In this article the author, from a law firm that specializes in beating up state courts for what the author considers excessive punitive damages awards, ATTACKED the West Virginia Supreme Court of Appeals for using procedural tricks to prevent the US Supreme Court from reviewing the award of $2.17 Million in punitive damages and $600K in attorney fees in the Brown v Quicken Loans case. The author considered the award excessive and violative of Quicken’s due process rights.
West Virginia Trial Court and Supreme Court of Appeals handling of the Brown v Quicken Loans and Quicken Loans v Brown cases do indeed raise the hackles of lenders who have cheated the holy hell out of borrowers. I feel inclined to render the following opinion about the huge punitive damages award the trial court (without a jury) made to Brown.
The courts duly haggled over the award through three trials and two appeals, and Quicken lawyers still don’t feel satisfied. They want to cheat borrowers with relative impunity.
I believe the Supreme Court has the final say on the meaning of the Constitution’s clauses like “Due Process” but not to the extent of undermining juries and judges who must act to punish the wicked to the extent they deem necessary to teach the wicked a lesson, and even, if necessary, to run them out of business altogether. The US Supreme Court sits altogether too remote from the little people and their abusers in the American hinterland to make appropriate rulings on whether a punishment abused due process rights of the abuser. Punishments by their very nature always abuse the perpetrator, and the perpetrator’s rights, as they should.
So I fully support the West Virginia Supreme Court of Appeals effort to keep the US Supreme Court out of such cases, by whatever clever means they must.
Quicken Loans has probably abused THOUSANDS of borrowers as badly as or worse than it abused Lourie Jefferson (Brown) in Wheeling WV, starting with encouraging the appraiser to value her $46,000 house at $144,000. She settled out of court with the appraiser and his insurer, but that did not punish Quicken for its underwriting of that horrific appraisal. BOTH the appraiser and Quicken’s loan officers and executives overseeing them belong in Federal Prison for that crime of bank fraud. And that is just the tip of the iceberg of crookedness in this case.
Laurie Jefferson was sick and broke and could not afford an attorney when Quicken foreclosed on her. Luckily, Jim Bordas, who knew her family, took her case on contingency, for 40%. He fought rabidly on their joint behalf. And he won. Now Quicken wants the US Supreme Court to undermine that win by reducing the damage award. In my opinion, the damage award should have gone much higher.
To get the proper perspective on my opinion, read the court opinions detailing the tale of horror of how Quicken’s agents and employees cheated Lourie Jefferson in every way they could, apparently. I archived them together here along with my overview:
I consider the Brown v Quicken case the POSTER CHILD for the methodology to which I refer as “Mortgage Attack.” See the details of the method at http://mortgageattack.com. The method contains these elements:
1. Find the injuries and related evidence
2. Hire a competent attorney
3. Artfully ATTACK the injurious.
Most foreclosure “victims” took loans they should not have. But they suffered some hardship that led to their breaching the note through non-payment. That injured the creditor who hired a lawyer and attacked the borrower through foreclosure. Typical foreclosure victims cannot afford competent counsel to find out how the lender team members (e.g., appraiser, broker, closer, lender) injured them and then attack the lender team members for those injuries.
In most loans, the injuries do not become immediately obvious as they did in the Brown case. And because it costs so much time and effort and talent to examine the loan related documents to find those injuries, most foreclosure victims cannot afford the cost. So they hire Pretense Defense attorneys to “keep them in the house as long as possible,” a scam in and of itself.
RARELY, therefore, can a plaintiff like Lourie Jefferson find competent counsel to help attack the lender team. Most attorneys cannot and will not take a case like Brown’s on contingency. As a consequence, most simply plod along to foreclosure and lose the house, enriching a foreclosure pretense defense attorney $15,000 to $30,000 in the process.
On behalf of all those tens of thousands or hundreds of thousands of foreclosure victims who suffered monstrous cheating of the kind Quicken Loans perpetrated on Lourie Jefferson (Brown), the Trial Court in Wheeling WV delivered an effective blow in ensuring that Lourie and Monique Brown received a little over $4 million (if I calculated correctly) for their injuries, with 40% going to Bordas and Bordas law firm for the diligent work they did in bringing Quicken Loans to well-deserved justice.
So, let us keep that perspective while pondering just how much the US Supreme Court should have to say in the matter of punitive damages which should have numbered in the tens of millions of dollars in order really to punish Quicken Loans enough to keep them from cheating other hapless borrowers like the desperate, ill Lourie Jefferson.
Courts across the land have trashed the Vapor Money Theory – the idea that the borrower’s note funded the loan, or there’s no real money and so the lender never actually gave money in the form of a loan. I provide some court opinions, and a host of related citations.
MICHAEL J. BARNES, Plaintiff(s), v. CITIGROUP INC., et al., Defendant(s).
United States District Court, E.D. Missouri, Eastern Division.
June 15, 2010.
” In the typical vapor money claim, “Plaintiff alleges that the promissory note he executed is the equivalent of `money’ that he gave to the bank. He contends that [the lender] took his `money,’ i.e., the promissory note, deposited it into its own account without his permission, listed it as an `asset’ on its ledger entries, and then essentially lent his own money back to him….He further argues that because [the lender] was never at risk, and provided no consideration, the promissory note is void ab initio, and Defendants’ attempts to foreclose on the mortgage are therefore unlawful.” Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499 at *3 (S.D. Ohio Mar. 9, 2006). While the vapor money theory has not been addressed by any court within the 8th Circuit, it and “similar arguments have been rejected by federal courts across the country.”McLehan v. Mortgage Electronic Registration Sys., No. 08-12565, 2009 WL 1542929 at *2 (E.D. Mich. June 2, 2009) (citations omitted). See, e.g., Thomas v. Countrywide Home Loans, No. 2:09-CV-00082-RWS, 2010 WL 1328644 (N.D. Ga. Mar. 29, 2010); Andrews v. Select Portfolio Servicing, Inc., No. RDB-09-2437, 2010 WL 1176667 (D. Md. Mar. 24, 2010); Barber v. Countrywide Home Loans, Inc., No. 2:09-CV-40-GCM, 2010 WL 398915 (W.D.N.C. Jan. 25, 2010); Kuder v. Washington Mut. Bank, No. CIV S-08-3087 LKK DAD PS, 2009 WL 2868730 (E.D. Cal. Sept. 2, 2009); Rodriguez v. Summit Lending Solutions, Inc., No. 09cv773 BTM(NLS), 2009 WL 1936795 (S.D. Cal. July 7, 2009); Johnson v. Deutsche Bank Nat’l Trust Co., No. 09-21246-CIV, 2009 WL 2575703 (S.D. Fla. July 1, 2009); Gentsch v. Ownit Mortgage Solutions Inc. No. CV F 09-0649 LJO GSA, 2009 WL 1390843 (E.D. Cal. May 14, 2009). Thus, the vapor money theory is not a valid route to recovery, and Plaintiff’s claims based upon it must be dismissed.
YVONNE MOSELY-SUTTON v. KENNETH MACFADYEN, USDC Maryland, 17 June 2011
Plaintiff appears to make a vapor money claim by alleging that, “Lawful money no longer is available for payment of debt in our economic system.” Compl. at 7. Plaintiff seems to assert that the loan at issue is unenforceable because “no such required cash was tendered,” presumably at the closing of the loan. Compl. at 5, ¶ 14. To the extent Plaintiff asserts a vapor money claim, this Court has previously noted that this “theory has been consistently rejected by federal courts as frivolous and insufficient to withstand a motion to dismiss.” Andrews v. Select Portfolio Servicing, Inc., 2010 WL 1176667, at *3 (D. Md. March 24, 2010). Accordingly, all claims based upon any variation of the vapor money theory must be dismissed.
In this TILA rescission appeal the court explained exactly why the borrower must tender in order to complete the rescission, and why the court has the power to rearrange the process, including the tender and lien removal sequence and mechanism. The court also explained the difference between old money and new money tender. And, most importantly the court explained that it can relieve the borrower of the obligation to tender ONLY in the case of creditor cheating or deceit.
“However, those cases relieving the borrower of his or her tender obligation, resulting in a forfeiture by the lender, are limited to “situations where creditors have tried to deceive or cheat the consumer.”/In re Williams,/291 B.R. 636, 655 (Bankr. E.D. Pa. 2003) (quoting/Michel v. Beneficial Consumer Discount Co.,/140 B.R. 92, 101 (Bankr. E.D. Pa. 1992)) (declining to hold that the borrower “should be relieved of her `tender obligation’” under TILA even though it adopted the minority view that termination of the lender’s security interest could not be conditioned upon tender).”
“We hold that, with this absence of any proof of an intent by Deutsche Bank or any of its predecessors to deceive or cheat Gardner, the trial court abused its discretion in ruling that rescission was appropriate, and in ordering the termination of Deutsche Bank’s security interest obtained in the 2005 refinance transaction, without also requiring Gardner to fulfill his tender obligation.”
I rightly point out that the borrower’s failure to find and lodge cheating/deceit causes of action against the lender team, such as appraisal or loan application fraud, constituted a COLOSSAL error that COST the borrower a LOT OF MONEY.
This of course vindicates my OFTEN REPEATED assertion that all home loan borrowers should purchase a COMPREHENSIVE MORTGAGE EXAMINATION from a COMPETENT PROFESSIONAL… BEFORE seeking a rescission or defending against a foreclosure attack.
People interested in much more info can call me at 727 669 5511, because I know Neil Garfield cannot or will not give it to them.
Rescission means making a contract null. It requires unwinding of the deal so as to restore the parties to “status quo ante,” or “pre-contract condition.” The unwinding requires the creditor to remove any lien and both creditor and borrower to tender (offer or present for acceptance) payment back to each other of what they received from each other. See the below definitions, court opinions, and law references.
RESCIND. To abrogate, annul, avoid, or cancel a contract; particularly, nullifying a contract by the act of a party. See Powell v Lince Co., 29 Misc. Rep. 419, 60 N. Y. Supp 1044; Hurst v. Trow Printing Co., 2 Misc. Rep. 361, 22 N. Y. Supp. 371. Black’s Law Dictionary2nd Edition (1910)
rescind (ri-sind), vb. (17c) 1. To abrogate or cancel (a contract) unilaterally or by agreement. [Cases: Contracts C=c249.] 2. To make void; to repeal or annul <rescind the legislation>. 3. Parliamentary law. To void, repeal, or nullify a main motion adopted earlier.
Also termed annul; repeal. rescindable, adj. rescind and expunge. See EXPUNGE (2).
rescission (ri-sizh-an), n. (17c) 1. A party’s unilateral unmaking of a contract for a legally sufficient reason, such as the other party’s material breach, or a judgment rescinding the contract; VOIDAKCE.• Rescission is generally available as a remedy or defense for a nondefaulting party and is accompanied by restitution of any partial performance, thus restoring the parties to their precontractual positions. Also termed avoidance. [Cases: Contracts G=’249.] 2. An agreement by contracting parties to discharge all remaining duties of performance and terminate the contract. – Also spelled recision; recission. – Also termed (in sense 2) agreement of rescission; mutual rescission; abandonment.
Cf. REJECTION (2); REPUDIATION (2); REVOCATION (1). [Cases: Contracts G=252.] – rescissory (ri-sis-<lree or ri-siz-), adj.
“The [UCC] takes cognizance of the fact that the term ‘rescission’ is often used by lawyers, courts and businessmen in many different senses; for example, termination of a contract by virtue of an option to terminate in the agreement, cancellation for breach and avoidance on the grounds of infancy or fraud. In the interests of clarity of thought – as the consequences of each of these forms of discharge may vary the Commercial Code carefully distinguishes three circumstances. ‘Rescission’ is utilized as a term of art to refer to a mutual agreement to discharge contractual duties. ‘Termination’ refers to the discharge of duties by the exercise of a power granted by the agreement. ‘Cancellation’ refers to the putting an end to the contract by reason of a breach by the other party. Section 2-720, however, takes into account that the parties do not necessarily use these terms in this way.” John D. Calamari & Joseph M. Perillo, The Law of Contracts § 21-2. at 864-65 (3d ed. 1987).
equitable rescission. (1889) Rescission that is decreed by a court of equity. [Cases: Cancellation of Instruments (;::; 1.]
legal rescission. (1849) 1. Rescission that is effected by the agreement of the parties. [Cases: Contracts C=> 251.] 2. Rescission that is decreed by a court of law, as
opposed to a court of equity.
“The modern tendency is to treat rescission as equitable, but rescission was often available at law. If plaintiff had paid money, or had delivered goods. he could rescind by tendering whatever he had received from defendant and suing at law to recover his money or replevy his goods. But if he had delivered a promissory note or securities, or conveyed real estate, rescission required the court to cancel the instruments or compel defendant to reconvey. This relief was available only in equity. Many modern courts ignore the distinction …. But versions of the distinction are codified in some states:’ Douglas Laycock, Modern American Remedies 627-28 (3d ed. 2002).
Black’s Law Dictionary9th Edition (2009)
“There is no reason why a court that may alter the sequence of procedures after deciding that rescission is warranted, may not do so before deciding that rescission is warranted when it finds that, assuming grounds for rescission exist, rescission still could not be enforced because the borrower cannot comply with the borrower’s rescission obligations no matter what. Such a decision lies within the court’s equitable discretion, taking into consideration all the circumstances including the nature of the violations and the borrower’s ability to repay the proceeds. If … it is clear from the evidence that the borrower lacks capacity to pay back what she has received (less interest, finance charges, etc.), the court does not lack discretion to do before trial what it could do after. Determinations regarding rescission procedures shall be made on a “case-by-case basis, in light of the record adduced.” Yamamoto v. Bank of New York, 329 F.3d 1167 (9th Cir. 2003)
Courts have equitable discretion to allow borrowers to tender via monthly payments. In re Stuart, 367 B.R. 541, 552 (Bankr.E.D.Pa.2007); Shepeard v. Quality Sliding & Window Factory, Inc., 730 F.Supp. 1295 (D.Del.1990) (allowing borrower to satisfy tender obligation by making monthly payments); Mayfield v. Vanguard Sav. & Loan Ass’n, 710 F.Supp. 143, 149 (E.D.Pa.1989) (allowing borrower to satisfy tender obligation by making monthly payment).
15 U.S.C. §1635. Right of rescission as to certain transactions
Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Board, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Board, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.
(b) Return of money or property following rescission
When an obligor exercises his right to rescind under subsection (a) of this section, he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the boligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.
(c) Rebuttable presumption of delivery of required disclosures
Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof.
(d) Modification and waiver of rights
The Board may, if it finds that such action is necessary in order to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of any rights created under this section to the extent and under the circumstances set forth in those regulations.
(e) Exempted transactions; reapplication of provisions
This section does not apply to—
(1) a residential mortgage transaction as defined in section 1602(w) of this title;
(2) a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property;
(3) a transaction in which an agency of a State is the creditor; or
(4) advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan.
(f) Time limit for exercise of right
An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor, except that if (1) any agency empowered to enforce the provisions of this subchapter institutes a proceeding to enforce the provisions of this section within three years after the date of consummation of the transaction, (2) such agency finds a violation of this section, and (3) the obligor’s right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later.
(g) Additional relief
In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under section 1640 of this title for violations of this subchapter not relating to the right to rescind.
(h) Limitation on rescission
An obligor shall have no rescission rights arising solely from the form of written notice used by the creditor to inform the obligor of the rights of the obligor under this section, if the creditor provided the obligor the appropriate form of written notice published and adopted by the Board, or a comparable written notice of the rights of the obligor, that was properly completed by the creditor, and otherwise complied with all other requirements of this section regarding notice.
(i) Rescission rights in foreclosure
(1) In general
Notwithstanding section 1649 of this title, and subject to the time period provided in subsection (f) of this section, in addition to any other right of rescission available under this section for a transaction, after the initiation of any judicial or nonjudicial foreclosure process on the primary dwelling of an obligor securing an extension of credit, the obligor shall have a right to rescind the transaction equivalent to other rescission rights provided by this section, if—
(A) a mortgage broker fee is not included in the finance charge in accordance with the laws and regulations in effect at the time the consumer credit transaction was consummated; or
(B) the form of notice of rescission for the transaction is not the appropriate form of written notice published and adopted by the Board or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice.
(2) Tolerance for disclosures
Notwithstanding section 1605(f) of this title, and subject to the time period provided in subsection (f) of this section, for the purposes of exercising any rescission rights after the initiation of any judicial or nonjudicial foreclosure process on the principal dwelling of the obligor securing an extension of credit, the disclosure of the finance charge and other disclosures affected by any finance charge shall be treated as being accurate for purposes of this section if the amount disclosed as the finance charge does not vary from the actual finance charge by more than $35 or is greater than the amount required to be disclosed under this subchapter.
(3) Right of recoupment under State law
Nothing in this subsection affects a consumer’s right of rescission in recoupment under State law.
This subsection shall apply to all consumer credit transactions in existence or consummated on or after September 30, 1995
NORMAN BRADFORD SHOWS THAT THE COURTS LIKE RESCISSION and OTHER FORMS OF MORTGAGE ATTACK, etc, IF THE BORROWER ARTFULLY MANAGES THE ATTACK.
If you want to see a case where the court denied rescission pre-Jesinoski, but the court awarded damages and attorney fees to the plaintiff, and where the MORTGAGE ATTACK lawsuit shows you how to set up a win, read up on Bradford v HSBC. Get the PACER docket report for this case:
1:09-cv-01226-TSE-JFA Bradford v. HSBC Mortgage Corporation et al
If you use the RECAP THE LAW extension in Firefox or Chrome browser, you can get an abbreviated docket report and some case docs FREE. Get the Docket Report I just ran HERE:
This case has not ended yet, partly because the creditor filed for bankruptcy and has not come out yet.
As the above opinions show, Bradford took out a refi loan in 2006, and paid on it for two years even thought the loan broker had lied, bait and switched him, then Bradford send the lender a justified notice of rescission in 2008. He sued for TILA rescission, for related damages including credit reputation damage for failure of the creditor to remove the lien and to tender after he offered to tender, for FDCPA violations for trying to collect a rescinded debt, for RESPA violations because the servicer refused to tell him the identity of the creditor (for which Bradford won costs, $4K damage, and over $25K legal fees), and for wrongful foreclosure. He filed the lawsuit 1 year and 16 days after sending notice of rescission.
Document 56 shows that a competent plaintiff like Bradford can craft a multi-count complaint so that it sails past a motion to dismiss with flying colors. The judge analyzes the complaint carefully and seems to love it.
The court ended up dismissing the rescission complaint because the 4th Circuit had opined that the borrower must sue within 3 years after closing, and Bradford sued a little over 4 years after closing. Thereafter, the 4th Circuit changed its view about the timing of rescission lawsuit, incidentally aligning with the Jesinoski opinion.
After the creditor comes out of bankruptcy, Bradford will have the ability to challenge the rescission dismissal in light of later Circuit position on suing for rescission, and in light of Jesinoski. The court would, of course, reverse the dismissal and order the unwinding of the loan. However, Bradford will have a considerable amount of setoffs, and the creditor knows it.
So, instead of challenging the dismissal right off, he can demand a settlement from the creditor (“Give me the house free and clear and call us even”). He will point out how badly he has beat up his adversaries already, and how much more he will beat them up with the rescission and setoffs and enormous legal fees, etc. They might make him a suitable counter offer. Or he might have to take them back to court. Time will tell.
Regardless, Bradford has not made a house payment since late 2008, he does not have to make payments because of the justified rescission, and interest stopped accruing on his debt in 2008, giving him free use of that money in the form of his house
In summary, Norman Bradford has, though his case, conducted a Mortgage Attack seminar for anyone wanting to know how to beat up the bank and its team members. The pleadings sit there on PACER for you to study.
All of you who simply cannot believe that borrowers can beat the bank by proving the bank and its agents and allies injured the borrower, TAKE HEART. Here I present a crystal clear example of the MORTGAGE ATTACK methodology:
Bank of America, NA v. Pate, 159 So. 3d 383 – Fla: Dist. Court of Appeals, 1st Dist. 2015
Don’t waste your time whining about the banking industry, fractional reserve lending, the Federal Reserve, the money system, securitization, and such irrelevancies. Get a mortgage examination if necessary to find the causes of action, and use them to HAMMER the lender, creditor, servicer, appraiser, loan broker, closer, title company, etc (whoever hurt you) IN COURT.
As you can see, the Florida appeals court upheld the BENCH TRIAL (not jury) award of $250,000 in PUNITIVE DAMAGES and over $60,000 in compensatory damages for the INJURIES the BANK did to the BORROWER. The Pates could probably have won much more in a jury trial.
If you want to deploy the MORTGAGE ATTACK strategy in your own mortgage dispute, visit http://MortgageAttack.com to learn what works and what does not.
159 So.3d 383 (2015)
BANK OF AMERICA, N.A., and Third-Party Defendant, Homefocus Services, LLC, Appellants,
Phillip V. PATE and Barbara Pate, Robert L. Pohlman and Marcia L. Croom, Appellees.
District Court of Appeal of Florida, First District.
March 16, 2015.
J. Randolph Liebler and Tricia J. Duthiers of Liebler, Gonzalez & Portuondo, Miami, for Appellants.
384*384 Jonna L. Bowman of Law Office of Jonna Bowman, Blountstown, for Appellees.
ROWE and OSTERHAUS, JJ., concur; THOMAS, J., CONCURS SPECIALLY WITH OPINION.
THOMAS, J., Specially Concurring.
In this civil foreclosure case, the trial court found that Appellant Bank of America (the Bank) engaged in egregious and intentional misconduct in Appellee Pates’ (Pate) purchase of a residential home. Thus, based on the trial court’s finding that the Bank had unclean hands in this equity action, it did not reversibly err in denying the foreclosure action and granting a deed in lieu of foreclosure. In addition, the trial court did not err in ruling in favor of the Pates in their counterclaims for breach of contract and fraud, and awarding them $250,000 in punitive damages and $60,443.29 in compensatory damages, against the Bank and its affiliate, Homefocus Services, LLC, which provided the flawed appraisal discussed below. Finally, the trial court did not reversibly err in granting injunctive relief and thereby ordering the Bank to take the necessary measures to correct the Pates’ credit histories.
In the bench trial below, the trial court found that the Bank assured the Pates, based on the appraisal showing the home’s value far exceeded the $50,000 mortgage loan, that it would issue a home equity loan in addition to the mortgage loan. This was a precondition to the Pates’ agreement to purchase the home, which was in very poor condition but had historical appeal for the Pates. The Pates intended to restore the home, but needed the home equity loan to facilitate restoration.
Before the closing on the property, the Bank informed the Pates that it would close on the home equity loan “later,” after the mortgage loan was issued. The Bank later refused to issue the home equity loan, in part on the ground that the appraisal issued by Homefocus was flawed. The Pates were forced to invest all of their savings and much of their own labor in extensive repairs. Thus, the trial court found that the Pates detrimentally relied on the representations of the Bank that it would issue the home equity loan. The record supports the trial court’s conclusion that the Bank acted with reckless disregard constituting intentional misconduct by the Bank. See generally,Lance v. Wade, 457 So.2d 1008, 1011 (Fla.1984) (“[E]lements for actionable fraud are (1) a false statement concerning a material fact; (2) knowledge by the person … that the representation is false; (3) the intent … [to] induce another to act on it; and (4) reliance on the representation to the injury of the other party. In summary, there must be an intentional material misrepresentation upon which the other party relies to his detriment.”).
The trial court further found that the Pates complied with the Bank’s demand to obtain an insurance binder to provide premiums for annual coverage, and that the Bank agreed to place these funds in escrow, utilizing the binder to pay the first year of coverage and calculate future charges to the Pates. Although the Pates fulfilled this contractual obligation, the Bank failed to correctly utilize the escrow funds. Consequently, the Pates’ insurance policy was ultimately cancelled due to nonpayment. The Pates attempted to obtain additional coverage but were unsuccessful due to the home’s structural condition. The Bank then obtained a force-placed policy with $334,800 in coverage and an annual premium of $7,382.98, which was 385*385 included on the mortgage loan, quadrupling the Pate’s mortgage payment.
The Pates offered to pay the original $496.34 monthly mortgage payment, but the Bank refused, demanding a revised mortgage payment of $2,128.74. The trial court found it “disturbing that Bank of America could financially profit due to [the Bank’s] failure to pay the home insurance…. [T]he profits for one or more months of forced place insurance would have been substantial.”
The trial court further found that during the four years of litigation following the Pates’ default, the Bank’s agents entered the Pate’s home several times while the Pates resided there, attempted to remove furniture, and placed locks on the exterior doors. Following the Bank’s action, the Pates had to have the locks changed so their family could enter the residence. During two of the intrusions, the Pates were required to enlist the aid of the sheriff to force the Bank’s agent to leave their home. The trial court found as fact that, due to the Bank’s multiple intrusions into their home, the Pates were forced to obtain alternative housing for 28 months, at a cost of thousands of dollars.
In Estate of Despain, the court held that “[t]o merit an award of punitive damages, the defendant’s conduct must transcend the level of ordinary negligence and enter the realm of willful and wanton misconduct….” 900 So.2d at 640. Florida courts have defined such conduct as including an “entire want of care which would raise the presumption of a conscious indifference to consequences, or which shows… reckless indifference to the rights of others which is equivalent to an intentional violation of them.” Id. (quoting White Constr. Co. v. Dupont, 455 So.2d 1026, 1029 (Fla.1984)). Here, the Bank’s intent to defraud was shown by its reckless disregard for its actions. The facts showing the Bank’s “conscious indifference to consequences” and “reckless indifference” to the rights of the Pates is the same as an intentional act violating their rights. See White Constr. Co., 455 So.2d at 1029. The record evidence provides ample support for the trial court’s ruling in favor of the Pates’ claim for punitive damages against the Bank.
This California 4th District appellate opinion contains a treasure trove of virtual advice for borrowers whom the lender scammed with a fake loan mod while foreclosing on him at the same time (“dual tracking.”
The panel fully supported the opinion of the trial court which awarded Bergman $250,000 in damages plus legal fees. The court would have awarded him much more had Bergman’s attorney hired Law Partner On Call (http://lawpartneroncall.com) to manage the litigation, write the pleadings, and write the jury instructions.
Bergman got his payday for breach of contract by his creditor, but he made a bunch of mistakes.
For example, he did not include an attorney fees provision in his loan security instrument (that standard form only says the creditor can recover legal fees and costs) in the event the court finds that the creditor or servicer or other agent engaged in wrongdoing that injured the borrower. The court awarded Bergman fees anyway, but against great opposition by the creditor. Most borrowers make the same mistake.
And, Bergman failed to add to the security instrument that a special penalty attaches to dual tracking, a scam that virtually every lender has run on desperate borrowers who want a loan mod.
Furthermore, Bergman made the same mistake many do in loan mod negotiations – he failed to record the name and ID# of everyone he talked to at the bank, and he failed to get a signed writing saying he had to miss payments in order to qualify for the loan mod, and that if he missed them, then made proper trial payments, the lender would grant the loan mod. Everything was oral leading up to the actual mod. And oral agreements have no more value than the paper on which the parties wrote them. The lender’s attorney blustered about it, but the court ruled that the parties had indeed make that agreement, then failed to give Bergman a loan mod. I believe many courts, faced with similar facts, have ruled that no agreement existed.
Bergman’s most monumental mistake: he failed to hire a competent professional to examine his loan documents for evidence of torts, contract and regulatory breaches, and legal errors. Had he done that, and lodge those as claims in his complaint, he could have won gargantuan damages award because, almost certainly, fraud underlay his loan.
Bergman while in the right, found uncommon good luck in this litigation. Many borrowers have lost using his paper-thin arguments.
READ THE OPINION thoroughly, especially if you have a mortgage and consider a loan mod.
But if you really want to win, call me right now at 727 669 5511 and schedule a mortgage examination, whether or not you face foreclosure. Read all about what wins and what does not win at http://mortgageattack.com.
Filed 9/30/15 Bergman v. JP Morgan Chase Bank, N.A. CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT
(Super.Ct.No. RIC10014015) OPINION
APPEAL from the Superior Court of Riverside County. Ronald L. Taylor, Judge. (Retired judge of the Riverside Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed.
AlvaradoSmith, John M. Sorich, S. Christopher Yoo, Jacob M. Clark; Parker Ibrahim & Berg, John M. Sorich and Mariel Gerlt-Ferraro for Defendant and Appellant.
Burkelegal and Gregory Burke for Plaintiff and Appellant.
Plaintiff and respondent Jeffrey A. Bergman (Bergman) sued defendant and appellant JPMorgan Chase Bank, N.A. (Chase) on claims involving a residential loan modification. A jury found in favor of Bergman on his causes of action for intentional misrepresentation and breach of the implied covenant of good faith and fair dealing.
Chase appeals from a $250,000 judgment in favor of Bergman, and the posttrial orders denying Chase’s motion for judgment notwithstanding the verdict (JNOV) and granting attorney’s fees to Bergman.
Chase argues the verdict is not supported by substantial evidence because no evidence shows Chase made misrepresentations to Bergman. Additionally, Chase argues the trial court erred in evidentiary rulings and jury instructions. Finally, Chase contends the judgment’s award of damages was duplicative, and the attorney’s fees provision under the subject deed of trust and promissory note did not include recovery of fees.
Bergman has filed a cross-appeal, raising issues of instructional and evidentiary error, and additional claims by Bergman for breach of contract and attorney’s fees.
We presume the judgment is correct if it is supported by substantial evidence. (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 494; Denham v. Superior
Court (1970) 2 Cal.3d 557, 564; San Diego Metropolitan Transit Development Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 528.) To warrant reversal, an error in jury instructions must result in a miscarriage of justice. (Mize-Kurzman v. Marin
CommunityCollegeDist. (2010) 202 Cal.App.4th 832, 862; Soule v. General Motors
Corp. (1994) 8 Cal.4th 548, 580.) Evidentiary error must also be “arbitrary, capricious, or patently absurd . . . resulting in a manifest miscarriage of justice.” (Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1685.) On a motion for judgment notwithstanding the verdict, an appellate court must decide whether any substantial evidence supports the verdict unless the verdict raises purely legal questions. (Trujilllov.NorthCountyTransitDist. (1998) 63 Cal.App.4th 280, 284; Wolf v. Walt Disney Pictures
& Television (2008) 162 Cal.App.4th 1107, 1138.) An award of attorney’s fees is
reviewed de novo. (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1212.) Based on the various appropriate standards of review, we affirm the judgment:
“The ultimate determination is whether a reasonable trier of fact could have found for the respondent based on the whole record.” (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
FACTUAL AND PROCEDURAL BACKGROUND
In 2005, Bergman purchased the subject residential real property located at 22330 Foxhall Drive in Corona, making a down payment of $250,000. Bergman proceeded to make improvements to the property costing about $291,000.
In 2007, Bergman refinanced the property with an adjustable rate mortgage of
$937,500, based on a value of $1.25 million. Bergman testified he thought the loan was a conventional loan. Instead, the monthly payments in the fixed amount of $5,273.44 were interest-only for the first 10 years until 2017.
Bergman made the monthly payments from January until October 2008. Chase acquired the beneficial interest in the loan in September 2008. In December 2008, Bergman asked for a loan modification with a lower interest rate. He paid the loan modification fee of $1,582. The bank agreed to reduce the interest rate to 3 percent and the monthly payment to $4,112.74, while increasing the loan balance by an additional
$9,000. In the third year, the monthly payment would increase to $5,417.64, applied to both principal and interest.
When Bergman realized how much the monthly payment would increase in the third year, he immediately contacted Chase about another modification. He testified Chase offered proposed terms for a new loan modification with a 40-year term, a fixed interest rate at 3 percent, and a $3,000 monthly payment. Bergman had the ability to pay
$3,000 a month.
Bergman testified he did not make a payment on the first loan modification in January 2009 or later because the Chase bank staff1 told him that to qualify for another loan modification he would need to be in default. Bergman did not remember making a payment that was reversed and returned in February 2009, for nonsufficient funds, or “NSF.”
A notice of default (NOD) was recorded in April 2009. Although Bergman contacted Chase about the NOD, Bergman did not realize in July 2009 that the
Bergman could not name most of the bank staff to whom he Almost none of the correspondence he received from Chase included individual names.
foreclosure was proceeding. A notice of trustee’s sale was mailed to Bergman, posted on the property, and recorded on August 3, 2009.
In the meantime, in August 2009, Bergman consulted with a real estate broker about a short sale. Bergman also finally received information about a HAMP2 loan modification from Chase. Bergman submitted a HAMP hardship affidavit and financial information to Chase on August 20, 2009. Bergman had suffered financial difficulties from a divorce, a downturn in his limousine business, and two surgeries. He stated the property was worth $578,000 and the outstanding loan was $946,000. However, Bergman could not qualify for a HAMP loan because of the limit of $729,750 on loan modifications.
Bergman identified one Chase employee, Hifa Boolori, whose name appears on correspondence dated August 28, 2009, approving a trial plan agreement. A trial plan agreement was not a HAMP loan but a Chase internal loan modification program.
Bergman agreed to the plan and made three trial plan payments of $2,775 in September, October, and November 2009. He provided additional information, anticipating he would receive a second loan modification.
Bergman testified he did not know the foreclosure was proceeding at the same time the second loan modification was being evaluated. He was told the foreclosure
would be “frozen.” In his fifth amended complaint, he alleged he was informed on November 17, 2009, that he had been denied a loan modification and a sale was
Home Affordable Modification
scheduled for January 5, 2010. At trial, he testified he did not know the trustee’s sale was scheduled for December 2, 2009, but had been rescheduled for January 15, 2010.
On December 17, 2009, Bergman signed a listing agreement for a short sale. He drafted a letter on December 22, 2009, asking Chase to let him sell the property in a short sale.
On the same date, December 22, 2009, Chase wrote Bergman a letter asking him to provide two recent paystubs to support his loan modification request. After receiving that letter, Bergman called Chase—because he had already been told his loan modification was denied—but Chase told him the loan was still under review. Bergman provided copies of his bank statements for October and November 2009.
On January 12, 2010, Chase again wrote Bergman, stating his loan modification was being reviewed. On February 11, 2010, Bergman wrote Chase, asking to cancel the loan modifications and to proceed with a short sale. Bergman continued to receive conflicting information about his loan from Chase until July 2010.
The property was sold at a trustee’s sale in July 2010 to defendant Mark Mraz, a friend of Bergman’s. One appraised fair market value was $595,000. The unpaid principal balance was $1,022.265.92. Bergman continued to receive notices about loan modification after the sale.
After the property was sold, Bergman was sued for unlawful detainer. Bergman posted a cash bond of $30,000 with money borrowed from his parents. Bergman incurred additional attorney’s fees defending the unlawful detainer action.
The jury completed the special verdict forms on all seven causes of action and punitive damages. The jury awarded Bergman damages of $125,000 on the cause of action for breach of the implied covenant of good faith and fair dealing and $125,000 on the cause of action for intentional misrepresentation.
At trial Chase objected to Bergman’s testimony about the $291,000 he spent on property improvements on the grounds that information had not been disclosed during discovery. Chase argues the trial court abused its discretion by allowing Bergman to testify. (Evid. Code, § 352.) Chase contends it was prejudiced by “surprise at the trial” because Chase could not adequately challenge Bergman’s testimony regarding the property upgrades. (Chronicle Pub. Co. v. Superior Court (1960) 54 Cal.2d 548, 561.)
Chase’s pretrial motion in limine sought to exclude any documentary evidence and witnesses not previously disclosed. Bergman was not an undisclosed witness and he did not submit documentary evidence about the property upgrades at trial. Furthermore, we have reviewed Chase’s record citations to its discovery requests and those requests do not support Chase’s contention that it “specifically requested all documents in support of Bergman’s claims.” Chase’s requests for admission, form and special interrogatories, and document requests do not ask generally or particularly for any documents in support of Bergman’s claim for damages based on the cost of the property improvements.
Therefore, the predicate for Chase’s argument—that Bergman did not comply with
discovery requests—is not supported by the record. The trial court did not abuse its
discretion in allowing Bergman’s testimony, which did not involve undisclosed documents or witnesses. (Boeken v. Phillip Morris, Inc., supra, 127 Cal.App.4th at p. 1685.)
JURY INSTRUCTION ON CORPORATE FRAUD
The trial court gave the jury a standard instruction based on CACI No. 1900, concerning intentional misrepresentation: “Jeffrey Bergman claims that [Chase] made a false representation that harmed him.” Chase contends the court erred by not giving its proposed Special Instruction No. 11: “To assert a fraud action against a corporation, a plaintiff must also allege [the] names of the person or persons who allegedly made the
fraudulent representation, their authority to speak, to whom they spoke, what they said or
wrote, and when it was said or written.”
The special instruction requested by Chase is based on heightened pleading requirements for corporate fraud, requiring a plaintiff to allege specifically the name of the person who made the alleged misrepresentations, his authority to speak, and what he said or wrote, and when it was said or written. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153,
157; Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) However, “[l]ess specificity in pleading fraud is required ‘when “it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy . . . .”’ (Committee on Children’s Television, Inc. v. General
Foods Corp. (1983) 35 Cal.3d 197, 217.)” (Cansino, at p. 1469.)
In the present case, Bergman specifically alleged and testified that he knew the name of one Chase employee in particular, Hifa Boloori, who made representations to him, although he spoke to many Chase employees during many phone calls between 2008 and 2010. Additionally, Chase had extensive records of contacts and conversations with Bergman which included information about which Chase employees contacted him, including the period between October 2008 and February 2009. Under the category of “USR,” the Chase delinquency notes identified the Chase employee by his or her initials, allowing Chase to determine who contacted Bergman far more easily than Bergman could do so. Even if Chase’s records do not expressly document an oral promise for a
40-year loan at 3 percent interest with $3,000 monthly payments, the records still include information about the employees who talked to Bergman.
Under these circumstances, it was not error or prejudicial for the trial court to instruct the jury according to the standard jury instruction and not to use Chase’s
proposed special instruction. The instruction to the jury was not required to be as specific as the pleading. Nevertheless, Bergman identified one person by name and Chase had to know its own employees based on its own records. (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.) There was no error causing a miscarriage of justice and no prejudice in refusing Chase’s special instruction. (Mize-Kurzman v. Mann Community College Dist., supra, 202 Cal.App.4th at p. 862, citing Soule v. General Motors Corp., supra, 8 Cal.4th at p. 580.)
V SUBSTANTIAL EVIDENCE
Chase argues there is not substantial evidence to support the jury’s verdict on the causes of action for fraud by intentional misrepresentation and breach of the covenant of good faith and fair dealing. In our review, we are guided by well-established principles: “It is for the trier of fact to determine the weight of the evidence and the credibility of the witnesses and resolve all conflicts. Where disputed facts are presented to and resolved by the trial judge, unless clearly erroneous his findings will not be disturbed by the reviewing court; it is not the province of this court to substitute its judgment for that of the trier of fact. On appeal the evidence and all reasonable inferences to be drawn therefrom must be viewed in a light most favorable to the findings and judgment. [Citations.] ‘Such a judgment, when attacked on evidentiary grounds, must be affirmed when there is any evidence, direct or circumstantial, to support the findings of the trial court. Stated negatively, such a judgment cannot be reversed unless there is no evidence, direct or circumstantial, to support the findings. These rules are elementary.’
[Citations.]” (Ach v. Finkelstein (1968) 264 Cal.App.2d 667, 674.)
Chase contends there is not substantial evidence of the elements of intentional misrepresentation: 1) a false representation of a material fact; 2) knowledge of the falsity; 3) intent to induce another to rely on the misrepresentation; 4) reliance on the misrepresentation; and 5) resulting damage. (Ach v. Finkelstein, supra, 264 Cal.App.2d
at p. 674; Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1111.) Chase argues substantial
evidence does not show that Chase made any misrepresentation to Bergman or that Bergman was induced to default on a loan as a result of a misrepresentation by Chase.
Bergman asserts that Chase was liable for two separate misrepresentations: 1) that, if his loan was in default, he could obtain a loan modification; and 2) if Bergman made three trial plan payments he could obtain a loan modification. The jury found the former was true and the latter was not.
“‘In its broad, general sense the concept of fraud embraces anything which is intended to deceive, including all statements, acts, concealments and omissions involving a breach of legal or equitable duty, trust or confidence which results in injury to one who justifiably relies thereon. . . . There is no absolute or fixed rule for determining what facts will constitute fraud; whether or not it is found depends upon the particular facts of the case under inquiry. Fraud may be proved by direct evidence or it may be inferred from all of the circumstances in the case. [Citation.] “Actual fraud is always a question of fact.” (Civ. Code, § 1574.)’ [Citations.]” (Ach v. Finkelstein, supra, 264 Cal.App.2d at p. 675.)
Chase’s argument is primarily that Bergman is inconsistent in his testimony about exactly what he was told and when. However, Bergman’s testimony and other evidence certainly supports his contention that Chase informed him that in order to qualify for a second loan modification, he would have to be in default. Based on the evidence, the jury could have reasonably found that, beginning in December 2008 and continuing through 2010, Bergman had many conversations with Chase about modifying his loan.
Although Chase wants to pin Bergman down to precise dates and times, the general tenor
of the evidence was consistent. Because Bergman hoped to obtain a second loan modification, he defaulted on payments under the first modification. His default continued as he waited to complete the second modification, including making the additional three trial payments in late 2009, and investigating a short sale as an alternative if the second loan modification was not completed. We conclude substantial evidence supported the jury verdict that Chase made intentional misrepresentations to Bergman. (Ach v. Finkelstein, supra, 264 Cal.App.2d at pp. 673-676.)
Breach of Covenant of Good Faith and Fair Dealing
Chase also argues there was not substantial evidence of breach of the covenant of good faith and fair dealing and the special jury verdicts were inconsistent. We disagree.
The court gave the jury the following instructions on breach of contract: 1) Bergman claims that he and Chase “entered into an oral contract for a loan modification at fixed payments under $3,000.00”; 2) Chase “breached this contract by not providing him a permanent loan modification after he made the three trial plan payments”; and 3) to prove breach of contract, Bergman must prove Chase “failed to do something that the
contract required it to do.” The court gave the jury additional instructions on the breach of the covenant of good faith and fair dealing: 4) Bergman must prove the parties entered into a valid contract; and 5) Chase “interfered with” Bergman’s “right to receive the benefits of the contract.”
The instructions are confusing but the jury apparently reconciled any conflicts by finding that Bergman and Chase had a binding oral contract for a loan modification with
$3,000 payments. However, the jury did not find the oral contract was conditioned on
defendant making three trial plan payments. Therefore, the jury found Chase did not “fail to do something that the oral contract required it to do,” namely provide a loan modification after Bergman made the three payments. Nevertheless, the jury also found Chase interfered with “Bergman’s right to receive benefits of the contract,” i.e. the promise of a loan modification.
In other words, the jury did not find Chase was required to give Bergman a loan modification if he made the three trial plan payments; Chase did not breach the contract for that reason. But Chase did interfere with Bergman’s benefits under the contract by not giving him the promised loan modification. Therefore, as already discussed, sufficient evidence showed that there was a contract for a loan with $3,000 payments and that Chase interfered with the contractual benefit to Bergman.
VI DUPLICATIVE DAMAGES
Bergman testified that his damages included his original down payment of
$250,000 and the property improvements of $291,000. Chase argues the damages award was duplicative and the intent of the jury was not to award $250,000 but to award a total of only $125,000 for both causes of action found in his favor.
The court gave the jury multiple, somewhat contradictory, instructions on damages. Ultimately, the jury awarded damages of $125,000 for breach of the implied covenant and $125,000 for intentional misrepresentation. The trial court entered a judgment of $250,000. The trial court reasoned:
“It’s the Court’s opinion that the jury did intend to award separate damages to the plaintiff for the improvements that the plaintiff testified that he made to his home . . . and the down payment which he made for the home. [¶] So my interpretation of the jury verdict was they intended to award damages for both of those injuries incurred by the plaintiff and not just one sum of the $125,000. So, in other words, I agree . . . as to how the jury reached its verdict on these two separate causes of action, which were based upon different losses incurred by the plaintiff.”
There is no evidence in the record of the “intent” of the jury. Instead, the record shows the jury was given special verdict forms for each of the seven causes of action and the claim for punitive damages. The jury was instructed to award separate damages for each cause of action. It was not instructed to award damages collectively. The amount of damages claimed by Bergman was at least $541,000, the combined amount of his down payment and the property improvements. The jury’s verdict awarding him damages of
$125,000 each on two causes of action is within the realm of damages.
Chase’s argument that the jury meant to award only $125,000 is speculative and the cases relied upon by Chase are distinguishable. Shell v. Schmidt (1954) 126 Cal.App.2d 279, 291, involved a single cause of action, not two causes of action as here. In DuBarry Internat., Inc. v. Southwest Forest Industries, Inc. (1991) 231 Cal.App.3d 552, 564, the court acknowledged a plaintiff could be entitled to recover separate damages on two causes of action: “They do involve, after all, alleged invasions of different rights.” Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1158, held that a party “is
not entitled to more than a single recovery for each distinct item of compensable damage
supported by the evidence.” However, “[i]n contrast where separate items of compensable damage are shown by distinct and independent evidence, the plaintiff is entitled to recover the entire amount of his damages, whether that amount is expressed by the jury in a single verdict or multiple verdicts referring to different claims or legal theories.” (Id. at p. 1159.)
The present case involves two separate causes of action, different theories, and two distinct items of compensable damages. Under these circumstances, no duplicative damages were awarded by the jury.
CHASE’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT
Chase contends the trial court should have granted its motion for JNOV for two reasons. Chase repeats the argument that Bergman did not identify the employee who made the misrepresentation—an argument we have already rejected.
Second, Chase argues Bergman was not damaged because the proper measure of damages for the wrongful foreclosure of real property is the value of the equity in the property at the time of the foreclosure. (Munger v. Moore (1970) 11 Cal.App.3d 1, 11; Civ. Code, § 3333.) At the time of the foreclosure sale in July 2010, the unpaid principal balance, along with costs, totaled $1,022,256.92, leaving no equity.
Chase’s argument about wrongful foreclosure is not pertinent, however, because the jury rejected the wrongful foreclosure claim and did not award damages on that cause of action. Instead, the jury awarded damages for intentional misrepresentation and
breach of the covenant of good faith and fair dealing. The jury was instructed Bergman
could prove damages for breach of contract based on what would reasonably compensate for the breach. (CACI No. 350.) The jury was also instructed it could award Bergman reasonable compensation for harm. (CACI No. 1923.) The instructions to the jury, as reasonably construed did not prohibit the jury from awarding damages for the original down payment or for the property improvements, even if the losses for those items of damage were not sustained until after Chase committed its breach or made its misrepresentations. The damages awarded were not for wrongful foreclosure and the measure of such damages is not relevant.
VIII ATTORNEY’S FEES
The trial court awarded Bergman attorney’s fees—reduced from $454,772.23 to
$188,100—finding that he could recover fees under both contract and tort based on the attorney’s fees provision in the original note and trust deed under which the foreclosure was conducted. The same result occurred in Smith v. Home Loan Funding, Inc. (2011) 192 Cal.App.4th 1331, 1337-1338. (Civ. Code, § 1717; Code Civ. Proc., § 1021.)
The subject note provides: “. . . the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note [including] reasonable attorneys’ fees.” The subject trust deed provides: “Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided . . . including, but not limited to,
reasonable attorneys’ fees . . . .”
The Smith court construed the very same language and found that that “breach of the implied covenant can sometimes support an award of fees under section 1717.”
(Smith v. Home Loan Funding, Inc., supra, 192 Cal.App.4th at p. 1337.) Smith distinguished Sawyer v. Bank of America (1978) 83 Cal.App.3d 135, 140, 145, and held that, where one party had a fiduciary obligation and made an express oral promise, it was justifiable to treat the oral agreement and the loan documents as a single agreement because they were all part of the same transaction. (Smith, at pp. 1337-1338, citing Civ.
Code, § 1642 [“Several contracts relating to the same matters, between the same parties, . . . are to be taken together”].)
The oral contract between Bergen and Chase was part of a single agreement, including the note and deed of trust; the trial court found the oral contract was intended to effect a modification of the original obligation. Therefore, the trial court’s award of attorney’s fees was proper, allowing the prevailing party to recoup attorney’s fees under the intertwined tort and contract claims. (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1341-1343.)
Special Verdict on Wrong Foreclosure
The special verdict on the cause of action for wrongful foreclosure asked: Did Chase “violate any law or regulation governing foreclosure?” Bergman contends the special verdict should have read: Did Chase Bank “cause an illegal, fraudulent or oppressive sale of the real property located at 22330 Foxhall Drive, Corona, CA 92883?” Bergman argues his claim is not for wrongful foreclosure based on a statutory violation
but “Chase’s fraudulent practice of inducing borrowers into default with the promise of a
loan modification.” The basis for this instruction is thus exactly the same as Bergman’s causes of action for intentional misrepresentation and breach of the covenant of good faith and fair dealing, for which he recovered damages. Under these circumstances, there was no miscarriage of justice in refusing Bergman’s alternative instruction. (Mize- Kurzman v. Marin Community College Dist., supra, 202 Cal.App.4th at p. 862, citing Soule v. General Motors Corp., supra, 8 Cal.4th at p. 580.)
Special Verdict on Punitive Damages
Bergman claims the jury should have been instructed that Chase could be directly liable for fraud and punitive damages. A corporate employer may only be liable for punitive damages as a result of its employees’ acts where it somehow ratified the behavior. (Civ. Code, § 3294, subd. (b); Weeks v. Baker & McKenzie (1978) 63 Cal.App.4th 1128, 1153.) The special verdict on punitive damages was based on CACI No.VF-3904: “Did an agent or employee of [Chase] engage in the conduct of malice, oppression, or fraud against Plaintiff?” The jury was also given an instruction based on CACI No. 3936 about liability for punitive damages for a corporate entity based on the acts of its agents. Chase could not be found directly liable for punitive damages for its own conduct. (Davis v. Kiewit Pacific Co. (2013) 220 Cal.App.4th 358, 365.) The jury was properly instructed on punitive damages.
At the end of trial, the court denied Bergman’s request for leave to amend to add a claim for breach of a written contract under HAMP or the Chase trial payment plan. An appeal from a trial court’s decision in granting or denying a request to amend the
pleadings is reviewed for a clear showing of an abuse of discretion. (Garcia v. Roberts (2009) 173 Cal.App.4th 900, 909.) The guiding principles are: “(1) whether facts or legal theories are being changed and (2) whether the opposing party will be prejudiced by the proposed amendment.” (City of Stanton v. Cox (1989) 207 Cal.App.3d 1557, 1563.)
Throughout the trial, Bergman had relied on a theory of an oral promise, not a written contract. The trial court properly denied Bergman’s oral motion to amend, and subsequent motion for JNOV, because the introduction of new facts and theories would cause prejudice to Chase. There was no reason for Bergman to wait years to amend his claims. We reject Bergman’s contentions on this issue.
Bergman argues he should have been allowed to offer evidence of the attorney’s fees he incurred in the unlawful detainer action and he was entitled to recover those fees under the note and trust deed. We conduct a de novo review on whether there is a legal basis for a fee award. (Conservatorship of Whitley, supra, 50 Cal.4th at p. 1212.)
After Chase objected to the submission of evidence on attorney’s fees for the unlawful detainer action, Bergman’s counsel stated he would raise it later. Bergman’s counsel did not raise the issue again. The record shows Bergman waived this issue. (Estate of Odian (2006) 145 Cal.App.4th 152, 168.) Furthermore, Bergman’s claim was for attorney’s fees sustained in a separate unlawful detainer action by Mraz, the third party who purchased the property at trustee’s sale. Bergman cites no authority for the recovery of attorney’s fees under these circumstances. In fact, he concedes there is no
authority but asks this court to resolve the issue in a published opinion. We decline to do so.
We reject both appeals and affirm the judgment. In the interests of justice, we order the parties to bear their own costs on appeal.