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.
23
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
22
1
23 Individually and as Trustee of the Suzanne Takowsky
Revocable Living Trust dated June 22, 2006.
24
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,
25
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.
28

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),

7
 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
24
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
26
27
28

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
12
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).
20
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 well-
23 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
27
28

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 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
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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.
24
11
CC § 47(c) applies to communications “without malice.”
25
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...)

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 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
25
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.

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 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
22
23
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13
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.”

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 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.
19
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).
25
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

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 1 relocation costs and expenses.
2 CONCLUSION
3 Based on the foregoing, we AFFIRM the bankruptcy court.
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