California Appeals Court Rules Oral Promises Are Binding

California Appeals Court Rules Oral Promises Are Binding
02/09/2011 BY: JOY LEOPOLD

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California appeals court ruling could have far reaching effects for servicers who believe oral promises do not carry weight.
Last month, the three judges hearing the case of Aceves v. U.S. Bank found that the bank had promised to negotiate a loan modification for a customer while intending to proceed with the foreclosure on the customer’s house.

The plaintiff, Claudia Aceves, was on the verge of filing for Chapter 13 bankruptcy protection, but was told by the bank that she could receive a loan modification instead.
Unlike Chapter 7 bankruptcy, which would have required Aceves give up her home, Chapter 13 protection would have helped her stay in her home.
Aceves did not file for bankruptcy protections, and the bank foreclosed on her home, claiming, “an oral promise to postpone either a loan payment or a foreclosure is unenforceable.”
But the court ruled that while, in the absence of consideration a gratuitous oral promise ordinarily would be unenforceable, but, “under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement.”
Because Aceves was pursuing another plan of action in order to keep her home, and decided against it once the bank promised to negotiate a modification with her, the bank was bound to keep that promise, and breached it by continuing with the foreclosure.

24 Responses

  1. Thought I’d throw more into the mix since it appears CA still doesn’t get it.

    “New York’s US Bankruptcy Court Rules MERS’s Business Model Is Illegal by L. Randall Wray”. Benzinga

    Read more: http://www.businessinsider.com/new-y…#ixzz1ELGof163

  2. As far as the Gomes case, I posted here several times, as well as blogged at http://bryllaw.blogspot.com/2010/12/va-bankruptcy-judge-slams-deutsche-bank.html that it is not enough to mount a speculative challenge to a party’s authority to foreclose; one must state specific facts, and even have specific exhibits, showing why the non-judicial foreclosure process is defective. Otherwise, any non-judicial foreclosure may become judicial, which the judges will not permit.
    The Gomes attorneys would have been well-advised to read my post about Deutsche (link above) and the other posts on the burden of proof in non-judicial foreclosure challenges.

  3. Thank you everyone for all the comments. I’m embroiled in a BK AP right now and just filed 1st amended. I have a pretty good attorney (same as Dan E.), so I’ll just have to hope & pray that the judge sees it our way & we get to discovery.

  4. ian:

    So true. Thanks.

  5. Joyce Louise- that should be contributionS (plural) to ANONYMOUS

  6. Anonymous:

    You are a class act. Thanks for your contribution.

  7. Patrick Pulatie

    I have not seen any CA cases where court states that, in the process, MERS – as nominee/agent may conceal the identity of who they are nominee/agent for and that fraudulent documents are allowed in the process. It is just not addressed in any decisions. Also – know of no instances where borrower allowed MERS – as nominee/agent — to conceal who they are nominee/agent for – and to allow fraud in process of transfer. If fraud is used — which it was — MERS as agent/nominee– is also responsible.

    MERS is supposed to have ALL valid and accurate information in their records — and, supposedly, this info is available to borrowers. But, this is not the case.

    In the case provided by leapfrog — the judge does not address concealing identify of who the nominee/agent is acting on behalf of – and does not address how loan got into Investment trust – – judge does not identify the trust. This challenges MERS authority as nominee/agent to start with.

    Please provide a case that shows that judge accepts concealed identity by agents.

    I understand that CA has been behind all current fraud being flushed out in other states. And, Gary H is right — CA is diligent that all transfers/assignments must be valid and accurate. Attorney blew this one.

    Believe MERS issue in CA is an easy win — IF the right attorney is focused and willing to take to Ninth Circuit if necessary.

    But, I know that you like the status quo.

  8. On a Short Note,

    One other thing flies out the window here, the right of “Tender”. If a claim is made by the Plaintiff for Fraud based on “fraudulent foreclosure”, Tender is a moot point. Tender should not be allowed to prevail over fraudulet actions.

  9. leapfrog,

    “I saw this today. I would love to see someone dissect this further. It doesn’t appear to be good news at all”.

    I believe a huge mistake was made by the attornys representing Gomes v Countrywide. The non-judicial side of forclosure allows for to many “outs” in favor of the opposing party, especially when a plaintiff claims that the foreclosure is “unlawful”.

    “Unlawful”, places all of us in non-judicial states, in a position of proving the same procedural law or code of the state we live in.

    IMHO, what ‘toots’ a higher horn is “fradulent foreclosure” based on the conveyence itself (as witten and signafied) and the ambiguous nature of MERS Corp.as nominee.

    We all know who and what MERS represents. By placing that statement in any Deed creates a condition of Fraud “knowingly” NOT to be to True.

    This is were the Court errorred, the “Fraud” was in the declaration of the Deed allowing MERS a right to foreclose on its behalf.

    The plaintiffs attorneys “screwed the pooch” on this one, go after the documents…..those that were signed and look at them very carefully and don’t forget the UCC codes of delivery.

  10. Ann,

    But – how about Leapfrog’s reference?? SEE

    http://www.courtinfo.ca.gov/opinions/documents/D057005.PDF

  11. ANOMYNOUS,

    Do yourself and everyone else and stick to states where you MIGHT know what you are talking about. Otherwise, you do a disservice to all as well.

    I have on occasion posted the exact same positions that the Appeals Court found to be valid. And everyone claimed I was a shill or did not know what I was talking about.

    CA law has consistently ruled that 2924 is “exhaustive”. Furthermore, they have consistently ruled that MERS is a lawful agent, and that MERS can foreclose, especially since the borrower grants MERS the power in the Deed.

    Certain judges, like Buford in the Central District BK courts, who rule against MERS, are considered to be Rogue Judges.

    Now, in CA, the courts, both Civil and Federal, as well as BK courts, will look the the Appeals Court ruling as their guidance. Any lower court judge, or Federal judge who does not accept the Appeals Court ruling, will face having their decisions appealed to higher courts. Eventually, either the 9th Circuit or the CA Supremes will have the final decision.

    But in the meantime, arguments against MERS and legal standing in CA are dead, as they should be.

    BTW, I have seen agreements that Garfield and most attorneys will never see, and the agreements support the Agency relationship.

  12. Found the full Appeal Court Opinion
    http://www.courtinfo.ca.gov/opinions/documents/B220922.PDF

  13. I have no smiley faces in my comment.

  14. leapfrog

    Will try This is VERY important. Some sections below — any my comments are under COMMENT – after quotes from author and CA decision..

    1) Afterward, Mr. Gomes’ mortgage/promissory note was placed, just so many others, into an investment trust and became part of one or more pools of mortgages

    COMMENT — Where is the proof than mortgage/note was placed into investment trust? MERS MUST record this.. Where is MERS record for placement ?? MERS must identify the current “investor.”

    2) As is also customary for MERS transactions, no formal assignment of the deed of trust to Countrywide or anyone else from KB accompanied that sale.

    COMMENT — NO — MERS must have a record of ALL assignments — even though it is does not need to recorded in County Registrar’s Office.

    3) In other words, Mr. Gomes asserted the “show me the note” defense that has been at the center of the news for well over 18 months now.

    COMMENT– “show me the note” –does not work — need to “SHOW ME” — the complete chain of assignment — which must be recorded by MERS – as nominee. Nominee does NOT mean — “do not have to disclose current creditor” — or “chain of assignment.” “Every Action MUST be prosecuted in the name of the real party in interest” — both state and federal law. Although an agent (or MAYBE nominee) may file on behalf of the actual creditor — they MUST identity that party on whose behalf they are acting (federal and state rules of law) — and must produce valid chain of assignments according to debt collection law — the FDCPA. And, also according to the new amendment to the TILA (May 2009).

    4) First, they contended that the non-judicial foreclosure process did not require proof of the beneficial owner’s having granted permission to to the foreclosing entity MERS. Second, they contended that even if it did, that requirement was met by MERS, which had been expressly delegated authority to act under the deed of trust.

    COMMENT — What?? Proof of MERS as nominee is on the note — no borrower grants authority to MERS to foreclose upon default without MERS identifying WHO is actually foreclosing.and on whose behalf MERS — as nominee — would be acting.

    5) It is held that in this state, because any agent of the lender can proceed to trustee’s sale, MERS standing was valid whether or not there had been a proper assignment of the note within the meaning of California real estate transfer law.

    COMMENT — Okay — they want to play the game of AGENT — whether or not assignments exist. Nevertheless, MERS MUST identify WHO they are AGENT for — and how it got there — including all valid and legal assignments – according to federal law — EVEN IF ASSIGNMENTS DO NOT EXIST.

    6) That is why I almost cried when I saw about 10 months ago for the first time pro bono clinic intake client that was facing a collection demand from a collection agency for $310,000: it was the difference between the mortgage balance on his foreclosed home and what the lender ultimately sold it for (plus costs.) The lender had proceeded in judicial foreclosure, won, and then turned the balance over to a collection agency.

    COMMENT — Was turned over to a collection agency PRIOR to judicial foreclosure — but failed to inform the Court. And, yes — all fees and costs added. All in violation of federal law — and federal rules of procedure.

    7) Since, too often, as goes California so goes the nation,

    COMMENT — Yes — I have been saying this for awhile. Fortunately, other states have disregarded CA decisions — because CA is in disarray. CA is in a dire state — and other states are not following CA’s pretend law.
    Where are the foreclosure protesters in CA — see protesters in Wisconsin — as to government workers. What has happened in CA?? Where are the protesters?? Wisconsin puts CA to shame.

    8) Now, however, a California appeals court has ruled that in this state, at least as it relates to non-judicial foreclosure, MERS has a right to proceed, and therefore any nominee or agent’ has a right to proceed, under our law, without regard to the formalities of real estate title and secured lending transfers.

    COMMENT — CA court refused to acknowledge that any nominee or agent — MUST identify the actual creditor on whose behalf they claim to act — and this according to federal and state law – which demands that creditor be identified and agent/nominee MUST identify the current creditor — and HOW it got there. Formalities?? What formalities — CA decision is a disregard of the law. Attorney did not plead proper violation of law.

    9) Make absolutely sure, if you retain a lawyer, that it is someone who can demonstrate that they have been litigating both real estate title issues and securitization issues for at least a few years IN YOUR STATE.

    COMMENT — -Yes — if attorney (or pro se) is not astute — you will wind up with a manipulated decision such as this one in CA.

    Now – just pulled the actual decision from CA court site.

    See below — for actual review quotes by the Court.

    “In his declaratory relief cause of action, Gomes sets forth the purported legal authority for his first cause of action, alleging that Civil Code section 2924, subdivision (a), by “necessary implication,” allows for an action to test whether the person initiating the foreclosure has the authority to do so. We reject this argument. Section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the foreclosure process. However, nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action.

    The cases are not controlling on us and, in any event, they are not on point, as none recognize a cause of action requiring the noteholder’s nominee to prove its authority to initiate a foreclosure proceeding.

    Gomes has not asserted any factual basis to suspect that MERS lacks authority to proceed with the foreclosure. He simply seeks the right to bring a lawsuit to find out whether MERS has such authority. No case law or statute authorizes such a speculative suit.7

    Gomes appears to acknowledge that California’s nonjudicial foreclosure law does not provide for the filing of a lawsuit to determine whether MERS has been authorized by the holder of the Note to initiate a foreclosure.

    That argument should be addressed in the first instance to the Legislature, not the courts.

    If, by citing these cases, Gomes means to argue that MERS lacks standing in California to initiate a nonjudicial foreclosure, the argument is without merit because under California law MERS may initiate a foreclosure as the nominee, or agent, of the noteholder. As we have explained, Civil Code section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the foreclosure process. (Italics added.)

    MERS is the owner and holder of the note as nominee for the lender, and thus MERS can enforce the note on the lender’s behalf.””

    COMMENT — as stated — even if MERS can conduct a foreclosure — by federal law (and state law) for real party in action — MERS MUST identify the party for whom they are acting. And, MERS must provide all chain of assignments — as held by them as “NOMINEE” — to enforce valid and legal transfer for which MERS claims to be acting as Nominee. RECONSTRUST — produced no assignments and produced no sales — that entitled them to collection rights — as required under federal law. MERS produced no records of transfer. As nominee/agent — MERS MUST identify the real party in interest — even if they pursue the action as the nominee/agent for the real party.

    In addition, the attorney for this case did NOT plead that assignments were improper. In fact – no one – including the court – has knowledge of any assignments. Must get those assignments — and, further, Recontrust — is NOT a lender – and is NOT the party to whom which loans were sold/assigned via an “investment trust.” Argument, by court, is invalid from onset – and attorney failed to pursue.

    Fear many courts – especially in CA – are preying upon the inexperience of pro se defendants and attorneys who do not understand the law.
    Agree, these decisions are detrimental as they convey erroneous court analysis to others — who may naively rely upon these decisions.

    Attorneys are not doing their job. ReContrust is a default service manager for debt buyers. Therefore, since loan is a default debt, thus, unsecured, the loan is subject to discharge in BK. (see TARP OVERSIGHT COMMITTEE REPORT DATED 11/2010 – Footnote 35.

    The attorney for this case should be asking for an En Banc review — as to 1) No knowledge of assignments by MERS, and ReContrust is not a lender – and not a creditor — and, therefore, MERS is not in compliance with federal law. 2) Federal and State law require identification of of the current creditor.

    The attorney, in this case, did NOT plead that assignments were improper – and that there is no knowledge of the assignments. Attorney must demand assignments. If no assignments, as stated, it is an unsecured debt – subject to BK and discharge – by law.

    Simultaneously ask for En Banc review, and file action for BK — to demand identification of creditor – that the CA court refused to do.

  15. Neil, can you post the full court opinion for this case ?
    It will be very helpful to me. Thanks

  16. leapfrog
    i think the blog author summed it up

    ” The authority is on the face of the deed of trust, the challenge brought by the borrower isn’t recognized as a justiciable issue by the statute, which is the comprehensive list of causes of action, and the demurrer is sustained. The leave to amend discussion is more aimed at the fact that since the claims are outside the statute, there is no way any amendment can cure the defect of the original complaint, so the court’s order was properly granted without leave to amend.”

  17. I saw this today. I would love to see someone dissect this further. It doesn’t appear to be good news at all.

    http://www.dailykos.com/story/2011/02/21/947501/-The-Show-Me-the-Note,-MERS-DefenseA-Cautionary-Tale

  18. One error in the story is the concept that filing
    Chapter 7 necessarily means losing the home.
    If the Judgment was obtained by fraud, one need
    only list the Judgment as unsecured and disputed
    and the home as homesteaded.
    My experience shows that the “pretender lender”
    will not file a motion to lift the stay because it knows
    it will not prevail. The debtor will receive a discharge
    of the fraudulent debt and walk away with an unencumbered house.

  19. The pretender/lenders have two computer systems going. One is for Loan Modification and one is for foreclosure. AHMSI (one of the worst) has one system in Coppell, TX where their headquarters are and one in Florida for Loan Mods. They have additonal addresses for service of process. I suggest that when you sue them, you also send certified copies of the Summons and Complaint to the address in Coppel, TX and the address in Florida. That way, the employees working there know what is going on and everybody is on the same page. They will tell you anything if they can take your home away from you. Burmese8@yahoo.com

  20. I do believe “we remember who we are”, and are fixing this.

    No “fiction” should be able to harm a “real”.
    There a “description of land” that is being fought for and in the process the fixture on the land, which is someone’s home, is being stolen.

    Our life energy created these resources, and built these homes. These fictions have no business modules for supporting ‘humanity’ or ‘life’.

    Their business modules are not designed for anyone to make a real decision; yet everyone uses the module to do something on behalf of the company (fiction) without any accountability for their actions.

    If the module calls for creating an obligation, and creating a trust, and not transferring assets into the trust, no one declares the module invalid, but they force a ‘real’ into court in a conflict over a bad business module design.

    That’s why a judge, the next thing closest to a God, when it comes to the rule of law, must step in and honor the law.

    Mankind should not be in conflict, nor should we be unwillingly drawn into conflict by attorneys acting as bill collectors for unsecured fictions pretending to be creditors or lenders.

    I am pleased this decision was made.

    I got the tax documents from both PNC Mortgage and Fannie Mae, each indicating the Lender by placement of their name in the Lender section. Both indicate the same amount claimed to be loaned.

    I was never in contract, deed, nor assignment with either.

    From a tax standpoint, those are a fraudulent tax documents and their business module expects me to send those documents in with my tax filing and sign a tax document as the preparer and indicate under penalty of perjury that the information filed is true, correct, and complete?

    I don’t think so.

    There was one only transaction to buy the home and many to steal it.

    There was only one lender, and one true creditor.

    The lender was never PNC Mortgage nor Fannie Mae.

    There should be a mail fraud judgment for sending false tax documents to people. There should be a criminal judgment against those who victimize through fraudclosures, and deceptive business practices.

    I shall submit a copy of these documents to the IRS Fraud division for their investigation.

    I refuse to be caught up in these deceptive practices and will not be coerced into paying taxes on activity I am not a party to.

    I am not a party to this system, and will not accept any fraudulent tax obligations.

    Trespass Unwanted, alive, allodial, corporeal, life, live born, born alive, whole blood, free, freeman, in jure divino

  21. I wish your headline had read, Oral Promise to not parallel foreclose found binding by the courts.

  22. Do you think this Appeal Caselaw would help me fight a bank that stated they would refi me after we closed, if i would accept the terms they increased/changed at the last minute. In fact the bank loan officer said; “accept these terms and we will refinance after the loan closes and the dust settles.” The bank changed the sales cyucle represnted terms at the last minute; to much higher rate/payment…and when called on the carpet promissed the moon to make it right after closing. we had no choice but to accept due to loosing escrow money if we failed to perform the purchase.

  23. Well finally, we have only been arguing this for years and years. Now all of a sudden, the court has made the right decision. So many people elect to not pursue the course that would help them keep their home because servicers make statements like this and give them false hope while they continue with the foreclosure process.

    This is nothing new but reality may be upon us.

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