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No Contract from Lender’s Letter, Phone Call

Although plaintiff alleges defendant promised in a letter not to accelerate a note on plaintiff’s property until after a certain date, and in a telephone conversation not to foreclose if plaintiff applied for a short sale, the Hanover Circuit Court dismisses plaintiff’s claim for breach of contract and other claims challenging defendant lender’s actions.

Plaintiff alleges on July 14, 2010, defendant Chase Home Finance wrote plaintiff a letter that promises Chase would not accelerate a note until after July 30, 2010. The letter provides information to defendant that is relevant in the event plaintiff’s loan qualifies as “high risk.” Plaintiff fails to allege plaintiff’s loan is “high risk.”

The court finds that because plaintiff fails to plead that the loan is high risk, there are insufficient facts to support that the letter was a promise to plaintiff. There being no promise, the court finds the July 14, 2010, letter cannot be the basis of a contract between the parties.

Plaintiff further alleged the phone conversation between a Chase representative and plaintiff before July 30, 2010, constituted a unilateral contract offer. Plaintiff alleged an IBM representative told plaintiff they would withhold foreclosure if plaintiff applied for a short sale. In order for the unilateral contract offer to be accepted, all conditions precedent must be performed. Plaintiff, however, failed to allege sufficient facts to support that plaintiff applied for a short sale, which was a condition precedent to any contract being formed. Therefore, the court finds plaintiff has failed to allege sufficient facts to show the phone conversation formed a contract between the parties.

Plaintiff also has failed to allege sufficient facts to support that defendants made promises to plaintiff based on these communications. Because the court finds no contracts resulted, this case is only about a transfer of realty, which is outside the scope of the UCC. The court considers the argument that it is inequitable to hold that the UCC applies to an action on the note but not to the foreclosure. That argument, however, would presume that the borrower is at a disadvantage at the institution of the agreement between the parties. In reality, the borrower is in an equal position and presumed to understand the remedies available to the lender and the difference between the note and deed of trust. The court finds no implied covenant of good faith and fair dealing applies in this case, and it sustains defendants’ demurrers to these claims.

The court also sustains the demurrers to plaintiff’s fraud claims, and plaintiff fails to allege sufficient facts support any misrepresentation by defendants.

Finally, the court sustains defendant’s demurrers to plaintiff’s claims for breach of fiduciary duty, to quiet title, for declaratory judgment and for emotional distress.

Kramer v. Chase Home Finance (Harris) No. CL 10-1458, Sept. 27, 2011; Hanover County Cir.Ct.; Henry W. McLaughlin for plaintiff, Geoffrey J. O’Brien for defendant Muncy; Peter I. Grasis for defendant IBM Lender Servs.; Robert F. Moorman for defendant Chase Home Finance. VLW 011-8-183, 5 pp.

VLW 011-8-183

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