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Keywords

trialmotionforeclosurebankruptcychapter 13 bankruptcycorporation

plaintifftrialtrustbankruptcy

Related Cases

Aceves v. U.S. Bank, N.A., 192 Cal.App.4th 218, 120 Cal.Rptr.3d 507, 11 Cal. Daily Op. Serv. 1317, 11 Cal. Daily Op. Serv. 1941, 2011 Daily Journal D.A.R. 1613

Facts

Claudia Aceves obtained an adjustable rate loan from Option One Mortgage Corporation secured by her residence. After struggling to make payments, she filed for bankruptcy and was promised by U.S. Bank that they would work with her on a loan reinstatement and modification if she forwent further bankruptcy proceedings. Relying on this promise, Aceves did not convert her bankruptcy case to Chapter 13 or oppose the bank's motion to lift the bankruptcy stay, but the bank proceeded with foreclosure instead of negotiating with her.

As alleged in this case, plaintiff, a married woman, obtained an adjustable rate loan from a bank to purchase real property secured by a deed of trust on her residence. About two years into the loan, she could not afford the monthly payments and filed for bankruptcy under chapter 7 of the Bankruptcy Code ( 11 U.S.C. §§ 701 – 784 ). She intended to convert the chapter 7 proceeding to a chapter 13 proceeding ( 11 U.S.C. §§ 1301 – 1330 ) and to enlist the financial assistance of her husband to reinstate the loan, pay the arrearages, and resume the regular loan payments.

Issue

Did U.S. Bank's promise to negotiate a loan modification create an enforceable obligation under the doctrine of promissory estoppel, and did Aceves reasonably rely on that promise to her detriment?

Rule

The elements of a promissory estoppel claim are: (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.

1 “ ‘The elements of a promissory estoppel claim are “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3)[the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” ’ ” ( Advanced Choices, Inc. v. State Dept. of Health Services (2010) 182 Cal.App.4th 1661, 1672, 107 Cal.Rptr.3d 470.)

Analysis

The court determined that U.S. Bank's promise to work with Aceves on a loan modification was clear and unambiguous. Aceves's reliance on this promise was reasonable and foreseeable, as she forwent her right to seek relief under Chapter 13 bankruptcy, which would have allowed her to cure her mortgage default. The court concluded that U.S. Bank's failure to engage in negotiations constituted a breach of that promise, resulting in Aceves's detriment.

We conclude (1) plaintiff could have reasonably relied on the bank's promise to work on a loan reinstatement and modification if she did not seek relief under chapter 13, (2) the promise was sufficiently concrete to be enforceable, and (3) plaintiff's decision to forgo chapter 13 relief was detrimental because it allowed the bank to foreclose on the property.

Conclusion

The court affirmed the trial court's dismissal of all claims except for those of promissory estoppel and fraud, allowing Aceves to pursue these claims.

The order and the judgment are reversed to the extent they dismissed the claims for promissory estoppel and fraud. In all other respects, the order and judgment are affirmed.

Who won?

U.S. Bank prevailed on most claims, as the trial court dismissed all but the claims for promissory estoppel and fraud, which were allowed to proceed.

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