Truman Capital Advisors LP et al v. Nationstar Mortgage LLC

Filing 23

MEMORANDUM AND ORDER granting 14 Motion to Dismiss. For the foregoing reasons, we grant Nationstar's motion to dismiss the complaint in its entirety. The Clerk of the Court is respectfully directed to terminate the motion pending at docket number 14 and close this case. (Signed by Judge Naomi Reice Buchwald on 8/22/2014) Copies Mailed by Chambers. (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------X
TRUMAN CAPITAL ADVISORS LP,
U.S. BANK NATIONAL ASSOCIATION, solely
as LEGAL TITLE TRUSTEE FOR THE
TRUMAN 2012 SC2 TITLE TRUST and as
PARTICIPATION AGENT FOR THE TRUMAN
2012 SC2 TITLE TRUST, and TRUMAN
2012 SC2 TITLE TRUST,

MEMORANDUM AND ORDER
13 Civ. 5945 (NRB)

Plaintiffs,
- against NATIONSTAR MORTGAGE, LLC
Defendants.
-------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Plaintiffs Truman Capital Advisors LP (“TCA”), Truman 2012
SC2 Title Trust (the “Trust”), and, in its capacity as legal
title trustee and participation agent for the Trust, U.S. Bank
National Association (“U.S. Bank”) (collectively, “plaintiffs”)
bring this action against Nationstar Mortgage, LLC (“Nationstar”
or

“defendant”).

breach

of

Plaintiffs’

contract

and

complaint

promissory

alleges

estoppel

claims

arising

out

for
of

defendant’s refusal to consummate the sale of 538 mortgages that
TCA attempted to purchase from Nationstar at auction.

Pending

before the Court is defendant’s motion to dismiss the complaint,
pursuant

to

Federal

Rule

of

Civil

Procedure

12(b)(6),

for

failure to state a claim.

For the reasons stated herein, we

grant Nationstar’s motion to dismiss.
BACKGROUND
TCA is a limited partnership with its principal offices
located in Armonk, New York.

Compl. ¶ 3.

TCA is an investment

manager for institutional investors and, in this capacity, it
created the Trust and served as the agent of Truman 2012 SC2,
LLC (the “Depositor”).

Id. ¶ 8.

As the Depositor’s agent, TCA

identified potential residential mortgage investments and then
facilitated their purchase.
investments

were

Id.

deposited

subsequently managed.

Id.

Once purchased, these mortgage
into

the

Trust,

which

TCA

U.S. Bank’s involvement in this

lawsuit is as the legal title trustee and participation agent
for the Trust; it sues in this capacity and not as an individual
actor.

Id.

¶

4.

Nationstar

is

a

mortgage

servicer

that

services nearly 650,000 mortgages with a total unpaid principal
balance of over $100 billion.

Id. ¶ 9.

Defendant’s offices are

located in New York, New York, and it is a registered mortgage
banker licensed by the New York Banking Department.

Id. ¶ 6.

In or about January 2013, Nationstar enlisted Auction.com,
a provider of online real estate auction services, to conduct a
series

of

auctions

for

the

sale

of

many

non-performing

residential mortgages, which were grouped into pools and offered
2

to bidders.

Id. ¶¶ 12, 16.

In each of the auctions, Nationstar

established a minimum sale, or “reserve,” price in advance of
bidding;

if

the

final

bid

did

not

exceed

this

price,

mortgages would not be sold, even to the highest bidder.
id. ¶ 14.

the
See

On or about January 23, 2013, Auction.com published

the Reserve Auction Terms and Conditions (the “Auction Terms”)
which would govern the Nationstar auctions, and TCA registered
as an auction bidder on the same date.
id. Ex. 1.

Id. ¶¶ 17, 19; see also

Plaintiffs and defendant agree that all parties to

the instant dispute were bound by the Auction Terms.

See Def.

Nationstar Mortg. LLC’s Mem. of Law in Supp. of Mot. to Dismiss
the Compl. (“Def.’s Mem.”) at 5–7; Pls.’ Mem. in Opp’n to Def.’s
Mot. to Dismiss the Compl. (“Pls.’ Opp’n”) at 5.
In preparation for the reserve auctions, TCA conducted a
due

diligence

review

of

636

mortgage

loans

that

it

was

interested in purchasing on behalf of the Depositor, and on
February 21, 2013, TCA timely bid on 480 of those loans.
¶¶

25,

28.

At

the

conclusion

of

the

auction,

Compl.

Auction.com

confirmed in writing that TCA was the winning bidder for 304 of
the 408 loans on which it had bid.
price

was

approximately

Id. ¶ 29.

$94,045,115.

Id.

The winning bid
Nationstar

then

conducted a second auction through Auction.com, and on March 6,
2013, TCA placed bids on 346 more mortgage loans.
3

Id. ¶¶ 35,

40.

At the close of this second auction, TCA was the winning

bidder for 234 additional mortgage loans, paying approximately
$55,312,005 and bringing its total number of purchased loans to
538.

Id. ¶ 41.

As it did after the first auction, Auction.com

confirmed TCA’s status as the winning bidder in writing.
On

March

15,

2013,

Auction.com

notified

Id.

TCA

that

Nationstar had decided not to sell all of the mortgage loans for
which TCA had been informed that it was the winning bidder.
¶ 45.

Id.

Nationstar maintains that it was within its rights to

refuse to complete the sale of the 538 mortgage loans to TCA
and,

to

this

consummated.

date,

none

Id. ¶ 49.

of

the

sales

to

TCA

have

been

In response, the Depositor authorized

TCA to commence the instant lawsuit.

Id. ¶ 50.

TCA filed its complaint in the Supreme Court of the State
of

New

York,

County

of

New

York,

on

July

29,

2013.

The

complaint contains two counts: (1) breach of contract and (2)
promissory estoppel.

Id. ¶¶ 51–58.

Plaintiffs seek damages in

excess of $35 million based on Nationstar’s refusal to complete
the sale of the 538 mortgage loans at issue.

Defendant timely

removed the action to this Court on August 22, 2013, pursuant to
28 U.S.C. §§ 1332, 1441, and 1446.

See Notice of Removal at 1.

Then on December 20, 2013, defendant filed the instant motion to
dismiss

the

complaint

under

Federal
4

Rule

of

Civil

Procedure

12(b)(6).

The motion was fully briefed by February 21, 2014,

and we conducted oral argument on August 7, 2014.
DISCUSSION
I.

Legal Standard
When deciding a motion to dismiss for failure to state a

claim pursuant to Rule 12(b)(6), the Court must accept as true
all factual allegations in the complaint and draw all reasonable
inferences in plaintiff’s favor.

Harris v. Mills, 572 F.3d 66,

71 (2d Cir. 2009); Kassner v. 2nd Ave. Delicatessen Inc., 496
F.3d

229,

237

(2d

Cir.

2007).

Nevertheless,

a

plaintiff’s

“[f]actual allegations must be enough to raise a right of relief
above the speculative level.”

Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662,
678

(2009)

(finding

that

a

plaintiff’s

allegations

must

demonstrate “more than a sheer possibility that a defendant has
acted unlawfully” in order to pass muster under Rule 12(b)(6)).
Ultimately, a plaintiff must allege “enough facts to state a
claim to relief that is plausible on its face,” and if the
plaintiff has “not nudged [its] claims across the line from
conceivable to plausible, [the] complaint must be dismissed.”
Twombly, 550 U.S. at 570.
“all civil actions.”

This pleading standard applies to

Iqbal, 556 U.S. at 684 (internal quotation

marks omitted)).
5

II.

Breach of Contract Claim
Although

plaintiffs

initially

brought

suit

in

New

York

state court, all parties concede that the instant dispute is
governed by California law.
(“The

respective

rights

and

See Auction Terms § 6, para. 2
obligations

of

the

parties

with

respect to these Auction Terms and Conditions and the conduct of
the Auction shall be governed by, interpreted and enforced under
the laws of the state of California.”); see also Def.’s Mem. at
7;

Pls.’

Opp’n

at

7

n.6.

To

state

a

claim

for

breach

of

contract under California law, a plaintiff must establish: (1)
the existence of a contract, (2) the plaintiff’s own performance
or excuse for nonperformance, (3) the defendant’s breach, and
(4) damages.

Pyramid Techs., Inc. v. Hartford Cas. Ins. Co.,

752 F.3d 807, 818 (9th Cir. 2014) (citing Abdelhamid v. Fire
Ins. Exch., 106 Cal. Rptr. 3d 26, 32–33 (Ct. App. 2010)).
Defendant’s argument is that plaintiffs’ claim fails on the
first prong of the test: a contract did not exist between the
parties compelling Nationstar to sell the mortgages at issue.
Most critically, defendant cites the following language in the
Auction Terms: “No obligation to sell shall be binding on Seller
unless

and

until

a

written

contract

6

of

sale

or

loan

sale

agreement is signed and delivered by Seller.”1
6,

para.

3.

Nationstar

maintains

that

it

Auction Terms §
never

signed

and

delivered either a contract of sale or a loan sale agreement,
and as such, that it had no obligation to consummate the sale of
the mortgages to TCA.

See Def.’s Mem. at 6–7.

Plaintiffs’ points in opposition are manifold.

First, they

claim that defendant’s entire argument rests on the language of
only a single line of the Auction Terms; when the Auction Terms
are considered in their entirety, plaintiffs’ assert, it becomes
clear that Nationstar was bound to sell the mortgage loans to
plaintiffs.

See Pls.’ Opp’n at 7–11.

Put simply, plaintiffs

contend that the Auction Terms created bilateral obligations -because TCA faced steep penalties if it failed to purchase the
loans after casting the winning bid, it follows that Nationstar
must have been obligated to consummate the sale.
Second,

plaintiffs

assert

that

the

email

Id. at 11.

confirmations

from

Auction.com that TCA was the winning bidder for the 538 mortgage
loans at issue constituted written “contracts of sale” that were
binding

on

Nationstar

under

the

Auction

Terms.

Third,

plaintiffs contend that even if they did not have a contract
with

Nationstar

under

the

Auction

Terms,

an

enforceable

It is undisputed that the word “Seller,” as used throughout the Auction
Terms, refers to defendant Nationstar.
See Auction Terms, Introduction
(“‘Seller’ herein shall include the selling entity and its parent company,
subsidiaries, or affiliated companies.”).
1

7

agreement was nonetheless created under California common law.
Id. at 22–23.
dismissal

is

Fourth and finally, plaintiffs maintain
inappropriate

at

this

stage

of

the

that

litigation

because the Auction Terms are, at the very least, ambiguous, and
plaintiffs’ motion is therefore ill-suited for determination on
the pleadings.

Id. at 22.

Although plaintiffs’ arguments are

numerous, we find none persuasive, and we will address them each
in turn.
A.

Additional Auction Terms

Plaintiffs cite multiple provisions from the Auction Terms
that

they

claim

support

their

assertion

that

Nationstar

was

obligated to sell TCA the mortgage loans for which it was the
winning bidder.

Those provisions are as follows:

(1) In order to become the Winning Bidder for a Note,
a Bidder must meet or exceed the Reserve Price and the
bid must be accepted by the Seller (see “Subject to
Confirmation” section below).
(2) To purchase a particular note at the Auction, one
must be acknowledged by the Auctioneer as the Winning
Bidder (the bidder to whom the Auctioneer acknowledges
the note as being” SOLD” to) and such Note is not
identified as being “Subject to Confirmation.”
(3) If the Winning Bidder cannot be reached within
two (2) hours of Auctioneer’s acknowledgment of the
winning bid, then Auctioneer or Seller can declare the
Winning Bidder to be in default.
(4) In the event of such declaration [of default] the
Winning Bidder’s bid shall be null and void and the
Auctioneer and Seller shall have absolutely no further
liability or obligation to that Bidder.
8

(5) IN ADDITION, SUCH WINNING BIDDER SHALL BE SUBJECT
TO LIQUIDATED DAMAGES EQUAL TO TEN PERCENT (10%) OF
THE PURCHASE PRICE AND AUCTIONEER AND SELLER RESERVES
THE RIGHT TO SEEK ANY AND ALL OTHER REMEDIES,
INCLUDING SPECIFIC PERFORMANCE.
Auction Terms § 3, paras. 1, 3, 4 (emphasis in original).

Under

plaintiffs’ interpretation, these terms demonstrate “that the
Auction

Terms

created

bilateral

rights

and

obligations”

that

attached when TCA was designated as the winning bidder, and
defendant

breached

these

obligations

when

follow through on the mortgage loan sales.
While

we

agree

with

plaintiffs

that

it

elected

not

to

Pls.’ Opp’n at 11.

these

terms

suggest

a

winning bidder has some rights against the selling party, we do
not conclude that one such right was to compel the sale of the
loans on which the winning bidder had bid.
In considering the five terms listed, the first two are
minimally

relevant

to

the

instant

controversy.

Essentially,

these terms outline the process by which a party can become the
winning bidder for a set of loans and that such a designation is
a condition precedent to completing a sale.

Here, there is no

dispute that TCA was the winning bidder for the 538 mortgage
loans at issue -- the only question is what rights, if any, such
a

designation

conferred.

Thus,

the

first

two

advance plaintiffs’ argument that one of the

9

terms

do

not

specific rights

conferred by “winning bidder” status is the ability to compel
the sale of the mortgages on which the party had bid.
By contrast, the third, fourth, and fifth terms cited by
plaintiffs demonstrate that a seller does, in fact, have some
obligation to the winning bidder.

In particular, the fourth

provision cited above -- which disclaims any obligation for the
seller

in

the

case

of

the

winning

bidder’s

default

--

also

provides evidence for its inverse: if the winning bidder did not
default, then the seller did have some continuing obligation to
the

purchaser.

However,

the

fact

that

Nationstar

had

some

obligation to plaintiffs is not the same as saying that it had
the specific obligation to consummate the sale.

The Auction

Terms make clear that, following a party’s designation as a
winning bidder, there must still be an exchange of a loan sale
agreement, followed by a formal closing process, before the sale
is completed.

Auction Terms § 3, paras. 4, 9.

These additional

steps suggest that Nationstar structured the contract to allow
it to retain multiple opportunities to walk away from the deal;
one

such

opportunity,

as

defendant

suggests,

would

decision not to sign and return the loan documentation.
§ 6, para. 3.

be

the

See id.

We find that a more logical reading of the

Auction Terms is that after a party is confirmed to be the
winning bidder, the seller would be obligated to either sell the
10

loans to the winning bidder at the agreed upon price or to
refuse the sale.
was

the

winning

In this case, after TCA was informed that it
bidder,

Nationstar

could

not

have

solicited

further bids or further negotiated the price -- it could have
either accepted the deal at the agreed upon price with TCA or
walked away; those were the only two options.

This would have

acted as a significant restraint on defendant and created a set
of bilateral obligations, but these obligations would not have
included a forced sale of the mortgage loans.
Plaintiffs resist this interpretation, insisting that they
had participated in a reserve auction and, as such, a contract
to sell the mortgages was formed when the auctioneer closed the
bidding

and

TCA’s

bids

were

Auctions & Auctioneers § 34.
of the Auction Terms.

accepted.

See

7

Am.

Jur.

2d

However, this is a misapprehension

We recognize that the title of the Terms

and Conditions labelled the auction a “Reserve Auction” and that
the

similar

themselves.
reserve

language

was

included

in

the

Auction

Terms

See, e.g., Auction Terms § 3, para. 1 (“This is a

auction

and

all

Notes

have

a

reserve

price.”).

Substantively, however, the existence of a reserve was only one
feature of the agreement, and the Auction Terms actually created
a selling structure more akin to a conditional auction.

11

In a conditional auction, “the seller reserves the right
to accept or reject bids after the close of the bidding.”

7 Am.

Jur. 2d Auctions & Auctioneers § 34; see also Young v. Hefton,
173

P.3d

671,

677

(Kan.

Ct.

App.

2007)

(holding

that

where

“there were signs and indications . . . that the sellers were
retaining some measure of final approval or control” over the
sale,

it

creates

marks omitted).

a

conditional

auction)

(internal

quotation

Here, defendant’s right to reject the winning

bid was implicitly reserved through the inclusion of the term
requiring that Nationstar return a signed contract of sale or
loan

sale

agreement

consummated.

in

order

for

the

transaction

to

be

“[W]here a right is reserved in the seller to

reject any and all bids received, the right may be exercised by
the owner even after the auctioneer has accepted a bid.”

In re

El

1983)

Camino

Press,

31

B.R.

340,

344

(internal quotation marks omitted).

(Bankr.

C.D.

Cal.

Thus, defendant breached no

agreement with plaintiffs when it elected not to consummate the
sales in question.
Plaintiffs’ invocation of a litany of Auction Terms that
tangentially relate to the instant issue cannot obscure what is
plain:

TCA

participated

in

a

conditional

auction

in

which

Nationstar retained the right to renege on the deal unless and
until it delivered particular signed documents to plaintiffs.
12

That delivery never came, and thus the deal was never done.
Therefore, we reject plaintiffs’ assertion that the contract as
a

whole

suggests

that

Nationstar

was

obligated

to

sell

the

mortgage loans to TCA when it was named the winning bidder.
B.

The Winning Bidder Confirmations

Plaintiffs next argue that even if TCA’s designation as the
winning bidder did not create a binding obligation on Nationstar
to

sell

the

mortgages,

the

subsequent

emails

to

TCA

from

Auction.com that confirmed TCA’s status as the winning bidder
functioned as an enforceable contract of sale.

The argument

proceeds as follows: (1) the emails were sufficiently definite
to constitute an enforceable contract; (2) Auction.com was in
the

position

to

bind

Nationstar;

and

(3)

the

Auction

Term

providing for the return of the signed loan sale agreement acted
as just a formalization of the contract terms outlined in the
emails.

However, steps two and three in this logical chain are

fatally flawed, and plaintiffs’ argument fails as a result.
At

the

first

step,

plaintiffs’

“To be enforceable under

California

argument
law, a

is

supportable.

contract

must be

sufficiently definite for the court to ascertain the parties’
obligations and to determine whether those obligations have been
performed or breached.”

Sateriale v. R.J. Reynolds Tobacco Co.,

697 F.3d 777, 789 (9th Cir. 2012)
13

(internal quotation marks

omitted).

Here,

essential

terms

the
of

emails
an

from

Auction.com

agreement,

namely

contained

(1)

the

the

parties

involved, (2) a description of the mortgages to be sold, (3) the
price of the mortgages, and (4) the timing of sale.

See Unihan

Corp. v. Max Grp. Corp., No. CV 09–07921 MMM, 2011 WL 6814044,
at *7 (C.D. Cal. Dec. 28, 2011)

(offering “price, quantity,

product specifications, and delivery deadline” as examples of
essential terms).

Thus, in a theoretical sense, the emails

contained sufficient information to act as a binding contract.
However,
Auction.com,
Auction.com
purpose

of

this
not

would

between

functioned
conducting

as
the

be

a

TCA

contract

and

the

between

Nationstar.

agent

auctions,

TCA

and

Undoubtedly,

of

Nationstar

for

the

but

Auction.com

was

not

defendant’s agent in the context of the delivery of the signed
contract of sale.

The Auction Terms make clear that Auction.com

was “acting exclusively as the Seller’s agent as an auctioneer.”
Auction

Terms

Auction.com’s

§

3,

position

para.
as

an

1

(emphasis

agent

that

may

added).

Thus,

bind

Nationstar

stopped with the drop of the auction hammer; the

subsequent

email confirmations, therefore, could not have bound defendant.
Cf. Cal. Civ. Code § 2330 (West 2014) (“An agent represents his
principal for all purposes within the scope of his actual or
ostensible authority.” (emphasis added)).
14

Furthermore,

the Auction Terms specifically provide that

Nationstar would have no obligation to sell “until a written
contract of sale or loan sale agreement is signed and delivered
by Seller.”

Id. § 6, para. 3 (emphasis added).

Throughout the

Auction Terms, a distinction is drawn between Nationstar, the
Seller, and Auction.com, the Auctioneer, and when both parties
have the authority to act, that fact is made clear.

See, e.g.,

id. § 3, para. 4 (“Auctioneer or Seller can declare the Winning
Bidder

to

be

in

default.”);

id.

§

6,

para.

1

(“Seller

and

Auctioneer have the right to postpone or cancel the Auction . .
. .”).

Thus, the fact the Auction Terms state that the seller

had the authority to sign and deliver the sale documentation and
did

not

suggests

mention
that

that

the

the

auctioneer

Auction.com’s

may

conduct

also

have

done

so

would

have

been

no

substitute for that of Nationstar in fulfilling this provision.
Moreover, it is inaccurate to assert that the written and
signed loan sale agreement functioned as a mere formalization of
the contract terms contained in the email confirmations.
ensuring

that

it

would

not

be

bound

until

it

signed

By
and

delivered a loan sale agreement, Nationstar used the process of
reducing the terms to a signed writing as a mechanism to retain
final approval over the deal.

In fact, the Auction Term cited

by defendant operates as “an express reservation of the right
15

not to be bound” in the absence of a particular, signed writing.
Adjustrite Sys., Inc. v. GAB Bus. Servs., Inc., 145 F.3d 543,
549 (2d Cir. 1998) (quoting Winston v. Mediafare Entm’t Corp.,
777 F.2d 78, 80 (2d Cir. 1985)); see also The Aspect Grp., Inc.
v. Movietickets.com, Inc., No. CV 05-3125 SFEX, 2006 WL 5894608,
at *7 (C.D. Cal. Jan. 24, 2006) (“[W]here it is understood that
the agreement is incomplete until reduced to writing and signed
by the parties, no contract results.” (internal quotation marks
omitted)).

Accordingly, the emails from Auction.com did not

bind Nationstar, and plaintiffs’ argument to the contrary fails.
C.

California Common Law

Plaintiffs next suggest that even if this Court were to
find, as we do above, that a contract was not formed between the
parties under the Auction Terms, we should nevertheless hold
that a contract was formed by common law principles.
Opp’n

at

22–23.

This

argument

lacks

merit.

See Pls.’

All

parties

acknowledge that they acceded to the Auction Terms, which were
in turn binding on both plaintiffs and defendant.

One such

term, as we elaborated above, ensured that Nationstar would not
be

bound

unless

documentation.

If

and

until

express

it

delivered

agreements,

such

signed
as

the

loan

Auction

Terms, could be trumped by common law dictates, it would render
the written contract a nullity and disregard the manifest intent
16

of the parties.

See Tehama-Colusa Canal Auth. v. U.S. Dep’t of

Interior, 819 F. Supp. 2d 956, 987 (E.D. Cal. 2011) (“The plain
language within the four corners of the contract must first be
examined

to

parties.”);

determine
see

also

the

mutual

Facility

intent

Constr.

of

Mgmt.

the

contracting

Inc.

v.

Ahrens

Concrete Floors, Inc., No. 1:08–cv–01600–JOF, 2010 WL 1265184,
at *4 (N.D. Ga. Mar. 24, 2010) (listing cases that stand for the
proposition

that

the

express

terms

of

a

contract

supersede

common law).

We will not disregard the specific terms to which

all

assented

parties

principles

which

and

happen,

advantageous to plaintiffs.

instead
in

apply

this

a

set

instance,

of
to

general
be

more

Consequently, we reject plaintiffs’

argument that defendant was obligated to complete the sale of
the mortgage loans under California common law.
D.

Ambiguity of the Auction Terms

Plaintiffs’

final

attempt

to

salvage

their

breach

of

contract claim is to assert that the Auction Terms are simply
too ambiguous to warrant a dismissal of their breach of contract
claim.

“Where the existence of a contract is at issue and the

evidence is conflicting or admits of more than one inference, it
is

for

the

trier

actually existed.”
692,

699

(Ct.

of

fact

to

determine

whether

the

contract

Bustamante v. Intuit, Inc., 45 Cal. Rptr. 3d

App.

2006).

However,
17

as

we

have

maintained

throughout, the Auction Terms are clear: “No obligation to sell
shall be binding on Seller unless and until a written contract
of

sale

or

Seller.”
contract

loan

sale

Auction
of

sale

agreement

Terms
or

§

6,

loan

is

para.

sale

signed
3.

and

delivered

Because

agreement

was

no

by

written

delivered

to

plaintiffs by Nationstar, defendant was under no obligation to
sell the mortgage loans at issue.

While plaintiffs’ arguments

have relied on obfuscation, or at least complication, of the
Auction Terms, the aforementioned conclusion is simple and clear
based on the plain language of the agreement.

Therefore, we

find the Auction Terms unambiguous and dismiss plaintiffs’ claim
against defendant for breach of contract.
III.

Promissory Estoppel Claim
Plaintiffs

regarding
adequately

the
pled

assert
breach
a

that
of

claim

irrespective

contract
for

claim,

promissory

of

our

they

have

estoppel.

finding
still
“Under

California law, the elements of promissory estoppel are (1) a
promise clear and unambiguous in its terms; (2) reliance by the
party to whom the promise is made; (3) the reliance must be both
reasonable

and

foreseeable;

and

(4)

the

estoppel must be injured by his reliance.”

party

asserting

the

Sateriale, 697 F.3d

at 792 (citing U.S. Ecology, Inc. v. State, 28 Cal. Rptr. 3d
894, 905 (Ct. App. 2005)).
18

This claim fails based on the very first element of the
test.

Plaintiffs contend that that this prong is “satisfied by

the allegation that Auction.com, acting as Defendant’s agent,
listed the notes for auction and invited TCA . . . to submit
bids to purchase the notes.”

Pls.’ Opp’n at 23.

Yet, as we

establish above, this invitation to bid is far from a clear and
unambiguous

promise

to

the

bidder

that

it

is

entitled

to

consummate the purchase of the loans if it wins the auction.
Rather, the Auction Terms outline that designation of a party as
a winning bidder is but the first step among many in completing
a sale.

Accordingly, plaintiffs have failed to plead the first

element of a promissory estoppel claim, and the count must be
dismissed as a result.2

Because we dismiss this count based on the first element, we do not analyze
the second through fourth prongs of pleading promissory estoppel under
California law. We note, however, that given the plaintiffs’ sophistication
and their ability to comprehend defendant’s reservation of the right to
renege on the sale unless and until it delivered the signed loan sale
agreement, we would likely find plaintiffs’ reliance on Nationstar’s alleged
promises to complete the sale to be unreasonable.
2

19

CONCLUSION

For the foregoing reasons, we grant Nationstar's motion to
dismiss the complaint in its entirety.
lS

respectfully

directed

to

The Clerk of the Court

terminate

the

motion

pending

at

docket number 14 and close this case.

SO ORDERED.

Dated:

New York, New York
August ~a, 2014

L~
//

(

.~-~~
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

Copies of the foregoing Order have been mailed on this date
to the following:
Attorneys for Plaintiffs

Robert D.
Robert J.
Michelman
800 Third
New York,

Piliero, Esq.
Ontell, Esq.
& Robinson
Avenue, 24th Floor
NY 10022

Attorneys for Defendant

Matthew P. Previn, Esq.
Ross E. Morrison, Esq.
BuckleySandler LLP
1133 Avenue of the Americas, Suite 3100
New York, NY 10036
20