Court Allows Plaintiffs to Proceed with Claims Against Their Lender

The plaintiffs in Fleet v. Bank of America, N.A. (9/24/14) obtained a loan from Bank of America. In 2009, they applied to modify their loan under the Making Homes Affordable Act. In 2011, they were approved for a trial period plan under a Fannie Mae modification program. It was plaintiffs’ understanding that they had to make three trial period payments. If so, they would then have to pass a financial hardship test. If they passed, the loan would be permanently modified. Plaintiffs made the first two trial period payments, with the understanding that any foreclosure would be suspended. However, the lender proceeded with the foreclosure and their house was sold at a trustee’s sale to a third party. Plaintiffs were ultimately evicted.

Plaintiffs, in pro per, filed suit against Bank of America (and other defendants) alleging several causes of action, including promissory estoppel, breach of contract, fraud, and accounting. The bank demurred to plaintiffs’ amended complaint. The court sustained the demurrer, without leave to amend.

Plaintiffs appealed. The appellate court considered whether plaintiffs had stated any causes of action against the lender. With respect to the breach of contract cause of action, the court determined that plaintiffs alleged that they performed the terms of the trial payment plan until they were excused by the bank’s conduct. This was sufficient to state a cause of action.

With respect to fraud, the court concluded that plaintiffs’ complaint included the elements for promissory fraud. They alleged that the bank never intended to modify the loan and that plaintiffs relied on the lender’s false promises by making the trial payments and by refraining from undertaking other measures to keep their home. They were also damaged by the loss of their home and potentially by the funds they spent in repairs to the property during the same time period. While the court acknowledged that plaintiffs may not prove their cause of action, it noted that the allegations were sufficient to withstand demurrer. Plaintiffs also stated a cause of action for negligent misrepresentation against three bank representatives with whom they communicated regarding the trial payment plan and the status of the foreclosure. The court concluded that plaintiffs had also alleged facts that could support a cause of action for promissory estoppel.

The court found that plaintiffs had not adequately alleged an accounting cause of action. The court acknowledged that if plaintiffs overpaid the bank by making the trial payments or otherwise, the overpayment would constitute an element of damages, but it did not give rise to a cause of action for accounting.

Plaintiffs were in pro per. The court advised them to retain counsel, so that they have a "chance to litigate on equal terms" with the bank. The court also commented on the unique form of plaintiffs’ complaint, but noted that plaintiffs who are in pro per deserve more latitude than those who are represented by counsel.

Hannah Shafsky, Senior Attorney