2018-00226338-CU-OR

Criselda Centeno vs. U.S. Bank National Association

Nature of Proceeding: Motion for Preliminary Injunction

Filed By: Artinian, Vartkes

The order to show cause is DISCHARGED, the temporary restraining order is DISSOLVED, and the motion for preliminary injunction is DENIED

The Court notes that it has received Plaintiffs’ objections to the declaration of Sherry Benight. There is no proof of service of the objections and the objections appear to be untimely. Nonetheless, the Court will consider the objections. The objections are

OVERRULED.

1. Overview

This is a non-judicial foreclosure, Homeowners’ Bill of Rights (“HBOR”) action. Plaintiffs Criselda Centeno and Anthony Bui (collectively “Plaintiffs”) obtained a first lien mortgage loan in August 2005. The lien was secured by a Deed of Trust on 250 Lyman Circle, Sacramento, CA 95835. In February 2012, due to hardship and loss of income, Plaintiffs submitted a completed Request for Mortgage Assistance (“RMA”) to Select Portfolio Serving, Inc. (“SPS”). (Complaint, ¶ 18.) Plaintiffs were given a written Trial Payment Plan (“TPP”) in June 2014. (Id., ¶ 26.) Plaintiffs allege that the TPP was “completely in opposition of what Defendants had advised Plaintiffs but to which Plaintiffs still fully performed.” (Id., ¶ 26.) Plaintiffs completed the three-month payments of $3,680.09 for July, August and September 2014. (Id., ¶ 29.) In October 2014, Plaintiffs faxed their income and requested to have a modification review. (Id., ¶ 30.) In January 2015, per Defendants’ instructions, Plaintiffs submitted the application with the RMA form revision. (Id. ¶ 31.) On November 16, 2015, a Notice of Default and Election to Sell (“NOD”) was recorded.

In March 2016, Plaintiffs received a demand letter for $60,221.69 to cure the default. (Id., ¶ 35.) Plaintiffs allege that in June 2016 they submitted a complete First Loan modification application to SPS. (Id., ¶ 36.) Plaintiffs allege that Defendants failed to issue a written determination as to the application. (Id., 37.) Notices of Trustee’s Sale were recorded on March 18, 2016, June 23, 2016, August 29, 2016, and January 12, 2018. (Id., ¶ 39.)

The complaint contains HBOR causes of action against Opposing Defendant U.S. National Bank Association (“Bank”) for violations of Civ. Code §§ 2923.5, 2924.11, 2923.7 and 2937. There are also causes of action for breach of contract, negligence, intentional/negligent infliction of emotional distress, and unfair business practices.

On 2/2/2018, the Court granted Plaintiffs’ ex parte application for TRO and OSC re:

preliminary injunction.

The Court notes that Plaintiffs filed a prior lawsuit against the same defendants in December 2016. (Centeno v. U.S. Bank National Association, Sacramento Superior Court, case no. 34-2016-00198396), for the same HBOR violations, breach of contract, negligence and unfair business practices (“First Action”). Plaintiffs dismissed the action on 11/22/2017. Plaintiffs failed to reference the First Action in their complaint or their ex parte application.

Bank proffers evidence that in the First Action, Plaintiffs admitted that they were offered and accepted a permanent loan modification in October 2014. (Declaration of Tiffany F. Ng (“Ng Decl.”), ¶ 4.) Plaintiffs also admitted that they immediately defaulted on the loan modification. (Id.) Although Plaintiffs defaulted on the loan modification, SPS fully evaluated a loan modification application submitted by Plaintiffs in April

2016. (Declaration of Sherry Benight (“Benight Decl.”), ¶ 6.) Plaintiffs did not qualify for loan mitigation assistance, and SPS mailed Plaintiffs a denial letter on May 31, 2016. (Id. Ex. D.) SPS, however, offered Plaintiffs another loan modification in August 2017, but Plaintiffs rejected the offer. (Id. ¶ 7, Ex. E.) SPS offered another loan modification in November 2017; Plaintiffs again rejected the offer. (Id. ¶ 7, Ex. F.)

While the First Action was pending, Bank’s counsel, Tiffany G. Ng, engaged in extensive discussions with Plaintiffs’ counsel regarding possible alternatives to foreclosure, including two mandatory settlement conferences. (Ng Decl., ¶ 5.)

Plaintiffs have failed to make the last 41 monthly mortgage payments. (Benight Decl. ¶ 9.) SPS has advanced more than $42,334.55 in escrow payments for taxes and insurance on the property. (Id. ¶ 10.) The amount currently required to reinstate the loan is $169,900.32. (Id. ¶ 11.) The amount currently required to pay off the loan in full is $993,466.54. (Id.)

2. Legal Standard

In deciding whether to enter a preliminary injunction, the court evaluates two interrelated factors: (1) the likelihood that the applicant will prevail on the merits at trial, and (2) the interim harm the applicant will likely suffer if preliminary relief is not granted, as compared to the likely harm the opposing party will suffer if the preliminary injunction issues. (See, e.g., Langford v. Superior Court (Gates) (1987) 43 Cal.3d 21, 28.) One of these two factors may be accorded greater weight than the other depending on the applicant’s showing. (See Commons Cause v. Bd. of Supervisors (1989) 49 Cal.3d 432, 447.)

3. Analysis

a. Civ. Code §2923.5 & Civ. Code § 2923.7

Civ. Code §2923.5 requires certain contacts be made with the borrower prior to a notice of default being recorded. Civ. Code §2923.7 requires a single point of contact.

Here, the NOD was recorded on November 16, 2015. Plaintiffs aver that no contacts were made prior to the recording of the NOD, and no single point of contact was

provided. (Declaration of Criselda Centano, ¶¶ 28-29.)

Bank counters that pursuant to Civ. Code §2924.12(a)(2), it corrected and remedied any alleged defects, thus, it cannot be held liable for these purported violations. (Civ. Code §§2924.12(a)(2) and 2924.12(c).)

The Court agrees with Bank that it corrected and remedied any alleged defects. Specifically, SPS fully evaluated a loan modification application submitted by Plaintiffs in April 2016 and mailed Plaintiffs a denial letter on May 31, 2016. (Benight Decl., ¶ 6 and Ex. D.) SPS offered Plaintiffs another loan modification in August 2017, but Plaintiffs rejected the offer. (Id. ¶ 7, Ex. E.) SPS offered another loan modification in November 2017; Plaintiffs again rejected the offer. (Id. ¶ 7, Ex. F.) Additionally, Bank’s counsel engaged in extensive discussions with Plaintiffs’ counsel regarding possible alternatives to foreclosure, including two mandatory settlement conferences. (Ng Decl., ¶ 5.)

The Court is not persuaded by Plaintiffs’ argument in reply that if Bank had contacted them prior to the recording of the NOD, they “would have been afforded the help earlier when default initially occurred, when their financial situation was

different.” (Reply, 4:12-16.) Plaintiffs fail to proffer evidence or allege in their complaint that their financial situation was different when the default initially occurred such that any pre-NOD contacts would have resulted in a different outcome. Additionally, the violation did not, as Plaintiffs suggest, “deprive them of the opportunity to obtain a loan modification.” (Reply, 4:15-17.) Plaintiffs were reviewed for and denied a loan modification in May 2016, and were offered another two loan modifications in 2017, which they rejected.

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to demonstrate a likelihood of prevailing on the merits on the Civ. Code §2923.5 & Civ. Code § 2923.7 causes of action.

b. Civ. Code §2937

Plaintiffs claim that Bank violated Civ. Code §2937 by failing to provide notice of transfer of servicing of the mortgage. Bank proffers evidence that SPS sent a letter to Plaintiffs in September 2008 informing them that SPS was taking over as their loan servicer. (Benight Decl., ¶ 3, Ex. A.)

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to demonstrate a likelihood of prevailing on the merits.

c. Civ. Code §2924.11

Plaintiffs allege that Bank violated Civ. Code §2924.11 by: (1) failing to make a written determination of their June 2016 loan modification application, and (2) failing to permanently modify their loan after the June 2014 TPP.

Bank has shown that it corrected and remedied the failure to make a written determination by offering Plaintiffs two loan modifications in August and November 2017. (Benight Decl., ¶ 7, Exs. E-F.) Bank also tenders evidence that it offered Plaintiffs a permanent loan modification, which Plaintiffs accepted in October 2014. (Ng Decl., ¶ 4.)

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to demonstrate a likelihood of prevailing on the merits.

d. Breach of Contract

Plaintiffs allege that Bank breached the TPP by “rescinding the TPP.” As noted above,

Bank proffers evidence that it offered Plaintiffs a permanent loan modification, which
Plaintiffs accepted in October 2014. (Ng Decl., ¶ 4.)

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to demonstrate a likelihood of prevailing on the merits.

e. Negligence, Intentional/Negligent Infliction of Emotional Distress, and Unfair Business Practices

These causes of action are all predicated upon Banks purported HBOR violations, which Plaintiffs fail to demonstrate a likelihood of prevailing on the merits. Consequently, for the purposes of this motion only, Plaintiffs also fail to demonstrate a likelihood of prevailing on the merits of these causes of action.

4. Balance of the Harms

The Court recognizes that Plaintiffs will suffer harm if they lose their home. Nonetheless, Bank has also suffered harm in that Plaintiffs failed to make the last 41 monthly mortgage payments. SPS has also advanced more than $42,334.55 in escrow payments for taxes and insurance on the property. The amount currently required to reinstate the loan is $169,900.32. The amount currently required to pay off the loan in full is $993,466.54. Thus, the balancing of harms is equal to both parties.

Given that Plaintiffs fail to show a likelihood of prevailing on the merits and that the balance of harms is equal to both parties, the motion for preliminary injunction is

DENIED.