Errico v. Pacific Capital Bank, N.A.
2010 U.S. Dist. LEXIS 119401
| N.D. Cal. | 2010Background
- Plaintiffs Errico and related parties sought financing for a 140-unit condominium project in Turlock, California from Pacific Capital Bank.
- Defendants orally promised up to 75% financing of the project’s appraised value, but later restructured funding into phased loans and deferred condominium financing.
- Plaintiffs provided extensive documentation over 2005–2007; defendants ultimately denied condominium financing in 2009 after several appraisals and cost updates.
- Plaintiffs allege ECOA violations for failure to notify of adverse action, incomplete application, and lack of reasonable diligence, along with age discrimination; they also assert several contract, fraud, and related state-law theories.
- The court previously dismissed parts of the First Amended Complaint and now addresses the Second Amended Complaint, granting in part and denying in part the motions to dismiss.
- The court allowed amendment for certain ECOA and state-law claims and required amended pleading within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ECOA adverse-action notice | Errico stated completed application; defendant failed to notify adverse action within 30 days. | Could be time-barred by statute and/or not a completed application for condo loan. | Plaintiffs stated a claim for failure to notify of adverse action. |
| ECOA incomplete-application notice | If condo loan was not complete, defendant failed to notify incompleteness. | Deferred condo loan due to market, not incomplete matters; may not trigger notice. | Plaintiffs stated a claim for failure to notify of incomplete application. |
| ECOA reasonable diligence | Defendants delayed in obtaining information and processing the application beyond a reasonable time. | Defendants acted with reasonable diligence or disputes facts. | Plaintiffs stated a claim for failure to use reasonable diligence. |
| ECOA age discrimination | Delay and treatment based on age, or implicit age bias, violated ECOA. | No actionable age discrimination shown; inquiries allowed for creditworthiness. | Age-discrimination claim dismissed with leave to amend. |
| Breach of oral contract | Oral promise to finance 75% of project, made over two years, created a binding contract. | Terms not definite; negotiations contemplated writing; Statute of Frauds applies. | Dismissed with leave to amend. |
Key Cases Cited
- Dufay v. Bank of America, 94 F.3d 561 (9th Cir. 1996) (procedural ECOA notice violation can ground a claim even absent discrimination)
- Simon v. Hartford Life and Accident Ins. Co., 546 F.3d 661 (9th Cir. 2008) (material facts must be construed in the plaintiff's favor)
- Khajavi v. Feather River Anesthesia Medical Group, 84 Cal. App. 4th 32 (Cal. App. 3d Dist. 2000) (negotiations and writing contemplated; oral contract may be incomplete)
- City Solutions v. Clear Channel Communications, Inc., 365 F.3d 835 (9th Cir. 2004) (fraud and related claims require particularity and justifiable reliance)
- Oakland Raiders v. Oakland-Alameda County Coliseum, Inc., 144 Cal. App. 4th 1175 (Cal. App. 4th Dist. 2006) (waiver and contract principles affect enforceability under statutes of frauds)
- Laks v. Coast Fed. Sav. & Loan Assn., 60 Cal. App. 3d 885 (Cal. App. 2d Dist. 1976) (promissory estoppel and reliance on bank commitments may be analyzed)
- Poway Royal Mobilehome Owners Ass'n. v. City of Poway, 149 Cal. App. 4th 1460 (Cal. App. 4th Dist. 2007) ( California appellate guidance on estoppel and contract formation)
- Kipperman v. Dixson (In re Diego's Inc.), 88 F.3d 775 (9th Cir. 1996) (estoppel when reliance on oral contract)
- Friedman v. Friedman, 20 Cal. App. 4th 876 (Cal. App. 1st Dist. 1992) (oral contracts and writing expectations; contract formation nuances)
- Racine & Laramie, Ltd. v. Dep't of Parks & Rec., 11 Cal. App. 4th 1026 (Cal. App. 4th Dist. 1992) (implied covenant requires underlying contract)