SEVENTH FEDERAL CIRCUIT | Key Points

1. Indiana’s Seventh Circuit affirmed dismissal of a homeowner’s claims against JPMorgan Chase Bank (“the Bank”) finding the homeowner’s complaint failed to state a cause of action for breach of contract, promissory estoppel, fraud, and/or intentional infliction of emotional distress. Taylor v. JPMorgan Chase Bank, N.A., 958 F.3d 556, 559 (7th Cir. 2020). The homeowner, Anthony Taylor (“Taylor”), asserted these claims against Chase based on Chase’s alleged failure to “honor its loan-modification offer.” The lower court dismissed Taylor’s claims finding he failed to state a claim upon which relief could be granted because Taylor failed to attach a copy of the parties’ agreement that was signed by Chase, an explicit requirement of the proposed Trial Period Plan (“TPP”) agreement. Taylor appealed the dismissal.

2. The Seventh Circuit agreed with the lower court that the requirement Chase sign and return the TPP to Taylor was a condition precedent to contract formation and without an enforceable contract, there could be no breach. Likewise, the Court rejected Taylor’s promissory estoppel and fraud claims concluding Chase never made a “definite promise to modify his loan” nor a misrepresentation regarding the status of his modification. The Court affirmed the dismissal of Taylor’s claims.

3. This decision will prove helpful in disposing of claims based on failed HAMP attempts in the early stages of litigation, but the conditional provisions used in Chase’s documents should be applied in a broader context to ensure “forced” settlements are avoided and the bank has the opportunity to provide final approval before entering into a binding contract.

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