Under California Law, a party seeking to defeat the statute of frauds based on promissory estoppel must allege an actual change in position. In Jones v. Wachovia Bank, 230 Cal.App.4th 935 (2014), the California Court of Appeal affirmed a trial court’s dismissal of plaintiffs’ claims for breach of oral promises to postpone a foreclosure sale after concluding plaintiffs could not establish detrimental reliance or injury under the doctrine of promissory estoppel.

In Jones, plaintiffs obtained a loan from Wachovia Bank’s predecessor secured by their residence. Plaintiffs fell behind on their mortgage payments and Wachovia caused the trustee to record a notice of default. Although plaintiffs and Wachovia subsequently entered into a forbearance agreement, plaintiffs failed to bring the loan current. As a result, on January 13, 2009, Wachovia caused the trustee to record a notice of trustee’s sale. The trustee’s sale was postponed three times. Each postponed sale date was publicly available online and via an automated telephone system. Plaintiffs confirmed the first two postponements with the trustee, but did not confirm the third postponement date. Plaintiffs alleged that a Wachovia representative gave them a sale date of June 18, 2023 during a phone conversation. The property, however, was sold as scheduled by the trustee on June 8, 2009.

Plaintiffs brought an action against Wachovia to set aside the trustee’s sale, to cancel the trustee’s deed, and for promissory estoppel. Although plaintiffs did not have sufficient funds to cure their default, they nonetheless alleged that they detrimentally relied on Wachovia’s alleged oral sale date of June 18 because they lost the opportunity to cure their default. The trial court sustained demurrers to plaintiffs’ claims to set aside the trustee’s sale and to cancel the trustee’s deed upon sale. The trial court then granted summary judgment in favor of Wachovia on plaintiffs’ promissory estoppel claims. Plaintiffs appealed the trial court’s ruling on their promissory estoppel claim. The Court of Appeal, however, affirmed summary judgment in favor of Wachovia.

To estop Wachovia from asserting the statute of frauds, plaintiffs were required to create a triable issue of material fact regarding their detrimental reliance resulting in an unconscionable injury. Plaintiffs could not establish detrimental reliance because they could not show that they substantially changed their position as a result of Wachovia’s alleged representation that the foreclosure was scheduled for June 18 (as opposed to the actual date of June 8).

The Court distinguished Wade v. Markwell & Co., 118 Cal.App.2d 410 (1953) and Garcia v. World Savings, FSB, 183 Cal.App.4th 1031 (2010). In Wade, the plaintiff gave a lender a mink coat as security for a loan. When the plaintiff was ready to redeem, she was told by the lender that the coat would be held for an extra week. However, the lender sold the coat before the week’s end, which gave rise to a valid claim for promissory estoppel. The Court of Appeal distinguished Wade because in that case the borrower actually had the funds to redeem the coat, but was dissuaded from doing so by the lender’s misrepresentations. In the instant action, however, “plaintiffs were not induced to forebear any paying of their deficiency by the postponement of the trustee’s sale.”

In Garcia, a lender foreclosed on the homeowners’ property after verbally assuring the homeowners that the trustee’s sale would not occur. Crucially, the lender was aware that the borrowers were in the process of refinancing and had obligated themselves under the refinance loans, but the lender nonetheless went ahead with the sale. The homeowners’ actions in procuring a high interest loan as a result of the lender’s representations was sufficient to support a finding of detrimental reliance. In the instant case, however, “plaintiffs took no similar action and simply hoped that Wachovia would agree to further postponements.”

The Court of Appeal also rejected plaintiffs’ claim that they were harmed by Wachovia’s verbal representation because they had purportedly “arranged” for a friend to pay the entire amount of their loan. This theory was not pleaded in the operative complaint, but even if it was, an informal agreement to borrow money from a friend is not a change in position sufficient to establish an estoppel.

This decision represents another arrow in the quiver of lender defendants. Baseless allegations of a change in position will not establish an estoppel sufficient to make an alleged “verbal” promise to postpone a foreclosure enforceable. A borrower must show substantial detrimental reliance and unconscionable injury to defeat the statute of frauds. Mere plans to take future action are not enough.

If you would like more information regarding this decision, please contact Lisa S. Yun or Alejandro E. Moreno.


Lisa S. Yun
(619) 338-6541
[email protected]

Alejandro E. Moreno
(619) 338-6664
[email protected]