Cruz v. Hacienda Associates, LLC (In Re Cruz)
446 B.R. 1
Bankr. D. Mass.2011Background
- Debtor Jose D. Cruz seeks to enjoin foreclosure by Wells Fargo on his Marlborough, Massachusetts residence.
- The motion arose after a temporary restraining order delayed a scheduled sale and a January 18, 2011 hearing.
- Cruz asserts Wells Fargo breached HAMP-related obligations by foreclosing while a loan modification was under review.
- He contends Wells Fargo failed to issue written denial of modification and did not offer alternative foreclosure mitigation options.
- Cruz has proposed Chapter 13 plans requiring monthly payments to the trustee, intended to fund mortgage and taxes during modification review.
- The court conditions any injunction on Cruz making specified monthly payments to the Chapter 13 trustee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cruz can show likelihood of success on breach of contract. | Cruz argues he is a third party beneficiary of HAMP-related SPAs, and Wells Fargo breached by foreclosing during modification review. | Wells Fargo contends there is no private right of action for borrowers under HAMP and Cruz lacks third-party beneficiary status. | No likelihood of success on breach of contract. |
| Whether Cruz can show likelihood of success on breach of duty of good faith and reasonable diligence. | Wells Fargo foreclosed while modification was under consideration, violating good faith and diligence duties. | Wells Fargo argues it complied with applicable procedures and had discretion in timing. | There is a substantial likelihood Cruz will prevail on Count V. |
| Whether the court should grant preliminary relief given irreparable harm. | Foreclosure sale would irreparably harm Cruz and defeat relief sought in Counts I and V. | foreclosure timing was lawful or not proven to cause irreparable harm. | Irreparable harm shown; injunction appropriate pending merits. |
| Whether the public interest supports an injunction. | Preventing improper foreclosures protects homeowners and community interest. | Foreclosure guidelines and lender rights support timely enforcement. | Public interest favors delaying foreclosure pending resolution. |
Key Cases Cited
- Narragansett Indian Tribe v. Guilbert, 934 F.2d 4 (1st Cir.1991) (core consideration is likelihood of success for injunction)
- Williams v. Resolution GGF OY, 417 Mass. 377 (Mass. 1994) (mortgagees must act as trustees and in good faith)
- Taylor v. Weingartner, 223 Mass. 243 (Mass. 1916) (trustee-like duties in foreclosure context)