Blankenchip v. CitiMortgage, Inc., 2:14-cv-02309

Background

Randy and Susan Blankenchip defaulted on their adjustable-rate mortgage and applied for a HAMP loan modification through CitiMortgage; Citi approved a three-month Trial Period Plan (TPP) requiring three "timely" monthly payments and submission of documentation.
The TPP listed deadlines of July 1, August 1, and September 1 for the three payments, but also stated that payment received by the last day of the month in which due would suffice; plaintiffs made the three payments on July 15, August 11, and September 15, 2011.
Citi recorded and repeatedly postponed a trustee’s sale while reviewing plaintiffs for HAMP and a traditional modification, sent a September 12, 2011 letter canceling a "Forbearance Plan," and then conducted a nonjudicial foreclosure sale on November 10, 2011.
Plaintiffs sued asserting wrongful foreclosure, breach of contract, promissory estoppel, breach of the implied covenant of good faith and fair dealing, fraud, UCL (Cal. Bus. & Prof. Code § 17200), and intentional infliction of emotional distress.
Citi moved for summary judgment; the court overruled Citi’s numerous evidentiary objections and found genuine disputes of material fact on most causes of action but granted summary judgment for Citi on the IIED claim and on promissory estoppel as to alleged oral promises.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Were TPP payments "timely" where paid mid-month rather than by the 1st?	Payments within the month satisfied the TPP; TPP language and Citi conduct created an end-of-month grace period.	TPP required first payment by the 1st for foreclosure protection; payments after the 1st did not guarantee protection or obligation to modify.	Court: Ambiguity resolved against drafter (Citi); payments made by month-end were timely—summary judgment denied on this ground.
Did plaintiffs submit required documents and was TPP properly cancelled/notified?	Plaintiffs submitted documentation and received conflicting assurances from Citi representatives that file was in order; cancellation notice caused confusion.	Citi contends plaintiffs were missing documents and properly notified of cancellation.	Court: Triable issues of fact exist about document submission and whether Citi properly notified plaintiffs—summary judgment denied.
Were plaintiffs ineligible for permanent HAMP modification because of interest-rate reset?	Eligibility under the TPP did not depend on an interest-rate increase; HAMP/Freddie Mac guidance supports calculating eligibility for ARMs without later rereview.	Citi argues a post-TPP review showed modification would raise the rate (not permitted) so plaintiffs were ineligible.	Court: Disputed fact as to eligibility; Citi’s after-the-fact interest-rate rationale insufficient on summary judgment—denied.
Were plaintiffs’ claims for wrongful foreclosure, breach, fraud, UCL, and punitive damages foreclosed by lack of tender or other defenses?	Plaintiffs assert foreclosure was wrongful/void due to breach of TPP and deficient notification; they relied to their detriment.	Citi argues lack of tender, inevitability of foreclosure, and no justifiable reliance prevent recovery.	Court: Tender not required where foreclosure alleged void; genuine disputes on avoidability, reliance, and fraud-supporting facts—summary judgment denied (except for IIED and oral-promissory-estoppel).

Key Cases Cited

Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard and materiality)
Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burdens)
Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878 (9th Cir.) (HAMP TPP is enforceable contract; servicer obligations)
West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780 (Cal. Ct. App.) (trial period modification constitutes contract)
Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.) (TPP contractual analysis)
Reichert v. General Ins. Co. of America, 68 Cal.2d 822 (elements of breach of contract under California law)