Case Number: EC062018    Hearing Date: July 25, 2014    Dept: NCD

TENTATIVE RULING (7-25-14)
#18
EC 062018
ZANDERHOLM v. SELECT PORTFOLIO SERVICING, INC.

Demurrer to Complaint of Plaintiff Steven R. Zanderholm by Defendant Select Portfolio Servicing, Inc.

TENTATIVE:
Demurrer is SUSTAINED.
The first cause of action for violation of Civil Code §2923.6 fails to clearly state that plaintiff submitted a complete loan package.
The second cause of action for promissory estoppel fails to allege a clear and unambiguous promise, reasonable reliance on such a promise, detrimental reliance, or the appropriate limited contract damages flowing from such a claim.

Ten days leave to amend.

CAUSES OF ACTION: from Complaint
1) Breach of Civil Code § 2923.6
2) Promissory Estoppel

SUMMARY OF FACTS:
Plaintiff Steven Zanderholm alleges that he is the owner of his primary residence in Rosemead, which is subject to a loan and first deed of trust originally serviced by JP Morgan Chase Bank but subsequently assigned to defendant Select Portfolio Servicing as successor. Plaintiff alleges that in August of 2013 he submitted a loan modification package requested by Chase, that the servicing of the account was transferred to SPS, which sent a letter that if he was working with his prior servicer, SPS would work to continue the process, but that plaintiff has been informed that his property was being sold at foreclosure.

ANALYSIS:
First Cause of Action—Violation of Civil Code section 2923.6
The complaint alleges that plaintiff has never received a notification that his modification was denied, and that at the time defendants filed the NOD and set the foreclosure sale date, plaintiff was still in active modification review.

Defendant argues that there is no allegation that plaintiff had submitted a complete loan application, as there is no allegation that Chase acknowledged receipt of the application or that it was complete, and the allegations are that SPS first learned of the application on the eve of the foreclosure sale. It is true that it is not clearly alleged that SPS was submitted a complete loan application, but SPS is sued as the successor to Chase, and the allegations are that it should have been continuing the process as the new loan servicer. The facts alleged are that plaintiff “submitted a modification package as requested by Chase,” and that Chase then repeatedly assured plaintiff he was in modification review and the NOD should be disregarded. [paras. 8-11]. In sum, the demurrer is sustained with leave to amend, and plaintiff is required to more clearly plead that he submitted a complete first lien modification application, the receipt of which presumably would have been acknowledged in writing on thus and such date.

Second Cause of Action—Promissory Estoppel
Promissory estoppel is the doctrine under which one who makes a promise upon which another justifiably relies may be bound to perform it, despite lack of consideration.

Here, the cause of action asserts that there was a representation by Chase/SPS that they “would not foreclose during the modification review process.” [Para. 19]. This promise does not appear clear and unambiguous, particularly when defendant was under no obligation under the HAMP program to actually modify the loan. See Laks v. Coast Federal Savings and Loan Association (1976) 60 Cal.App.3d 885at 893.

The promise as now alleged is not sufficiently certain to give rise to a promissory estoppel claim, and arguably also could not have reasonably invoked reasonable reliance.

Here, the detrimental reliance alleged is that plaintiff submitted documents requested by defendant and “delayed taking any other actions to save the Property from potential foreclosure by Chase/SPS.” [Para. 20]. He alleges that plaintiff “did not pursue other avenues such as refinancing seeking other means of bringing current his past due balance and/or seeking a sale of the property.” [Para. 25].

This is not the type of detrimental reliance which generally supports a promissory estoppel theory. See Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031 (procuring high interest loan using other property as security deemed sufficient detrimental reliance), Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218 (failing to convert bankruptcy action deemed sufficient detrimental reliance). The demurrer is sustained.

In addition, the cause of action as alleged does not seek the damages flowing from reliance on this promise, such as the cost of refinancing or preparing to sell the property, which are the only contract type damages available in connection with such a claim. The demurrer is sustained.