United States District Court, N.D. California, San Francisco Division
PENNY L. PATINO, Plaintiff,
ZFRANKLIN CREDIT MANAGEMENT CORPORATION, et al., Defendants.
ORDER GRANTING THE PLAINTIFF'S TEMPORARY
RESTRAINING ORDER RE: ECF NOS. 67, 69, 70
BEELER United States Magistrate Judge.
mortgage-foreclosure case, the defendants are moving forward
with a trustee's sale of Ms. Patino's home. The court
assumes familiarity with the case's facts and
incorporates by reference its order on the defendants'
most recent motion to dismiss. To summarize, though, Ms. Patino
- whose history of mental and physical abuse and cognitive
abilities rendered her unable to understand the significance
of her financial decisions - obtained a $155, 571.67
home-equity credit line. She alleges that, although suffering
from a mental disorder, she properly rescinded the loan under
the Truth in Lending Act (“TILA”). But her lender,
Cal State 9 Credit Union, refused to accept her rescission
and returned her check (for the full loan balance) with an
“X” and the word “void” written on
Ms. Patino's “post[-]traumatic stress disorder
prevented [her] from fully understanding this sequence of
events, and from fully understanding that no rescission had
taken place.” And because the loan was never cancelled,
Ms. Patino “was compelled to continue to make her line
of equity payments, which payments included principal and
interest.” Ms. Patino thus seeks relief under TILA
and asserts additional claims for wrongful foreclosure,
unfair business practices, breach of contract, intentional
and negligent infliction of emotional distress, and quiet
title. She seeks damages, and declaratory and injunctive
after moving the trustee's sale multiple times, the
defendants are proceeding with the sale of Ms. Patino's
home. Ms. Patino seeks a temporary restraining order
(“TRO”). The court ordered the defendants to
respond (they did),  and the court held a hearing on the
matter. For the reasons stated on the record at the hearing,
and as described below, the court grants Ms. Patino's
temporary restraining order preserves the status quo and
prevents irreparable harm until a hearing can be held on a
preliminary injunction application. See Granny Goose
Foods, Inc. v. Brotherhood of Teamsters & Auto Truck
Drivers, 415 U.S. 423, 439 (1974). A temporary
restraining order is an “extraordinary remedy”
that the court should award only when a plaintiff makes a
clear showing that it is entitled to such relief. See
Winter v. Natural Res. Defense Council, Inc., 555 U.S.
7, 22 (2008). A temporary restraining order may be issued
without providing the opposing party an opportunity to be
heard only if “specific facts in an affidavit or a
verified complaint clearly show that immediate and
irreparable injury, loss, or damage will result to the movant
before the adverse party can be heard in opposition.”
standards for a temporary restraining order and a preliminary
injunction are the same. See Stuhlbarg Int'l Sales
Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d
832, 839 n.7 (9th Cir. 2001). A movant must demonstrate (1) a
likelihood of success on the merits, (2) a likelihood of
irreparable harm that would result if an injunction were not
issued, (3) the balance of equities tips in favor of the
plaintiff, and (4) an injunction is in the public interest.
See Winter, 555 U.S. at 20. The irreparable
injury must be both likely and immediate. See Id. at
22-23. “[A] plaintiff must demonstrate immediate
threatened injury as a prerequisite to preliminary injunctive
relief.” Caribbean Marine Servs. Co., Inc. v.
Baldrige, 844 F.2d 668, 674 (9th Cir. 1988).
Winter, the Ninth Circuit employed a “sliding
scale” test that allowed a plaintiff to prove either
“(1) a likelihood of success on the merits and the
possibility of irreparable injury; or (2) [ ] serious
questions going to the merits were raised and the balance of
hardships tips sharply in its favor.” See Walczak
v. EPL Prolong, Inc., 198 F.3d 725, 731 (9th Cir. 1999).
In this continuum, “the greater the relative hardship
to [a movant], the less probability of success must be
shown.” Id. After Winter, the Ninth
Circuit held that although the Supreme Court invalidated the
sliding scale approach, the “serious questions”
prong of the sliding scale survived so long as the movant
satisfied the other elements for preliminary relief.
Alliance for Wild Rockies v. Cottrell, 632 F.3d
1127, 1131-32 (9th Cir. 2011). Thus, a preliminary injunction
may be appropriate when a movant raises “serious
questions going to the merits” and the “balance
of hardships tips sharply in the plaintiff's favor,
” provided that the other elements for relief also are
satisfied. Id. at 1132, 1135.
A Temporary Restraining Order is Appropriate to Preserve the
the facts alleged in the Second Amended Complaint
(“SAC”) raise (at least) serious questions going
to the merits of Ms. Patino's claims. The defendants
argue the opposite because, they say: (1) Ms. Patino signed
an interest-reduction agreement that affirmed the loan
(defeating her rescission claim) and waived her right to TILA
set off and recoupment; (2) she should be judicially estopped
from making her claims because she did not disclose them in
her prior bankruptcy filings; and (3) she has unclean hands
because she has not made loan payments since November 2008,
owes $93, 909.25 in interest, and did not fully cooperate in
earlier ADR processes.
stage of the case, the court denies the defendants'
arguments. Ms. Patino argues that the interest-reduction
agreement is unenforceable. For example, she argues that the
agreement is unconscionable, there was no intentional waiver,
the terms are ambiguous, and she did not have the capacity to
enter into the agreement. In light of the allegations in the
SAC, these arguments are potentially meritorious.
court also will not now judicially estop Ms. Patino from
asserting her claims. Morris v. California, 966 F.2d
448, 453 (9th Cir.1991) (“[J]udicial estoppel is an
equitable doctrine invoked by a court at its
discretion.”) (internal quotations omitted). Judicial
estoppel is an equitable doctrine that prevents a party from
benefitting by taking one position but then later seeking to
benefit by taking a clearly inconsistent position.
Hamilton v. State Farm Fire & Cas. Ins. Co., 270
F.3d 778, 782 (9th Cir. 2001). It is intended to protect the
integrity of the judicial process by preventing a litigant
from “playing fast and loose with the courts.”
Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir.
1990). Courts consider several factors to determine whether
to invoke judicial estoppel, including: (1) “a
party's later position must be ‘clearly
inconsistent' with its earlier position”; (2) the
party must have “succeeded in persuading a court to
accept that party's earlier position”; and (3)
“the party seeking to assert an inconsistent position
would derive an unfair advantage or impose an unfair
detriment on the opposing party if not estopped.”
Hamilton v. State Farm Fire & Cas. Ins. Co., 270
F.3d 778, 782-83 (9th Cir. 2001) (citing New Hampshire v.
Maine, 532 U.S. 742, 750-51 (2001)) (internal quotations
omitted). On balance, these factors do not weigh in favor of
judicially estopping Ms. Patino from asserting her claims, at
least not at this stage of the case. This is especially true
in light of her mental capacity and the absence of indicia of
bad-faith, fast-and-loose conduct.
similar reasons - particularly the absence of bad faith - the
court will not now hold that Ms. ...