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Gurvinder Ghuman; Parminder Ghuman v. Wells Fargo Bank

June 15, 2012

GURVINDER GHUMAN; PARMINDER GHUMAN,
PLAINTIFFS,
v.
WELLS FARGO BANK, N.A. DBA AMERICA'S SERVICING COMPANY; AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



ORDER RE: MOTION FOR PRELIMINARY INJUNCTION (Doc. 7)

I. INTRODUCTION

Plaintiffs Gurvinder Ghuman and Parminder Ghuman (hereinafter referred to as "Plaintiffs") have filed a motion for preliminary injunction enjoining defendant Wells Fargo Bank, N.A. dba America's Servicing Company from conducting a foreclosure sale of real property located at 1644 East El Paso, Fresno, California 93720. For reasons discussed below, the motion shall be denied.

II. FACTS AND PROCEDURAL BACKGROUND

On June 1, 2012, Plaintiffs filed their complaint against defendants Wells Fargo Bank, N.A. dba America's Servicing Company ("Wells Fargo") and Does 1 through 100, inclusive, asserting causes of action for (1) declaratory relief, (2) contractual breach of the implied covenant of good faith and fair dealing, (3) violation of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., (4) violation of the Real Estate Settlement Procedures Act, 1 U.S.C. §§ 2601 et seq., (5) rescission, (6) fraud, (7) "Unfair and Deceptive Business Act Practices," (8) breach of fiduciary duty and (9) "unconscionability -- UCC-2-3202." On June 7, 2012, Plaintiffs filed an ex parte motion for a temporary restraining order and preliminary injunction enjoining Wells Fargo and its agents, servants and employees from conducting a foreclosure sale of real property located at 1644 East El Paso, Fresno, CA 93720.

In an order issued June 8, 2012, the Court denied Plaintiffs' motion for a temporary restraining order inasmuch as Plaintiffs sought to proceed on an ex parte basis, but set an expedited briefing schedule and hearing on Plaintiffs' motion for preliminary injunction. Ghuman v. Wells Fargo Bank, N.A., slip copy, 2012 WL 2090320 (E.D.Cal. June 8, 2012).

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 questions going to the merits were raised and the balance of hardships tips sharply in [plaintiff's] favor.' " Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citing Clear Channel Outdoor, Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 2000)).

IV. DISCUSSION

Having reviewed the pleadings of record and all competent and admissible evidence submitted, the Court finds Plaintiffs have failed to establish a likelihood of success on the merits. Plaintiffs first contend a preliminary injunction should issue because Mortgage Electronic Registration Systems, Inc. (MERS), the beneficiary of the deed of trust securing the East El Paso property, lacked authority to make an assignment of the deed to Deutsche Bank. As to this claim, Plaintiffs allege as follows:

"On August 29, 2005, Plaintiffs signed a negotiable promissory note (the 'Note'), in the amount of $407,600.00, loan number #1127078466, in favor of Secured Bankers Mortgage Co. ('Lender') . . . . [¶] On the same day, to secure the Note, Plaintiffs signed a Deed of Trust (the 'Deed of Trust'), which conveyed a security interest in the Property to Lender. The Deed of Trust was recorded on September 2, 2005 as Instrument No. 2005-0206533 of Official Records in the Office of the Recorder of Fresno County, California. The Deed of Trust named Mortgage Electronic Registration Systems, Inc. ('MERS') as the beneficiary under the Deed of Trust, acting solely as 'nominee' for Lender and Lender's successors and assigns." Plaintiffs further allege:

"On or about November 30, 2005, Lender sold and transferred its interest in the Plaintiffs' Note (but not Lender's interest in and to the Deed of Trust) to the $369,641,876 Morgan Stanley Mortgage Loan Trust 2005-10, a New York mortgage backed securities trust (the 'Morgan Stanley Trust'), which was registered with the Securities and Exchange Commission ('SEC') . . . . [¶] . . . [¶] On or about December 7, 2007, . . . Lender ceased conducting business. At the time Lender ceased operations, the Note had been transferred . . . to the Morgan Stanley Trust, but the Deed of Trust was never transferred."

Plaintiffs further allege that on May 27, 2009, MERS purported to assign the deed of trust to Deutsche Bank and recorded said assignment as instrument #20090071467 in the official records of the Fresno County Recorder.*fn1 Plaintiffs now contend a beneficiary under a deed of trust must have an interest in the underlying promissory note to assign the deed, and that because Secured Bankers Mortgage Co. (Secured Bankers) (1) sold Plaintiffs' note to the Morgan Stanley Trust and (2) no longer does business, MERS could not have assigned the deed to Deutsche Bank. From this, Plaintiffs assert subsequent assignments of the deed would necessarily have been wrongful such that Wells Fargo, the current mortgagee, cannot foreclose on Plaintiffs' property. Plaintiffs have provided no authority -- and the Court's research reveals no authority -- to support this proposition.

First, "since the assignment of the debt (the promissory note), as opposed to the security (the [deed of trust]), commonly is not recorded, the lender could have assigned the note to the beneficiary in an unrecorded document not disclosed to plaintiffs." Herrera v. Federal National Mortgage Association, 205 Cal.App.4th 1495, 141 Cal.Rtpr.3d 326, 334 (2012) (citing Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 272, 129 Cal.Rptr.3d 467 (2011)). Second, while Plaintiffs contend Secured Bankers "ceased conducting business," no competent evidence of this has been provided. Plaintiffs have also provided no argument or evidence to explain how the situation might have affected Secured Bankers's ability to transfer the loan. Third, notwithstanding a similar absence of evidence in the record to show Secured Bankers's interest in the promissory note was in fact sold and transferred to the Morgan Stanley Trust, the deed of trust expressly provided as follows:

"The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS. This Security Instrument secures to Lender (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower ...


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