In re: Suzanne Marie Takowsky

FILED NOV 12 2014 [1] SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP Nos. CC-13-1376-TaSpD ) CC-13-1386-TaSpD 6 SUZANNE MARIE TAKOWSKY, ) ) Bk. No. 08-14149 7 Debtor. ) _____________________________ ) Adv. No. 11-02468 8 ) DEL TORO LOAN SERVICING, INC.,) 9 ) Appellant/ ) 10 Cross-Appellee, ) ) 11 v. ) MEMORANDUM* ) 12 SUZANNE MARIE TAKOWSKY, ) ) 13 Appellee/ ) Cross-Appellant. ) 14 ) 15 Argued and Submitted on September 18, 2014 at Pasadena, California [16] Filed – November 12, 2014 [17] Appeal from the United States Bankruptcy Court 18 for the Central District of California 19 Honorable Neil W. Bason, Bankruptcy Judge, Presiding 20 Appearances: Stephen R. Wade for appellant/cross-appellee Del Toro Loan Servicing, Inc.; Richard Tobin Baum for 21 appellee/cross-appellant Suzanne Takowsky. [22] Before: TAYLOR, DUNN, and SPRAKER,** Bankruptcy Judges. [24] * 25 This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may 26 have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1. [27] ** 28 The Honorable Gary A. Spraker, Chief Bankruptcy Judge for the District of Alaska, sitting by designation. 1 Del Toro Loan Servicing, Inc. (“Del Toro”) appeals from a 2 judgment for wrongful foreclosure in favor of debtor Suzanne 3 Takowsky.1 As a threshold matter, it challenges the bankruptcy 4 court’s constitutional authority to enter the judgment. Del 5 Toro also alleges error in a number of the bankruptcy court’s 6 determinations. The Debtor cross-appeals from the bankruptcy 7 court’s denial of her request for an award of emotional distress 8 and relocation expense damages. We conclude that the bankruptcy 9 court did not commit reversible error and, thus, AFFIRM. 10 FACTS 11 The Debtor filed a chapter 132 bankruptcy petition in March 12 2008. Approximately one month later, she obtained a $135,000 13 loan (the “Loan”) from the Alan I. Sherman and Rachel Sherman 14 Trust dated 11/24/1994 (“Sherman Trust”). The obligation was 15 evidenced by a promissory note (“Sherman Note”) in favor of the 16 Sherman Trust and secured by a second priority deed of trust 17 against the Debtor’s real property in Beverly Hills, California 18 (the “Property”); the deed of trust named Del Toro as trustee. 19 At the beginning of 2011, the Debtor defaulted on the 20 Sherman Note for the second time.3 As a result, Del Toro 21 recorded a notice of default (“NOD”) in March 2011. The NOD [1] 23 Individually and as Trustee of the Suzanne Takowsky Revocable Living Trust dated June 22, 2006. [2] Unless otherwise indicated, all chapter and section 25 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 . 26 3 The Debtor previously defaulted on the Sherman Note in 27 2010. Del Toro commenced a non-judicial foreclosure, but the Debtor timely cured the default and statutorily reinstated the 28 obligation. [2] 1 identified the Loan as the obligation in default and $5,722.18 2 as the amount in default as of March 16, 2011. 3 In the ensuing months, Pedro Ferre, the Debtor’s long-term 4 companion, served as the Debtor’s point of contact and 5 communicated with Del Toro representatives in an attempt to 6 resolve the default. In response, Del Toro representatives 7 emailed Ferre loan reinstatement calculations on May 13, 8 June 16, and July 1, 2011. Apparently,4 the May email – and 9 only that email – indicated that “[p]roof that the senior 10 mortgage is current, property taxes are paid and there is active 11 insurance on the property will also be required in order to 12 fully reinstate the loan.” Trial Tr. (Jan. 18, 2013) at 13 193:14-18. The later emails sent to Ferre in June and July 14 simply stated: “[a]ttached you will find the reinstatement quote 15 to bring the account current” and “[a]ttached is the 16 reinstatement quote forwarded to you to reinstate the account.” [17] Id. at 194:1-3, 5-6 . The July 1, 2011 email stated that a 18 payment of $14,158.20 would reinstate the Loan. 19 Del Toro eventually recorded a notice of sale and scheduled 20 the trustee’s sale for mid-July. On July 8, 2011, the last day 21 possible for statutory reinstatement, Ferre went into a local 22 bank branch and wired $14,158.20 into Del Toro’s bank account. 23 Before he wired the funds, he communicated with Del Toro and 24 confirmed the amount necessary for reinstatement. Hours later, [4] Del Toro did not include any of these emails or the 26 May 13, 2011 reinstatement notice in the record on appeal; nor do 27 the documents appear as filed on the adversary proceeding docket. We, thus, rely on the trial transcripts wherein the bankruptcy 28 court read the text of the emails into the record. [3] 1 Del Toro in an email confirmed receipt of the wired funds and 2 acknowledged that this payment brought the “account” current. 3 The email also stated, however, that default on the account 4 continued because of verified delinquencies in payment of the 5 senior obligation and property taxes. Del Toro, thus, demanded 6 that, pursuant to California Civil Code (“CC”) § 2924c(a)(1), 7 the Debtor provide written evidence that she was current on the 8 senior obligation, taxes, and insurance prior to reinstatement. 9 It sent a letter to the Debtor, dated the same day, containing 10 an identical message. 11 Ferre and the Debtor’s attorney promptly responded to Del 12 Toro’s email; both expressed surprise and consternation. In 13 response, Del Toro stated its intent to press forward with the 14 sale. The Debtor then commenced an adversary proceeding against 15 Del Toro, Alan Sherman, and Rachel Sherman. The adversary 16 complaint alleged claims for wrongful foreclosure and fraud and 17 deceit. Concurrently, she sought injunctive relief barring the 18 scheduled foreclosure sale; the bankruptcy court denied the 19 motion. As a result, after a brief postponement, Del Toro 20 conducted the trustee’s sale and sold the Property to Arden 21 Management LLC and Borkes Capital Management LLC (“Arden and 22 Borkes”). 23 The Debtor eventually amended her complaint in the 24 adversary proceeding to include Arden and Borkes as defendants. 25 The final version of the complaint alleged claims for wrongful 26 foreclosure and quiet title as to all defendants, claims for 27 cancellation of the trustee’s deed upon sale as to Arden and 28 Borkes, and claims for fraud and deceit as to the Sherman Trust [4] 1 and Del Toro. Prior to trial, the Debtor settled with the 2 Sherman Trust and Borkes and Arden; each made substantial 3 payments in exchange for releases. The bankruptcy court 4 approved the settlements, leaving Del Toro as the sole 5 defendant. 6 In the first joint pre-trial order, the Debtor and Del Toro 7 stipulated that Ferre was the Debtor’s authorized agent and that 8 Del Toro was the Sherman Trust’s agent. The disputed issues of 9 law and fact centered on the $14,158.20 payment and Del Toro’s 10 representations to Ferre. The joint pre-trial order also 11 identified waiver and estoppel issues relating to the payment 12 and Del Toro’s oral and written statements. 13 In its trial brief, filed the afternoon before the first 14 day of trial, Del Toro claimed for the first time that it was 15 protected by immunity pursuant to CC §§ 2924 and 47. The Debtor 16 contested the assertion, arguing that, among other things, Del 17 Toro waived the privilege defense. 18 The bankruptcy court conducted the liability phase of trial 19 in January 2013. Ferre testified regarding his communications 20 with Del Toro and emphasized that its representative told him on 21 several occasions that tender of the amount in the reinstatement 22 calculations would reinstate the Sherman Note. According to 23 Ferre, the representative never once mentioned that Del Toro 24 also required proof that the Debtor was current on the senior 25 obligation or taxes, and that this was true even as he stood at 26 the bank and spoke to the representative on the phone just 27 before wiring the $14,158.20 payment. [5] 1 At the conclusion of the trial on liability,5 the 2 bankruptcy court orally ruled in the Debtor’s favor and then 3 further explained its determinations in a memorandum decision. 4 It determined that the NOD identified the Loan as the source of 5 relevant default and that although Del Toro initially required 6 proof that payments on senior obligations, taxes, and insurance 7 were current prior to reinstatement, it subsequently abandoned 8 that requirement. It emphasized that a person receiving the 9 June and July emails and reinstatement calculations would not 10 understand that reinstatement included payments not specified in 11 those documents. It also found Ferre’s testimony credible as to 12 the statements made to him by the Del Toro representative. The 13 bankruptcy court, thus, concluded that Del Toro improperly 14 conducted the trustee’s sale. It further concluded that Del 15 Toro was not entitled to immunity as it waived the defense, but 16 also found that immunity was inapplicable under the 17 circumstances. Finally, it determined that the Debtor satisfied 18 her burden as to the statute of frauds issue raised by Del Toro 19 in relation to its oral statements to Ferre. 20 In the subsequent joint pre-trial order in relation to the 21 trial on damages, the parties agreed that the county sheriff 22 evicted the Debtor from the Property and that she incurred 23 relocation expenses. Among other things, they disputed the 24 Debtor’s entitlement to emotional distress and relocation [25] 26 5 The bankruptcy court dismissed the Debtor’s fraud and 27 deceit claim on Del Toro’s motion for judgment as a matter of law under Civil Rule 50 (made applicable in bankruptcy under 28 Bankruptcy Rule 9015). [6] 1 expense damages. 2 Following the trial on damages, the bankruptcy court issued 3 a second memorandum decision and awarded damages in the amount 4 of $312,606.49, based on the Debtor’s loss of equity in the 5 Property. The damages award did not include any damages on 6 account of emotional distress and relocation expense. Timely 7 appeals followed. 8 JURISDICTION 9 As discussed below, the bankruptcy court had jurisdiction 10 pursuant to 28 U.S.C. §§ 1334 and 157(c)(2). We have 11 jurisdiction under 28 U.S.C. § 158 . 12 ISSUES 13 I. On appeal, Del Toro challenges whether the bankruptcy 14 court: (A) had constitutional authority to enter the 15 judgment; (B) erred in determining that Del Toro could not 16 exercise the power of sale based on the NOD; and (C) erred 17 in determining that Del Toro’s actions were not statutorily 18 protected. 19 II. On cross-appeal, the Debtor argues that the bankruptcy 20 court erred in denying her request for an award of 21 emotional distress and relocation expense damages. 22 STANDARDS OF REVIEW 23 We review a bankruptcy court’s findings of fact for clear 24 error and its conclusions of law de novo. Leavitt v. Alexander 25 (In re Alexander), 472 B.R. 815, 820 (9th Cir. BAP 2012). A 26 factual finding is clearly erroneous if it is illogical, 27 implausible, or without support in inferences that may be drawn 28 from the facts in the record. Retz v. Sampson (In re Retz), [1] 606 F.3d 1189, 1196 (9th Cir. 2010). 2 The bankruptcy court’s decision on whether to award damages 3 is reviewed for an abuse of discretion. See Dawson v. Wash. 4 Mutual Bank, F.A. (In re Dawson), 390 F.3d 1139, 1150 (9th Cir. 5 2004). A bankruptcy court abuses its discretion if it applies 6 the wrong legal standard, misapplies the correct legal standard, 7 or if its factual findings are clearly erroneous. See 8 TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 , 832 9 (9th Cir. 2011) (citing United States v. Hinkson, 585 F.3d 1247 , 10 1262 (9th Cir. 2009) (en banc)). 11 We may affirm on any basis in the record. Caviata Attached 12 Homes, LLC v. U.S. Bank, N.A. (In re Caviata Attached Homes, 13 LLC), 481 B.R. 34, 44 (9th Cir. BAP 2012). 14 DISCUSSION 15 I. 16 We first address Del Toro’s issues on appeal. 17 A. The bankruptcy court had authority to enter the judgment. 18 Del Toro first challenges the bankruptcy court’s authority 19 to enter a final judgment in the adversary proceeding and argues 20 that its entry of the judgment on a state law claim violated 21 Article III of the United States Constitution.6 It further 22 contends that “even with consent to enter a final judgment, the 23 bankruptcy court could not override the restrictions set forth [6] 25 Del Toro also argues that the bankruptcy court lacked authority to enter the judgment because the Debtor’s chapter 13 26 case exceeded the 60-month maximum period under § 1322(d). Del 27 Toro raises this argument for the first time on appeal; we do not exercise our discretion to consider it. See Eden Place, LLC v. 28 Perl (In re Perl), 513 B.R. 566, 576 (9th Cir. BAP 2014). [8] 1 by Article III of the Constitution.” 2 We reject Del Toro’s argument. There is no dispute that 3 the Debtor based her wrongful foreclosure claim in the adversary 4 proceeding on California law. At a minimum, however, the 5 adversary proceeding was a “related to,” non-core bankruptcy 6 proceeding as the non-exempt proceeds from the judgment, if any, 7 were subject to administration by the chapter 13 trustee in the 8 bankruptcy case. See 28 U.S.C. § 157 (b), (c); Fietz v. Great W. 9 Sav. (In re Fietz), 852 F.2d 455 , 457 (9th Cir. 1988) (civil 10 proceeding is “related to” a bankruptcy case if the outcome of 11 the proceeding could conceivably have any effect on the estate 12 being administered in bankruptcy). 13 In the Ninth Circuit, “a bankruptcy court may 14 constitutionally enter final judgment on a . . . claim against a 15 nonclaimant to the bankruptcy estate with the consent of the 16 parties.” Mastro v. Rigby, 764 F.3d 1090, 1095 (9th Cir. 2014) 17 (citing Exec. Benefits Ins. Agency v. Arkison (In re Bellingham 18 Ins. Agency, Inc.), 702 F.3d 553, 557 (9th Cir. 2012), aff’d on 19 other grounds, 134 S. Ct. 2165 (2014)). At oral argument, Del 20 Toro asserted that it never consented to the bankruptcy court’s 21 entry of judgment. The record belies this assertion. At the 22 conclusion of trial, Del Toro’s counsel expressly agreed to 23 entry of final judgment by the bankruptcy court. Trial Tr. 24 (June 5, 2013) at 225:19-22. Further, the record is clear that 25 this agreement was not made with the condition of future [9] 1 district court review.7 Given Del Toro’s consent, 28 U.S.C. 2 § 157(c)(2) authorized the bankruptcy court to enter final 3 judgment on the wrongful foreclosure claim. See Mastro v. 4 Rigby, 764 F.3d at 1095 . 5 B. The bankruptcy court did not err in concluding that Del 6 Toro wrongfully foreclosed under the NOD. 7 Del Toro primarily challenges the bankruptcy court’s 8 determination that it could not exercise the power of sale based 9 on the NOD. It argues that the bankruptcy court’s determination 10 that “the NOD was required to state, with specificity, the 11 existence of or exact amount(s) of any default on the senior 12 lien, or the property taxes in order to require evidence that 13 they were current, as a condition to reinstatement pursuant to 14 [CC §§] 2924 and 2924(c)” is unsupported by authority. Del Toro 15 insists that California law supports its conclusions. We 16 disagree. 17 1. The bankruptcy court did not err in its interpretation 18 of the NOD. 19 a. Reinstatement of a defaulted obligation in 20 California. 21 CC § 2924c governs reinstatement of a defaulted obligation 22 that forms the basis of a notice of default. Reinstatement 23 requires payment of: the defaults identified in the notice of 24 default, defaults on “recurring obligations,” and reasonable 25 costs, expenses, and fees incurred in enforcing the obligation [26] 27 7 The fact that Del Toro did not elect to have its appeal 28 heard by the district court underscores this point. [10] 1 or security. Cal. Civ. Code § 2924c(a)(1).8 Reinstatement, 2 thus, involves not only payment of the defaults expressly 3 identified in the notice of default and foreclosure expenses, 4 but also payment of “recurring obligations.” The notice of 5 default, however, need not identify a “recurring obligation.” 6 See Cal. Civ. Code § 2924c(a)(1); 1990 Cal. Legis. Serv. ch. 657 7 (S.B. 2339).9 8 If a new default occurs or is discovered after the notice 9 of default is recorded, and the default is not a “recurring 10 obligation,” a new notice of default is required. See Cal. Civ. 11 Code § 2924(e) (rebuttable presumption that beneficiary actually [8] 13 The statute specifically provides that the trustor must pay the beneficiary the entire amount due, at the time payment is 14 tendered, with respect to: 15 (A) all amounts of principal, interest, taxes, assessments, insurance premiums, or advances actually 16 known by the beneficiary to be, and that are, in default and shown in the notice of default, under the 17 terms of the deed of trust or mortgage and the 18 obligation secured thereby, and (B) all amounts in default on recurring obligations not 19 shown in the notice of default . . . . Cal. Civ. Code § 2924c(a)(1) (emphasis added). [9] 21 The reinstatement statute was amended in 1990; the legislative history indicates that the statute was amended to: 22 [P]ermit . . . beneficiary under a trust deed to require the . . . trustor to cure all defaults under 23 the . . . trust deed of principal, interest, taxes, 24 assessments, insurance premiums, or advances actually known by the beneficiary to be in default, as 25 specified, and shown in the notice of default, plus all amounts in default on recurring obligations, as 26 defined, not shown in the notice of default, as a 27 condition to reinstating the secured obligation and avoiding a sale of the security property. 28 1990 Cal. Legis. Serv. ch. 657 (S.B. 2339) (emphasis added). [11] 1 knew of all unpaid loan payments on the obligation owed; but, 2 “the failure to include an actually known default shall not 3 invalidate the notice of sale and the beneficiary shall not be 4 precluded from asserting a claim to this omitted default or 5 defaults in a separate notice of default.”). 6 For the purposes of CC § 2924c, a “recurring obligation” 7 means: 8 [1] all amounts of principal and interest on the loan subject to the deed of trust in default due after the 9 notice of default is recorded; 10 [2] all amounts of principal and interest advanced on senior liens, which are advanced after the recordation 11 of the notice of default; and 12 [3] payments of taxes, assessments, and hazard insurance advanced after recordation of the notice of 13 default. 14 Cal. Civ. Code § 2924c(a)(1) (emphasis added). A recurring 15 obligation, thus, is limited to obligations secured by the trust 16 deed involved in the foreclosure; this type of obligation 17 includes both principal and interest coming due on the 18 underlying loan after recordation of the notice of default and 19 amounts that the foreclosing lender is entitled to add to its 20 secured claim on account of actual advances for payment of 21 senior obligations, real property taxes, and insurance. In sum, 22 reinstatement requires payment of all amounts secured by the 23 trust deed that is the subject of the foreclosure. 24 Reinstatement may also include other payments; the 25 beneficiary may require the trustor to provide reliable written 26 evidence that amounts owed to senior lenders, tax authorities, 27 and insurers have been paid as a condition precedent to 28 reinstatement. See id. [12] 1 Upon payment of the required reinstatement amount, which 2 always includes complete payment of the defaulted amount of the 3 trust deed secured obligation (unless the parties otherwise 4 mutually agree in writing) and may include payments on senior 5 obligations, taxes, and insurance, the foreclosure sale “shall 6 be dismissed or discontinued and the obligation and deed of 7 trust . . . shall be reinstated and shall be and remain in force 8 and effect, the same as if the acceleration had not occurred.” 9 Cal. Civ. Code § 2924c(a)(1). 10 b. The default or defaults subject to the NOD were 11 reinstated prior to foreclosure. 12 Here, the bankruptcy court determined that the NOD 13 described the breach at issue as the default on the Loan. We 14 agree. The NOD referenced a loan number found on both the 15 Sherman Note and the related trust deed. 16 It also determined that the Debtor tendered the amount 17 listed in the July 1, 2011 loan reinstatement calculation and, 18 thus, that she “cured the only default explicitly listed in the 19 NOD.” Adv. ECF No. 133 at 14. It acknowledged that the Debtor 20 was delinquent on the senior obligation and taxes and that the 21 Sherman Trust and Del Toro “could have, when they issued the 22 NOD, conditioned reinstatement on [the Debtor] being current on 23 senior liens, property taxes, and hazard insurance premiums.” 24 Id. But, it concluded that Del Toro could not exercise the 25 power of sale “on those grounds because Del Toro did not specify 26 those defaults in the NOD.” Id. Again, we see no error. The 27 NOD related solely to the Loan; amounts owed to third parties 28 were not secured by the trust deed related to the Loan unless [13] 1 the Sherman Trust advanced amounts to pay them. Further, they 2 were not “recurring obligations.” Del Toro does not allege that 3 the Sherman Trust advanced any amount on account of the senior 4 obligation, property taxes, or insurance. 5 We acknowledge that the Sherman Trust had the right to 6 condition reinstatement on the Debtor’s written proof that the 7 senior obligation, taxes, and insurance were current. See Cal. 8 Civ. Code § 2924c(a)(1). The NOD referenced this right and 9 stated: 10 While your property is in foreclosure, you still must pay other obligations (such as insurance and taxes) 11 required by your note and deed of trust . . . . If you fail to make future payments on the loan, pay 12 taxes on the property, provide insurance on the property, or pay other obligations as required in the 13 note and deed of trust . . . , the beneficiary . . . may insist that you do so in order to reinstate 14 your account in good standing. In addition, the beneficiary . . . may require as a condition to 15 reinstatement that you provide reliable written evidence that you paid all senior liens, property 16 taxes, and hazard insurance premiums. 17 Cal. Civ. Code § 2924c(b)(1) (emphasis added). 18 Del Toro, however, misses the key point - the reinstatement 19 statute and the NOD made this condition precedent optional. 20 Unlike the absolute requirement that Debtor pay amounts secured 21 by the trust deed at the time of reinstatement, the requirement 22 that she pay amounts owed to third parties was optional. And 23 the bankruptcy court correctly found on this record that at the 24 time of reinstatement, Del Toro, as the Sherman Trust’s agent, 25 did not require compliance with the optional condition 26 precedent. 27 Further, and contrary to Del Toro’s assertion, the 28 bankruptcy court did not err in its reliance on Anderson v. [14] 1 Heart Fed. Sav. & Loan Ass’n, 208 Cal. App. 3d 202 (1989), Ung 2 v. Koehler, 135 Cal. App. 4th 186 (2005), and Sys. Inv. Corp. v. 3 Union Bank, 21 Cal. App. 3d 137 (1971). In Anderson, the 4 California court of appeal held that a beneficiary, as a 5 condition to cure of the default as to principal and interest 6 could not demand payment of delinquent taxes or repayment of 7 advances for insurance premiums. 208 Cal. App. 3d at 215 . In 8 response to Anderson, the California legislature amended the 9 reinstatement statute in 1990, adding the language on recurring 10 obligations. See 1990 Cal. Legis. Serv. ch. 657 (S.B. 2339). 11 In doing so, the legislature stated its intent to “supersede” 12 Anderson insofar as the case restricted a beneficiary’s ability 13 “to demand payment of all amounts in default under the terms of 14 an obligation secured by a . . . trust deed as a condition to 15 reinstatement of the obligation . . . .” Id., note sec. 3. As 16 stated, however, the amounts owed to third parties here were not 17 secured by the subject trust deed and were not recurring 18 obligations. Further, at the time of reinstatement, payment of 19 the optional condition precedent was not required. The 20 bankruptcy court did not rely on Anderson in a manner 21 inconsistent with the reinstatement statute. 22 As Del Toro asserts, Ung merely reinforces the well23 established rule that as to a notice of default, “t]he debtor is 24 to be given enough information so the default can be cured.” [25] 135 Cal. App. 4th at 202 . Similarly, in System Investors, the 26 California court of appeal reiterated that someone “relying upon 27 the notice of default is bound by its provisions, and cannot 28 insist upon any grounds of default other than those stated in [15] 1 that notice.” 21 Cal. App. 3d at 153 (internal citation and 2 quotation marks omitted). Del Toro does not suggest that these 3 cases are overruled. And, in any event, the bankruptcy court 4 did not rely on them erroneously. 5 In sum, Del Toro has not shown that the bankruptcy court 6 committed reversible error in determining that the Debtor 7 reinstated the Loan through the $14,158.20 wire transfer. As a 8 result of this reinstatement, Del Toro was not free to continue 9 with the foreclosure. 10 2. Del Toro was equitably estopped from requiring written 11 proof of third party payments as a condition to 12 reinstatement. 13 The first joint pre-trial order identified as triable 14 issues of law waiver and estoppel in relation to Del Toro’s 15 July 1 reinstatement calculation, its statements to Ferre, and 16 its acceptance of the $14,158.20 payment. Further, “we may 17 consider a legal issue not raised on appeal where the matter is 18 one of law and further development of the factual record is not 19 necessary.” Canino v. Bleau (In re Canino), 185 B.R. 584 , 594 20 (9th Cir. BAP 1995); United States v. Howell (In re Howell), [21] 120 B.R. 137, 140 (9th Cir. BAP 1990) (nature of equitable 22 estoppel elements raise questions of law). Here, the record 23 supports a determination that equitable estoppel barred Del Toro 24 from proceeding with foreclosure after it accepted the 25 $14,158.20 wire transfer. 26 Equitable estoppel prevents one party from denying “the 27 existence of a state of facts if [the party] intentionally led 28 another to believe a particular circumstance to be true and to [16] 1 rely upon such belief to [their] detriment.” City of Goleta v. 2 Superior Court, 40 Cal. 4th 270, 279 (2006); see also Eucasia 3 Sch. Worldwide, Inc. v. DW August Co., 218 Cal. App. 4th 176 , 4 182 (2013) (equitable estoppel “prevent[s] a person from 5 asserting a right which has come into existence by contract, 6 statute or other rule of law where, because of his conduct, 7 silence or omission, it would be unconscionable to allow him to 8 do so.”). 9 The elements for equitable estoppel are: (1) the party to 10 be estopped must know the facts; (2) they must intend that their 11 conduct will be acted on or must act in a way that causes the 12 other party to believe that was their intent; (3) the other 13 party must be ignorant of the true facts; and (4) the other 14 party must detrimentally rely on the conduct. City of Goleta, [15] 40 Cal. 4th at 279 . 16 Here, no matter the Sherman Trust or Del Toro’s actual, 17 subjective intent, Del Toro made statements and took actions 18 that reasonably led to the conclusion that the $14,158.20 wire 19 transfer would reinstate the Loan and halt foreclosure. It 20 initially required proof of third party payments in addition to 21 payment in full of amounts secured by the trust deed, but 22 thereafter consistently took a contrary position. Indeed, Ferre 23 testified that immediately prior to wiring the money to Del 24 Toro, its representative confirmed that all he was required to 25 do to stop the foreclosure sale was cure the default as 26 reflected in the July 1 loan reinstatement calculation. Del 27 Toro did not offer declaratory evidence to the contrary from the 28 representative. The bankruptcy court found Ferre credible on [17] 1 this point, and “we give great deference to the bankruptcy 2 court’s determinations regarding the credibility of witnesses.” 3 See In re Retz, 606 F.3d at 1203-04 . The reasonableness of 4 Ferre’s assumption is underscored by the fact that: “generally, 5 the acceptance of payment of a delinquent installment of 6 principal or interest cures that particular default and 7 precludes a foreclosure sale based upon such pre-existing 8 delinquency. The same is true of a tender which has been made 9 and rejected.” Bisno v. Sax, 175 Cal. App. 2d 714, 724 (1959). 10 Del Toro notified the Debtor and Ferre of the renewed 11 condition precedent for proof of payment on third party 12 obligations only after its receipt, acceptance, and retention of 13 the $14,158.20 payment and only after there was detrimental 14 reliance in the form of a significant payment. Nothing in the 15 record suggests that Del Toro ever returned the $14,158.20 to 16 the Debtor. And there can be no serious dispute that the Debtor 17 made this payment in an attempt to stop foreclosure. 18 Del Toro contends that “its conduct did not constitute 19 waiver of the right to demand proof of current status on the 20 [senior obligation.]” It argues that, under California law, 21 waiver requires an intentional relinquishment of rights and, 22 thus, there was no basis, as a matter of law, for a finding of 23 waiver. 24 First, Del Toro misconstrues the record; the bankruptcy 25 court never made an explicit finding as to waiver of the 26 condition, let alone that Del Toro intended to waive it. 27 Second, to the extent that Del Toro actually refers to estoppel, 28 we disagree for the reasons discussed above. And, third, even [18] 1 if waiver was at issue here, a finding that Del Toro 2 intentionally or voluntarily waived the condition was not 3 necessarily required. See Iskanian v. CLS Transp. Los Angeles, 4 LLC, 59 Cal. 4th 348, 374 (2014) (“While ‘waiver’ generally 5 denotes the voluntary relinquishment of a known right, it can 6 also refer to the loss of a right as a result of a party’s 7 failure to perform an act it is required to perform, regardless 8 of the party’s intent to relinquish the right.”) (internal 9 citation omitted). 10 Under these circumstances, it was unconscionable for Del 11 Toro to move forward with the foreclosure sale. As a result, it 12 was equitably estopped from requiring written proof that the 13 Debtor was current on the senior obligation and taxes as a 14 condition to reinstatement. 15 3. The statute of frauds does not provide Del Toro with a 16 defense. 17 Del Toro also argues that the statute of frauds prevented 18 the admission of evidence of its oral statements modifying the 19 terms of the NOD. Citing CC § 1624, it contends that the 20 statute of frauds prohibited evidence of an alleged oral 21 agreement or the bankruptcy court’s enforcement of the alleged 22 agreement. 23 We find Del Toro’s statute of frauds argument puzzling; the 24 bankruptcy court did not determine that there was an oral 25 agreement between Del Toro and the Debtor to modify the NOD. 26 Indeed, the record makes clear that neither the Sherman Note nor [19] 1 the trust deed nor the NOD were ever amended.10 At all relevant 2 times, the NOD stated that the Sherman Trust had the option of 3 requiring proof of third party payments as a condition precedent 4 to reinstatement. The problem is that Del Toro’s statements and 5 actions reasonably indicated that the Sherman Trust did not 6 intend to exercise this optional right. So far as we can tell, 7 the statute of frauds had no application to the wrongful 8 foreclosure claim here. 9 C. Del Toro’s absolute privilege argument was not preserved. 10 Finally, Del Toro argues that its communications as a 11 foreclosing trustee were absolutely privileged pursuant to 12 CC § 2924 and 47. As a finding of malice is required to defeat 13 the privilege under California law,11 it challenges the 14 bankruptcy court’s finding that it acted with malice, and argues 15 that the first joint pre-trial order did not identify malice as 16 an issue for adjudication. 17 Del Toro, however, neglects to address the fact that the 18 bankruptcy court initially found that it waived this defense.12 [10] 20 In this respect, Del Toro’s reliance on Secrest v. Sec. Nat. Mortg. Loan Trust 2002-2, 167 Cal. App. 4th 544 (2008), is 21 inapposite. In that case, the California court of appeal held that a forbearance agreement that modified a promissory note and 22 deed of trust – agreements themselves subject to the statute of 23 frauds – was, in turn, also subject to the statute of frauds pursuant to CC § 1698. Id. at 553. [11] CC § 47(c) applies to communications “without malice.” [12] Observing that privilege was an affirmative defense, the 26 bankruptcy court identified two instances of waiver here: first, 27 that Del Toro failed to appropriately plead privilege as a defense in its answer. And, second, that Del Toro failed to 28 (continued...) [20] 1 Although it listed the CC § 2924(d) waiver issue in its 2 statement of issues on appeal and in its brief on appeal, Del 3 Toro never specifically and distinctly addressed that issue in 4 the brief itself. As a result, we do not consider the waiver 5 determination on appeal. See Padgett v. Wright, 587 F.3d 983 , 6 986 n.2 (9th Cir. 2009) (appellate court “will not consider 7 matters on appeal that are not specifically and distinctly 8 raised and argued in appellant’s opening brief.”) (internal 9 citation and quotation marks omitted). 10 Thus, the bankruptcy court’s waiver determination provides 11 a sufficient reason for affirmance, and we need not consider its 12 alternative basis for disregarding Del Toro’s privilege claim. 13 II. 14 We next address the Debtor’s issues on cross-appeal. 15 A. The bankruptcy court did not err when it declined to award 16 additional damages. 17 On cross-appeal, the Debtor argues that the bankruptcy 18 court erred when it declined to award emotional distress and 19 incidental damages to the Debtor. We disagree. 20 1. Emotional distress damages. 21 The Debtor argues that the bankruptcy court clearly erred 22 when it found that Del Toro did not proximately cause her 23 emotional distress. She contends that the bankruptcy court 24 discarded the established standard for causation, which permits [12] (...continued) 26 raise or include the defense in the joint pre-trial order; 27 instead, it raised the privilege issue for the first time in its phase one trial brief. And, we note that Del Toro filed this 28 trial brief on the afternoon prior to the first day of trial. [21] 1 recovery when a defendant’s actions were a substantial factor 2 that resulted in damages. We affirm the bankruptcy court’s 3 ultimate decision on an alternative basis. 4 Generally, a person may not recover damages for emotional 5 distress based solely on a wrongful foreclosure claim. See 6 Miller and Starr, California Real Estate § 10:254 (3d ed.) 7 (citing Erlich v. Menezes, 21 Cal. 4th 543, 554 (1999) 8 (California does not permit “recovery for emotional distress 9 arising solely out of property damage.”)). Instead, recovery 10 for emotional distress is potentially available when alleged in 11 a concurrent, but separate, claim for intentional infliction of 12 emotional distress. See Ragland v. U.S. Bank Nat’l Ass’n, [13] 209 Cal. App. 4th 182, 203 (2012). Indeed, our search of case 14 authority failed to yield a single California case where 15 emotional damages were awarded in connection with a judgment for 16 wrongful foreclosure in the absence of a handcuffed claim for 17 intentional infliction of emotional distress. The Debtor’s 18 reliance on cases involving wrongful eviction and on CC § 3333,13 19 thus, does not compel a different result. 20 Here, the final version of the adversary complaint did not 21 allege a claim for intentional infliction of emotional distress [25] Cal. Civ. Code § 3333 , titled “Torts in general,” provides that “[f]or the breach of an obligation not arising from 26 contract, the measure of damages, except where otherwise 27 expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, 28 whether it could have been anticipated or not.” [22] 1 damages.14 Nor was there an alternative tort basis for the 2 recovery of emotional distress. In sum, there was no basis for 3 the Debtor to recover emotional distress damages. 4 The Debtor relies on Pintor v. Ong, 211 Cal. App. 3d 837 , 5 841 (1989), but it is distinguishable. There, the California 6 court of appeal held that the rule of tort damages applied to 7 the defendant’s violation of a statutory duty, “namely, that all 8 detriment proximately caused by breach of a legal duty is 9 compensable, including damages for emotional distress.” Id. at 10 841-42. That case did not involve wrongful foreclosure. 11 Instead, Pintor involved breach of a specific statutory duty – 12 the failure to reconvey a deed of trust after satisfaction of 13 the debt – which, in turn, gave rise to strict liability for all 14 damages sustained as a result of the violation.15 See id. at 15 843. There is no such strict liability statute in connection 16 with wrongful foreclosure. 17 On this record, the bankruptcy court did not err in denying 18 damages for emotional distress. [14] To state a claim for intentional infliction of emotional [20] distress, the “plaintiff must allege that (1) the defendant 21 engaged in extreme and outrageous conduct with the intention of causing, or reckless disregard of the probability of causing, 22 severe emotional distress to the plaintiff; (2) the plaintiff actually suffered severe or extreme emotional distress; and [23] (3) the outrageous conduct was the actual and proximate cause of 24 the emotional distress. Ross v. Creel Printing & Publ’g Co., 100 Cal. App. 4th 736, 744-45 (2002). [15] See Cal. Civ. Code § 2941 (d) (“The violation of this 26 section shall make the violator liable to the person affected by 27 the violation for all damages which that person may sustain by reason of the violation, and shall require that the violator 28 forfeit to that person the sum of five hundred dollars ($500).”). [23] 1 2. Moving and storage costs and expenses. 2 The Debtor also argues that she was entitled to moving and 3 storage expenses incurred as a result of the wrongful 4 foreclosure. According to the Debtor, whether she inevitably 5 would have incurred these expenses in the future is irrelevant, 6 as Del Toro set in motion the particular circumstances 7 necessitating her relocation. We, again, disagree. 8 Proximate cause “is ordinarily concerned, not with the fact 9 of causation, but with the various considerations of policy that 10 limit an actor’s responsibility for the consequences of his 11 conduct.” PPG Indus., Inc. v. Transamerica Ins. Co., 20 Cal. 12 4th 310, 316 (1999) (internal citation omitted). Here, policy 13 considerations support the bankruptcy court’s denial of any 14 recovery for relocation damages. 15 The bankruptcy court found that the Debtor “would have 16 incurred those costs and expenses regardless of Del Toro’s 17 wrongdoing,” as relocation was imminent for other reasons. On 18 this record, the bankruptcy court’s finding was not clearly 19 erroneous and was not inconsistent with the damages awarded in 20 connection with wrongful foreclosure. It determined that, 21 although loss of the Property was inevitable, the Debtor had the 22 ability to recover equity in the Property through overbid or 23 sale. The bankruptcy court, thus, awarded damages in connection 24 with lost equity. In doing so, it implicitly determined that 25 the Debtor was not entitled to recover both equity and 26 possession of the Property. This determination was not 27 illogical, implausible, or without support from the record. The 28 bankruptcy court, thus, did not err in denying damages for [24] 1 relocation costs and expenses. 2 CONCLUSION 3 Based on the foregoing, we AFFIRM the bankruptcy court.