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Rhoda Y. Solomon, An Individual v. Aurora Loan Services

October 3, 2012



Plaintiff Rhoda Y. Solomon initiated this action against defendant Aurora Loan Services, LLC, in connection with the foreclosure and sale of plaintiff's residence. Plaintiff now requests a preliminary injunction barring defendant from selling the residence to a third party and pursuing an unlawful detainer action against her in state court.

I. Relevant Facts and Procedural History Plaintiff held a mortgage with defendant,*fn1 but fell behind in payments beginning January 1, 2010. Plaintiff sent a letter to defendant explaining that she was suffering hardship due to loss of a job, and filed ff filed for three Home Affordable Modification Program ("HAMP") loan modifications. Two applications were denied, but the third application was neither granted nor denied. (Second Am. Compl. ("SAC") ¶¶ 8-24 (Docket No. 25).) Defendant filed a Substitution of Trustee naming Quality Loan Service Corporation ("Quality") as trustee under the Deed of Trust. (Id. ¶ 25, Ex. O.) Quality recorded a Notice of Default listing a past-due balance of $20,802.84. (Id. ¶ 27, Ex.

Q.) Quality then recorded a Notice of Trustee's Sale on June 10, 2011 that indicated a sale would be held on July 5, 2011. (Id. ¶ 28, Ex. R.)

Plaintiff alleges that she contacted defendant on June 15, 2011, just days after the Notice of Trustee's Sale, and spoke with "Rebecca." (Id. ¶ 29.) Plaintiff explained to Rebecca that plaintiff was wrongly denied her HAMP modifications and that she had recently become re-employed. (Id.) Rebecca replied that plaintiff had two options: 1) pay Aurora the entirety of her arrearage, or 2) obtain a loan workout under HAMP. (Id.) Plaintiff discussed the situation with her mother and brother, who were living with her at the time, and they decided that together they could pay back the arrearage. (Id.)

Calling back the next day, plaintiff alleges to have spoken with "Maytal." (Id.) Plaintiff asked to be transferred to Rebecca but Maytal informed plaintiff that she could only transfer calls to supervisors. (Id.) According to plaintiff, she explained to Maytal that she wanted to reinstate her loan so as to avoid foreclosure and that she was hoping defendant would reduce the principal balance on her home through a HAMP modification. (Id.) Maytal responded that plaintiff could reinstate her loan by paying the amount past due, but that the only way to reduce the principal would be to obtain a HAMP modification. (Id.) Plaintiff allegedly offered to pay the arrearage, as she had sufficient funds at the time to cover the accrued balance. (Id.) Maytal told her to wait until defendant informed her of the results of her HAMP application. (Id.) Maytal allegedly informed plaintiff that defendant filed a Notice of Sale "as a matter of course, but that [defendant] could not foreclose on plaintiff's property until and unless [defendant] reject[s] her application." (Id.)

Approximately two weeks later, on June 29, 2011, plaintiff claims to have sent defendant a letter in which she explained that she was experiencing financial hardship due, in part, to the loss of her job and disability. (Id. ¶ 31, Ex. S.) The letter requested a loan modification. (Id.) Plaintiff also submitted a fourth HAMP modification application. (Id.)

On August 11, 2011, defendant foreclosed on the residence, which was sold to defendant for $215,100. (Id. ¶ 32, Ex. T.) On or about October 3, 2011, defendant filed an ulawful detainer action against plaintiff in state court. (Id. ¶ 33, Ex. U.) The state court issued a temporary restraining order preventing defendant from selling the property for twenty-two days and set a preliminary injunction hearing for January 27, 2012. (Ex Parte Appl. for TRO Ex. A (Docket No. 32).) Two days before the preliminary injunction hearing, defendant removed the case to federal court. (Notice of Removal Ex. 1 (Docket No. 1).)

After removal, the court granted defendant's motion to dismiss plaintiff's Complaint and plaintiff subsequently filed a First Amended Complaint alleging nine claims against defendant. The court granted defendant's second motion to dismiss on all claims except plaintiff's claims for (1) promissory estoppel and

(2) to set aside the trustee's deed upon sale. (Order Re: Def.'s Mot. to Dismiss Pl.'s First Am. Compl. (Docket No. 23).)

Eight months after the case was removed to federal court, plaintiff requested an ex parte temporary restraining order ("TRO") one day before the unlawful detainer trial was set to commence in state court. She requested that the court prohibit sale of the property and enjoin the state court from proceeding with the unlawful detainer action. (Ex Parte Appl.) The court denied plaintiff's request for a TRO in its entirety. The court granted and scheduled a hearing on plaintiff's motion for a preliminary injunction. (Order Denying TRO (Docket No. 35).)

In state court, the unlawful detainer trial was continued until October 19, 2012. (Pl.'s Reply 3:4-5.) After submitting the request for a TRO, plaintiff allegedly filed for bankruptcy, though the details of that bankruptcy action have not been submitted to the court.*fn2

II. Abstention from Enjoining the Unlawful Detainer Action With respect to plaintiff's request that the court restrain defendant from proceeding with the unlawful detainer trial, Younger v. Harris, 401 U.S. 37 (1971), and the Anti-Injunction Act, 28 U.S.C. § 2283, counsel against such an injunction. "In Younger, the Supreme Court espouse[d] a strong federal policy against federal-court interference with pending state judicial proceedings." Columbia Basin Apartment Ass'n v. City of Pasco, 268 F.3d 791, 800 (9th Cir. 2001) (alteration in original) (internal quotation marks omitted). Younger abstention has been extended to civil cases and, "[a]bsent extraordinary circumstances, []abstention is required if the state proceedings are (1) ongoing, (2) implicate important state interests, and (3) provide the plaintiff an adequate opportunity to litigate federal claims." Id. "A number of courts have found Younger abstention appropriate when asked to restrain state unlawful detainer proceedings." Wadhwa v. Aurora Loan Servs., LLC, Civ. No. 2:11--1784 KJM KJN, 2011 WL 2681483, at *3 (E.D. Cal. July 8, 2011) (citing cases).

Plaintiff argues that Younger abstention is inappropriate here because plaintiff does not have an adequate opportunity to litigate promissory estoppel as an affirmative defense in the unlawful detainer trial. Plaintiff does not provide, nor can this court find, a case in which a federal court enjoined a state court unlawful detainer proceeding under the adequacy prong of Younger.

In addition to Younger abstention, the Anti-Injunction Act "forbids a federal court from enjoining or staying state court proceedings 'except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.'" Diaz v. Nat'l City Bank, Civ. No. 2:12-1393 MMA NLS, 2012 WL 2129916, at *2 (S.D. Cal. June 12, 2012) (quoting 28 U.S.C. ยง 2283). "The exceptions to the Anti--Injunction Act are narrowly construed and 'doubts as to the propriety of a federal injunction against a state court proceeding should be resolved in favor of permitting the state action to proceed.'" Id. (quoting ...

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