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U.S. Bank National Association, A National v. Sandy K. Friedrichs

November 9, 2012

U.S. BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION, AS SUCCESSOR-IN-INTEREST TO THE FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER
FOR PARK NATIONAL BANK,
PLAINTIFF,
v.
SANDY K. FRIEDRICHS, AN INDIVIDUAL; AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Gonzalo P. CURIELUnited States District Judge

[Doc. No. 3.]

ORDER GRANTING DEFENDANT'S MOTION FOR PRELIMINARY INJUNCTION;

SETTING BRIEFING SCHEDULE

On October 15, 2012, Defendant filed an ex parte motion for temporary restraining order and preliminary injunction seeking to restrain Plaintiff from foreclosing Defendant's property located at 1340 La Mirada Drive, San Marcos, California 92078. (Dkt. No. 3.) On October 18, 2012, the Court denied Defendant's ex parte motion for a temporary restraining order because the Court concluded that Defendant had not shown irreparable harm since Plaintiff had moved the sale of the property to November 15, 2012. (Dkt. No. 6.) The Court set a briefing schedule as to the motion for preliminary injunction. Defendant filed a supplemental brief on October 29, 2012. (Dkt. No. 15.) Plaintiff filed a reply on October 31, 2012. (Dkt. No. 16.) On November 9, 2012, the Court held a hearing on the motion for preliminary injunction. Brian Tanada appeared on behalf of Plaintiff and Sandy Zappia and non-party Albert Zappia appeared pro se. Based on the reasoning below, the Court GRANTS Defendant's motion for preliminary injunction.

Procedural Background

On July 13, 2012, Plaintiff U.S. Bank National Association ("U.S. Bank"), as successor to the Federal Deposit Insurance Corporation ("FDIC"), as Receiver for Park National Bank ("Park National") filed a complaint in the Superior Court of San Diego against Defendant Sandy Friedrichs for appointment of receiver and judicial foreclosure. On September 28, 2012, Defendant Sandy Zappia and non-party Albert Zappia, Defendant's husband, proceeding pro se, removed the case to this Court. (Dkt. No. 1.) On October 12, 2012, the case was transferred to the undersigned judge. (Dkt. No. 2.) On October 15, 2012, Defendant filed an ex parte motion for temporary restraining order and preliminary injunction seeking to restrain Plaintiff from foreclosing Defendant's business property located at 1340 La Mirada Drive, San Marcos, California 92078. (Dkt. No. 3.) On October 18, 2012, the Court denied Defendant's ex parte motion for a temporary restraining order because the Court concluded that Defendant had not shown irreparable harm since Plaintiff had moved the sale of the property to November 15, 2012. (Dkt. No. 6.) The Court set a briefing schedule as the motion for preliminary injunction. Defendant filed a supplemental brief on October 29, 2012. (Dkt. No. 15.) Plaintiff filed an opposition on October 31, 2012. (Dkt. No. 16.) Defendant filed a reply on November 1, 2012. (Dkt. No. 28.)

Factual Background

Around April 9, 2007, GreenPoint Mortgage Funding lent Defendant, on a recourse basis, the principal sum of $340,000, secured by the property located at 1340 La Mirada Drive, San Marcos, CA 92078. (Dkt. No. 5-1, Ocepek Decl. ¶¶ 5-6; Ex. 1.) The loan was memorialized in a written Promissory Note. (Id.) On April 18, 2007, GreenPoint recorded a "Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing" ("Deed of Trust") with the San Diego County Recorder's Office. (Id. ¶ 7; Ex. 2.) Defendant executed the Deed of Trust as trustor, to GreenPoint, as beneficiary, and to Marin Conveyancing Corp., as trustee. (Id.) According to the title policy issued in connection with the Loan, the Deed of Trust constitutes a first priority lien on the Property. (Id. ¶ 7; Ex. 2.)

On August 1, 2008, Park National recorded an "Assignment of Deed of Trust" whereby GreenPoint assigned all of its right, title, and interest in, to and under the Note, Deed of Trust and Assignment to Park National. (Id. ¶ 9; Ex. 3.) The loan assignment was notarized on April 25, 2007 but executed by Patrick Nygard, Assistant VP of GreenPoint, on February 29, 2008.

On October 30, 2009, the FDIC placed Park National into receivership and assigned the assets of Park National, including the Loan, to U.S. Bank. (Id. ¶ 10; Ex. 4.) The Note was assigned from GreenPoint to Park National by way of an Endorsement on the last page of the Note. (Id. ¶ 6 ; Ex. 1.) When the FDIC closed Park National, the Note was assigned by the FDIC as Receiver for Park National to U.S. Bank by way of an Allonge to Note. (Id.) As a result of the Endorsement and Allonge, U.S. Bank is the current holder of the Note.

In late March 2012, non-party Albert Zappia submitted a check in the amount of $287,734.26 to U.S. Bank as an attempted payoff for the Loan. (Id. ¶ 12; Dkt. No. 1-2 at 55.) The check bore the notation "EFT Only for Discharge of Debt." (Dkt. No. 1-2 at 55.) The check was returned because it was written on a closed account. (Dkt. No. 5-1, Ocepek Decl., Ex. 5.)

A U.S. Bank statement dated April 16, 2012 indicated that the amount due was $0.00. (Dkt. No. 1-2 at 57.) In subsequent correspondence, outside counsel for U.S. Bank informed Defendant about the insufficient funds and that the loan was in default. (Dkt. No. 1-2 at 59.) Starting in April and May 2012, Defendant failed to make her monthly loan payment. (Dkt. No. 501, Ocepek Decl. ¶ 13.) Defendant's failure to pay the Loan is a default on the obligations for which the Deed of Trust is security. (Id.)

Around June 22, 2012, U.S. Bank recorded a Substitution of Trustee, wherein Beacon Default Management, Inc. became the successor trustee under the Deed of Trust. (Id. ¶ 14; Ex. 6.) U.S. Bank started non-judicial foreclosure proceedings by recording a notice of default and election to sell around June 22, 2012. (Id. ¶ 15; Ex. 7.) Around September 12, 2012, U.S. Bank noticed a trustee's sale on the property ...


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