Chavez v. Indymac Mortgage Services
219 Cal. App. 4th 1052
Cal. Ct. App.2013Background
- Chavez refinanced her San Diego home in 2006; loan was secured by a deed of trust later assigned to OneWest/Indymac.
- After default, Chavez entered a HAMP Trial Period Plan (three reduced payments) in early 2010 and allegedly complied with its terms.
- Defendants sent Chavez a Home Affordable Modification Agreement (Step Two); she signed and returned it, made required payments, and performed under the agreement.
- Defendants never mailed Chavez a lender-signed copy of the Modification Agreement, later refused an October payment (returning her personal check), and sold the property at a foreclosure sale without giving her notice of default or trustee's sale.
- Chavez sued for breach of the Modification Agreement and wrongful foreclosure; the trial court sustained defendants’ demurrer without leave to amend and entered judgment for defendants. The Court of Appeal reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statute of frauds bars enforcement of the alleged loan modification | Chavez: defendants induced her to sign/perform; equitable estoppel prevents statute-of-frauds defense | Defendants: modification is subject to statute of frauds and unsigned by lender, so unenforceable | Reversed: alleged facts support equitable estoppel to preclude statute-of-frauds defense |
| Whether Chavez alleged breach of the Modification Agreement | Chavez: she returned signed agreement, performed, and defendants accepted payments then repudiated | Defendants: no enforceable contract because lender did not sign and return the agreement | Reversed: complaint alleges a viable breach claim when documents read together and conduct considered |
| Whether tender is required to challenge the foreclosure / whether wrongful foreclosure claim survives | Chavez: no tender required because agreement modified indebtedness and defendants breached; sale was void | Defendants: Chavez failed to allege tender so wrongful foreclosure fails | Reversed: pleaded exception to tender (sale void because enforceable modification and performance) |
| Whether leave to amend for promissory estoppel should have been allowed | Chavez: promissory estoppel alternative based on her detrimental reliance (did not seek other aid) | Defendants: (implicit) promissory estoppel not alleged or would fail | Not decided on merits: court need not reach promissory estoppel because breach/estoppel claims suffice; amendment not barred |
Key Cases Cited
- Secrest v. Security Nat. Mortg. Loan Trust 2002-2, 167 Cal.App.4th 544 (statute of frauds applies to mortgage forbearance/modifications)
- Redke v. Silvertrust, 6 Cal.3d 94 (equitable estoppel can bar statute-of-frauds defense where detrimental reliance would make denial fraudulent)
- Marks v. Walter G. McCarty Corp., 33 Cal.2d 814 (signature may be printed, stamped, or typewritten for statute-of-frauds purposes)
- Barroso v. Ocwen Loan Servicing, LLC, 208 Cal.App.4th 1001 (contract interpretation should avoid unfair or illusory results; servicer must send signed modification once borrowers meet conditions)
- Lona v. Citibank, N.A., 202 Cal.App.4th 89 (elements for equitable relief to set aside trustee's sale and tender rule exceptions)