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Thursday, May 24, 2012



As the attorney for the (now former) homeowner, I'm really not sure if this would be the law in other states, or just be limited to Minnesota. Minnesota had a statute on the books that made the promissory estoppel argument problematic in the eyes of the Court because it required that a "credit agreement" be in writing. Since the decision was based on this Minnesota statute (the "Credit Agreement Statute"), it obviously wouldn't be controlling in any other jurisdiction, but could certainly be considered persuasive.

I personally find this case to be very problematic for homeowners everywhere. If Ms. Brisbin wasn't harmed by being induced into inaction in this case, I think it would be difficult for many/any party to claim that they were harmed by reliance on a mortgage company's broken promise. In Minnesota, you have an absolute right to postpone your foreclosure by filing an affidavit of postponement. Had Ms. Brisbin not been induced into inaction, she could have postponed the sale for five months and had that much more time to come up with the reinstatement amount (which was obviously substantially smaller than the redemption amount). She additionally could have filed for Chapter 13 bankruptcy protection and made the payments up over a three or five year plan. Perhaps Ms. Brisbin would not have a claim for promissory estoppel due to the Credit Agreement Statute, but this apparent lack of damages is what prevented her from recovering for fraud or negligent misrepresentation.

I believe fraud or negligent misrepresentation was made even more egregious when looking at Aurora's call logs, which reflected that Ms. Brisbin called several times inquiring about her modification application and scheduled foreclosure, that she was not aware that the sale was not canceled, that Aurora knew Ms. Brisbin incorrectly thought Aurora had canceled the sale, yet Aurora specifically "did not advise" her that the sale occurred.

The way the Court's decisions came down, I have a hard time seeing how anyone would be able to recover when they have been induced or defrauded into not taking action. Ms. Brisbin's damages were deemed to be speculative; the problem with this rationale is that all damages when induced into inactivity are speculative. Would a bank have given Ms. Brisbin a loan for $8,000 to reinstate her loan? We won't know only because she didn't try due to her trust in Aurora's misrepresentation. A banker could say that s/he would have given a loan, but that would be speculation as to what s/he would have done six months earlier. She had a right to try to save her home, but that was taken away from her when she relied on a lie from Aurora.

All in all, I'm tremendously disappointed with the outcome of this case and I worry that there may be a highly negative public policy that is furthered by the decision. The fact that Aurora decided to fight this case for so hard, for so long, and for presumably so much money makes me worry that this is by no means an isolated incident. It doesn't make sense to me that this company would expend so many resources to defending its right to orally lie to its customers if it didn't stand to benefit from more lies to more people.

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