RANDY BLANKENCHIP and SUSAN BLANKENCHIP, Plaintiffs,
v.
CITIMORTGAGE, INC.; CALWESTERN RECONVEYANCE, LLC; and DOES 1-50, inclusive, Defendants.
Civ. No. 2:14-02309 WBS AC.

United States District Court, E.D. California.
August 26, 2016.

Randy Blankenchip, Plaintiff, represented by Andre M. Chernay, United Law Center, Henry Joseph Hymanson, United Law Center & Sandeep Singh Dhillon, United Law Center.

Susan Blankenchip, Plaintiff, represented by Andre M. Chernay, United Law Center.

CitiMortgage, Inc., Defendant, represented by Karen Palladino Ciccone, Akerman LLP, Justin Donald Balser, Akerman LLP & Robert Ramos Yap, Akerman Senterfitt LLP.

MEMORANDUM AND ORDER RE: MOTION FOR SUMMARY JUDGMENT

WILLIAM B. SHUBB, District Judge.

Plaintiffs Randy and Susan Blankenchip initiated this suit against defendants CitiMortgage, Inc. (“Citi”) and Cal-Western Reconveyance, LLC, alleging that defendants breached a loan modification agreement and wrongfully foreclosed on their home. Presently before the court is Citi’s motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. (Docket No. 72.)

I. Factual and Procedural History

Plaintiffs’ allegations concern a residential mortgage loan they took out for their home in Suisun City, California. (Blankenchip Decl. ¶ 6 (Docket No. 74-2); Cohoon Decl. Exs. 1-4 (Docket No. 72-3).) The loan had an adjustable interest rate that decreased from 6.625% to 3% on June 1, 2011. (Cohoon Decl. ¶ 13, Exs. 1, 4.) Due to a reduction in their income, plaintiffs struggled to maintain their monthly loan payments. (Blankenchip Decl. ¶¶ 10-11.) In 2009, plaintiffs defaulted on their loan. (Cohoon Decl. ¶ 12.) A notice of default was issued on May 3, 2011 and Citi initiated foreclosure proceedings. (Id. ¶¶ 16-17, Ex. 6.)

In April 2011, in response to plaintiffs’ request for a loan modification, Citi sent plaintiffs a letter inviting them to apply for a loan modification through the Home Affordable Modification Program (“HAMP”) by submitting forms and income documentation. (Cohoon Decl. ¶ 14; Blankenchip Decl. ¶ 12, Ex. A.) Plaintiffs submitted bank statements, pay stubs, a bonus check, the HAMP Hardship Affidavit, and a signed IRS Form 4506T. (Id. ¶¶ 15-16.) On June 13, 2011, Citi sent plaintiffs a letter notifying them that they were approved to enter into a trial period plan (“TPP”) under HAMP. (Id. ¶ 20, Ex. G.) The letter explained that in order to accept this offer, plaintiffs must make their first monthly trial period payment. (Id.) It further explained that to qualify for a permanent modification, plaintiffs must make three trial period payments of $2,758.08 “in a timely manner.” (Id.) The first payment was due by July 1, 2011, the second by August 1, 2011, and the third by September 1, 2011. (Id.) The TPP stated, “After all trial period payments are timely made and you have submitted all the required documents, your mortgage will be permanently modified.” (Id.)

Despite providing payment deadlines on the first of the month, the same letter also provided that “[i]f each payment is not received by CitiMortgage, Inc. in the month in which it is due, this offer will end and your loan will not be modified under the Making Home Affordable Program.” (Id.) A reminder letter regarding plaintiffs’ August TPP payment similarly stated: “If you fail to make a Trial Payment by the last day of the month in which it is due, you will be considered to have failed the trial period and will not be eligible for a HAMP modification.” (Cohoon Decl. Ex. 13.)

The additional information attached to the offer letter stated that the “terms of your trial period plan below are effective on the day you make your first trial period payment, provided you have paid it on or before 7/1/11.” (Blankenchip Decl. Ex. G.) The terms stated that Citi would “not proceed to foreclosure sale during the trial period, provided you are complying with the terms of the trial plan.” (Id.) “Any pending foreclosure action or proceeding that has been suspended may be resumed if you are notified in writing that you failed to comply with the terms of the trial period plan or do not qualify for a permanent modification.” (Id.)

Plaintiffs paid their trial period payments on July 15, 2011, August 11, 2011, and September 15, 2011. (Id. ¶¶ 23, 27, 33; Cohoon Decl. ¶¶ 29, 37, 41, Ex. 11 at 29-30.) Plaintiffs could not pay their TPP payments by the first of the month because the exact days of the month on which Mr. Blankenchip gets paid as the Managing Partner of a Texas Roadhouse restaurant vary and he gets his bonus in the middle of the month. (Blankenchip Decl. ¶¶ 7-8, 21.)

On August 5, 2011, Citi issued and recorded a notice of trustee’s sale. (Cohoon Decl. ¶ 33, Ex. 14.) Citi postponed the sale several times while plaintiffs were under review for both the HAMP modification and a traditional modification. (Id. ¶¶ 35-36, Ex. 3, Servicing Notes at 48, 53-56, 60-62.) On September 12, 2011, Citi sent plaintiffs a letter stating that, “[b]ecause you have not kept the terms of the Forbearance Plan with us, we have cancelled it.” (Blankenchip Decl. Ex. M.) Mr. Blankenchip states that he called their assigned Homeowner Support Specialist, Mahagony Burris, after receiving this letter and she “told me not to worry about the September 12, 2011 letter, that CITI had received all three of my TPP payments and that she would be working with other departments at CITI to get the final modification documents together and sent out to me.” (Id. ¶ 37.)

On October 10, 2011, Citi contends it determined that plaintiffs were ineligible for a permanent HAMP modification because the interest rate on plaintiffs’ loan would have increased from 3% to 3.75% if their loan was modified. (Cohoon Decl. ¶ 43, Ex. 3, Servicing Notes at 48.) Citi also determined that plaintiffs did not qualify for a traditional loan modification because of insufficient income. (Id. ¶ 44, Ex. 3, Servicing Notes at 42.) Citi nonetheless initiated a re-review of plaintiffs for a loan modification and requested updated paystubs and an updated Workable Solutions Packet from plaintiffs on October 14, 2011. (Id. ¶¶ 45-47, Ex. 16.) On November 3, 2011, Citi sent plaintiffs another letter stating that the “deadline for you to return the required documentation for the Home Affordable Modification Act has been extended” and requesting that plaintiffs submit their documents by December 5, 2011. (Id. Ex. 17.) The letter explained that plaintiffs were “at risk and will be removed from the program If [sic] we do not receive your documents by the deadline.” (Id.) Citi now contends that this letter was issued and sent by Citi’s vendor in error. (Id. ¶ 49; Citi’s Mot. for Summ. J. (“Citi’s Mot.”) at 5 n.1 (Docket No. 72).)

On November 10, 2011, before the documents deadline had passed, Citi conducted a nonjudicial foreclosure sale of plaintiffs’ home. (Cohoon Decl. Ex. 18.) Plaintiffs vacated the house that month. (Blankenchip Decl. ¶¶ 54-55.)

In their First Amended Complaint (“FAC”), plaintiffs allege seven causes of action against defendants: (1) wrongful foreclosure; (2) breach of contract; (3) promissory estoppel; (4) breach of the implied covenant of good faith and fair dealing; (5) fraud; (6) unlawful business practices in violation of California Business Professions Code section 17200; and (7) intentional infliction of emotional distress. (FAC (Docket No. 11).) On February 19, 2016, this court approved a stipulation between Ms. Blankenchip and Citi dismissing with prejudice her claim for intentional infliction of emotional distress and agreeing that Citi will not be permitted to conduct any mental examination of Ms. Blankenchip. (Docket No. 49.)

Presently before the court is Citi’s motion for summary judgment on each of plaintiffs’ claims.

II. Evidentiary Objections

On a motion for summary judgment, “[a] party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). Further, “[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Id. R. 56(c)(4).

Citi raises forty-four evidentiary objections to plaintiffs’ evidence submitted in opposition to Citi’s motion for summary judgment. (Citi’s Evidentiary Objs. (Docket No. 78).) Citi objects to portions of Mr. Blankenchip’s declaration on the grounds of hearsay, lack of personal knowledge, and the best evidence rule; to plaintiffs’ expert witness report and the expert’s deposition on the grounds that her opinion does not qualify as admissible expert opinion and constitutes extrinsic evidence that cannot modify the written TPP agreement under the parol evidence rule; and to the HAMP and Freddie Mac guidelines on the grounds that they are also extrinsic evidence that cannot modify the written TPP agreement under the parol evidence rule. (Id.)

As this court explained at length in Burch v. Regents of the University of California, 433 F. Supp. 2d 1110 (E.D. Cal. 2006), “[a]s a practical matter, the court finds this entire exercise of considering evidentiary objections on a motion for summary judgment to be futile and counter-productive.” Id. at 1122. Not only does deciding excessive numbers of objections begin “to defeat the objectives of modern summary judgment practice—namely, promoting judicial efficiency and avoiding costly litigation,” it is often difficult to address even seemingly appropriate objections based on hearsay or failure to authenticate “away from the dynamics of a trial,” where “the opposing party will have an opportunity to present the evidence in an alternative and admissible form” or a question can be rephrased if an objection is sustained. Id.

Further, with respect to hearsay objections to evidence submitted by the non-moving party, “the court cannot ignore the fact that a non-movant in a summary judgment setting is not attempting to prove its case, but instead seeks only to demonstrate that a question of fact remains for trial.” Id. at 1121. “Objections to the form in which the evidence is presented” by a non-moving party “are particularly misguided.” Id. at 1119. “As the Ninth Circuit has held, `to survive summary judgment, a party does not necessarily have to produce evidence in a form that would be admissible at trial, as long as the party satisfies the requirements of Federal Rules of Civil Procedure 56.'” Id. at 1120 (citing Fraser v. Goodale, 342 F.3d 1032, 1036-37 (9th Cir. 2003)). “In other words, when evidence is not presented in an admissible form in the context of a motion for summary judgment, but it may be presented in an admissible form at trial, a court may still consider that evidence.” Id.

Citi filed an unruly number of evidentiary objections with little explanation of the basis for each and, as the non-moving party, plaintiffs are arguably entitled to more leniency. Further, the record suggests that plaintiffs will be capable of presenting their evidence in an admissible form at trial. For example, Citi objects to several paragraphs of Mr. Blankenchip’s declaration pursuant to the best evidence rule, arguing that his description is inadmissible to prove the contents of letters sent by Citi. (See Citi’s Evidentiary Objs. ¶¶ 1-4, 6, 9, 11-12, 15, 18, 22, 25, 27-28, 32-33.) It is clear, however, from plaintiffs’ exhibits that they would be able to prove the contents with copies of the letters themselves and this evidentiary issue would be easily resolved at trial. Similarly, Citi objects to the portions of Mr. Blankenship’s declaration in which he describes statements made to him by Citi representatives as hearsay. (See id. ¶¶ 5, 8, 10, 13-14, 16, 17, 19-21, 23-24, 26, 29, 31, 34-35.) First, these statements would likely be admissible as admissions by a party-opponent under Federal Rule of Evidence 801(d)(2). Second, as with the letters, the record suggests plaintiffs would be able to cure any possible hearsay prior to trial by, for example, relying on Citi’s servicing notes where Citi representatives recorded what was communicated to plaintiffs. The court therefore overrules Citi’s objections.[1]

III. Discussion

Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the non-moving party’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party moving for summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact and can satisfy this burden by presenting evidence that negates an essential element of the non-moving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Alternatively, the moving party can demonstrate that the non-moving party cannot produce evidence to support an essential element upon which it will bear the burden of proof at trial. Id.

Once the moving party meets its initial burden, the burden shifts to the non-moving party to “designate `specific facts showing that there is a genuine issue for trial.'” Id. at 324 (quoting then-Fed. R. Civ. P. 56(e)). To carry this burden, the non-moving party must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party].” Anderson, 477 U.S. at 252.

In deciding a summary judgment motion, the court must view the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in its favor. Id. at 255. “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment . . . .” Id.

A. Breach of Contract and of the Implied Covenant of Good Faith and Fair Dealing

A claim for breach of contract requires (1) the existence of a contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff. Reichert v. Gen. Ins. Co. of Am., 68 Cal. 2d 822, 830 (1968). Further, “[i]mplied in every contract is a covenant of good faith and fair dealing that neither party will injure the right of the other to receive the benefits of the agreement.” Wolkowitz v. Redland Ins. Co., 112 Cal. App. 4th 154, 162 (2d Dist. 2003). “A cause of action for tortious breach of the covenant of good faith and fair dealing requires the existence and breach of an enforceable contract as well as an independent tort.” Innovative Bus. P’ships, Inc. v. Inland Cntys. Reg’l Ctr., Inc., 194 Cal. App. 4th 623, 631-32 (4th Dist. 2011).

The United States Department of the Treasury started the HAMP program in 2009 in response to the financial crisis to incentivize banks to refinance mortgages of distressed homeowners so they could stay in their homes. Corvello v. Wells Fargo Bank, NA, 728 F.3d 878, 880 (9th Cir. 2013). HAMP aims to assist homeowners who have defaulted or are in imminent danger of defaulting on their home mortgages. Inman v. Suntrust Mortg., Inc., Civ. No. 1:10-1031 AWI GSA, 2010 WL 3516309, at *1 n.2 (E.D. Cal. Sept. 3, 2010).

Eligible borrowers who wish to permanently modify their loan through HAMP must first enter a TPP, which is a period of three or more months during which the borrower must make timely trial payments of the modified amount and provide required documentation to the loan servicer. Corvello, 728 F.3d at 880-81. If the servicer concludes that the borrower is not eligible for HAMP after reviewing the documents submitted or the borrower does not make the required trial payments, the servicer must promptly communicate the ineligibility determination to the borrower in writing. Id. at 881. If the borrower complies with the terms of the TPP, the servicer must offer the borrower a permanent loan modification. Id.

Home loan servicers receive financial incentives from the United States Department of the Treasury for completing a HAMP loan modification: servicers are entitled to $1,000 for each permanent modification they make. Id. at 880. There are, at the same time, financial incentives for allowing a borrower to participate in a TPP but then proceeding to foreclosure rather than offering a permanent modification. As Citi’s representative Jeanne Pezold explained, “each time a payment is made by the borrower the servicer retains a servicing fee.” (See Yap Decl. Ex. B, Pezold Dep. at 106:18-20.) Once a borrower defaults and stops making payments, the servicer cannot collect its servicing fees until the foreclosure sale. At that time, the lender pays the servicer the total fees owed for servicing the loan after the date of default. (Id. at 107:1-25, 108:2-10.) If the servicer offers a TPP before proceeding to foreclosure, it is able to extend the number of months between default and the foreclosure sale, thereby increasing its own servicing fees.

“[A] trial loan modification under HAMP constitutes a valid, enforceable contract under state law . . . .” West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780, 799 (4th Dist. 2013) (citing Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556-57 (7th Cir. 2012)); see also Corvello, 728 F.3d at 883-84 (citing West with approval); Meixner v. Wells Fargo Bank, N.A., 101 F. Supp. 3d 938, 947 (E.D. Cal. Apr. 24, 2015) (Nunley, J.) (“The Ninth Circuit has recently held that, . . . a TPP Agreement offered pursuant to HAMP is a contract, and a party to that contract may sue for breach if the lender violates a term contained within the four corners of the TPP.” (citing Corvello, 728 F.3d at 880) (internal quotation marks omitted)). While the modification is not complete until all of the conditions are met, banks are contractually obligated under the terms of the TPP to offer a permanent modification to borrowers who comply with the TPP by (1) timely making the required trial payments and (2) submitting accurate documentation. Corvello, 728 F.3d at 883. The Ninth Circuit has explained that this “interpretation of the TPP avoids the injustice that would result were . . . [banks] allowed to keep borrowers’ trial payments without fulfilling any obligations in return.” Id. at 884.

1. Timely Trial Payments

The first question is therefore whether plaintiffs timely made the required trial payments. The court concludes for the following reasons that they did.

“`The interpretation of a written instrument, even though it involves what might properly be called questions of fact, is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. . . . It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.'” Greater Middleton Ass’n v. Holmes Lumber Co., 222 Cal. App. 3d 980, 989 (1st Dist. 1990) (quoting Parsons v. Bristol Dev. Co., 62 Cal. 2d 861, 865 (1965)); see also Oceanside 84, Ltd., 56 Cal. App 4th at 1448 (“[T]he interpretation of the contract is a question of law for the trial court and for this court.”); Titan Grp., Inc. v. Sonoma Valley Cnty. Sanitation Dist., 164 Cal. App. 3d 1122, 1127 (1st Dist. 1985) (“In the absence of conflicting extrinsic evidence, the interpretation of a contract becomes a question of law and an appellate court `must make an independent determination of the meaning of the contract.'” (citation omitted)).

While the TPP required three timely payments by the first of July, August, and September 2011 and plaintiffs did not pay until July 15, August 11, and September 15, 2011, respectively, the TPP also stated that “[i]f each payment is not received by CitiMortgage, Inc. in the month in which it is due, this offer will end and your loan will not be modified under the Making Home Affordable Program.” (Blankenchip Decl. Ex. G (emphasis added).)

This end of month language was also emphasized in an August 5, 2011 letter Citi sent plaintiffs to notify them that it had not yet received their August 1, 2011 TPP payment. (Cohoon Decl. Ex. 13.) The letter stated, “If you fail to make a Trial Payment by the last day of the month in which it is due, you will be considered to have failed the trial period and will not be eligible for a HAMP modification.” (Id.) That Citi included this language in a reminder sent on the fifth of August—after the second payment was supposedly due—and sought payment despite plaintiffs’ having made their first trial payment after the first of July, all suggest that Citi intended to accept payment after the first of the month and still considered plaintiffs to be eligible for a HAMP loan modification.

At the August 22, 2016 hearing, Citi argued that the TPP “could not be more clear” in stating that Citi was obligated to suspend foreclosure proceedings only if plaintiffs made their first payment by July 1, 2011, but if plaintiffs paid after the first of the month, Citi had the option of offering plaintiffs a permanent loan modification but no obligation to permanently modify or suspend foreclosure. Citi representative Jeanine Cohoon stated: “For them to be able to be considered for the modification they were pursuing, they just had to make the payment within the month it’s due. To get any additional protections regarding the foreclosure process, they had to make their first payment by the first of July.” (Id. Ex. E, Cohoon Dep. Volume II at 151:16-22; see also id. Ex. D, Cohoon Dep. Volume II at 95:5-22.)

This distinction with regard to Citi’s obligations is not at all clear from the face of the TPP or Citi’s conduct throughout the loan modification process. The offer letter did not explicitly state that if plaintiffs paid after the first of the month, their loan might be modified and no foreclosure protection would be provided. Rather, it stated that if plaintiffs did not pay by the end of the month, their loan “will not be modified under the Making Home Affordable Program.” (Blankenchip Decl. Ex. G (emphasis added).) It defies logic to claim that plaintiffs could still be participating in the loan modification program under HAMP and yet have no protection against foreclosure. In fact, Citi’s own 2010 HAMP policies and procedures for government sponsored enterprises (“GSE”) loans stated that “Receipt of the first payment due under the trial period plan on or before the last day of the month in which the first payment is due is evidence of the borrower’s acceptance of the trial period plan and its terms and conditions.” (Hymanson Decl. Ex. C at 10 (emphasis added).) One term of the TPP is that Citi will not proceed to foreclosure sale during the trial period.

Even assuming Citi’s interpretation could be reconciled with the terms stated in the TPP, its interpretation would at most render the TPP terms ambiguous. “If a contract is capable of two different reasonable interpretations, the contract is ambiguous. A well-settled maxim states the general rule that ambiguities in a form contract are resolved against the drafter.” Oceanside 84, Ltd. v. Fid. Fed. Bank, 56 Cal. App. 4th 1441, 1448 (2d Dist. 1997); see also Cal. Civ. Code § 1654 (“In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.”). Citi is not only the drafter of the agreement but also the more sophisticated party and any ambiguity in the TPP agreement should be interpreted against it. The court therefore finds that, properly interpreted, the TPP agreement provided plaintiffs a grace period until the end of the month for their three trial payments. Accordingly, the court will not grant Citi’s motion for summary judgment based on the fact that plaintiffs paid their trial payments after the first of the month but before the end of the month.

2. Required Documents

The next question is whether plaintiffs submitted all the required documents under the TPP and, if not, if Citi properly informed plaintiffs that it was cancelling the TPP due to a failure to comply. For the following reasons, the court finds that there are triable issues of fact regarding both plaintiffs’ submission of documents and Citi’s notice of cancellation.

Citi’s representative, Sinner, stated in his deposition that plaintiffs did not get a permanent loan modification because “they were still missing documents from what the underwriter requested.” (Yap Decl. Ex. A, Sinner Dep. at 127:23-25.) Sinner also admitted, however, that the Homeowner Support Specialist assigned to work with plaintiffs, Burris, told plaintiffs otherwise. (Id. at 121:16-25, 128:1-10.) Sinner stated: “It looks like Miss Burris may have missed asking for” the missing documents “or may have misinformed the Blankenchips” that their file was in order. (Id. at 128:8-10.)

Citi’s servicing notes for plaintiffs’ loan indicate that on September 21, 2011, Mr. Blankenchip called and reported that he had just been told by Burris that their file was “in order” but then received a letter stating the Forbearance Plan was cancelled. (Cohoon Decl. Ex. 3, Servicing Notes at 58 (“RANDY BLANKENCHIP called in std spoke with counselor this week was adv file in order then rec letter date 9/12 stating [plan] cancelled due to nonpymt . . . asked that counselor call using cell number.”).) The notes further indicate that Burris called Mr. Blankenchip back on September 22, 2011 and advised him that he received the letter because his TPP was completed and Burris would be working with the closer to have the final permanent modification documents sent out. (Id. (“RANDY BLANKENCHIP had beena dvthat he rcvd the for term letter b/c his tpp has been completed and that I will be working with the closer to have final docs sent out.”).)

Citi accepted plaintiffs’ three trial payments, even the payment received two days after the cancellation letter was mailed, and provided plaintiffs conflicting information about the documents required to proceed. Plaintiffs have therefore established genuine issues of material fact as to whether they submitted the required documents and whether Citi properly notified them that they failed to comply with the terms of the TPP.

Lastly, Citi argues that even if plaintiffs timely made the TPP payments and submitted the required documents, Citi determined on October 10, 2011 that they were no longer eligible for a permanent modification because a permanent modification would have increased their interest rate from 3% to 3.75%, which Citi contends is not allowed under HAMP. (Citi’s Mot. at 5, 7; Cohoon Decl. Ex. 3, Servicing Notes at 48-49, Ex. 4, Apr. 20, 2011 Letter from Citi.) According to the TPP offer letter, however, plaintiffs’ eligibility did not depend on the interest rate of their loan. This was not part of the contract Citi drafted and invited plaintiffs to accept, despite plaintiffs’ note making clear that the loan had an adjustable interest rate that would change on June 1, 2011, (Cohoon Decl. Ex. 1), and Citi’s knowledge that the rate would drop to 3% as early as April 20, 2011, when it sent plaintiffs a letter notifying them of the new interest rate, (id. Ex. 4). Accordingly, Citi cannot claim that plaintiffs were ineligible for a permanent modification because of an interest rate adjustment that Citi was aware of before it even mailed the TPP offer letter.

In addition, plaintiffs’ expert witness, Tara Twomey, explained that “there’s a provision in the . . . [HAMP] guidelines that requires . . . at least a one-eighth of a percent reduction in the interest rate” through a HAMP loan modification. (Hymanson Decl. Ex. A, Twomey Dep. at 72:16-21 (Docket No. 74-3).) Twomey stated, however, that “under the HAMP guidelines and under the Freddie Mac guidelines, when you have an adjustable rate loan,” if “the new interest rate, is not determined at the time the TPP underwriting is done, then the servicer assumes essentially a flat line, so the interest rate stays the same, and they can issue the TPP on that basis.” (Id. at 71:24-25, 72:1-11.) Twomey therefore believes that Citi offered plaintiffs a TPP based on their verified income and original interest rate of 6.625% and had no reason to conduct a “rereview at the end” of the trial period. (Id. at 74:9-25.)

This is corroborated by the United States Department of the Treasury’s Supplemental Directive 09-07, which provides that “[w]ith respect to adjustable rate loans where there is a rate reset scheduled within 120 days after the date of the evaluation. . . the monthly mortgage payment used to determine eligibility will be the greater of (i) the borrower’s current scheduled monthly mortgage payment or (ii) a fully amortizing monthly mortgage payment based on the note reset rate using the index value as of the date of the evaluation.”[2] (Pls.’ Req. for Judicial Notice (“RJN”) Ex. A (Docket No. 75-1).) Viewing the evidence in the light most favorable to the non-moving party, plaintiffs have established a genuine issue of fact as to whether they were eligible for a permanent HAMP modification despite Citi’s realization four months after offering plaintiffs a TPP that their interest rate would decrease to 3%.

For all the above reasons, the court will deny Citi’s motion for summary judgment on plaintiffs’ breach of contract and breach of good faith and fair dealing claims.

B. Promissory Estoppel

The elements of promissory estoppel are: “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” U.S. Ecology, Inc. v. State, 129 Cal. App. 4th 887, 901 (4th Dist. 2005) (citation and internal quotation marks omitted) (alteration in original); see West, 214 Cal. App. 4th at 803. “Because promissory estoppel is an equitable doctrine to allow enforcement of a promise that would otherwise be unenforceable, courts are given wide discretion in its application.” U.S. Ecology, Inc., 129 Cal. App. 4th at 902 (citing C & K Eng’g Contractors v. Amber Steel Co., 23 Cal. 3d 1, 7-8 (1978)).

“[A]llegations that the plaintiff undertook new obligations or forewent other options can establish reliance for purposes of a promissory estoppel claim.” Meadows v. First Am. Tr. Servicing Sols., LLC, Civ. No. 11-5754 YGR, 2012 WL 3945491, at *4 (N.D. Cal. Sept. 10, 2012); see also West, 214 Cal. App. 4th at 805 (finding the plaintiffs adequately alleged detrimental reliance where the plaintiffs alleged they lost opportunities, including selling their home or finding a co-signer). “`Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a question of fact.'” All. Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1239 (1995) (quoting Blankenheim v. E. F. Hutton & Co., 217 Call. App. 3d 1463, 1475 (6th Dist. 1990)). “`However, whether a party’s reliance was justified may be decided as a matter of law if reasonable minds can come to only one conclusion based on the facts.'” Id. (quoting Guido v. Koopman, 1 Cal. App. 4th 837, 843 (1st Dist. 1991)).

At the August 22, 2016 hearing, plaintiffs conceded that their promissory estoppel claim is barred by the statute of limitations to the extent it is based on oral promises. Accordingly, the court will grant Citi’s motion for summary judgment of plaintiffs’ promissory estoppel claim as to any alleged oral promises.

With respect to plaintiffs’ promissory estoppel claim based on the promises Citi made in the written TPP agreement, Citi argues that plaintiffs fail to demonstrate that their reliance on the TPP was reasonable or justifiable because (1) the TPP stated that Citi would not proceed to foreclosure sale if plaintiffs paid the first trial payment by July 1, 2011 and plaintiffs failed to pay by July 1, 2011, and (2) the TPP provided that any pending foreclosure action could be resumed if plaintiffs were notified in writing that they failed to comply with the TPP or did not qualify for a permanent modification and Citi sent plaintiffs a letter on September 12, 2011 notifying them the TPP had been cancelled. (Citi’s Mot. at 13-14.)

As discussed above, the contract, properly interpreted, provided plaintiffs a grace period for trial payments until the end of the month. Given that plaintiffs thus continued to participate in the HAMP loan modification process by making payments in the middle of the month, they were entitled to receive the same foreclosure protections regardless of whether they paid on the first or fifteenth of the month. A jury could therefore find that their reliance on the TPP foreclosure protections was reasonable.

Though Citi sent a letter on September 12, 2011 stating that plaintiffs’ “Forbearance Plan” had been cancelled, Mr. Blankenchip claims he did not know what Citi meant by this letter as Citi had never used the term “Forbearance Plan” before. (Blankenchip Decl. ¶ 35.) When he called Citi for clarification, Burris did not explain that his TPP had been cancelled but rather told him his file was in order and final permanent modification documents would be sent out shortly. There is therefore a dispute as to whether Citi properly communicated its ineligibility determination to plaintiffs. Accordingly, the question of whether plaintiffs reasonably relied on the TPP is one that must be decided by the factfinder at trial and cannot be decided on a motion for summary judgment.

Citi further argues that plaintiffs cannot establish they reasonably relied on Citi’s November 3, 2011 correspondence to plaintiffs. (Citi’s Mot. at 14.) The November 3, 2011 letter informed plaintiffs that the “deadline for you to return the required documentation for the Home Affordable Modification Program has been extended” to December 5, 2011. (Cohoon Decl. Ex. 17.) It further stated, “The deadline is real—don’t risk being dropped from the program. You are at risk and will be removed from the program If [sic] we do not receive your documents by the deadline.” (Id.) Citi nonetheless went ahead with a foreclosure sale on November 10, 2011—prior to the deadline set in this letter. While Citi argues both that its November 3, 2011 correspondence did not clearly or unambiguously promise the foreclosure sale would be postponed and that it was sent to plaintiffs in error, (Citi’s Mot. at 5 n.1, 14), Mr. Blankenchip states that no one ever informed him it was sent in error, (Blankenchip Decl. ¶ 45). He also represents that, while he believed he had already submitted all the required documents, he was willing and ready to send any additional documents necessary for a modification. (Id. ¶ 46.) The letter seemed to suggest that plaintiffs were still eligible for a modification and participating in the “Home Affordable Modification Program.” Plaintiffs have therefore sufficiently established a dispute as to whether they reasonably relied on this letter.

Accordingly, the court will deny Citi’s motion for summary judgment on plaintiffs’ promissory estoppel claim based on Citi’s written promises.

C. Wrongful Foreclosure

The elements of wrongful foreclosure are: “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale suffered prejudice or harm; and (3) the trustor or mortgagor tenders the amount of the secured indebtedness or was excused from tendering.” West, 214 Cal. App. 4th at 800.

Citi first argues it is entitled to summary judgment because plaintiffs failed to tender the full amount due under their loan. (Citi’s Mot. at 8.) “Tender is not required,” however, “where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the property.” Glaski v. Bank of Am., Nat’l Ass’n, 218 Cal. App. 4th 1079, 1100 (2013); see also McGarvey v. JP Morgan Chase Bank, N.A., Civ. No. 2:13-01099 KJM EFB, 2013 WL 5597148, at *11 (E.D. Cal. Oct. 11, 2013) (“Tender is required only when foreclosure has already occurred and the plaintiff alleges irregularities in the foreclosure process itself.”). As this court explained in its December 3, 2014 Order denying Citi’s motion to dismiss plaintiffs’ wrongful foreclosure claim on this same ground, “[h]ere, plaintiffs are not seeking to set aside a foreclosure sale that was procedurally flawed” but rather are seeking “damages based on the alleged invalidity of the foreclosure sale in the first place.” (Dec. 3, 2014 Order at 8.) Because plaintiffs contend the foreclosure was wrongful because it was void, the court once again finds that plaintiffs need not have tendered.

Citi next argues that it is entitled to summary judgment because plaintiffs cannot produce evidence to establish prejudice because they defaulted on their loan, would not have qualified for a permanent HAMP modification or traditional modification under any circumstances, and the trustee’s sale was therefore unavoidable. As discussed above, however, there is a genuine issue of fact as to whether plaintiffs qualified for a permanent HAMP modification and the foreclosure was avoidable. Accordingly, the court must deny Citi’s motion for summary judgment on plaintiffs’ wrongful foreclosure claim.

D. Fraud

“The elements of a cause of action for fraud in California are: `(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.'” Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009) (citation and emphasis omitted); see Stansfield v. Starkey, 220 Cal. App. 3d 59, 72-73 (2d Dist. 1990). To maintain an action for fraud “based on a false promise, one must specifically allege and prove, among other things, that the promisor did not intend to perform at the time he or she made the promise and that it was intended to deceive or induce the promisee to do or not do a particular thing.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 159 (6th Dist. 1991). “[M]aking a promise with an honest but unreasonable intent to perform is wholly different from making one with no intent to perform and, therefore, does not constitute a false promise.” Id.

Plaintiffs argue Citi falsely promised to provide a permanent loan modification and suspend foreclosure proceedings during the TPP without ever intending to honor these promises. (Pls.’ Opp’n at 21.) The TPP offer letter in and of itself—with its contradicting first of the month and end of the month deadlines—is enough to call into question whether Citi ever intended to fulfill its promises. Cohoon’s explanation that the two deadlines meant Citi had an obligation to provide foreclosure protection and a permanent loan modification only if plaintiffs made their first payment by July 1, 2011 and discretion if they paid within the month, (see Yap Decl. Ex. E, Cohoon Dep. Volume II at 151:16-22), suggests that Citi wanted to be able to leave both the pathway to foreclosure and the pathway to modification open at all times. While the TPP offer letter may simply have been negligently drafted, a reasonable jury could also find that Citi intentionally wrote its offer in such a fashion to best position Citi to retract its promises if it so decided. Even if Citi suspended the foreclosure sale on multiple occasions and made some efforts towards modifying plaintiffs’ loan, it was also simultaneously exploring the possibility of foreclosure—always looking for whichever option better benefited it and never fully committing to honoring its promises to plaintiffs. As discussed above, a reasonable jury could also find that Citi had a financial incentive to take plaintiffs through the loan modification process rather than immediately foreclosing, even if it never intended to offer them a permanent loan modification. Though the trustee’s sale resulted in a deficiency of $217,576.79, (Cohoon Decl. ¶ 59, Ex. 19), the investor—Freddie Mac—bore this loss and still paid Citi $997.16 in servicing fees at the time of foreclosure, (id. ¶ 62, Ex. 21; Yap Decl. Ex. B, Pezold Dep. at 106-110).

Further, as discussed above in the context of plaintiffs’ promissory estoppel claim, plaintiffs have also established the element of justifiable reliance. Accordingly, the court must deny Citi’s motion for summary judgment on plaintiffs’ fraud claim.

E. Intentional Infliction of Emotional Distress

The statute of limitations for a claim of intentional infliction of emotional distress in California is two years. Cal. Civ. Code § 335.1. “Generally, a limitations period begins to run upon the occurrence of the last fact essential to the cause of action.” Pugliese v. Superior Ct., 146 Cal. App. 4th 1444, 1452 (2d Dist. 2007). At the August 22, 2016 hearing, plaintiffs conceded that their intentional infliction of emotional distress claim is barred by the statute of limitations. Accordingly, the court must find that plaintiffs’ intentional infliction of emotional distress claim is time barred and grant Citi’s motion for summary judgment on this claim.

F. Unfair Competition Law

California’s UCL prohibits “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. “The UCL’s purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.” Kasky v. Nike, Inc., 27 Cal. 4th 939, 949 (2002) (citing Barquis v. Merchs. Collection Ass’n, 7 Cal. 3d 94, 110 (1972)). Under this statute, a prevailing plaintiff is generally limited to injunctive relief and restitution of any interest acquired by means of unfair competition. See Cal. Bus. & Prof. Code § 17203; Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 179 (1999).

Citi first contends that plaintiffs do not have standing to assert a UCL claim. A private person has standing to sue under the UCL if he can “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 322 (2011). The purpose of the UCL standing requirement is to “eliminate standing for those who have not engaged in any business dealings with would-be defendants and thereby strip such unaffected parties of the ability to file `shakedown lawsuits,’ while preserving for actual victims of deception and other acts of unfair competition the ability to sue and enjoin such practices.” Id. at 317. Plaintiffs clearly had a business relationship with Citi and suffered injury due to a loss of real property through foreclosure and poor credit ratings.

To establish that the economic injury was the result of an unfair business practice, a plaintiff must show a “causal connection or reliance on the alleged misrepresentation.” Id. at 326 (citation and internal quotation marks omitted). “A plaintiff fails to satisfy the causation prong of the statute if he or she would have suffered `the same harm whether or not a defendant complied with the law.'” Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 522 (4th Dist. 2013) (quoting Daro v. Superior Ct., 151 Cal. App. 4th 1079, 1099 (1st Dist. 2007)).

For example, in Jenkins, the court found the plaintiff lacked standing under the UCL because she could not establish a causal link between the foreclosure of her home and the defendant’s six unlawful or unfair acts, all of which occurred after the plaintiff defaulted on her loan. Id. at 523. Even if the defendant had not acted unfairly, the plaintiff still would have defaulted and suffered the same economic injury.

Unlike in Jenkins, plaintiffs entered into a TPP agreement with Citi to cure their initial default and reinstate the loan. Plaintiffs have established a genuine issue of fact with respect to whether they qualified for a permanent HAMP modification and, as a result, whether a trustee’s sale was inevitable. A reasonable jury could therefore find that plaintiffs did not suffer injury due to their own inability to pay but rather because of Citi’s unfair or unlawful conduct despite plaintiffs having made the three trial period payments within the month in which they were due. Accordingly, the court must deny Citi’s motion for summary judgment of plaintiffs’ UCL claim for lack of standing.

The UCL “establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.” Cel-Tech Commc’ns, Inc., 20 Cal. 4th at 180. “Each prong of the UCL is a separate and distinct theory of liability” and offers an “independent basis for relief.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009) (citing S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal. App. 4th 861 (4th Dist. 1999)).

As discussed above, a question of fact remains for trial as to whether Citi made false promises with fraudulent intent. Accordingly, the court must also find there is a genuine dispute of fact as to plaintiffs’ fraud claim under the UCL based on this same allegation.

Plaintiffs also contend Citi engaged in unlawful business practices by breaching its obligations under the TPP agreement and selling plaintiffs’ home at a foreclosure auction. “An action is unlawful under the UCL and independently actionable if it constitutes a violation of another law, `be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.'” Cooksey v. Select Portfolio Servicing, Inc., Civ. No. 2:14-1237 KJM KJN, 2014 WL 4662015, at *7 (E.D. Cal. Sept. 18, 2014); see also McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457, 1474-75 (2d Dist. 2006) (“By extending to business acts or practices which are `unlawful,’ `the UCL permits violations of other laws to be treated as unfair competition that is independently actionable.'” (citation omitted)). Given that plaintiffs have established a genuine dispute of material fact regarding Citi’s breach of contract, promissory estoppel, and wrongful foreclosure, plaintiffs have also established a dispute regarding Citi’s unlawful business acts or practices under the UCL.

Accordingly, the court will deny Citi’s motion for summary judgment on plaintiffs’ UCL claim.

G. Punitive Damages

Plaintiffs seek punitive damages with respect to their claims for fraud and unlawful business practices under the UCL. (FAC at 19-20.) Citi moves for summary judgment on the ground that plaintiffs are not entitled to punitive damages as a matter of law. (Citi’s Mot. at 22.)

Pursuant to California Civil Code section 3294, a plaintiff may recover punitive damages “[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” Cal. Civ. Code § 3294(a). Punitive damages are “for the sake of example and by way of punishing the defendant.” Id. Subsection (c) defines fraud as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” Id. § 3294(c).

Given that the court has already found a genuine issue of material fact regarding Citi’s fraudulent conduct, the court must deny Citi’s motion for summary judgment on plaintiffs’ punitive damages request and leave it for a jury to determine whether Citi’s actions reach the requisite level of intent.

IT IS THEREFORE ORDERED that Citi’s motion for summary judgment (Docket No. 72) be, and the same hereby is, GRANTED on plaintiffs’ intentional infliction of emotional distress claim and promissory estoppel claim as to any alleged oral promises, and DENIED in all other respects.

[1] Citi also contends plaintiffs should not be permitted to present any oral argument and that the court should deem Citi’s material facts set forth in its separate statement as undisputed because plaintiffs’ opposition was untimely. (Citi’s Reply at 1 n.1 (Docket No. 77).) Plaintiffs were required to file their opposition by midnight on August 8, 2016 and they instead filed at 5:48 a.m. on August 9, 2016. The court will not decide this motion for summary judgment based on such a procedural technicality.

[2] Freddie Mac servicers are required to comply with the Department of the Treasury’s Supplemental Directives. (See Pls.’ RJN Ex. D at 1.) Citi serviced plaintiffs’ loan on behalf of Freddie Mac.

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