By ABIGAIL FIELD Posted 3:00 PM 02/02/11

On Jan. 27, a California appeals court ruled that U.S. Bank conned Claudia Aceves out of her home. Specifically, the court found that U.S. Bank (USB) told Aceves that if she gave up bankruptcy court protection on her home, it would negotiate a loan modification with her. But, the court found, the bank had no intention of negotiating. Instead, as soon as the bankruptcy court protection was removed, the bank foreclosed. As a result, the court ruled, Aceves can sue U.S. Bank for damages and fraud.

What she can’t do, unfortunately, is get her house back. The court found the foreclosure, once Aceves was duped into allowing it, was done legitimately. In further bad news for Aceves, the opinion contains enough information to make it likely that U.S. Bank didn’t have standing to foreclose when it did, but her lawyers did not raise those issues at trial, and weren’t asked by the court to raise them on appeal, so the court refused to consider them. One of her attorneys, Nick Alden, said that because of that, he considered the case a loss despite the ruling against the bank.

Key to the decision was the bank’s promise, and Aceves’s reliance on that promise to her significant detriment. Specifically, the bank promised to negotiate a mortgage loan modification, and relying on that promise, Aceves gave up her bankruptcy protections, so she was significantly damaged when the bank reneged. For the fraud claim, the court found that the bank not only failed to keep its promise, it never had any intent of keeping it. As Aceves’s other attorney, Dennis Moore, put it, “borrowers should be able to rely on the banks when negotiating.”

Comments

comments