Jones v. Wachovia Bank

• Decision Date: 22 September 2014
• Docket Number: H038382
• Court: California Court of Appeals Court of Appeals
• Parties: Mark S. JONES et al., Plaintiffs and Appellants, v. WACHOVIA BANK et al., Defendants and Respondents.

230 Cal.App.4th 935

179 Cal.Rptr.3d 21

Mark S. JONES et al., Plaintiffs and Appellants,

v.WACHOVIA BANK et al., Defendants and Respondents.

H038382

Court of Appeal,

Sixth District, California.

Filed September 22, 2014

See1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 244 et seq.

Trial Court: Santa Clara County Superior Court, No. 1–09–CV147777, Trial Judge: Hon. Kevin E. McKenney.

Counsel for Plaintiffs/Appellants Mark S. Jones, Roberta D. Jones: David A. Ryder, San Jose.

Counsel for Defendant/Respondent Wachovia Bank: Robert Arthur Bailey, Pasadena.

Counsel for Defendants/Respondents Wachovia Bank, Wells Fargo Bank: Jeremy E. Shulman, Pasadena.

Grover, J.

Plaintiffs Mark and Roberta Jones appeal from a judgment of dismissal entered after the trial court granted defendant Wachovia's ¹ motion for summary judgment.Plaintiffs seek damages under the doctrine of promissory estoppel after losing their home in a foreclosure sale which they understood from a phone conversation with the bank would be postponed to a date 10 days after the actual sale date. Because we conclude that plaintiffs have failed to establish a triable issue of material fact regarding detrimental reliance or injury under the doctrine of promissory estoppel, we will affirm the judgment.

I. TRIAL COURT PROCEEDINGS

A. The First Amended Complaint

Plaintiffs sued Wachovia over the foreclosure on their San Jose home. Count three of the first amended complaint-captioned “Damages From Breach of Contract Against WACHOVIA and WELLS FARGO BANK”-alleged that the bank breached an agreement to postpone the trustee sale and, by reason of that breach, plaintiffs lost their equity in the property.² Plaintiffs alleged that in an April 15, 2009 telephone conversation with Mark Jones, a Wachovia representative agreed to postpone the trustee sale to June 18, 2009. Plaintiffs further alleged they “had ready funds available to cure the outstanding default within the time prescribed by law prior to the June 18, 2009, postponed date of sale, and plaintiffs made preparations to timely submit said funds to WACHOVIA. Plaintiffs were prevented from doing so by the advancement of the trustee sale date to June 8, 2009.” Plaintiffs also challenged the trustee sale price of $420,000 as grossly disproportionate to the value of the home, and claimed damages in lost equity.

B. Wachovia's Demurrer

Wachovia demurred, arguing that plaintiffs failed to plead the elements of a breach of contract claim and, to the extent any agreement was oral, it was barred under both the statute of frauds and the terms of the deed of trust. Plaintiffs responded that the third cause of action was for breach of contract and promissory estoppel, and further that the bank's oral promise was enforceable under the doctrine of promissory estoppel. Plaintiffs argued further that Civil Code section 2924g, subdivision (c) provided for the verbal agreement to postpone a sale. The trial court overruled defendants' demurrer to count three without discussion.

C. Wachovia's Motion For Summary Judgment

Wachovia moved for summary judgment on count three, advancing several arguments directed at the breach of contract claim. Wachovia also argued that plaintiffs did not properly plead promissory estoppel, but even if they had they failed to show a promise, detrimental reliance, or injury. Wachovia relied on the following undisputed facts:

On July 13, 2006, plaintiffs borrowed $495,000 from Wachovia's predecessor, World Savings Bank, FSB. The loan was secured by a first deed of trust recorded against plaintiffs' home. On June 26, 2008, a notice of default issued by Cal–Western Reconveyance Corporation (Cal–Western) was recorded in the Santa Clara County Recorder's Office showing $9,549 in mortgage arrears. ³ After receiving notice of default, plaintiffs and Wachovia reached a forbearance agreement requiring plaintiffs to pay $10,000 and bring the loan current by October 27, 2008. Plaintiffs made the $10,000 payment but never brought the loan current.

On January 13, 2009, Cal–Western recorded a notice of trustee sale of plaintiffs' home. The notice set the sale, by public auction at the Santa Clara County Courthouse, for January 29, 2009. Wachovia postponed the sale three times at the request of plaintiffs. At the scheduled January 29 sale, Cal–Western's auctioneer announced a postponement to March 3, 2009, and memorialized the postponement in a written certificate. Plaintiffs did not attend the January 29 sale, but Mark Jones contacted Cal–Western by phone to confirm the postponement.

At the March 3, 2009 sale, the auctioneer announced the second postponement to April 17, 2009, and memorialized the postponement in a written certificate. Mark Jones contacted Cal–Western multiple times through its automated phone system to confirm that postponement.

According to plaintiffs, during an April 15, 2009 telephone call with Wachovia, Mark Jones was given a new sale date of June 18, 2009. But at the April 17 sale, the auctioneer announced the postponement to June 8, 2009 and memorialized that date in writing. Plaintiffs did not confirm the new sale date with Cal–Western, despite having done so for the previous two postponements. Wachovia's records reflect each postponement, with the April 17 sale postponed to June 8, not June 18. Each postponed sale date, including the June 8 date, was publically available online and through Cal–Western's automated telephone system.

Plaintiffs requested and received reinstatement quotes from Wachovia in September 2008, October 2008, and January 2009. Aside from the $10,000 forbearance payment made in September 2008 with the understanding that plaintiffs would pay the balance of their default two months later, plaintiffs made no other payments to bring their loan current. Although plaintiffs had no funds or assets in hand to cure the loan default, they would have borrowed funds from their accountant and friend, Roger Marlin, to cure the default before June 18. Marlin had loaned plaintiffs $10,000 for the forbearance payment, which plaintiffs had not paid back, and he and Mark Jones had discussed another loan to cure the default. But plaintiffs did not formally seek money from Marlin, and their discussions were not reduced to a formal agreement. Plaintiffs planned to contact Wachovia three or four days before June 18 to seek another postponement.

Third party purchaser Adrian Wunderman bought plaintiffs' home at the June 8 trustee sale for $420,000. At that time plaintiffs' outstanding debt was $570,147. Seeking the highest sales price possible, Wunderman, a local real estate broker, listed the property in August 2009 for $589,950, but he reduced the price by $30,000 after receiving no purchase offers. According to Wunderman, the house was run down with no significant upgrades from its original condition. Wunderman undertook cosmetic clean-up before selling the house, including the removal of stained, flea-infested carpet. Wunderman received one offer and sold the property for $555,000 on October 22, 2009. Plaintiffs were living next door to the foreclosed property when it was listed for sale. A “for sale” sign was posted in the front yard and the listing was available online. Wunderman would have accepted an offer from plaintiffs to repurchase the home for any amount exceeding $555,000.

D. Plaintiffs' Opposition to Summary Judgment

Pursuing their third cause of action based on a promissory estoppel theory, plaintiffs argued that they incurred detriment because, by Wachovia's “breach of their promise and advancing the sale date by a period of ten days to June 8, the plaintiffs were prevented from taking steps to reinstate the loan with [the bank], thereby losing a significant equity in their home, as well as incurring a significant state and federal income tax liability by reason of cancellation of debt income.”

Defending their damages claim, plaintiffs submitted a declaration from Gary Nobile, a realtor who opined that the fair market value of the property in June 2009 was $695,000, and a declaration from Mark Jones valuing the home at over $700,000 at the time of the trustee sale. Jones also opined that the $555,000 October 2009 selling price was substantially below the property's market value. Plaintiffs also provided a declaration from Roger Marlin who opined that plaintiffs incurred over $66,000 in cancellation of debt tax liability. The court sustained Wachovia's objections to Marlin's tax liability figure as irrelevant because no tax damages were alleged in the first amended complaint. The court also sustained objections to Nobile's $695,000 fair market value opinion and Jones's opinion that the home was valued at $700,000 and undersold at $555,000.

Plaintiffs responded to defendants' lack of harm argument by asserting that they had the right to pay off the loan up to the trustee sale, and that they were prepared to pay off not only the loan deficiency but the loan in full before June 18. Even though plaintiffs failed to plead their willingness and ability to pay the loan in full, and even though that course of action was not explored during discovery, Mark Jones explained in his declaration supporting plaintiffs' opposition to summary judgment that he was prepared to borrow funds from Marlin to pay the entire amount of the loan-in the range of $570,000–if, at the final hour, Wachovia refused to postpone the June 18 sale. Marlin asserted by declaration that he had told Jones he would do whatever was necessary to save plaintiffs' home from foreclosure. Marlin represented further that he had the ability to pay off plaintiffs' loan in full in June 2009 and would have done so on 48–hour notice had Jones asked him.

Jones explained by declaration that plaintiffs intended to seek another postponement from the bank before resorting to Marlin's offer, and they planned to make that request just three or four days before June 18 because Wachovia had advised them to wait until...