Greene v. U.S. Bank, N.A.

          ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION

          RICHARD SEEBORG UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiff John Greene brings this action against defendants U.S. Bank, National Association, as Legal Title Trustee for Truman 2016 SC6 Title Trust (“U.S. Bank”), Fay Servicing, LLC (“Fay”), and NBS Default Services, LLC (“NBS”) (collectively, “defendants”). Greene alleges that, for a variety of reasons, defendants were not legally entitled to foreclose upon his home. His prior request for a Temporary Restraining Order (“TRO”) was denied. He now moves for a preliminary injunction to prevent defendants from taking any further action pursuant to the foreclosure sale. Pursuant to Civil Local Rule 7-1(b), the motion is suitable for disposition without oral argument, and the hearing set for December 12, 2019 is vacated. For the reasons set forth below, the motion is denied.

         II. BACKGROUND

         In November 2005, Greene borrowed $599, 000 from World Savings Bank, secured by a deed of trust recorded against his Pittsburg, California home.^[1] In the following years, World Savings Bank changed its name to Wachovia Mortgage, and Wachovia Mortgage was converted to Wells Fargo Bank. In September 2013, Wells Fargo, via NBS, recorded a notice of default against the property. In the next five years, foreclosure was delayed as Greene filed for bankruptcy three times. Each of his bankruptcies was dismissed. When a relief from the automatic stay in Greene's third bankruptcy was granted, a notice of trustee's sale was recorded against Greene's home on September 20, 2018. The deed of trust was assigned from Wells Fargo to U.S. Bank on November 28, 2018.

         In 2019, Greene filed for bankruptcy two more times. Both filings were eventually dismissed, the latter on September 18, 2019. Meanwhile, the foreclosure sale of Greene's home by U.S. Bank, via Fay, occurred on August 5, 2019, and a deed of sale was recorded on August 8, 2019. An eviction trial is scheduled to begin imminently in Contra Costa County Superior Court.^[2]Greene filed the present action on November 12, 2019, moving for a TRO and/or a preliminary injunction to enjoin defendants “from taking action having legal effect based on the deed of trust, notice of default, notice of trustee's sale, and trustee's deed...including conducting a sale, rescheduling a new sale date, transfer of title, recordation of any liens, proceeding with an unlawful detainer action…or any other action based on a right arising out of the subject loan and deed of trust.” The crux of his complaint is that defendants did not have authority to conduct the foreclosure sale, because Greene was not provided adequate notice of the transfers in interests between the various banks and loan servicers. His application for a TRO was denied, but the parties were instructed that Greene's motion for a preliminary injunction would be considered after the defendants responded.^[3]

         III. LEGAL STANDARD

         A court may issue a preliminary injunction to preserve the status quo pending trial. L.A. Mem'l Coliseum Comm'n. v. Nat'l Football League, 634 F.2d 1197, 1200 (9th Cir. 1980). Nonetheless, “[a] preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). “A plaintiff seeking a preliminary injunction must establish (1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.” Winter, 555 U.S. at 20; Am. Trucking Ass'n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009). Alternatively, “‘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.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1132 (9th Cir. 2011) (interpreting Winter and explaining that the “sliding scale” test for preliminary injunctive relief remains valid). “Serious questions are ‘substantial, difficult and doubtful, as to make them a fair ground for litigation and thus for more deliberative investigation.'” Repub. of the Phil. v. Marcos, 862 F.2d 1355, 1362 (9th Cir. 1988) (citations omitted).

         IV. DISCUSSION

         A. Likelihood of Success on the Merits

         Greene has not shown a likelihood of success on the merits because, as defendants rightly point out, his action is likely barred by res judicata. Greene has initiated two prior actions related to the present action, one in federal court, Greene v. Wells Fargo Bank, No. 18-cv-06689 (“First Action”), ^[4] and another in state court, Greene v. Fay Servicing, No. MSC19-00177 (“Second Action”). Both were dismissed with prejudice before the present case was filed.

         Federal courts must give full faith and credit to state court judgments under 28 U.S.C. § 1738 and Article IV section 1 of the U.S. Constitution. Res judicata, or claim preclusion, prohibits lawsuits on “any claims that were raised or could have been raised” in a prior action. Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001) (quoting W. Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997) (emphasis added)). To determine whether a state court judgment bars a federal action, a federal court must apply the res judicata law of the state in which the judgment was entered. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984). Under California law, res judicata bars claims “only if (1) the decision in the prior proceeding is final and on the merits; (2) the present action is on the same cause of action as the prior proceeding; and (3) the parties in the present action or parties in privity with them were parties to the prior proceeding.” Zevnik v. Superior Court, 159 Cal.App.4th 888, 896 (2008).

         Here, viewing the Second Action as the prior proceeding, all three elements are likely satisfied with respect to Greene's claims. First, the prior proceeding ended in a final judgment on the merits. A dismissal with prejudice is a final judgment on the merits under California law. See Boeken v. Philip Morris USA, Inc., 230 P.3d 342, 345 (Cal. 2010). The Second Action was dismissed with prejudice with respect to defendants U.S. Bank and Fay on October 9, 2019. Thus, the prior proceeding ended in a final judgment on the merits.

         Second, the present action presents the same cause of action as the prior proceeding. Mycogen Corp. v. Monsanto Co., 28 Cal.4th 888, 897 (2002) (“[A]ll claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date.”). “To determine whether two proceedings involve identical causes of action for purposes of claim preclusion, California courts have consistently applied the ‘primary rights' theory.” Boeken, 230 P.3d at 348. “[U]nder the primary rights theory, the determinative factor is the ...