United States District Court, N.D. California, San Jose Division
ORDER DENYING MOTION FOR ORDER STOPPING TRUSTEE SALE
RE: DKT. NO. 69
HOWARD
R. LLOYD UNITED STATES MAGISTRATE JUDGE
Leonard
and Mary Ann Tyson sued U.S. Bank and T.D. Services for
alleged violations of state and federal law in connection
with the non-judicial foreclosure of real property in Santa
Cruz County, California.[1] The subject property is a duplex. This
court is told that Leonard Tyson lives in part of it as his
primary residence and rents out the other. Along with several
state law claims for relief, the Tysons asserted a Truth in
Lending Act (TILA) claim (15 U.S.C. § 1601, et
seq.) against U.S. Bank and a Fair Debt Collection
Practices Act (FDCPA) claim (15 U.S.C. § 1692) against
T.D. Services. After rounds of motions practice and amended
pleadings, this court granted defendants’ Fed.R.Civ.P.
12(b)(6) motions to dismiss the federal claims asserted in
the Tysons’ Second Amended Complaint (SAC). As for the
state law claims, the court declined to exercise jurisdiction
over them and dismissed those claims without
prejudice.[2] Judgment was entered accordingly. Leonard
Tyson appealed the matter.[3] The parties report that the appeal has
been fully briefed and remains pending.
U.S.
Bank has since discharged T.D. Services as the foreclosure
trustee and retained a different one that recorded a notice
of default several months ago. A notice of trustee sale
followed, and the sale has now been scheduled for August 17,
2016.
Pursuant
to Federal Rule of Appellate Procedure 8(a), [4] Tyson moves this
court for an order stopping the trustee sale pending the
resolution of his appeal. Tyson does not believe that any
sort of payment should be required as a condition of stopping
the foreclosure sale; however, at the motion hearing, his
attorney said that Tyson is willing to make monthly payments
to U.S. Bank’s counsel, in trust, in the amount of $4,
000.[5]
This
matter was briefed and heard on shortened time. U.S. Bank
opposes the motion. T.D. Services advises that, because it is
not involved with the scheduled sale, it takes no position on
Tyson’s motion. Upon consideration of the moving and
responding papers, as well as the arguments of counsel, this
court denies the motion.
LEGAL
STANDARD[6]
A stay
or injunction pending appeal “is not a matter of right,
even if irreparable injury might otherwise result.”
Nken v. Holder, 556 U.S. 418, 433 (2009). Rather,
such relief is “‘an exercise of judicial
discretion, ’ and ‘[t]he propriety of its issue
is dependent upon the circumstances of the particular
case.’” Id. (quoting Virginian Ry.
Co. v. United States, 272 U.S. 658, 672 (1952)). The
requesting party “bears the burden of showing that the
circumstances justify an exercise of that discretion.”
Id. at 433-34.
In
determining whether to grant a stay or injunction pending
appeal, the court conducts a balancing test that considers
four factors, similar to the standard for issuing a
preliminary injunction: (1) whether the applicant has made a
strong showing that he is likely to succeed on the merits;
(2) whether the applicant will be irreparably injured absent
relief; (3) whether the balance of equities tips in the
applicant’s favor; and (4) whether the requested relief
is in the public’s interest. Winter v. Natural
Resources Defense Council, Inc., 555 U.S. 7, 20 (2008);
Alliance for the Wild Rockies v. Cottrell, 632 F.3d
1127, 1131 (9th Cir. 2011). The first two factors are the
most critical. Nken, 556 U.S. at 434.
The
Ninth Circuit has held that the “serious
questions” version of the sliding scale approach to
deciding motions for preliminary injunction and motions for
stay survived the Supreme Court’s decision in
Winter. Alliance for the Wild Rockies, 632
F.3d at 1134. Thus, “‘serious questions going to
the merits’ and a hardship balance that tips sharply
toward the plaintiff can support issuance of an injunction,
assuming the other two elements of the Winter test
are also met.” Id. at 1132.
DISCUSSION
A.
Likelihood of Success on the Merits
Tyson
must make a “strong showing” that he is likely to
succeed on the merits. Nken, 418 U.S. at 434.
Although he is not required to show that it is more likely
than not that he will win on the merits of his appeal, the
mere possibility of success is not enough. Id.
Tyson
has not made a strong showing of success with respect to his
TILA claim against U.S. Bank. The present motion indicates
that the subject of his pending appeal concerns this
court’s ruling as to whether his TILA claim for
recoupment or set-off could be asserted affirmatively in this
lawsuit as a “defense” to claims pending in state
court. Relevant to the discussion here, this court concluded
that Tyson’s TILA claim was time-barred. Although he
was given an opportunity to do so, Tyson did not allege any
facts to support tolling. Instead, he maintained that the
limitations period did not apply because his TILA claim was
being asserted in this court as a defense against state court
unlawful detainer actions.
As
discussed in this court’s order of dismissal, TILA
provides that the limitations period does not apply where
violations are asserted “as a matter of defense by
recoupment or set-off” in “an action to collect
the debt . . . except as otherwise provided by State
law.” 15 U.S.C. § 1640(e). However, “Section
1640(e) of TILA makes recoupment available only as a
‘defense’ in an ‘action to collect a
debt.’” Ortiz v. Accredited Home Lenders,
Inc., 639 F.Supp.2d 1159, 1164 (S.D. Cal. 2009); see
also Molina v. OneWest Bank, 903 F.Supp.2d 1008, 1017
(D. Hawai’i 2012) (stating that recoupment under TILA
“is a defense, not an affirmative claim for
relief”); Tacheny v. M&I Marshall & Ilsley
Bank, No. 10-cv-2067 (PJS/JJK), 2011 WL 1657877 at *5
(D. Minn., Apr. 29, 2011) (concluding that the limitations
period applied where plaintiffs were not asserting recoupment
as a matter of defense in an action that the lenders filed
against them, but rather, asserted ...