Promissory Estoppel in California

March 22, 2011 by Joseph Creed

Promissory estoppel seems like a simple concept yet it is largely misunderstood.  Promissory estoppel can be triggered as a cause of action where a contract fails due to lack of consideration.  In the case of Garcia vs. World Savings FSB et al, handled by Mr. Creed, the Appellate Court in California found promissory estoppel was a valid cause of action when the Garcia’s relied on an oral promise to postpone foreclosure. In reliance on that promise by World Savings to postpone their sale date, the Garcias procured a high interest, hard money loan on another real property they owned free and clear.

While some thought this case expanded the availability of promissory estoppel as a claim for wronged homeowners, Mr. Creed sees this decision as enforcing what is in fact, text book promissory estoppel.

In the Garcia case, there was a clear and unambiguous promise made to postpone foreclosure by World Savings.  This was shown by the actions of both World Savings and the Garcias before and after the wrongful sale. The Garcias could have walked away from their home and kept a valuable piece of land they owned free of encumbrances if not for the promise made by World Savings.  The damages to the Garcias included, among other things, fees and interest on the hard money loan and the encumbrance of their real property with a high interest loan.

The jury is still out on exactly when promissory estoppel is a viable cause of action when fighting breached oral promises to postpone sales and modify mortgage loans.  If you think your lender broke an oral promise to postpone a foreclosure sale on your home, contact us today for a free consultation.

No Comments

No comments yet.

Leave a comment

You must be logged in to post a comment.