Case Name: Perry v. Bank of America, N.A., et al.
Case No.: 2015-1-CV-288529

This is a wrongful foreclosure action for damages. In the first amended complaint (“FAC”), plaintiff Joan Perry (“Plaintiff”) alleges the following: At all relevant times, defendants Bank of America, N.A. (“BANA”), Nationstar Mortgage, LLC (“Nationstar”), and U.S. Bank, N.A. (“US Bank”) (collectively, “Defendants”) each acted as co-conspirators, agents, employees, and/or alter egos, and/or aided and abetted each other. (FAC, ¶¶ 12-15.) Plaintiff refinanced her original loan through Countrywide Home Loans, Inc. (“Countrywide”) by executing a promissory note (“the Note”) secured by a deed of trust (“DOT”) against the subject property (“the Property”) in 2004. (Id., ¶¶ 18-19, & p. 2:3-6.) In or about 2009, Plaintiff fell behind on payments and Countrywide’s successor-in-interest, BANA agreed to review her loan modification application. (Id., ¶¶ 20-21.) In September 2009, BANA offered an “unfair and fraudulent” modification. (Id., ¶¶ 21-22.) Despite financial difficulties, Plaintiff remained current until May 2013, when BANA’s representative responded to her request for assistance by advising her to stop making payments to qualify for a loan modification. (Id., ¶¶ 23-25.) In reliance thereon, Plaintiff stopped making payments in mid-2013, defaulted, applied for a loan modification with BANA, and was informed that her application was under review until the servicing of her loan was transferred to Nationstar in October 2013. (Id., ¶¶ 26-31.) Plaintiff contacted Nationstar, and upon its instruction, re-applied for a modification, and was informed that her application was under review for several months while falling further in arrears. (Id., ¶¶ 32-34.) On or about October 27, 2015, Nationstar advised that US Bank, as trustee for the new holder of the Note, would not work with Plaintiff. (Id., ¶ 37.) Despite not having received a formal denial of her application, on October 31, 2014, a notice of default (“NOD”) was recorded. (Id., ¶¶ 35 & 39.) Defendants’ conduct damaged Plaintiff’s credit score which in turn caused other harm. (Id., ¶¶ 41-42.)

In the FAC, Plaintiff asserts causes of action for: (1) violation of Civil Code sections 2923.4, 2923.55, 2923.6, and 2924 et seq. against Defendants; (2) negligence against Defendants; (3) actual fraud in violation of Civil code section 1572 against BANA; (4) violation of the unfair competition law (“UCL”) against Defendants; and (5) breach of the covenant of good faith and fair dealing against Defendants.

Defendants demur to the FAC as a whole and to each cause of action for failure to state a claim and make a request for judicial notice in support thereof. (See Code Civ. Proc., § 430.10, subd. (e).)

I. Judicial Notice

Defendants’ request for judicial notice of the DOT, the NOD, and the Notice of Trustee’s Sale (“NOTS”) is GRANTED. (See Evid. Code, § 452, subd. (c); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265; see also Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301.)

II. Demurrer

On demurrer, courts admit “all material facts properly pleaded” and facts subject to judicial notice, but not contentions, deductions, or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) If a demurrer is sustained, then leave to amend is liberally allowed as a matter of fairness, unless the pleading shows on its face that it is incapable of amendment. (City of Stockton v. Super. Ct. (2007) 42 Cal.4th 730, 747; see also Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

A. First Cause of Action for Violations of Civil Code Sections 2923.4, 2923.55, 2923.6, & 2924 et seq. Against Defendants
The first cause of action against Defendants is for allegedly (a) failing to contact Plaintiff to assess her situation; (b) failing to conduct a good faith review of her loan modification application(s); and (c) dual-tracking by recording the NOD before Plaintiff received a formal denial of her application(s). (FAC, ¶¶ 43-54.) Plaintiff alleges that as a result of BANA’s and Nationstar’s wrongful acts and omissions, she was not given a fair opportunity to reach an agreement to avoid foreclosure and was thereby denied her rights under Civil Code sections 2923.4, 2923.55, 2923.6, and 2924. (Id., ¶ 54.)

Defendants persuasively argue that Plaintiff cannot state a claim for violation of Civil Code section 2923.4. That provision merely states that the purpose of the Homeowner’s Bill of Rights (“HBOR”) is to ensure that borrowers are considered for and have a meaningful opportunity to obtain available loss mitigation options, if any, offered by or through the loan servicer. (Civ. Code, § 2923.4, subd. (a).) “Nothing in the [HBOR], however, shall be interpreted to require a particular result of that process.” (Id., subd. (b).) Furthermore, neither the HBOR nor any other state or federal law requires a lender or servicer to provide the sought-after loan modification. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 67.) Thus, Plaintiff cannot state a claim for Defendants’ failure to provide a sought-after foreclosure prevention alternative such as a loan modification under Civil Code section 2923.4 or any other state or federal law.

Civil Code sections 2923.55 requires the loan servicer to attempt to contact the borrower to discuss foreclosure prevention alternatives before recording a notice of default. (Civ. Code, § 2923.55, subds. (a)-(b).) Only a material violation of this provision may support a cause of action. (See Civ. Code, § 2924.12, subds. (a)-(b).) Plaintiff alleges that Defendants failed to contact her to assess her financial situation because she contacted them before they contacted her, and when she contacted them, their agents refused to help and “no one had discussed any options with her.” (FAC, ¶ 47.) Elsewhere, Plaintiff alleges that she contacted BANA’s agents to discuss foreclosure prevention alternatives before she stopped making payments and defaulted on the Note in mid-2013. (Id., ¶¶ 24-27.) The fact that Plaintiff—as opposed to BANA—initiated contact before Plaintiff missed any payments is insufficient to plead a material violation of Civil Code section 2923.55. Moreover, despite the general allegation that “no one discussed any options,” Plaintiff specifically alleges that representatives for BANA and later for Nationstar discussed foreclosure prevention alternatives with Plaintiff and allowed her to apply for a loan modification. (Id., ¶¶ 25-34.) When a specific allegation contradicts a general allegation, the specific allegation controls and may make the complaint subject to demur, even if the general allegation, standing alone, would have been sufficient. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1235-1236.) Thus, in light of the specific allegations (FAC, ¶¶ 24-34), the general allegation that “no one discussed any options” (id., ¶ 47) is inadequate to support a claim for violation of Civil Code section 2923.55.
Civil Code section 2923.55 also requires the notice of default to include a declaration of compliance. (Civ. Code, § 2923.55, subd. (c).) Plaintiff alleges on information and belief that the declaration of compliance was “robo-signed”—i.e. signed by an employee “without any review”—by an employee of Nationstar due to the fact that it is a boilerplate form that contains checkboxes. (FAC, ¶ 53.) It is true that the declaration attached to the NOD and signed by Nationstar’s employee is a boilerplate form with checkboxes that mirrors the language of Civil Code section 2923.55. (Defendants’ RJN, Ex. B.) Even so, the allegation that the declaration was “robo-signed” by virtue of the fact that it is boilerplate form with checkboxes cannot support a claim for violation of Civil Code section 2923.55. “There is no indication that the Legislature wanted to saddle lenders with the need to ‘custom draft’ the statement required by the statute in notices of default.” (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 214.) In any event, Plaintiff alleges facts showing that BANA and later Nationstar did in fact discuss available foreclosure prevention alternatives with her more than 30 days before the NOD was recorded. (FAC, ¶¶ 24-34.) Thus, any defect in the declaration attached to the NOD would not be material and therefore could not support a viable claim for violation of Civil Code section 2923.55. (See Civ. Code, § 2924.12, subds. (a)-(b).)

Additionally, Civil Code section 2923.55 provides that, before the recordation of a notice of default, the mortgage servicer must comply “with subdivision (c) of Section 2923.6, if the borrower has provided a complete application as defined in subdivision (h) of Section 2923.6.” (Civ. Code, § 2923.55, subd. (a)(3).) Subdivision (c) of Civil Code section 2923.6 only applies to a complete application, and subdivision (h) provides: “For purposes of this section, an application shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” Plaintiff does not allege that her applications were complete as defined by Civil Code section 2923.6. (See FAC, ¶¶ 27-37.) Furthermore, subdivision (c) of Civil Code section 2923.6 only applies to an application for “a first lien loan modification offered by, or through, the borrower’s mortgage servicer.” (Civ. Code, § 2923.6, subd. (c).) Plaintiff alleges that after she submitted an application to BANA, BANA informed her that it was no longer the servicer of her loan in October 2013. (Id., ¶¶ 27-30.) Therefore, as of October 2013, the foreclosing entities were not barred from recording the NOD based on the application to BANA. Additionally, although Plaintiff allegedly did not receive a formal denial of her subsequent application to Nationstar (FAC, ¶¶ 31-37), Nationstar informed her that the current holder of the loan would not work with her before the NOD was recorded (id., ¶¶ 35-36). There is no requirement that the loan servicer ensure that the borrower receives official notice of the denial. All that is required is that the loan servicer send written notice. (Civ. Code, § 2923.6, subd. (f).) Plaintiff does not allege that Nationstar failed to send such a notice. Therefore, she has not adequately pleaded a claim for dual tracking in violation of Civil Code sections 2923.55 and 2923.6.

Most importantly, “to minimize the risk of borrowers submitting multiple applications for first lien loan modifications for the purpose of delay, the mortgage servicer shall not be obligated to evaluate applications from borrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification prior to January 1, 2013, . . . unless there has been a material change in the borrower’s financial circumstances since the date of the borrower’s previous application and that change is documented by the borrower and submitted to the mortgage servicer.” (Civ. Code, § 2923.6, subd. (g).) Plaintiff alleges facts showing that in 2009, BANA evaluated her for a loan modification. (FAC, ¶¶ 21-22.) Thus, neither BANA nor Nationstar were required to evaluate Plaintiff’s subsequent applications unless there was a “material change” in her financial circumstances that Plaintiff documented and submitted to BANA and Nationstar. (See Civ. Code, § 2923.6, subd. (g).) Plaintiff does not allege a material change in her financial circumstances or that she documented such a change and submitted the documentation to BANA and Nationstar. Without such allegations, Plaintiff cannot state a claim for dual-tracking in violation of Civil Code sections 2923.55 and 2923.6.

Finally, to the extent Plaintiff claims that Defendants violated Civil Code section 2924 et seq., there is no obligation imposed by those statutes that could support a cause of action based on the facts alleged. Civil Code section 2924.12 provides that a borrower may state a cause of action for a material violation of Civil Code sections 2923.55, 2923.6, 2923.9, 2923.10, 2923.11, and 2923.17. (Civ. Code, § 2924.12, subds. (a)-(b).) A borrower may only seek injunctive relief for such material violations if the trustee’s deed upon sale has not yet been recorded. (Id., subd. (a).) Only after the trustee’s deed upon sale has been recorded may a borrower state a claim for monetary damages. (Id., subd. (b).) Plaintiff asserts that she seeks only damages, not injunctive or declaratory relief. (FAC, ¶ 55.) Nothing alleged in the FAC suggests that the trustee’s deed upon sale has been recorded. Therefore, Plaintiff cannot state a claim for damages based on any alleged violation of Civil Code sections 2923.55, 2923.6, 2923.9, 2923.10, 2923.11, and 2923.17. It is possible for Plaintiff to amend the FAC to state a cause of action for injunctive relief based on a material violation of those statutes. (See Civ. Code, § 2924.12, subds. (a)-(b).) Leave to amend will therefore be granted. (See City of Stockton v. Super. Ct., supra, 42 Cal.4th, at p. 747.)

In light of the foregoing, the demurrer to the first cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

B. Second Cause of Action for Negligence Against Defendants

Plaintiff alleges that Defendants are liable for negligence based on their handling of her loan modification application and BANA’s instruction that she default on the Note before seeking a modification. (FAC, ¶¶ 56-64.) A claim for negligence requires a legal duty, breach of that duty, causation, and resulting damages. (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917; McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.) Defendants take issue with each element.

The existence and scope of legal duty are questions of law, although facts that cause a duty to arise (or from which it is inferred) must be pleaded. (Vescovo v. New Way Enterprises, Ltd. (1976) 60 Cal.App.3d 582, 589.) Whether a servicer owes a duty of care to a borrower depends on an analysis of the six factors outlined in Biakanja v. Irving (1958) 49 Cal.2d 647, 650. (Jolly v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 899.) Bank advice directly related to loan modification is within the scope of a conventional role as a lender and typically does not support the existence of a duty. (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 207; Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1095-1096.) Under the six-factor test, a lender or servicer may owe a borrower a duty to exercise reasonable care in the review of their loan modification applications once it agreed to consider them. (Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 944.)

Plaintiff does not allege that Nationstar agreed to review her loan modification application after it became the servicer of her loan. (FAC, ¶¶ 31-34.) Instead, Nationstar merely informed Plaintiff that she would need to begin the application process anew. (Id., ¶ 33.) Thus, Plaintiff has not pleaded facts giving rise a duty based on the review of the application submitted to Nationstar.

That being said, since Plaintiff alleges that BANA agreed to review her loan modification application (FAC, ¶¶ 25-30), she has pleaded sufficient facts to show that BANA owed a legal duty in processing her application. Even so, she does not allege that BANA breached that duty in processing that application before the servicing of the loan transferred to Nationstar. (FAC, ¶¶ 27-30.) To the extent Plaintiff claims that BANA negligently advised her to stop making payments to qualify for a loan modification before she submitted her application (id., ¶ 25), nothing in the FAC suggests that this advice was inaccurate or somehow negligent. Thus, Plaintiff has not adequately alleged the element of breach as to BANA.

Lastly, Defendants persuasively argue that Plaintiff has not adequately pleaded causation and resulting damages. The pleader may not recover upon the bare statement that the defendant’s negligence has caused him injury. (Guilliams v. Hollywood Hospital (1941) 18 Cal.2d 97, 101.) “If the conduct which is claimed to have caused the injury had nothing at all to do with the injuries, it could not be said that the conduct was a factor, let alone a substantial factor, in the production of the injuries.” (Mitchell v. Gonzales (1991) 54 Cal.3d 1041, 1052.) Unless the juxtaposition of the allegations of wrongful conduct and harm naturally give rise to an inference of causation, the pleader “must plead specific facts” to show how the conduct caused or contributed to his injury. (Christensen v. Superior Court (1991) 54 Cal.3d 868, 900-901; Bockrath v. Aldrich Chemical Co., Inc. (1999) 21 Cal.4th 71, 78.) Defendants had no duty to offer Plaintiff a loan modification, and therefore any damages caused by the fact that Plaintiff did not receive a sought-after modification cannot support the negligence claim. (See Lueras v. BAC Home Loans Servicing, LP, supra, 221 Cal.App.4th, at p. 67.) Plaintiff alleges that before the alleged misconduct at issue, she was experiencing financial difficulties. (FAC, ¶ 23.) Plaintiff further alleges that as a result of Defendants’ subsequent conduct in handling her loan modification applications, her credit score has been damaged, which in turn has caused her to lose income and diminished her ability to take care of her family, operate her business, and avoid foreclosure. (Id., ¶¶ 41-42.) The alleged mishandling of the applications and the subsequent harm to her credit score do not support the inference of causation, and Plaintiff does not otherwise allege facts to show causation. Thus, she has not sufficiently pleaded the elements of causation and resulting damages.

Since the FAC does not show that Plaintiff cannot cure these defects, leave to amend will be granted. (See City of Stockton v. Super. Ct., supra, 42 Cal.4th, at p. 747.)

Accordingly, the demurrer to the second cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

C. Third Cause of Action for Actual Fraud in Violation of Civil Code Section 1572 Against BANA

Plaintiff alleges that BANA’s agents fraudulently misrepresented that she qualified for a loan modification and thereby committed actual fraud in violation of Civil Code section 1572. (FAC, ¶¶ 65-74.) Civil Code section 1572 defines “actual fraud” only for purposes of determining the parties’ consent to a contract. Plaintiff does not allege that she executed any contract in reliance on BANA’s fraud. Therefore, Civil Code section 1572 is inapplicable. To state a cause of action for fraud and deceit (see Civ. Code, §§ 1709-1710), the plaintiff must allege particular facts, including what was stated and how, when, where, to whom, and by what means it was tendered, and in an action against a corporate defendant, the identity of the individual who made the representation and their authority to speak. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) Plaintiff does not include such particular allegations. It is possible for her to amend to add such allegations. Leave to amend will therefore be granted. (See City of Stockton v. Super. Ct., supra, 42 Cal.4th, at p. 747.)

Thus, the demurrer to the third cause of action for failure to state a claim is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

D. Fourth Cause of Action for Violation of UCL Against Defendants

Plaintiff’s third cause of action for violation of the UCL, to the extent it is based on the same allegations of misconduct discussed above (FAC, ¶¶ 75-88), is not adequately pleaded because she has not sufficiently stated her other causes of action. (See Krantz v. BT Visual Images, LLC (2001) 89 Cal.App.4th 164, 178.) Plaintiff also asserts that Defendants violated the UCL because the earlier loan modification offered by BANA was unfair and fraudulent. (FAC, ¶¶ 21-22 & 84.) Plaintiff does not allege any facts to support her claim that the prior offer of a loan modification was unfair or fraudulent. Thus, she has not adequately pleaded a claim for violation of the UCL based on that offer. Finally, Plaintiff does not adequately plead standing because she does not allege to have suffered an injury-in-fact and to have lost money or property as a result of any alleged violation of the UCL. (See Bus. & Prof. Code, § 17204.) The face of the FAC does not disclose that it is incapable of amendment, given that BANA allegedly induced Plaintiff stopping making payments before she defaulted. (FAC, ¶¶ 24-26; see also City of Stockton v. Super. Ct., supra, 42 Cal.4th, at p. 747; see also Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 523 [holding that a borrower cannot state a claim for violation of the UCL when the alleged violation occurred after the borrower defaulted], disapproved of on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919.)

Accordingly, the demurrer to the fourth cause of action for failure to state a claim is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

E. Fifth Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing Against Defendants

Plaintiff alleges that Defendants breached the covenant of good faith and fair dealing implied in the Note, the DOT, and the promise to review her loan modification applications by: (a) denying Plaintiff’s benefits under the loan; (b) “setting Plaintiff up for certain default” and inducing her to stop making payments by advising that she would then qualify for a loan modification; (c) “failing to disclose essential information that directly affected the Plaintiff’s decision to modify her loan”; (d) failing to review her loan modification applications in good faith; and (d) reporting Plaintiff’s default to credit agencies and pursuing foreclosure. (FAC, ¶¶ 91-98.) It is universally recognized the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.” (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 373.) “A party violates the covenant if it subjectively lacks belief in the validity of its act or if its conduct is objectively unreasonable.” (Id., at p. 372.)

Plaintiff alleges that Defendants breached the covenant implied in the Note and the DOT. (FAC, ¶ 91.) She does not plead the terms of the Note or the DOT. The DOT provides that Plaintiff is required to make payments on the principal balance of the Note, i.e. $630,000, plus interest each month, and the Note has a variable interest rate. (Defendants’ RJN, Ex. A, pp. 1-2.) Plaintiff’s payments would first be applied to the interest due on the Note, and then the payments would be applied to the principal. (Id., Ex. A, at p. 4.) If Plaintiff defaults, then the lender and its agents and assigns have the right to exercise the power-of-sale clause and to charge fees to Plaintiff. (Id., Ex. A, at pp. 8 & 11.) Nothing alleged in the FAC or set forth in the express terms of the DOT suggests that Defendants would be barred from reporting Plaintiff’s default to credit agencies, or that they would be required to consider Plaintiff’s loan modification applications. Plaintiff does not otherwise allege facts to show that Defendants denied her of any benefit under the Note and the DOT. Therefore, Plaintiff has not stated a claim for violation of the implied covenant of good faith and fair dealing based on the Note and the DOT.

Moreover, to the extent Plaintiff generally alleges that Defendants somehow promised to modify her loan (FAC, ¶¶ 97-98), elsewhere in the complaint, she specifically alleges facts showing that no such promise to provide a modification as made (id., ¶¶ 21-34). Instead, BANA merely agreed to review Plaintiff’s loan modification applications in 2009 and again in 2013. (Id., ¶¶ 21 & 25.) The first agreement allegedly occurred after Plaintiff fell behind on her payments on the Note in or about 2009, and requested a loan modification. (Id., ¶ 21.) Plaintiff alleges that BANA offered her a modification that she believes “was unfair and fraudulent” because it increased the principal owed, had an adjustable interest rate, and required Plaintiff to pay the interest first and make a balloon payment in September 2014. (Id., ¶¶ 21-22.) However, BANA was not obligated to provide the sought-after modification under the Note, the DOT, or based upon its promise to review Plaintiff’s application. Plaintiff does not allege that BANA acted without believing the validity of its act, and its offered modification is not objectively unreasonable. Thus, Plaintiff has not sufficiently alleged a breach of the covenant implied in the Note and the DOT based on the allegedly “unfair and fraudulent” loan modification offer in 2009.

The second agreement to review Plaintiff’s application was in 2013, after she experienced further financial difficulties and contacted BANA for assistance. (FAC, ¶¶ 23-25.) BANA’s agent allegedly told her that “to qualify for a loan modification, it would be necessary for her to stop making her monthly payments,” and “assured Plaintiff that she would qualify for a permanent loan modification.” (Id., ¶ 25.) In reliance on these “misrepresentations, in mid-2013, Plaintiff stopped making her monthly payments” after May 2013, and defaulted on the Note. (Id., ¶¶ 24 & 26-27.) Plaintiff alleges that this conduct constitutes a breach of the covenant of good faith and fair dealing. (Id., ¶¶ 93-94.) Plaintiff does not allege facts showing that the statements that she was required to stop making payments in order to qualify for a loan modification and that she would qualify for a loan modification were false, made without a subjective belief in their validity, or objectively unreasonable. Therefore, Plaintiff has not sufficiently pleaded a breach of the implied covenant based on the alleged misrepresentations made by BANA’s representative in 2013.

Furthermore, Plaintiff has not alleged the existence of a contract to support a claim for breach of the implied covenant based on the allegations that Defendants gave her the “runaround” and ultimately did not grant her requested modification. (See FAC, ¶¶ 95 & 97-99.) Courts have found that borrowers may state a cause of action for breach of the implied covenant based on similar allegations when the parties executed forbearance agreements or trial placement plan (“TPP”) contracts. (See Lueras v. BAC Home Loans Servicing, LP, supra, 221 Cal.App.4th, at p. 76; see also Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 929.) Here, Plaintiff does not allege that any such forbearance agreement or TPP exists. Therefore, she has not pleaded breach of the implied covenant based on the allegations that Defendants gave her the runaround and did not provide her sought-after modification.
Finally, Defendants persuasively argue that Plaintiff has not pleaded that she sustained damages as a result of their allegedly improper conduct. Plaintiff only alleges that, as a result of Defendants’ conduct, she “is now burdened with a loan amount that exceeds the fair market value, is not likely to be repaid in Plaintiff’s time, and further places Plaintiff at greater risk of losing her property to foreclosure.” (FAC, ¶ 101.) The express terms of the DOT require Plaintiff to pay that debt—including any charges incurred in the foreclosure process—to avoid foreclosure. (Defendants’ RJN, Ex. A.) Plaintiff has not alleged sufficient facts to show that the fact that this total is greater than the fair market value of the Property and the fact that Plaintiff cannot afford to repay the amount owed is caused by Defendants’ allegedly improper conduct.

Since the FAC does not disclose that it is incapable of amendment, leave to amend will be granted. (See City of Stockton v. Super. Ct., supra, 42 Cal.4th, at p. 747.)

In light of the foregoing, the demurrer to the fifth cause of action for failure to state a claim is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.