Habtemariam v. PNC Bank, National Assoc.
2:16-cv-01189
E.D. Cal.Jul 31, 2017Background
- Plaintiff Genet Habtemariam owns 7 Shipman Court, Sacramento; she refinanced in 2007 and had a Second Deed of Trust (SDOT) recorded April 17, 2007.
- PNC (successor to National City) sent Habtemariam an IRS Form 1099-C in 2010 indicating debt cancellation; no release of the SDOT was recorded.
- PNC assigned the loan to US Mortgage Resolution (UMR) in ~2012; UMR later sold the SDOT to Vida Capital (Vida) circa 2014.
- Vida attempted to collect in 2015, recorded a Notice of Default (Sept. 22, 2015), and conducted a non-judicial trustee sale; a deed transferring title to Vida was recorded Feb. 16, 2016.
- Gateway Bank, holder of a first-priority deed of trust (Gateway DOT), scheduled a trustee sale for Aug. 3, 2017; Habtemariam sought a temporary restraining order (TRO) to enjoin that sale pending resolution of disputes about the SDOT cancellation and related rights.
- The court consolidated related proceedings, found serious questions on the merits and imminent irreparable harm (risk of losing primary residence), and granted a TRO enjoining Gateway from proceeding with foreclosure or related adverse acts; no bond required. The court set a briefing schedule and a preliminary injunction hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TRO should enjoin Gateway's trustee sale | Habtemariam: sale will cause irreparable harm (loss of home); serious questions exist because PNC issued 1099‑C and the SDOT was effectively cancelled | Gateway: Habtemariam has not asserted claims against Gateway or produced evidence against Gateway | Court granted TRO under sliding-scale: serious questions on the merits, likely irreparable harm, public interest, equities tip sharply to plaintiff |
| Whether plaintiff must post bond for TRO | Habtemariam: bond unnecessary or disputed; rental value evidence contested | Vida/Gateway: TRO would deprive them of rent; Vida requests bond payable to it | Court declined to require bond at TRO stage due to record uncertainties |
| Whether Vida is harmed by enjoining Gateway sale | Habtemariam: delay only preserves status quo while merits are determined | Vida: loss of rental income and other harms from delay | Court found Vida’s asserted harm insufficiently shown to outweigh plaintiff’s harm; equities favor plaintiff |
| Whether TRO is in the public interest | Habtemariam: protects compliance with alleged federal settlement (1099‑C) and state foreclosure protections | Gateway/Vida: public interest in enforcing security interests and foreclosing | Court held TRO serves public interest in ensuring compliance with federal settlement effects and foreclosure law |
Key Cases Cited
- Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423 (1974) (TROs preserve status quo pending full hearing)
- Mazurek v. Armstrong, 520 U.S. 968 (1997) (plaintiff bears burden for extraordinary injunctive relief)
- Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) (standard for TRO equals preliminary injunction)
- Winter v. Nat. Res. Def. Council, 555 U.S. 7 (2008) (preliminary injunction requires likelihood of success, irreparable harm, balance of equities, and public interest)
- Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009) (applying Winter factors)
- Caribbean Marine Serv. Co. v. Baldridge, 844 F.2d 668 (9th Cir. 1988) (irreparable harm must be imminent for TRO)
- All. for Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) (serious questions sliding-scale approach remains viable)