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Lenn M. Haffeman, and Beverly A. Haffeman v. Foreclosure Sale Wells Fargo Bank

March 9, 2012

LENN M. HAFFEMAN, AND BEVERLY A. HAFFEMAN, PLAINTIFFS,
v.
FORECLOSURE SALE WELLS FARGO BANK, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Barry Ted Moskowitz, Chief Judge United States District Court

INJUNCTION AGAINST ORDER DENYING REQUEST FOR

On February 28, 2012, Plaintiffs Lenn M. Haffeman and Beverly A. Haffeman filed an ex parte application seeking a temporary restraining order enjoining a foreclosure sale of the property located at 7103 Via Del Charro, Rancho Santa Fe, CA 92067 (the "Property"), scheduled for March 12, 2012. For the reasons set forth herein, the Court DENIES Plaintiffs' ex parte application.

I. BACKGROUND

On or about July 25, 2006, Plaintiffs executed a deed of trust in favor of Defendant Wells Fargo (the "Deed of Trust"), encumbering the Property as security for a loan made by Wells Fargo to Plaintiffs in the amount of $2,625,000 (the "Loan"). The trustee named in the Deed of Trust is Fidelity National Insurance Company ("Fidelity"). The beneficiary under the Deed of Trust is Wells Fargo. Plaintiffs made all payments on the loan through approximately August 2010.

On August 18, 2011, a Notice of Default and Election to Sell Under Deed of Trust ("Notice of Default") was recorded against the Property. On November 22, 2011, Defendants caused to be recorded a Notice of Trustee's Sale ("Notice of Sale"), scheduling a non-judicial foreclosure sale of the Property for December 14, 2011.

On December 12, 2011, Plaintiffs filed a complaint in the Superior Court of California, San Diego County, alleging procedural defects in the foreclosure proceedings and seeking an injunction against the December 14, 2011 foreclosure sale. Specifically, Plaintiffs alleged that Defendants failed to comply with the procedural requirements of California Civil Code § 2923.5, and that Defendants failed to honor a provision in the Deed of Trust requiring them to provide Plaintiffs 30 days' notice prior to filing a Notice of Default.

On December 13, 2011, Judge Earl Maas granted Plaintiffs' unopposed request for a temporary restraining order, enjoining Defendants from proceeding with the scheduled foreclosure sale. (See Dkt. No. 6-3, Temporary Restraining Order dated Dec. 13, 2011.) In that same order, Judge Maas also scheduled a preliminary injunction hearing on February 10, 2012, required Plaintiffs to make mortgage payments in the amount of $7,500 per month for the TRO to remain in effect, and ordered that tax payment for the Property must remain current. (Id.)

On January 6, 2012, Defendants timely removed Plaintiffs' state court case pursuant to 28 U.S.C. § 1441(b). On February 28, 2012, Plaintiffs filed an ex parte application seeking a second TRO against the second scheduled foreclosure sale (now scheduled for March 12, 2012).

II. DISCUSSION

A plaintiff seeking a preliminary injunction or temporary restraining order must establish that (a) he is likely to succeed on the merits; (b) he is likely to suffer irreparable harm in the absence of preliminary relief; (c) the balance of equities tips in his favor; and (d) an injunction is in the public interest. Winter v. Natural Resources Defense Council, 555 U.S. 7, 20 (2008).

The Ninth Circuit has held that the "sliding scale" approach to preliminary injunctions survives Winter when applied as part of the four-element Winter test. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). In other words, "'serious questions going to the merits' and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest." Id. at 1135.

a. Likelihood of success on the merits

In support of their ex parte application, Plaintiffs argue (a) that Defendants violated the procedural requirements of California Civil Code ยง 2923.5 during the foreclosure proceedings; and (b) that the Notice of Default is invalid because its signor, Defendant First American Trustee Servicing Solutions, LLC, did not have lawful authority to record and sign it. The Court addresses these arguments, as well as Plaintiffs' claim in their complaint that Defendants breached the 30-day notice requirement in the Deed of Trust. The Court does ...


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