The elements of a promissory estoppel claim 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 or her reliance.
Plaintiff borrower alleged that, in reliance on Defendant bank's promise to work with her in reinstating and modifying her home loan, she did not attempt to save her home from foreclosure by converting a chapter 7 bankruptcy case to a chapter 13 case. Thereafter the bank went forward with the foreclosure and did not commence negotiations toward a possible loan solution. The borrower sued the bank for promissory estoppel, quiet title, slander of title, fraud, and declaratory relief; she also sought to set aside the trustee's sale and to void the trustee's deed upon the sale of the home. The trial court dismissed the case on demurrer and the borrower appealed.
Can the borrower maintain her promissory estoppel action and other causes against the bank?
The Court found that the bank failed to appreciate that Chapter 13 could be used legitimately to assist a borrower in reinstating a home loan and avoiding foreclosure. The court also found that (1) the borrower could have reasonably relied on the bank's promise to work on a loan reinstatement and modification if she did not seek relief under Chapter 13; (2) the promise was sufficiently concrete to be enforceable and; (3) the decision to forgo Chapter 13 relief was detrimental because it allowed the bank to foreclose on the property. The borrower also adequately alleged a claim for fraud, the elements of which were similar to the elements of promissory estoppel. The borrower's other claims, all based on alleged irregularities in the foreclosure process, lacked merit.