O'Connor-Rose v. JPMorgan Chase Bank, N.A.

Filing 65

ORDER signed by Senior Judge William B. Shubb on 1/14/2014 ORDERING that plaintiff's #57 motion to enforce the settlement agreement is DENIED. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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DONNA RUTH O’CONNOR ROSE,
Plaintiff,

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v.

CIV. NO. 2:12-225 WBS CMK
MEMORANDUM AND ORDER RE: MOTION
TO ENFORCE SETTLEMENT AGREEMENT

J.P. MORGAN CHASE, N.A.,

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Defendant.

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Plaintiff Donna Ruth O’Connor Rose brought this action

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against J.P. Morgan Chase, N.A., for breach of contract arising

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out of alleged misconduct related to her home mortgage loan.1

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Plaintiff contends that she accepted an offer by defendant to

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settle the case in exchange for a reduction of plaintiff’s loan

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balance, and now moves to enforce that purported settlement

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Because the factual and procedural history of the case
is not relevant to the issues decided in this Order, and because
the court has described the factual background of this case at
length before, (see Docket Nos. 25, 39), the court will not
repeat it here.
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agreement.2

(Docket No. 57.)

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Plaintiff first contends that defendant sent her a

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letter on September 25, 2013 informing her that she had been

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approved for a loan modification agreement on the same terms as

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the purported settlement agreement, and that this letter

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constituted an offer to settle the case.

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Even if defendant had made this offer, plaintiff did not accept

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it; indeed, later emails by plaintiff’s counsel confirm that this

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offer, which required plaintiff to make an initial contribution

(See Pl.’s Mot. Ex. 1.)

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of $25,000, was a “non starter” and an “outrageous counter-

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offer.”

(See Pl.’s Mot Ex. 2 at 7, 8.)

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Plaintiff then contends that an e-mail sent by

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defendant’s counsel on November 15, 2013, constitutes an

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acceptance of a settlement offer.

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call[] scheduled with my in-house counsel on Monday.

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expect to resolve this case based on the loan modification we

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discussed. Let me call you Monday.”

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plaintiff’s insistence to the contrary, this e-mail is plainly

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not a written acceptance of a settlement offer, but simply refers

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to an earlier telephone conversation on October 28, 2013 about

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potential settlement terms between the parties.

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This e-mail states: “I have a

(Id. at 3.)

We still

Despite

During that conversation, defendant allegedly agreed to

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settle the case in exchange for a loan modification.

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defendant had orally agreed to these settlement terms, that

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Even if

Although plaintiff initially moved for attorney’s fees
as part of her motion to enforce the settlement agreement,
plaintiff clarified in her reply that she would “defer the issue
of attorney fees to the Rule 11 motion plaintiff will be making.”
(Pl.’s Reply 9:17-19.) Accordingly, the court will not address
the question of attorney’s fees in this Order.
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settlement agreement would be unenforceable.

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settlement agreement concerning an interest in real property,

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like any such contract, is subject to the statute of frauds.

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Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 800 (9th Cir. 1991)

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(citations omitted); Nicholson v. Barab, 233 Cal. App. 3d 1671,

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1682 (2d Dist. 1991) (noting that a “number of California

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appellate cases . . . have impliedly concluded that the statute

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of frauds does apply to such agreements”).

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of frauds requires that any agreement concerning an interest in

In California, a

California’s statute

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real property be in writing and signed by the party against whom

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the agreement is enforced.

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Cal. Civ. Code § 1624.

Plaintiff further contends that defendant orally agreed

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to reduce the principal balance of her mortgage loan by $20,000,

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that her attorney orally accepted this offer and confirmed

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acceptance by e-mail,3 and that “all that Chase had to do was

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revise the modification agreement and send it to plaintiff.”

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(Pl.’s Mot. to Enforce Settlement at 5-6.)

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agreement to modify the terms of plaintiff’s loan is

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unenforceable because it is an oral contract affecting an

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interest in real property and therefore does not satisfy the

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Statute of Frauds.

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2002-2, 167 Cal. App. 4th 544, 554 (4th Dist. 2008) (reasoning

This purported

See Secrest v. Sec. Nat’l Morg. Loan Trust

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Plaintiff’s subsequent confirmation of her acceptance
by email does not satisfy the statute of frauds absent proof that
defendant, the party against whom plaintiff seeks to enforce the
settlement agreement, agreed to the terms of the settlement in a
signed writing. See Cal. Civ. Code § 1624. As discussed above,
the writings that plaintiff characterizes as evidence that
defendant accepted the settlement agreement are not signed and do
not manifest an acceptance.
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that, because “a mortgage or deed of trust is a lien on

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property,” an agreement to modify the terms of a mortgage loan is

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subject to the statute of frauds).

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Several judges of this court have similarly held that a

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purported oral promise to modify a loan fails to satisfy the

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statute of frauds.

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Supp. 2d ----, CIV. NO. 1:13-1378 LJO JLT, 2013 WL 5486777, at *4

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(E.D. Cal. Sep. 30, 2013) (“Absent a written agreement to modify

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the loan, any claim based upon an oral contract to modify the

See, e.g., Khan v. CitiMortgage, Inc., --- F.

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loan is barred by the statute of frauds.” (citing Secrest, 167

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Cal. App. 4th at 552)); Basham v. Pac. Funding Grp., Civ. No.

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2:10-96 WBS GGH, 2010 WL 2902368, at *6 (E.D. Cal. Jul. 22,

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2010)(holding that a claim for breach of an oral loan

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modification agreement was barred by the Statute of Frauds).

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In a series of cases beginning with Monarco v. Lo

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Greco, 35 Cal. 2d 621 (1950), California courts have held that a

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defendant is estopped from asserting the statute of frauds when

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it would result in the unjust enrichment of the defendant or in

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“unconscionable injury” to the plaintiff as a result of her

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reasonable reliance on the purported agreement.

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25.

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circumstances which give the injury an unjust and unconscionable

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character . . .

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up to its end of the bargain is not enough.”

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v. SCM Microsystems, Inc., No. 10-CV-01773-LHK, 2010 WL 5069832,

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at *7 (N.D. Cal. Dec. 7, 2010) (citations omitted); see also

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Carlson v. Richardson, 267 Cal. App. 2d 204, 208 (1st Dist. 1968)

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(holding that “loss of bargain, and damage resulting therefore,

35 Cal. 2d 624-

The application of this doctrine, however, requires “unusual

. A simple allegation that a party has not lived

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SOAProjects, Inc.

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do not themselves estop a [promisor] from relying upon the

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statute of frauds.”

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While plaintiff contends that defendant’s failure to

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abide by the purported settlement agreement has left her “in the

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position of having no loan modification” on an “underwater

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property,” (Pl.’s Reply at 9:10-13), these allegations do not

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show that she has suffered any unconscionable injury above and

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beyond the denial of a loan modification.

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contends that she sold another parcel of property that she “would

And while plaintiff

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have built on and moved to should she have lost her home” in

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reliance on the promise of a loan modification, (id. at 9:1-2),

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it is far from clear that this constitutes “unconscionable

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injury” or that plaintiff’s reliance on the purported oral

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settlement was reasonable.

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Cal. 3d 1247, 1263 (1987) (holding that plaintiff’s reliance on

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an oral agreement regarding a real estate commission was not

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reasonable because the lack of a written agreement “should have

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indicated to [plaintiff] that . . . there was no such agreement

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or that it would not be enforceable”).

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not estopped from asserting that the statute of frauds bars

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plaintiff’s motion to enforce the settlement agreement, and the

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court must deny the motion.

See Philippe v. Shappell Indus., 43

Accordingly, defendant is

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IT IS THEREFORE ORDERED that plaintiff’s motion to

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enforce the settlement agreement be, and the same hereby is,

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DENIED.

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Dated:

January 14, 2014

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