Chang v. Wachovia Mortgage, FSB et al
Filing
57
ORDER by Judge Samuel Conti denying 46 Motion for Leave to File; granting 48 Motion for Summary Judgment (sclc1, COURT STAFF) (Filed on 8/6/2012)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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United States District Court
For the Northern District of California
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CYNTHIA M. CHANG,
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Plaintiff,
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v.
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WACHOVIA MORTGAGE, FSB, a national )
association; WELLS FARGO BANK,
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N.A., a national association; and )
DOES 1 through 50, inclusive,
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Defendants.
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Case No. C-11-1951 SC
ORDER DENYING MOTION FOR
LEAVE TO AMEND AND GRANTING
MOTION FOR SUMMARY JUDGMENT
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I.
INTRODUCTION
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Plaintiff Cynthia M. Chang ("Plaintiff" or "Chang") brings
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this action for promissory estoppel against Defendants Wachovia
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Mortgage, FSB ("Wachovia") and Wells Fargo Bank, N.A. ("Wells
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Fargo") (collectively, "Defendants") in connection with the
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foreclosure of her home.
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Defendants promised to postpone foreclosure while they were
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considering Plaintiff's application for a loan modification.
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reliance on this promise, Plaintiff refrained from selling her home
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and recovering her equity in the property.
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broke their promise by selling Plaintiff's home without notice
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while loan modification discussions were ongoing.
The crux of Plaintiff's case is that
In
Defendants allegedly
Defendants'
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action allegedly caused Plaintiff to lose over $250,000 in equity
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and adversely affected her credit score.
Plaintiff now moves for leave to file a second amended
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4
complaint ("SAC") so as to add new causes of action for "negligent
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performance of an assumed duty" and "damage to credit."
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("SAC Mot.").
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Opp'n"), 50 ("Reply ISO SAC Mot.").
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Defendants' fully briefed motion for summary judgment.
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("MSJ"), 51 ("MSJ Opp'n"), 54 ("Reply ISO MSJ").
The motion is fully briefed.
ECF No. 46
ECF Nos. 47 ("SAC Mot.
Also before the Court is
ECF Nos. 48
Pursuant to Civil
United States District Court
For the Northern District of California
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Local Rule 7-1(b), the Court finds this matter appropriate for
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determination without oral argument.
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below, the Court DENIES Plaintiff's motion for leave to file a SAC
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and GRANTS Defendants' motion for summary judgment.
For the reasons set forth
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II.
BACKGROUND
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A.
Factual Background
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Plaintiff was the owner of a residence located at 80
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Collingwood Street, Number 302, San Francisco, California, Block
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2648, Lot 056 ("the Property") from 1996 through 2010.
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2 ("Chang Decl. ISO SAC") ¶ 2.
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refinanced the Property with World Savings Bank ("WSB"), Wells
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Fargo's predecessor-in-interest.1
ECF No. 45-
Around May 18, 2006, Plaintiff
Defs.' Exs. 2-5.2
The refinance
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Plaintiff alleges, and Wells Fargo concedes, that Wachovia is
WSB's successor-in-interest, and that Wells Fargo is Wachovia's
successor-in-interest. ECF No. ("FAC") ¶¶ 2-6. The Court refers
to all three entities as Wells Fargo, the latest successor-ininterest.
2
Defendants filed an appendix of exhibits in support of their
motion for summary judgment. ECF Nos. 45-5 - 45-11 ("Defs.'
Exs."). Plaintiff also filed an appendix of exhibits. ECF Nos.
52, 53 ("Pl.'s Exs.").
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consisted of two loans: the first in the principal amount of
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$380,000 ("the First Loan") and the second, an equity line of
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credit, in the amount of $50,000 ("the Second Loan").
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loans were secured by deeds of trust recorded against the Property.
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Id.
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Id.
Both
In 2008, Plaintiff was laid off from her teaching position at
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San Francisco State University.
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22 ("FAC") ¶ 7.
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loan payments.
Chang Decl. ISO SAC ¶ 3; ECF No.
Sometime thereafter, Plaintiff fell behind on her
Id.
In September 2009, Wells Fargo initiated
United States District Court
For the Northern District of California
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foreclosure proceedings on the Second Loan by recording and mailing
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a notice of default.
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Plaintiff was $4,525.97 in arrears.
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financial problems worsened.
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dog assault which interfered with her ability to work.
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ISO SAC ¶ 3; Defs.' Ex. 6 ("Chang Dep.") at 29.
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2010, a notice of trustee's sale was recorded and mailed to
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Plaintiff in connection with the Second Loan.
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trustee's sale on the Second Loan was initially scheduled for
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February 1, 2010.
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any information indicating whether Defendants initiated foreclosure
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proceedings against the First Loan during this period.
Defs.' Ex. 8.
Id.
According to the notice,
In November 2009, Plaintiff's
She suffered a wrist injury from a
Chang Decl.
On January 11,
Defs.' Ex. 10.
The
Unhelpfully, neither party has submitted
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Due to her financial difficulties, Plaintiff attempted to
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obtain a loan modification on both her First Loan and Second Loan.
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In September 2009, Plaintiff initiated loan modification
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discussions with Wells Fargo.
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reviewed Plaintiff's loans under the Mortgage Assistance Program
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("MAP") and the Home Affordable Modification Program ("HAMP").
Chang Dep. at 40.
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Wells Fargo then
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Dolan Decl. ¶ 12.3
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was postponed four times.
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dated April 12, 2010, set the foreclosure sale for May 12, 2010.
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Id.
During the review process, the foreclosure sale
Defs.' Ex. 18.
The final postponement,
Underwriters ultimately determined that Plaintiff was
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ineligible for a modification under either MAP or HAMP.
Dolan
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Decl. ¶ 13.
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for MAP and HAMP programs in four separate letters sent between
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April 9, 2010 and April 16, 2010.
Wells Fargo notified Plaintiff that she was ineligible
Defs.' Exs. 14-17.
An April 9
United States District Court
For the Northern District of California
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letter stated that the First Loan was ineligible for modification
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under MAP.
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dated April 12.
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stated that the Second Loan was ineligible for modification under
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MAP.
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note that during our review of your situation, we suspended the
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foreclosure process.
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will now resume."
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that the First Loan was also ineligible for modification under
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HAMP.
Defs.' Ex. 14.
That message was repeated in a letter
Defs.' Ex. 15.
Defs.' Ex. 16.
Another letter dated April 12
The two April 12 letters also stated: "Please
The foreclosure process against the property
Defs.' Ex. 15-16.
An April 16 letter stated
Defs.' Ex. 17.
Plaintiff states that, following receipt of the April 9 and
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April 12, 2010 letters, she immediately and repeatedly called Wells
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Fargo and requested that it explain the status of her pending loan
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modification applications.
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Plaintiff also states that "[a]t no time in my telephone
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conversations with defendant in April and May[] 2010[] did
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defendant tell me that the Trustee's sale was still pending or that
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ECF No. 51-1 ("Chang MSJ Decl.") ¶ 24.
Michael Dolan ("Dolan"), who is employed in Wells Fargo's Loss
Mitigation Support Group, filed a declaration in support of
Defendants' motion for summary judgment. ECF No. 48-1 ("Dolan
Decl.")
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there was a Trustee's sale date set."
Id. ¶ 25.
There is no
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indication that Plaintiff requested this information during her
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telephone conversations with Wells Fargo.
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was her understanding that both the First Loan and Second Loan were
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still being considered for modification in April and May of 2010
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and that "defendant more than once confirmed that there would be no
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foreclosure while loan modification was being considered."
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27.
Plaintiff claims that it
Id. ¶
On May 12, 2010, the Property was sold at a trustee's sale to
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United States District Court
For the Northern District of California
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a third party.
Defs.' Ex. 20.
Plaintiff states that the sale took
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her by "complete surprise" because she thought she was still being
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considered for a loan modification.
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also states that, had she been aware of the status of the
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foreclosure process, she would have sought a private sale of the
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Property so that she could recover her equity.
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Plaintiff claims that the foreclosure sale caused her to lose
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equity in excess of $250,000.
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claims that Defendant's conduct has materially and adversely
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affected her credit score.
Chang MSJ Decl. ¶ 13.
Id. ¶ 15.
She
Id. ¶ 14.
Additionally, Plaintiff
Id.
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B.
Procedural History
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Plaintiff brought this action in California state court on
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March 21, 2011, alleging nine causes of action, including a claim
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for promissory estoppel.
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removed to federal court, Defendants moved to dismiss.
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On July 21, 2011, the motion was granted in part and denied in
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part.
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undisturbed, but four of Plaintiff's claims were dismissed with
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prejudice, and the remainder were dismissed with leave to amend.
ECF No. 21.
ECF No. 1, Ex. A.
After the action was
ECF No. 13.
The promissory estoppel claim remained
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Id. at 15-16.
Plaintiff subsequently amended a number of her
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claims and Defendants again moved to dismiss them.
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28.
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leaving only Plaintiff's claim for promissory estoppel undisturbed.
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ECF No. 37.
ECF Nos. 22,
On November 15, 2011, the Court dismissed the amended claims,
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On April 20, 2012, the Court issued a scheduling order,
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setting trial for September 10, 2012 and the discovery cut-off for
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July 10, 2012.
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Court also set August 10, 2012 as the last date for dispositive
ECF No. 44 ("4/20/2012 Scheduling Order").
United States District Court
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For the Northern District of California
Id.
The
motions to be heard.
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motion for leave to file a SAC.
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of action for negligent performance of an assumed duty and damage
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to credit.
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their motion for summary judgment.
SAC Mot., Ex A.
On June 5, 2012, Plaintiff filed her
Plaintiff seeks to add new causes
On June 22, 2012, Defendants filed
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III. DISCUSSION
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A.
Plaintiff's Motion for Leave to Amend
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Federal Rule of Civil Procedure 15(a)(1) allows a party to
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amend its pleading once as a matter of course during a certain
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period of time.
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including this one, "a party may amend its pleading only with the
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opposing party's written consent or the court's leave."
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Civ. P. 15(a)(2).
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so requires."
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for granting leave to amend is generous."
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Police Dept., 901 F.2d 696, 701 (9th Cir. 1988).
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considers five factors in assessing the propriety of leave to
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amend--bad faith, undue delay, prejudice to the opposing party,
Fed. R. Civ. P. 15(a)(1).
Id.
In all other cases,
Fed. R.
"The court should freely give leave when justice
Thus, in cases such as this, "[t]he standard
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Balistreri v. Pacifica
"The court
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futility of amendment, and whether the plaintiff has previously
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amended the complaint."
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F.3d 984, 995 (9th Cir. 2011).
United States v. Corinthian Colleges, 655
Here there is no evidence of bad faith.4
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As to undue delay,
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Plaintiff could have brought her two proposed claims earlier, as
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they do not rest on new facts uncovered through discovery.
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delay by itself, however, is insufficient to justify denying a
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motion to amend."
9
1999).
"Undue
Bowles v. Reade, 198 F.3d 752, 758 (9th Cir.
Also weighing against Plaintiff's motion is the fact that
United States District Court
For the Northern District of California
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she has amended her complaint twice before.
Additionally,
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amendment would prejudice Defendants to a certain extent since they
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may need additional discovery to respond to Plaintiff's new claims.
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See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990).
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The discovery cut-off has already passed and trial is set to
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commence in one month.
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pre-trial dates and deadlines can be re-scheduled and it is
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doubtful that additional discovery would be excessively burdensome
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since Plaintiff's new causes of action are based on many of the
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same facts as her existing claim for promissory estoppel.
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dispositive factor here is futility of amendment.
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proposed claims for negligent performance of an assumed duty and
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damage to credit cannot possibly succeed, granting Plaintiff leave
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to amend would not help her case.
See 4/20/2012 Scheduling Order.
However,
The
As Plaintiff's
Plaintiff's proposed claim for negligent performance of an
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assumed duty is predicated on the theory that once Defendants
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assumed the obligation of reviewing Plaintiff's loan modification
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Defendants make the implausible argument that Plaintiff's bad
faith is evidenced by the fact that she moved to amend before
Defendant moved for summary judgment. See Opp'n to SAC Mot. at 5.
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applications, they owed Plaintiff a duty of care in carrying out
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the task.
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breached that duty by failing to promptly notify Plaintiff of the
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scheduled date for the foreclosure sale.
SAC Mot. at 4.
Plaintiff contends that Defendants
The Court disagrees.
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Id.
Under California law, "a financial
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institution owes no duty of care to a borrower when the
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institution's involvement in the loan transaction does not exceed
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the scope of its conventional role as a mere lender of money."
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Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089, 1096
United States District Court
For the Northern District of California
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(1991).
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conventional roles by committing to review Plaintiff's application
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for a loan modification.
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borrower's eligibility for a loan modification is intimately tied
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to a financial institution's lending role.
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Fargo Bank, N.A., 10-CV-01390-LHK, 2011 U.S. Dist. LEXIS 8296, *26-
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27 (N.D. Cal. Jan. 28, 2011).
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Plaintiff some kind of tort duty by accepting her loan modification
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application, that duty was limited to processing and reviewing the
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application with due care.
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would suggest this narrow duty encompasses an obligation to ensure
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that a borrower is aware of the date of a postponed foreclosure
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sale.
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Plaintiff asserts that Defendants stepped outside their
SAC Opp'n at 3-4.
However, assessing a
See DeLeon v. Wells
Further, even if Defendants owed
Plaintiff offers no authority which
Amending the pleadings to add Plaintiff's proposed cause of
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action for damage to credit would also be futile.
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to credit constitutes an independent cause of action -- and it is
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not clear that it does -- it must be predicated on some culpable
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conduct on the part of the defendant.
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Defendant engaged in culpable conduct by "foreclos[ing] on
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Even if damage
Here, Plaintiff argues that
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plaintiff's residence without giving her proper notice and
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opportunity to receive her equity."
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set forth in this Order and the Court's prior orders on Defendants'
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motions to dismiss, the Court cannot conclude that Defendant
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engaged in any wrongdoing when they foreclosed on the Property.
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Accordingly, Plaintiff could not possibly state a claim for damage
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to credit.
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SAC Mot. at 5.
However, as
For these reasons, the Court DENIES Plaintiff's motion for
leave to file a SAC.
United States District Court
For the Northern District of California
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B.
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Entry of summary judgment is proper "if the movant shows that
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there is no genuine dispute as to any material fact and the movant
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is entitled to judgment as a matter of law."
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56(a).
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require a directed verdict for the moving party.
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Liberty Lobby, Inc., 477 U.S. 242, 251 (1986).
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mandates the entry of summary judgment . . . against a party who
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fails to make a showing sufficient to establish the existence of an
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element essential to that party's case, and on which that party
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will bear the burden of proof at trial."
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477 U.S. 317, 322 (1986).
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Defendants' Motion for Summary Judgment
Fed. R. Civ. P.
Summary judgment should be granted if the evidence would
Anderson v.
Thus, "Rule 56[]
Celotex Corp. v. Catrett,
Here, the evidence before the Court cannot support Plaintiff's
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claim for promissory estoppel, even when viewed in the light most
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favorable to her.
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are: "(1) a promise clear and unambiguous in its terms; (2)
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reliance by the party to whom the promise is made; (3) [the]
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reliance must be both reasonable and foreseeable; and (4) the party
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asserting the estoppel must be injured by his reliance."
The elements of a claim for promissory estoppel
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Aceves v.
1
U.S. Bank, N.A., 192 Cal. App. 4th 218, 225 (Cal. Ct. App. 2011)
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(internal quotations omitted).
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by his language or conduct leads another to do what he would not
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otherwise have done shall not subject such person to loss or injury
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by disappointing the expectations upon which he acted."
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Bailey, 8 Cal. 2d 416, 423 (Cal. 1937) (quoting Dickerson v.
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Colgrove, 100 U.S. 578, 580 (1880)).
"The vital principle is that he who
Wilson v.
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Plaintiff alleges that Defendants promised they would not
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proceed with the foreclosure sale so long as they were considering
United States District Court
For the Northern District of California
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Plaintiff's application for a loan modification.
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undisputed facts show that Defendants honored that promise.
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Defendants denied Plaintiff's application for a loan modification
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on April 12, 2010, and did not foreclose on the Property until one
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month later.
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letters informed Plaintiff that Defendants were "unable to proceed
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with [Plaintiff's] loan modification request."
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also stated: "Please note that during our review of your situation,
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we suspended the foreclosure process.
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against the property will now resume."
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these letters, Plaintiff believed that her modification application
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was still under review and the foreclosure sale would be postponed
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further, her belief was unforeseeable and unreasonable.
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reliance cannot support a claim for promissory estoppel.
See Defs.' Exs. 15, 16.
FAC ¶ 24.
The
The April 12, 2010 denial
Id.
The letters
The foreclosure process
Id.
If, after receiving
Such
In her declaration, Plaintiff suggests that Defendants later
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resumed their consideration of her loan modification application
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and indicated that they would continue to postpone the foreclosure
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sale.
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declaration does not create a triable issue of fact.
See Chang MSJ Decl. ¶¶ 18-29.
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The Court finds that the
The
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declaration describes Plaintiff's understanding of the status of
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her loans based on her telephone conversations with Defendants'
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representatives, as well as what Defendants' representatives did
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not say during those conversations.
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declaration is any indication that Defendants affirmatively stated
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that Plaintiff's loan was still under review after April 12, 2010.
See id.
Absent from the
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Plaintiff also makes much of the confusion created by the fact
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that, in April 2010, her First Loan was in active foreclosure while
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her Second Loan was not.
See MSJ Opp'n at 4.
Plaintiff states:
United States District Court
For the Northern District of California
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"Often when I called, I was asked for a loan number and in several
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instances I provided the loan number for the First Loan, Loan No.
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1394.
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MSJ Decl. ¶ 27.
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the Property would not be subject to a foreclosure sale.
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Plaintiff's confusion about her loans cannot save her claim for
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promissory estoppel.
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clear and unambiguous promise that they would refrain from
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foreclosing on one loan if the other was not in active foreclosure.
Defendant was not in fact foreclosing on this loan."
Chang
It appears that Plaintiff took this to mean that
There is no evidence that Defendants made a
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Additionally, Plaintiff has not offered any evidence to
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suggest that her First Loan was under review during the relevant
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period.
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Plaintiff that the First Loan was ineligible for a loan
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modification and that foreclosure proceedings would resume on that
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loan.
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documents pertaining to the First Loan which purportedly contradict
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the April 12 denial letter.
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Exs. A, D, E, F).
In the April 12 denial letter, Defendants informed
See Defs.' Ex. 15.
Plaintiff points to a number of
See MSJ Opp'n at 4-5 (citing Pl.'s
The Court sees no contradiction.
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Plaintiff first refers to a delinquency record maintained by
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ON RFD & FNCLS TO FURTHER RVEW SITUATION . . . .
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SALE DATE."
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evidence to suggest that these statements were actually conveyed to
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her or that this record shows that Defendant had committed to
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reconsidering her modification application.
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("Dolan Dep.") at 136-37.
9
2010 denial letter, which states: "Even though you are ineligible
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United States District Court
Wells Fargo, dated April 19, 2010, which states: "GATHERING DETAILS
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For the Northern District of California
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for assistance under [MAP], the [First] loan may still be eligible
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for other loss mitigation options . . . ."
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statement is irrelevant.
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for other loss mitigation options does not mean that it was still
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under review by Defendants.
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from Defendants dated August 3, 2010, which states that Plaintiff
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was again denied for the HAMP program.
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goes on to say: "You have 30 calendar days from the date of this
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notice to contact [Defendants] to discuss the reason for non-
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approval . . . no foreclosure sale will be conducted and you will
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not lose your home during this 30-day period . . . ."
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Plaintiff could not have relied on the representations in this
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letter since it was sent months after the foreclosure sale took
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place.
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dated May 5, 2010, thanking Plaintiff for her "home equity
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application."
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equity loan is irrelevant to the status of her application for a
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loan modification.
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5
Pl.'s Ex. A.
NO FCL SCHEDULED
However, Plaintiff has offered no
See ECF NO. 54-1 Ex. A
Second, Plaintiff points to the April 9,
Defs.' Ex. 14.5
This
The fact that the First Loan was eligible
Third, Plaintiff points to a letter
Pl.'s Ex. E.
The letter
Id.
Finally, Plaintiff refers to a letter from Wells Fargo,
Pl.'s Ex. F.
But Plaintiff's application for a home
Plaintiff also filed a copy of this document as Plaintiff's
Exhibit D.
12
For these reasons, the Court GRANTS Defendants' Motion for
1
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Summary Judgment as to Plaintiff's sole remaining claim for
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promissory estoppel.
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IV.
CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiff Cynthia
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Chang's motion for leave to file a second amended complaint and
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GRANTS Defendants Wachovia Mortgage and Well Fargo Bank, N.A.'s
9
motion for summary judgment.
The Court will enter a separate
United States District Court
For the Northern District of California
10
judgment on Plaintiff's sole remaining claim for promissory
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estoppel.
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IT IS SO ORDERED.
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Dated: August 6, 2012
UNITED STATES DISTRICT JUDGE
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