OPINION AND ORDER
ANN AIKEN, District Judge
Pursuant to 28 U.S.C. § 2254, petitioner filed a petition for writ of habeas corpus on October 4, 2007. Petitioner's claims are denied and the petition is dismissed.
BACKGROUND
On December 7, 2001, petitioner was indicted by a grand jury inState v. Jones, Washington County Circuit Court Case No. C013282CR, for Robbery I, Robbery II, Burglary I and Assault II. At trial, the evidence showed that petitioner and an accomplice, Cohens, accompanied the victim, Babcock, to his apartment for the purpose of selling him crack cocaine. At the apartment, petitioner and Cohens attacked Babcock, took his wallet and debit card, and forced him to provide them with the card's password. As Cohens was leaving to withdraw money from Babcock's account, Cohens instructed petitioner to strike Babcock with an electric guitar if Babcock moved. Petitioner stuck Babcock with the electric guitar, causing physical injury. Petitioner and Cohens then used Babcock's debit card to take money from Babcock's account. After a jury trial on August 20, 2002, petitioner was convicted of Kidnapping, Assault, and two count of Robbery. Petitioner was sentenced to partially consecutive sentences totaling 102 months.
Petitioner sought direct appeal of his conviction, but the Court of Appeals affirmed without opinion and the Oregon Supreme Court denied review. Petitioner then sought post-conviction relief (PCR) alleging several instances where he believed trial counsel had been legally ineffective. Petitioner proceeded to trial and the PCR court denied relief. Petitioner appealed the decision, but the Court of Appeals affirmed without opinion, and the Oregon Supreme Court again denied review.
Petitioner raises four grounds for relief in his habeas petition. In his memo, however, petitioner briefs only one ineffective assistance of counsel claim, which is not raised in his petition. Petitioner fails to brief any claims that are raised in his petition.
In his brief, petitioner asserts that he received "ineffective assistance from counsel when his trial counsel failed to investigate, prepare and present a defense to the specific intent elements of the charges." In his petition, petitioner alleges only that he was "denied effective assistance of trial counsel under the 6th Amendment in that: . . . (7) Ineffective Assistance of Counsel." Petitioner listed additional grounds of ineffective counsel not relevant to a specific intent defense.
DISCUSSION
A. Standard of Review for Writ of Habeas Corpus
Under the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), federal courts must afford the state court's factual findings and legal rulings a defined measure of deference. See 28 U.S.C. §§ 2254(d), (e). A federal court may not grant a habeas petition regarding any claim "adjudicated on the merits" in state court, unless the state court decision "was contrary to, or involved an unreasonable application of, clearly established Federal Law, as determined by the Supreme Court," or "resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the State Court proceeding." 28 U.S.C. § 2254(d). The Supreme Court construed this statutory text as a "command that a federal court not issue the habeas writ unless the state court was wrong as a matter of law or unreasonable in its application of law in a given case." Williams v. Taylor, 529 U.S. 362, 381 (2000).
In sum, federal courts are prevented from granting habeas relief to a state petitioner where the relevant decision is not "contrary to" or "an unreasonable application of" Supreme Court precedent. Crater v. Galaza, 491 F.3d 1119, 1126 (9th Cir. 2007). Further, a "merely erroneous" state decision does not warrant relief unless it is also "`an unreasonable application' of clearly established federal law." Early v. Packer, 537 U.S. 3, 11 (2002) (emphasis in original).
B. Procedurally Defaulted Claims
Respondent asserts that petitioner's ineffective assistance claim is procedurally defaulted because he failed to include it in his PCR petition and failed to raise it on appeal.
Habeas petitioners are required to exhaust state remedies on all claims alleged in their § 2254 petition unless it appears there is an absence of available state corrective process, or circumstances exist that render such process ineffective to protect the petitioner's rights. 28 U.S.C. § 2254(b)(1). In order to properly exhaust state remedies, "the state prisoner must give the state courts an opportunity to act on his claims before he presents those claims to a federal court in a habeas petition."O'Sullivan v. Boerckel, 526 U.S. 838, 842 (1999). To "fairly present" a federal claim in state court, habeas petitions must "include reference to a specific federal constitutional guarantee, as well as a statement of facts that entitle the petitioner to relief." Gray v. Netherland, 518 U.S. 152, 162-63 (1996). See also Hiivala v. Wood, 195 F.3d 1098, 1106 (9th Cir. 1999) (habeas petitioner must have "alert[ed] the state courts to the fact that he was asserting a claim under the United States Constitution"). The United States Supreme Court states:
ordinarily a state prisoner does not `fairly present' a claim to a state['s] [appellate] court if that court must read beyond a petition or a brief (or a similar document) that does not alert it to the presence of a federal claim in order to find material, such as a lower court opinion in the case, that does so.
Baldwin v. Reese, 541 U.S. 27, 32 (2004).
Hiivala also holds, "the mere similarity between a claim of state and federal error is insufficient to establish exhaustion."Hiivala, 195 F.3d at 1106. The exhaustion requirement is not "satisfied by the mere circumstance that the `due process ramifications' of an argument might be `self-evident.'" Gatlin v. Madding, 189 F.3d 882, 888 (9th Cir. 1999); see also Anderson v. Harless, 459 U.S. 4, 7 (1982).
Reese held that the petitioner did not "fairly present" his federal claim to a state court because his petition did not explicitly state his "ineffective assistance of appellate counsel" claim "refer[red] to a federal claim" in addition to a state claim. Reese, 541 U.S. at 33. The Court noted that Reese's "petition refer[red] to provisions of the Federal Constitution in respect to other claims but not in respect to that one. The petition provide[d] no citation of any case that might have alerted the court to the alleged federal nature of the claim."Id. (emphasis in original)
Similarly, in Duncan v. Henry, the Court found the "respondent did not apprise the state court" that one of his claims was a violation of both state law and 14th Amendment due process when he "specifically rais[ed] a due process objection before the state court based on a different claim." 513 U.S. 364, 365 (1995). Duncan held that claim was not exhausted because it had not been "fairly presented" to the state courts. 513 U.S. 364, 365-66 (1995).
As discussed above, failing to alert the state court to a federal issue results in a procedurally defaulted claim. Moreover, a federal claim is "fairly presented" to the state courts only if it was properly presented to: (1) the state's Supreme Court; (2) as a federal question; (3) in the appropriate petition or brief; and (4) in the proper procedural context so that its merits would be considered. If a petitioner failed to "fairly present" his federal claims to the state courts, and can no longer do so under state law, then petitioner's state court remedies are technically exhausted. Coleman v. Thompson, 501 U.S. 722, 732 (1991). Further, the claims are then also procedurally defaulted because the state court remedies were not properly exhausted. O'Sullivan, 526 U.S. at 848.
In his brief, petitioner alleges that counsel was ineffective for failing to present a defense that petitioner could not form the specific intent necessary to commit the charged offenses due to his mental deficiencies. Petitioner failed to raise this claim in his PCR proceeding. Although, in petitioner's PCR petition, he did raise a similar claim, that "trial counsel was ineffective for failing to pursue a defense that [he] lacked the required mental state to commit the crimes." However, during his PCR proceedings, petitioner claimed that he lacked specific intent due to his alcohol and drug use. Petitioner testified in his deposition and at trial that he lacked the requisite intent because he was "chemically unbalanced" due to alcohol and drug use. This argument relies on trial counsel presenting a defense (Or. Rev. Stat. 161.125(1)) which allows evidence of alcohol and drug impairment to negate specific intent.
Here, petitioner alleges that trial counsel should have argued that he could not form specific intent due to his mental deficiencies. That argument is based on Or. Rev. Stat. 161.300, which allows evidence of a mental disease or defect to negate specific intent. Because petitioner is now arguing a different claim that was considered by the state courts, petitioner's claim is defaulted. As noted above, the "mere similarity of claims is insufficient to exhaust." Duncan, 513 U.S. at 365-66.
Even assuming that petitioner raises the same claim here that he raised in his PCR petition, his claim is defaulted because he failed to include this claim in his PCR brief to the Oregon Court of Appeals. Even broadly construed, petitioner's ineffective assistance claim raised in his brief before this court was not "fairly presented" to Oregon's highest court. It is therefore defaulted. Carriger v. Lewis, 971 F.2d 329, 333-34 (9th Cir. 1992) (ineffective counsel claims are discrete and each must be properly exhausted or it will be defaulted).
Petitioner is barred under Oregon law from filing any additional appeals or PCR proceedings, and therefore cannot "fairly present" any additional claims to the Oregon state courts. Therefore, petitioner has procedurally defaulted on his claims. Further, I find no evidence of "cause and prejudice" for failing to fairly present these federal claims in state court, nor do I find evidence that petitioner's convictions resulted in a "fundamental miscarriage of justice" because he is actually innocent. Petitioner's claims are procedurally defaulted and therefore dismissed.
CONCLUSION
Under the AEDPA, this court must defer to the decision of the PCR court. Petitioner procedurally defaulted on his claims and failed to demonstrate either "cause and prejudice" for that failure or any evidence of "actual innocence." Therefore, petitioner's federal habeas petition is denied and this case is dismissed.
IT IS SO ORDERED.
Dated this 8 day of November 2010.
cts remained as to when plaintiffs' application was completed).
Thus, Plaintiffs have stated a claim for failure to notify of an adverse action within the thirty-day period specified by ECOA. Defendants' motion to dismiss this cause of action is denied.
2. Failure to Notify of Incomplete Application
In the alternative, Plaintiffs argue that, if their loan application as to the condominium development was not complete by August 10, 2007, Defendants violated ECOA by not informing Plaintiffs of their incomplete application. See 12 C.F.R. § 202.9(c) ("[w]ithin 30 days after receiving an application that is incomplete regarding matters that an applicant can complete, the creditor shall notify the applicant either: (i) Of action taken, in accordance with paragraph (a) of this section; or (ii) Of the incompleteness, in accordance with paragraph (c)(2) of this section." Instead, according to Plaintiffs' allegations, Defendant Maharaj told Plaintiffs on September 12, 2007 that the loan documents would be ready "in one week." See SAC ¶¶ 35, 65.
Defendants argue that the real reason for deferring the condominium loan was the overall decline in the real estate market and the increasing likelihood that construction costs would exceed 75 percent of the appraised value. See Defs.' Mot. to Dismiss 7. In other words, according to Defendants, the loan deferral was not based on "matters that an applicant can complete" and thus did not require a response on Defendants' part.
Although Defendants' argument may prove correct, the Court cannot dismiss Plaintiffs' allegations on the basis of Defendants' alternative interpretation of the facts. See Simon v. Hartford Life and Accident Ins. Co., 546 F.3d 661, 664 (9th Cir. 2008) ("All allegations of material fact shall be taken as true and construed in the light most favorable to the nonmoving party."). Here, the Court must construe the allegations in the light most favorable to Plaintiffs, and in doing so, the Court finds that Plaintiffs have sufficiently alleged failure to notify of an incomplete application. According to Plaintiffs' allegations, after August 10, 2007, Defendants falsely informed Plaintiffs that the condominium loan would be ready "in one week" and "intentionally failed to notify plaintiffs of the incompleteness of the condominium loan application so as not to jeopardize the other two loans for the commercial plaza and off-site improvements." See SAC ¶ 65. Plaintiffs further allege that they would not have incurred the substantial expenses in relation to the commercial plaza and off-site improvements if they had been informed of the incomplete application or uncertain status of the condominium financing. Id. at ¶ 66. Under the notice provisions of ECOA, Plaintiffs' allegations sufficiently state a claim for failure to notify of an incomplete application.
Accordingly, Defendants' motion to dismiss this cause of action is denied.
3. Failure to Use Reasonable Diligence
As with the analysis of the prior two ECOA claims, the Court finds that Plaintiffs have sufficiently stated a claim for Defendants' failure to use reasonable diligence in determining whether Plaintiffs had submitted a completed application. See 12 C.F.R. § 202.2(f) (in reviewing an application for completeness, "the creditor shall exercise reasonable diligence in obtaining such information" necessary to decide whether to extend credit). Plaintiffs' SAC goes into specific detail about the alleged delay on the part of Defendants, which included requiring additional appraisals and requiring additional cost breakdowns for nearly two years after the alleged completed application on August 10, 2007, until finally informing Plaintiffs that their loan application had been denied in July 2009. See SAC ¶¶ 70-73. Defendants' contentions that it acted with reasonable diligence do not provide a basis for dismissal of Plaintiffs' claim at this stage. See Dufay, 94 F.3d at 565 (finding summary judgment inappropriate because of genuine factual dispute as to whether defendant bank acted with "reasonable diligence").
Thus, Defendants' motion to dismiss this cause of action is denied.
4. Age Discrimination
The prior three claims focus on the notice provisions of ECOA. In their fourth claim, Plaintiffs assert actual age discrimination in violation of ECOA. See 15 U.S.C. § 1691(a)(1) (prohibiting a creditor from discriminating against any applicant based on age, among other factors). Under ECOA, however, it is not prohibited discrimination "to make an inquiry of the applicant's age or of whether the applicant's income derives from any public assistance program if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of credit-worthiness [creditworthiness] as provided in regulations of the Board." Id. at § 1691(b)(2). Plaintiffs submit that Defendants' unreasonable delay in acting on Plaintiffs' application, in itself, constitutes age discrimination because "any delay inherently impacts the elderly disproportionately and in a discriminatory manner." See SAC ¶ 75. And, Plaintiffs continue, Defendants violated ECOA by considering Plaintiff William Errico's age in connection with whether Plaintiffs' could complete the condominium project. Id.
Plaintiffs' allegations of age discrimination, as currently pled, fail to state a claim under ECOA. To state a discrimination claim under ECOA, Plaintiffs must show that: 1) they were members of a protected class; 2) they applied for and were qualified for the loan at issue; 3) the loan was rejected despite Plaintiffs' qualifications; and 4) the creditor continued to approve loans for similarly situated applicants or treated members not in the protected class more favorably. See Shiplet v. Veneman, 620 F. Supp. 2d 1203, 1232 (D. Mont. 2009). Even construing the pleadings in their favor, Plaintiffs have not alleged sufficient facts to establish an age discrimination claim. Specifically, Plaintiffs have not alleged that other, similarly situated applicants were treated more favorably. Moreover, on Plaintiffs' own allegations, Defendants agreed to waive any recourse to Plaintiffs' personal assets in the event of default and agreed that the death of the Plaintiffs would not constitute default. See SAC ¶¶ 37-38. These allegations of accommodations on the part of Defendants because of Mr. Errico's age do not support an inference of age discrimination.
Accordingly, Plaintiffs' age discrimination claim under ECOA is dismissed with leave to amend.
B. State Law Causes of Action
As Plaintiffs have stated a claim under ECOA, the Court will now address Plaintiffs' state law causes of action.
1. Breach of Oral Contract
Under California law, a binding oral contract may arise "when all of the terms are definitely understood" and agreed to by both parties. Khajavi v. Feather River Anesthesia Medical Group, 84 Cal. App. 4th 32, 61 (Cal. App. 3d Dist. 2000). However, in the context of negotiations, "where the parties understood that the proposed agreement is not complete until reduced to formal writing and signed, no binding contract results until this is done." Louis Lesser Enterprises, Ltd. v. Roeder, 209 Cal. App. 2d 401, 405 (1962). Under California Civil Code § 1624 (Statute of Frauds), a "contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000)" must be in writing and "subscribed by the party to be charged" or else the contract is invalid. Cal. Civ. Code § 1624(a)(7). A party may be estopped, however, from relying on the statute of frauds "where unconscionable injury would result from denying enforcement of the oral contract after one party has been induced by the other seriously to change his position in reliance on the contract." See Kipperman v. Dixson (In re Diego's Inc.), 88 F.3d 775, 778 (9th Cir. Cal. 1996).
Plaintiffs allege that, beginning on or around December 1, 2005 and continuing for a period of about two years, Defendants "orally agreed and promised on several occasions to finance the construction of the entire PUD for plaintiffs." SAC ¶ 80. According to Plaintiffs, Defendant Maharaj, on December 1, 2005, told Plaintiffs that he was "ready to process the Construction Commitment when [Plaintiffs] were ready." Id. at ¶ 82. The oral contract, which was allegedly evidenced by the parties' course of dealing, involved a loan for 75% of the appraised value of the entire development project, would be capped at a maximum of three years, and would have an interest rate established by the marketplace, the prime rate, and Defendants' lending practices. Id. The interest rate ultimately agreed upon was 0.25% below the Wall Street Journal prime rate. Id. Finally, Plaintiffs allege that the oral contract is excluded from the Statute of Frauds by reason of estoppel, as Plaintiffs detrimentally relied on the oral agreement in not selling the Turlock Property even though an entity called "Standard Homes" offered Plaintiffs $4.4 million. Id. at ¶ 84.
The Court finds that Plaintiffs' claim for breach of oral contract, as currently pled, is insufficient to establish an enforceable oral contract. Although certain terms were allegedly agreed upon (e.g., loan for 75% of appraised value), Plaintiffs' allegations of the parties' conduct suggest that the terms were subject to continuing negotiation and also suggest that, as with the other two loans, the parties contemplated reducing the terms to a formal writing. See Khajavi, 84 Cal. App. at 60-61 (an oral contract is only binding if the parties reach an agreement as to all material terms and, if a formal writing is anticipated, is not complete until reduced to written form). For example, the parties did not settle on a repayment plan, did not decide the exact amount (as opposed to the percentage) of the loan, did not settle on a time period, and did not settle on how the loan would be disbursed. In addition, the parties' course of dealing with respect to the other loans supports an inference the parties' anticipated reducing the negotiations to writing. Especially with so much money at stake (potentially more than $20 million), the Court will not find an oral contract on the basis of Plaintiffs' expectation of an agreement.
Moreover, Plaintiffs' allegations, as currently pled, are insufficient to establish an estoppel exception to the Statute of Frauds. First, as noted above, Plaintiffs have not alleged sufficient facts establishing an oral contract upon which they could rely. And second, as to Plaintiffs' allegations that an entity called "Standard Homes" offered them $4.4 million for the Turlock Property and that Plaintiffs would have sold it but for the oral contract (SAC ¶ 84), Plaintiffs do not provide a date or any other details regarding this alleged "offer." Thus, it is not clear that Defendants' actions caused Plaintiffs to forsake another sales opportunity. See Kipperman, 88 F.3d at 779 (allowing estoppel to Statute of Frauds when plaintiff gave up other offers for sale of restaurant in reliance on oral contract).
Accordingly, the Court will grant Defendants' motion to dismiss the breach of oral contract cause of action with leave to amend.
2. Breach of Implied Contract
Under California Civil Code § 1621, "[a]n implied contract is one, the existence and terms of which are manifested by conduct. "An implied contract . . . in no less degree than an express contract, must be founded upon an ascertained agreement of the parties to perform it, the substantial difference between the two being the mere mode of proof by which they are to be respectively established . . . Although an implied in fact contract may be inferred from the `conduct, situation or mutual relation of the parties, the very heart of this kind of agreement is an intent to promise.'" See Friedman v. Friedman, 20 Cal. App. 4th 876, 887 (Cal. App. 1st Dist. 1993).
Plaintiffs allege that "to the extent there is no oral contract as alleged above, there was an implied in fact contract between the parties based on their course of dealing" between December 2005 and September 2007. SAC ¶ 89. This course of dealing, according to Plaintiffs, includes the prior two loans and the appraisals, cost estimates, and title reports provided to Defendants. Plaintiffs argue that the three loans were "so closely linked" that the agreements on the first two loans "necessarily imply a duty to provide the third." Pls.' Opp'n to Defs.' Mot. to Dismiss ECOA and Contract Claims at 22. Plaintiffs submit that the Statute of Frauds does not apply "by reason of promissory estoppel" and partial performance. SAC ¶ 94.
Defendants argue that, under California Civil Code § 1625, a written contract supersedes all prior negotiations and stipulations. There is no dispute that the parties entered into written contracts for the commercial plaza and off-site improvements on November 30, 2007. Thus, according to Defendants, the parties' two written contracts supersede any prior negotiations regarding the loan for the condominium development, and there remains no implied in fact contract as to the entire project as of November 30, 2007.
Defendants have the better of the argument. Plaintiffs' allegations that there was one overall promise to finance the entire project, including the condominium development, run into the obstacle that Plaintiffs agreed in writing, on November 30, 2007, to separately finance only the loans for the commercial plaza and the off-site development. An implied in fact contract may only be "founded upon an ascertained agreement of the parties to perform it." Zenith Ins. Co. v. O'Connor, 148 Cal. App. 4th 998, 1010 (Cal. App. 2d Dist. 2007). Here, on Plaintiffs' own allegations, Defendants continued to request additional information for the condominium loan, negotiated additional terms, and only signed written contracts for the other two loans. These allegations certainly suggest an expectation to complete an agreement, but not an actual agreement. See Apablasa v. Merritt Co., 176 Cal. App. 2d 719 (Cal. App. 2d Dist. 1959) ("[the] preliminary negotiation leading up to the execution of a contract must be distinguished from the contract itself. There is no meeting of the minds of the parties while they are merely negotiating as to the terms of the agreement to be entered into.").
Accordingly, Defendants' motion to dismiss the breach of implied contract cause of action is granted with leave to amend.
3. Breach of Covenant of Good Faith and Fair Dealing
"The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purposes. Thus, the implied covenant does no more than protect the right to enjoy the benefits of the contract." Eisenberg v. Alameda Newspapers, Inc., 74 Cal. App. 4th 1359, 1390-1391 (Cal. App. 1st Dist. 1999). "In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract." See Love v. Fire Ins. Exchange, 221 Cal. App. 3d 1136, 1153 (1990).
Plaintiffs' seventh cause of action is for breach of covenant of good faith and fair dealing "by intentionally and negligently acting to deprive plaintiffs of the benefits of the contracts and agreements as alleged above and by preventing plaintiffs' performance." SAC ¶ 99.
The difficulty with Plaintiffs' argument is that "[t]he implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation." See Racine Laramie, Ltd. v. Dep't of Parks Rec., 11 Cal. App. 4th 1026, 1031 (Cal. App. 4th Dist. 1992). Here, Plaintiffs essentially ask the Court to create a third loan agreement rather than "supplement" the two existing loan agreements. Although it is apparent that both parties can be said to have anticipated a loan for the condominium construction, the existing contracts between the parties (e.g., the two written contracts for the commercial plaza and off-site improvements) do not expressly require a third loan for the development of the condominiums, and the Court has already determined that Plaintiffs do not state a claim for breach of oral or implied contract. Therefore, without an underlying contract to rely on, it cannot be said that Defendants' deprived Plaintiffs of any contractual benefit. See Peterson Dev. Co. v. Torrey Pines Bank, 233 Cal. App. 3d 103, 116 (Cal. App. 4th Dist. 1991) (cause of action for breach of covenant of good faith and fair dealing requires "an underlying contract" upon which to imply the covenant).
The Court grants Defendants' motion to dismiss the breach of covenant of good faith and fair dealing with leave to amend.
4. Promissory Estoppel
"In California, under the doctrine of promissory estoppel, `A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.'" See Kajima/Ray Wilson v. Los Angeles County Metrop. Transp. Auth., 1 P.3d 63, 66 (Cal. 2000). The four elements of promissory estoppel are: 1) a clear promise; 2) reasonable reliance; 3) substantial detriment; and 4) damages "measured by the extent of the obligation assumed and not performed." See Poway Royal Mobilehome Owners Ass'n. v. City of Poway, 149 Cal. App. 4th 1460, 1470 (Cal. App. 4th Dist. 2007).
Defendants cite to a 1976 California appellate court decision as providing guidance in a similar situation. See Laks v. Coast Fed. Sav. Loan Assn., 60 Cal. App. 3d 885 (Cal. App. 2d Dist. 1976). Laks involved a plaintiff who received a conditional commitment letter from defendant bank for the financing of the construction of a hotel. Id. at 891. The California court held that the letter, which expressly stated that it is a "conditional commitment" and was completely silent as to the actual terms of the loan from the lead lender, was not a clear promise upon which plaintiff could reasonably rely for a promissory estoppel cause of action. Id. at 893.
Plaintiffs allege that "to the extent that there is no enforceable contract as alleged above, [Pacific Capital Bank] is liable under a theory of promissory estoppel." SAC ¶ 104. The Court agrees with Plaintiffs that Laks is distinguishable based on the allegations here that Defendants promised financing of the entire project without condition and that Plaintiffs reasonably relied on this promise based on the parties' history together. Specifically, Plaintiffs allege: 1) that there was a clear promise to finance the entire project in the minimum amount of 75% of the appraised value; 2) Plaintiffs reasonably relied on this promise based on Defendants' role as "financial adviser" to Plaintiffs over a period of approximately two years; 3) Plaintiffs experienced substantial detriment by investing substantial time and money in design and construction costs, and took on substantial credit obligations in the two loans for the commercial plaza and off-site improvements on the assurance that Defendant Pacific Capital Bank would finance the entire project; and 4) that Plaintiffs have suffered actual damages in design and construction costs, loan fees, and lost profits from both the commercial plaza and condominiums. SAC ¶¶ 105-108. The Court finds these allegations sufficient to state a claim for promissory estoppel.
Thus, Defendants' motion to dismiss the promissory estoppel cause of action is denied.
5. Fraud
"Under California law, the `indispensable elements of a fraud claim include a false representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages.'" Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Federal Rule of Civil Procedure 9(b), which applies to both state and federal causes of action, requires that the circumstances surrounding the fraud be pled with specificity. Id. at 1103-04. Defendants argue that Plaintiffs have failed to meet the heightened pleading standard for fraud and that, as to the $6.9 million loan for the commercial plaza, Plaintiffs have waived any right to sue for fraud based on their agreement on November 30, 2007 to reduce the interest rate on their $6.9 million loan (signed on September 12, 2007) by 0.25 percent.
The Court finds that Plaintiffs have sufficiently stated a claim for fraud (providing the "who, what, where, when, and how" of the fraudulent conduct). Plaintiffs have identified a specific individual (Defendant Niraj Maharaj), specific misrepresentations (that Defendants would finance the entire project for 75% of the appraised value and that the condominium financing would be available a week after the execution of the loans on the commercial plaza and the off-site improvements), an exact date on which the alleged misrepresentations were made (September 12, 2007), an intent to defraud (that Defendants had no intention of delivering on the third loan, but wanted to obtain fees, commissions, and the right to seize property under the first two loans), justifiable reliance (Plaintiffs obtained financing and incurred substantial design and construction costs based on Defendant Maharaj's misrepresentations), and damages (costs and lost profits). See SAC ¶¶ 110-113; see also City Solutions v. Clear Channel Communs., Inc., 365 F.3d 835, (9th Cir. 2004) (finding fraud claim valid where plaintiffs identified specific misrepresentation, established justifiable reliance, and made plausible claim that defendants' conduct caused damages).
The Court also rules that whether Plaintiffs waived their rights to sue for fraud by agreeing to an interest rate reduction on November 30, 2007 is subject to dispute, and thus not appropriate for dismissal at the pleading stage. See Oakland Raiders v. Oakland-Alameda County Coliseum, Inc., 144 Cal. App. 4th 1175, 1192 (Cal. App. 3d Dist. 2006) (although waiver "may be determined as a matter of law where the underlying facts are undisputed," acknowledging that "the existence of waiver is ordinarily a question of fact."). It is not "undisputed" that Plaintiffs learned of the fraud on November 30, 2007, and knowingly agreed to a new agreement that provided substantial benefits to Plaintiffs. On Plaintiffs' allegations, they still believed the condominium loan would be forthcoming even as of November 30, 2007.
Accordingly, Defendants' motion to dismiss the fraud cause of action is denied.
6. Negligent Misrepresentation
As Defendants acknowledge, negligent misrepresentation "sounds in fraud" and is subject to Rule 9(b)'s heightened pleading standard, except that negligent misrepresentation does not have the same element of "intent to deceive or defraud." See Oakland Raiders, 144 Cal. App. 4th at 1184 ("the term `fraud' may be used to describe not just an intentional misrepresentation but as well certain misrepresentations that are merely negligent, as the separate and distinct tort of negligent misrepresentation is `a species of the tort of deceit.'"). Thus, as Plaintiffs allege sufficient facts to establish fraud (i.e., intentional misrepresentation), they also allege sufficient facts to establish negligent misrepresentation. See Intrieri v. Superior Court, 117 Cal. App. 4th 72, 85, 12 Cal. Rptr. 3d 97 (2004) (The elements of a cause of action for fraud and a cause of action for negligent misrepresentation are very similar . . . [B]oth torts are defined as deceit. However, the state of mind requirements are different."). Thus, even if Defendants did not intend to defraud, Plaintiffs have sufficiently alleged that Defendants made false statements without reasonable grounds for such belief. Id. at 86 ("Negligent misrepresentation lacks the element of intent to deceive. Therefore, where the defendant makes false statements, honestly believing that they are true, but without reasonable ground for such belief, he may be liable for negligent misrepresentation, a form of deceit.").
Accordingly, Defendants' motion to dismiss this cause of action is denied.
7. Elder Abuse
Plaintiffs' eleventh and final cause of action is for elder abuse under California Welfare and Institutions Code § 15610.30. SAC ¶ 122. Section 15610.30(a) provides:
(a) "Financial abuse" of an elder or dependent adult occurs when a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to
defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 1575 of the Civil Code.
Cal. Welf. Inst. Code § 15610.30(a). Plaintiffs, who were 78 and 77 at the time of the filing of the SAC on March 5, 2010, allege that Defendants, who had previously acted as "financial advisers" to Plaintiffs, "fraudulently and negligently induced a [sic] plaintiffs to obtain two loans from [Pacific Capital Bank] and, as a result, wrongfully induced plaintiffs: a) to mortgage their Turlock property to defendant [Pacific Capital Bank] and b) to incur interest charges, fees and other expenses associated with the loans and development of the Turlock Property." SAC ¶ 124.
The elder abuse claim, as Defendants acknowledge, is essentially another fraud-based claim, and, taking all allegations in the SAC as true, does state a claim for the reasons provided above in analyzing Plaintiffs' fraud and negligent misrepresentation causes of action. See Intrieri, 117 Cal. App. 4th at 82-86 (finding summary adjudication inappropriate as to plaintiff's elder abuse, fraud, and negligent misrepresentation causes of action where triable issues of fact existed as to each cause of action).
Accordingly, the Court denies Defendants' motion to dismiss Plaintiffs' elder abuse cause of action.
IV. CONCLUSION
Accordingly, the Court DENIES IN PART AND GRANTS IN PART Defendants' motions to dismiss Plaintiff's second amended complaint according to the following:
The Court DENIES Defendants' motions to dismiss with respect to the first cause of action (Failure to Notify of Adverse Credit Decision in Violation of the ECOA), second cause of action (Failure to Notify of Incomplete Application in Violation of the ECOA), third cause of action (Failure to Use Reasonable Diligence in Obtaining Information in Violation of the ECOA), eighth cause of action (Promissory Estoppel), ninth cause of action (Fraud), tenth cause of action (Negligent Misrepresentation) and eleventh cause of action (Elder Abuse).
The Court GRANTS with leave to amend Defendants' motions to dismiss with respect to the fourth cause of action (Age Discrimination under ECOA), fifth cause of action (Breach of Oral Contract), sixth cause of action (Breach of Implied Contract) and seventh cause of action (Breach of Covenant of Good Faith and Fair Dealing).
Any amended complaint must be filed within thirty (30) days of this Order. Failure to timely file an amended complaint will result in dismissal of the relevant causes of action with prejudice.
IT IS SO ORDERED.