Greene v. U.S. Bank

Background

John B. Greene sued U.S. Bank, N.A. as Legal Title Trustee for Truman 2016 SC6 Title Trust, Fay Servicing, LLC, and NBS Default Services, LLC. Greene alleged that the defendants lacked legal authority to foreclose on his home because he had not received adequate notice of transfers of interests among the banks and loan servicers. He sought a preliminary injunction—an extraordinary court order intended to preserve the status quo before trial—and asked the court to stop defendants from taking further action based on the loan documents and foreclosure sale.

Greene had previously sought a temporary restraining order, which the court denied. The foreclosure sale occurred on August 5, 2019, and a deed of sale was recorded on August 8, 2019. An eviction trial was scheduled in Contra Costa County Superior Court. Greene had also filed two earlier related actions, one in federal court and one in state court; both had been dismissed with prejudice before this case was filed.

Ruling on Judicial Notice

The court granted defendants’ request for judicial notice of publicly recorded property documents and filings from related proceedings.

Preliminary-Injunction Standard

The court explained that Greene had to show a likelihood of success on the merits, likely irreparable harm without an injunction, that the balance of hardships favored him, and that an injunction served the public interest. Alternatively, serious questions on the merits and a sharply favorable hardship balance could support an injunction if the other requirements were met.

Likelihood of Success

The court concluded that Greene had not shown a likelihood of success because his action was likely barred by res judicata, also called claim preclusion. This doctrine prevents a later lawsuit based on claims that were raised or could have been raised in an earlier action.

Applying California law to the earlier state-court action, the court found that the three required elements were likely satisfied. First, the earlier action ended in a final judgment on the merits because it was dismissed with prejudice as to U.S. Bank and Fay. Second, the court found that the earlier action and the present case involved the same cause of action. Although Greene relied on federal-law violations and challenged the defendants’ authority to foreclose rather than only the foreclosure process, the court found that both actions centered on the same alleged wrongful foreclosure. The court also found that Greene could have raised his current challenge in the earlier action because the foreclosure sale and the alleged assignment of the deed of trust had already occurred, or were known to him, before that earlier complaint was filed.

Third, the court found that the parties were the same or were in privity. Greene, U.S. Bank, and Fay were parties to the earlier action. The court found NBS to be in privity with the other defendants because of its role in recording a notice of default on behalf of Wells Fargo. The court noted that Greene might later uncover evidence showing that he could not have brought his current claims earlier, but on the record then before it, the claims were likely precluded.

Irreparable Harm

The court found that Greene had not shown imminent, irreparable harm. The foreclosure sale had already occurred. No eviction judgment had yet been entered, so there was no imminent harm from enforcing such a judgment. To the extent Greene sought to stop the state eviction proceeding itself, the court stated that the Anti-Injunction Act prevented the requested federal relief. Greene also did not identify another imminent action by defendants with enough specificity.

Balance of Equities and Public Interest

The balance of equities favored Greene. The court recognized that his home had already been foreclosed upon, that he faced an upcoming unlawful-detainer trial, and that his repeated bankruptcy filings and prior complaints reflected significant financial and medical hardship. The defendants had not argued that an injunction would cause them hardship. The court nevertheless found that this factor did not overcome Greene’s failure to show likely success and irreparable harm.

The court found the public-interest factor largely neutral because an injunction would affect only the parties and no party had identified a public interest at stake.

Disposition

Judge Seeborg denied Greene’s motion for a preliminary injunction, without prejudice to the merits of his claims. The order did not resolve the merits of the underlying claims.