Freeman v. U.S. Bank National Association

Filing 83

ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DFT by Judge Ricardo S Martinez. (RS)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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CASE NO. 2:10-cv-01544-RSM

RAHSAAN FREEMAN,
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Plaintiff,

ORDER ON BENCH TRIAL
GRANTING JUDGMENT IN FAVOR
OF DEFENDANT

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v.
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U.S. BANK N.A., d/b/a U.S. BANK,

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Defendant.
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I. INTRODUCTION
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This case is before the Court for judgment on Plaintiff Rahsaan Freeman’s claim for
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promissory estoppel. He alleges that Defendant U.S. Bank National Association (“U.S. Bank” or
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the “Bank”) made statements to him during the hiring process in 2010 that amounted to a legally
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enforceable promise. A bench trial was held to adjudicate the claim. For the reasons stated in the
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following Findings of Fact and Conclusions of Law, the Court enters Judgment in favor of U.S.
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Bank.
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 1

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II. BACKGROUND AND PROCEDURAL HISTORY
This case concerns U.S. Bank’s decision to terminate Mr. Freeman several weeks after

3 offering him employment in 2010. Freeman’s Amended Complaint asserted claims against U.S.
4 Bank for promissory estoppel and negligent misrepresentation. The Amended Complaint sought
5 relief on the basis that during the hiring process, U.S. Bank promised Mr. Freeman that the
6 details surrounding a past termination with the Bank would not affect Mr. Freeman’s future
7 employment. The Court granted summary judgment in favor of U.S. Bank on both claims. Dkt. #
8 36. Mr. Freeman appealed, and the Ninth Circuit Court of Appeals affirmed in part, reversed in
9 part, and remanded the case for further proceedings. Dkt. # 45. Although it affirmed the Court’s
10 ruling on the negligent misrepresentation claim, the Ninth Circuit held that the Court erred in
11 granting summary judgment on Mr. Freeman’s promissory estoppel claim. It held that there was
12 a material issue of fact about (1) “the existence of a specific and narrow promise by U.S. Bank
13 that the bank had done its due diligence and that [Freeman’s] prior termination would not affect
14 his new employment”; (2) about “whether he changed his position in reliance on the bank’s
15 promise by informing several banks with whom he had been discussing open positions that he
16 had accepted another offer and notifying clients of his change to U.S. Bank”; and (3) about
17 “whether justice requires the enforcement of the bank’s promise: Was Freeman forthcoming and
18 truthful throughout the interview process to the best of his recollection, as he contends, or did he
19 purposefully omit information about his prior termination to increase his odds of being rehired?”
20 Freeman v. U.S. Bank Nat. Ass’n, 527 F. App’x 619, 620-21 (9th Cir. 2013).
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The Court held a bench trial on May 5, 2014. The Court has carefully considered the

22 testimony of each of the witnesses, the parties’ trial exhibits, the parties’ proposed Findings of
23 Fact and Conclusions of Law, and the closing arguments of counsel. The following constitute the
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 2

1 Court’s Findings of Fact and Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of
2 Civil Procedure. To the extent certain findings of fact may be deemed conclusions of law, or
3 certain conclusions of law be deemed findings of fact, they shall each be considered conclusions
4 or findings, respectively.
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III. FINDINGS OF FACT
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A. Freeman’s Initial Employment with U.S. Bank
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1.

Freeman first worked at U.S. Bank from 1997 to 2000 as a Personal Banker. Def.’s Trial

Exs. A-4, A-7; Dkt. # 72, ¶ 5.
2.

During this time, Freeman received recognition from the Bank for his sales

accomplishments. Pl.’s Ex. 3. Freeman was promoted to Area Sales Manager in the Brokered
Loan Division. Pl.’s Trial Ex. 4; Dkt. # 72, ¶ 6.
B. Freeman’s 2000 Termination
3.

In 2000, the Bank began investigating Freeman for committing a number of ethical

violations and falsifying bank documents. Def.’s Trial Ex. A-7. The Bank concluded that Mr.
Freeman had violated their code of ethics by having a family member process a second mortgage
on his home, and that Freeman had falsified bank documents. Id.
4.

On March 6, 2000, Freeman was terminated from U.S. Bank for violating bank policies,

including falsifying loan documents. Id.
5.

The Bank concluded that Freeman falsified sections of a U.S. Bank Advantage Line

Application for two married U.S. Bank customers. Id.
6.

The Bank also concluded that Freeman falsified a verbal income and employment

verification form for the same two customers. Id.
7.

On the original form, the two customers stated their incomes as $30,000 and $32,484. Id.

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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 3

1 8.

Freeman changed the customers’ Advantage Line Application by altering their annual

2 incomes. Id. Freeman closed the two circles in the threes on the forms, making the numbers
3 eights. Id. The stated income figures went from “30,000” and “32,484” to “80,000” and
4 “82,484.” Id.
5 9.

Freeman altered other information on the application, including the year the business

6 started from “1999” to “1995,” and the number of years as owner from blank to “4.” Id.
7 10.

Freeman changed the responses of the customers regarding Personal Savings Account

8 Balance and Savings Account Balance to larger numbers than originally produced by the couple.
9 Id.
10 11.

Freeman added information to the portions of the application left blank by the customers

11 as well. Id. He filled in “476,000” as the Annual Sales as Reported for Tax Purposes and
12 “510,000” as the Approximate Net Worth. Id. Freeman also filled in the current business
13 checking balance as “11,000” and current business savings as “13,400.” Id.
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Additionally, Freeman falsified a Verbal Income and Employment Verification form for

15 the same customers. Id. For one of the two customers, Freeman wrote that he spoke to Ken
16 Clarkson at the Washington State Patrol on “6/11/99 at 4:45 PM.” Id. He listed a phone number
17 but the phone number was actually the same as the customers’ telephone line that was listed on
18 the Advantage Line of Credit Application. Id.
19 13.

Prior to terminating Freeman in 2000, U.S. Bank Human Resources representative,

20 Sharon Bach, tried to verify the customer’s income and learned that Washington State Patrol
21 does not verify income. Dkt. # 72, ¶ 16.
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 4

1 14.

Freeman was never given an official reason for his termination or a termination letter. Ex.

2 A, p. 10 (Freeman Test., Trial Day 1).1 He remembered two areas of primary concern during his
3 termination meeting. Id. at p. 3 (Freeman Test., Trial Day 1). First, that he “coached” customers
4 about how to fill out loan applications, and second that he used a family member to process a
5 personal loan for him. Id. at pp. 3-6 (Freeman Test., Trial Day 1).
6 15.

Both of these actions violated the Bank’s ethics policy. Def.’s Trial Ex. A-7.

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Freeman altered the numbers the customers wrote on their form to higher numbers. Id. at

8 p. 37 (Freeman Test., Trial Day 1). He did not call the Washington State Patrol, but still
9 completed the Verbal Income and Employment Verification form.
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The falsified documents were discussed during the 2000 termination interview.

11 C. Freeman’s Employment History
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After his termination from U.S. Bank, Freeman worked for a number of different banks

13 in a variety of roles. However, he was never employed with a single employer, aside from his
14 own company, for more than three years.
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From U.S. Bank Freeman went to work for First Horizon Home Loans.

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After First Horizon Home Loans, Freeman went to work for a company called First

17 Magnus for six months to a year, and then switched companies again and started with Sun West.
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Freeman and a business partner decided to create a small business called Freeman Lundt

19 and Associates.
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In 2008, Freeman began working for Wells Fargo Bank as a Senior Commercial Real

21 Estate Specialist. Dkt. # 72, p.3.
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In 2010, Wells Fargo decided to dissolve the division that Freeman was working in. Id.
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Exhibit A, which is attached to this Order, contains certified excerpts of the testimony
24 elicited during trial days one and two.
ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 5

1 D. Freeman’s Recruitment in 2010
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In January of 2010, Wells Fargo offered him a separation agreement. Freeman accepted

3 the agreement. Def.’s Trial Ex. A-8; Dkt. # 72, ¶ 22.
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Under that agreement, he received a severance package that allowed him to receive his

5 base salary and benefits through July 28, 2010. Def.’s Trial Ex. A-8; Dkt. # 72, ¶ 23. However,
6 to receive a salary through that time, Freeman could not accept new employment until after
7 March 28, 2010. Def.’s Ex. A-8; Dkt. # 72, ¶ 23.
8 26.

While Freeman was looking for new employment, a bank manager at U.S. Bank named

9 David Leonard called Freeman and asked him to apply for a job at U.S. Bank. Dkt. # 72, ¶¶ 2610 27.

Leonard was recruiting new bankers to work for him at U.S. Bank. Leonard received a

11 recommendation about Freeman from someone else in the industry. Ex. A, p. 45 (Leonard Test.,
12 Trial Day 2).
13 28.

In their early conversations Freeman told Leonard that he had previously worked at U.S.

14 Bank and that he had been terminated from that position. Id. at p. 46 (Leonard Test., Trial Day
15 2); Dkt. # 72, ¶ 29.
16 29.

He told Leonard the exact reason that he was terminated was unclear. Ex. A, p. 46

17 (Leonard Test., Trial Day 2); see also, Dkt. # 72, ¶ 30. But, Freeman told Leonard that “[he] got
18 terminated for violating the code of ethics, I did business with a family member. That was a no
19 no. And number two, I coached a client on how to qualify for the Advantage Loan application.”
20 Ex. A, p. 12 (Freeman Test., Trial Day 1).
21 E. Freeman’s Disclosures to U.S. Bank about his Previous Termination
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After the initial interview, Leonard and his manager, Joey Nix, interviewed Freeman for a

23 second time. Dkt. # 72, ¶ 40. During this interview Freeman again told U.S. Bank that he was not
24 sure of the exact reason he was previously fired. See Dkt. # 72, ¶ 42.
ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 6

1 31.

The two possible reasons he remembered were coaching a client applying for a loan

2 application and having his brother-in-law process his mortgage.
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Freeman did not disclose that what he meant by “coaching” was writing false information

4 on a financial document. Further, Freeman submitted an employment application that stated, “I
5 was terminated from US Bank 11 years ago for violating the code of ethics. My second mortgage
6 was done by my brother in law (not supposed to do business with family) and I told a customer
7 how to fill out their advantage line application (which is what we were trained to do at the
8 time).” Def.’s Trial Ex. A-9; see also Dkt. # 72, ¶ 36.
9 33.

Freeman did not disclose to Ms. Nix or Mr. Leonard that he altered and falsified loan

10 documents.
11 34.

Nix did not think Freeman was honest with U.S. Bank during the interviewing process in

12 2010.
13 35.

Leonard also felt that Freeman was not forthcoming about his previous termination from

14 U.S. Bank. Ex. A, p. 49 (Leonard Test., Trial Day 2). When asked the following: “Mr. Leonard,
15 when you reviewed the information that Ms. Bach sent to you, what did you conclude as to what
16 Mr. Freeman told you during the interview process?”, Leonard responded, “That what he was
17 terminated for was not the things that he had told us.” Id. (Leonard Test., Trial Day 2).
18 36.

When Nix and Leonard confronted Freeman about the document falsification he became

19 defensive. He told Ms. Nix “that that couldn’t possibly be the case, because [the income
20 verification form] did not exist until well after 1999, and he felt that this was all part of a big
21 forgery to terminate him, that it was doctored-up information to terminate him and to discredit
22 him.” Id. at p. 54 (Nix Test., Trial Day 2).
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 7

1 F. U.S. Bank’s Due Diligence
2 37.

Because Freeman’s termination had occurred almost 10 years prior to his rehire, his

3 original personnel file was destroyed.
4 38.

Before hiring Freeman, Leonard and Nix discussed Freeman’s situation with Human

5 Resources representative Jan Coonley. See Dkt. # 72, ¶ 47. Coonley was the Human Resources
6 representative responsible for Leonard’s group.
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Coonley, who was located in Los Angeles, was able to see that Freeman was marked as

8 ineligible for rehire on the employee database, Peoplesoft, but she was unable to gather any more
9 information from the internal site. See id. at ¶¶ 48-51.
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Coonley directed Ms. Rodriguez and Ms. Schofield (human resources employees in the

11 Seattle area) to search for any information related to Freeman’s prior employment. Id. at ¶ 50.
12 Ms. Rodriguez and Ms. Schofield were unable to find any information, such as a personnel file.
13 Id. at ¶¶ 50-51.
14 41.

Three weeks after Freeman was hired, Coonley contacted Sharon Bach after receiving a

15 tip from an employee relations worker that Bach had more information regarding Freeman’s
16 termination in 2000. Id. at ¶¶ 62-64.
17 42.

Bach attended Freeman’s termination meeting in 2000. Def.’s Trial Ex. A-7. She

18 memorialized her notes and impressions from that meeting. Id. However, Bach no longer
19 supported the group Freeman was working for in 2000 and had moved offices from Seattle to
20 Northgate. Bach also did not support the small business banking group that Freeman was hired
21 into in 2010.
22 43.

Freeman did not remember that Bach was present during his termination meeting in 2000.

23 44.

Bach had additional information about Freeman that was no longer contained in his

24 personnel file. Bach faxed a portion of Freeman’s old personnel file to Ms. Coonley.
ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 8

1 G. Promise that Freeman’s Past Termination would not Affect his 2010 Employment
2 45.

Freeman’s testimony that Leonard and Nix promised him that his past termination would

3 not affect his 2010 employment opportunity is not credible.
4 46.

Freeman could not recall the exact language of the conversation but believed that both

5 Leonard and Nix assured him his past termination would not affect his 2010 employment.
6 Freeman stated, “The commitment to me was that my prior reasons for termination in the year
7 2000 were not going to be a problem for me taking this new job. The past was in the past and
8 we’re starting over. And those words -- those words came from David, ‘The past is the past,’ you
9 know.” Ex. A, p. 18 (Freeman Test., Trial Day 1). Freeman stated that Leonard and Nix “assured
10 me that my previous employment -- previous termination wasn’t going to be an issue moving
11 forward with the new job, that the past was in the past, and I get to start over with U.S. Bank.”
12 Id. at p. 33 (Freeman Test., Trial Day 1).
13 47.

Freeman’s testimony was directly at odds with the testimony of Leonard and Nix. Neither

14 Leonard or Nix told Mr. Freeman that he would not be terminated for any reason related to his
15 past employment. For example, when asked “Did you ever tell Mr. Freeman that the past is in the
16 past and nothing that had happened in 2000 would affect his current employment?” Leonard
17 responded, “No.” Id. at p. 50 (Leonard Test., Trial Day 2). Similarly, the following testimony
18 was provided by Nix:
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Q: And did you ever say anything to Mr. Freeman that suggested he couldn’t be
terminated for some specific reason?

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A: No.
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Q: And did you ever promise him, “the past was in the past”?
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A: No.
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Q: Did you ever say anything like that?
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 9

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A: No.

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Q: All right. And did you ever tell him that his prior termination would not impact
his future employment with US Bank?

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A: No.
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Id. at p. 56 (Nix Test., Trial Day 2).
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48.

Freeman believed that Nix and Leonard were unhappy with his termination and thought

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that he was getting “a raw deal.” Id. at p. 22 (Freeman Test., Trial Day 1).
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49.

Nix and Leonard, however, were not upset that U.S. Bank was terminating Freeman. Nix

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was upset that Freeman did not disclose the entirety of the circumstances surrounding his past
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termination. Leonard never told Freeman that he received a “raw deal”:
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Q: Did you tell him that?
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A: That he got a raw deal?
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Q: Yeah.
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A: No.
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Id. at p. 48 (Leonard Test., Trial Day 2). Further, Nix was the person responsible for firing
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Freeman and she did not think he got a “raw deal”:
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Q: At any point did you think he got a raw deal?
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A: No.
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Q: And did you ever tell him that you thought he got a raw deal or that you thought the
bank was doing something unfair?

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A: No.

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Q: At any point did you tell him the termination decision was
unfair?

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A: No.
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Q: And who made the termination decision?
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 10

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A: I did.

2 Id. at pp. 51-52 (Nix Test., Trial Day 2).
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IV. CONCLUSIONS OF LAW

5 A. Promissory Estoppel
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To succeed on a claim for promissory estoppel, a plaintiff must prove each of the

7 following five elements by a preponderance of the evidence:
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(1) a promise which (2) the promisor should reasonably expect the promisee to
change his position and (3) does cause the promisee to change his position (4)
justifiably relying on the promise, in such a manner that (5) injustice can be
avoided only by enforcement of the promise.

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Havens v. C & D Plastics, Inc., 876 P.2d 435, 442 (1994) (internal brackets omitted) (quoting
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Klinke v. Famous Recipe Fried Chicken, Inc., 616 P.2d 644, 648 n.2 (1980)); see Restatement
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(Second) of Contracts § 90 (1981). Here, Freeman has failed to establish elements (1)—that he
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was made a promise by U.S. Bank and (4)—that even if a promise had been made, he would be
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justified in relying on such a promise.
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1. Promise
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The threshold requirement for Freeman’s promissory estoppel claim is that there was a
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promise made by U.S. Bank. Havens, 876 P.2d at 443 (quoting Hunt v. Great W. Sav. Bank, 774
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P.2d 554, 557 n.4 (1989)). A promise is “a manifestation of intention to act or refrain from acting
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in a specified way, so made as to justify a promisee in understanding that a commitment has been
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made.” Id. “[A]lthough promissory estoppel may apply in the absence of mutual assent or
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consideration, the doctrine may not be used as a way of supplying a promise.” Id.
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Freeman failed to establish that U.S. Bank made him a promise. First, Nix and Leonard
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offered credible testimony that U.S. Bank never made the following promise to Freeman: that his
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 11

1 past termination would not affect his 2010 employment. Their testimony did not corroborate Mr.
2 Freeman’s testimony that he was told that “the past is in the past.” Moreover, Ms. Nix’s
3 testimony revealed that she, and not human resources, made the decision to terminate him after
4 additional evidence had come to light about his previous termination because she believed that
5 he had misrepresented the nature and gravity of his past unethical violations. She did not equate
6 “coaching a client to fill out an advantage line application” with fraudulently altering loan
7 documents. Ultimately, she made the termination decision because she felt that she had been lied
8 to during the hiring process.
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Second, Mr. Freeman failed to identify the words that were used to promise him that

10 would not be terminated in the future, despite remembering the exact “promise that he would
11 have a laptop and a place to work.” At most, Mr. Freeman recalled comments that the “past was
12 in the past” and vague assurances that his past termination would not affect his employment in
13 2010. However, all of this testimony was directly contradicted by testimony from Leonard and
14 Nix. Leonard and Nix affirmatively stated they made no such promise to Freeman.
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Third, although Mr. Freeman argued that he had also been promised that the Bank would

16 do “its due diligence,” the evidence and testimony presented at trial demonstrated that U.S. Bank
17 went through the proper channels to investigate the circumstances of Freeman’s prior
18 termination. Nix and Leonard contacted the appropriate human resources representative, Ms.
19 Coonley, in order to obtain more information. Because of U.S. Bank’s retention policy, Coonley
20 was unable to locate Freeman’s full personnel file. Nix and Leonard hired Freeman based on the
21 information he provided about his prior termination, and the lack of any conflicting information.
22 However, once Nix and Leonard discovered the true reasons for Freeman’s original termination
23 they felt Mr. Freeman was not truthful during the interview process.
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 12

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At the core of a promissory estoppel claim is the requirement of a promise. Having found

2 no such promise from U.S. Bank, the Court finds that Freeman fails to satisfy the first element of
3 promissory estoppel.
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2. Justifiable Reliance
Even if Freeman established that U.S. Bank made him a legally enforceable promise, he

6 has failed to demonstrate that he would have been justified in relying on U.S. Bank’s promise. It
7 would not have been reasonable for Freeman to rely on a promise made by the Bank that “the
8 past was in the past.” At the time the Bank allegedly made the promise, Freeman had not
9 disclosed to U.S. Bank that he falsified loan documents in 1999. Rather, he told the Bank on
10 numerous occasions that he only remembered “coaching” a client and doing business with a
11 relative. Freeman did not disclose that he falsified loan documents. Once that information came
12 to light, both Nix and Leonard felt that Freeman did not accurately or fully disclose the reasons
13 for his previous termination. Because Freeman did not disclose that he falsified loan documents
14 by altering numbers and entering demonstrably false information on the documents, he was not
15 justified in relying on any purported promise made by U.S. Bank that he would not be terminated
16 in the future based on the circumstances of his previous termination, should the details
17 surrounding his termination surface at a later date.
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V. CONCLUSION

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Having fully considered the evidence presented at trial, the exhibits admitted into

20 evidence, and the argument of counsel, and being fully advised, the Court finds in favor of U.S.
21 Bank on Plaintiff’s remaining claim.
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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 13

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The Clerk is directed to enter judgment accordingly.

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Dated this 31st day of July 2014.

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A

RICARDO S. MARTINEZ
UNITED STATES DISTRICT JUDGE

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ORDER ON BENCH TRIAL GRANTING JUDGMENT IN FAVOR OF DEFENDANT - 14