Bushell v. JPMorgan Chase Bank, N.A.
220 Cal. App. 4th 915
| Cal. Ct. App. | 2013Background
- Bushells obtained a May 2004 WaMu loan to buy a Roseville home, secured by a deed of trust.
- Chase acquired WaMu’s assets/liabilities, including the Bushell loan, after WaMu’s failure.
- Default occurred in December 2008; in May 2009 Chase offered a Trial Period Plan (TPP) under HAMP.
- TPP required signing documents, hardship affidavit, income verification, and one initial trial payment of $1,420.31; plaintiffs complied.
- Chase confirmed in June 2009 that timely trial payments would qualify plaintiffs for a permanent modification; 26 trial payments were made through August 2011.
- Chase later denied modification as “denied by the investor,” paused communications, then resumed processing before a January 2011 trustee’s sale notice; trial court demurred dismissing the suit, and the appellate court reversed on contract, promissory estoppel, and fraud claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the TPP constitutes a enforceable contract | Bushells allege the TPP obligates Chase to offer a permanent modification upon performance. | Chase argues the TPP is only an offer to consider for modification, not a contract. | TPP constitutes an enforceable contract under HAMP if conditions are met. |
| Whether Chase breached the TPP by failing to offer a permanent modification | Bushells performed all conditions and qualified under HAMP. | Chase contends no obligation to offer a permanent mod absent explicit HAMP qualification. | Yes, breach of the TPP contract with failure to offer a good faith permanent modification. |
| Whether the implied covenant of good faith and fair dealing was violated | Chase acted in bad faith by stringing plaintiffs along and not offering a modification. | No separate covenant violation beyond the contract terms. | Yes, implied covenant was breached given failure to offer a good faith permanent modification. |
| Whether plaintiffs state a claim for promissory estoppel | Clear promise to modify and reliance by plaintiffs in pursuing modification. | Damages bar due to payments plaintiffs were already obligated to pay. | Yes, plaintiffs adequately plead detrimental reliance and a promissory estoppel claim. |
| Whether plaintiffs state a claim for fraud based on a false promise | Chase made true-false representations that modification would be offered if conditions were met. | Arguments lacked specificity about who made the promises and whether damages occurred. | Yes, sufficient facts alleged to support fraud based on false promise. |
Key Cases Cited
- Reichert v. General Ins. Co., 68 Cal.2d 822 (Cal. 1968) (elements of contract damages and pleadings standard)
- Wilson v. 21st Century Ins. Co., 42 Cal.4th 645 (Cal. 2007) (good faith and fair dealing implied covenant standard constraints)
- West v. JPMorgan Chase Bank, N.A., 214 Cal.App.4th 780 (Cal. App. 2012) (HAMP TPP contract enforceability and must offer permanent modification)
- Barroso v. Ocwen Loan Servicing, LLC, 208 Cal.App.4th 1005 (Cal. App. 2012) (TPP can create enforceable contract under California law)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (HAMP NPV and TPP enforceability; private remedies via state law)