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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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Adish Singh,

No. CV11-1341-PHX-DGC
Plaintiff,

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vs.

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ORDER

Chase Home Finance, a Delaware limited
liability company,

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Defendant.

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Plaintiff Adish Singh has filed a motion to exclude a settlement offer made by

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Defendant Chase Home Finance. Doc. 20. The motion has been fully briefed. Docs. 20,

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24, 26. Neither party has requested oral argument. For the reasons below, the Court will

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deny the motion.

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I.

Background.

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Singh purchased a home through a purchase money mortgage secured by a deed of

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trust with Chase Home Finance LLC (“Chase”). Doc. 24-1, at 3. The principal balance

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on the loan is $1,077,000. Singh agreed to make interest-only payments for the first ten

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years, with payments of both interest and principal for the remaining term of the loan.

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The initial interest rate was 7.25%. Singh’s initial monthly payment was $6,774.13, of

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which $6,506.88 was for interest.

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In 2009, after Singh began having difficulties meeting his mortgage obligations,

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he contacted Chase to request a loan modification. In October 2010, Singh and Chase

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entered a Trial Period Plan (“TPP”). Chase agreed that if Singh complied with the TPP

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and made three monthly payments of $6,124.39 between December 1, 2010 and

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February 1, 2011, Chase would enter into a permanent modification of his mortgage and

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would reduce his principal debt.

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payments. Doc. 20, at 20 (Ex. 3). On February 1, 2011, Chase sent Singh a proposed

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permanent loan modification. Doc. 20, at 32 (Ex. 4). Under the terms offered, Chase

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would add $163,359.38 in arrearages to the principal balance, fix Singh’s previously

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adjustable interest rate at 4.125% for the next five years and at 4.750% for the remaining

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life of the loan, and offer a modified monthly payment of $6,087.73, of which $5,267.71

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was principal and interest.

Doc. 20, at 15 (Ex. 2).

Singh made the monthly

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Singh contacted Chase to discuss why it had increased his principal instead of

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reducing it. On February 4, 2011, Singh’s counsel sent a demand letter threatening a

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lawsuit if Chase did not comply with its agreement to provide a principal debt reduction

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modification. Doc. 20, at 57 (Ex. 5). Chase retained outside counsel to assist with the

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negotiations. On June 2, 2011, Singh sent Chase a draft of the lawsuit he intended to file.

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Doc. 20, at 102 (Ex. 6).

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On June 24, 2011, Chase, through counsel, offered Singh another proposed loan

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modification (the “Offer”) in an e-mail with the subject line “Singh-Rule 408

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communication.”

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$184,316.06 in past due interest and other expenses to the principal balance, fix Singh’s

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interest rate at 4.125% for the next five years and at 4.5% for the remaining life of the

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loan, and offer a new monthly payment of $5,766.75 in principal and interest. After

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counsel for the parties exchanged a series of emails, Singh ultimately rejected the Offer.

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On June 28, 2011, Singh filed a complaint asserting claims for breach of contract and

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fraud, among others, and alleging that he “made demand upon Chase to honor its

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representations and provide the principal debt reduction but Chase has refused.” Doc. 1-

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1, at 6 (Compl. ¶ 42).

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II.

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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
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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

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subsection (a) makes clear that the rule concerns efforts “to prove or disprove the validity

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or amount of a disputed claim.” Id. The rule then makes two categories of information

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inadmissible: (1) offers made “in compromising or attempting to compromise the claim,”

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and (2) statements and conduct made during “negotiations about the claim.” Fed. R. Ev.

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408(a)(1), (2) (emphasis added). The focus is on “the claim.” Rule 408 operates only

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when a party seeks to introduce compromise offers and conduct related to a claim in

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order to prove the validity or invalidity of that claim. As the Advisory Committee Note

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to Rule 408 explains: “evidence of an offer to compromise a claim is not receivable in

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evidence as an admission of . . . the validity or invalidity of the claim.” Fed. R.

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Evid. 408, 1972 Adv. Comm. Note (emphasis added).

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In this case, “the claim” which Chase seeks to disprove through use of the Offer is

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Singh’s claim that Chase committed fraud and breach of contract. That was not the claim

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about which the Offer was made. The negotiations between Singh and Chase that gave

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rise to the Offer were negotiations to modify the loan contract, not negotiations about

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Singh’s claim of fraud and breach of contract. Although litigation had been threatened

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by Singh’s lawyer, the Offer did not concern the threatened causes of action; it concerned

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new terms for Singh’s loan with Chase. Because the Offer did not relate to the claim

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being asserted in this Court, it is not excluded by Rule 408.

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Nor does admission of the Offer violate the public policy underlying Rule 408.

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The purpose of Rule 408 is “to encourage the compromise and settlement of existing

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disputes” and “to ensure that parties may make offers during settlement negotiations

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without fear that those same offers will be used to establish liability should settlement

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efforts fail.” Josephs v. Pacific Bell, 443 F.3d 1050, 1064 (9th Cir. 2006); Rhoades,

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504 F.3d at 1161.

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settlement discussions if he knew that settlement communications would later be used

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against him in litigation” is not persuasive. Doc. 26, at 8. Singh does not seek to exclude

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a statement he made during negotiations. He seeks to exclude an offer made by Chase.

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The policy of encouraging compromise and settlement is not frustrated by admitting the

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Offer.

Singh’s argument that he “would not have engaged in candid

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Finally, it is immaterial that Chase labeled the Offer a “Rule 408 communication.”

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Doc. 20, at 116. This Circuit has instructed that “Rule 408 should not be used to bar

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relevant evidence . . . simply because one party calls its communication with the other

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party a ‘settlement offer.’” Cassino v. Reichhold Chemicals, Inc., 817 F.2d 1338, 1343

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(9th Cir. 1987).

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IT IS ORDERED that Plaintiff’s motion to exclude (Doc. 20) is denied.

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Dated this 19th day of December, 2011.

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