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Robert H. Zakar, Valerie Zakar v. Chl Mortgage Pass-Through Trust 2006-Hyb3

April 4, 2011

ROBERT H. ZAKAR, VALERIE ZAKAR,
PLAINTIFFS,
v.
CHL MORTGAGE PASS-THROUGH TRUST 2006-HYB3
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-HYB3, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

ORDER DENYING PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

Presently before the Court is Plaintiffs' motion for preliminary injunction, seeking the enjoinment of a foreclosure sale. (Doc. No. 2).

BACKGROUND

On or about January 19, 2006, Plaintiffs obtained a $792,000 loan in order to purchase real property in San Diego.*fn1 The note on the property is secured by a Deed of Trust recorded on January 24, 2006. The Deed of Trust identifies America's Wholesale Lender ("AWL") as the lender, ReconTrust Company, N.A. ("Recon") as the trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary.

After Plaintiffs became delinquent on their mortgage payments, Recon recorded a Notice of Default and Election to Sell Under the Deed of Trust on August 19, 2009. On April 5, 2010, Recon recorded a Notice of Trustee's Sale of the Property, referencing a sale date of April 26, 2010. The foreclosure sale scheduled for April 26th did not occur. On July 6, 2010, Recon filed a Corporation Assignment of Deed of Trust ("Corporation Assignment") in which MERS assigned its beneficial interests under the Deed of Trust to "The Bank of New York Mellon FKA The Bank of New York as Trustee for the Certificateholders CWMBS, Inc. CHL Mortgage Pass-Through Trust 2006-HYB 3 Mortgage Pass-Through Certificates, Series 2006-HYB3." Plaintiffs allege that the foreclosure was subsequently rescheduled for March 8, 2011.*fn2

Plaintiffs filed this action on March 4, 2011. The Complaint sets forth eleven causes of action:

(1) wrongful foreclosure by a stranger, (2) intentional fraud, (3) fraudulent concealment, (4) negligence, (5) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. 1961 et , (6) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., (7) violation of California Financial Code § 50505, (8) unfair debt collection practices under the Rosenthal Act, California Code § 1788(e)-(f), and the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. 1692 et seq., (9) violation of California Civil Code § 2923.5, (10) violation of California Civil Code § 2923.6, and (11) unlawful, unfair or deceptive practices.

LEGAL STANDARD

In determining whether to grant a preliminary injunction, the Court applies the standard articulated in Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S. Ct. 365 (2008). A party seeking a preliminary injunction 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. Id. at 374. Injunctive relief is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Id. at 375-76.

DISCUSSION

As to each of the causes of action in the Complaint, Plaintiffs have failed to show the requisite likelihood of success on the merits to warrant equitable relief. Notably, a party moving for injunctive relief must demonstrate irreparable injury is "likely" in the absence of an injunction, rather than merely possible. See id. at 375.

Plaintiffs' motion for a preliminary injunction primarily relies upon Plaintiffs' first cause of action alleging that the foreclosure sale is being conducted by a stranger without the lawful ability to foreclose. Specifically, Plaintiffs contest the validity of the Corporation Assignment of Deed of Trust recorded on July 06, 2010. The Corporation Assignment purports to assign all beneficial interest under the Deed of Trust from MERS to "The Bank of New York Mellon FKA The Bank of New York as Trustee for the Certificateholders CWMBS, Inc. CHL Mortgage Pass-Through Trust 2006-HYB 3 Mortgage Pass-Through Certificates, Series 2006-HYB3." Plaintiffs' claim that this was an impermissible assignment and argue that the beneficiary of the mortgage note is currently unknown which invalidates the foreclosure proceedings. However, as previously noted, the Deed of Trust identifies Recon as the trustee. There is no indication that the Corporation Assignment displaced Recon from its original capacity as trustee. Nor have Plaintiffs provided any authority suggesting that the allegedly improper assignment of the beneficiary's interest precludes the trustee from instituting foreclosure proceedings. Under California Civil Code § 2924(a)(1), the foreclosure process may be conducted by the "trustee, mortgage or beneficiary or any of their authorized agents." Cal. Civ. Code § 2924(a)(1). Inasmuch as Recon recorded both the Notice of Default on April 9, 2009, and the Notice of Trustee's Sale on April 5, 2010, it does not appear that Plaintiffs' home is being unlawfully foreclosed upon by stranger. Accordingly, Plaintiffs have not established that they are likely to prevail on their first claim.

As to the remaining claims, Plaintiffs rely entirely upon the allegations contained within the Complaint to demonstrate their likelihood of success on the merits.

In their second cause of action, Plaintiffs allege intentional fraud. Plaintiffs have not demonstrated a likelihood of success on the merits of this claim inasmuch as they have not pled all of the necessary elements of a fraud claim. One of the essential elements of fraud is the justifiable reliance of the plaintiff. Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). Plaintiffs contend that the Defendants fraudulently recorded the Corporation Assignment with the forged signature of a notary. There is no indication, however, that Plaintiffs justifiably relied upon ...


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