Agraan v. Select Portfolio Servicing, Inc., 2:17-cv-02163

Background

Plaintiffs Pete and Alicia Agraan are facing a trustee sale of their home scheduled for December 6, 2017 and seek a TRO to halt the sale.
SPS offered a trial loan modification on June 22, 2017 which the Agraans did not accept due to insufficient income; they later claimed changed finances and submitted a new application on September 15, 2017.
On September 18, 2017 SPS sent a letter stating no loss mitigation options were available and that foreclosure would proceed; plaintiffs sent an appeal letter asserting changed circumstances and offering additional documentation.
SPS’s September 27, 2017 letters acknowledged receipt and said a response would be provided; plaintiffs assert they received no substantive follow-up and contend their September application remained pending.
Plaintiffs filed suit in state court and obtained a TRO; defendants removed to federal court, contending the state TRO expired under Rule 65(b), and a new trustee sale date was set.
The federal court granted the ex parte TRO, finding plaintiffs likely to suffer irreparable harm, raising serious questions on the merits of an HBOR dual-tracking claim, and setting an expedited preliminary-injunction schedule.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a TRO should enjoin the December 6 trustee sale	Agraan: sale should be enjoined because loss of home is irreparable and HBOR protections (no dual tracking) apply while a complete modification application/appeal is pending	SPS: state TRO expired after removal; SPS properly declined to consider serial modification requests and letters merely acknowledged receipt	TRO granted to preserve status quo pending preliminary-injunction hearing; no bond required
Whether SPS violated HBOR §2923.6 by dual tracking	Agraan: September 15 application and appeal documented a material change and remained pending, so SPS could not proceed with sale	SPS: had no obligation to consider repeated applications; post-appeal communications were merely acknowledgments	Court found serious questions as to whether SPS complied with §2923.6 and whether denial complied with written-denial requirements
Whether SPS’s September 18 letter constituted a valid written denial under HBOR	Agraan: denial lacked mandated appeal-right information under §2923.6(f) making the denial defective	SPS: did not substantively explain; characterized later letters as acknowledgments	Court found a serious question whether the letter satisfied §2923.6(f); record unclear and favors further adjudication
Whether bond should be required for the TRO	Agraan: did not propose bond; immediate relief needed to prevent loss of home	SPS: requested financial conditions including a bond if TRO issued	Court declined to require a bond at this time

Key Cases Cited

Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423 (1974) (TROs preserve status quo and are temporary pending full hearing)
Reno Air Racing Ass’n v. McCord, 452 F.3d 1126 (9th Cir. 2006) (TRO standards and purpose)
Mazurek v. Armstrong, 520 U.S. 968 (1997) (burden on movant for extraordinary relief like TRO)
Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) (same standard for TRO and preliminary injunction)
Winter v. Natural Res. Defense Council, 555 U.S. 7 (2008) (plaintiff must show likelihood of success, irreparable harm, balance of equities, and public interest)
Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009) (discussing Winter factors)
Caribbean Marine Serv. Co. v. Baldridge, 844 F.2d 668 (9th Cir. 1988) (TRO requires imminent, irreparable injury)
Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) (sliding-scale approach: serious questions plus balance of hardships may justify injunction)