Acevedo v. Loan Co. of San Diego

• Decision Date: 10 August 2020
• Docket Number: Case No. 20-cv-1263-BAS-MSB
• Parties: DIMAS ACEVEDO, Plaintiff, v. THE LOAN COMPANY OF SAN DIEGO, et al., Defendants.
• Court: U.S. District Court — Southern District of California

DIMAS ACEVEDO, Plaintiff,
v.
THE LOAN COMPANY OF SAN DIEGO, et al., Defendants.

Case No. 20-cv-1263-BAS-MSB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

August 10, 2020

ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER

[ECF No. 3]

On July 7, 2020, Plaintiff Dimas Acevedo filed an Ex Parte Motion for Temporary Restraining Order, requesting the Court enjoin a scheduled foreclosure. (ECF No. 3.) Defendant The Loan Company of San Diego filed an opposition to the Motion ("Opp'n," ECF No. 9) to which Plaintiff replied ("Reply," ECF No. 13). The Court held a telephonic oral argument on July 29, 2020. The Court then ordered supplemental briefing on one issue and temporarily postponed the foreclosure until further order. (ECF No. 18.) Both parties filed briefs. For the foregoing reasons, the Court DENIES the Motion and lifts the temporary postponement of the foreclosure.

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I. FACTUAL ALLEGATIONS

Plaintiff is the owner of two parcels of land located at 1351-1355 Imperial Beach Boulevard and 1361-1363 Imperial Beach Boulevard in Imperial Beach, California. ("Compl.," ECF No. 1, at ¶ 1, (hereinafter "parcel 1" and "parcel 2" respectively).) Plaintiff states he has lived in one of the units on parcel 2 since April 2015. ("Acevedo Supp. Decl.," ECF No. 22, ¶ 5.) In July 2017, Defendant The Loan Company of San Diego loaned Plaintiff $1,200,000 for him to buy both parcels. (Compl. ¶ 3.)¹ Both parcels secure the loan. (Id. ¶ 10.) Plaintiff alleges the loan "was fashioned in such a way that it was secured by both [parcels] in order to circumvent the requirements of" federal regulations. (Id. ¶ 12.) The loan covers all five homes on the properties. (Id. ¶ 36.)² Defendant Action Foreclosure Services, Inc. is the foreclosing trustee (id. ¶ 4) and set a foreclosure date for both properties for July 31, 2020. (Mot. at 2.) Plaintiff seeks an order:

To restrain and enjoin Defendants, its agents, assigns, employees, officers, attorneys, and representatives, and those in active concert or participation with them, pending trial of this action, from engaging in or performing any act to deprive or foreclose on Plaintiff of his residence in and possession of the real properties located at 1351-1355 Imperial Beach Boulevard, Imperial [Beach], California and 1361-1363 Imperial Beach Boulevard, Imperial Beach, California, including but not limited to instituting or maintaining eviction, or eviction enforcement proceedings on the property or from otherwise taking any steps whatsoever to deprive Plaintiff of their residence in and possession of the property or to impair or degrade the value of the Property.

(Id. at 7-8.) Defendant the Loan Company opposes the Motion, and Defendant Action Foreclosure Services, Inc. did not file a response. Although all of Plaintiff's

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causes of action are technically made against "all Defendants," Plaintiff does not once mention Action Foreclosure Services in the substance of his Complaint and makes it clear that the claims are centered around The Loan Company's actions. Thus, when the Court references "Defendant" throughout this Order, it is referencing The Loan Company.

II. LEGAL STANDARD

The standard for a temporary restraining order ("TRO") and preliminary injunction are "substantially identical." Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Am. Trucking Ass'ns Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter v. Nat. Res. Defense Council, Inc., 555 U.S. 7, 21 (2008)). A TRO's "underlying purpose [is to] preserv[e] the status quo and prevent[ ] irreparable harm" until a preliminary injunction can be held. Granny Goose Foods, Inc. v. Bhd. Of Teamsters & Auto Truck Drivers, 415 U.S. 423, 439 (1974).

III. ANALYSIS

A. Timing of the Ex Parte Motion

Plaintiff moves ex parte for a TRO, titling his motion an "emergency ex parte application." While the Court agrees that Plaintiff seeks an injunction before the scheduled foreclosure of July 31, 2020, it is less clear why Plaintiff did not request relief earlier and thus effectively made the situation an emergency.

Notices of default were recorded in August 2019 for both parcels. (Exhibits 4 and 5 to Lavinsky Decl., ECF No. 16.) Notices of Trustee's sale were recorded in January 2020 for both parcels. (Exhibits 6 and 7 to Lavinsky Decl.) The Trustee's sale was scheduled for February 19, 2020. (Lavinsky Decl. ¶ 16.) Plaintiff filed a bankruptcy petition, to which Defendant objected, and the Bankruptcy Court set a

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hearing for July 8, 2020. (Exhibit 12 to Coughlin Decl., ECF No. 9-2.) Plaintiff filed the present lawsuit on July 6, 2020. On July 17, 2020, the Bankruptcy Court dismissed the bankruptcy case. (Exhibit 11 to Coughlin Decl.)

Thus, Plaintiff has been on notice of the foreclosure for almost a year. Despite notice of the impending foreclosure sale, however, Plaintiff waited to file this suit challenging the sale until July 6, 2020, filed the TRO motion on July 7, 2020, and did not file the proof of service of said motion on Defendants until July 15, 2020.

A proper ex parte motion must "address . . . why the regular noticed motion procedures must be bypassed," i.e., "it must show why the moving party should be allowed to go to the head of the line in front of all other litigants and receive special treatment." Mission Power Eng'g Co. v. Cont'l Cas. Co., 883 F. Supp. 488, 492 (C.D. Cal. 1995). This requires the moving party to "show that the moving party's cause will be irreparably prejudiced if the underlying motion is heard according to regular noticed motion procedures" and "that the moving party is without fault in creating the crisis that requires ex parte relief, or that the crisis occurred as a result of excusable neglect." Id.; see also Hammett v. Sherman, No. 19-CV-605 JLS (LL), 2019 WL 8013763, at *1 (S.D. Cal. Sept. 23, 2019). Plaintiff does not explain the lengthy delay in filing the Motion after he learned of the foreclosure. Plaintiff's lack of diligence has forced his "emergency" onto the Court, compelling it to come to a decision in the few days before the scheduled foreclosure. The Court could deny the ex parte motion simply because Plaintiff has created the crisis; nevertheless, given the scheduled foreclosure and the parties' need for a decision, the Court will evaluate the present Motion.

B. Likelihood of Success on the Merits

Plaintiff argues he is likely to succeed on the merits of his claim that the loan violates various federal statutes and other state laws.³ The parties agree that the loan

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is secured by all properties on both parcels. (Lavinsky Decl. ¶ 4; Mot at 2.) The issue is the legality of the way Defendant structured the loan.

1. The Truth in Lending Act ("TILA") and Regulation Z

Plaintiff claims Defendant "never made any of the TILA-RESPA disclosure forms [sic] to Plaintiff." (Compl. ¶ 38.) He states he was never given a loan estimate or a closing disclosure. (Id. ¶¶ 40, 41.)

a. Plaintiff's Residence

The parties fiercely debate whether Plaintiff lives at one of the properties. In his Motion, Plaintiff states he has lived on parcel 2 since April 6, 2015, prior to purchasing it, and he continued to live there after buying it. (Mot. at 3.) Plaintiff and his attorney submit various documents that list parcel 2 as Plaintiff's address, for example: w-2 wage statements from 2016 to 2019 from Plaintiff's employer (Exhibit D to Aldana Decl., ECF No. 3-2)⁴ and driver's licenses for Plaintiff and his wife (Exhibits 1-4, 7 to Acevedo Decl., ECF No. 13-1). In his supplemental briefing, Plaintiff (for the first time) submitted a declaration under penalty of perjury declaring that he lives on parcel 2. (Acevedo Supp. Decl. ¶¶ 5, 20.)

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In response, Defendant points to the loan documents where Plaintiff listed his residence as a condo in Chula Vista. (Exhibits 2 and 3 to Lavinsky Decl. (deeds of trust listing Plaintiff's address as "[redacted] #13, Chula Vista, CA 91913-2408").) Plaintiff's Chula Vista address is also listed on other loan-related documents. (See Exhibit 13 and 14 to Lavinsky Decl. (disclosure statement of real estate loan and borrower contact information sheet).) The disclosure statement also provides that the loan of $1,200,000 is to be secured by deeds of trust on property located at 1351-1355 and 1361-1363 Imperial Beach Boulevard, "which is not expected to be used as Borrower's principal residence." (Exhibit 13 to Lavinsky Decl. at 1.) On that same document, Plaintiff initialed next to the statement: "I hereby warrant and represent the property securing the loan is held or will be held for investment purposes only; and is not now or intended to be my personal dwelling or on residential real property that includes or is intended to include my personal dwelling." (Id. at 2.) Plaintiff's tax returns also list the Chula Vista condo as his residence. (Exhibit 16 to Lavinsky Decl.) Plaintiff states he rented the Chula Vista condo so that his children could attend a nearby school. (Acevedo Supp. Decl. ¶ 28.)

But the Court need not make a determination as to whether Plaintiff lives at the property; the below analysis does not require a decision either way.

b. TILA and Regulation Z Analysis

TILA, 15 U.S.C. §§ 1601 et seq., and its implementing regulations, 12 C.F.R. §§ 226 et seq. ("Regulation Z"), require lenders to disclose certain information to borrowers as part of a loan transaction, including a "separate written itemization of the amount financed," the "finance charge," and the APR. See 12 C.F.R. §§ 226.18(c)-(d), 226.22. "Congress enacted TILA 'to assure a meaningful disclosure of credit terms so that the consumer will be...