Mahin Oskoui v. Jpmorgan Chase Bank

Citations: 851 F.3d 851; 2017 U.S. App. LEXIS 4365; 2017 WL 957206Docket: 15-55457

Court: Court of Appeals for the Ninth Circuit; March 13, 2017; Federal Appellate Court

Original Court Document: View Document

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The United States Court of Appeals for the Ninth Circuit reversed a district court’s summary judgment in favor of J.P. Morgan Chase Bank, N.A., concerning Mahin Oskoui's claims for damages related to her unsuccessful attempts to modify her home loan. Oskoui, representing herself, asserted various claims, including breach of contract and violations of California’s Unfair Competition Law (UCL), arguing she was a victim of an unconscionable process by Chase. The appellate panel found that the district court erred by not considering Oskoui’s breach of contract claim and remanded the case, allowing her to amend her complaint to include a right to rescind based on the Truth in Lending Act, as established in Jesinoski v. Countrywide Home Loans, Inc. The case highlights the procedural missteps in handling Oskoui's claims and underscores her right to seek remedy for the alleged mishandling of her loan modification requests.

On May 21, 2009, Chase offered Oskoui a Trial Plan Agreement, stipulating three payments of $3,280.05 between July and September 2009, without detailing borrower requirements for loan modification approval. Oskoui complied fully by remitting $9,840.15 but was informed on November 10, 2009, that she did not qualify for a loan modification under either the HAMP or CHAMP programs, citing insufficient income despite her monthly income of $10,575. Chase's internal documents indicated two additional disqualifying factors: an unpaid principal balance of $833,000, exceeding HAMP limits, and failure to pass the net present value (NPV) test, which compares potential cash flows from modified versus unmodified loans. Chase did not disclose these reasons in its denial letter and misleadingly suggested potential alternatives to avoid foreclosure without clarifying what those alternatives entailed. In January 2010, Oskoui submitted a new modification application, unaware of her prior ineligibility. On March 1, 2010, Chase acknowledged her application, stating willingness to help and outlining a new payment plan, but did not address any income concerns or conditions necessary for modification, creating ambiguity regarding her eligibility for permanent relief after successful payments.

Chase's correspondence with Oskoui reflects a pattern of conflicting information regarding her eligibility for a loan modification. After initially welcoming her to a Trial Period Plan (TPP) and acknowledging her income verification on March 1, 2010, Chase informed her the next day that she was ineligible for a federal HAMP modification due to her loan's unpaid principal balance exceeding the program limit. This letter notably did not mention the necessary Net Present Value (NPV) test and instead suggested that she might qualify for other unspecified modification options, which Oskoui perceived as threats rather than helpful guidance. Despite being encouraged by Chase to continue making monthly payments, she ultimately made payments for seven months, totaling $2,988.49, before receiving a foreclosure notice on October 25, 2010. Chase continued to communicate with her, suggesting potential monetary incentives for modified payments, which led Oskoui to withdraw from the process, feeling financially drained and emotionally exhausted. She expressed that the process significantly impacted her well-being, particularly given her demanding job as a registered nurse and her advanced age. After two years of pursuing loan modification, Chase sent a final denial letter on January 4, 2011, citing a lack of required documentation, leaving Oskoui feeling betrayed by what she viewed as a scheme for Chase's financial gain rather than a genuine attempt to assist her.

Oskoui's request for a loan modification was denied by the district court, which granted Chase's motion for summary judgment, citing her failure to provide necessary documentation in late 2010. The court noted that her claim of a contractual relationship with Chase was merely conclusory and pointed out that she had not included a breach of contract claim in her first amended complaint. However, the court denied Chase’s motion to dismiss Oskoui’s claim under California's Unfair Competition Law (UCL), recognizing it as viable for alleging fraudulent and unfair business practices. Judge Wu referenced relevant case law, affirming that deceptive practices likely to mislead the public could constitute a violation under UCL. 

The court acknowledged that if Oskoui's allegations were true, Chase had misled her by soliciting payments while knowing she did not qualify for a modification program. Chase's actions included requesting payments without first confirming her eligibility, which was contrary to HAMP guidelines. Oskoui paid $33,738 over two years without receiving any modification, arguing that had she been informed of her ineligibility, she would not have made those payments. The court underscored that Chase's communications had falsely indicated that a loan modification was possible, thus leading Oskoui into a misleading process without proper disclosures.

Chase's brief claims the CHAMP Guidelines lacked a HAMP loan balance limitation but fails to mention the NPV test. During oral arguments, Chase's counsel suggested a rationale for their actions, citing a potential improvement in Oskoui’s financial situation; however, this expectation was deemed unreasonable. The court found Chase's "other alternatives" strategy unconvincing, regardless of whether its actions were intentional or due to incompetence. Oskoui, a 68-year-old nurse in distress, was misled over two years, during which she made multiple attempts to seek help from Chase, only to be ignored.

The district court mistakenly overlooked Oskoui’s breach of contract claim in her pro se complaint, which she explicitly titled as such. She contended that the Temporary Payment Plan (TPP) constituted a binding contract, suggesting that Chase's acceptance of her payments while failing to modify her loan constituted a breach. Oskoui argued she had met all TPP conditions and provided sufficient documentation to qualify for a modification. Additionally, she referenced a letter from Chase promising a modification agreement upon successful completion of the TPP.

The court cited the Seventh Circuit's decision in Wigod v. Wells Fargo Bank, which supports Oskoui's claim by rejecting arguments that TPP terms were unenforceable due to conditions requiring further financial review. The court noted that the TPP clearly defined conditions for a permanent modification, which Oskoui fulfilled, similar to Wigod’s situation. This precedent was recognized by the California Court of Appeal and affirmed that California and Illinois laws on this matter are aligned.

Chase thanked Oskoui in a letter dated November 3, 2010, for her participation in the HAMP program but later claimed that it never offered her a HAMP modification. However, after Oskoui made three payments, Chase was contractually obliged to provide her with an Agreement reflecting a new payment amount, regardless of whether it was labeled a HAMP or CHAMP agreement. Chase's failure to fulfill this obligation constitutes a breach of contract. The court directs the district court to allow Oskoui to amend her complaint regarding this breach.

Oskoui originally included a claim under the Truth in Lending Act (TILA), which was dismissed for failure to state a claim. Following the Supreme Court's ruling in Jesinoski v. Countrywide Home Loans, Inc., which affirmed a borrower's right to rescind loans via written notice within three years of the transaction, Oskoui seeks permission to amend her complaint to assert a rescission claim. She contends that she sent a TILA rescission letter to Chase in December 2009, within the statutory timeframe. Chase argues that its agreement with the FDIC shields it from liability related to WaMu's past dealings. However, Oskoui asserts that her rescission letter was directed to Chase, not WaMu. The court finds that this issue should be addressed in the district court and allows Oskoui to amend her complaint, contingent upon her prompt submission of the referenced rescission letter. The decision is reversed and remanded for further proceedings.