Question

This is a post first discussion forum. Please respond to the following scenario: A Question of Ethics-Promissory Estoppel. Claudia Aceves borrowed $845,000 from U.S. Bank to buy a home. Less than two years into the loan, she could no longer afford the monthly payments. The bank notified her that it planned to foreclose on her home. (Foreclosure is a process that allows a lender to repossess and sell the property that secures a loan.) The bank offered to modify Aceves's mortgage if she would forgo bankruptcy. In reliance on the bank's promise, she agreed. Once she withdrew the filing, however, the bank foreclosed and began eviction proceedings. Aceves filed a suit against the bank for promissory estoppel. [Aceves v. U.S. Bank, N.A., 192 Cal.App.4th 218, 120 Cal.Rptr.3d 507 (2 Dist. 2011)] (See Promissory Estoppel.) 1. Could Aceves succeed in her claim of promissory estoppel? Why or why not? 2. Did Aceves or U.S. Bank behave unethically? Discuss.

Answer 1

1. In this case, Claudia could win because the bank has breached the promissory estoppel. The bank had promised that the foreclosure proceedings can be stopped if she dropped the bankruptcy proceedings.

The promise contains all the prerequisites for a promissory estoppel as the following conditions are met:

a. The terms and conditions of the promise are clear.

b. The promise is made with a clear intention.

c. The promise is understood by the person who was promised.

Based on the bank's promise, Claudia stopped the bankruptcy proceedings but the bank broke its promise.

2. The bank's action in this case is to be considered as unethical because the bank had made a promise that convinced an individual to withdraw bankruptcy proceedings which caused her a loss.