California Court of Appeals, Fourth District, First Division
APPEAL from a judgment of the Superior Court of San Diego County, Super. Ct. No. 37-2010-00105461- CU-OR-CTL Lorna Alksne, Judge.
Law Offices of Frank De Santis, Frank De Santis and Valorie E. Ryan for Plaintiff and Appellant.
Kent Qian for National Housing Law Project; Elizabeth Letcher for Housing and Economic Rights Advocates; Law Office of Eric Andrew Mercer and Eric Mercer as Amici Curiae on behalf of Plaintiff and Appellant.
Malcolm Cisneros, William G. Malcolm and Brian S. Thomley for Defendants and Respondents.
In this case, a lender mailed a homeowner a loan modification agreement under the Home Affordable Mortgage Program (HAMP). The homeowner signed, returned and performed under the loan modification agreement. The lender, however, never mailed the homeowner a signed copy of the loan modification agreement. We conclude the homeowner sufficiently alleged equitable estoppel to preclude the lender's reliance on the statute of frauds defense. We also conclude that the homeowner sufficiently alleged a cause of action for wrongful foreclosure. Accordingly, the judgment entered after the court sustained the lender's demurrer without leave to amend is reversed.
FACTUAL AND PROCEDURAL BACKGROUND
In accordance with the principles governing our review of a ruling sustaining a demurrer, the following factual recitation is taken from the allegations of the third amended complaint filed by Angelica Chavez and from documents cognizable by judicial notice. (Code Civ. Proc., § 430.30, subd. (a); Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.)
In 1999, Chavez purchased residential real property located in San Diego, California (the property). In 2006, she refinanced the property which she occupied as the owner. In connection with the refinance, Chavez executed a promissory note, promising to pay SBMC Mortgage the principal amount of $380, 000.00, plus interest. The promissory note was secured by a deed of trust encumbering the property. The deed of trust was later assigned to OneWest Bank, F.S.B. and Indymac Mortgage Services (together Defendants).
In November 2009, a notice of default and election to sell under deed of trust was executed and recorded. The notice stated that Chavez was in default on the promissory note and that the amount in arrears, as of October 29, 2009, was $10, 603.65. In December 2009, Chavez entered into negotiations with Defendants for a loan modification. In January 2010, Defendants offered Chavez a "Home Affordable Modification Trial Period Plan (Step One of Two-Step Documentation Process)" (the Trial Period Plan) under HAMP. (Undesignated year references are to 2010.) The Trial Period Plan required her to make three monthly payments of $1, 167.46 in February, March, and April.
The Trial Period Plan stated that "[i]f I am in compliance with this Trial Period Plan... then the lender will provide me with a Home Affordable Modification Agreement." Chavez alleged that she fully complied with all the terms of the Trial Period Plan and in May, Defendants mailed her a "Home Affordable Modification Agreement (Step Two of Two-Step Documentation Process)" (the Modification Agreement) which stated, in part, that after she signed and returned two copies of the Modification Agreement to Defendants, Defendants "will send me a signed copy of this Agreement." It further provided that if her material representations, which included her residency in the property, were true in all material respects and if the preconditions to the modification have been met, "the Loan Documents will automatically become modified on 7/1/2010."
Chavez timely returned the Modification Agreement in June, fully complied with all the requirements of the Modification Agreement and continued making her payments on time by personal check. She believed that her loan had been permanently modified. In September, Defendants returned her check for the October payment because "the check [was] not certified." The Trial Period Plan and Modification Agreement, however, do not contain such a requirement. On October 15, the property was sold at auction below fair market value. After the sale took place, Chavez learned that her home had been sold at foreclosure even though she had never received a notice of default or notice of trustee sale from Defendants. In November, Chavez was served with an unlawful detainer summons and was forced to move from her residence in February 2011 due to the wrongful foreclosure on her home.
Chavez filed this action alleging breach of the Modification Agreement and wrongful foreclosure. The trial court sustained Defendants' demurrer, without leave to amend, and entered judgment in favor of Defendants. Chavez timely appealed. We granted an application by the National Housing Law Project, ...