United States District Court, D. Arizona
Bryan W. Hummel and Sandra M. Dahl Living Trust, Plaintiff,
Rushmore Loan Management, LLC and DiTech Financial, LLC, Defendants.
G. Campbell United States District Judge.
Brian W. Hummel and Sandra M. Dahl Living Trust (the
“Trust” or “Plaintiff”) has filed a
motion for temporary restraining order (“TRO”)
seeking to enjoin Defendant Rushmore Loan Management, LLC
from conducting a trustee's sale of a home owned by the
Trust scheduled for Monday, June 5, 2017. Doc. 18. For the
following reasons, the Court will grant the TRO.
is a living trust organized under the laws of Arizona. Doc.
1, ¶ 2. The Trust was created on September 19, 2007, and
a certificate of trust was recorded with the Mohave County,
Arizona Recorder's Office (“Mohave County”)
on October 22, 2007. Id. Plaintiff's counsel
Peter Dahl serves as successor trustee to the Trust.
Id., ¶ 1. The Trust owns property located at
2692 Avenida Grande, Bullhead City, Arizona (the
“Property”). Id. Defendants Ditech
Financial, LLC and Rushmore are both foreign LLCs registered
in the state of Delaware with offices in Maricopa County,
Arizona. Id., ¶¶ 4-5.
26, 2004, Bryan Hummel and Sandra Dahl (collectively
“Borrowers”) entered into a “mortgage/deed
of trust/security deed/note” on the Property.
Id., ¶ 7. The deed of trust
(“DOT-1”) listed First National Bank of Arizona
as the mortgage lender and Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the beneficiary.
Id. On August 17, 2005, Borrowers entered into a
second deed of trust (“DOT-2”) with Countrywide
Bank. Id., ¶ 9. On August 25, 2005, DOT-2 was
recorded in Mohave County. Id. On September 8, 2005,
Borrowers paid off all debts secured by DOT-1 and obtained a
“deed of release and reconveyance” from MERS,
which was recorded in Mohave County. Id., ¶ 8.
February 26, 2007, Borrowers entered into a third deed of
trust (“DOT-3”) with MERS as the beneficiary.
Id., ¶ 11. On March 14, 2007, Borrowers paid
off all debts secured by DOT-2 and obtained a “deed of
release and reconveyance” from Countrywide Bank, which
was recorded in Mohave County. Id., ¶ 10. On
March 30, 2007, DOT-3 was recorded in Mohave County.
Id., ¶ 11.
September 19, 2007, Borrowers executed a warranty deed
conveying the Property to the Trust “for
consideration.” Id., ¶ 13. On October 22,
2007, this conveyance was recorded in Mohave County.
Id. On February 21, 2008, Borrowers, “in their
individual capacity and as husband and wife, ” entered
into another mortgage and deed of trust agreement
(“DOT-4”) with Countrywide. Id., ¶
15. On March 4, 2008, DOT-4 “was recorded with the
Maricopa County Recorder.” Id.
(emphasis in original). On March 17, 2008, Borrowers paid off
all debts secured by DOT-3, and secured a deed of release and
reconveyance from MERS, which was recorded in Mohave County.
Id., ¶ 12.
January 2009, Borrowers “in their individual capacity
defaulted on their obligations under [DOT-4.]”
Id., ¶ 17. On February 17, 2009, Countrywide
invoked the acceleration clause contained in the mortgage
contract that accompanied DOT-4. Id. On May 25, 2011
- three years after entering into DOT-4 with Borrowers, and
nearly four years after the Property was conveyed to the
Trust - Countrywide recorded DOT-4 in Mohave County.
Id., ¶ 16.
2012, “Countrywide and its successor Bank of America,
then assigned [DOT-4] to Ocwen Loan Servicing, LLC”
(id., ¶ 18), which thereafter assigned DOT-4 to
Residential Credit Solutions (id., ¶ 19). In
September 2016, Residential Credit Solutions assigned DOT-4
to Defendant Ditech. Id., ¶ 20. In 2017, Ditech
assigned DOT-4 to Defendant Rushmore. Id., ¶
21. Currently, Rushmore “hold[s] [DOT-4] on the subject
property and claims that it is owed $404, 918.11.”
Id., ¶ 22. Soon thereafter, Rushmore noticed a
trustee's sale for January 17, 2017, to be held at the
Mohave County Courthouse in Kingman, Arizona. Id.,
¶ 24. The trustee's sale has been postponed on at
least three occasions - once until February 27, 2017
(id., ¶ 25), then until April 10, 2017 (Doc.
7), and subsequently until June 5, 2017 (Doc. 18).
February 23, 2017, the Trust initiated this action seeking a
declaration that the Trust is the Property's lawful owner
and that Defendants are precluded from foreclosing on the
Property because the statute of limitations for doing so has
expired. See Doc. 1 at 4-6. On April 6, 2017,
Rushmore filed a motion to dismiss the Trust's complaint.
Doc. 13. That motion is fully briefed (Docs. 14, 15, 16, 17)
and currently being considered by the Court. On June 1, 2017,
the Trust filed this motion for a TRO. Doc. 18.
standard for issuing a TRO is the same as that for issuing a
preliminary injunction. Phillips v. Fremont Inv. &
Loan, No. CV-09-2585-PHX-GMS, 2009 WL 4898259, at *1 (D.
Ariz. Dec. 11, 2009) (citing Brown Jordan Int'l, Inc.
v. The Mind's Eye Interiors, Inc., 236 F.Supp.2d
1152, 1154 (D. Haw. 2007)). A plaintiff must show that (1) it
is likely to succeed on the merits, (2) it is likely to
suffer irreparable harm without an injunction, (3) the
balance of equities tips in its favor, and (4) an injunction
is in the public interest. Winter v. Nat. Res. Def.
Council, Inc., 555 U.S. 7, 20 (2008). “[I]f a
plaintiff can only show that there are ‘serious
questions going to the merits' - a lesser showing than
likelihood of success on the merits - then a preliminary
injunction may still issue if the ‘balance of hardships
tips sharply in the plaintiff's favor, ' and the
other two Winter factors are satisfied.”
Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d
1281, 1291 (9th Cir. 2013) (quoting All. for the Wild
Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.
2011)). “Serious questions are ‘substantial,
difficult and doubtful, as to make them a fair ground for
litigation and thus for more deliberative
investigation.'” Republic of the Philippines v.
Marcos, 862 F.2d 1355, 1362 (9th Cir.1988) (en banc)
(quoting Hamilton Watch Co. v. Benrus Watch Co., 206
F.2d 738, 740 (2d Cir. 1952)).
Trust's complaint contains four counts: (1) Statute of
Limitations, (2) Declaratory Relief, (3) Slander of Title and
Trespass to Real Property, and (4) Common Law Fraud. Doc. 1
at 4-6, ¶¶ 1-26. The Trust asserts two reasons that
that it is likely to succeed on the merits. First, DOT-4,
which was effected by Borrowers in their individual capacity,
“does not have any force and effect on the Trust which
purchased the [P]roperty for consideration in 2007.”
Doc. 18 at 3. Second, the Trust “has a reasonable
probability of proving that the defendants are ...