Case Name: Vidal Preciado v. Trustee Corps, et al.
Case No.: 1-14-CV-258562

Defendants Specialized Loan Servicing, LLC (“SLS”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) demur to plaintiff Vidal Preciado’s (“Plaintiff”) first amended complaint (“FAC”) as a whole and to the only cause of action set forth therein on the grounds of uncertainty and failure to state a claim. (See Code Civ. Proc. [“CCP”], § 430.10, subds. (e)-(f).) Defendant MTC Financial, Inc. d.b.a. Trustee Corps (“the Trustee”) also demurs to Plaintiff’s FAC as a whole and to the only cause of action contained therein on the grounds of uncertainty and failure to state a claim. (See id.) Plaintiff brings a motion to strike both demurrers. (See CCP, § 435, subds. (a)-(b).)

The Trustee’s request for judicial notice in support of its demurrer is GRANTED IN PART and DENIED IN PART. (See Evid. Code § 452, subd. (c); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264.) The request is GRANTED as to the first four documents because those documents are recorded real property records, but the request is DENIED as to the fifth document because it is not recorded.

Plaintiff’s motion to strike the demurrers is DENIED because it is not properly noticed. (See Cal. Rules of Court, rules 3.1112(a) & 3.1322.)

SLS and Freddie Mac’s demurrer for uncertainty is OVERRULED. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal App 4th 612, 616 [“[a] demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures”].) Likewise, the Trustee’s demurrer or uncertainty is also OVERRULED. (See id.)

SLS and Freddie Mac’s demurrer for failure to state a claim is OVERRULED. (See Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371 [necessary elements to state a claim for breach of contract are: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damages to plaintiff].) The first alleged contract at issue was an oral agreement between Plaintiff and Freddie Mac, the second alleged contract was SLS’s oral agreement to reconsider Plaintiff’s loan modification application, and the breach of contract claim is not predicated on the deed of trust. (FAC, p. 3 at ¶ BC-1.)

To plead the existence of an oral contract, the plaintiff is only required to plead the contract’s general legal effect. (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616 [“[a]n oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words”].) The FAC alleges sufficient facts to support the first element of a breach of contract claim because it alleges the general legal effects of the oral agreements. (FAC, p. 3 at ¶ BC-1.) The FAC alleges that Defendants breached the oral agreements not only by “continu[ing] with foreclosure of plaintiff’s home,” but also by “prevent[ing] a decision from being made on the appeal from defendants [sic] denial of his modification application in violation of law.” (FAC, p. 3 at ¶ BC-2.) SLS and Freddie Mac argue that the breach of contract claim must fail because the alleged contract violates the statute of frauds. While the statute of frauds requires certain agreements to be in writing (Civ. Code, §§ 1624 & 2922), it only supports a demurrer “when the complaint shows on its face” that the contract “is within the statute of frauds and does not comply with its requirements.”

(Parker v. Solomon (1959) 171 Cal.App.2d 125, 136.) While a mortgage or deed of trust falls within the statute of frauds (see Civ. Code, § 2922), the first alleged agreement was merely a loan contract, and no facts in the FAC suggest that the loan contract is actually a mortgage. The FAC also does not allege that the first oral loan contract or the subsequent modification were for an amount greater than $100,000. (See Civ. Code, § 1624, subd. (a)(7) [loan contracts in excess of $100,000 must be in writing].) Thus, the face of the FAC shows that the alleged oral loan contract and subsequent loan modification agreement do not fall within the statute of frauds. Lastly, SLS and Freddie Mac assert that their demurrer should be sustained because the FAC does not allege sufficient facts to support a cause of action for a violation of the Homeowners Bill of Rights (“HBOR”). This argument is unavailing because the FAC does not assert a cause of action for a violation of the HBOR.

The Trustee’s demurrer to the FAC for failure to allege sufficient facts is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The FAC alleges that only Freddie Mac and SLS entered into contracts with Plaintiff. (FAC, p. 3 at ¶ BC-1.) Since a plaintiff must allege the existence of a contract in order to state a claim for breach of contract (see Careau & Co. v. Security Pacific Business Credit, Inc., supra, 222 Cal.App.3d 1371), the FAC does not allege sufficient facts to support a breach of contract claim against the Trustee.