SCOTT CALL JOLLEY, Plaintiff and Appellant,
CHASE HOME FINANCE, LLC, et al., Defendants and Respondents.
CERTIFIED FOR PUBLICATION
ORDER MODIFYING OPINION AND DENYING REHEARING
[NO CHANGE IN JUDGMENT]
1. At the top of page 6, first line, the sentence that reads," Jolley further testified that as a result of these representations he was induced to complete construction at a cost of $100,000, borrowing from family and friends to do so" shall be deleted and replaced with the following sentence:
Jolley further testified that as a result of these representations he was induced to "borrow heavily to finish the project."
2. On page 29, second full paragraph, first line, the sentence that reads, "He invested $100,000 in finishing construction on the property shortly before foreclosure proceedings were initiated" shall be deleted and replaced with the following sentence:
He invested funds borrowed from other sources in finishing construction on the property shortly before foreclosure proceedings were initiated.
3. On page 29, second full paragraph, the last sentence that reads, "Had Jolley known that Chase would ultimately foreclose on the property, he would have had no incentive to invest an additional $100,000 in its completion" shall be deleted. No new sentence is required.There is no change in the judgment.
Respondent's petition for rehearing is denied.
The Underlying Facts
The Proceedings Below
The Motion and the Request for Judicial Notice
"1. On September 25, 2008, Washington Mutual Bank, _.A. ("WaMu") was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver for WaMu pursuant to its authority under the Federal Deposit Insurance Act, 12 U.S.C. § 1821(d). Pursuant to the Purchase and Assumption Agreement between the FDIC as Receiver for WaMu, and Chase, dated September 25, 2008, Chase acquired certain of the assets of WaMu, including all loans and loan commitments of WaMu. A copy of that Purchase and Assumption Agreement is attached hereto as Exhibit A and can be found on the FDIC's website at http://www.fdic.gov/about/freedom/Washington_Mutual_P_and _ A.pdf." The attached copy was 39 pages, including exhibits. No separate points and authorities accompanied Chase's request for judicial notice.
The Ruling on the Motion
"The Court affirms its tentative ruling which stated as follows:
"The undisputed evidence establishes that Defendant Chase Home Finance, LLC (Chase) is not liable for the alleged intentional and negligent misrepresentations (causes of action nos. 1 & 2), made to Plaintiff by employees of the Washington Mutual Bank in relation to the Construction Loan issued to Plaintiff, pursuant to the Purchase and Assumption Agreement through which Chase acquired Washington Mutual from the FDIC on September 25, 2008.
"Under that Agreement, Chase expressly did not assume liability for borrower's claims `related in any way to any loan or commitment to lend made by the Failed Bank prior to failure, . . .' or `otherwise arising in connection with [WaMu's] lending or loan purchase activities. . . .' (Request to Take Judicial Notice, Ex. 1, P&A Agreement ¶ 2.5) [¶] . . . [¶]
"The third cause of action for Breach of Contract/Promissory Estoppel also fails, as the undisputed evidence shows that Defendants never promised to modify the Washington Mutual Construction, or to issue Plaintiff any additional funds to complete the Project. No enforceable promise or loan modification agreement was created by Chase's conduct.
"Chase's employee Mr. North's representations to Plaintiff that approval of his loan modification application was "likely", "highly probable", and "looks good", are all opinions of Mr. North, which do not create a binding commitment to modify a loan, nor do they represent the fact that the loan has been approved.
"These hopes or expectations expressed by North do not constitute either: a clear and unambiguous promise to approve the application; nor do they evidence any terms to create an enforceable contract. (SeeLaks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885, 891, 893 [agreement to make construction loan was expressly conditional, and lacked essential terms of the loan, and could not support a cause of action for promissory estoppel].)
"Also, there is no evidence to suggest that Mr. North had authority to approve a loan modification either by himself, or with the consent of others.
"A borrower's `understanding or expectation that the Bank would extend a loan is not sufficient to establish an agreement to make a loan. [Citation.]' (Conrad v. Bank of America (1996) 48 Cal.App.4th 133, 156.) `To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages. [Citations.]' (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 770.) `When the evidence clearly shows that the only (and the complete) subject matter that is under consideration is left for further negotiation and agreement, there is no contract, not for vagueness or indefiniteness of terms but for lack of any terms. [Citation.]' (Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 59.)
"The motion is granted on the fourth cause of action for Negligence.
"`Under California law, a lender does not owe a borrower or third party any duties beyond those expressed in the loan agreement, except those imposed due to special circumstance.' (Sipe v. Countrywide Bank(E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153, citing Nymark v. Heart Fed. Savings & Loan Assn., (1991) 231 Cal.App.3d 1089, 1096.). . . .
"The undisputed evidence shows that Chase and Plaintiff engaged in the typical lender/borrower relationship. Plaintiff has not presented evidence of special circumstances on which to impose a general duty of due care. (See Sipe v. Countrywide Bank (E.D.Cal. 2010) 690 F.Supp.2d 1141, 1153.)
"Moreover, the complaint does not allege, and there is no evidence to establish, that Chase committed a negligent act after acquiring Plaintiff's loan."
1. Summary Judgment Law and the Standard of Review
"Code of Civil Procedure section 437c, subdivision (c) provides that summary judgment is properly granted when there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) As applicable here, moving defendants can meet their burden by demonstrating that `a cause of action has no merit,' which they can do by showing that `[o]ne or more elements of the cause of action cannot be separately established.' (§ 437c, subd. (o)(1); see also Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 486-487.) Once defendants meet this burden, the burden shifts to plaintiff to show the existence of a triable issue of material fact. (§ 437c, subd. (p)(2).)
"On appeal `[w]e review a grant of summary judgment de novo; we must decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. [Citations.]' (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) Put another way, we exercise our independent judgment, and decide whether undisputed facts have been established that negate plaintiff's claims. (Romano v. Rockwell Internat., Inc., supra, 14 Cal.4th at p. 487.) As we put it inFisherman's Wharf Bay Cruise Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320: `[W]e exercise an independent review to determine if the defendant moving for summary judgment met its burden of establishing a complete defense or of negating each of the plaintiff's theories and establishing that the action was without merit.' (Accord,Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945, 972.)
"But other principles guide us as well, including that `[w]e accept as true the facts . . . in the evidence of the party opposing summary judgment and the reasonable inferences that can be drawn from them.' (Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 67.) And we must `"view the evidence in the light most favorable to plaintiff as the losing part[y]" and "liberally construe plaintiff['s] evidentiary submissions and strictly scrutinize defendant['s] own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiff['s] favor."' (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 96-97.)"
2. The P&A Agreement: Judicial Notice, the Law, and Thorne's Testimony
"(g) Facts and propositions that are of such common knowledge within the territorial jurisdiction of the court that they cannot reasonably be the subject of dispute.
"(h) Facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy."
3. Summary Adjudication Was Improperly Granted On The First, Second, Third, Fourth, Fifth, And Eighth Causes Of Action
A. The First And Second Causes Of Action, For Misrepresentation
B. The Third Cause of Action, for Breach Of Contract/Promissory Estoppel
The Fourth Cause Of Action, For Negligence
C. The Fifth Cause Of Action, Violation Of Business And Professions Code Section 17200
E. The Eighth Cause Of Action, For Reformation
4. Summary Adjudication Was Properly Granted On The Sixth and Seventh Causes Of Action
A. The Sixth Cause Of Action, For Declaratory Relief
F. The Seventh Cause Of Action, For Accounting
5. Summary Judgment for CRC Was Proper
 Payments on the construction loan were interest only during construction and varied in amount depending on the status of funding. Once construction had been completed, the balance of the loan was to be rolled over into a fully amortized mortgage on the home. A reserve was included to pay the interest payments during construction. Because the reserve was calculated based on the predicted length of construction, it proved to be insufficient to cover interest payments during the extended construction period.
 Documents submitted by Chase show the outstanding principal owing at default in December 2008 was $2,426,650, increased to $2,632,066.99 when the notice of default was recorded. By the time the motion was filed in August 2011, Chase calculated it was owed $3,019,693.29.
 Jolley's complaint referred to both WaMu and Chase collectively as "the Bank," making it difficult to ascertain which conduct was alleged with respect to which entity.
 That section reads: "A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting." (Civ. Code, § 1589.)
 The motion was actually filed on behalf of both named defendants, Chase, and CRC. As noted, no charging allegations were made in Jolley's complaint against CRC, and his opposition to the motion said essentially nothing about it. Thus, the focus of the proceedings below, and here, is on Chase, and for ease of discussion we refer to Chase as the moving party.
 The remaining "facts" were four paragraphs attaching what were claimed to be "certified" or "true and correct" copies of documents recorded in Marin County.
 We cast no aspersions on Chase's counsel for her position, as the confidentiality agreement prepared by Jolley's counsel did not specify the documents requested.
 We find no express ruling on Jolley's ex parte application for a continuance, but it was effectively denied by the grant of summary judgment.
 The referenced footnote says that "Federal Courts have taken judicial notice of the P&A Agreement and similar agreements with the FDIC. (Allen v. United Fin. Mortgage Corp., 660 F.Supp.2d 1089, 1093 (N.D. Cal. 2009) (judicial notice taken of the P&A Agreement even though a few pages missing from that offered by defendant, because the Agreement is available online, from the FDIC's web site; In re Sharp, Case No. 09-13980 A P. No. 10-1032 (N. D. Cal. Bk.); Jarvis v. JP Morgan Chase Bank, N.A., 2010 WL 2927276, at *1, (C.D. Cal. July 23, 2010); see also Yeomalakis v. F.D.I.C., 562 F.3d 56, 60 (1st Cir. 2009.) (Resp. App. 86-89.)"
Some federal courts have taken judicial notice of the same or similar purchase and assumption agreements, frequently without discussion or analysis, either because they were deemed "public records" or because their contents could be "accurately and readily determined from sources whose accuracy cannot reasonably be questioned." (Fed. Rules Evid., rule 201(b)(2); Rosenfeld v. JPMorgan Chase Bank, N.A. (N.D.Cal. 2010) 732 F.Supp.2d 952, 958-960 [dismissing claims against Chase despite claim that it engaged in loan modification negotiations with plaintiff]; McCann v. Quality Loan Service Corp. (W.D.Wash. 2010) 729 F.Supp.2d 1238, 1241-1242 [in context of claims relating to WaMu refinance transaction, collecting cases holding Chase not liable for WaMu's conduct];Cassese v. Washington Mutual et al. (E.D.N.Y. Dec. 22, 2008 No. 05 CV 2724) 2008 U.S. Dist. Lexis 111709, at pp. *6-7, 2009 [same, including claims of fraud and breach of contract]; Moncrief v. Washington Mutual (S.D.Cal. June 28, 2010 No. 10CV350) 2010 U.S. Dist. Lexis 64100 at pp. *6-7 [same for claims filed after Chase acquired WaMu's assets].)
Some cases have found the language of section 2.1 of the P&A Agreement creates a degree of uncertainty about whether Chase assumed specific liabilities depending on whether it acted as lender, loan servicer, or both. (See Hayes-Boman v. J.P. Morgan Chase Bank (D.Minn. 2010) 724 F.Supp.2d 1003, 1015; Punzalan v. FDIC (W.D.Tex. 2009) 633 F.Supp.2d 406, 414 & fn. 5; In re Pena(Bankr. S.D.Tex. 2009) 409 B.R. 847, 859-862.)
 Chase also argues on appeal that Jolley's testimony is barred by the parol evidence rule and as hearsay. These objections were not made in the trial court, and are thus inappropriate here.
 Rosenfeld., supra, 732 F.Supp.2d at p. 969 [claim for breach of fiduciary duty]; Argueta v. J.P. Morgan Chase (E.D.Cal. June 30, 2011 No. CIV. 2:11-441) 2011 U.S. Dist. Lexis 70756, at p. *12;Sullivan v. JP Morgan Chase Bank, NA (E.D.Cal. 2010) 725 F.Supp.2d 1087, 1094 ["Plaintiffs' allegations that Defendant misrepresented to them that a permanent loan modification would be put into place are insufficient to form the basis of a negligence claim"].)
 Becker v. Wells Fargo Bank, N.A., Inc. (E.D.Cal. Mar. 22, 2011 No. 2:10-cv-02799) 2011 U.S. Dist. Lexis 29687, at pp. *67-71 [allegations about loan modification application process did not give rise to duty]; Dooms v. Fed. Home Loan Mortgage Corporation (E.D.Cal. Mar. 31, 2011 No. CV F 11-0352) 2011 Dist. Lexis 38550, at pp. *25-28; DeLeon v. Wells Fargo Bank, N.A. (N.D.Cal. Oct. 22, 2010 No. 10-CV-01390) 2010 U.S. Dist. Lexis 112941, at p. *12 [defendant did not have a duty "to complete the loan modification process"].)
 Connor held there was lender liability to the homeowners who bought into the housing tract. The Legislature subsequently enacted Civil Code section 3434 to restrict such liability, and to that extentConnor has been superseded by statute. (Anthony v. Kelsey-Hayes Co. (1972) 25 Cal.App.3d 442, 454, fn. 5.)
 We agree with Chase that no admissible evidence was submitted to support the assertion that Chase had decided in advance not to further fund any WaMu loans. The only evidence on this point was Thorne's declaration, which lacked foundation. However, regardless whether the decision was made in advance, if it were made without due care to avoid further injury to Jolley, then Chase is potentially liable for its own negligence.
 Such a loan more readily gives rise to a cause of action for negligence in that contractual disbursements must be made with due care. "A lender that enters into a loan agreement to disburse the loan funds according to the terms of the loan documents, assumes a duty of care to act reasonably to abstain from injuring the borrower by its disbursal of funds. A lender may be liable to the borrower who is damaged as a result of the lender's negligent disbursal of the loan funds." (12 Miller & Starr, California Real Estate (3d ed. 2011) § 36:6, fns. omitted.)
 We quote the California Legislature: "California is still reeling from the economic impacts of a wave of residential property foreclosures that began in 2007. From 2007 to 2011 alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation were in California, and the current wave of foreclosures continues apace. All of this foreclosure activity has adversely affected property values and resulted in less money for schools, public safety, and other public services. In addition, according to the Urban Institute, every foreclosure imposes significant costs on local governments, including an estimated nineteen thousand two hundred twenty-nine dollars ($19,229) in local government costs. And the foreclosure crisis is not over; there remain more than two million `underwater' mortgages in California.
"It is essential to the economic health of this state to mitigate the negative effects on the state and local economies and the housing market that are the result of continued foreclosures by modifying the foreclosure process to ensure that borrowers who may qualify for a foreclosure alternative are considered for, and have a meaningful opportunity to obtain, available loss mitigation options. These changes to the state's foreclosure process are essential to ensure that the current crisis is not worsened by unnecessarily adding foreclosed properties to the market when an alternative to foreclosure may be available. Avoiding foreclosure, where possible, will help stabilize the state's housing market and avoid the substantial, corresponding negative effects of foreclosures on families, communities, and the state and local economy." (Assem. Bill No. 278 (2011-2012 Reg. Sess.), § 1 (subdivisions designations omitted).)
 The legislative history of Assembly Bill No. 278 recognized extensive "`spillover' costs" of "the foreclosure epidemic": "By some estimates the foreclosure crisis will strip neighboring homeowners of $1.9 trillion in equity as foreclosures drain value from homes located near foreclosed properties by 2012. . . . Meanwhile, state and local governments continue to be hit hard by declining tax revenues coupled with increased demand for social services. In fact, the Urban Institute estimates that a single foreclosure costs $79,443 after aggregating the costs borne by financial institutions, investors, the homeowner, their neighbors, and local governments." (Sen. Rules Com., Off. Of Sen. Floor Analyses, Conference Report on Assem. Bill No. 278 (2011-2012 Reg. Sess.) June 27, 2012, pp. 14-15.)
 "When a borrower is in danger of defaulting, a commonsense approach under a traditional mortgage would be for the lender and borrower to mutually agree to modify the terms of the loan. . . . [¶] Despite the apparent mutual interest of loan holders and borrowers, many distressed homeowners report obstacles when trying to obtain a loan modification or short-sale approval. (See e.g. `Loan Modifications Elude Local Homeowners,' Sacramento Bee (January 17, 2011).). . . . [¶] . . . [¶] Some analysts and leading economists have cited a failure by banks to provide loan modifications as a single reason that the foreclosure crisis continues to drag on." (Sen. Floor Analysis of Assem. Bill No. 278 at pp. 15-16.)
 According to the legislative history, "borrowers can find their loss-mitigation options curtailed because of dual-track processes that result in foreclosures even when a borrower has been approved for a loan modification." (Sen. Floor Analysis of Assem. Bill No. 278, pp. 20-21.)
 Jolley alleged, inter alia, that he was told a "workable loan modification was in the works" and "[f]oreclosure proceedings would be suspended pending the outcome of the loan modification process." He further alleged the true facts were that "a loan modification was not in the works" and "foreclosure proceedings were ongoing." Beyond the mere allegations, Jolley testified that because of "inordinate delay" by Chase in responding to his initial contact regarding a loan modification, he "borrowed heavily from friends and family" to complete construction. And further, that had the loan modification been granted and the construction loan converted to a conventional loan, the permanent financing would have been at a "favorable rate," making the "payments substantially less" and he "could have afforded to pay them."