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Gosha v. Bank of New York Mellon Corp.

United States District Court, D. Oregon

June 5, 2019

GARY C. GOSHA, an individual; and KIT M. GOSHA, an individual, Plaintiffs,
BANK OF NEW YORK MELLON CORPORATION FKA THE BANK OF NEW YORK, as Trustee CWALT 2005-72, a Delaware Corporation; BAYVIEW LOAN SERVICING LLC, a Florida Corporation; and CLEAR RECON CORP., a California Corporation, Defendants.

          OPINION & ORDER


         Pro Se Plaintiffs Gary C. Gosha and Kit M. Gosha bring this action against Defendants Bank of New York Mellon, Bayview Loan Servicing LLC, and Clear Recon Corp., alleging breach of contract; unfair trade practices under Or. Rev. Stat. § (“ORS”) 646.608; violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692(f)(6); and violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e). Plaintiffs also seek a declaratory judgment regarding: (1) the rights of the parties under the Oregon Trust Deed Act, ORS 86.705, et seq.; and (2) Defendants Bank of New York's standing under the Note and Deed of Trust. Compl. ¶¶ 6, 63, ECF 1. With the filing of their complaint, Plaintiffs moved for a Temporary Restraining Order (“TRO”) to prevent the foreclosure sale of their home.

         On April 15, 2019, the Court issued a TRO restraining Defendants from conducting the foreclosure sale of Plaintiffs' home, then scheduled for April 23, 2019. Opinion & Order, ECF 18. On April 24, 2019, the Court held a preliminary injunction hearing. Mins. Proceedings, ECF 33. Because Plaintiffs are likely to succeed on the merits of their breach of contract claim and suffer irreparable harm in the absence of an injunction, the Court enjoins Defendants from pursuing the pending non-judicial foreclosure of Plaintiffs' home.


         Plaintiffs' claims arise out of various alleged procedural defects rendering Defendants' current non-judicial foreclosure of Plaintiffs' home unlawful, including but not limited to a breach of the notice provisions of the Deed of Trust. Compl. ¶¶ 1-5. Plaintiffs defaulted on their loan in September 2011, after their loan payments increased from $1, 500 to $2, 550 per month and their loan servicer allegedly told them that help was only available if they were in default. Compl. ¶ 29. Their servicer subsequently issued a “Notice of Attempt to Accelerate” and “threatened foreclosure.” Compl. ¶¶ 29-30. What followed was seven years of conflict and litigation between Plaintiffs and Defendants over the foreclosure of Plaintiffs' home.

         After Plaintiffs' prior suit was dismissed under Fed.R.Civ.P. 12(b)(6), Defendants voluntarily rescinded their initial non-judicial foreclosure proceedings. Compl. ¶ 18. To begin the non-judicial foreclosure process a second time, Defendant Bayview-the loan servicer- invited Plaintiffs to participate in the Oregon Foreclosure Avoidance Program (OFAP) in June of 2018. Compl. ¶ 25. The OFAP conference ended “with an adverse result for” Plaintiffs because Bayview was provided with a certificate of compliance, required for them to pursue the non-judicial foreclosure under Oregon law. Compl. ¶ 43.

         On October 10, 2018, Defendant Clear Recon Corp. filed its second Notice of Default in Washington County. Compl. Ex. J. On October 29, 2018, Plaintiffs sent a dispute letter to Defendant Clear Recon Corp. demanding that the foreclosure be rescinded. Compl. ¶ 47. The next day, Defendant Clear Recon Corp. rescinded the second notice of default and acceleration of the debt. Compl. ¶ 48, Ex. K.

         On December 22, 2018, Plaintiffs were served with another Trustee's Notice of Sale commencing the pending non-judicial foreclosure at the heart of the present case. Compl. ¶ 49, Ex. A. The Notice indicates that the current beneficiary of the Deed of Trust is Defendant Bank of New York Mellon and the trustee is Defendant Clear Recon Corp. Id. at 4-5. The Notice reflects delinquent payments by Plaintiffs beginning in September of 2011, with a total required to reinstate of $247, 892.26. Id. Along with the Notice of Sale, Defendants issued a third Notice of Default, which was recorded in the official records of Washington County on December 20, 2018. Clear Recon Decl. ¶¶ 7, 9, Ex. B, ECF 21. Since Defendants began the present judicial foreclosure, Plaintiffs have received unsolicited mail, calls, and flyers regarding the sale of their home. Compl. ¶¶ 56-57.


         “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The plaintiff “must establish that irreparable harm is likely, not just possible[.]” Alliance For The Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). The court may apply a sliding scale test, under which “the elements of the preliminary injunction test are balanced, so that a stronger showing of one element may offset a weaker showing of another.” Id. Thus, a party seeking an injunction may show greater irreparable harm as the probability of success on the merits decreases. Id. (noting also that the relevant test in the Ninth Circuit is described as the “serious questions” test where the likelihood of success is such that “serious questions going to the merits were raised and the balance of hardships tips sharply in plaintiff's favor”) (internal quotation marks and brackets omitted).

         The party requesting a preliminary injunction must carry its burden of persuasion by a “‘clear showing'” of the four required elements set forth above. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam); Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (quoting Mazurek, 520 U.S. at 972) (A “‘preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.'”).


         Plaintiffs now seek a preliminary injunction, arguing that the pending non-judicial foreclosure of their home is unlawful. In part, Plaintiffs argue that Defendants breached the terms of the Deed of Trust by failing to comply with the notice provisions in § 22 before initiating the present non-judicial foreclosure. Pls. Mot. TRO 2, ECF 2. In response, Defendants argue that Plaintiffs are unlikely to succeed on the merits of this claim and point to an earlier notice sent to Plaintiffs that complies with the notice provisions of § 22. Def. Opp'n TRO 14-15, ECF 19. Defendants further argue that the balance of the equities and the public interest factors both weigh in their favor. Hr'g Tr. 29:22-23, ECF 34. On the record before it, the Court agrees with the Plaintiffs and, after considering each of the Winter factors, finds that the issuance of a preliminary injunction is appropriate in this case.

         First, Plaintiffs are likely to succeed on the merits on their breach of contract claim. Section 22 of the Deed of Trust provides that the Lender must give the Borrower notice prior to acceleration following the ...

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