Source: https://timothymccandless.wordpress.com/2013/02/
Timestamp: 2019-04-25 19:53:42+00:00

Document:
CHASE HOME FINANCE, LLC et al., Defendants and Respondents.
Law Offices of Vernon Bradley, Vernon Bradley, Attorney for Plaintiff and Appellant.
Law Offices of Sohnen & Kelly, Harvey Sohnen, Patricia M. Kelly, Attorneys for Defendants and Respondents.
Plaintiff Scott Call Jolley and Washington Mutual Bank (WaMu) entered into a construction loan agreement in 2006, which eventually encountered problems due to alleged failures by WaMu to properly disburse construction funds. As Jolley was continuing to attempt to salvage the transaction, WaMu went into receivership with the Federal Deposit Insurance Corporation (FDIC), and in September 2008 JP Morgan Chase1 (Chase) bought WaMu’s assets through a purchase and assumption agreement (Agreement or P&A Agreement). Jolley soon stopped making payments on the loan, and in late 2009 Chase took steps to foreclose.
Two days before the scheduled foreclosure sale, Jolley sued Chase and California Reconveyance Company (CRC), the trustee, alleging eight causes of action, including misrepresentation, breach of contract, and negligence. Defendants jointly moved for summary judgment or, in the alternative, summary adjudication, Chase’s position based in large part on the theory that under the P&A Agreement Chase had not assumed the liabilities of WaMu. The Agreement was put before the court only in a request for judicial notice, which Agreement, an expert witness for Jolley declared, was not complete. Without addressing the expert’s testimony, the trial court granted the request for judicial notice and, rejecting all of Jolley’s arguments, granted summary judgment for both defendants.
Jolley appeals, arguing that there are triable issues of material fact relating to the financing debacle, not just limited to the claimed inauthenticity of the Agreement but also as to misconduct by Chase itself. We agree, and we reverse the summary judgment for Chase, concluding that six causes of action must proceed against it, all but the causes of action for declaratory relief and accounting. We affirm the summary judgment for CRC.
In January 2006 Jolley entered into a construction loan agreement with WaMu through which he borrowed $2,156,000 to renovate a house to be used as a rental property in Tiburon, a property he had earlier purchased with a loan from WaMu, having put down $330,000 on the $1,650,000 purchase price. After the construction loan agreement was signed, WaMu disbursed the money to pay off its own first mortgage, approximately $1.3 million. Jolley understood that approximately $1 million would be available to cover construction costs for the renovation.
Jolley claims WaMu lost the loan documents, which held up construction financing for approximately eight months. Construction went forward nonetheless, with Jolley incurring at least $100,000 in construction expense. Jolley testified that WaMu made false representations, including that amounts prepaid for construction ($328,308.79) would be reimbursed to him. He further claims there were significant irregularities in the loan disbursements, with the result that WaMu claimed it had disbursed more of the money than he had actually received, which errors caused delays in construction that resulted in financial losses.
Jolley retained an attorney to assist him, and by May 2006 the attorney had written to WaMu to try to straighten out these problems. In August 2006 Jolley retained Jeffrey Thorne, a former WaMu employee, to review implementation of the agreement and to facilitate its modification. Thorne went through the files and concluded that Jolley had not received approximately $350,000 due him under the loan agreement. Thorne wrote a detailed memorandum to WaMu explaining the problems, which memorandum recommended that the loan amount be increased to $2,485,000.
The modified agreement called for completion of construction by July 1, 2007, and required Jolley to make monthly interest and principal payments of $16,181.12 beginning August 1.2 Exactly what transpired from October 2006 to September 2008 is somewhat hazy from the record, but construction apparently continued, with Jolley continuing to make interest payments. If we read Chase’s documents correctly, the last disbursement was in June 2008.
On September 25, 2008, WaMu was closed by the Office of Thrift Supervision, and the FDIC was appointed receiver. (U.S. Dept. of the Treasury, Office of Thrift Supervision Order No. 2008-36 (Sep. 25, 2008); 12 U.S.C. § 1821(c).) On the same date, Chase acquired certain assets of WaMu, including all loans and loan commitments. According to Chase, the acquisition was pursuant to the P&A Agreement, which agreement was between the FDIC as receiver and Chase.
Section 2.5 of the Agreement expressly provided, however, that Chase would assume no liabilities associated with borrower claims arising out of WaMu’s lending activities: “Notwithstanding anything to the contrary in this Agreement, any liability associated with borrower claims for payment of or liability associated with borrower claims for payments of or liability to any borrower for monetary relief, or that provide for any other form of relief to any borrower, whether or not such liability is reduced to judgment, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, legal or equitable, judicial or extra-judicial, secured or unsecured, whether asserted affirmatively or defensively, related in any way to any loan or commitment to lend made by the failed Bank prior to the failure, or to any loan made by a third party in connection with a loan which is or was held by the Failed Bank, or otherwise arising in connection with the Failed Bank’s lending and loan purchase activities are specifically not assumed by the assuming Bank.” As will be seen, this paragraph played a central role in the trial court’s decision granting summary judgment.
According to Jolley’s testimony, “Once Chase had taken over the operations of [WaMu], they continued in the construction loan department with the same people that I had been dealing with when [Wamu] still owned the loan. I had dealt with Mabette Del Rosario, Neil Lampert, and Jed Sonstrom in the legal department . . . . After the takeover by Chase, Mabette Del Rosario continued to run the construction disbursement department. I was led to believe that because Chase had taken over the loan from [Wamu], it was still going to honor the original agreement which said in the addendum Construction/Permanent Loan Part One: `When all conditions prior to rollover are met as described in the construction loan agreement, the loan will rollover to a fully amortized loan.'” Another Chase employee with whom Jolley would come to deal was Andrew North.
In November 2008, shortly after Chase had entered the picture, Jolley made his last monthly payment on the loan, claiming he was forced to default thereafter by WaMu’s breaches and negligence in the funding of the construction loan. The total amount owing on the loan by the time of Jolley’s default, according to Chase’s records, was $2,426,650.00. At the time of Jolley’s default, construction had not been completed, but was allegedly completed sometime between April 2009 and April 2010.
After Chase’s involvement Jolley tried to secure a loan modification, with Thorne continuing to advocate on Jolley’s behalf that he would need an additional $400,000 to complete construction. Thorne and Jolley both told Chase “in great detail” about the prior problems with the loan.
As indicated, the original construction loan contained a rollover provision. Chase claims it was not obligated to honor it because Jolley was in default and construction had not been completed when he went into default, and thus “all conditions prior to rollover” had not been met.
But, Jolley testified, he was encouraged on many occasions by North that, in light of the history of problems with WaMu, there was a “high probability” that Chase “would be able to modify the loan so as to avoid the foreclosure.” North said the “likelihood was good,” that it was “likely” when construction was complete he could roll the construction loan into a fully amortized conventional loan. Jolley further testified that as a result of these representations he was induced to complete construction at a cost of $100,000, borrowing from family and friends to do so. In addition to other damages, Jolley claims the construction delays and “inordinate delay” during the loan modification negotiations prevented him from selling the property before the housing market collapsed.
Ultimately, instead of agreeing to a loan modification, Chase demanded payment of the loan in full.3 On December 29, 2009, CRC, as trustee, recorded a notice of default, and on March 30, 2010, recorded and served a notice of sale.
On April 5, 2010 North sent Jolley an email saying he had requested the Chase foreclosure department to hold off on its planned foreclosure, “which means any future sale dates will be postpone [sic] to give us the opportunity to see if we can modify the collateral property.” Chase refused.
On April 19, 2010, two days before the scheduled foreclosure sale, Jolley filed this lawsuit. It named Chase Home Finance LLC and CRC, and alleged eight causes of action: (1) fraud and deceit—intentional misrepresentation;4 (2) fraud and deceit—negligent misrepresentation; (3) breach of contract/promissory estoppel; (4) negligence; (5) violation of Business and Professions Code section 17200 et. seq.; (6) declaratory relief; (7) accounting; and (8) reformation. Though CRC was named as a defendant, no specific wrongdoing was alleged with respect to it.
On April 20, 2010, Jolley obtained a temporary restraining order prohibiting Chase from going forward with the trustee’s sale. And on August 20, 2010, a preliminary injunction was issued, with Jolley putting up a $50,000 bond.
Meanwhile, an answer was filed on behalf of Chase and CRC jointly.
On August 25, 2011, Chase6 filed a motion for summary judgment or, in the alternative, summary adjudication, fundamentally claiming that it had no liability for borrower claims based on WaMu’s conduct prior to the FDIC receivership. It relied on federal law relating to the powers of the FDIC as receiver and on the terms of the P&A Agreement, specifically that it had acquired only the assets of WaMu in its purchase from the FDIC, not the liabilities. This contention was based on section 2.5 of the Agreement quoted above, which had also been asserted as an affirmative defense in Chase’s answer. The motion was set for hearing on November 15, 2011.
“1. On September 25, 2008, Washington Mutual Bank, _.A. (“WaMu”) was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver for WaMu pursuant to its authority under the Federal Deposit Insurance Act, 12 U.S.C. § 1821(d). Pursuant to the Purchase and Assumption Agreement between the FDIC as Receiver for WaMu, and Chase, dated September 25, 2008, Chase acquired certain of the assets of WaMu, including all loans and loan commitments of WaMu. A copy of that Purchase and Assumption Agreement is attached hereto as Exhibit A and can be found on the FDIC’s website at http://www.fdic.gov/about/freedom/Washington_Mutual_P_and _ A.pdf.”7 The attached copy was 39 pages, including exhibits. No separate points and authorities accompanied Chase’s request for judicial notice.
Jolley filed opposition to the motion. He also objected to the request for judicial notice as to the P&A Agreement, and filed points and authorities supporting his position, most fundamentally disputing that the 39-page Agreement was the complete document governing Chase’s purchase of WaMu. Thorne, who at one time worked at the FDIC as an independent contractor, filed a declaration stating he had seen and read a 118-page P&A Agreement for the Chase purchase of WaMu. Thorne claimed the longer document had never been made public and its provision governing assumption of liability was different.
Meanwhile, Chase had filed a reply to Jolley’s opposition, which included 62 objections to Jolley’s evidence, 40 of which objected to particular testimony in Thorne’s declaration or his deposition.
“The undisputed evidence establishes that Defendant Chase Home Finance, LLC (Chase) is not liable for the alleged intentional and negligent misrepresentations (causes of action nos. 1 & 2), made to Plaintiff by employees of the Washington Mutual Bank in relation to the Construction Loan issued to Plaintiff, pursuant to the Purchase and Assumption Agreement through which Chase acquired Washington Mutual from the FDIC on September 25, 2008.
“The third cause of action for Breach of Contract/Promissory Estoppel also fails, as the undisputed evidence shows that Defendants never promised to modify the Washington Mutual Construction, or to issue Plaintiff any additional funds to complete the Project. No enforceable promise or loan modification agreement was created by Chase’s conduct.
“Chase’s employee Mr. North’s representations to Plaintiff that approval of his loan modification application was “likely”, “highly probable”, and “looks good”, are all opinions of Mr. North, which do not create a binding commitment to modify a loan, nor do they represent the fact that the loan has been approved.
“Also, there is no evidence to suggest that Mr. North had authority to approve a loan modification either by himself, or with the consent of others.
`Under California law, a lender does not owe a borrower or third party any duties beyond those expressed in the loan agreement, except those imposed due to special circumstance.’ (Sipe v. Countrywide Bank (E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153, citing Nymark v. Heart Fed. Savings & Loan Assn., (1991) 231 Cal.App.3d 1089, 1096.) . . . .
No ruling was made on any of the evidentiary objections.
Judgment was thereafter entered accordingly, from which Jolley filed a timely notice of appeal.
As noted, Chase requested judicial notice of the P&A Agreement attached to the declaration of its counsel who represented that it was a copy of the agreement found on the FDIC website. The declarant was not a custodian of records, was not a party to the Agreement, gave no indication she was involved in negotiating or drafting it, and provided no background as to how she acquired knowledge of the document. Indeed, she did not even aver it was a true and complete copy.
We also note that the request was for judicial notice of the fact that on September 25, 2008, “Chase acquired certain of the assets of WaMu, including all loans and loan commitments of WaMu.” The papers did not request judicial notice that Chase did notassume liabilities based on borrower claims. Unquestionably, the trial court below used the Agreement for a much broader purpose, namely to prove that Chase did not assume liability for WaMu’s alleged misdeeds with respect to Jolley’s loan.
We conclude this was error, and that the content and legal effect of the P & A Agreement could not properly be determined on judicial notice under California law. And certainly not here.
As noted above, Chase’s request for judicial notice requested it, however unhelpfully, “pursuant to . . . Evidence Code sections 450-460.” As also noted, the order granting summary judgment ended with the ruling that Chase’s request for judicial notice was also granted, citing Evidence Code section 452, subdivisions (c) & (d).
Certainly the P&A Agreement does not come within subdivision (d), as it is not a record of any court. And while it is true that subdivision (c) “enables courts in California to take notice of a wide variety of official acts. . . . [and] an expansive reading must be provided to certain of its phrases [and] included in `executive’ acts are those performed by administrative agencies. . . .” (Simons, California Evidence Manual (2012) Judicial Notice § 7:11, p. 544), we do not understand a contract with a private bank to come within that subdivision.
“(g) Facts and propositions that are of such common knowledge within the territorial jurisdiction of the court that they cannot reasonably be the subject of dispute.
In typically scholarly fashion, Witkin has an elaborate exposition of the law of judicial notice in 1 California Evidence (5th ed. 2012), Judicial Notice, ch. 2, beginning at page 109. Beginning at section 32, the author discusses “matters commonly known or readily determinable,” and goes on for several sections with descriptions of cases and “illustrations” of such facts. One looks in vain for any case remotely supporting Chase’s position here. In sum, we hold that judicial notice was not properly taken of the content of the P&A Agreement even if there was no dispute about its authenticity. A fortiori here, where the very authenticity of the Agreement was in dispute.
As described above, Jolley’s opposition included a declaration from Thorne, who had been a “senior construction loan consultant” with WaMu until July of 2006, having been in charge of construction lending in 38 states since May 2005. He was an “asset manager for the FDIC” at the time he signed the declaration (October 2011), and was “intimately familiar with the procedures for taking over a failed bank.” And he testified: “Pursuant to the public part of the agreement with the FDIC, of which were approximately 36 pages, the balance of the contract and the complete agreement with the FDIC and Chase bank is 118 pages long which has not been made public. I am familiar with this agreement, I read it.” Though somewhat ungrammatical, the declaration fairly clearly recites the existence of a nonpublic agreement (or portion of an agreement) that could affect the outcome of this case. In short, Thorne testified that the P&A Agreement submitted by Chase was not the full agreement entered between Chase and the FDIC, but rather a longer version exists, the terms of which are different from the version of which the court below took judicial notice.
As noted, the trial court did not rule on these, or any other, evidentiary objections, and Jolley preliminarily contends that the objections cannot be maintained here. He is wrong, as specifically held in Reid v. Google, Inc. (2010) 50 Cal.4th 512, 534, a case involving objections made in a summary judgment proceeding. The Supreme Court held that if the objections were not ruled upon in the trial court, the objections are presumed overruled and are preserved for appeal. We thus turn to the merits of Chase’s objections, and find there is none.
Chase questions the competency of Thorne’s declaration because he is not a lawyer, was not employed at WaMu at the time of the P&A Agreement, and was never employed by Chase. This, the argument runs, fails to establish personal knowledge or expertise sufficient to opine about the contents of the purported nonpublic agreement. Chase also points out that while his declaration says Thorne was an independent contractor at the FDIC at the time he signed the declaration, it fails to show he worked there at the time of the WaMu receivership.
But that is no basis for rejecting Thorne’s testimony on the narrow point that a 118-page agreement exists, one that he had personally read. We view his testimony on this point as that of a percipient witness, not an expert.
It may be true that in some extreme circumstances “a trial court may weigh the credibility of a declaration submitted in opposition to a summary judgment motion and grant the motion `where the declaration is facially so incredible as a matter of law that the moving party otherwise would be entitled to summary judgment.'” (People v. Schlimbach (2011) 193 Cal.App.4th 1132, 1142, fn. 9, quoting Estate of Housley (1997) 56 Cal.App.4th 342, 359-360.) This is not such a case.
Thorne’s declaration certainly raises significant issues vis a vis Chase and the FDIC, with testimony that is hardly run of the mill. But that testimony is not so incredible that it could be ignored or rejected as untruthful on summary judgment, especially given the FDIC’s response here, which not only did not deny the existence of the longer agreement, but suggested there were documents to be produced if there were a confidentiality agreement.
The conclusion that Chase was not liable for WaMu’s conduct presupposes acceptance of the P&A Agreement submitted by Chase as the full and complete contract governing its assumption of liabilities. Since, as discussed above, the Agreement was not properly utilized here, on that basis alone the summary adjudication of first and second causes of action was improper. In addition to the alleged misrepresentations by WaMu, Jolley alleges misstatements by Chase after the receivership, which would render summary adjudication improper for an additional reason if there are triable issues of material fact with respect to such misrepresentations. We find such issues here.
Jolley testified that Chase representative North told him in various ways—that it was “highly probable,” and “likely,” and “look[ed] good”—that a modification of the loan agreement would be approved and the construction loan rolled over into a conventional loan. The trial court concluded there was no evidence of a misstatement of fact, but at most an overoptimistic opinion upon which Jolley could not reasonably have relied. We disagree.
Jolley presented evidence that he in fact relied upon these statements, expending additional sums to complete the construction, that the promising statements by North induced him to borrow from other sources to finish the renovation. These consequences were entirely foreseeable in light of the history of the construction loan, the unfinished status of the underlying project, and the encouraging statements by North that the loan would likely be rolled over into a conventional loan once construction was completed. Whether Jolley’s reliance was justified in the circumstances is a factual question for a jury, not one for summary judgment.
Plaintiffs were able to pay off the loans before a foreclosure sale was conducted, and then sued the bank, claiming that in order to pay off the loans they were forced to sell other assets at distressed prices. (Id. at pp. 473-474.) They alleged several theories based fundamentally on the bank’s having taken a “hard line” during negotiations regarding repayment of the loans. (Id. at p. 479.) Summary judgment was granted for the bank, which was affirmed on appeal.
Chase points particularly to the statement in Price to the effect that the bank would “redo” the loans or “work with” the borrowers, and draws a parallel between those representations and the statements made by North here. We find the analogy unpersuasive. The Price plaintiffs admitted in discovery that they understood their obligations under the original notes and never disputed that the amounts claimed by the bank were in fact owed to it. (Price, supra, 213 Cal.App.3d at pp. 472, 480-481.) And the alleged promise to “redo” the contract was never asserted during loan renegotiation as a basis for loan modification. (Id.at pp. 480-481.) In short, the plaintiffs’ own actions undermined any claim of reliance on the misstatement. This is not the situation here.
Here we have more specificity as to a predicted outcome of the loan modification process and the likelihood of its occurrence, as Jolley continued discussions with North into the days immediately preceding the proposed trustee’s sale. Indeed, there is documentary evidence that North continued to represent that he would ask the “Foreclosure Department to hold [its] processes,” thus making the alleged promises more certain—and more central to the loan renegotiation efforts. And not only did Jolley not act inconsistently with a claim of reliance, he in fact relied, investing additional funds into completing the construction in anticipation that the loan would be rolled into a conventional loan.
While there may not be any direct showing of an intention to defraud, it is clear that Chase would benefit from Jolley’s further investment in the construction project. This is so because the bank could ultimately foreclose on a newly renovated property instead of a stalled construction project, making its ability to realize on the asset more fruitful. In addition, prolonging the loan modification process allowed Chase’s investment in the property to mount while Jolley’s equity, if any, was consumed in a declining real estate market. Drawing all inferences in favor of the nonmoving party, as we must (Nazir v. United Airlines, Inc., supra, 178 Cal.App.4th at p. 254), we conclude that prolonged communication—perhaps more accurately, miscommunication—about a possible loan modification raises a triable issue of fact of intent by Chase to profit by misleading Jolley about his loan modification prospects, a showing sufficient to withstand summary adjudication.
On the third cause of action, styled breach of contract/promissory estoppel, Chase claims there was no evidence of a breach by it of WaMu’s loan agreement, again claims the P&A Agreement relieves it of any liability for any breach by WaMu, and claims its own conduct toward Jolley in the form of North’s promising forecast of a loan modification did not create a contract or amount to an estoppel. We, of course, disagree as to the P&A Agreement. We also find a triable issue of material fact regarding Chase’s own conduct.
Thorne testified that after he got involved on Jolley’s behalf, Jolley “received disbursements on the work that had been completed based on the inspection that had been made.” The trial court construed that statement as follows: “Plaintiff’s expert, Jeffrey Thorne, . . . testified that Plaintiff ultimately received the disbursements for the work Plaintiff had completed.” And the court concluded, “[t]he undisputed evidence shows Chase fulfilled all of its obligations under the Construction Loan Agreement.” We read the record differently.
To begin with, this was not specified as an undisputed fact in Chase’s moving papers, and Jolley did not admit any such fact as undisputed. It cannot be said that the undisputed facts show no controversy on this point.
Jolley contends “Chase . . . had a direct continuing responsibility to provide necessary funding to see that the project was finished . . . .” We understand this to mean that Jolley believes Chase was obligated to disburse, but failed to disburse, additional funds under his preexisting agreement with WaMu. The fact that Thorne may have believed the loan had been fully funded by WaMu prior to the receivership (if his statement is properly so construed) does not bind Jolley to that same conclusion.
Turning to the paperwork, Thorne’s memorandum to WaMu in approximately September 2006 recommended a modified loan amount of $2,485,000. As far as we can tell, the amount actually disbursed as of September 25, 2008, was $2,426,650. This also suggests that further disbursements may have been due under the modified agreement. We are also not able to say with confidence that the dispute about the $350,000 that Thorne found to be “in limbo” was ever resolved. In sum, there appear to be disputed facts concerning whether WaMu, succeeded by Chase, ever fully funded the loan, factual disputes relating to whether the lender’s obligations under the modified loan agreement ever were fulfilled.
Chase also argues it was under no obligation to disburse further funds or to roll over the construction loan because Jolley was in default on the loan payments beginning in December 2008. True, the loan contract conditioned the loan rollover provision on the borrower’s compliance with the terms of the loan agreement. But there was a two-month period postreceivership—and prior to Jolley’s default—during which it seems possible that funds were due to be disbursed, at least under Jolley’s interpretation of the loan agreement.
Jolley also argues that the frequent reassurances by North that a modification was forthcoming induced him to rely, and as a result he “borrowed from friends and family to finish the construction.” The effect of this is a triable issue of fact whether Chase has potential liability for its own conduct under a theory of promissory estoppel.
The trial court granted summary adjudication on the fourth cause of action, for negligence, essentially finding no duty. The order read as follows: “`Under California law, a lender does not owe a borrower or third party any duties beyond those expressed in the loan agreement, except those imposed due to special circumstance.’ (Sipe v. Countrywide Bank(E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153, citing Nymark v. Heart Fed. Savings & Loan Assn., (1991) 231 Cal.App.3d 1089, 1096.) . . .” We conclude there was a triable issue of material fact as to a duty of care to Jolley, which potentially makes Chase liable for its own negligence.
Such “general rule” has often been repeated, including in federal cases involving the takeover by Chase of WaMu’s loans12 and cases decided in the context of loan modification applications.13 It was primarily on the basis of this general rule that the trial court below, without further analysis, granted summary adjudication of the negligence claim. And Chase relies upon such general rule here, contending it owed Jolley no duty of care. Such reliance is misplaced.
When considered in full context, the cases show the question is not subject to black-and-white analysis—and not easily decided on the “general rule.” We conclude here, where there was an ongoing dispute about WaMu’s performance of the construction loan contract, where that dispute appears to have bridged the FDIC’s receivership and Chase’s acquisition of the construction loan, and where specific representations were made by a Chase representative as to the likelihood of a loan modification, a cause of action for negligence has been stated that cannot be properly resolved based on lack of duty alone.
Perhaps the Biakanja factors must be applied here too. (See Auto Equity Sales v. Superior Court (1962) 57 Cal.2d 450, 455.) But even if not, they are certainly appropriate for consideration, which consideration compels a conclusion for Jolley.
We begin by identifying the specific conduct by Chase that Jolley claims was negligent so as to limit our analysis “to the specific action the plaintiff claims the particular [defendant] had a duty to undertake in the particular case.” (Vasquez v. Residential Investments, Inc.(2004) 118 Cal.App.4th 269, 280.) As we see it, Jolley claims Chase had an obligation to investigate the history of the loan and to make additional disbursements, to review his loan modification request in good faith, and to conform to standards of conduct in the industry to protect him against further losses associated with the loan. Chase allegedly acted unreasonably by failing to review Jolley’s request for a loan modification in good faith, having decided in advance it would extend no further monies in connection with WaMu’s loans.15Jolley also complains about specific misstatements, false assurances given by Chase personnel about the prospects for a loan modification, while different personnel at Chase—the actual decision makers—were bent on foreclosure.
The first factor, the extent to which the transaction was intended to affect the plaintiff, hardly needs discussion. Jolley was the person in direct negotiation, and contractual privity, with the loan originator (WaMu), from which Chase took over. Jolley specifically brought to Chase’s attention his dissatisfaction with WaMu’s funding of the loan. To the extent Chase undertook a reassessment of the propriety of past disbursements, it obviously did so for Jolley’s benefit. And North’s representations were made directly to Jolley, and were certainly likely to, if not intended to, affect his decisionmaking.
Likewise, it was certainly foreseeable that harm to Jolley could ensue in the event of Chase’s negligence. Jolley began missing payments shortly after Chase bought WaMu’s assets. That his credit rating would be adversely affected if Chase failed to negotiate with him in good faith was foreseeable, making it more difficult for him to secure alternative financing to cure the default. Given North’s encouragement, it was also foreseeable that Jolley would sink more of his own money into the project, thereby suffering further injury.
There is also no doubt that Jolley was in fact injured. He invested $100,000 in finishing construction on the property shortly before foreclosure proceedings were initiated. As to the closeness of the connection between Chase’s acts and Jolley’s injury, the upbeat prediction of the availability of a loan modification and the rollover of the loan into a conventional mortgage was almost certainly a primary factor in causing this particular injury. Had Jolley known that Chase would ultimately foreclose on the property, he would have had no incentive to invest an additional $100,000 in its completion.
While it is not possible to tell at this point how blameworthy Chase’s conduct may prove to be, this is not a case such as Nymark, where the borrower was in a better position to protect his own interests. To the contrary, Jolley’s ability to protect his own interests in the loan modification process was practically nil. Chase held all the cards. The fact that Chase benefited from prolonging the loan renegotiation period and encouraging Jolley to complete construction certainly lends itself to a blameworthy interpretation. And a fair reading of the evidence here includes that Jolley was subjected to “dual tracking,” which as discussed below has now been made illegal, illegality that tends to reinforce the view that Chase’s conduct was blameworthy.
The policy of preventing future harm also favors imposing a duty of care on an entity in Chase’s position. When a bank acquires from the FDIC loans from a failed bank part of what it acquires is the history of the loan. Even if acquiring banks are not liable for breaches, fraud, or negligence of the failed bank under their purchase and assumption agreements—an issue we do not decide—simple good business practices dictate that they take into account the position in which the borrower has been placed prior to their acquisition of the loan. Where there is a long running dispute whether the failed bank properly disbursed monies due under the loan, the acquiring bank owes a duty of care to investigate the history of the loan and take that into account in negotiating with the borrower for a loan modification. Particularly so here.
We note that we deal with a construction loan, not a residential home loan where, save for possible loan servicing issues, the relationship ends when the loan is funded. By contrast, in a construction loan the relationship between lender and borrower is ongoing, in the sense that the parties are working together over a period of time, with disbursements made throughout the construction period, depending upon the state of progress towards completion.16 We see no reason why a negligent failure to fund a construction loan, or negligent delays in doing so, would not be subject to the same standard of care.
Even when the lender is acting as a conventional lender, the no-duty rule is only a general rule. (Osei v. Countrywide Home Loans (E.D.Cal. 2010) 692 F.Supp.2d 1240, 1249.) As a recent federal case put it: “Nymark does not support the sweeping conclusion that a lender never owes a duty of care to a borrower. Rather, the Nymark court explained that the question of whether a lender owes such a duty requires `the balancing of the “Biakanja factors.”‘” (Newson v. Countrywide Home Loans, Inc. (N.D.Cal. Nov. 30, 2010 No. C 09-5288) 2010 U.S. Dist. Lexis 126383, at p. * 15.) Or, in the words of an even more recent case, in each case where the general rule was applied to shield a lender from liability, “the plaintiff sought to impose upon the lender liability for activities outside the scope of the lender’s conventional role in a loan transaction. It is against this attempt to expand lender liability (to that of, e.g., an investment advisor or construction manager) that the court inNymark found a financial institution owes no duty of care to a borrower when its involvement in the loan transaction `does not exceed the scope of its conventional role as a mere lender of money.’ Nymark, 231 Cal.App.3d at 1096. Nymark and the cases cited therein do not purport to state a legal principle that a lender can never be held liable for negligence in its handling of a loan transaction within its conventional role as a lender of money.” (Ottolini v. Bank of America (N.D.Cal. Aug. 19, 2011 No. C-11-0477) 2011 U.S. Dist. Lexis 92900, at p. *16.) We agree with these observations.
Chase relies upon the historical truism that a bank as lender is entitled to pursue its own economic interest in dealing with a borrower, citing Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67. We live, however, in a world dramatically rocked in the past few years by lending practices perhaps too much colored by short-sighted self-interest. We have experienced not only an alarming surge in the number of bank failures, but the collapse of the housing market, an avalanche of foreclosures,17 and related costs borne by all of society.18 There is, to be sure, blame enough to go around. And banks are hardly to be excluded.
Granted, these ameliorative efforts have been directed primarily at aiding resident homeowners at risk of losing their homes. (Civ. Code, §§ 2923.5, subd. (f); Assem. Bill No. 278, § 18, adding Civ. Code, § 2924.15.) We also understand there is no express duty on a lender’s part to grant a modification under state or federal loan modification statutes. And until the new legislation takes effect, no private right of action for damages is granted under the statutes. (See Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1616; Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 214; Pantoja v. Countrywide Home Loans, Inc. (N.D.Cal.2009) 640 F.Supp.2d 1177, 1188.) We do not cite any of these legislative measures in reliance upon their provisions, nor do we suggest their provisions were violated in the present case. Rather, we refer to the existence—and recent strengthening—of these legislative measures because they demonstrate a rising trend to require lenders to deal reasonably with borrowers in default to try to effectuate a workable loan modification. In short, these measures indicate that courts should not rely mechanically on the “general rule” that lenders owe no duty of care to their borrowers.
Existing state statutes relating to loan modifications will soon be supplemented by stiffer restrictions on the conduct of lenders and loan servicers during the loan modification process. Even as this case has been pending before us, on July 2, 2012, the California Legislature passed Assembly Bill No. 278 and Senate Bill No. 900, which have since been signed into law by the Governor. These provisions address more pointedly the foreclosure crisis in our state through even greater encouragement to lenders and loan servicers to engage in good faith loan modification efforts.
The same legislation provides homeowners who are facing foreclosure or whose homes have actually been lost to foreclosure with a remedy if the lender or loan servicer materially violated the provisions of the Act intentionally, recklessly, or through “willful misconduct.” (Assem. Bill No. 278, §§ 16 & 17, adding Civil Code, § 2924.12): those facing foreclosure may seek an injunction, while those who have lost their homes may seek treble actual damages or statutory damages of $50,000, whichever is greater.
Of course, these provisions do not apply to our case. The question for our purposes is whether the new legislation sets forth policy considerations that should affect the assessment whether a duty of care was owed to Jolley at that time. We think it does.
Jolley claims Chase violated the unfair competition law (UCL) (Bus. & Prof. Code, § 17200), but does not specify which acts violated that provision or the nature of the violation. Again, he bases his theory of liability on the premise that Chase “must stand squarely in the shoes of WaMu for all of its criminal, fraudulent, negligent and otherwise `unfair’ practices perpetrated against Appellant and the world economy . . . .” He further claims, without specificity, that Chase is equally liable for such wrongdoing on its own part.
Granting summary adjudication on the fifth cause of action, the trial court concluded that “the undisputed evidence shows that Chase has not violated any law, or committed a deceptive or fraudulent act/misrepresentation to fall within § 17200.” There was no reference to “unfair” conduct.
With respect to Chase’s own conduct, we have already decided that North’s statements may be construed as misstatements of fact, with possible liability for such conduct left to the trier of fact. That raises a triable issue as to “fraudulent.” We have also concluded that dual tracking has been alleged and supported by Jolley’s declaration. And while dual tracking may not have been forbidden by statute at the time, the new legislation and its legislative history may still contribute to its being considered “unfair” for purposes of the UCL. Summary adjudication of Jolley’s fifth cause of action was improper.
The trial court did not state any reason for granting summary adjudication on the declaratory relief cause of action, but simply recited in conclusory fashion that Jolley was not entitled to such relief, citing Gafcon, supra, 98 Cal.App.4th at pages 1401-1402. Citation of that case suggests the ruling was premised on the notion that Jolley has, if anything, a fully matured cause of action against Chase, and not one appropriate for declaratory relief. With this we agree.
The undisputed facts show that loan modification negotiations did not result in a written instrument or contract under which the parties’ rights need to be declared. While there may be a controversy about past conduct, we see no reason why money damages would not be an adequate remedy. (See Gafcon, supra, 98 Cal.App.4th at pp. 1403-1404.) Moreover, this cause of action is redundant of Jolley’s other claims, and declaratory relief may be denied “where its declaration or determination is not necessary or proper at the time under all the circumstances.” (Code Civ. Proc., § 1061.) Where, as here, Jolley has a fully matured cause of action for money, he must seek damages, and not pursue a declaratory relief claim. (Gafcon, supra, 98 Cal.App.4th at pp. 1403-1404; Jackson v. Teachers Ins. Co.(1973) 30 Cal.App.3d 341, 344.) Summary adjudication of the sixth cause of action was proper.
Chase contends that Jolley’s cause of action for an accounting is subject to summary adjudication because Jolley makes no claim that money was due him under the contract with WaMu, and no independent contract was ever entered into with Chase. The trial court found “no evidence that Defendants owe [Jolley] any money under the Construction Loan Agreement that requires an accounting.” It further concluded, “[Jolley] makes no effort to identify where in the payment record he is owed any money” with the consequence that “no grounds for an accounting exist.” Jolley’s efforts aside, there are disputed facts with respect to whether the modified construction loan had been fully funded prior to Chase’s acquisition of the loan.
That said, we find an accounting remedy uncalled for in this case. There was no fiduciary relationship between the parties and we detect no proof of any other special relationship that would give rise to an accounting remedy, nor a specification of amounts due so complicated that it cannot be determined in a legal action for damages. Summary adjudication of the seventh cause of action was proper.
The summary judgment in favor of CRC is affirmed, as are the summary adjudications in favor of Chase of the sixth and seventh causes of action. The summary judgment for Chase is reversed. Both sides shall bear their respective costs on appeal.
Haerle, Acting P.J. and Lambden, J., concurs.
2. Payments on the construction loan were interest only during construction and varied in amount depending on the status of funding. Once construction had been completed, the balance of the loan was to be rolled over into a fully amortized mortgage on the home. A reserve was included to pay the interest payments during construction. Because the reserve was calculated based on the predicted length of construction, it proved to be insufficient to cover interest payments during the extended construction period.
3. Documents submitted by Chase show the outstanding principal owing at default in December 2008 was $2,426,650, increased to $2,632,066.99 when the notice of default was recorded. By the time the motion was filed in August 2011, Chase calculated it was owed $3,019,693.29.
4. Jolley’s complaint referred to both WaMu and Chase collectively as “the Bank,” making it difficult to ascertain which conduct was alleged with respect to which entity.
6. The motion was actually filed on behalf of both named defendants, Chase, and CRC. As noted, no charging allegations were made in Jolley’s complaint against CRC, and his opposition to the motion said essentially nothing about it. Thus, the focus of the proceedings below, and here, is on Chase, and for ease of discussion we refer to Chase as the moving party.
7. The remaining “facts” were four paragraphs attaching what were claimed to be “certified” or “true and correct” copies of documents recorded in Marin County.
8. We cast no aspersions on Chase’s counsel for her position, as the confidentiality agreement prepared by Jolley’s counsel did not specify the documents requested.
9. We find no express ruling on Jolley’s ex parte application for a continuance, but it was effectively denied by the grant of summary judgment.
11. Chase also argues on appeal that Jolley’s testimony is barred by the parol evidence rule and as hearsay. These objections were not made in the trial court, and are thus inappropriate here.
15. We agree with Chase that no admissible evidence was submitted to support the assertion that Chase had decided in advance not to further fund any WaMu loans. The only evidence on this point was Thorne’s declaration, which lacked foundation. However, regardless whether the decision was made in advance, if it were made without due care to avoid further injury to Jolley, then Chase is potentially liable for its own negligence.
17. We quote the California Legislature: “California is still reeling from the economic impacts of a wave of residential property foreclosures that began in 2007. From 2007 to 2011 alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation were in California, and the current wave of foreclosures continues apace. All of this foreclosure activity has adversely affected property values and resulted in less money for schools, public safety, and other public services. In addition, according to the Urban Institute, every foreclosure imposes significant costs on local governments, including an estimated nineteen thousand two hundred twenty-nine dollars ($19,229) in local government costs. And the foreclosure crisis is not over; there remain more than two million `underwater’ mortgages in California.
In McCollough v. Johnson, Rodenburg & Lauinger, LLC., No. 09-35767 (9th Cir. Mar. 4, 2011), plaintiff opened a credit card account around 1990 with Chemical Bank, which later merged with Chase. Plaintiff’s account became delinquent and in 2000, Chase Manhattan charged off the $3,000 account balance and later sold the account to CACV of Colorado, Ltd. CACV filed a collection action in state court in 2005. Two weeks later, CACV dismissed the case after plaintiff pointed out that the statute of limitations had lapsed. In 2006 CACV ‘s parent company retained Johnson, Rodenburg & Lauinger (“JRL”), a debt collection law firm, to pursue collection of plaintiff’s debt.
One way to stop harassing phone calls from a collection agency is to send them a Cease and Desist Letter, requesting that they stop contacting you. Below is a sample Cease and Desist Letter.
I am requesting that you cease and desist with your efforts to collect on the debt referenced above. I wish to deal with the original creditor and not a collection agency.
Therefore, I request that you cease collection efforts immediately or face legal action under State and Federal consumer protection laws. I hope you would consider giving this letter the attention it deserves.

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