 4-5.)

In his Reply, plaintiff does not dispute defendants' representations that the Third Street NOS was withdrawn and that the foreclosure process was ultimately halted in accordance with the December 13th Order. (Reply at 2-3.) Indeed, because the NOS was withdrawn, plaintiff agrees with defendants that his Motion's second and third requests (for an "Order of Rescission" of the NOS and for "Written Instructions Stopping the Foreclosure") are no longer necessary. (Id. at 3.) Plaintiff's primary contention on Reply is that defendants should be sanctioned for not taking a more active role in assuring its agents' compliance with the court's December 13th Order. ...


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