Filed 7/29/20

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

CHRISTOPHER S. REEDER, 

Plaintiff and Appellant,

v.

SPECIALIZED LOAN 

SERVICING LLC et al.,

Defendants and Respondents.

 B296148

 (Los Angeles County

 Super. Ct. No. LC106994)

APPEAL from an order of the Superior Court of Los 

Angeles County. Virginia Keeny, Judge. Affirmed.

Salisian│Lee, Richard H. Lee, H. Han Pai and Glenn R. 

Coffman for Plaintiff and Appellant.

Yu│Mohandesi, B. Ben Mohandesi, Pavel Ekmekchyan and 

Lisa M. Lawrence for Defendants and Respondents.

__________________________
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SUMMARY

Plaintiff Christopher S. Reeder lost an investment property 

to foreclosure after he failed to make the balloon payment due on 

a 2005 home equity line of credit that matured on April 1, 2015. 

He sued the lender and its assignee, as well as the loan servicer, 

alleging breach of contract, wrongful foreclosure and three fraud

claims. All the claims were founded on plaintiff’s assertion that, 

before the parties executed the credit agreement and deed of 

trust securing it in 2005, the lender made a verbal commitment 

that, at the end of the 10-year term, plaintiff could refinance or 

re-amortize the loan with a new 20-year repayment period. 

The trial court sustained defendants’ demurrer to these 

claims without leave to amend, concluding the oral agreement 

plaintiff alleged was barred by the statute of frauds, and was in 

any event too indefinite to be enforced. This also meant there 

could be no wrongful foreclosure cause of action. The court 

further found no actionable fraud was alleged.

We agree and affirm the judgment.

FACTS

Plaintiff owned a property on Tiara Street in Encino, 

originally as his principal residence and then, starting in 2008, as 

an investment property.

On March 16, 2005, plaintiff obtained a home equity line of 

credit from defendant E-Loan, Inc. The line of credit (or loan), 

evidenced by a written credit agreement, had a maximum 

indebtedness of $245,000, a variable interest rate, and a balloon 

payment due on its April 1, 2015 maturity date. The loan was 

secured by a second deed of trust on the Encino property. Wells 

Fargo Bank, N.A. (not a party) held third and fourth lien 

positions, with deeds of trust recorded later in April 2005.
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Plaintiff alleges that before he accepted the line of credit, 

loan officer Veronica Harmon promised him in a verbal 

discussion that the 2005 line of credit “would provide a 10-year 

draw or advance period, subject to a balloon payment at 

maturity, but [plaintiff] could refinance or re-amortize the loan 

into a 20-year amortized, principal and interest repayment 

period.” Plaintiff refers to this as the “verbal loan commitment,” 

and alleges he would not have entered into the transaction had 

he known E-Loan would not honor the verbal loan commitment. 

In early 2015, defendant Specialized Loan Servicing LLC 

(SLS) began servicing plaintiff’s loan. Plaintiff did not receive 

any demand for the balloon payment due on April 1, 2015, and 

continued to make monthly payments. Later in 2015, SLS 

returned plaintiff’s payments for August, September, and 

October 2015. 

Plaintiff began active inquiries with SLS in September 

2015, and learned SLS had reported to credit bureaus that he 

was 60 days late in paying off the loan. Plaintiff submitted a 

formal request for loss mitigation assistance from SLS, seeking 

“to proceed on the correct loan terms as he understood them,” and 

submitted documentation to SLS multiple times in the ensuing

months.

In November 2015, E-Loanassigned plaintiff’s loan to an 

affiliate, defendant E*Trade Bank. 

In January 2016, SLS erroneously closed its review of 

plaintiff’s loss mitigation request, claiming lack of required 

documentation. Plaintiff submitted more documents and 

continued to seek assistance from SLS. In August 2016, SLS 

offered plaintiff a trial loan modification. Plaintiff rejected this 

offer “because it was not in accordance with the terms he was 
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verbally promised” in 2005. Plaintiff then sent SLS an email 

reiterating his request for a 20-year amortization on the loan and 

removal of any negative credit reporting. He submitted 

additional documents in October 2016, and resubmitted them in 

January 2017 after being told they could not be located. 

In May 2017, SLS recorded a notice of default, listing a 

total amount due of more than $265,000. 

In June 2017, plaintiff told SLS he intended to sell the 

property, because SLS was unwilling to provide loan terms as in 

the verbal loan commitment, and requested removal of the notice 

of default. In July, he asked SLS to take a “discounted payoff.” 

In August and September, he submitted and resubmitted 

documents and further requests for mortgage assistance.

In early October, plaintiff received a notice of trustee’s sale, 

recorded on September 25, 2017, setting the sale for October 27, 

2017. 

Plaintiff submitted a short sale package to SLS on

October 5, 2017, and SLS requested additional information from 

plaintiff over the next several weeks. SLS continued the trustee’s 

sale date, and plaintiff believed this was because of the ongoing 

discussions. On November 1, 2017, plaintiff received an 

October 18, 2017 letter denying plaintiff’s short sale request 

because there was sufficient equity in the property to fully pay off 

the loan.

The trustee’s sale occurred on November 3, 2017, with no 

advance notice to plaintiff. The property was sold to a third party 

for $300,000.

Plaintiff filed this lawsuit in March 2018. Defendants 

demurred, plaintiff filed an amended complaint, and defendants 

again demurred. (Plaintiff did not attach the loan agreement or 
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deed of trust to his complaint. Defendants sought judicial notice 

of the deed of trust when they filed their demurrer.) 

As mentioned at the outset, the trial court sustained 

defendants’ demurrer to plaintiff’s breach of contract, wrongful 

foreclosure, and fraud claims without leave to amend. Plaintiff 

then dismissed several other causes of action, and on January 14, 

2019, the trial court entered a minute order stating that all 

causes of action had either been dismissed or sustained without 

leave to amend, and the court deemed the matter complete.

Plaintiff filed a timely notice of appeal from the 

January 14, 2019 order.

DISCUSSION

1. Standard of Review

A demurrer tests the legal sufficiency of the complaint. We 

review the complaint de novo to determine whether it alleges 

facts sufficient to state a cause of action. For purposes of review, 

we accept as true all material facts alleged in the complaint, but 

not contentions, deductions or conclusions of fact or law. We also 

consider matters that may be judicially noticed. (Blank v. 

Kirwan (1985) 39 Cal.3d 311, 318.) 

When a demurrer is sustained without leave to amend, “we 

decide whether there is a reasonable possibility that the defect 

can be cured by amendment: if it can be, the trial court has 

abused its discretion and we reverse; if not, there has been no 

abuse of discretion and we affirm.” (Blank v. Kirwan, supra, 

39 Cal.3d at p. 318.) Plaintiff has the burden to show a 

reasonable possibility the complaint can be amended to state a 

cause of action. (Ibid.)
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2. The Breach of Contract Claim

We conclude the verbal agreement to refinance or reamortize plaintiff’s loan is subject to the statute of frauds and is 

unenforceable on that ground. In addition, the oral agreement is 

too indefinite to be enforced. Consequently, plaintiff cannot state 

a cause of action for breach of contract.

a. The statute of frauds

The statute of frauds provides that certain contracts are 

invalid unless they, or some note of them, are in writing and 

signed by the party to be charged. (Civ. Code, § 1624, subd. (a).) 

This writing requirement “ ‘ “serves only to prevent the contract 

from being unenforceable” ’ ”; the statute of frauds “ ‘merely 

serve[s] an evidentiary purpose.’ ” (Sterling v. Taylor (2007) 

40 Cal.4th 757, 766; ibid. [“ ‘The primary purpose of the Statute 

is evidentiary, to require reliable evidence of the existence and 

terms of the contract and to prevent enforcement through fraud 

or perjury of contracts never in fact made.’ ”].)

The authorities are clear that the alleged oral agreement is 

subject to the statute of frauds. “An agreement for the sale of 

real property or an interest in real property comes within the 

statute of frauds. That includes a promissory note and a deed of 

trust securing performance under the note.” (Rossberg v. Bank of 

America, N.A. (2013) 219 Cal.App.4th 1481, 1503; Secrest v. 

Security National Mortgage Loan Trust 2002-2 (2008) 

167 Cal.App.4th 544, 552; see also Civ. Code, § 2922 [“A mortgage 

can be created, renewed, or extended, only by writing, executed 

with the formalities required in the case of a grant of real 

property.”].) Further, “[a]n agreement to modify a contract that 

is subject to the statute of frauds is also subject to the statute of 

frauds.” (Secrest, at p. 553; ibid. [a forbearance agreement was 
7

subject to the statute of frauds because it modified the original 

promissory note and deed of trust the borrowers executed]; Civ. 

Code, § 1698, subd. (a) [“A contract in writing may be modified by 

a contract in writing.”]; see also Paul v. Layne & Bowler Corp. 

(1937) 9 Cal.2d 561, 564 [“an oral agreement to make a contract 

which must be in writing, is itself within the statute of frauds”].)

Here, the alleged oral agreement modified the 2005 loan 

and the trust deed, negating the provision in the trust deed 

stating that “[a]ll amounts due under the [line of credit] must be 

paid in full not later than April 1, 2015.” It necessarily follows

that the alleged verbal loan commitment was subject to the 

statute of frauds and therefore invalid.

Plaintiff resists this conclusion, contending the oral 

agreement preceded the loan and trust deed, and therefore did 

not and could not modify those documents. For this proposition, 

plaintiff cites Secrest and other authorities that refer to 

subsequent modification of a contract. While most contract 

modifications no doubt do occur later in time, plaintiff cites no 

authority that so limits the application of the statute of frauds. It 

is incontrovertible that the alleged oral agreement changes—

indeed, eliminates—an important term of the parties’ written 

agreement. To be valid, it had to be in writing, and it was not. 

Plaintiff next contends there is a “fraud exception to the 

statute of frauds.” There is not. Plaintiff correctly points out 

that the statute of frauds was enacted for the purpose of 

preventing frauds, and cannot be used to perpetrate a fraud. 

Thus, “ ‘a misrepresentation of one’s intention is actionable even 

“when the agreement is oral and made unenforceable by the 

statute of frauds.” ’ ” (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 

18, 29 (Tenzer).) We will revert to this point in our discussion of 
8

plaintiff’s fraud claims, post, but it has nothing to do with 

plaintiff’s breach of contract claim. The contract plaintiff alleges

“ ‘ “is oral and made unenforceable by the statute of frauds.” ’ ” 

(Ibid.)

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b. Uncertainty

Aside from the statute of frauds, the alleged oral agreement 

is unenforceable for another reason: it is too uncertain and 

indefinite to be enforced. One court explains: “ ‘ “ ‘Where a 

contract is so uncertain and indefinite that the intention of the 

parties in material particulars cannot be ascertained, the 

contract is void and unenforceable.’ ” ’ ” (Daniels v. Select 

Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1174.) In 

1 There are certain circumstances under which a party may 

be estopped from relying on the statute of frauds to defeat 

enforcement of an oral contract (Tenzer, supra, 39 Cal.3d at p. 27; 

Monarco v. Lo Greco (1950) 35 Cal.2d 621, 623), but plaintiff has 

made no such claim. The doctrine is applied “to prevent fraud 

that would result from refusal to enforce oral contracts” in 

circumstances involving unconscionable injury or unjust 

enrichment. (Monarco, at p. 623.) Monarco explains that “fraud 

may inhere in the unconscionable injury that would result from 

denying enforcement of the contract after one party has been 

induced by the other seriously to change his position in reliance 

on the contract . . . , or in the unjust enrichment that would 

result if a party who has received the benefits of the other’s 

performance were allowed to rely upon the statute.” (Id. at 

pp. 623-624, citations omitted.) Plaintiff makes no reference to

this point in his opening brief, except to say he could amend the 

complaint to allege the estoppel doctrine. On the facts he has 

alleged in his complaint, the doctrine does not apply. The facts 

alleged identify no serious change of position in reliance on the 

oral agreement; plaintiff had the benefit of a $245,000 line of 

credit for 10 years.
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addition to the identity of the lender and the borrower, a contract 

involving a loan must include its amount and the terms for 

repayment. (Ibid.) “Preliminary negotiations or agreements for 

future negotiations—so-called agreements to agree—are not 

enforceable contracts.” (Ibid.)

The alleged oral agreement fails this test. Plaintiff’s 

operative complaint does not allege any of the basic material 

terms of a loan that would commence 10 years later—not the loan 

amount, not the interest rate, and not the amortization schedule. 

It is apparent to us that, absent those particulars, the intention 

of the parties cannot be ascertained and the alleged contract is 

unenforceable. At most, plaintiff has alleged an agreement to 

agree 10 years later. That is not an enforceable contract.

3. The Fraud Claims

The elements of fraud are misrepresentation, knowledge of 

falsity, intent to induce reliance on the misrepresentation, 

justifiable reliance on the misrepresentation, and resulting 

damages. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) 

Promissory fraud is a subspecies of fraud, and an action may lie 

where a defendant fraudulently induces the plaintiff to enter into 

a contract, by making promises he does not intend to keep. 

(Ibid.) “In such cases, the plaintiff's claim does not depend upon 

whether the defendant’s promise is ultimately enforceable as a 

contract.” (Ibid.) “In California, fraud must be pled specifically; 

general and conclusory allegations do not suffice.” (Id. at p. 645; 

Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th

26, 47 [“ ‘ “Every element of the cause of action for fraud must be 

alleged in the proper manner (i.e., factually and 

specifically).” ’ ”].) 
10

Plaintiff alleged three fraud claims: intentional 

misrepresentation, false promise, and negligent 

misrepresentation—all centering on a false promise by E-Loan’s 

loan officer, Ms. Harmon, that after 10 years, plaintiff “would be 

able to re-amortize or re-finance the 2005 [line of credit] into a 

20-year amortized, principal and interest repayment period.” We 

find plaintiff’s allegations insufficient to state a fraud claim, 

promissory or otherwise.

The complaint alleges that when defendants made their 

promise that plaintiff would be able to re-amortize or refinance 

after 10 years, they “had no intention of allowing Plaintiff to reamortize or re-finance.” The complaint alleges defendants, 

through Ms. Harmon, “made their false promises with the intent 

to induce Plaintiff to enter into the 2005 [line of credit]”; plaintiff 

“had a right to rely on Defendants’ false promises, acted in 

reasonable reliance on those promises, and, in ignorance of their 

falsity, entered into the 2005 [line of credit].” 

These allegations are the very sort of general and 

conclusory allegations that are insufficient to state a fraud claim. 

For one thing, plaintiff has alleged no facts or circumstances 

suggesting defendants’ intent not to perform the alleged promise 

when it was made. “It is insufficient to show an unkept but 

honest promise, or mere subsequent failure of performance.” 

(Riverisland Cold Storage, Inc. v. Fresno-Madera Production 

Credit Assn. (2013) 55 Cal.4th 1169, 1183 (Riverisland).) 

Plaintiff has alleged no facts or surrounding circumstances 

suggesting anything more. 

More importantly, entirely absent from plaintiff’s 

complaint are any facts that, if proved, would demonstrate 

plaintiff’s justifiable reliance on a promise he could refinance the 
11

loan 10 years later. It is patently unreasonable to rely on a 

promise of refinancing 10 years down the road, with no indication 

of what any of the terms of such a refinancing might be. It is 

obvious that innumerable factors pertinent to refinancing may 

change during a 10-year period—property value, equity in the 

property, income, and so on. “[P]romissory fraud, like all forms of 

fraud, requires a showing of justifiable reliance on the 

defendant’s misrepresentation.” (Riverisland, supra, 55 Cal.4th 

at p. 1183.) Plaintiff has alleged no facts or circumstances 

suggesting such a showing could ever be made.

We conclude with a final note. Plaintiff argues at some 

length about the parol evidence rule, but is mistaken about its 

application here. The parol evidence rule is a rule of substantive 

law, providing that “when parties enter an integrated written 

agreement, extrinsic evidence may not be relied upon to alter or 

add to the terms of the writing.” (Riverisland, supra, 55 Cal.4th 

at p. 1174; see also Code Civ. Proc., § 1856.) There is an 

exception, however, for evidence of fraud. (§ 1856, subd. (g); 

Riverisland, at p. 1182 [“ ‘[I]t was never intended that the parol 

evidence rule should be used as a shield to prevent the proof of 

fraud.’ ”].)

Here, plaintiff contends the oral agreement “is admissible 

as parol evidence to establish fraud in inducing [plaintiff] to enter 

into the 2005 [line of credit] under the guise of false promises.” 

But the fraud exception to the parol evidence rule does not come 

into play here, where the only question is whether plaintiff has 

sufficiently alleged a fraud claim in the first place. As we have 

seen, he has not. (Cf. Julius Castle Restaurant, Inc. v. Payne 

(2013) 216 Cal.App.4th 1423, 1442 [“A party claiming fraud in 
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the inducement is still required to prove they relied on the parol 

evidence and that their reliance was reasonable.”].)

4. Wrongful Foreclosure

The basic elements of a cause of action for wrongful 

foreclosure are that the trustee has caused “ ‘an illegal, 

fraudulent, or willfully oppressive sale’ ” under the power of sale 

in a deed of trust; the trustor or other party challenging the sale 

was prejudiced or harmed; and the trustor tendered the amount 

of the secured indebtedness or was excused from doing so. (Miles 

v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 

408.) 

The sole basis for plaintiff’s wrongful foreclosure 

allegations is his claim that defendants breached the alleged oral 

loan commitment. He contends that, “[g]iven the allegations of 

an enforceable contract and subsequent breach,” the foreclosure 

sale “was illegal, fraudulent, or willfully oppressive.” Because, as 

we have found, the alleged oral agreement is not an enforceable 

contract, its breach cannot support a claim of wrongful 

foreclosure.

5. Amendment of the Complaint

Plaintiff contends the trial court abused its discretion in 

failing to grant leave to amend, and points out that a showing as 

to how the complaint can be amended to state a legal claim may 

be made for the first time on appeal. But plaintiff has not shown 

how he can amend to cure the defects in the complaint. He says 

that he can “provide further details” to show the oral agreement 

was not subject to the statute of frauds and was not an 

agreement to agree; to explain he was not in default and the 

foreclosure sale was illegal; and to show the oral promises made 

are actionable in fraud. But he does not tell us what those 
13

“further details” are—only what he contends their legal effect 

would be. Plaintiff’s operative complaint does not allege facts 

sufficient to state a cause of action, and plaintiff adds nothing 

more in his briefs.

DISPOSITION

The judgment is affirmed. Respondents shall recover costs 

of appeal.

GRIMES, Acting P. J.

WE CONCUR:

STRATTON, J. 

WILEY, J.