Gustin v. PHH Mortgage Corporation

Background

Brandon Lee Gustin sued PHH Mortgage Corporation over a loan and a foreclosure involving residential property identified in the opinion as 11 Benita Way in Martinez, California. Gustin alleged that he and his wife signed a $338,000 promissory note with IndyMac Bank in 2006 and that the property was wrongfully foreclosed and sold. His complaint challenged the loan assignment under the Uniform Commercial Code and asserted wrongful-foreclosure claims. The opinion states that Gustin acknowledged PHH was the current loan servicer, not the trustee or beneficiary.

A state court entered an order for restitution and possession of the property in June 2024. Gustin then sought a temporary restraining order and preliminary injunction—emergency relief intended to prevent an action temporarily or while the court considers a preliminary injunction. His amended application asked the federal court to stay execution of the writ of possession until the wrongful-foreclosure litigation was resolved. PHH opposed the application.

Legal standard

The court applied Federal Rule of Civil Procedure 65. To obtain a temporary restraining order or preliminary injunction, a plaintiff must show a likelihood of success on the merits, likely irreparable harm without the relief, that the balance of equities favors the plaintiff, and that the injunction would serve the public interest. Under the Ninth Circuit’s sliding-scale approach, serious questions on the merits may be enough if the hardship balance sharply favors the plaintiff, provided the plaintiff also shows likely irreparable injury and that the public interest favors an injunction.

Court’s reasoning

The court acknowledged the disruption that an imminent sheriff’s lockout could cause Gustin and his family. It nevertheless concluded that Gustin had not shown a likelihood of success or even serious questions on the merits because the court lacked jurisdiction to grant the requested relief.

The Rooker-Feldman doctrine is a jurisdictional rule that generally prevents a federal district court from acting as an appellate court over a state-court judgment. The court explained that the doctrine applies when a person who lost in state court claims that the state court’s decision was legally wrong and seeks relief from that judgment in federal court.

Gustin’s application sought to stop state officers from carrying out the state court’s writ of possession. The court reasoned that granting the requested order would invalidate the judgment in the state unlawful-detainer proceeding. It held that California state-law provisions allowing a court or judge to stay execution of a judgment did not give the federal district court authority to do so under these circumstances.

The court expressly assumed, without deciding, that the foreclosure sale might have been unlawful and might be subject to being set aside. Even with that assumption, it concluded that the requested temporary restraining order would interfere with the state-court possession judgment.

Disposition

Judge Haywood S. Gilliam, Jr. denied Gustin’s ex parte application for a temporary restraining order and preliminary injunction, identified as Docket No. 20. The order did not decide whether the foreclosure itself was lawful.