United States District Court, N.D. California, San Jose Division
ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER
RE: DKT. NO. 46
H. KOH United States District Judge
Cesar Galindo (“Galindo”) and Maria Rivera
“Plaintiffs”), bring suit against Defendant BSI
Financial Services, Inc. (“BSI”) and Ocwen Loan
Servicing LLC (“Ocwen”) (collectively,
“Defendants”) for negligence, violation of
California Civil Code § 29236(c), and violation of
California's Unfair Competition Law (“UCL”).
Before the Court is Plaintiffs' motion for a temporary
restraining order (“TRO”), which seeks to enjoin
Defendants from foreclosing on Plaintiffs' home on July
19, 2017. See ECF No. 46 (“TRO Mot.”).
Defendants have opposed Plaintiffs' motion. ECF Nos. 52
& 53. For the following reasons, Plaintiffs' TRO
motion is DENIED.
September 26, 2006, Galindo borrowed $436, 000 from Bank of
America, N.A. (“BOA”), secured by a deed of trust
encumbering property located at 3146 Barletta Lane in San
Jose, CA (hereinafter, “the Property”). ECF No.
31 (First Amended Complaint, or “FAC”), ¶
14. Plaintiffs defaulted on the loan on March 1, 2009.
See ECF No. 53-2 (Notice of Default). A Notice of
Default and Election to Sell Under Deed of Trust was recorded
on March 2, 2011. Id.
September 11, 2012, Ocwen acquired from BOA the servicing
rights for Plaintiffs' loan. See ECF No. 53-3,
at ¶ 5. Plaintiffs “began applying for a [Home
Affordable Modification Program (“HAMP”)] loan
modification.” FAC ¶ 18. In 2015, “after
years of applications [for home loan modifications] that
resulted in bad faith denials, Plaintiffs' filed an
administrative complaint with Ocwen. Id. ¶ 15.
Ocwen informed Plaintiffs that Plaintiffs had been approved
for a Trial Period Plan (“TPP”) offer on
September 14, 2012, but Ocwen ultimately denied Plaintiffs a
loan modification on December 13, 2012 because Plaintiffs
failed to make the TPP payments. Id., Ex. 2.
Further, Ocwen had approved Plaintiffs “for a
Proprietary Modification” on December 14, 2014, but
Plaintiff failed to make the initial payments by the due
date, and accordingly, Ocwen denied Plaintiff a Proprietary
Modification on February 11, 2015. Id. Ocwen's
May 29, 2015 letter to Plaintiffs also informed Plaintiffs
that Ocwen received “[a] second HAMP request”
from Plaintiffs on April 8, 2015.” Id.
However, Ocwen again denied Plaintiffs a HAMP modification
“because the owner of the account either does not allow
principal reduction or does not participate in the
HAMP” program. Id.
2015, BSI acquired from Ocwen the servicing rights to
Plaintiffs' loan. See ECF No. 52-4 (“BSI
Decl.”), at ¶ 5; ECF No. 53-3 (“Ocwen
Decl.”), at ¶ 4. Thereafter, Plaintiffs sent a
loan modification request to BSI. See BSI Decl., at
¶ 5. On September 22, 2015, Galindo emailed documents to
Daniel McAteer (“McAteer”), senior loss
mitigation specialist for BSI. FAC ¶ 28. On September
23, 2015, McAteer replied to Galindo and told Galindo that
McAteer would forward the documents for review. Id.
September 28, 2015, BSI filed a Notice of Trustee's Sale
(hereinafter, “Notice of Sale”) with the Santa
Clara County Recorder's Office. Id. ¶ 32.
The Notice of Sale scheduled sale for October 30, 2015.
Plaintiff alleges that at the time that BSI recorded the
Notice of Sale on September 28, 2015, “[n]o decision
had been made on Plaintiffs' loan modification
application.” Id. ¶ 33.
January 4, 2017, Plaintiffs filed suit against BSI in this
Court. ECF No. 1. Plaintiffs alleged four causes of action
against BSI: (1) negligence; (2) breach of the implied
covenant of good faith and fair dealing; (3) violation of
California Civil Code Section 2923.6(c); and (4) violation of
January 26, 2017, BSI moved to dismiss all four causes of
action. See ECF No. 11. On February 2, 2017,
Plaintiffs opposed BSI's motion. ECF No. 14. On February
9, 2017, BSI filed a reply. ECF No. 15.
March 17, 2017, the Court granted BSI's motion to
dismiss. ECF No. 23. As relevant here, the Court held that
Plaintiffs failed to state a claim for negligence against BSI
because Plaintiffs based their negligence claim, in part, on
conduct that was committed by Ocwen, not BSI.
Id. at 10-11. For similar reasons, the Court held
that Plaintiffs could not state a claim for violation of the
implied covenant of good faith and fair dealing or the UCL
against BSI for Ocwen's conduct. The Court held that
Plaintiffs also failed to allege that BSI violated California
Civil Code § 2923.6(c) because Plaintiffs failed to
allege that their application was “complete”
within the meaning of the statute, and Plaintiffs had
attached an email to the Complaint from McAteer that showed
that McAteer considered Plaintiffs' application to be
incomplete. The Court granted Plaintiffs leave to amend the
complaint within thirty days, but stated that Plaintiffs
“may not add new causes of action or parties without
leave of the Court or stipulation of the parties pursuant to
Federal Rule of Civil Procedure 15.” Id. at
April 13, 2017, Plaintiffs filed a motion for leave to file a
FAC and requested leave of Court to add Ocwen as a defendant.
ECF No. 26. BSI did not oppose Plaintiffs' motion. ECF
No. 28. On May 26, 2017, the Court granted Plaintiffs'
motion for leave to file a FAC. ECF No. 30.
29, 2017, Plaintiffs filed a FAC, which added Ocwen as a
defendant and alleged that BSI violated California Civil Code
§ 2923.6(c) and that both Ocwen and BSI were negligent
and violated the UCL. ECF No. 31.
Court held a case management conference on June 14, 2017. ECF
No. 42. Because Plaintiffs indicated at the case management
conference that Plaintiffs may dismiss BSI, the Court ordered
Plaintiffs to file by July 5, 2017 either a stipulation of
dismissal as to BSI or a statement as to why Plaintiffs are
proceeding against BSI. Id.
5, 2017, Plaintiffs' counsel filed a declaration stating
that Plaintiffs intended to keep BSI as a defendant until
Plaintiffs could “add in the owner(s) of the
loan” to the lawsuit. ECF No. 45.
July 5, 2017, Plaintiffs filed a motion for TRO, which asked
the Court to enjoin Defendants from selling Plaintiffs home
at a trustee's sale that was scheduled to occur on July
19, 2017. ECF No. 46. Plaintiffs stated in their motion that
they had demonstrated a likelihood of success on the merits
as to their negligence and UCL claims against Ocwen.
Id. Plaintiffs' motion for TRO did not address
any of Plaintiffs' claims against BSI. In support of
their negligence and UCL claims against Ocwen, Plaintiffs
submitted a declaration that they learned on May 29, 2015
that Ocwen had offered Plaintiffs a HAMP loan modification on
September 14, 2012. See ECF No. 46-2, at ¶ 6.
However, Plaintiffs “never received notice-either
verbally or in writing-of Ocwen's offer.”
Id. ¶ 8. Plaintiffs state that they did not
learn of the misconduct until “May 29, 2015” and
Plaintiffs “then filed a complaint against various
defendants.” Id.¶ 10.
counsel also filed a declaration in support of
Plaintiffs' motion for TRO. Plaintiffs' counsel
stated that he had provided notice of Plaintiffs' TRO
motion to Defendants BSI and Ocwen by mail, email, and phone.
ECF No. 46-4, at ¶ 2.
5, 2017, the Court ordered Defendants Ocwen and BSI to file a
response to Plaintiffs' application ...