Aceves v. U.S. Bank, N.A.

120 Cal.Rptr.3d 507 (2011)

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Nature of the Case

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Facts

P obtained a loan for a home and borrowed $845,000 at an initial rate of 6.35 percent. After two years, the rate became adjustable. The term of the loan was 30 years. P's initial monthly payments were $4,857.09. P could no longer afford the monthly payments on the loan. A 'Notice of Default and Election to Sell Under Deed of Trust' was given. P filed for bankruptcy protection under chapter 7 of the Bankruptcy Code imposing an automatic stay on the foreclosure proceedings. P contacted D and was told that, once her loan was out of bankruptcy, the bank 'would work with her on a mortgage reinstatement and loan modification.' She was asked to submit documents to D for its consideration. D intended to convert her chapter 7 bankruptcy case to a chapter 13 case and to rely on the financial resources of her husband 'to save her home' under chapter 13. D filed a motion in the bankruptcy court to lift the stay so it could proceed with a nonjudicial foreclosure. In reliance on D's promise to work with her to reinstate and modify the loan, P did not oppose the motion to lift the bankruptcy stay and decided not to seek bankruptcy relief under chapter 13. No one from D contacted P to discuss the reinstatement and modification of the loan, D scheduled P's home for public auction on January 9, 2009. On December 10, 2008, P sent documents to D related to reinstating and modifying the loan. D informed P that a 'negotiator' would contact her on or before January 13, 2009-four days after the auction of her residence. D eventually called and said to forget about any assistance in avoiding foreclosure because the 'file' had been 'discharged' in bankruptcy. On January 2, 2009, D again contacted P, saying that D had mistakenly decided not to offer her any assistance. D would reconsider a loss mitigation proposal. The day before the auction, D called P's bankruptcy attorney and stated that the new balance on the loan was $965,926.22; the new monthly payment would be more than $7,200; and a $6,500 deposit was due immediately via Western Union. D refused to put any of those terms in writing. P did not accept the offer. The next day the home was sold at a trustee's sale to D. P was served with a three-day notice to vacate the premises and, a month later, D filed an unlawful detainer action against her and her husband. P sued D claiming that D never intended to work with P to reinstate and modify the loan. D so promised only to convince P to forgo further bankruptcy proceedings, thereby permitting the bank to lift the automatic stay and foreclose on the property. D filed a demurrer. The trial court entered an order sustaining the demurrer without leave to amend, and a judgment in favor of D. P appealed.