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Minor v. Bank of New York Mellon

United States District Court, N.D. California

December 27, 2019

EVETTE MINOR, Plaintiff,
THE BANK OF NEW YORK MELLON, et al., Defendants.




         Plaintiff filed an ex parte application for a temporary restraining order and order to show cause regarding a preliminary injunction. For the reasons stated herein, plaintiff's application is Denied.


         Plaintiff borrowed $92, 000 in 2005 and has made no payments since 2008. Nevertheless, she seeks a TRO to stop the lender from foreclosing. He or she who seeks equity must do equity. There is no equity in having stiffed the bank for over ten years. The TRO is denied. The details now follow.

         In July 2005, plaintiff took out a $92, 000 home equity line of credit from Countrywide Home Loans, Inc., evidenced by a promissory note and secured by a deed of trust on real property located in Santa Rosa, California. Plaintiff took out this loan in order to make the down payment required to purchase the same Santa Rosa property.

         The loan was subject to a variable interest rate that tracked the Wall Street Journal prime rate, an economic indicator defined by the base rate on corporate loans posted by at least 70% of the ten largest United States banks. The rate on plaintiff's loan is calculated by adding a 3.95% margin on top of the prime rate. When the prime rate moves, plaintiff's rate follows. So it went for the first few years, starting at 9.95% and reaching 11.45% by November 2007.

         Plaintiff's payments on the loan came to a permanent stop in January 2008.

         By 2010, plaintiff filed a petition for Chapter 13 bankruptcy. The pleadings reveal little about this bankruptcy. The public docket of the bankruptcy, however, reveals that plaintiff twice attempted to set the loan aside during the proposed, 60-month bankruptcy repayment plan without incurring interest. In re Minor, No. 10-1-1883AJ13 (Bankr. N.D. Cal.) (Judge Alan Jaroslovsky), Dkt. Nos. 45, 54. Before a plan was confirmed, however, plaintiff chose dismissal over conversion to Chapter 7 liquidation. In re Minor, No. 10-1-1883AJ13, Dkt. No.56.

         Following the bankruptcy, plaintiff did not receive a loan statement until 2016 or 2017. She also made no payments. Eventually, defendant Specialized Loan Servicing, LLC, caught up and, by mid-2018, it took the first step towards foreclosure.

         Before Specialized got too far, however, plaintiff again filed for Chapter 13 bankruptcy. Plaintiff did not mention this ongoing bankruptcy in either her amended complaint or the TRO application. Plaintiff's Chapter 13 repayment plan was confirmed this time, but only after defendants were relieved from the automatic stay under Bankruptcy Rule 4001(a)(3) in December 2018. Bankruptcy Judge Dennis Montali expressly authorized defendants to enforce their rights in the Santa Rosa property. To that end, defendants recorded a notice of default and election to sell under the deed of trust in February 2019 (Dkt. No. 6, at 15-16). The notice stated that plaintiff was in breach for nonpayment of “the installment of principal and interest which became due on 2/20/2008, and all subsequent installments, together with late charges as set forth in the note and deed of trust, advances, assessments, fees, and/or trustee fees, if any” (Compl. Exh. G). The amount needed to cure the default and reinstate the loan was $78, 902.54 as of February 19, 2019 (ibid.).

         In the ensuing months, the parties negotiated a modification. Ultimately, plaintiff rejected the terms and defendants moved forward with foreclosure. Defendants recorded a notice of trustee's sale and scheduled it for November 25. The total amount due increased to $181, 006.66. Ten days before the scheduled sale, plaintiff filed this action in state court and obtained a TRO shortly thereafter. The complaint alleged seven causes of action, including three fraud claims, negligence, unfair competition under California Business and Professions Code Section 17200, unfair debt collection practices under California Civil Code Section 1788; and wrongful foreclosure. The state court scheduled a hearing on the preliminary injunction for December 18.

         On December 13, however, defendants removed asserting diversity jurisdiction. A week later, defendants moved to dismiss. On December 23, the day before Christmas Eve, plaintiff filed an amended complaint in federal court asserting eight claims. Plaintiff dropped the fraud claims, replaced them with contract claims, and added a claim for violation of the Federal Fair Debt Collection Practices Act. Both sides agree that the district court has removal jurisdiction.

         The amended complaint raised new allegations that defendants had miscalculated the interest charged on the loan, thus invalidating the foreclosure notices and precluding the impending trustee's sale. That is, after twelve years of nonpayment, two bankruptcy proceedings challenging the loan's collection, several failed requests to modify the loan obligations, nearly a year stalling defendants' effort to foreclose, the last month spent litigating this ...

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