Ex Parte Application 05-11-11

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TIMOTHY L. MCCANDLESS, ESQ. SBN 147715LAW OFFICES OF TIMOTHY L. MCCANDLESS1881 Business Center Drive, Ste. 8ASan Bernardino, CA 92408Tel: (909) 890-9102Fax: (909) 382-9956

Attorney for Plaintiff (s)ERIC SHOCKLEY and CHARLES FETTERS

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF CONTRA COSTA

ERIC SHOCKLEY and CHARLES FETTERS, Plaintiff,

V.

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.;ALEXANDER ZAN HAMILTON, dba EAGLE HOME MORTGAGE; AMERITECH MORTGAGE INC., IRINA PETROVNA TRAJANOVICH, President of AMERITECH; ZORAN TRAJANOVICH, Chairman of Ameritech, CITIGROUP GLOBAL MARKETS REALTY CORP., HSBC MORTGAGE SERVICES, NDEX WEST LLC, and DOES 1 through 50 inclusive,

Defendants.

Case No.: C11-00865

EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION; SUPPORTING MEMORANDUM OF POINTS AND AUTHORITIES AND SUPPORTING DECLARATION OF ERIC SHOCKLEY; CHARLES FETTERS; CERTIFICATE OF EX PARTE; DECLARATION OF TIMOTHY MCCANDLESS; [PROPOSED] ORDER

DATE: May 11, 2011TIME: 1:30 p.m.DEPT: 60

EX PARTE APPLICATION

This matter cannot wait to be heard on a regular notice because a non-judicial foreclosure

– trustee sale has been scheduled for May 16, 2011 Plaintiffs ERIC SHOCKLEY and

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CHARLES FETTERS [hereinafter PLAINTIFFS] hereby applies for a restraining order and

order to show cause why a preliminary injunction should not be issued, restraining and enjoining

defendants MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; AMERITECH

MORTGAGE INC., CITIGROUP GLOBAL MARKETS REALTY CORP., HSBC

MORTGAGE SERVICES, NDEX WEST LLC their agents, employees and all persons

associated with them and/or acting in concert with them, from taking any action whatsoever to

foreclose on PLAINTIFFS’ home. Plaintiffs’ home is that certain real property commonly

known as. 203 S. 13th Street, Richmond, CA 94084. The Legal descriptions are as follows: APN:

544120002; NYSTROMS ADD N LOTS 34 TO 37 BLK.

Plaintiffs will apply for an Order to Show Cause (“OSC”) why a preliminary injunction

should not be granted enjoining defendants MORTGAGE ELECTRONIC REGISTRATION

SYSTEMS, INC.; AMERITECH MORTGAGE INC., CITIGROUP GLOBAL MARKETS

REALTY CORP., HSBC MORTGAGE SERVICES, NDEX WEST LLC [“Foreclosing

Defendants”], their agents, employees, representatives, attorneys, and all persons acting in

concert or participating with them from foreclosing and/or selling Plaintiffs’ property located at

203 S. 13th Street, Richmond, CA 94084.

Concurrently, plaintiffs hereby apply for a hearing date to obtain a preliminary

injunction. To be certain, loss of the Plaintiffs’ property would constitute irreparable harm,

whereas, if the court issues the Temporary Restraining Order, there will be no prejudice to the

Defendants whatsoever.

This application is made, because pecuniary compensation would not afford adequate

relief for the loss of Plaintiffs' Home, that Defendants are seeking to foreclose on Plaintiffs'

Home in violation of the rights of Plaintiffs and that great and irreparable injury will result to

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Plaintiffs before the matter can be heard on notice. Defendants’ action to proceed with the sales

in violation of the rights of plaintiffs. Plaintiffs have previously obtained an order for similar

relief in this case but with a different lawsuit and most of these parties, have been dismissed.

The application is based upon this notice; the Complaint on file; the attached memorandum of

points and authorities; and any oral argument, which may be heard at the time of the hearing of

this matter.

Dated: May 10, 2011THE LAW OFFICES OF TIMOTHY MCCANDLESS

By _____________________________

Timothy McCandless, Attorney for PlaintiffsERIC SHOCKLEY AND CHARLES FETTERS

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I.

INTRODUCTION/BACKGROUNDAll of these facts are established are in the complaint filed on April 11, 2011 which is on

file in this matter and plaintiffs respectfully requested on their declaration that the courts take

judicial notice of said complaint.

On or about June 7, 2006 financed their purchase through LIME FINANCIAL by virtue

of a Trust Deed and Notes securing the Loans. [See Exhibit “A” to plaintiffs’ complaint]. When

plaintiffs chose to refinance this loan, BRENDA FRASIER, a broker, represented defendant

AMERITECH assisted them with the paperwork. On June 13, 2006, the Deed of Trust [“DOT”]

was recorded at Contra Costa Recorder’s office. Plaintiffs chose to execute this DOT in 2006

and refinanced their home in 2006. Brenda Frasier, the broker, suggested Ameritech for a 30-

year note to pay this debt. They were advised that they could not obtain the 30-year note but

were able to obtain a new first with a prepayment penalty due in two years. At her suggestion,

they obtained a second loan which had a balloon payment.

Plaintiffs were also instructed by Frasier, broker for defendant AMERITECH that the

loan had to be only under plaintiff ERIC SHOCKLEY’S name. Reluctantly, plaintiffs followed

AMERITECH’s advice. Plaintiffs discovered later that their broker did not execute the required

Mortgage Loan Origination with the borrower. There is no evidence of one being executed and

under California law, a broker is required to execute this document because it establishes the

relationship between the broker and client and the services be provided. Thus, plaintiffs allege

that defendant AMERITECH violated California Business and Professions Code 10240-10248.3,

10241. Moreover, plaintiffs allege that the underwriting for this loan was flawed. There was no

determination whatsoever of plaintiffs’ ability to repay the loan with complete disregard for the

Guidance Letters issued by Federal Agencies and even Federal and State Laws. Another

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important factor was, at the time the loan was being executed, it stated that plaintiffs’ income

was $9,380.00 per month. Plaintiffs’ income was purposely inflated.

Plaintiff alleges, there were no initial disclosures for either interest rate. Defendant

AMERITECH violated California Civil Code Civil Section 1916.7 10(c). Plaintiffs were not

given full disclosure about the adjustable payment and adjustable rate loan. Plaintiffs did not

know that their monthly payments could go substantially up. Plaintiffs eventually discovered

that DEFENDANT LIME was a wholesaler of loans and sold their loan to .J.P. CHASE and

HSBC.

Because the two-year prepayment was coming due, plaintiffs immediately contacted

CHASE to do a loan modification. CHASE did modify the loan but never reduced the principal.

They lowered the interest rate which was not helpful since they increased the payment by finally

setting up the impound account. Because of this, plaintiffs defaulted on the loan. Plaintiffs

allege that on June 15, 2009 Defendants NDEX and CHASE HOME FINANCE allege that

Plaintiffs became in default of their loan. On June 17, 2009, defendant NDEX caused the

Notice of Default [NOD] to be recorded and on this NOD, instructions were to contact CHASE

HOME FINANCE for payment arrangements. CHASE and NDEX are not on the Deed of Trust.

. Plaintiffs, on August 17, 2009, arranged to have a Forensic Loan Audit Examination.

This report shows the glaring deficiencies of what has transpired regarding the loan and loan

modification. The report speaks for itself and plaintiffs allege that the defendants, all of them,

did not comply with foreclosure laws and more importantly, blatantly provided a loan that was

set up to fail. [See Exhibit 1 to plaintiffs’ Declaration re Ex parte and Exhibit D to their

complaint].

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Foreclosure laws were not complied with. No proper assignment has taken place. Thus,

the Notice of Default and all subsequent actions are unlawful because The Notice of Default was

recorded on June 17, 2009. The Substitution of Trustee was executed after the Notice of Default

was filed, thus rendering the Notice of Default voidable. The Assignment Deed of Trust was

also executed after the Notice of Default was recorded, which was July 10, 2009. How then

can these defendants claim they are proper foreclosers? Defendants did not comply with the new

foreclosure laws – Civil Code 2923.5 et seq, 2934(a) et seq. They were not contacted by the

lender even though they submitted a Declaration of Due Diligence on their Notice of Default.

The Notice of Default is defective in that there is no declaration under penalty of perjury.

Plaintiffs were not given alternatives to foreclosure as mandated by the law.

Real property is unique, and plaintiff’s injury will be uncompensable in damages if

defendants are allowed to proceed. Demarist v. Quickloan Funding Inc., 2009 WL 940377 at 9

(C.D. Cal.2009).

In contrast, foreclosing defendants will suffer no hardship if the instant motion is granted.

They will retain whatever security interest they have in the property and will be able to seek

liquidation of the assets protecting their interest if they prevail. If the subject property is sold

plaintiffs' injury will be uncompensable.

Statistics show that defendants are not even marketing the properties upon which they

foreclose but rather are sitting on them so foreclosure gains defendants nothing. Indeed, an

unoccupied home is subject to damages and resulting loss, while an occupied home will be

maintained and preserved. Because the balance of hardship tips heavily in plaintiffs’ favor,

plaintiff needs only to establish a serious question going to the merits upon which plaintiffs has a

better than fair chance of prevailing.

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Here, plaintiffs alleged and can establish prima facie violations of law and at the very

least have a fair chance of prevailing on the merits. Defendants are not only guilty of wrongful

foreclosure and predatory lending, they have also committed fraud and violated a host of statutes.

This Court should exercise its authority and enter the requested injunctive relief.

II.ARGUMENT

A. The Standard for Preliminary Injunctive Relief

The standard for granting a preliminary injunction requires balancing plaintiffs’

likelihood of success on the merits against the relative hardship to the parties. Here, the balance

of hardships tips sharply in support of plaintiffs –they will lose their home if an injunction does

not issue. In contrast, defendants will suffer no serious hardship as their security in their home

will remain (Demarest v Quick Loan Funding, Inc. 2009 WL 940377 at 9 (C.D. Cal 2009) and it

seems likely they will not immediately sell the property even if they do foreclose.

California Code of Civil Procedure Section 526(a)(1)-(5) states:(a) An injunction may be granted in the following cases:

(1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.(2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.(3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.(4) When pecuniary compensation would not afford adequate relief.(5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.

A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION SHOULD BE ISSUED IF PLAINTIFF’S RIGHT TO RELIEF IS APPARENT FROM

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THE COMPLAINT AND THE RELIEF CONSISTS IN RESTRAINING THE COMMISSION OR CONTINUANCE OF THE ACT COMPLAINED OF.

Code of Civil Procedure § 526(a) (1)

In this case, the complaint demonstrates that, unless restrained, defendants will proceed

with a non-judicial foreclosure against plaintiffs’ real property without justification and in

violation of California Civil Code section 2924(c). As set forth in the complaint and as

evidenced by the Notices of Default and Trustee’s Sale recorded by one or more of the

defendants without right or privilege, defendants and their predecessors or successors in interest

have commenced a non-judicial foreclosures against plaintiffs’ property despite their attempts to

negotiate terms with the lender through NACA and on their own with Chase. More importantly,

despite the apparent fact the Deed of Trust defendants hold and which is alleged by defendants to

be a valid lien against plaintiffs’ home, is void and does not constitute a valid lien against their

home. It is clear SHOCKLEY and FETTERS are the true and rightful owners of the real

property and did not enter into an enforceable loan transaction with defendants as evidenced both

by the allegations set forth in their Complaint, the exhibits thereto and the fact defendants knew

or should have known the terms contained in various loan documents they prepared and tendered

to plaintiffs were not, in view of the facts then known to defendants, capable of being performed

by plaintiffs and were, in fact, impossible, were therefore void and otherwise unenforceable as

shown by the documents themselves.

A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION SHOULD BE ISSUED IF AN ACT WOULD PRODUCE WASTE OR GREAT OR

IRREPARABLE INJURY TO A PARTY DURING LITIGATION.An injunction may be granted when it appears by the complaint or affidavits (or

declarations) that the commission or continuance of some act during the litigation would produce

waste, or great or irreparable injury to a party to the action (Code Civ. Proc. § 526(a)(2), 2015.5;

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Volpicelli v. Jared Sydney Torrance Memorial Hosp. (1980) 109 Cal. App. 3d 242 ; Smith v.

Smith (1942) 49 Cal. App. 2d 716 ). The term ''irreparable injury'' means that species of

damages, whether great or small, that ought not to be submitted to on the one hand or inflicted on

the other (Wind v. Herbert (1960) 186 Cal. App. 2d 276). This definition warrants the use of the

injunctive power of the court against a wrong that a trial judge deems insufferable because it

constitutes an overbearing assumption by one person of superiority and domination over the

rights and property of others (Fretz v. Burke (1967) 247 Cal. App. 2d 741). It is plain that

defendants’ recording a Notice of Default and Assignment Deed of Trust and the Substitution of

Trustee is not justified, particularly where, as here, such Notice of Default l was filed improperly

and that, specifically, NDEX– the servicer was NOT the Trustee of Record at the time such

Notice was filed nor did NDEX know, as evidenced by documents contained in the public

records of the Contra Costa County Recorder, who the actual beneficiary of the Deed of Trust

pursuant to which the Notice was filed actually was. Further, defendants know or should have

known they have no presently cognizable interest in the property and that pursuance of

foreclosure would result in loss of plaintiffs’ home at worst or so cloud his title as to make it

impossible for him to continue to reside in his home without incurring enormous legal expense.

Such a loss ought not to be submitted to by plaintiffs, nor suffered to be inflicted by the

defendants.

A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION SHOULD BE ISSUED IF AN ACT WOULD RENDER THE JUDGMENT

INEFFECTUALAn injunction may be granted when it appears, during the litigation, that a party to the

action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in

violation of the rights of another party to the action respecting the subject of the action, and

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tending to render the judgment ineffectual ( Code Civ. Proc. § 526(a)(3) ; Heckman v.

Ahmanson (1985) 168 Cal. App. 3d 119; Lenard v. Edmonds (1957) 151 Cal. App. 2d 764;

Rossi v. Rossi (1955) 134 Cal. App. 2d 639). While the conduct alleged in the complaint is

outrageous, and may justify an award of monetary damages, the principal relief sought herein is

to prevent defendants from foreclosing on plaintiff’s property. Thus, if defendants were

permitted to proceed with their non-judicial foreclosure, any subsequent judgment relative to

such an action would be ineffectual.

California Code of Civil Procedure Section 527 states:

(a) A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor. No preliminary injunction shall be granted without notice to the opposing party.

With the pending trustee sale of plaintiffs’ home impending April 15, 2011, they face a

real, imminent, and severe harm that cannot be adequately compensated with a monetary award.

Once this home is sold, no amount of money can compensate them for the loss of their home.

CCP 526(a)(2), (4)-(5). This fact is also recognized under California law in the context of a

home purchase. California law recognizes that both irreparable injury and inadequacy of money

damages are presumed to be present where real property is involved. California law further

recognizes that where a single-family residence is involved, the presumption of the inadequacy

of money damages is conclusive. Civil Code Section 3387 states:

“It is presumed that the breach of an agreement to transfer real property be adequately relieved by pecuniary compensation. In the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive.” In determining whether to grant a preliminary injunction, the Court shall consider the

probability of Plaintiff’s success on the merits, and whether greater injury will result to the

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Defendants in granting the injunction than to the Plaintiff in refusing it. Continental Baking Co.

v. Katz (1968) 68 Cal.2d 512, 528, 67 Cal.Rptr. 761, 771. Similarly, in Robbins v. Superior

Court of Sacramento County (1985) 38 Cal.3d 199, 211 Cal.Rptr. 398, the California Supreme

Court explained the trial court’s proper balancing of hardships in determining whether a

preliminary injunction should issue:

“The trial courts consider two interrelated questions in deciding whether to issue a preliminary injunction:

Are the plaintiffs likely to suffer greater injury from a denial of the injunction than the defendants are likely to suffer from its grant; andIs there a reasonable probability that the plaintiffs will prevail on the merits.”

In applying the first prong of this two-prong test, Defendants are wealthy individuals and

institutions sophisticated in financial matters and will not be harmed by the issuance of the

preliminary injunction. However, if the temporary restraining order and preliminary injunction

are denied, Plaintiffs will be rendered homeless.

In applying the second prong of the aforementioned two-prong test, Plaintiff has more than a

reasonable probability of success on their complaint. The Complaint and declaration submitted

in support of this application clearly demonstrate that Plaintiffs are victims of fraudulent and

oppressive business practices by people regulated by State and Federal law and who have taken

undue advantage of many numerous persons in the general public such as Plaintiff, for huge

profit and gain. Defendants are clearly in violation of law set forth in Wyatt v. Union Mortgage

Co. (1979) 24 Cal.3d 773, 157 Cal.Rptr. 392 in that their agent, Brenda Frasier, broker for

defendant AMERITECH, a fiduciary, had “duties which extended beyond bare written disclosure

or terms of the transaction to duties of oral disclosure and counseling, which applies to

transactions with “mortgage loan brokers.” AMERITECH failed to disclose or counsel Plaintiffs

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as to the disastrous loan she was offering them in a market that Defendants knew was about to

collapse. It was not until plaintiffs received the forensic analysis did they see the glaring

discrepancies and non-compliance with the law.

Finally, no undertaking should be required because if the Deed of Trust is valid, the

Defendants are fully secured and, in fact, may NOT obtain any relief against Plaintiffs except for

that they receive from a trustee's sale. If the Deed of Trust is void then Defendants are NOT

entitled to the property in any fashion. In contrast, Plaintiffs are without resources as a result of

Defendants’ wrongful actions and unable to raise additional funds to post a bond and still seek

legal redress against Defendants. Restraining the foreclosure will not materially affect the

Defendants in the same way a foreclosure will harm Plaintiffs.

Foreclosure is a drastic sanction. Baypoint Mortgage Corp. v. Crest Premium Real Estate

etc. Trust, (1985) 168 Cal.App.3d 818, 837. Irreparable injury will almost always be involved in

a home foreclosure, especially if the grounds for invalidating the foreclosure rest on the

voidability rather than the voidness of the transaction. Furthermore, courts presume in a

foreclosure context that the property is unique, that its loss is irreparable and that money

damages are inadequate unless the property is being openly marketed and has no special value to

the owner than its market price. Jessen v. Keystone Sav. & Other Loa Assn. 142 Cal.App.3d

454, 457-58.

III.

CONCLUSION

Based on the foregoing, Plaintiffs SHOCKLEY and FETTERS respectfully requests a

temporary restraining order and an order requiring foreclosing Defendants to show cause why a

preliminary injunction should not issue pending trial in this action, enjoining Defendants and

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their employees, agents, and persons acting with them or on their behalf, from selling, attempting

to sell, or causing to be sold the trust property described in the second on file in this action either

under the power of sale in the deeds of trust or by foreclosure action.

DATED: May 10, 2011

THE LAW OFFICES OF TIMOTHY MCCANDLESS

By _____________________________

Timothy McCandless, Attorney for PlaintiffsCHARLES FETTERS ANDERIC SHOCKLEY

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Ex Parte Application 05-11-11