167 F. Supp. 3d 1108
E.D. Cal.2016Background
- Plaintiffs Patrick and Nelda White obtained a $1.35M mortgage in 2006 and sought loan modifications from Chase and later servicer Select Portfolio Servicing (SPS) between 2012–2013.
- Chase and SPS orally indicated Plaintiffs appeared to qualify but repeatedly conditioned any modification on verification and completion of paperwork.
- Plaintiffs took actions (removed listing, maintained insurance, paid HOA/gardener/pool service, made repairs/purchases) in reliance on the representations.
- Chase twice denied modification after verification; SPS also denied after an appraisal/verification and Plaintiffs exhausted appeals.
- Plaintiffs filed a First Amended Complaint alleging promissory estoppel, intentional misrepresentation (fraud), and negligent misrepresentation against Chase and SPS.
- The court considered defendants’ motions to dismiss and dismissed the FAC in full without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Promissory estoppel (Chase) | Chase promised a loan modification and Whites reasonably relied to their detriment | Representations were conditional and lacked essential terms; no clear and unambiguous promise | Dismissed — no clear/unambiguous promise; reliance was not reasonable; amendment futile |
| Promissory estoppel (SPS) | SPS promised modification and Whites reasonably relied | Statements were conditional (verification/appraisal) and ambiguous | Dismissed — conditional promise; reliance unreasonable; dismissal without leave to amend |
| Intentional misrepresentation/fraud (Chase & SPS) | Defendants knowingly misled Plaintiffs into believing they qualified | Plaintiffs failed to plead who made statements, when, defendants’ knowledge/intent; statements were conditional | Dismissed — failed Rule 9(b) particularity and no facts showing knowledge/intent; amendment futile |
| Negligent misrepresentation (Chase & SPS) | Defendants negligently represented qualification for modification | Statements concerned future events (promises), not past/existing facts; plaintiffs did not identify specific speakers or lack of reasonable basis | Dismissed — misstatements were predictions/future promises, not actionable negligent misrep.; dismissal without leave to amend |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (courts need not accept legal conclusions as true)
- Foman v. Davis, 371 U.S. 178 (standards for leave to amend pleadings)
- Laks v. Coast Fed. Sav. & Loan Assn’s, 60 Cal.App.3d 885 (conditional/ambiguous commitments do not support promissory estoppel)
- Garcia v. World Sav., FSB, 183 Cal.App.4th 1031 (preliminary negotiations not actionable as promissory estoppel)
- U.S. Ecology, Inc. v. State, 129 Cal.App.4th 887 (elements of promissory estoppel)
- Lazar v. Superior Court, 12 Cal.4th 631 (promissory fraud and elements of fraud)
- Fox v. Pollack, 181 Cal.App.3d 954 (elements of negligent misrepresentation)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (Rule 9(b) particularity: who, what, when, where, how)