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Miguel Arroyo, et al. v. Aurora Bank

January 18, 2012

MIGUEL ARROYO, ET AL.
v.
AURORA BANK, FSB, ET AL.



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS: NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): ORDER DENYING PLAINTIFFS' REQUEST FOR PRELIMINARY INJUNCTION

On January 17, 2012, the parties appeared before the Court on Plaintiffs Miguel and Oralia Arroyo's request for a preliminary injunction. After considering the moving and opposing papers on Plaintiffs' request, as well as the parties' oral arguments, the Court DENIES the requested preliminary injunction. Because no good cause to extend the temporary restraining order ("TRO") has been shown, as stated in the Court's January 6, 2012 order to show cause, the TRO expired at the conclusion of the January 17, 2012 hearing.

Plaintiffs seek to prevent Defendants Aurora Bank, FSB and Aurora Loan Services, LLC (collectively, "Aurora") from moving forward with attempts to sell or transfer their home until Plaintiffs' claims are fully resolved. Specifically, Plaintiffs seek to enjoin Aurora from conducting a foreclosure sale of their home.

I. LEGAL STANDARD

In order to show they are entitled to a preliminary injunction, Plaintiffs must show (1) a likelihood of success on the mertis; (2) a likelihood of irreparable harm; (3) that the balance of equities tips in Plaintiffs' favor; and, (4) an injunction is in the public interest. Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 129 S. Ct 365, 374 (2008).

II. DISCUSSION

Plaintiffs fail to show a likelihood of success on the merits of their claims. To the contrary, the Court finds that in all likelihood, Plaintiffs' claims fail on the merits.

First, Plaintiffs fail to allege tender. "Under California law, in an action to set aside a trustee's sale, a plaintiff must demonstrate that he has made a valid and viable tender offer of payment of the indebtedness." Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1183 (N.D. Cal. 2009). Although Plaintiffs seek to enjoin an impending foreclosure sale, rather than set aside a foreclosure sale, their failure to allege tender is likewise fatal to their claims insofar as each claim seeks to avoid a foreclosure sale.

Turning to their individual claims for relief, Plaintiffs allege that the Workout Agreement they entered into with Aurora was obtained through fraud. Accordingly, they seek recission of the Agreement, along with restitution (Claims One and Two). Aurora argues that these claims fail because Plaintiffs fail to plead fraud and mistake with particularity. Plaintiffs' argue that their recission and restitution claims are based on mistake of fact, and in the alternative, fraud in the inducement. Plaintiffs claim that the mistake of fact was that the Workout Agreement was improper for their needs because Aurora had no intention of considering a permanent loan modification for Plaintiffs when the Agreement expired.

The Court finds that the Agreement does not contain any promises regarding the availability or likelihood of permanent loan modification upon conclusion of the Agreement. While Aurora could consider Plaintiffs' for such a modification, the Agreement specifies that this decision was discretionary, which Plaintiffs admit in their complaint (Compl. ¶ 17). See Dkt. 4, Ex. A, Workout Agreement, Attachment A - Stipulated Payments at b ("Upon the Expiration Date [of the Agreement], Customer must cure the arrearage through a full reinstatement, payment in full, loan modification agreement, or other loan workout option that Lender may offer . . . Customer's failure to enter into a 'Cure Method' will result in the loan being disqualified [from future programs]" and regular collection activity will resume, including resumption of the foreclosure process.)

The Court also rejects Plaintiffs' arguments that the Agreement did not bind Aurora to do anything, or that the Agreement fails for lack of consideration. The Agreement specifies in ΒΆ 3 that Aurora "shall forebear from exercising any and all of its rights and remedies . . . during the term of this Agreement" provided that ...


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