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

February 13, 2013

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. Curiel United States District Judge

ORDER DISSOLVING PRELIMINARY INJUNCTION

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 also set a briefing schedule as to the motion for preliminary injunction. (Id.) On November 9, 2012, the Court held a hearing on the motion for preliminary injunction. (Dkt. No. 31.) At the hearing, the Court granted Defendant's motion for preliminary injunction pending further briefing by the parties. (Dkt. No. 33.)

The Court finds the matter suitable for resolution without oral argument pursuant to Local Civil Rule 7.1(d)(1). Based on the reasoning below, the Court DISSOLVES the preliminary injunction issued on November 9, 2012. (Dkt. No. 33.)

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.) 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 6, 2012. (Dkt. No. 28.)

On November 9, 2012, the Court held a hearing on Defendant's motion for preliminary injunction. (Dkt. No. 31.) At the hearing, the Court granted Defendant's motion for preliminary injunction pending further briefing by the parties. (Dkt. No. 33.) Defendant was also required to post a $100,000 bond no later than November 15, 2012. (Id.) Defendant was also required to deposit with the Clerk of Court by the 15th day of each month the amount of $2,100.00.

On November 16, 2012, Plaintiff filed a supplemental brief. (Dkt. No. 35.) Around November 29, 2012, Defendant submitted a bond packet to the Court. (Dkt. No. 49.) On December 3, 2012, Plaintiff filed an objection to Defendant's bond packet. (Dkt. No. 47.) On the same day, Defendant filed a sur-reply in support of its motion for preliminary injunction. (Dkt. No. 51.) Subsequently, Plaintiff submitted another bond packet to include a missing title report.

Because the bond packet did not show that Defendant had sufficient collateral in the two properties Defendant sought to use to secure the bond, the Court set an order to show cause hearing why the preliminary injunction should not be dissolved. (Dkt. No. 54.) On December 11, 2012, Defendant filed a response to the OSC. (Dkt. No. 60.) On December 20, 2012, the Court held a hearing regarding sufficiency of the bond and a hearing on issues raised at the previous hearing on Defendant's motion for preliminary injunction. (Dkt. No. 71.) The Court granted Defendant's request to file documents entitled Request for Judicial Notice to demonstrate that the properties for the bond had sufficient equity. (Dkt. No. 72.) In addition, Plaintiff was directed to file supplemental documents on or before December 26, 2012. (Dkt. No. 71.) On December 26, 2012, Plaintiff filed a third supplemental declaration of Nicholas Ocepek. (Dkt. No. 75.). On January 3, 2013, Plaintiff filed an objection to Defendant's Request for Judicial Notice filed on December 20, 2012. (Dkt. No. 80.)

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 executed and notarized in April 2007 and became effective in February 2008, when the sale of the Loan to Park National was consummated. (Id.)

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 claims it 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.) The check bore the notation "EFT Only for Discharge of Debt." The check was returned because it was written on a closed account. (Id.; Ex. 5.)

Starting in April and May 2012, Defendant failed to make her monthly loan payment. (Id. ¶ 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 for October 18, 2012. (Id. ¶ 16.) The sale was been postponed until November 15, 2012. (Id. ¶ 17.)

Discussion

I

Preliminary Injunction To obtain a preliminary injunction, the moving party must show: (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm to the moving party in the absence of preliminary relief; (3) that the balance of equities tips in the moving party's favor; and (4) that an injunction is in ...


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