Fleet v. Bank of America CA4/3
229 Cal. App. 4th 1403
| Cal. Ct. App. | 2014Background
- Fleets obtained a mortgage from Bank of America in 2004 and sought a modification in 2009 under government programs;
- In November 2011 BofA informed them they were approved for a trial period plan (TPP) under a Fannie Mae modification program, requiring three monthly payments as a path to permanent modification;
- The Fleets paid two of the three required TPP payments (Dec 2011 and Jan 2012);
- Foreclosure was posted and the home was sold at a trustee’s sale on January 24, 2012;
- Afterward, the Fleets incurred $15,000 in sewer repairs and were evicted in August 2012, while continuing to attempt contact with BofA;
- They sued BofA and associated defendants in June 2012 alleging breach of contract, fraud, promissory estoppel, and accounting, with the trial court sustaining demurrers in part and dismissing some claims; the appellate court reversed in part and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint states a breach of contract claim against BofA under the TPP | Fleet breaches supported by TPP terms | TPP not a binding modification; no guaranteed modification | Yes, breach of contract stated against BofA |
| Whether promissory fraud was adequately pleaded | BofA knowingly promised modification to induce payment | Allegations insufficient or conclusory | Promissory fraud adequately pleaded against BofA (and certain agents) and not against all defendants |
| Whether fraudulent misrepresentation claims against individual BofA defendants survive | Agents assured payments were received and foreclosure suspended | No personal involvement by some individuals | Fraud claims stated against Williams, Smith, Garnham; others barred |
| Whether promissory estoppel lies given lack of consideration | Promissory estoppel should apply due to reliance on promises | Estoppel not available where there is consideration or contract | Remains viable against BofA in the alternative to breach, but limited as to other Defendants |
| Whether accounting claim is properly pled | Misapplication of payments and surplus from sale require accounting | Surplus funds resolution elsewhere; payments can be damages | Accounting claim inadequately pled as a standalone claim; may be folded into other claims |
| Leave to amend on appeal | Could amend to cure defects | No showing of how to amend; no abuse of discretion | No reversible error on leave-to-amend ruling; advisory for counsel |
Key Cases Cited
- West v. JPMorgan Chase Bank, N.A., 214 Cal.App.4th 780 (Cal. Ct. App. 2013) (discussed TPP under HAMP; modification process two-stage; rights upon timely payments)
- Rufini v. CitiMortgage, Inc., 227 Cal.App.4th 299 (Cal. Ct. App. 2014) (similar mortgage-modification claims; fraud/breach findings)
- Bushell v. JPMorgan Chase Bank, N.A., 220 Cal.App.4th 915 (Cal. Ct. App. 2013) (breach of contract/implied covenant; promissory estoppel; fraud)
- Barroso v. Ocwen Loan Servicing, LLC, 208 Cal.App.4th 1001 (Cal. Ct. App. 2012) (breach of contract; good faith; modification issues)
- Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878 (9th Cir. 2013) (federal review of loan-modification promises; fiduciary/contract theories)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (two-stage modification process under HAMP; TPP context)
- Lazar v. Superior Court, 12 Cal.4th 631 (Cal. 1996) (elements of promissory fraud)