Court Opinion

ID: 4192921
Source: CourtListenerOpinion
Date Created: 2017-08-03 17:03:20.68497+00
Date Added: 2024-06-11T14:40:26.178860
License: Public Domain

FILED
 1                         ORDERED PUBLISHED                  MAR 03 2015

 2                                                        SUSAN M. SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
                                                            OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5
 6   In re:                        )      BAP No.    CC-14-1346-TaDPa
                                   )
 7   WILLIAM DAVID GOLDSTEIN and   )      Bk. No.    2:10-bk-43720-DS
     MOLLY K. GOLDSTEIN,           )
 8                                 )
                    Debtors.       )
 9   ______________________________)
                                   )
10   WILLIAM DAVID GOLDSTEIN and   )
     MOLLY K. GOLDSTEIN,           )
11                                 )
                    Appellants,    )
12                                 )
     v.                            )      O P I N I O N
13                                 )
     ALBERTA P. STAHL, Chapter 7   )
14   Trustee; WELLS FARGO BANK,    )
     N.A.; BANK OF AMERICA, N.A., )
15                                 )
                    Appellees.     )
16   ______________________________)
17
                    Argued and Submitted on January 22, 2015
18                           at Pasadena, California
19                           Filed - March 3, 2015
20             Appeal from the United States Bankruptcy Court
                   for the Central District of California
21
        Honorable Deborah J. Saltzman, Bankruptcy Judge, Presiding
22                   ________________________________
23   Appearances:     William David Goldstein of the Law Offices of
                      William D. Goldstein argued for appellants
24                    William David Goldstein and Molly K. Goldstein;
                      Bernard Kornberg of Severson & Werson argued for
25                    appellees Wells Fargo Bank, N.A. and Bank of
                      America, N.A.; and Timothy J. Yoo of Levene,
26                    Neale, Bender, Yoo & Brill LLP argued for
                      appellee Alberta P. Stahl.
27                    __________________________________
28   Before:   TAYLOR, DUNN, and PAPPAS, Bankruptcy Judges.
 1   TAYLOR, Bankruptcy Judge:
 2
 3                               INTRODUCTION
 4        Appellants, chapter 71 debtors William David Goldstein and
 5   Molly K. Goldstein, appeal the bankruptcy court’s order
 6   authorizing the chapter 7 trustee to compromise and sell, as
 7   property of the chapter 7 estate, four state court claims filed
 8   by the Goldsteins in postpetition litigation.   We conclude that
 9   the bankruptcy court did not err when it held that the claims at
10   issue were property of the estate that could be compromised or
11   sold, and we AFFIRM.
12               FACTUAL BACKGROUND AND PROCEDURAL HISTORY
13   A.   Events preceding the Goldsteins’ bankruptcy filing
14        Like many similarly situated homeowners impacted by the bad
15   economy, the Goldsteins applied in 2009 for modification of the
16   mortgage2 against their home in Culver City, California.   In
17   October 2009, Wells Fargo Bank, N.A. (“Wells Fargo”), as the
18   loan servicer, granted the Goldsteins a three-month trial period
19   plan (“TPP”) under the Home Affordable Modification Program
20
21
22        1
             Unless specified otherwise, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
23   and all “Rule” references are to the Federal Rules of Bankruptcy
24   Procedure, Rules 1001-9037.
          2
25           The mortgage was originated by American Mortgage
     Network, Inc. The beneficial interest in the mortgage was
26   purchased by Bank of America, N.A. as Successor by Merger to
     LaSalle Bank National Association, as Trustee for Morgan Stanley
27   Loan Trust 2006-3AR; Wells Fargo Bank, N.A. serviced the loan,
     albeit at least initially under the name of America’s Servicing
28   Company.

                                     -2-
 1   (“HAMP”).3    The TPP required the Goldsteins to make the first of
 2   three payments by November 1, 2009, and to provide executed
 3   copies of the TPP and certain other required documentation.    The
 4   second and third payments were due December 1, 2009 and
 5   January 1, 2010, respectively.    The TPP provided4:
 6        If I am in compliance with this Loan Trial Period and
          my representations in Section 1 continue to be true in
 7        all material respects, then the Lender will provide me
          with a Loan Modification Agreement, as set forth in
 8        Section 3, that would amend and supplement (1) the
          Mortgage on the Property, and (2) the Note secured by
 9        the Mortgage.
10   Request for Judicial Notice, ECF Dkt. #41 at 47 of 254.
11        The Goldsteins made the three trial payments required under
12   the TPP.     Wells Fargo, however, did not provide a permanent loan
13   modification nor did it send the Goldsteins a notice of denial
14   of a permanent modification, as required under the TPP and
15   HAMP.5   Thereafter, the Goldsteins made four more monthly
16
          3
             Pursuant to Congress’ Troubled Asset Relief Program, the
17
     U.S. Department of the Treasury launched HAMP in 2009 to help
18   distressed homeowners with delinquent mortgages. See Corvello
     v. Wells Fargo Bank, N.A., 728 F.3d 878, 880 (9th Cir. 2013)
19   (per curiam).
          4
20           The TPP also provided that it would “not take effect
     unless and until both [the Goldsteins] and the Lender sign it
21   and Lender provides [the Goldsteins] with a copy of [the TPP]
     with the Lender’s signature.” Request for Judicial Notice, ECF
22   Dkt. #41 at 47 of 254. No fully signed copy of the TPP was ever
     returned to the Goldsteins.
23
          5
24           HAMP, like the TPP here, required Wells Fargo either to
     provide the Goldsteins a permanent loan modification, if the
25   Goldsteins made the three trial payments and otherwise complied
     with the TPP or to notify them that they did not qualify for a
26   permanent loan modification. See Corvello, 728 F.3d at 880-81
     (discussing background and provisions of HAMP); and West v.
27   JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780, 797-98 (2013)
     (interpreting the United States Department of the Treasury
28                                                      (continued...)

                                      -3-
 1   payments in the amount required under the TPP.   Wells Fargo
 2   still did not send them either notice of denial or a permanent
 3   loan modification agreement.   The Goldsteins stopped their
 4   payments after May 2010, and in August 2010, filed for
 5   protection under chapter 7 to stop foreclosure proceedings.
 6   They received their discharges in December 2010, and the
 7   bankruptcy case was closed as a no asset case.
 8   B.   The State Court Action
 9        In October 2012, nearly two full years after they received
10   their chapter 7 discharges, the Goldsteins filed an action
11   against Wells Fargo and Bank of America, among others, in Los
12   Angeles, California Superior Court (the “State Court Action”).
13   They subsequently filed a verified second amended complaint (the
14   “SAC”).   The first, second, third, and fifth causes of action in
15   the SAC relate to the TPP (the “TPP Claims”).6
16        In the first cause of action, for fraud in the inducement,
17   the Goldsteins alleged that when Wells Fargo offered them the
18   TPP in 2009, Wells Fargo never intended to grant them a
19   permanent loan modification, as required under HAMP; yet, to
20   their detriment, the Goldsteins made seven payments totaling
21   $22,201.83 in reliance thereon.   The Goldsteins alleged in the
22
23        5
           (...continued)
24   Directive 09-01 and HAMP guidelines as imposing the proviso that
     if the borrower complies with a HAMP trial plan agreement, the
25   lender must offer a permanent loan modification).
          6
26           The remaining 9 of the 13 causes of action contained in
     the SAC related to postpetition events and transactions between
27   the Goldsteins and Wells Fargo (and others) in connection with
     subsequent loan modifications and foreclosure proceedings, none
28   of which pertain to the matters addressed in this appeal.

                                    -4-
 1   second cause of action, based on promissory estoppel, that they
 2   reasonably relied to their detriment on Wells Fargo’s promise to
 3   provide them with a permanent loan modification following the
 4   Goldsteins’ compliance with the TPP and that Wells Fargo should
 5   be required to make good on its promise.    In the third cause of
 6   action, the Goldsteins asserted that Wells Fargo’s actions with
 7   respect to the TPP constituted fraud and were done maliciously
 8   and with oppression, entitling the Goldsteins to an award of
 9   punitive and exemplary damages.   The Goldsteins based their
10   fifth cause of action on breach of contract and the assertions
11   that they complied with their obligations under the TPP, Wells
12   Fargo did not, and the Goldsteins were damaged as a result.
13        Wells Fargo and Bank of America demurred to the SAC.    As to
14   the TPP Claims, they based their demurrer on the grounds that
15   the Goldsteins lacked standing to raise them because the TPP
16   Claims arose prepetition, the Goldsteins did not schedule them
17   in their bankruptcy, and, therefore, they remained assets of the
18   chapter 7 case.   The state court issued a tentative ruling in
19   advance of the hearing sustaining the demurrer as to the TPP
20   Claims, but continued the hearing to allow the Goldsteins to
21   reopen the bankruptcy case.
22   C.   Case reopening and subsequent events
23        The Goldsteins promptly filed a motion to reopen the
24   bankruptcy case, “for the limited purpose of allowing [the
25   Goldsteins] to file an Amended Schedule B (personal property) to
26   schedule certain claims against Wells Fargo Bank.”   Order
27   Granting Motion to Reopen, ECF Dkt. #23 at 2.   The bankruptcy
28   court granted the motion.   It also ordered that a trustee be

                                    -5-
 1   reappointed to administer the estate and that the case was to be
 2   re-closed 30 days after the Goldsteins filed their Amended
 3   Schedule B, “provided that, neither the chapter 7 trustee nor
 4   any party in interest opposes such re-closing of the case prior
 5   to expiration of the 30-day period.”    Id. (emphasis in
 6   original).
 7        The Goldsteins filed their Amended Schedule B disclosing
 8   the TPP Claims as other contingent and unliquidated claims in
 9   the amount of $22,000; they included, however, the following
10   disclaimer:
11             Debtors believe all causes of action are
               post-petition causes of action, but Wells
12             Fargo’s Demurrer in Superior Court alleges
               that causes of action 1, 2, 3 and 5 are pre-
13             petition causes of action, which debtors
               lack standing to prosecute, because not
14             scheduled. Approx. $22,000 plus argument
               for punitive damages.
15
16   ECF Dkt. #24 at 4.
17        Before 30 days passed, Wells Fargo and Bank of America
18   together filed a Motion to Extend Deadline Before Closing of
19   Case (“Motion to Extend”) for the stated purpose of allowing
20   settlement negotiations with the Trustee to continue with
21   respect to the TPP Claims – with the potential for payout to the
22   Goldsteins’ unsecured creditors.     The Goldsteins promptly filed
23   opposition.   In their opposition, the Goldsteins argued that the
24   case should not be allowed to remain open unless the Trustee
25   filed a motion to sell and that no offer to purchase the TPP
26   Claims then existed.   They also argued that determining whether
27   the TPP Claims constituted prepetition or postpetition claims
28   might be problematic, because although events on which the TPP

                                    -6-
 1   Claims were based “started pre-petition,” the law “allowing”
 2   suit on such events “did not exist” until two years
 3   postpetition.     ECF Dkt. #28 at 4.
 4          At the hearing on the Motion to Extend, the Goldsteins took
 5   a firmer position and asserted that the TPP Claims were
 6   postpetition claims.7    The bankruptcy court continued the
 7   hearing to coincide with a hearing it then scheduled on a motion
 8   to be filed by the Trustee, either to compromise under Rule 9019
 9   or to sell under § 363.
10   D.   The Trustee’s agreement with Wells Fargo and motion to
11   compromise controversy, or alternatively, for order authorizing
12   sale
13          The Trustee subsequently entered into a written agreement
14   with Wells Fargo (“Agreement”) and filed it as an exhibit to her
15   motion to compromise or sell the TPP Claims (“Motion”).
16          1.   The terms of the Agreement
17          Pursuant to the Agreement, which was expressly made subject
18   to bankruptcy court approval pursuant to a motion under Rule
19   9019, Wells Fargo8 agreed to pay the Trustee $60,000 in full
20   settlement of the TPP Claims.     As an essential term of the
21
22          7
             The Goldsteins did not provide in their excerpts of
     record a copy of the transcript of the hearing on the Motion to
23   Extend, apparently because it was not available for download.
24   We have exercised our discretion to review independently the
     hearing transcript electronically filed on the bankruptcy case
25   docket. See O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert,
     Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989).
26
            8
             Notwithstanding that Bank of America was not party to
27   the Agreement, as an essential term of the Agreement, the
     Trustee agreed that all releases provided therein also released
28   Bank of America.

                                      -7-
 1   Agreement, Wells Fargo’s obligation to pay the $60,000 was made
 2   subject to entry of a final order specifically finding that the
 3   TPP Claims were property of the bankruptcy estate and not
 4   property of the Goldsteins as individuals.9   In addition, the
 5   parties to the Agreement agreed that to the extent the
 6   bankruptcy court ruled that sale of the TPP Claims under § 363
 7   was the proper procedure, approval under § 363 also satisfied
 8   the Trustee’s obligation to obtain court approval.
 9        2.   The Motion
10        The Trustee moved for approval of the Agreement as a
11   compromise of controversy under Rule 9019, or alternatively, as
12   a sale of estate assets, subject to overbid procedures, under
13   § 363(b) and (m) and Rule 6004.   Under both legal theories, the
14   Trustee requested that the bankruptcy court make the specific
15   finding that the TPP Claims were prepetition assets.
16        In support of her argument that the TPP Claims were
17   prepetition assets,10 the Trustee argued that: (1) the TPP Claims
18
19        9
             The Agreement also provided that the order would not be
20   final for purposes of the Agreement until it was no longer
     subject to appeal. In light of this provision of the Agreement,
21   the appeal is not moot.
22        10
             Because the Goldsteins appeal only from the bankruptcy
     court’s finding that the TPP Claims are prepetition assets of
23   the estate, and do not argue that the bankruptcy court otherwise
24   erred in its Rule 9019 or § 363 holdings, we do not review the
     Trustee’s legal and factual support for the Rule 9019 and § 363
25   rulings here. The Goldsteins based their opposition to the
     Motion solely on the ground that the Trustee lacked authority to
26   sell or compromise the TPP Claims because they were not property
     of the estate. We note, however, that the Trustee cited the
27   appropriate legal authority under both provisions and the
     bankruptcy court found that the Trustee otherwise presented a
28   sufficient record for the ultimate holdings.

                                    -8-
 1   were based solely on prepetition facts and thus accrued
 2   prepetition; and (2) contrary to the Goldsteins’ argument, the
 3   discovery rule, which is applicable for purposes of statutes of
 4   limitations analysis, did not postpone accrual for ownership
 5   purposes under the bankruptcy analysis.11    The Trustee also
 6   argued that the decision in West v. JPMorgan Chase Bank, N.A.,
 7   214 Cal. App. 4th 780 (2013), which the Goldsteins argued
 8   constituted a postpetition change of law that gave rise to their
 9   TPP Claims postpetition, merely strengthened the Goldsteins’
10   claims – it did not create them.     Trustee asserted that no
11   binding case law existed prepetition that prohibited the
12   Goldsteins from bringing the TPP Claims before they filed
13   bankruptcy and, thus, that they were prepetition assets of the
14   estate.
15        3.   The Goldsteins’ Opposition
16        The Goldsteins opposed the Motion based on two primary
17   arguments.   First, they argued that factually none of the TPP
18   Claims were “complete” until Wells Fargo put into writing its
19   denial of a permanent HAMP modification two weeks after the
20   Goldsteins filed for bankruptcy.     Because Wells Fargo never gave
21   the Goldsteins notice that it was denying their HAMP loan
22   modification application, they argue, the TPP Claims could not
23   have arisen any earlier – and thus they were postpetition
24
25
          11
26           Trustee also argued that the Goldsteins admitted in the
     SAC that they were aware of Wells Fargo’s breach in May 2010,
27   three months before they filed bankruptcy, and that they filed
     bankruptcy to stop foreclosure, which would not have been
28   necessary but for the denial of the modification.

                                    -9-
 1   claims.12
 2        Second, the Goldsteins asserted that at the time they filed
 3   for bankruptcy, neither federal nor state case law “allowed
 4   borrowers to sue their lenders for refusing to give the borrower
 5   a HAMP loan modification, despite the borrower having fully
 6   performed a HAMP TPP.”    Opposition to Motion, ECF Dkt. #50
 7   at 23.    The Goldsteins cited two decisions13 in which the
 8   respective courts, when presented with similar factual scenarios
 9   and causes of action, determined that no contracts or executed
10   agreements existed between the subject borrowers and lenders to
11   support the borrowers’ actions.    The Goldsteins argued that this
12   state of the law changed in 2012 and 2013, with three decisions.
13   First, the Seventh Circuit issued its opinion in Wigod v. Wells
14   Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012), holding that a
15   HAMP TPP was an enforceable contract that “could give rise to
16
          12
             As part of the support for this factual argument, the
17   Goldsteins filed under seal with the bankruptcy court
18   transcriptions of certain telephone conversations between the
     Goldsteins and representatives of Wells Fargo in which Wells
19   Fargo repeatedly told the Goldsteins that they should continue
     making the TPP payments while their modification was under
20   consideration – not disclosing that, as later determined, Wells
     Fargo denied the modification in February 2010 (six months prior
21   to the petition date). They also sought authority to file these
     transcripts under seal as part of the record on appeal. This
22   panel denied the request to file under seal, without prejudice,
     by order entered January 22, 2015. The parties thereafter
23   jointly filed a motion to allow substitution of redacted copies
24   of the transcripts (the “Motion to Substitute”). This panel
     granted the Motion to Substitute by order entered February 25,
25   2015.
          13
26           The Goldsteins cited Nungaray v. Litton Loan Servicing,
     LP, 200 Cal. App. 4th 1499 (2011), and Grill v. BAC Home Loans
27   Servicing, LP, 2011 WL 127891 (E.D. Cal. Jan. 14, 2011). We
     note that both cited decisions post-date the petition date but
28   pre-date the Goldsteins’ initiation of the State Court Action.

                                     -10-
 1   claims against banks, for breach of contract, misrepresentation
 2   and fraud.”   ECF Dkt. 50 at 25.   Then the California court of
 3   appeal in West v. JPMorgan Chase Bank and the Ninth Circuit in
 4   Corvello v. Wells Fargo Bank, N.A. adopted the Wigod reasoning.
 5        The Goldsteins argued that, as a matter of law, their right
 6   to remedy under the TPP Claims was created by the postpetition
 7   decisional authority in Wigod, West, and Corvello, and not
 8   before.   They contended, therefore, that the TPP Claims
 9   necessarily constituted postpetition claims.
10        4.   The bankruptcy court’s ruling
11        The bankruptcy court ruled orally after hearing argument on
12   the Motion and held that all of the TPP Claims arose prepetition
13   and were property of the estate.    The bankruptcy court found
14   that:
15        to the extent there was any fraud, any inducement, any
          breach of contract, any promissory estoppel claim,
16        that breach would have occurred after the debtors
          performed and, as debtors[’] counsel in her last
17        comments said, noted the full performance by the
          debtors took place in early 2010 after the debtors had
18        made their three payments. Once the debtors made
          those three payments and otherwise complied with their
19        obligations under the HAMP modification, the fact that
          they were not granted a permanent modification, that
20        constitutes the breach. There’s no question that that
          was before the bankruptcy case was filed.
21
22   Hr’g Tr. (June 26, 2014) at 53:25-54:11.    The bankruptcy court
23   found that the facts giving rise to the fraud claim also arose
24   prepetition, as the Goldsteins themselves alleged in the SAC
25   that they learned that the denial was in February 2010 and they
26   filed bankruptcy in August 2010 because of the denial.
27        The bankruptcy court also stated that it was not persuaded
28   that “because there were recent cases with respect specifically

                                    -11-
 1   to a cause of action based on HAMP modifications that there was
 2   no law or no legal right for debtors to have filed a cause of
 3   action prior to the bankruptcy case.”      Hr’g Tr. (June 26, 2014)
 4   at 55:10-14.   The bankruptcy court reasoned that the lack of
 5   published cases prepetition was in part due to the fact that
 6   HAMP procedures were relatively new.      Rather than focusing on
 7   the existence of some conflicting legal precedent, which the
 8   bankruptcy court noted had no “impact on the date that a claim
 9   arises for purposes of when that claim accrues,” Hr’g Tr. (June
10   26, 2014) at 56:12-13, the bankruptcy court relied on the fact
11   that prepetition there was “no controlling law saying that the
12   debtors had no right to file a cause of action.”      Hr’g Tr. (June
13   26, 2014) at 55:21-22.   Thus, the bankruptcy court found that
14   the TPP Claims were “assets that the Trustee is entitled to, and
15   in fact obligated to administer.”      Hr’g Tr. (June 26, 2014) at
16   56:20-21.
17        The Goldsteins appealed from the bankruptcy court’s
18   decision the same day the bankruptcy court entered its order.
19                               JURISDICTION
20        The bankruptcy court had jurisdiction under 28 U.S.C.
21   §§ 1334 and 157(b)(2)(A) and (N).      We have jurisdiction under
22   28 U.S.C. § 158.
23                                  ISSUES
24        Did the bankruptcy court err when it determined that the
25   TPP Claims were property of the bankruptcy estate?
26                            STANDARD OF REVIEW
27        Whether property is property of the estate is a question of
28   law reviewed de novo.    Mwangi v. Wells Fargo Bank, N.A. (In re

                                     -12-
 1   Mwangi), 432 B.R. 812, 818 (9th Cir. BAP 2010) (citing White v.
 2   Brown (In re White), 389 B.R. 693, 698 (9th Cir. BAP 2008)).
 3                                 DISCUSSION
 4        On appeal, the Goldsteins make the same primary arguments,
 5   pro se,14 as their counsel argued to the bankruptcy court.15
 6   First, they contend that none of the TPP Claims were complete,
 7   for accrual purposes, until the Goldsteins learned postpetition
 8   that Wells Fargo denied them a permanent loan modification –
 9   thereby damaging them.   Second, they assert that no published
10   decisional authority existed prepetition that supported
11   borrowers’ actions against their lenders based on similar
12   factual scenarios and, thus, that their right to remedy did not
13   arise until postpetition.     Both arguments are unavailing.
14   A.   Property of the estate
15        Section 541(a)(1) of the Bankruptcy Code defines “property
16   of the estate” to include “all legal or equitable interests of
17   the debtor in property as of the commencement of the case.”16
18   Legal causes of action are included within the broad scope of
19
          14
20             Mr. Goldstein, however, is himself an attorney.
21        15
             In their opening appeal brief, however, the Goldsteins
     for the first time also attempt to argue that Wells Fargo had
22   unclean hands because of its alleged fraud and that Wells Fargo
     should be judicially estopped from taking allegedly inconsistent
23   positions regarding whether a contract existed and whether Wells
24   Fargo breached it. We decline to consider either of these newly
     raised arguments in this ap peal. See Padgett v. Wright, 587
25 F.3d 983, 985 n.2 (9th Cir. 2009) (per curiam); and Scovis v.
     Henrichsen (In re Scovis), 249 F.3d 975, 984 (9th Cir. 2001)
26   (refusing to consider issue raised for the first time on appeal
     absent exceptional circumstances).
27
          16
             Section 541(b) lists exclusions from this broad
28   definition, none of which are asserted to be applicable here.

                                      -13-
 1   § 541.   Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789
 2 F.2d 705, 707 (9th Cir. 1986) (citing United States v. Whiting
 3   Pools, Inc., 462 U.S. 198, 205 & n.9 (1983)).     This includes
 4   prepetition tort causes of action, id., as well as prepetition
 5   causes of action based on contract, Rau v. Ryerson (In re
 6   Ryerson), 739 F.2d 1423, 1425 (9th Cir. 1984).     The question
 7   presented in this appeal is whether the tort- and contract-based
 8   causes of action comprising the TPP Claims accrued, for
 9   bankruptcy purposes, prior to the Goldsteins’ petition date and,
10   thus, constitute property of the estate.     See Cusano v. Klein,
11   264 F.3d 936, 947 (9th Cir. 2001).     The bankruptcy court
12   concluded they did; we agree.
13   B.   The TPP Claims accrued prepetition.
14        “To determine when a cause of action accrues, and therefore
15   whether it accrued pre-bankruptcy and is an estate asset, the
16   Court looks to state law.”    Boland v. Crum (In re Brown), 363
17 B.R. 591, 605 (Bankr. D. Mont. 2007) (citing Cusano).     “It is
18   important, however, to distinguish principles of accrual from
19   principles of discovery and tolling, which may cause the statute
20   of limitations to begin to run after accrual has occurred for
21   purposes of ownership in a bankruptcy proceeding.”     Cusano, 264
22 F.3d at 947.
23        In California, “generally, a cause of action accrues and
24   the statute of limitation begins to run when a suit may be
25   maintained.    Ordinarily this is when the wrongful act is done
26   and the obligation or the liability arises, but it does not
27   accrue until the party owning it is entitled to begin and
28   prosecute an action thereon.    In other words, a cause of action

                                     -14-
 1   accrues upon the occurrence of the last element essential to the
 2   cause of action.”   Howard Jarvis Taxpayers Assn. v. City of La
 3   Habra, 25 Cal. 4th 809, 815 (2001) (citations and internal
 4   quotation marks omitted).    Therefore, if a claim “could have
 5   been brought,” it has accrued.    Cusano, 264 F.3d at 947.   Here,
 6   we determine, as did the bankruptcy court, that all of the TPP
 7   Claims could have been brought prepetition.
 8        Under the terms of the TPP, Wells Fargo agreed to provide
 9   the Goldsteins with a permanent loan modification if the
10   Goldsteins complied with the TPP requirements or to notify them
11   if they did not qualify after making the three TPP payments.
12   The Goldsteins made the third payment on January 1, 2010.     Wells
13   Fargo then was required to take one of two possible actions; it
14   did nothing.   Thus, at that prepetition point in time, the
15   Goldsteins could have brought their TPP Claims.    Wells Fargo did
16   not act in compliance with its alleged representations,
17   promises, or contractual agreements despite the Goldsteins’ full
18   performance.   The Goldsteins’ four additional payments arguably
19   increased their damages claim, but did not delay the accrual of
20   the TPP Claims themselves.
21        Nor were the Goldsteins delayed in their ability to bring
22   the TPP Claims due to their lack of receipt of a written denial
23   of a permanent loan modification or because they may not have
24   learned until sometime postpetition that Wells Fargo denied the
25   permanent loan modification in February 2010.17   Instead, because
26
27        17
             The Goldsteins assign error to the bankruptcy court’s
     acceptance as fact of the Goldsteins’ allegation contained in
28                                                     (continued...)

                                      -15-
 1   Wells Fargo took neither of the HAMP-required alternative
 2   actions – and there is no question that the Goldsteins
 3   admittedly knew they did not do so – the Goldsteins could have
 4   brought the TPP Claims before they filed bankruptcy.    As of the
 5   commencement of the case, if the TPP Claims could have been
 6   brought, they accrued and became part of the bankruptcy estate.
 7   See In re Brown, 363 B.R. at 605.     We determine, as a matter of
 8   law, that the TPP Claims accrued prepetition and therefore
 9   conclude that the bankruptcy court did not err when it held that
10   the TPP Claims were property of the estate.
11   C.   The Goldsteins were not prohibited from bringing the TPP
12   Claims prepetition even if some contrary non-binding precedent
13   existed or supportive precedent was lacking at that time.
14         The Goldsteins also argue that because they never received
15   a signed copy of the TPP, as required by its terms prior to it
16   taking effect, they had no agreement or contract with Wells
17   Fargo until such time as the Seventh Circuit’s reasoning and
18   decision in Wigod was adopted in California (West) and by the
19   Ninth Circuit (Corvello).18   And the Goldsteins contend that the
20
21         17
           (...continued)
     their SAC that they learned in May 2010 of Wells Fargo’s denial
22   of the permanent loan modification in February 2010. The
     Goldsteins contend that their allegation was a mere misstatement
23   that they have since corrected. Because we determine that the
24   TPP Claims accrued prepetition when Wells Fargo did not give
     notice of denial or provide the permanent loan modification,
25   which neither side disputes, we determine that even if the
     bankruptcy court erred by relying on the SAC allegation, it
26   would be harmless error.
27        18
             In Corvello, the Ninth Circuit specifically found that
     such a provision in a TPP, drafted by the bank, did not deprive
28                                                     (continued...)

                                    -16-
 1   state of the law prepetition, before the Wigod, West, and
 2   Corvello decisions, in effect, prevented them from bringing the
 3   TPP Claims.
 4        In their arguments, the Goldsteins appear to miss the point
 5   that in all three of these decisions, the courts reached their
 6   ultimate conclusions regarding the viability of the state common
 7   law claims at issue through application of existing state law;
 8   and their analysis of contractual obligations of banks under
 9   HAMP was based on review of HAMP provisions and applicable
10   Treasury guidelines.   See Corvello, 728 F.3d at 880 (finding
11   Treasury Supplemental Directive 09-01 to be the controlling
12   Treasury guideline for the process of applying for and receiving
13   a permanent modification); Bushell v. JPMorgan Chase Bank, N.A.,
14   220 Cal. App. 4th 915, 923 (2013) (lenders “must perform HAMP
15   loan modifications in accordance with Treasury regulations,”
16   such as Supplemental Directive 09-01, issued in April 2009,
17   delineating HAMP’s eligibility requirements and modification
18   procedures).
19        These courts did not create new legal rights.   They
20   interpreted the respective borrowers’ rights under state laws
21   then in effect to consider the impact of HAMP provisions and
22   related agreements.    The plaintiffs in each case faced the same
23   state of the law that the Goldsteins complain they faced
24   prepetition, but they persevered and eventually persuaded the
25
26
27        18
           (...continued)
     borrowers of the benefits of their agreement.   Corvello, 728
28 F.3d at 884-85.

                                     -17-
 1   reviewing courts to rule in their favor.19   The Goldsteins,
 2   arguably, might have done the same.20
 3        The Goldsteins rely on Drewes v. Vote (In re Vote), 261
 4 B.R. 439 (8th Cir. BAP 2001), and Sliney v. Battley (In re
 5   Schmitz), 270 F.3d 1254 (9th Cir. 2001), to support their
 6   arguments.   Both decisions are factually and legally
 7   distinguishable.   In both cases, the rights under review, crop
 8   disaster assistance and fishing rights, respectively, were
 9   created postpetition by legislation enacted postpetition.      In re
10   Vote, 261 B.R. at 442; In re Schmitz, 270 F.3d at 1255-56.
11   Here, the TPP Claims rely on California common law regarding
12   fraud, promissory estoppel, and contract as it existed
13   prepetition, interfacing with the HAMP provisions enacted in
14
15        19
             The eventually successful plaintiffs in Wigod first
     filed their complaint in April, 2010 in district court; received
16   their unfavorable ruling in January 2011; but succeeded before
     the Seventh Circuit in March 2012. See Wigod v. Wells Fargo
17   Bank, N.A., 2011 U.S. Dist. LEXIS 7314 (N.D. Ill., Jan. 25,
18   2011). The plaintiff in West was encountering problems with her
     request for HAMP modification in late 2009 and early 2010, and
19   was foreclosed in May 2010. West v. JPMorgan Chase Bank, N.A.,
214 Cal. App. 4th at 789-90. She filed her initial complaint in
20   November 2010 and suffered an unfavorable judgment in January
     2012, before prevailing on appeal in March 2013. Id. at 791.
21   Similarly, the plaintiff in Corvello first filed his complaint
     in November 2010 to address claims related to a HAMP temporary
22   payment plan that started in the summer of 2009. Corvello, 728
F.3d at 881; Complaint, Corvello v. Wells Fargo Bank, N.A., No.
23   3:10-cv-05072-VC (N.D. Cal. Nov. 9, 2010), ECF Dkt. #1.
24        20
             The court in Corvello acknowledged that many state and
25   federal courts had dealt with similar factual circumstances,
     citing Sutcliffe v. Wells Fargo Bank, N.A., 283 F.R.D. 533, 549-
26   50 (N.D. Cal. 2012), for its collection of cases. We note that
     in Sutcliffe, among the cases it collected, were a number of
27   cases where courts held in 2010 and 2011 that a TPP is an
     enforceable agreement, at least for purposes of surviving a
28   Civil Rule 12(b)(6) motion. 283 F.R.D. at 549-50.

                                    -18-
 1   2009.     The Goldsteins’ ability to file the TPP Claims did not
 2   require enactment of new legislation.      The TPP Claims involved
 3   interpretation of the legal significance of the facts as they
 4   existed prepetition.     The developing case law arguably assisted
 5   the Goldsteins’ likelihood of recovery on the TPP Claims as it
 6   interpreted what HAMP required of the banks in a manner
 7   favorable to the Goldsteins; it did not create a new right.21
 8   The Goldsteins cite no legal authority to support their
 9   contention that judicial interpretation of the HAMP provisions
10   resulted in new legal rights that the Goldsteins did not have as
11   of the commencement of the bankruptcy case, and we know of none.
12                                 CONCLUSION
13        Based on the foregoing, we AFFIRM.
14
15
16
17
18
19
20
21
22
23
          21
24           It bears mentioning here that if any of the statute of
     limitations periods applicable to the causes of action
25   comprising the TPP Claims had run before the Wigod, West, and
     Corvello favorable opinions were published, the subsequent
26   favorable decisions could not revive the time-barred causes of
     action. See Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1116
27   (1988) (“[A] change in the law, either by statute or by case
     law, does not revive claims otherwise barred by the statute of
28   limitations.”).

                                      -19-