Case Name: Alan N. Slater v. Justin Crowley, et al.
Case No.: 2017-CV-308241

Demurrer to the Complaint by Defendants Justin Crowley and Matt Hollingsworth

Factual and Procedural Background

The judicial council form complaint filed by plaintiff Alan Slater (self-represented) (“Plaintiff”) alleges a single cause of action for breach of contract. The alleged defendants included on the caption of the Complaint are Justin Crowley, CFO of Select Portfolio Servicing Inc. (“SPS”), and Matt Hollingsworth, CEO of SPS (collectively, “Defendants”). According to the Complaint, Plaintiff entered into a written contract with SPS on February 22, 2017. The alleged contract is attached as Exhibit A to the Complaint and appears to be a promissory note signed by Plaintiff to make payment to SPS. Plaintiff alleges that, on March 8, 2017, SPS employees breached the contract when they refused to pick up the payoff check for the loan.

Demurrer to the Complaint

On May 11, 2017, Defendants filed the instant demurrer to the Complaint on the ground that it fails to state a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Defendants also submitted a request for judicial notice in conjunction with the demurrer. The demurrer was initially set for hearing on July 18, 2017. Plaintiff filed and served an untimely opposition on July 13, 2017. Both parties were present at the hearing. The Court continued the motion to August 15, 2017 to allow Plaintiff an opportunity to bring a court reporter to the hearing. Also, given the untimely filing and service of the opposition, the Court allowed Defendants to file reply papers before the hearing on the demurrer. Defendants filed timely reply papers on July 24, 2017 and the Court now addresses the issues raised on demurrer.

Meet and Confer

In opposition, Plaintiff argues that the demurrer should be overruled as defense counsel failed to adequately meet and confer before filing the motion.

Before filing a demurrer, a demurring party must “meet and confer in person or by telephone” with the opposing party to determine “whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).) This conference should occur at least five days before the deadline to file. (Code Civ. Proc., § 430.41, subd. (a)(2).)

When filing the demurrer, the demurring party must include a declaration stating either “the means by which the demurring party met and conferred with [the other party] and that the party did not reach an agreement resolving the objections raised in the demurrer” or “[the other party] failed to respond to the meet and confer request of the demurring party or otherwise failed to meet in good faith.” (Code Civ. Proc., § 430.41, subd. (a)(3).) A court’s determination the meet and confer process was insufficient is not a ground to sustain or overrule a demurrer. (Code Civ. Proc., § 430.41, subd. (a)(4).)

In opposition, Plaintiff contends that he only spoke with defense counsel for a short time before both sides agreed to speak again with respect to the demurrer. (See OPP at p. 4.) Plaintiff claims that he spoke with defense counsel a few days later but discovered that the demurrer had already been filed. (Ibid.) Conversely, defense counsel submitted a declaration under penalty of perjury stating that he attempted to meet and confer with Plaintiff by telephone in order to discuss objections to the Complaint. (See Declaration of Marvin B. Adviento at ¶ 3.) Counsel states that he was unable to reach Plaintiff and left him a voicemail message to contact him to discuss the matter. (Ibid.) Defense counsel indicates that he did not receive any phone call back from the Plaintiff. (Ibid.) Based on this evidence, the Court will take defense counsel at his word and find that there was a sufficient meet and confer attempt before filing the demurrer. Also, as stated above, even a deficient meet and confer attempt would not constitute grounds for overruling the demurrer. Therefore, the Court will address the demurrer on its merits.

Request for Judicial Notice

In support of the demurrer, Defendants request judicial notice of the following documents recorded in Santa Clara County: (1) Deed of Trust recorded on April 6, 2007 as Instrument Number 19372202 (Exhibit 1); and (2) Deed of Trust recorded on April 6, 2007 as Instrument Number 19372203 (Exhibit 2).

“Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.) Evidence Code section 452, subdivision (h) allows a court, in its discretion, to take judicial notice of facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.

“[C]ourts have taken judicial notice of the existence and recordation of real property records, including deeds of trust, when the authenticity of the documents is not challenged. [Citations.] The official act of recordation and the common use of a notary public in the execution of such documents assure their reliability, and the maintenance of the documents in the recorder’s office makes their existence and text capable of ready confirmation, thereby placing such documents beyond reasonable dispute.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 [disapproved on other grounds in Yvanova v. New Century Morg. Corp. (2016) 62 Cal.4th 919].) Although it would be improper to take judicial notice of the truth of statements of fact recited within the documents, the trial court is permitted to take judicial notice of the legal effect of the documents’ language when that effect is clear. (Id. at p. 265.)

Here, Exhibits 1 and 2 constitute real property documents recorded in Santa Clara County and thus subject to judicial notice under Evidence Code section 452, subdivision (h). Accordingly, the request for judicial notice is GRANTED.

Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

Breach of Contract

The Complaint alleges a single claim for breach of contract. To state a cause of action for breach of contract, a party must plead (1) the existence of a contract, (2) his or her performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damage. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 228.)

Here, Defendants persuasively argue that Plaintiff does not properly allege the necessary elements to support a breach of contract claim. In particular, Plaintiff fails to allege that he entered into a written contract with Defendants. As stated above, the alleged contract in this case is the promissory note attached as Exhibit A to the Complaint and signed by the Plaintiff. (See Complaint at Exhibit A.) The promissory note is identified as “Negotiable Security Instrument No. 0000002726.” (Ibid.) There is nothing in the promissory note to suggest that Plaintiff entered into a written contract with Defendants. Furthermore, the promissory note itself is not signed by Defendants nor is there any language within the document indicating that Defendants intended to be bound by terms alleged in the promissory note. Thus, without the existence of a valid contract, there is no claim stated for breach of contract.

Accordingly, the demurrer to the breach of contract cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND for failure to state a claim. (See City of Stockton v. Super Ct. (2007) 42 Cal.4th 730, 747 [where plaintiff has not had opportunity to amend complaint in response to demurrer, “leave to amend is liberally allowed as a matter of fairness unless the complaint shows on its face that it is incapable of amendment”].) Having sustained the demurrer on this ground, the Court declines to address the argument based on the failure to join an indispensable party.

The Court will prepare the Order.