906 F. Supp. 2d 982
N.D. Cal.2012Background
- Plaintiff Harvey refinanced in 2005 with Countrywide; Bank of America is current note holder and DOT beneficiary.
- From 2009 to 2011, BOA allegedly encouraged Plaintiff to miss payments to obtain a HAMP modification and delayed its review.
- BOA allegedly denied HAMP in 2010 as erroneous but later sent NHRP materials; Plaintiff rejected NHRP terms as less favorable.
- Plaintiff claims BOA promised no penalties or foreclosure while modification was pursued, then imposed late fees and reported delinquencies.
- Foreclosure filings occurred in 2011 (NOD) with subsequent trustee sale notices; multiple postponements followed; Plaintiff remained willing to pay.
- Plaintiff filed suit in state court, then realigned to federal court; amended complaint asserts nine claims including ECOA, breach of implied covenant, misrepresentation, and UCL.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tender requirement for setting aside foreclosure | Plaintiff contends tender may be excused due to inducement. | Tender is required to challenge foreclosure unless an exception applies. | Tender not required at pleading stage; may be required if seeking to set aside foreclosure. |
| HAMP denial and private right of action | Claims arise from promises independent of HAMP denial; not a pure HAMP challenge. | No private right of action for HAMP violations. | Not dismissed; claims target pre- and during-application promises, not the denial itself. |
| ECOA claim sufficiency | Plaintiff alleges discriminatory credit practices and delayed notification under ECOA. | Plaintiff is not shown to be in a protected class or to have applied for credit as ECOA requires. | Claim dismissed with leave to amend to plead prima facie ECOA elements. |
| Implied covenant of good faith and fair dealing | BOA breached by promising no penalties while modifying and delaying review. | Covenant cannot create duties beyond the DOT terms; alleged promises are independent of the contract. | Dismissed with leave to amend, must tie breaches to specific DOT provisions. |
| Promissory estoppel | Promised priority in modification process and non-foreclosure induced reliance and damages. | Promissory estoppel fails for lack of specificity and proper damages under law. | Denied; claim survives for pleading purposes with notice-like detail. |
Key Cases Cited
- Arnolds Mgmt. Corp. v. Eischen, 158 Cal.App.3d 575 (Cal.Ct.App. 1984) (tender required to set aside foreclosure, with exceptions)
- Karlsen v. Amer. Sav. & Loan Ass’n, 15 Cal.App.3d 112 (Cal.Ct.App. 1971) (tender principle in California foreclosure)
- Woods v. Google, Inc., 889 F.Supp.2d 1182 (N.D. Cal. 2012) (contract/tech claims; informs good-faith standards in pleading)
- Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162 (9th Cir. 2012) (promissory estoppel standards and fraud pleading guidance)
- Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) (fraud pleading particularity under Rule 9(b))
- Lona v. Citibank, N.A., 202 Cal.App.4th 89 (Cal.Ct.App. 2011) (tendering and foreclosure defenses; statutory considerations)