United States District Court, N.D. California
ORDER DENYING TEMPORARY RESTRAINING ORDER
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
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.
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.
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.
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
payments on the loan came to a permanent stop in January
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.
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.
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.).
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.
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.
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