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Sophia F. Ludyjan-Woods v. American Mortgage Express Corp. Dba American

January 30, 2013


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


Plaintiff filed her complaint on December 4, 2012. As part of that complaint, she requested issuance of a temporary restraining order (TRO). The Court on December 5 denied the request, noting that it was not filed as a motion and did not address the standards for issuance of preliminary injunctive relief.

On January 30, Plaintiff electronically filed an ex parte application seeking a TRO or, alternatively, a preliminary injunction (the "Application"). The Application asks the Court to enjoin a foreclosure sale of Plaintiff's home, scheduled for the next morning, and not to require Plaintiff to post a bond.

Legal Standards

The Application goes through the analysis discussed in Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423, 438--39 (1974) and Winter v. Natural Res. Def. Council, Inc. 555 U.S. 7, 20--24 (2008). Although the Application does not discuss it, Plaintiff could also have relied on the formulation approved in Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011).

It is worth remembering that neither analysis governs the process of issuing or denying a TRO. The Court exercises its discretion to grant or deny a TRO in conjuntion with principles of equity. See Inland Steel v. United States, 306 U.S. 153 (1939); and Stanley v. Univ. of Southern Cal., 13 F.3d 1313 (9th Cir.1994). The Court also applies Fed. R. Civ. P. 65(b), which governs how and under what circumstances a TRO may be issued. Issuance of a TRO is an extraordinary remedy, and Plaintiff bears the burden of making a clear showing that it should issue. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997).

Under the standard the Application relies on, Plaintiff must show (1) a likelihood of success on the merits; (2) likelihood of irreparable injury if preliminary relief is not granted; (3) the balance of hardships tips in her favor; and (4) granting relief would be in the public interest. See Winter, 555 U.S. at 20--24. The Court examines all four on a flexible "continuum." Leiva--Perez v. Holder, 640 F.3d 962, 964--70 (9th Cir.2011). But, by the same token, Plaintiff must make a showing on all four prongs. See Alliance for Wild Rockies, 632 F.3d at 1135. Even though a stronger showing on one element can offset a weaker showing of another, Leiva-Perez, 640 F.3d at 964, all four must be shown in at least some degree.

Under the alternate formulation of Alliance for Wild Rockies, Plaintff would have to show (1) "serious questions going to the merits" and (2) the balance of hardships tips sharply towards her.

Likelihood of Success on the Merits

Plaintiff's position is that she is likely to prevail because Defendant American Mortgage Express took advantage of her when it gave her a subprime loan in October of 2005 to buy her house. She wants to modify the loan, and has tendered a settlement, but says Defendants have refused.

Plaintiff's federal claim is that Defendants failed to make disclosures required under TILA and RESPA. Her supplemental state claims are that lenders' representatives misled her into taking out a sub-prime loan "that was almost guaranteed to fail" (Application, 6:14--16); and also that Defendant Midland Mortgage has violated Cal. Civ. Code §§ 2923.5 et seq. by refusing to provide loan counseling, foreclosure alternatives, or mitigation options, and by arbitrarily denying her a loan modification.

The Application argues that even though the relevant statutes of limitations under TILA, RESPA, and state law have passed, she is entitled to equitable tolling "[b]ecause counsel for Plaintiff recently discovered the misrepresentations and other improper conduct of [lenders] in the origination of the Loan . . . ." (Application, 6:23--25.)

This argument for tolling fails. The availability of equitable tolling does not depend on the date a plaintiff actually discovers alleged fraud, but on the date when it could reasonably be discovered through investigation of sources open to her, had she exercised all due diligence. See Sarantapoulas v. Bank of America, N.A., 2012 WL 4761900, slip op. at *4 (N.D. Cal., Oct. 5, 2012) (citing Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1109 (1998); and Santa Maria v. Pacific Bell, 202 F.3d 1170, 1178 (9th Cir. 2000)). The argument here is that Plaintiff was presented with the terms of her loan in 2005 but didn't understand them. The disclosures and other information she says she didn't get could also have been discovered in 2005. See Hubbard v. Fid. Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996) (plaintiff was not entitled to equitable tolling of TILA claim, because nothing prevented her from examining her loan contract and the lender's disclosures in light of applicable legal requirements). It is very likely, then, that all of Plaintiff's claims are time-barred.

As for ยง 2923.5, it merely creates a procedural safeguard for borrowers by requiring mortgagees (or their agents) to contact mortgagors in order to explore options to prevent foreclosure; it does not require that mortgagors actually "provide loan counseling or foreclosure alternatives, [or] mitigation options" (Application, 6:18--20), nor does it create any right to a loan modification. See Mabry v. Superior Court, 185 Cal. App. 4th 208, 214 (Cal. App. 4 Dist., 2010). Plaintiff's allegations don't suggest ...

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