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Aceves vs. U.S. Bank
Transcript of Aceves vs. U.S. Bank
A. Claudia Jacqueline Aceves (Plaintiff and Appellant)
married women living in California obtained an adjustable rate loan from her bank to purchase her home.
two years into the loan she could no longer afford the monthly payments and filed for bankruptcy under ch.7 of the bankruptcy code
she intended to turn her ch.7 proceedings into a ch.13 proceeding which would allow her to enlist the financial assistance of her husband to reinstate the loan, pay what she owed and then resume her regular loan payments.
Aceves argued that the banks promise to work with her in reinstating and modifying the loan, was enforceable because she had relied on the promise. Thus why forgoing the bankruptcy protection under ch.13, and the bank subsequently breaching its promise by foreclosing.
The question here is whether U.S. bank made and kept a promise to negotiate with Aceves, not whether the bank promised to make a loan or modify a loan.
Aceves could not assert that she relied on the terms of a modified loan agreement in forgoing bankruptcy relief. She acknowledges that the parties never got that far because the U.S. Bank broke its promise to negotiate with her in an attempt to reach a mutually agreeable modification.
Aceves claim rests on whether U.S. bank engaged in the promised negotiations
The trial court dismissed the case on demurrer ( a formal objection to the legal sufficiency of an opponent's pleading)
B. U.S. Bank (Defendant and Respondent)
When Aceves contacted the bank, the bank promised her that if she would forgo further bankruptcy proceedings under ch.13, they would work with her on a loan reinstatement and negotiate a loan modification.
In reliance on the promise that the defendant (the bank) had made to the plaintiff; the plaintiff (Aceves) did not convert her case to a ch.13 bankruptcy proceeding.
While the bank was promising to work with the plaintiff, it was simultaneously complying with the notice of requirements to conduct a foreclosure.
The bankruptcy court lifted the stay, but the bank did not work with the plaintiff in an attempt to reinstate and modify the loan. Rather, it completed the foreclosure.
Plaintiff filed this action against the bank, alleging a cause of action for promissory estoppel (prevents one from denying a fact inconsistent with an earlier position if it would result in an injury to someone else
Aceves promissory estoppel claim is not based on a promise to make a unilateral offer but on a promise to negotiate in an attempt to reach a mutually agreeable loan modification. And even assuming this case involved a promise to make a unilateral offer, we cannot say the banks offer satisfied such a promise in light of the offers terms and the circumstances under which it was made.
The bank argues that an oral promise to postpone a loan payment or a foreclosure is unenforceable. In the absence of consideration, a gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust deed ordinarily would be unenforceable under the civil code
Was there injury?
No, because this is not a case where the homeowner paid the funds needed to reinstate the loan before the foreclosure. Promissory estoppel does not provide a basis for invalidating the foreclosure.
Was this decision ethical?
No. Even though legally she had no standing in the courts, Claudia Aceves was a person. She had a home, and while she was struggling to pay for that home, she looked to the bank for help. For assistance. And instead of guiding her down the best path for her to take... they basically took advantage of her situation and hoodwinked her into losing her home. It was legal, but it was not right.
Did Claudia Aceves have the grounds to take legal action against the U.S. Bank by means of promissory estoppel?