Singh v. JPMorgan Chase Bank NA

Filing 30

ORDER denying 20 Motion in Limine. Signed by Judge David G Campbell on 12/19/2011.(NVO)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Adish Singh, No. CV11-1341-PHX-DGC Plaintiff, 10 11 vs. 12 ORDER Chase Home Finance, a Delaware limited liability company, 13 Defendant. 14 15 Plaintiff Adish Singh has filed a motion to exclude a settlement offer made by 16 Defendant Chase Home Finance. Doc. 20. The motion has been fully briefed. Docs. 20, 17 24, 26. Neither party has requested oral argument. For the reasons below, the Court will 18 deny the motion. 19 I. Background. 20 Singh purchased a home through a purchase money mortgage secured by a deed of 21 trust with Chase Home Finance LLC (“Chase”). Doc. 24-1, at 3. The principal balance 22 on the loan is $1,077,000. Singh agreed to make interest-only payments for the first ten 23 years, with payments of both interest and principal for the remaining term of the loan. 24 The initial interest rate was 7.25%. Singh’s initial monthly payment was $6,774.13, of 25 which $6,506.88 was for interest. 26 In 2009, after Singh began having difficulties meeting his mortgage obligations, 27 he contacted Chase to request a loan modification. In October 2010, Singh and Chase 28 entered a Trial Period Plan (“TPP”). Chase agreed that if Singh complied with the TPP 1 and made three monthly payments of $6,124.39 between December 1, 2010 and 2 February 1, 2011, Chase would enter into a permanent modification of his mortgage and 3 would reduce his principal debt. 4 payments. Doc. 20, at 20 (Ex. 3). On February 1, 2011, Chase sent Singh a proposed 5 permanent loan modification. Doc. 20, at 32 (Ex. 4). Under the terms offered, Chase 6 would add $163,359.38 in arrearages to the principal balance, fix Singh’s previously 7 adjustable interest rate at 4.125% for the next five years and at 4.750% for the remaining 8 life of the loan, and offer a modified monthly payment of $6,087.73, of which $5,267.71 9 was principal and interest. Doc. 20, at 15 (Ex. 2). Singh made the monthly 10 Singh contacted Chase to discuss why it had increased his principal instead of 11 reducing it. On February 4, 2011, Singh’s counsel sent a demand letter threatening a 12 lawsuit if Chase did not comply with its agreement to provide a principal debt reduction 13 modification. Doc. 20, at 57 (Ex. 5). Chase retained outside counsel to assist with the 14 negotiations. On June 2, 2011, Singh sent Chase a draft of the lawsuit he intended to file. 15 Doc. 20, at 102 (Ex. 6). 16 On June 24, 2011, Chase, through counsel, offered Singh another proposed loan 17 modification (the “Offer”) in an e-mail with the subject line “Singh-Rule 408 18 communication.” 19 $184,316.06 in past due interest and other expenses to the principal balance, fix Singh’s 20 interest rate at 4.125% for the next five years and at 4.5% for the remaining life of the 21 loan, and offer a new monthly payment of $5,766.75 in principal and interest. After 22 counsel for the parties exchanged a series of emails, Singh ultimately rejected the Offer. 23 On June 28, 2011, Singh filed a complaint asserting claims for breach of contract and 24 fraud, among others, and alleging that he “made demand upon Chase to honor its 25 representations and provide the principal debt reduction but Chase has refused.” Doc. 1- 26 1, at 6 (Compl. ¶ 42). 27 II. 28 Doc. 20, at 116-17. Under the terms offered, Chase would add Discussion. Singh argues that the Offer is inadmissible under Rule 408 to prove the validity or -2- 1 2 3 4 5 6 7 8 9 10 invalidity of his breach of contract and fraud claims. Rule 408 states in pertinent part: Evidence of the following is not admissible . . . either to prove or disprove the validity or amount of a disputed claim . . . (1) furnishing, promising, or offering – or accepting, promising to accept, or offering to accept – a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or a statement made during compromise negotiations about the claim . . . . Fed. R. Evid. 408(a). By its terms, Rule 408 does not apply to the Offer. The first sentence in 11 subsection (a) makes clear that the rule concerns efforts “to prove or disprove the validity 12 or amount of a disputed claim.” Id. The rule then makes two categories of information 13 inadmissible: (1) offers made “in compromising or attempting to compromise the claim,” 14 and (2) statements and conduct made during “negotiations about the claim.” Fed. R. Ev. 15 408(a)(1), (2) (emphasis added). The focus is on “the claim.” Rule 408 operates only 16 when a party seeks to introduce compromise offers and conduct related to a claim in 17 order to prove the validity or invalidity of that claim. As the Advisory Committee Note 18 to Rule 408 explains: “evidence of an offer to compromise a claim is not receivable in 19 evidence as an admission of . . . the validity or invalidity of the claim.” Fed. R. 20 Evid. 408, 1972 Adv. Comm. Note (emphasis added). 21 In this case, “the claim” which Chase seeks to disprove through use of the Offer is 22 Singh’s claim that Chase committed fraud and breach of contract. That was not the claim 23 about which the Offer was made. The negotiations between Singh and Chase that gave 24 rise to the Offer were negotiations to modify the loan contract, not negotiations about 25 Singh’s claim of fraud and breach of contract. Although litigation had been threatened 26 by Singh’s lawyer, the Offer did not concern the threatened causes of action; it concerned 27 new terms for Singh’s loan with Chase. Because the Offer did not relate to the claim 28 -3- 1 being asserted in this Court, it is not excluded by Rule 408. 2 Nor does admission of the Offer violate the public policy underlying Rule 408. 3 The purpose of Rule 408 is “to encourage the compromise and settlement of existing 4 disputes” and “to ensure that parties may make offers during settlement negotiations 5 without fear that those same offers will be used to establish liability should settlement 6 efforts fail.” Josephs v. Pacific Bell, 443 F.3d 1050, 1064 (9th Cir. 2006); Rhoades, 7 504 F.3d at 1161. 8 settlement discussions if he knew that settlement communications would later be used 9 against him in litigation” is not persuasive. Doc. 26, at 8. Singh does not seek to exclude 10 a statement he made during negotiations. He seeks to exclude an offer made by Chase. 11 The policy of encouraging compromise and settlement is not frustrated by admitting the 12 Offer. Singh’s argument that he “would not have engaged in candid 13 Finally, it is immaterial that Chase labeled the Offer a “Rule 408 communication.” 14 Doc. 20, at 116. This Circuit has instructed that “Rule 408 should not be used to bar 15 relevant evidence . . . simply because one party calls its communication with the other 16 party a ‘settlement offer.’” Cassino v. Reichhold Chemicals, Inc., 817 F.2d 1338, 1343 17 (9th Cir. 1987). 18 IT IS ORDERED that Plaintiff’s motion to exclude (Doc. 20) is denied. 19 Dated this 19th day of December, 2011. 20 21 22 23 24 25 26 27 28 -4-

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