Court Opinion

ID: 2675821
Source: CourtListenerOpinion
Date Created: 2014-05-27 19:01:08.073773+00
Date Added: 2024-06-11T12:38:16.628866
License: Public Domain

Filed 5/27/14 Crosby v. Aurora Loan Services CA3
                                           NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                      THIRD APPELLATE DISTRICT
                                                     (Sacramento)
                                                            ----

CHRISTOPHER CROSBY,                                                                          C071027

                   Plaintiff and Appellant,                                       (Super. Ct. No. 34-2010-
                                                                                  00087199-CU-OR-GDS)
         v.

AURORA LOAN SERVICES, LLC,

                   Defendant and Respondent.

         Plaintiff Christopher Crosby sued defendant Aurora Loan Services, LLC (Aurora),
alleging Aurora failed to evaluate his request for a loan modification and to forebear from
foreclosing on his home, allegedly in violation of an agreement between the two parties.
The trial court sustained Aurora’s demurrer without leave to amend. Plaintiff appeals
from the judgment of dismissal, contending he pleaded sufficient facts to proceed with
his causes of action for breach of contract/promissory estoppel and breach of the implied
covenant of good faith and fair dealing. We disagree with his contentions and affirm the
judgment.

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                         FACTS AND PROCEDURAL HISTORY
       On an appeal from a judgment of dismissal on a demurrer, we deem plaintiff’s
factual allegations as true. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-
967.) We also accept as true facts appearing in exhibits attached to the complaint, and, to
the extent they conflict with the allegations in the pleading, we give them preference.
(Brakke v. Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 767-768.)
       In 2006, plaintiff refinanced the purchase of his home with a 30-year adjustable
rate note and deed of trust in the amount of $1.5 million at 7.625 percent interest.
Monthly payments were $10,616.91. In May 2009, plaintiff began experiencing financial
difficulties, and he stopped paying on the note. The lender subsequently recorded a
notice of default and, later, a notice of trustee’s sale.
       In January 2010, plaintiff contacted defendant Aurora, the entity that serviced
plaintiff’s loan, to seek a loan modification. The parties entered into a “workout
agreement” under which Aurora agreed not to foreclose upon the deed of trust for a
period of roughly six months and to consider plaintiff’s request for a loan modification.
In exchange, plaintiff agreed to make monthly payments of $8,046.67, beginning on
February 10, 2010. The agreement expired on the date the sixth monthly payment was
due; in this case, July 10, 2010. By that date, plaintiff had to reinstate the loan, pay it in
full, or enter into a modification agreement Aurora may have offered him. If none of
those actions occurred by that date, Aurora could resume foreclosure.
       Of significance here, the workout agreement made plaintiff’s payment of the six
monthly payments a condition precedent to Aurora’s obligation to forebear from
foreclosure and to consider a modification. If plaintiff failed to make any of the
payments by their due dates and in the full amounts, Aurora could terminate the workout
agreement immediately and without notice, and it could proceed with foreclosure.
       Plaintiff alleged he performed all of his obligations under the workout agreement.
He specifically asserted he timely paid four monthly payments in the months of February,

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March, April, and May, and he attached to the complaint copies of bank statements
recording those payments. He did not allege he made the payments due in June or July,
nor did he attach any bank statements recording those payments. He nonetheless asserted
he had every reason to believe and expect that Aurora would evaluate his request for a
loan modification and suspend foreclosure proceedings.
       However, a trustee’s sale of plaintiff’s home occurred on July 19, 2010, and
Aurora purchased the property.
       Plaintiff sued Aurora and other parties involved with the note. In his first
amended complaint, plaintiff sought damages from Aurora under causes of action for,
among others, breach of the workout agreement/promissory estoppel, and breach of the
implied covenant of good faith and fair dealing.
       Aurora filed a demurrer to the first amended complaint, and the trial court
sustained the demurrer without leave to amend.
       Plaintiff appeals from the judgment of dismissal, asserting the trial court erred in
sustaining the demurrer as to his claims for breach of contract and breach of the implied
covenant. We review the sufficiency of his factual claims de novo, and we review the
trial court’s determination not to grant leave to amend for abuse of discretion. (Blank v.
Kirwan (1985) 39 Cal.3d 311, 318.)
                                       DISCUSSION
                                              I
                         Breach of Contract/Promissory Estoppel
       Plaintiff contends he pleaded sufficient facts to state a cause of action for breach
of the workout agreement and promissory estoppel under that agreement. Specifically, he
asserts he alleged sufficient facts showing Aurora breached the workout agreement by
foreclosing on his property and by failing to evaluate his request for a loan modification.
He also contends he pleaded sufficient facts to establish promissory estoppel; he relied to

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his detriment upon Aurora’s promises to forebear from foreclosing and to evaluate his
modification request. We disagree with his contentions.
       Plaintiff failed to plead sufficient facts showing Aurora breached the workout
agreement. Aurora’s obligations to forebear from foreclosing and to evaluate his request
for a loan modification were contingent on plaintiff paying each of the six monthly
payments. Plaintiff specifically alleged he paid only four of the payments. These
specific allegations and the exhibits supporting them supersede his contrary and general
allegations of complying with all of the agreement’s terms. (Brakke v. Economic
Concepts, Inc., supra, 213 Cal.App.4th at pp. 767-768.) Plaintiff’s failure to comply with
the agreement and pay all of the payments constituted a default. Under the terms of the
workout agreement, his default effectively terminated the agreement and freed Aurora
from considering plaintiff’s request for a modification and from forbearing on its pursuit
of foreclosure.
       Plaintiff does not challenge Aurora’s right to terminate the workout agreement
upon his default, nor does he suggest he can lawfully plead he paid all six monthly
payments. Instead, he asserts Aurora’s promise in the workout agreement not to
foreclose is ambiguous and conflicts with another provision in the agreement stating
nothing in the agreement constituted a waiver of any of Aurora’s rights or remedies
against plaintiff. He argues we should resolve this conflict in his favor and interpret the
agreement to require Aurora not to foreclose.
       There is no ambiguity or conflict in the agreement. Aurora promised to forebear
from exercising its remedies under the note and deed of trust until the workout agreement
expired so long as plaintiff did not default on the workout agreement. If plaintiff
defaulted, Aurora could immediately exercise its remedies, and nothing in the agreement
could be constituted as a waiver of its right to exercise those remedies. There is no
conflict in the workout agreement to be construed against Aurora.

                                             4
       Plaintiff asserts he pleaded sufficient facts showing Aurora breached the
agreement by not considering his request for a loan modification. The workout
agreement, however, did not obligate Aurora to consider his request unless plaintiff did
not default. Because plaintiff cannot plead around his default, he cannot plead facts
showing he was contractually entitled to have his request for a modification considered.
       Plaintiff also asserts he pleaded sufficient facts to establish promissory estoppel.
He contends Aurora lured him away from his right to let the property go without recourse
by promising to consider a loan modification. Promissory estoppel, however, does not lie
where the promisor has not broken his promise. It applies when an injustice arising from
reliance and action upon a promise can be avoided only by enforcing the promise.
(Rest.2d Contracts, § 90, subd. (1), p. 242; Kajima/Ray Wilson v. Los Angeles
Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310.) Aurora never
promised plaintiff to evaluate his request for a loan modification unconditionally. Thus,
plaintiff received the promise he bargained for: an agreement not to foreclose but to
evaluate his modification request on condition he pay all six monthly payments. Plaintiff
defaulted on that agreement, resulting in the promise’s termination. There is no promise
made by Aurora left to enforce.
       Because plaintiff cannot plead around his default under the workout agreement,
the trial court correctly sustained the demurrer to his breach and promissory estoppel
cause of action without leave to amend.
                                              II
                    Implied Covenant of Good Faith and Fair Dealing
       Plaintiff alleged Aurora breached the implied covenant of good faith and fair
dealing by denying him the benefits of, and not fulfilling its performance of, the workout
agreement; namely forbearance of foreclosure and evaluation of his loan modification
request. Plaintiff contends he pleaded sufficient facts to establish this cause of action.
However, we have concluded plaintiff cannot plead sufficient facts to recover for breach

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of the express terms of the agreement on these grounds. Thus, he cannot plead to recover
under an implied covenant that purportedly extended him more rights than the
agreement’s express terms. “ ‘As to acts and conduct authorized by the express
provisions of the contract, no covenant of good faith and fair dealing can be implied
which forbids such acts and conduct. And if defendants were given the right to do what
they did by the express provisions of the contract there can be no breach.’ [Citation.]”
(Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2
Cal.4th 342, 374 (Carma Developers).)
       Plaintiff faults the trial court for addressing this argument only as it related to his
claim that Aurora breached the agreement by foreclosing, and for not also addressing it as
to his claim that Aurora breached the agreement by not considering his loan modification
request. Plaintiff suffered no prejudice from the court’s purported omission. He failed to
plead Aurora breached the agreement by not considering his modification request, and
thus there can be no breach of the implied covenant on that theory. (Carma Developers,
supra, 2 Cal.4th at p. 374.)
       Plaintiff cannot plead facts establishing a violation of the implied covenant based
on Aurora’s actions that complied with the agreement. Thus, the trial court correctly
sustained the demurrer and did not abuse its discretion by denying him leave to amend.
                                         DISPOSITION
       The judgment of dismissal is affirmed. Costs on appeal are awarded to Aurora.
(Cal. Rules of Court, rule 8.278(a).)

                                                          NICHOLSON              , J.

We concur:

      BLEASE                   , Acting P. J.

      HULL                     , J.

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