United States District Court, D. Oregon
L. Koen, Legal Aid Services of Oregon Attorneys for
G. Grant, Donald G. Grant Attorneys for Defendants.
OPINION AND ORDER
Michael H. Simon United States District Judge
Linda Marquard (“Mrs. Marquard”) and David
Marquard (“Mr. Marquard”) (collectively,
“the Marquards” or “Plaintiffs”)
bring this lawsuit against Defendants New Penn Financial,
LLC, dba Shellpoint Mortgage Servicing
(“Shellpoint”); and the Bank of New York Mellon,
fka the Bank of New York (the “Bank”)
(collectively, “Defendants”). Before the Court is
Plaintiffs' motion for preliminary injunction to prohibit
Defendants, pending trial, from continuing to demand and
collect from Plaintiffs a monthly escrow of $342.44 for
Plaintiffs' anticipated 2017 property taxes. The Court
held a hearing on May 31, 2017. For the following reasons,
Plaintiffs' motion is granted.
preliminary injunction is an “extraordinary remedy that
may only be awarded upon a clear showing that the plaintiff
is entitled to such relief.” Winter v. Nat. Res.
Def. Council, 555 U.S. 7, 22 (2008). A plaintiff seeking
a preliminary injunction generally must show that: (1) the
plaintiff is likely to succeed on the merits; (2) the
plaintiff is likely to suffer irreparable harm in the absence
of preliminary relief; (3) the balance of equities tips in
favor of the plaintiff; and (4) an injunction is in the
public interest. Winter, 555 U.S. at 20; see
Id. at 20-23 (rejecting the Ninth Circuit's earlier
rule that the mere “possibility” of irreparable
harm, as opposed to its likelihood, was sufficient, in some
circumstances, to justify a preliminary injunction).
Supreme Court's decision in Winter, however, did
not disturb the Ninth Circuit's alternative
“serious questions” test. All. for the Wild
Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir.
2011). Under this test, “‘serious questions going
to the merits' and a hardship balance that tips sharply
toward the plaintiff can support issuance of an injunction,
assuming the other two elements of the Winter test
are also met.” Id. at 1132. Thus, a
preliminary injunction may be granted “if there is a
likelihood of irreparable injury to plaintiff; there are
serious questions going to the merits; the balance of
hardships tips sharply in favor of the plaintiff; and the
injunction is in the public interest.” M.R. v.
Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012).
2005, Mrs. Marquard purchased a home in Portland, Oregon. She
and her husband, Mr. Marquard, have been living there ever
since. Their son currently lives with them. In 2007, the
Marquards refinanced their home with the loan that is at
issue in this lawsuit, and Mr. Marquard was added to the
title. In February 2011, Mrs. Marquard was laid off from her
job as an associate director of strategic planning for an
energy conservation non-profit organization. Later in 2011,
the Marquards became unable to make payments on their home
Marquard has two ruptured discs in his lower back, stemming
from prior work, most recently from lifting a concrete
fountain at a nursery. His injury causes him back pain and
numbness in his legs. He is substantially limited in his
ability to sit, stand, and bend. In 2015, the Social Security
Administration found him to be disabled.
August 2015, Mrs. Marquard began working part-time as a
cashier at a Fred Meyer supermarket, earning $10.50 per hour.
In March 2016, Mrs. Marquard was diagnosed with non-small
cell lung cancer. She then underwent surgery to remove the
upper lobe of her right lung. In September 2016, Mrs.
Marquard learned that her cancer had spread, and she was
diagnosed with Stage IV non-small cell lung cancer. She has
been unable to work since then. On September 29, 2016, Mrs.
Marquard applied for Social Security Disability Insurance
(“SSDI”) under the Social Security
Administration's expedited Compassionate Allowances
Initiative. Her application was approved. She receives $2,
485 per month in SSDI benefits.
Shellpoint has been the mortgage servicer for Plaintiffs'
home loan since December 1, 2016, when it succeeded
Plaintiffs' former servicer, Specialized Loan Servicing
LLC (“SLS”). For the loan that is at issue in
this lawsuit, Plaintiffs entered into their mortgage
arrangement on January 26, 2007. Paragraph 3 of their Deed of
Borrower shall pay to Lender . . . a sum (the
“Funds”) to provide for payment of amounts due
for: (a) taxes and assessments and other items which can
attain priority over this Security Instrument as a lien or
encumbrance on the Property . . . . These items are called
“Escrow Items.” . . . Borrower shall pay Lender
the Funds for Escrow Items unless Lender waives
Borrower's obligation to pay the Funds for any or all
Lender may, at any time, collect and hold Funds in an amount
(a) sufficient to permit Lender to apply the Funds at the
time specified under RESPA, and (b) not to exceed the
maximum amount a lender can require under RESPA. Lender
shall estimate the amount of Funds due on the basis of
current data and reasonable estimates of expenditures of
future Escrow Items or otherwise in accordance with
ECF 16-3 at 4 (Deed of Trust ¶ 3) (emphasis added). The
Deed of Trust also provides: “If there is a surplus of
Funds held in escrow, as defined under RESPA, Lender shall
account to Borrower for the excess funds in accordance with
RESPA.” ECF 16-3 at 4 (Deed of Trust ¶ 3).
14, 2016, the Oregon Department of Revenue
(“DOR”) approved Plaintiffs' application for
property tax deferral. Under the program (the “Oregon
Tax Deferral Program”), the State of Oregon agreed to
pay Plaintiffs' property taxes to Multnomah County on an
annual basis, beginning November 15, 2016. Also under the
program, on July 14, 2016, the State placed a lien on
Plaintiffs' property to secure repayment of the property
taxes paid by the State for Plaintiffs. In a confirmation
letter sent to Plaintiffs, the DOR advised Plaintiffs:
If your mortgage company includes property tax in your
monthly mortgage payments, tell them the state is paying your
property taxes. They may adjust your mortgage payments. We
recommend you send the mortgage company a copy of this
ECF 17-2 at 1. The confirmation letter also states that
Plaintiffs will remain in the Tax Deferral Program at least
through the end of 2017 unless they become ineligible.
Plaintiffs may become ineligible if “[t]he ownership of
the property changes, ” “[t]he deferral
applicant[s] die, ” or “[t]he deferral
applicant[s] move from the property for any reason other
than health reasons.” ECF 17-2 at 1; see also
Or. Rev. Stat. § 311.684.
November 1, 2016, Plaintiffs applied for a loan modification
under the Home Affordable Modification Program
(“HAMP”). Plaintiffs' loan modification
application included a copy of their property tax deferral
approval letter. Also on November 1, 2016, Plaintiffs,
through their attorney, informed SLS, Shellpoint's
predecessor as Plaintiffs' loan servicer, that Plaintiffs
had been accepted into the Oregon Tax Deferral Program.
Plaintiffs' attorney sent to the attorney for SLS, James
A. Craft (“Craft”), proof that Plaintiffs'
property tax deferral had been uploaded to the Oregon
Foreclosure Avoidance Program portal.
November 7, 2016, Plaintiffs and their attorney met with a
representative of SLS, who informed Plaintiffs that they
could make trial-period modification payments in the monthly
amount of $2, 105.83, which would include an escrow for
one-twelfth of Plaintiffs' anticipated annual property
taxes. At that meeting, Plaintiffs' attorney requested
that SLS not require as part of Plaintiffs' trial-period
payments any amount for an escrow of property taxes. At the
meeting, SLS refused to grant the request. Instead, SLS
stated at the meeting that if Plaintiffs made all three
payments under the trial-period modification, SLS would
reanalyze the escrow account for Plaintiffs' loan.