Miles v. Deutsche Bank National Trust Co.
236 Cal. App. 4th 394
| Cal. Ct. App. | 2015Background
- Miles refinanced a Riverside home in 2005; loan serviced by HomEq and later owned by Deutsche Bank. Payments escalated in 2007–2008 and Miles sought loan modifications.
- HomEq demanded multiple upfront fees and provided several different modification agreements (March 7 and March 13, 2008 among them); Miles alleges HomEq accepted his signed March 13 agreement (signed by HomEq VP) but later repudiated it and refused to honor payments.
- Miles paid over $44,000 seeking modifications that never permanently materialized; notices of default and trustee’s sales followed and the property was sold at a nonjudicial foreclosure in March 2009 despite Miles obtaining a temporary restraining order.
- Miles sued for breach of contract, fraud, negligent misrepresentation, and wrongful foreclosure. The trial court sustained a demurrer (with leave) as to breach of contract, fraud, and negligent misrepresentation and later granted summary judgment for defendants on wrongful foreclosure for lack of damages.
- On appeal the Court of Appeal reversed the dismissal of the contract and misrepresentation causes of action and reversed the summary judgment on wrongful foreclosure, holding (among other things) that wrongful foreclosure is a tort and tort damages are not limited to lost equity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether demurrer to breach of contract was proper | Miles alleged a written March 2008 modification (terms, signatures implied) and performance by making payments | Demurred for failure to specify whether contract was written and for not attaching or pleading the contract verbatim | Reversed — complaint sufficiently alleged a written modification and pleading the legal effect of the contract (not verbatim text) is adequate |
| Whether promissory statements can support fraud/misrep. claims | Miles alleges promises to modify made with no intent to perform and induced >$44,000 in payments | Defendants: future promises generally cannot support fraud; allegations lack specificity as to who made representations | Reversed — promissory fraud alleged (promise made with no intent to perform); specificity requirement relaxed where defendant has superior knowledge of details |
| Whether plaintiff forfeited right to appeal by declining to amend after leave | Defendants argued Miles voluntarily abandoned causes by not amending | — | Rejected — a plaintiff may stand on the sufficiency of the complaint and still appeal the demurrer ruling |
| Proper measure of damages for wrongful foreclosure on summary judgment | Miles sought recovery for lost rental income, emotional distress and other proximate losses in addition to lost equity | Defendants/trial court: damages limited to lost equity (FMV minus liens); no recoverable damages because property value < encumbrances | Reversed — wrongful foreclosure is a tort; damages include all proximate tort losses (not limited to equity), so summary judgment on damages was improper |
Key Cases Cited
- Munger v. Moore, 11 Cal.App.3d 1 (1970) (recognizes wrongful foreclosure as a tort and discusses measure of damages)
- Lona v. Citibank, N.A., 202 Cal.App.4th 89 (2011) (sets elements for challenging a foreclosure sale)
- Biakanja v. Irving, 49 Cal.2d 647 (1958) (factors for recognizing tort duties)
- Lazar v. Superior Court, 12 Cal.4th 631 (1996) (promissory fraud: promise made with no intent to perform may support fraud)
- Aubry v. Tri–City Hospital Dist., 2 Cal.4th 962 (1992) (standards for reviewing sustaining of demurrer)