West v Chase, some
quotes from the Appellate Court:
“We hold that
West stated causes of action for fraud, negligent misrepresentation, breach of
written contract, promissory estoppel, and unfair competition, and therefore
reverse the judgment on those causes of action.”
“In holding that West stated a cause of action for breach of written
contract, we agree with the analysis and interpretation of HAMP presented in
the recent opinion of the United States Court of Appeals for the Seventh
Circuit in Wigod v. Wells Fargo Bank,
N.A. (7th Cir. 2012) 673 F.3d 547, 556‑557 (Wigod). Core to our decision
is the court’s conclusion in Wigod, supra, 673 F.3d at page 557, that
when a borrower complies with all the terms of a TPP, and the borrower’s
representations remain true and correct, the loan servicer must offer the
borrower a permanent loan modification.
As a party to a TPP, a borrower may sue the lender or loan servicer for
its breach. (Id. at p. 559, fn. 4.)
Because West complied with all
the terms of the TPP, Chase Bank had to offer her a permanent loan
modification.” (Emphasis Added)
“The SPAs stated that servicers ‘shall perform the loan modification
. . . described in . . . the Program guidelines and
procedures issued by the Treasury . . . and . . . any
supplemental documentation, instructions, bulletins, letters, directives, or other
communications . . . issued by the Treasury.’”
““Where a borrower qualified for a HAMP loan modification, the
modification process itself consisted of two stages. After determining a borrower was eligible,
the servicer implemented a Trial Period Plan (TPP) under the new loan repayment
terms it formulated using the waterfall method.
The trial period under the TPP lasted three or more months, during which
time the lender ‘must service the mortgage loan . . . in the same
manner as it would service a loan in forbearance.’ Supplemental Directive 09‑01. After the trial period, if the borrower
complied with all terms of the TPP Agreement—including making all required
payments and providing all required documentation—and if the borrower’s
representations remained true and correct, the
servicer had to offer a permanent modification. See Supplemental Directive 09‑01 (‘If the
borrower complies with the terms and conditions of the [TPP], the loan
modification will become effective on the first day of the month following the
trial period. . . .’).”
(Fourth ellipsis & italics added, fn. omitted.)”
“Also on May 24, West made her 10th reduced payment of $1,931.86,
which Chase Bank rejected and returned to her.
“Although Chase Bank had told West no foreclosure sale had been
scheduled, her home was sold at a trustee’s sale conducted on May 26,
2010. “In violation of its promises and said letter, and HAMP rules (and
Supplemental Directives), two (2) days later, CHASE BANK secretly, sold
[West]’s home, on May 26,[]2010 during the re‑evaluation period. CHASE BANK issued letters dated May[]20,
2010, received May 24, 2010, rejecting [West]’s 10th payment
. . . , made pursuant to the continuing forbearance agreement.”
“West alleged that in reliance on the representations and Chase Bank’s
alleged concealment of the foreclosure sale, she suffered damages “including loss of mortgage payments made under
false pretenses, attorney fees, legal costs, personal injuries, pain and
suffering, anxiety, humiliation, fear, extreme emotional distress, and physical
injuries.””
“Under the allegations of the third amended
complaint, West likely would have been successful in taking legal action to
stop the sale.”
In January 2010 and again in March 2010, Chase Bank
advised West to “continue to make your trial period payments on time.” She
made all of her payments.”
[Chase argument fails] “This argument ignores Chase Bank’s obligations
under HAMP and the express and implied obligations under the Trial Plan
Agreement. When Chase Bank received
public tax dollars under the Troubled Asset Relief Program,[1] it agreed to offer TPP’s and loan
modifications under HAMP according to guidelines, procedures, instructions, and
directives issued by the Department of the Treasury. (Wigod,
supra, 673 F.3d at p. 556.) Under the United States Department of the
Treasury, HAMP Supplemental Directive 09‑01 (Apr. 6, 2009)
(Directive 09‑01), if the lender approves a TPP, and the borrower complies
with all the terms of the TPP and all of the borrower’s representations remain
true and correct, the lender must offer
a permanent loan modification. (Wigod, supra, at p. 557.)
Directive 09‑01, supra,
at page 18, states: “If the
borrower complies with the terms and conditions of the [TPP], the loan
modification will become effective on the first day of the month following the
trial period . . . .”[2] “
“Nonetheless, the defendant
bank was required to offer “some sort
of good‑faith modification to [the plaintiff] consistent with HAMP guidelines.”
“ (Ibid.) (Page 17 West)
“But such a proviso
is imposed by the United States Department of the Treasury through
Directive 09‑01, supra,
page 18 (see Wigod, supra, 673 F.3d at p. 557), and a
contract must be interpreted in a way to make it lawful (Civ. Code,
§ 1643). To
make the Trial Plan Agreement lawful, it must be interpreted to include the
proviso imposed by Directive 09‑01.
In addition, HAMP guidelines “informed the reasonable expectations of
the parties to [the Trial Plan Agreement].”
(Wigod, supra, at p. 565.)
“ (West pg 18)
“Thus, as alleged in
the third amended complaint, the Trial Plan Agreement required Chase Bank to
offer West a permanent loan modification because she had complied with the
terms of that agreement. “
Quiet Title:
“Nothing we say precludes West from seeking leave to amend to allege quiet
title based on other facts or theories. “ (West pg. 24)
Promissory Estoppel:
“West’s third amended complaint adequately alleges promissory estoppel under
these authorities.”
UCL: “We conclude
the third amended complaint stated a cause of action under the UCL based on
unfair or fraudulent practices. Liberally construed, the third amended
complaint alleged Chase Bank engaged in a practice of making TPP’s that did not comply with HAMP guidelines and the
United States Department of the Treasury directives; made misrepresentations regarding a borrower’s right and ability to
challenge the bank’s calculation of the NPV; made misrepresentations about pending foreclosure sales; and wrongfully had trustee’s sales conducted
when the borrower was in compliance with a TPP. Under
such allegations, Chase Bank engaged in unfair business practices under any of
the three definitions.”
[1] The Emergency Economic Stabilization Act of
2008, title 12 United States Code section 5201 et seq., gave the
Secretary of the Treasury the power to establish the Troubled Asset Relief
Program to purchase, make, and fund commitments to purchase troubled assets
from any financial institution, on such terms and conditions as set by the
Secretary. (12 U.S.C.
§ 5211(a)(1).) The Emergency
Economic Stabilization Act of 2008 defines a “troubled asset” as a financial
instrument the purchase of which is necessary to promote financial
stability. (12 U.S.C.
§ 5202(9)(B).)
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