Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—EDCal: Bank of America Not Liable for Representations of Loan Modification Plan , (Nov 27, 2012)
Organizations Mentioned:Bank of America | Goodwin Procter, LLP
By Jody Coultas, J.D.
Bank of America, N.A. was not liable for California Unfair Competition Law (UCL) violations for allegedly representing that a borrower would qualify for a modification of a loan that was later foreclosed, according to the federal district court in Sacramento (Whatley v. Bank of America, N.A., November 21, 2012, England, M.).
After obtaining a loan from Bank of America, the borrower contacted the bank about a loan modification. The bank representative informed the borrower that he was not far enough behind on his mortgage payments to qualify for a loan modification, but would qualify once he was far enough behind. Eventually, the borrower received a letter stating he was pre-approved for a modification, pursuant to the Home Affordable Modification Program. After submitting multiple application packages and requested documents, he was notified that his application had been closed and his property was going to be sold at a trustee’s sale. The borrower filed the UCL claims.
Unlawful, Unfair, or Fraudulent Acts
The UCL makes actionable any unlawful, unfair or fraudulent business act. An act can be alleged to violate any or all of the three prongs of the UCL—unlawful, unfair, or fraudulent. The unlawful prong borrows violations of other laws. Unfair business practices are acts that violate established public policy or are immoral, unethical, oppressive, or unscrupulous and cause injury to consumers which outweigh its benefits. Fraudulent prong claims may be brought based upon conduct likely to deceive the public.
The borrower premised his UCL claim on his other claims for deceit, promissory estoppel, and wrongful foreclosure. Because the court dismissed the other causes of action, the UCL claim failed. According to the borrower, Bank of America engaged in fraudulent and unfair practices by promising help with mortgages, including a loan modification, if the borrower became delinquent. There was insufficient evidence to support the UCL claims and did not adequately identify Bank of America’s immoral or unethical act or the public policy that was violated.
The case is No. 2:11-cv-02901-MCE-GGH.
John Steve Sargetis (United Law Center) for Jack E. Whatley. Hong-An Vu (Goodwin Procter LLP) for Bank of America, N.A.
Cases: StateUnfairTradePractices CaliforniaNews