Case 8:11-cv-00571-CJC -MLG Document 28

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

MICHAEL M. CARNEY, Plaintiff, vs. BANK OF AMERICA CORPORATION, ET AL. Defendants.

Case No.: SACV 11-00571-CJC(MLGx)

ORDER GRANTING TEMPORARY STAY OF FORECLOSURE SALE AND ORDER TO SHOW CAUSE REGARDING A PRELIMINARY INJUNCTION

INTRODUCTION & BACKGROUND

Pro se Plaintiff Michael M. Carney brings this suit against Defendants Bank of America, N.A. (erroneously sued as Bank of America Corporation), BAC Home Loans Servicing, LP (erroneously sued as Countrywide Financial Corporation dba BAC Home Loans Servicing), Countrywide Home Loans, Inc., and ReconTrust Co., N.A. (ReconTrust) (collectively Defendants) and BondCorp Realty Services, Inc.
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(BondCorp), US Bank, N.A., and Mortgage Electronic Registration Systems, Inc. (MERS) arising from Defendants imminent foreclosure sale of Mr. Carneys home. Mr. Carney filed his suit in federal court on April 13, 2011 alleging claims related to his 2005 mortgage that is in default including violation of the Truth in Lending Act, violation of the Real Estate Settlement Procedures Act, and intentional misrepresentation.

On May 20, 2011, Defendants moved to dismiss Mr. Carneys Complaint under Federal Rule of Civil Procedure 12(b)(6). Mr. Carney did not submit an opposition to Defendants motion to dismiss, but on June 1, 2011 he filed an ex parte application for a temporary restraining order and order to show cause regarding a preliminary injunction to enjoin Defendants from conducting a trustees sale of his home. See Dkt. # 13. After considering Defendants Opposition and Mr. Carneys Reply, the Court denied Mr. Carneys ex parte application on June 7, 2011. See Dkt. # 17.

After Mr. Carney failed to oppose Defendants motion to dismiss, the Court granted that motion with leave to amend on June 17, 2011. See Dkt. # 18. On June 27, 2011, Mr. Carney timely filed his verified First Amended Complaint (FAC). See Dkt. # 20. On July 5, 2011, Mr. Carney filed his second ex parte application for a temporary restraining order and for an order to show cause why Defendants should not be preliminarily enjoined from conducting a trustees sale of his home. For the reasons explained below, a temporary stay of the foreclosure is necessary so a more expanded evidentiary record can be created to determine whether the purported trustee has the legal authority to conduct the foreclosure sale and whether the current beneficiary has approved of the foreclosure sale.1

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Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15.
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ANALYSIS

Mr. Carney has made a showing that ReconTrust might not be the proper trustee with legal authority to conduct the trustees sale scheduled for July 11, 2011. The issue is whether MERS properly substituted ReconTrust as trustee in place of First American Title Company prior to MERS assigning its beneficial interest in the deed of trust to US Bank, and whether US Bank has approved of the foreclosure sale. See FAC Ex. 9 (Corporation Assignment of Deed of Trust assigning MERS beneficial interest in the deed of trust to US Bank dated June 24, 2010 and recorded July 7, 2010); id. Ex. 6-2 (Substitution of Trustee listing MERS as the beneficiary and ReconTrust as the new trustee but not indicating the date of execution), id. Ex. 6-3 (Affidavit of Mailing for Substitution of Trustee by Code dated May 19, 2011); id. Ex. 6-1 (Notice of Trustees Sale listing ReconTrust as trustee and June 9, 2011 sale date); id. 72 (verified FAC alleging that no properly executed substitution of trustee was recorded prior to ReconTrust filing a Notice of Trustees Sale on October 29, 2010). Defendants have asserted in their opposition to Mr. Carneys ex parte application that MERS substituted ReconTrust as trustee in place of First American Title Company and this substitution was recorded, Oppn at 5, but they have not produced the records indicating that this substitution properly occurred during the time period that MERS was the beneficiary.

CONCLUSION

For the foregoing reasons, Defendant ReconTrust and each of its principals, agents, representatives, and assigns are hereby TEMPORARILY RESTRAINED AND ENJOINED from selling, scheduling to sell or transfer, attempting to sell or transfer, or causing to be sold or transferred, prior to the date of the order to show cause set forth below, the subject property, which is located at 241 Rochester Street in Costa Mesa, California 92627.
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ReconTrust is hereby ORDERED TO SHOW CAUSE why a preliminary injunction shall not issue. Any declarations, affidavits, points and authorities, or other submissions in opposition to the issuance of such a preliminary injunction shall be filed with the Court no later than July 14, 2011. Mr. Carney shall file any reply no later than July 18, 2011. The hearing on the order to show cause shall be on July 20, 2011 at 9:00 a.m. The briefing and hearing dates on the Courts order to show cause can be continued if ReconTrust consents to the temporary restraining order remaining in effect until the new date scheduled for the hearing. Indeed, the Court encourages the parties to meet and confer to attempt to reach an amicable resolution of this dispute.

Plaintiff shall immediately serve this order on Defendants.

DATED:

July 7, 2011 __________________________________ CORMAC J. CARNEY UNITED STATES DISTRICT JUDGE

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