## Facts

- Sondra S. Sutherland bought a condominium in Tarzana, California, financed by an FHA-insured mortgage loan originated by Funders Mortgage Corporation of America.
- Funders transferred servicing of the loan, and assigned the note and deed of trust, to Barclays American/Mortgage Corporation.
- Sutherland made timely payments through January 1994.
- After the property suffered severe earthquake damage, Sutherland contacted Barclays seeking temporary relief because she had to relocate and incur additional housing costs.
- Barclays agreed to place a three-month “stop” on the account during which Sutherland would not make payments.
- Sutherland understood that the missed payments would be added to the end of the loan term and that regular monthly payments would resume after the stop period.
- Near the end of the stop period, Barclays demanded that Sutherland’s next payment include the regular payment plus all three missed payments.
- Sutherland sent a check for one month’s payment; Barclays returned it as an unacceptable partial payment, treated the loan as in default, and proceeded toward nonjudicial foreclosure.
- Barclays advised Sutherland to seek relief through a HUD assignment program; HUD declined to accept assignment, and Barclays continued to refuse her regular payments.
- Sutherland sued for declaratory and injunctive relief and related claims to prevent foreclosure and to establish that no default existed.
- The trial court granted summary judgment for Barclays on all causes of action; Sutherland appealed.

## Issues

1. Whether the evidence regarding Barclays’ three-month payment “stop” created triable issues of material fact as to an enforceable modification or forbearance arrangement and breach based on Barclays’ lump-sum demand and refusal of regular payments.
2. Whether Barclays’ conduct and communications created triable issues as to waiver or equitable estoppel preventing Barclays from declaring a default and foreclosing.
3. Whether summary judgment was improper because at least some causes of action presented triable issues, requiring partial summary adjudication rather than judgment on the entire action.

## Decision

- The Court of Appeal reversed the summary judgment.
- The court held that some, but not all, of Sutherland’s causes of action presented triable issues of material fact.
- The court directed the trial court on remand to enter summary adjudication for Barclays on certain claims, while allowing the remaining claims to proceed.

## Legal Principles

- Summary judgment is improper if any cause of action presents a triable issue of material fact; the correct remedy is partial summary adjudication as to claims negated as a matter of law.
- Conflicting evidence about oral representations and the parties’ course of dealing can create triable issues regarding the existence and terms of a payment modification or forbearance agreement.
- A lender or servicer’s agreement to suspend payments, and a borrower’s reliance on that agreement, may support factual disputes concerning waiver of strict payment terms or equitable estoppel against asserting default.
- Credibility-dependent disputes about what was promised and how a borrower reasonably understood servicing communications generally cannot be resolved on summary judgment.

## Conclusion

The court set aside a blanket defense judgment because the record showed genuine factual disputes over what the mortgage “stop” meant, whether Sutherland reasonably relied on Barclays’ representations, and whether Barclays could treat her as in default and foreclose under those circumstances.


Sutherland v. Barclays Am./Mortg. Corp., 53 Cal. App. 4th 299 (Cal. Ct. App. 1997)