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Paul M. Howard v. Federal Home Loan Mortgage Corporation Aka Freddie

February 24, 2012

PAUL M. HOWARD PLAINTIFF,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION AKA FREDDIE MAC; U.S. BANK, N.A., AS TRUSTEE FOR TRUCAP GRANTOR TRUST 2010-2; AND ASSURED LENDER SERVICES, INC.
DEFENDANTS.



ORDER RE: PRELIMINARY INJUNCTION (Doc. 10)

I. INTRODUCTION

Plaintiff Paul M. Howard has moved for a preliminary injunction enjoining defendants U.S. Bank, N.A., Assured Lender Services, Inc., and their employees, agents and representatives from conducting a foreclosure sale of real property in Modesto, California. Having reviewed the pleadings of record and all competent and admissible evidence submitted, the Court grants the motion.

II. FACTS AND PROCEDURAL BACKGROUND

On June 24, 2011, plaintiff Paul M. Howard ("Plaintiff") filed his complaint against defendants Federal Home Loan Mortgage Corporation aka Freddie Mac, U.S. Bank, N.A., as Trustee for TruCap Grantor Trust 2010-2 ("US Bank") and Assured Lender Services, Inc. ("ALS"), asserting causes of action for (1) quiet title/declaratory relief (against all defendants), (2) injunctive relief (against US Bank and ALS), (3) breach of contract (against Freddie Mac) and (4) breach of the implied covenant to convey title free of liens (against Freddie Mac). Plaintiff alleged as follows:

"1. Plaintiff is an individual and the owner of a four-plex condominium located at 2108 Palisade Avenue, #1-4, Modesto, CA (the 'Property'). A legal description of the Property is attached hereto as Exhibit A. [¶] . . . [¶] 7. . . . [I]n 2008, Freddie Mac became the owner of the Property through a foreclosure sale on its then existing deed of trust ('the Freddie Mac DOT') against the Property. Plaintiff is informed and believes that a copy of the recorded Trustee's Deed Upon Sale (the 'Trustee's Deed') conveying the Property to Freddie Mac is attached hereto as Exhibit B. [¶] 8. In the summer of 2009, Plaintiff and Freddie Mac entered into a purchase agreement (the 'Purchase Agreement') for Plaintiff to purchase the Property from Freddie Mac (the 'Sale'). [¶] 9. The Sale closed, and on July 22, 2009, Freddie Mac executed a Grant Deed conveying the Property to Plaintiff. A copy of the recorded Grant Deed is attached hereto as Exhibit C."

Plaintiff further alleged:

"10. Plaintiff is informed and believes that despite the Sale and corresponding Grant Deed on December 3, 2010, Freddie Mac caused the Trustee under the Freddie Mac DOT to rescind the Trustee's Deed. A copy of the Rescission of Trustee's Deed Upon Sale is attached hereto as Exhibit D. [¶] 11. Plaintiff is informed and believes that around February 2011, Freddie Mac's beneficial interest under the Freddie Mac DOT was assigned to Defendant U.S. Bank, N.A., as Trustee for TruCap Grantor Trust 2010-2. [¶] 12. Plaintiff is informed and believes that on June 3, 2011, U.S.

Bank substituted in Assured Lender Services, Inc., as trustee under the Freddie Mac DOT. [¶] 13. Also on June 3, U.S. Bank caused Assured Lender Services to record a Notice of Trustee's Sale (the 'Foreclosure Sale') to foreclose on Unit 4 of the Property only. According to the Notice, the Trustee's Sale is set for June 28, 2011 at 12:00 p.m. A copy of the Notice of Trustee's Sale is attached hereto as Exhibit E."

On June 24, 2011, Plaintiff filed a motion for a temporary restraining order enjoining US Bank and ALS from proceeding with a foreclosure sale of Unit 4 of the Property. Plaintiff further moved for issuance of an order to show cause re: preliminary injunction enjoining US Bank, ALS and their representatives from proceeding with the foreclosure sale during the pendency of the litigation. On June 24, 2011, the Court granted Plaintiff's motion for a temporary restraining order and further directed US Bank and ALS to appear before the Court on July 11, 2011 and show cause why a preliminary injunction should not be granted "enjoining Defendants and their officers, employees, agents, servants, contractors, and representatives, and all persons and entities acting by or through them from proceeding with a Trustee Sale . . . on Unit 4" of the Property.

On July 1, 2011, US Bank and ALS filed their opposition to Plaintiff's application for preliminary injunction. On July 6, 2011, Plaintiff filed his reply to the opposition.

On July 8, 2011, the Court approved the parties' stipulation to continue the hearing on the order to show cause to August 29, 2011, and renewed the temporary restraining order pending further order of the Court. On August 23, 2011, the Court approved a second stipulation to continue the hearing on the order to show cause to October 24, 2011, and renewed the temporary restraining order pending further order of the Court. On October 20, 2011, the Court approved a third stipulation to continue the hearing on the order to show cause to January 30, 2012, and renewed the temporary restraining order pending further order of the Court. On January 27, 2012, the Court vacated the January 30, 2012 hearing date and took the matter under submission.

III. LEGAL STANDARD

Federal Rule of Civil Procedure 65(a) governs requests for preliminary injunctions. "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." Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). "A preliminary injunction is an extraordinary remedy never awarded as of right. In each case, courts 'must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.' 'In exercising their sound discretion, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction.' " Id. at 24 (internal citations omitted). The Ninth Circuit has adopted a sliding scale approach to preliminary injunctions in which an injunction may issue "where the likelihood of success is such that 'serious ...


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