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West v. JPMorgan Chase Bank, N.A. - 214 Cal. App. 4th 780, 154 Cal. Rptr. 3d 285 (2013)


The elements of fraud are: (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages. The elements of negligent misrepresentation are the same except for the second element, which for negligent misrepresentation is the defendant made the representation without reasonable ground for believing it to be true.


As authorized by Congress, the United States Department of the Treasury implemented the Home Affordable Mortgage Program (HAMP) to help homeowners avoid foreclosure during the housing market crisis of 2008. “The goal of HAMP is to provide relief to borrowers who have defaulted on their mortgage payments or who are likely to default by reducing mortgage payments to sustainable levels, without discharging any of the underlying debt.”

After her home loan went into default, plaintiff borrower Genevieve West agreed to a trial period plan (“TPP”), a form of temporary loan payment reduction under HAMP, from defendant JPMorgan Chase Bank, N.A. (“Chase Bank”), which had acquired her loan from the original lender. West complied with the terms of the TPP, and timely made every reduced monthly payment on her loan during the trial period and afterwards. Nonetheless, Chase Bank denied West a permanent loan modification, and West's home was sold at a trustee's sale just two days after Chase Bank told her, so West alleged, that no foreclosure sale was scheduled.

West brought this lawsuit alleging fraud, breach of written contract, promissory estoppel, and other causes of action, against Chase Bank. The trial court sustained without leave to amend Chase Bank's demurrer to the third amended complaint. West appealed from the subsequent judgment. 


Did plaintiff borrower's complaint against defendant mortgage lender sufficiently allege the claim of fraud with the required particularity?




The Court of Appeal held that the complaint alleged fraud with the required particularity by describing misrepresentations about the modification, showing justifiable reliance on them, and alleging that such reliance had caused the borrower to forego taking legal action to stop the foreclosure sale. Breach of contract was sufficiently pleaded because the contract had to be interpreted to make it lawful (Civ. Code, § 1643), which included incorporating HAMP requirements mandating that a lender offer a good-faith modification to a borrower complying with a trial plan agreement. The trustee's sale was not void because a substitution of trustee was recorded under Civ. Code, § 2934a, subd. (d); the notice of default was signed by an agent pursuant to Civ. Code, § 2924, subd. (a)(1); and the complaint lacked an allegation of tender. Unfair or fraudulent practices under Bus. & Prof. Code, § 17200, were sufficiently alleged. The Court affirmed as to the causes of action for conversion, slander of title, quiet title, and to set aside or vacate a void trustee sale. Holding that West stated causes of action for fraud, negligent misrepresentation, breach of written contract, promissory estoppel, and unfair competition,the Court reversed the judgment on those causes of action and remanded for further proceedings.

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