Judge: Theodore R. Howard, Case: 21-1200691, Date: 2022-08-18 Tentative Ruling
The demurrer by defendant Wells Fargo Bank, N.A. (“Wells Fargo”) to the first amended complaint (“FAC”) by plaintiff Laurie Lehman (“plaintiff”) is SUSTAINED IN PART AND MOOT IN PART. Plaintiff is granted 30 days leave to amend.
Plaintiff’s request to dismiss the third cause of action, without prejudice, is GRANTED. (CCP §581(c))
RJN by Wells Fargo
The court declines to take judicial notice of Exhibits A through G submitted by Wells Fargo as they are not relevant to the disposition of the demurrer. (See Arce v. Kaiser Foundation Health Plan (2010) 181 Cal.App.4th 471, 482).
Merits
This action arises out of an installment promissory note by plaintiff payable to Wells Fargo for $885,000 secured by a first trust deed in connection with plaintiff’s property in Corona del Mar. (FAC ¶¶2, 7)
In April or May of 2017, plaintiff defaulted on the note and applied to Wells Fargo for loan modification, which was denied. (FAC ¶6)
On 4/16/2018, the acting foreclosure trustee caused to be recorded a notice of default and election to sell (“NOD”) reflecting $54,714 as the amount to be paid to avoid foreclosure. (FAC ¶8) The $54,714 amount was substantially inflated by including past due obligations which Wells Fargo had earlier agreed to recharacterize as being due at the maturity of the loan. (FAC ¶9) The $870,207 balance stated to be due as of 4/16/2018 was also substantially inflated by Wells Fargo because plaintiff had not been credited for certain payments made or had been overcharged on the account. (FAC ¶9)
Plaintiff alleges that she was compelled to sell her residence for $1,650,000 on 2/25/2019 less than the approximate $1,950,000 - $2,000,000 fair market value. (FAC ¶13)
Wells Fargo generally demurs to all causes of action pled in the FAC.
C/A 1- Breach of Written Agreement
To plead a breach of contract cause of action, the complaint must plead the existence of the contract, the plaintiff’s performance or excuse for failure to perform, defendants’ breach and damage to plaintiff resulting therefrom. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1031)
If the action is based on breach of a written contract, the terms of that contract must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference into the pleading. (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307)
The FAC does not set out verbatim the terms of the written agreement entered into between the parties. Nor is a copy of the written agreement which Wells Fargo is alleged to have breached attached to the FAC and incorporated by reference. Without the essential terms of the contract, the FAC fails to establish the existence of a written contract.
Breach of the Covenant of Good Faith and Fair Dealing
Although not set out as a separate cause of action, ¶11 of the FAC purports to plead breach of the implied covenant of good faith and fair dealing within the first cause of action for breach of contract. The duty of good faith and fair dealing is read into contracts to protect the express covenants or promises of the contract. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 690). The covenant is a contract term. (Id. at p. 684).
The implied covenant imposes upon the contracting parties the obligation to do everything that the contract presupposes they will do to accomplish the purpose of the contract. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1393).
Because the FAC fails to establish the existence of a contract between the parties, there can be no breach of the covenant of good faith and fair dealing.
The demurrer to the first cause of action for breach of written agreement is SUSTAINED with 30 days leave to amend.
C/A 2 - Accounting
“A right to an accounting is derivative; it must be based on other claims.” (Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 833). Where the defendant has not engaged in any misconduct, the plaintiff has no right to an accounting. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 473, 593) If all other claims fail, a claim for accounting will fail too. (Janis, supra, 68 Cal.App.4th at p. 834)
Because the complaint fails to plead sufficient facts establishing an agreement between the parties and thus a breach thereof (i.e. misconduct by Wells Fargo), the Accounting cause of action fails too.
The demurrer to the second cause of action for Accounting is likewise SUSTAINED with 30 days leave to amend.
As a result of the dismissal of the third cause of action, the demurrer thereto is MOOT.
Wells Fargo shall comply with CCP §430.41 before filing any further demurrers.
Wells Fargo to give Notice of Ruling.