Jolley v. Chase Home Finance, LLC
213 Cal. App. 4th 872
| Cal. Ct. App. | 2013Background
- Jolley and WaMu entered a 2006 construction loan of about $2.156 million to renovate a rental home.
- WaMu allegedly mis disbursed funds and failed to reimburse prepaid construction costs, causing delays and losses.
- WaMu was closed in Sept. 2008; Chase bought WaMu’s assets under a P&A Agreement with the FDIC.
- Jolley stopped payments; Chase initiated foreclosure after Jolley defaulted in Nov. 2008.
- Chase sought summary judgment, relying on a 39-page P&A Agreement that it contends did not assume WaMu’s borrower liabilities.
- Jolley argued triable issues existed regarding the existence and terms of a longer, nonpublic P&A Agreement and Chase’s misconduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment was improper based on the P&A Agreement facts | Jolley contends a longer, nonpublic P&A Agreement governs liability. | Chase argues the 39-page P&A Agreement is complete and exclusive; liabilities not assumed. | Summary judgment reversed; triable issues remain about the Agreement's scope. |
| Whether Jolley presented triable facts on misrepresentation | Jolley alleges North's assurances were knowingly misrepresented and relied upon. | Chase maintains no binding promise or misrepresentation occurred; statements were opinions or are not binding. | Triable issues remain; misrepresentation and reliance can proceed to trial. |
| Whether Chase owed Jolley a duty of care in negligence | Chase’s conduct during modification negotiations and disbursement failures foreseeably harmed Jolley; Biakanja factors apply. | Lenders owe no duty beyond the loan terms absent special circumstances; no duty here. | Duty of care found; summary adjudication reversed on negligence claim. |
| Whether Jolley can state a claim for breach of contract/promissory estoppel | Chase or WaMu promised a loan modification; Jolley relied to finish construction. | No definitive promise or enforceable contract; modification not proven. | Triable issues remain; action can proceed to trial. |
| Whether declaratory relief or accounting were proper | Declaratory relief sought to resolve contract/liability questions; accounting for sums due. | No need for declaratory relief or accounting where mature damages exist and no fiduciary relation. | Summary adjudication proper for declaratory relief and accounting. |
Key Cases Cited
- Nazir v. United Airlines, Inc., 178 Cal.App.4th 243 (Cal. Ct. App. 2009) (summary judgment standard and burden shifting)
- Laks v. Coast Fed. Sav. & Loan Assn., 60 Cal.App.3d 885 (Cal. Ct. App. 1976) (promises based on superior knowledge may be binding)
- Price v. Wells Fargo Bank, 213 Cal.App.3d 465 (Cal. Ct. App. 1989) (whether bank promises to redo loans support reliance)
- Conrad v. Bank of America, 45 Cal.App.4th 133 (Cal. Ct. App. 1996) (promissory estoppel and reliance on bank promises)
- Connor v. Great Western Sav. & Loan Assn., 69 Cal.2d 850 (Cal. Sup. Ct. 1968) (lender duty when actively involved in construction; Biakanja factors)
- Biakanja v. Irving, 49 Cal.2d 647 (Cal. Sup. Ct. 1958) (establishes six Biakanja factors for duty analysis)