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Mamerto Q. and Minda C. Salinas v. Wachoivia Mortgage

July 26, 2011



This matter comes before the Court on Plaintiffs Mamerto Q. Salinas and Minda C. Salinas‟s ("Plaintiffs") Motion for a Preliminary Injunction (Doc. # 10). Defendant Wachovia Mortgage, a division of Wells Fargo Bank, N.A. ("Defendant") opposes the motion*fn1 (Doc. # 17).


On or about March 1, 2007, Plaintiffs obtained a $548,000.00 adjustable rate loan from Defendant for a property in Stockton, California. By 2010, Plaintiffs began to default on the loan so in May 2010, the parties entered into a written forbearance agreement.

Plaintiffs defaulted on that agreement and Defendants recorded a notice of default on October 27, 2010.

Plaintiffs filed the instant action alleging eleven causes of 6 action in the California Superior Court in the County of San Joaquin. Plaintiffs alleged a violation of the Truth in Lending Act, 15 U.S.C. § 1601, et seq. ("TILA") and ten violations of California state law. Defendant removed the action to this Court and filed a Motion to Dismiss the Complaint. Plaintiffs also filed this Motion for a Preliminary Injunction, requesting that the Court enjoin Defendant from a foreclosure sale on Plaintiffs‟ property.*fn2


A. Legal Standard

1. Preliminary Injunction "A plaintiff seeking a preliminary injunction 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." American Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052. (9th Cir. 2009), quoting Winters v. Natural Resources Defense Council, Inc., 55 U.S. 20, 374 (2008).

B. Claims for Relief 2

1. Likelihood of Success on the Merits Plaintiffs are unlikely to succeed on the merits. Plaintiffs‟ TILA claim lacks legal support. Plaintiffs argue that Defendant failed to clearly communicate the risks of the loan, but TILA does not require the lender to do so. See, e.g., 15 U.S.C. § 1637(a).

Additionally, the TILA claim is time barred. The statute of 8 limitations is one year if the plaintiff seeks damages and three 9 years if the plaintiff seeks a rescission of the loan. See 15 U.S.C. §§ 1640(e), 1635(f). Here, Plaintiffs‟ loan closed in March 2007, so the TILA claim should have been asserted no later than March 2008 for a damages claim or March 2010 for the rescission claim. Plaintiffs filed their Complaint on April 4, 2011. Thus, Plaintiffs‟ TILA claim is time-barred.

Plaintiffs‟ ten state law claims are also unlikely to succeed because they are all preempted by the Home Owners‟ Loan Act, 12 U.S.C. § 1461, et seq. ("HOLA"). The claims in the Complaint are entirely based on the origination of Plaintiffs‟ mortgage loan and, to a lesser extent, Defendant‟s subsequent servicing of the loan. HOLA regulation 12 C.F.R. §§ 560.2(b)(4), (9), and (10) preempt claims based on the "origination," the "terms of credit," or "disclosure" regarding mortgage loans. HOLA regulation 12 C.F.R. §§ 560.2(b)(5), (10), and (4) preempt the servicing of the loan and pertain to "loan-related fees [and] charges", "processing [or] servicing" and the extent the fees and charges were authorized by the loan‟s "terms of credit." When allegations within the Complaint fall within one of the categories listed under 12 C.F.R. § 560.2(b), "the analysis will end there; the law is preempted." Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 1005 (9th Cir. 2008).

In addition to being preempted, the fraud claim and the Section 2923.5 claim are legally defective. The statute of limitations for fraud is three years, so Plaintiffs‟ fraud claim became time-barred as of March 2010. See Code of Civil Procedure § 338(d). Furthermore, the fraud claim will not succeed because Defendant did not owe Plaintiffs any duty of care or disclosure.

Under California law, a financial institution owes no duty of care to a borrower when the institution‟s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money. Nymark v. Heart Federal Savings & Loan Assn., 231 Cal.App.3d 1089, 1096 (Cal. Ct.App.3d 1991). Finally, the violation of Civil Code § 2923.5 claim fails because Plaintiffs have not alleged a credible offer to 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 [her] obtaining relief, by restoring to the defendant everything of value which the plaintiff has received in the ...

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