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Adrian v. Onewest Bank

United States District Court, D. Arizona

February 6, 2015

Anthony Adrian; Maria M. Adrian, Plaintiffs,
v.
OneWest Bank, Defendant.

ORDER

FREDERICK J. MARTONE, Senior District Judge.

I.

On October 8, 2007, plaintiffs executed a promissory note in the amount of $384, 000 secured by a deed of trust on their property located in Surprise, Arizona. On January 24, 2011, the beneficial interest in the deed of trust was assigned to defendant OneWest Bank (the "Bank"). Plaintiffs defaulted on their loan payments in December 2010 and a notice of trustee's sale was recorded on February 16, 2011, setting a sale date of May 18, 2011. Plaintiffs began loan modification discussions with the Bank in late 2010, and submitted their application for a loan modification under the Home Affordable Mortgage Program ("HAMP") on March 8, 2011. The Bank requested additional financial documents in April and May 2011, each time notifying plaintiffs:

Your loan has an upcoming scheduled foreclosure sale date. If you would like to be considered for HAMP, a complete application must be received by [the Bank] no later than midnight on the seventh day prior to the scheduled foreclosure sale date. This condition will vary by state and investor type, and [the Bank] may not be able to stop foreclosure sale [sic] if the foreclosure process has already been initiated in all cases. The application must include the following to be considered for a loan modification and temporarily suspend the foreclosure sale date if necessary:
[list of required documents]
If the above documents are not received by midnight on the seventh day prior to your scheduled foreclosure sale date, your modification may be denied and your loan will proceed to foreclosure.

(Doc. 66-1, ex. 5). At the same time, however, a letter from the Bank dated April 8, 2011, gave plaintiffs what appear to be conflicting assurances, that "[d]uring the HAMP evaluation, the subject property for which the application has been received will not be referred to foreclosure or be sold at foreclosure sale if the foreclosure process has already been initiated." Id. at 21.

Then, on May 10, 2011, the Bank sent plaintiffs a letter stating that they would not receive a loan modification, not because they were found to be ineligible, or because they failed to provide the required financial documents, but "due to an imminent foreclosure sale of the property." (Doc. 66-1, ex. 6).

Plaintiffs filed a Chapter 7 bankruptcy petition on May 18, 2011, the same day set for the trustee's sale. The Bank subsequently obtained relief from the bankruptcy stay allowing it to foreclose on the property. The sale occurred on July 28, 2011. Plaintiffs then filed this action, asserting claims for wrongful foreclosure, intentional infliction of emotional distress, and fraud.

We granted the Bank's motion to dismiss for failure to state a claim, and plaintiffs appealed. The United States Court of Appeals for the Ninth Circuit affirmed the dismissal of the wrongful foreclosure and intentional infliction of emotional distress claims, and reversed and remanded the fraud claim, concluding that plaintiffs should be granted leave to amend.

On remand, plaintiffs filed an amended complaint, this time asserting claims for negligent performance of an undertaking and fraud. The gravamen of both claims is plaintiffs' allegation that the Bank informed them they must default on their mortgage before the Bank would consider a loan modification. Once plaintiffs defaulted, and notwithstanding the Bank's assurances that plaintiffs were not at risk of foreclosure, plaintiffs' property was sold at a trustee's sale. Plaintiffs claim they relied on the Bank's statements and lost their primary residence as a result. They contend they were financially sound throughout late 2010 and early 2011 and would not have defaulted on their mortgage but for the Bank's wrongful representations.

We now have before us the Bank's motion for summary judgment (doc. 63), plaintiffs' response (doc. 69), and the Bank's reply (doc. 73).

II.

On a motion for summary judgment, the moving party has the burden of showing the absence of any genuine issue of material fact. Once this prima facie showing is made, the burden shifts to the party opposing the motion to present evidence that establishes a genuine issue of material fact to justify a trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553 (1986). The nonmoving party must "designate specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. at 2553. A genuine issue exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). "If the evidence is merely colorable, or is not sufficiently probative, summary judgment may be granted." Id. at 249-50, 106 S.Ct. at 2511 ...


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