United States District Court, D. Arizona
ORDER
Honorable Rosemary Marquez United States District Judge
Pending
before the Court is Plaintiffs' Motion to Stay Judgment
Pending Appeal, Unopposed. (Doc. 96.) Plaintiff homeowners
brought this action against Defendant USAA Federal Savings
Bank seeking to prevent the foreclosure and trustee sale of
their house. (Doc. 35). The Court granted summary judgment in
favor of Defendant (Doc. 83), and Plaintiffs now seeks an
injunction preventing the foreclosure and sale of their house
pending appeal to the Ninth Circuit. (Doc 96.) For the
reasons explained below, the Court will grant Plaintiffs'
Motion for an Injunction.
Plaintiffs
alleged that the planned foreclosure and trustee sale was
barred by the applicable statute of limitations as well as by
promissory estoppel, estoppel by inaction, and estoppel by
misrepresentation. (Doc. 35 at 24.) In their Amended
Complaint, Plaintiffs requested a declaratory judgment that
the applicable statute of limitations was never tolled and
consequently had expired. (Id.) They also requested
injunctive relief barring Defendant “from conducting
any enforcement action, collection efforts, or filing a
lawsuit on Plaintiff Donges' HELOC Agreements or any
judicial or non-judicial foreclosure action upon the property
of Plaintiff Donges securing said HELOC agreements.”
(Id.) The parties stipulated to postponement of the
pending foreclosure “until this court issues an order
allowing the foreclosure to proceed or dismisses
Plaintiff's claims against USAA FSB in their
entirety.” (Doc. 26.) Defendant subsequently moved for
summary judgment (Doc. 64) and this Court granted summary
judgment to Defendant on all claims. (Doc. 83.) Judgment was
entered in favor of Defendant and the Amended Complaint was
dismissed. (Doc. 85.) Plaintiffs filed a notice of appeal on
May 29, 2019. (Doc. 88.) Plaintiffs now request that this
Court “stay its Order directing the Clerk of court to
enter Judgment in Defendant's favor and close the case
or, in the alternative, grant a Preliminary Injunction
against foreclosure for the duration of the appeal.”
(Doc. 96.) Plaintiff represents that Defendant does not
oppose the instant Motion, and Defendant did not file a
Response. (Id.)
In
general, the filing of a notice of appeal “divests the
district court of its control over those aspects of the case
involved in the appeal.” Griggs v. Provident
Consumer Disc. Co., 459 U.S. 56, 58 (1982). Federal Rule
of Civil Procedure 62(d) codifies an exception to exclusive
appellate jurisdiction, allowing a district court to
“suspend, modify, restore, or grant an injunction on
terms for bond or other terms that secure the opposing
party's rights” while an appeal is pending.
Fed.R.Civ.P. 62; see Natural Res. Def. Council, Inc. v.
Sw. Marine, Inc., 242 F.3d 1163, 1166 (9th Cir. 2001)
(recognizing that a district court “retains
jurisdiction during the pendency of an appeal to act to
preserve the status quo”). This rule “codifies
the inherent power of a court ‘to preserve the status
quo where in its sound discretion, the court deems the
circumstances so justify[.]' ” Christian
Science Reading Room v. Cty. & Cnty. of S.F., 784
F.2d 1010, 1017 (9th Cir.1986) (citation omitted). To obtain
an injunction from the Ninth Circuit pending appeal from a
final judgment of a district court, “[a] party must
ordinarily move first in the district court.” Fed. R.
App. P. 8(a)(1).
In
determining whether to grant an injunction pending appeal
pursuant to Federal Rule of Civil Procedure 62, courts may
apply the same equitable balancing test required for issuance
of a preliminary injunction. See In Re South LLC,
No. CV-11-2356-PHX- DGC, 2011 WL6019279 at *1 (D. Ariz. Dec.
5, 2011); accord Gila River Indian Cmty. v. United
States, No. CV-10-1993-PHX-DGC, 2011 WL 1656486, at *1
(D. Ariz. May 3, 2011). The Ninth Circuit's
“alternative test” for preliminary injunctive
relief requires the party seeking relief to demonstrate
“either a combination of probable success on the merits
and the possibility of irreparable injury or that serious
questions are raised and the balance of hardships tips
sharply in his favor.” Se. Alaska Conservation
Council v. U.S. Army Corps of Eng'rs, 472 F.3d 1097,
1100 (9th Cir. 2006).
Here,
Plaintiffs have adequately demonstrated that they will suffer
irreparable injury absent injunctive relief and that the
balance of hardships tips sharply their favor. Plaintiffs
seek an injunction preventing the sale of their home pending
the exercise of their right to appellate review. In the
absence of injunctive relief, a trustee sale will take place
on July 29, 2019, causing Plaintiffs' eviction from their
long-time home. (Doc. 96.) Defendant bank, on the other hand,
will maintain its security interest in the property
notwithstanding the issuance of injunctive relief. Plaintiffs
therefore face the possibility of irreparable injury and the
balance of equities tips sharply in their favor. See,
e.g., Deutsche Bank Nat'l Tr. Co. as Tr. for GSAA Home
Equity Tr. 2006-18 v. Cornish, 759 Fed.Appx. 503, 504-05
(7th Cir. 2019) (“[S]tays pending appeal should be the
norm in mortgage foreclosure appeals. . . The lender has the
security it bargained for-its interest in the property-to
protect its interests during the appeal. Without a stay, on
the other hand, the typical residential borrower will suffer
irreparable damage (eviction from the home) during the
appeal.”)
Plaintiffs
have also demonstrated serious questions going to the merits
on appeal. This action raises a question of first impression
as to the application of the Arizona Supreme Court's
recent decision in Mertola, LLC v. Santos, 422 P.3d
1028 (Ariz. 2018) to home equity lines of credit. Moreover,
even if there was not a serious legal question as to whether
the Mertola holding applies in the instant case, the
Court's determination that there is no genuine issue of
material fact requiring trial is also subject to appellate
review, including as to whether Plaintiff adequately alleged
that the loan was accelerated and the statute of limitations
began to run in 2011 after a bank employee stated that no
further payments would be accepted. (Doc. 71.) Plaintiffs
have established that serious questions exist for resolution
on appeal.
The
Court will grant the requested injunctive relief without
requiring the posting of a bond. District courts retain the
discretion to “waive the bond requirement or allow the
judgment debtor to use some alternative type of
security.” Brooktree Corp. v. Advanced Micro
Devices, Inc., 757 F.Supp. 1101, 1104 (S.D. Cal. 1990);
accord Fed. Prescription Serv. v. Am. Pharmaceutical
Ass'n, 636 F.2d 755, 759 (D.C. Cir. 1980) (noting
Rule 62 “in no way necessarily implies that filing a
bond is the only way to obtain a stay”); N. Ind.
Pub. Serv. Co. v. Carbon Cnty. Coal Co., 799 F.2d 265,
281 (7th Cir. 1986) (holding district court has discretion to
waive $2 million appeal bond); see also Fed. R. Civ.
P. 62 Advisory Committee Notes to 2018 Amendment, (explaining
that “[t]he new rule's text makes explicit the
opportunity to post security in a form other than a
bond”).
The
Court notes that Defendant does not oppose the instant
motion. (Doc. 96.) Furthermore, if Defendant is successful on
appeal, it will have the right to foreclose on the subject
property, thereby recovering substantially all of
Plaintiffs' debt. There is no indication that the
property is not being properly cared for, nor that the
security interest is not properly protected by the payment of
insurance and property taxes. The Court therefore finds that
the posting of a bond is not necessary to secure
Defendants' interest in the subject of this action.
See, e.g., Deutsche Bank, 759 Fed.Appx. 503, 507-08
(“In the case of a mortgage foreclosure . . . the
lender already has its security interest in the mortgaged
property. That security interest should ordinarily suffice to
protect the lender's rights pending appeal for purposes
of Rule 62.”) The Court will therefore issue the
requested injunctive relief without requiring the posting of
a bond. Should the property begin to deteriorate in value or
other circumstances arise such that Defendant's interest
in the property is no longer sufficient to secure its
interests pending appeal, Defendant may “petition the
[Court] for supplementary relief, ” including
dissolution of the injunction. Carbon Cnty. Coal
Co., 799 F.2d at 281. . . . .
Accordingly,
IT IS ORDERED that Plaintiffs' Motion to
Stay Pending Appeal, Unopposed (Doc. 96) is
granted. Defendant is hereby enjoined from
proceeding with the foreclosure and trustee sale of the
residence at 5514 N. Crescent Ridge Drive, Tucson, AZ, 85718,
Tax Parcel No. 109-11-3030. This injunction is to remain in
place until Plaintiffs appeal is ...