Opinion
C077841
08-29-2018
COREY T. HOFHEINZ, Plaintiff and Appellant, v. WELLS FARGO BANK, N.A., Defendant and Respondent.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34-2013-00139589-CU-CO-GDS)
Plaintiff Corey T. Hofheinz alleges that after he defaulted on his home mortgage loan, defendant Wells Fargo Bank, N.A. (Wells Fargo) offered to modify his loan in accordance with the Home Affordable Modification Program (HAMP). He communicated his desire to pursue such a modification to Wells Fargo within a few days, but Wells Fargo sold his home a week later at a trustee's sale without notice and without first determining whether he was eligible for a HAMP loan modification. Hofheinz sued Wells Fargo for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, unlawful business practices in violation of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), and promissory estoppel. The trial court sustained a demurrer to the second amended complaint without leave to amend and entered a judgment of dismissal. On appeal, Hofheinz contends that the allegations in the complaint are sufficient to state the specified causes of action and, in the alternative, the trial court abused its discretion in failing to grant him leave to amend. He also claims the trial court erred in failing to overrule Wells Fargo's demurrer as untimely.
Further unspecified references to the complaint are to the operative second amended complaint.
We shall conclude that the complaint fails to state facts sufficient to constitute a cause of action, and the demurrer was properly sustained without leave to amend. We shall reject Hofheinz's challenge to the timeliness of the demurrer. Accordingly, we shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Because this matter comes to us following a judgment sustaining a demurrer without leave to amend, we assume the truth of the material facts properly pleaded in Hofheinz's complaint. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126 (Zelig).) We also consider judicially noticeable matters and facts in the exhibits attached to the complaint. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732-733.)
A. The Home Affordable Modification Program (HAMP)
"In response to rapidly deteriorating financial market conditions in the late summer and early fall of 2008, Congress enacted the Emergency Economic Stabilization Act, P.L. 110-343, 122 Stat. 3765. The centerpiece of the Act was the Troubled Asset Relief Program (TARP), which required the Secretary of the Treasury, among many other duties and powers, to 'implement a plan that seeks to maximize assistance for homeowners and . . . encourage the servicers of the underlying mortgages . . . to take advantage of . . . available programs to minimize foreclosures.' 12 U.S.C. § 5219(a). Congress also granted the Secretary the authority to 'use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.' Id.
"Pursuant to this authority, in February 2009 the Secretary set aside up to $50 billion of TARP funds to induce lenders to refinance mortgages with more favorable interest rates and thereby allow homeowners to avoid foreclosure. The Secretary negotiated Servicer Participation Agreements (SPAs) with dozens of home loan servicers, including Wells Fargo. Under the terms of the SPAs, servicers agreed to identify homeowners who were in default or would likely soon be in default on their mortgage payments, and to modify the loans of those eligible under the program. In exchange, servicers would receive a $1,000 payment for each permanent modification, along with other incentives. The SPAs stated that servicers 'shall perform the loan modification . . . described in . . . the Program guidelines and procedures issued by the Treasury . . . and . . . any supplemental documentation, instructions, bulletins, letters, directives, or other communications . . . issued by the Treasury.' In such supplemental guidelines, Treasury directed servicers to determine each borrower's eligibility for a modification by following what amounted to a three-step process:
"First, the borrower had to meet certain threshold requirements, including that the loan originated on or before January 1, 2009; it was secured by the borrower's primary residence; the mortgage payments were more than 31 percent of the borrower's monthly income; and, for a one-unit home, the current unpaid principal balance was no greater than $729,750.
"Second, the servicer calculated a modification using a 'waterfall' method, applying enumerated changes in a specified order until the borrower's monthly mortgage payment ratio dropped 'as close as possible to 31 percent.'
"Third, the servicer applied a Net Present Value (NPV) test to assess whether the modified mortgage's value to the servicer would be greater than the return on the mortgage if unmodified. The NPV test is 'essentially an accounting calculation to determine whether it is more profitable to modify the loan or allow the loan to go into foreclosure.' [Citation.] If the NPV result was negative — that is, the value of the modified mortgage would be lower than the servicer's expected return after foreclosure — the servicer was not obliged to offer a modification. If the NPV was positive, however, the Treasury directives said that 'the servicer MUST offer the modification.' [U.S. Dep't of the Treasury, Home Affordable Modification Program] Supplemental Directive 09-01 [(Apr. 6, 2009)]." (Wigod v. Wells Fargo Bank N.A. (7th Cir. 2012) 673 F.3d 547, 556-557, fn. omitted.) B. The Loan
In April 2004, Hofheinz obtained a loan from Washington Mutual Bank, F.A. (WAMU) in the amount of $112,000 to refinance the mortgage on his home in Sacramento, California. The loan was evidenced by a promissory note and was secured by a deed of trust encumbering the property. The promissory note provided that the monthly principal and interest payments on the loan would be $900.34. In February 2007, WAMU assigned the loan and deed of trust to Wells Fargo, and Wells Fargo appointed First American Loanstar Trustee Services (First American) as the trustee under the deed of trust. C. The Default
Hofheinz later defaulted on his loan, and First American recorded a notice of default (NOD) on the subject property on April 8, 2009. The NOD provided that the amount of past-due payments on the loan, plus permitted costs and expenses, was $8,841.04 as of April 6, 2009, and would increase until the account became current. It also provided that Hofheinz may have the legal right to bring his account into good standing by paying the entire amount due on the account.
On June 9, 2009, First American recorded a notice of trustee's sale, which provided in part: "YOU ARE IN DEFAULT UNDER A DEED OF TRUST, DATED 4/21/2004. UNLESS YOU TAKE ACTION TO PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE." The notice further stated that Hofheinz's home would be sold at public auction on July 29, 2009, to the highest bidder.
On August 29, 2009, Hofheinz paid $10,500 to Wells Fargo. Wells Fargo did not apply those funds to the arrearages and held onto them until sometime after the trustee's sale. In a letter to Hofheinz's counsel, Wells Fargo explained that the $10,500 "was held in an unapplied funds account from August 28, 2009 to February 4, 2010. These monies could not be applied to the mortgagor's loan due to not receiving the total amount due as required. The Notice of Default delivered to Mr. Hofheinz on April 6, 2009 stated these requirements." D. Communications Regarding a Possible Loan Modification
On January 22, 2010, Wells Fargo wrote to Hofheinz and advised him that his "request for Moratorium" had been denied because he "failed to adhere to the agreed upon terms of the forbearance plan."
On January 28, 2010, Wells Fargo wrote to Hofheinz and advised him that he "may be eligible for the Home Affordable Modification program," and that if he wished to pursue this option he should contact Wells Fargo.
On February 4, 2010, Hofheinz telephoned Wells Fargo and "requested another postponement of the trustee's sale for a sufficient amount of time to enable workout negotiations . . . ." The next day, he faxed Wells Fargo "proof of availability of funds" belonging to his girlfriend as directed by Wells Fargo.
On February 11, 2010, Hofheinz was assured by Wells Fargo "that his access to such brokerage funds would be sufficient to achieve a HAMP workout loan modification and to avoid the need for the trustee's sale." Nevertheless, Hofheinz's property was sold that same day at a trustee's sale for more than $50,000 below the fair market value for the property on that date. E. Communications Following the Trustee's Sale
On February 24, 2010, Wells Fargo advised Hofheinz that it would rescind the sale but failed to do so.
When Hofheinz sought release of the net proceeds from the sale of his property, which exceeded $100,000, Wells Fargo responded that "[t]he only way for [Hofheinz] to receive excess funds is to admit the foreclosure is valid, otherwise the excess funds will be held to ensure that the correct parties receive the funds." F. The Instant Action
Hofheinz commenced this action against Wells Fargo on February 11, 2013, exactly three years after the subject property was sold at the trustee's sale. After Wells Fargo demurred to Hofheinz's original complaint, Hofheinz filed a first amended complaint. After the trial court sustained Wells Fargo's demurrer to the first amended complaint with leave to amend, Hofheinz filed the operative second amended complaint. Wells Fargo demurred to that complaint on the ground it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) The trial court sustained the demurrer without leave to amend and dismissed the case.
DISCUSSION
I
Standard of Review
In reviewing whether the trial court erred in sustaining Wells Fargo's demurrer without leave to amend, we review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) " ' "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed." [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it 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. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.' " (Zelig, supra, 27 Cal.4th at p. 1126, quoting Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
II
The Trial Court Properly Sustained the Demurrer to the Breach of Contract Cause of
Action
The elements of a breach of contract cause of action are (1) the existence of the contract, (2) performance by the plaintiff or excuse for nonperformance, (3) breach by the defendant, and (4) damages. (First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 745.)
The complaint alleges that (1) the January 28, 2010, letter, which "countermand[ed] the January 22nd letter lifting the trustee's sale moratorium," constituted an offer "to attempt to negotiate a workout of the default . . . in accordance with the federal Home Affordable Modification Program," (2) which Hofheinz accepted by telephoning Wells Fargo on February 4, 2010, (3) Wells Fargo breached "the modification offer" by selling the property without working with him to determine "if the loan payments could be modified in accordance with the HAMP program or to otherwise avoid the trustee's sale of the Property," and (4) Hofheinz was damaged thereby in that the sale "resulted in a price in excess of $50,000 below . . . fair market value," he lost possession of the house, and he was forced to defend against eviction from the house.
In sustaining the demurrer to the breach of contract cause of action, the trial rejected Hofheinz's assertion that January 28, 2010, letter gave rise to a valid contract, finding that it was "an invitation to potentially begin negotiations for a loan modification and contain[ed] no definite terms." Hofheinz contends this was error because "a reasonable construction of the countermanding language utilized by Wells Fargo represents that the foreclosure would be stopped to allow Hofheinz and Wells Fargo to determine if Hofheinz was eligible for HAMP" and that "[a]ll Hofheinz had to do to accept this new moratorium on the pending foreclosure and initiate the HAMP loan negotiation process was to respond by calling Wells Fargo to indicate his acceptance of this HAMP modification to the promissory note . . . and the deed of trust . . . process, which he did on or about February 4th." We are not persuaded.
The January 28, 2010 letter relied on by Hofheinz provides in pertinent part:
"Dear Corey T. Hofheinz,
"There is help available if you are having difficulty making your mortgage loan payments. You may be eligible for the Home Affordable Modification program, part of the initiative announced by President Obama to help homeowners.
"As your mortgage loan servicer, we will work with you in an effort to make your mortgage payment affordable. You will not pay any fees to take advantage of this opportunity to modify your mortgage loan payment and keep your home. Now is the time to act. We are ready to help you.
"Here's how it works: We will first determine if you are eligible based on your situation. If you are eligible, we will look at your monthly income and housing costs, including any past due payments, and then determine an affordable mortgage payment.
"At first, you will make new, affordable monthly payments on your mortgage loan during a trial period. If you make those payments successfully and fulfill all trial period conditions, we will permanently modify your mortgage loan. [¶] . . . [¶]
"To take advantage of this opportunity and the Home Affordable Modification program, contact us as soon as possible."
"Under basic contract law 'an offer must be sufficiently definite, or must call for such definite terms in the acceptance that the performance promised is reasonably certain.' [Citation.]" (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 770.) The January 28, 2010, letter simply advises Hofheinz that he "may be eligible for the Home Affordable Modification program" and to contact Wells Fargo as soon as possible "[t]o take advantage of this opportunity." (Italics added.) It does not state that the "foreclosure would be stopped" or that a "new moratorium" would begin should Hofheinz contact Wells Fargo and indicate his desire to "take advantage" of the HAMP. As the trial court properly found, the letter constituted "an invitation to potentially begin negotiations for a loan modification and contain[ed] no definite terms." As such, it did not give rise to an enforceable contract. (See Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 213-214 [" 'Preliminary negotiations or [agreements] for future negotiations are not the functional equivalent of a valid, subsisting agreement' "].) Accordingly, Hofheinz's breach of contract cause of action fails for lack of a valid contract, and the trial court properly sustained the demurrer to that cause of action.
We express no opinion as to whether Wells Fargo's actions violated HAMP's mandates as claimed by Hofheinz because even assuming that they did, Hofheinz still could not state a cause of action for breach of contract absent a valid contract. While courts have read HAMP's provisions into "HomeSaver forbearance agreements" (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 73-76) and "Trial Plan Agreements" (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 796-799), here there is no underlying agreement in which to incorporate those provisions. Moreover, while this court has held that lenders owe a duty of care in handling loan modification applications (Rossetta v. CitiMortgage, Inc. (2017) 18 Cal.App.5th 628, 640), a negligence cause of action is subject to a two-year statute of limitations. (Code Civ. Proc., § 339, subd. (1); William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294, 1313.) This action was filed three years after Hofheinz's home was sold at the trustee's sale. Accordingly, a negligence claim based on the handling of his loan modification is barred by the statute of limitations.
III
The Trial Court Properly Sustained the Demurrer to the Promissory Estoppel Cause of
Action
Promissory estoppel requires: (1) a promise that is clear and unambiguous in its terms, (2) reliance by the party to whom the promise is made, (3) the reliance must be reasonable and foreseeable, and (4) the party asserting the estoppel must be injured by his or her reliance. (Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 225.) Hofheinz prefaces his promissory estoppel cause of action on the January 28, 2010, letter, which he asserts "should be construed to be a written promise to forbear on the foreclosure." As we have discussed, the January 28, 2010, letter does not constitute a promise to forbear on the foreclosure, but rather an invitation to potentially begin negotiations for a loan modification. Accordingly, Hofheinz's promissory estoppel cause of action fails for lack of a clear and unambiguous promise, and the trial court properly sustained the demurrer to that cause of action.
IV
The Trial Court Properly Sustained the Demurrer to the Fraud Cause of Action
"The elements of fraud are (1) misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance on the misrepresentation, (4) justifiable reliance on the misrepresentation, and (5) resulting damages. [Citations.]" (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469; see also Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 605-606.)
Hofheinz bases his fraud cause of action on the January 28, 2010, letter. The complaint alleges in pertinent part that "WELLS FARGO promised by the January 28th letter . . . that [Hofheinz] would be allowed a reasonable opportunity to negotiate a HAMP workout before trustee's sale of the Property." As previously discussed, the January 28, 2010, letter contained no such promise. Accordingly, Hofheinz's fraud cause of action fails, and the trial court properly sustained the demurrer to that cause of action.
V
The Trial Court Properly Sustained the Demurrer to the UCL Cause of Action
The UCL prohibits "any unlawful, unfair or fraudulent business act or practice." (Bus. & Prof. Code, § 17200.) The complaint alleges that Wells Fargo violated the UCL by denying Hofheinz the opportunity to "negotiate for a HAMP workout loan modification, reinstatement, or payoff before conducting the trustee's sale" as required of "HAMP member financial institutions" like Wells Fargo, and that Hofheinz was damaged by the loss of his home at an amount more than $50,000 less than its fair market value.
Monetary damages are not available under the UCL. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266.) "The only nonpunitive monetary relief available under the [UCL] is the disgorgement of money that has been wrongfully obtained or, in the language of the statute, an order 'restor[ing] . . . money . . . which may have been acquired by means of . . . unfair competition.' ([Bus. & Prof. Code, ]§ 17203; cf. [id., §]§ 17206, 17207 [penalties].)" (Ibid.) The complaint does not identify any funds that Hofheinz has lost and which may be disgorged from Wells Fargo. Rather, a fair reading of the complaint is that Hofheinz seeks money from Wells Fargo as compensation for injuries Wells Fargo allegedly caused by denying Hofheinz the opportunity to "negotiate for a HAMP workout loan modification, reinstatement, or payoff before conducting the trustee's sale" as mandated by HAMP.
Because Hofheinz has failed to identify any available relief under the UCL, his UCL cause of action fails.
VI
The Trial Court Properly Sustained the Demurrer to the Breach of the Implied Covenant
of Good Faith and Fair Dealing Cause of Action
To plead a breach of the implied covenant of good faith and fair dealing, Hofheinz must allege the existence of a contractual obligation, along with conduct that frustrates his right to benefit from the contract. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394; Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 371.) "The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made. [Citation.] The covenant thus cannot ' "be endowed with an existence independent of its contractual underpinnings." ' [Citations.] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350.) It likewise cannot be interpreted so broadly as to prohibit a party from taking an action that is expressly authorized by the agreement. (See Carma Developers, 2 Cal.4th at p. 374.)
Hofheinz bases his breach of the implied covenant of good faith and fair dealing cause of action on the deed of trust. The complaint alleges that Wells Fargo breached the deed of trust's implied covenant of good faith and fair dealing by "accept[ing] the $10,500 payment tendered by check #2757 in good faith to cure the arrearages on the Note, without timely objection to and not returning the check until on or after 2/4/2010, in a calculated effort by WELLS FARGO to prevent [Hofheinz] from curing the arrearages or stopping the February 11, 2010 trustee's sale of the Property, and refusing to rescind such sale despite Joel Havick on or about 2/24/10 advising Plaintiff that it would."
The terms of the deed of trust, which Hofheinz attached to the complaint, expressly allow Wells Fargo to "accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder" and to not "apply such payments at the time such payments are accepted." Instead, Wells Fargo "may hold such unapplied funds until Borrower makes payment to bring the Loan current," and "[i]f Borrower does not do so within a reasonable period of time, Lender shall either apply such funds or return them to Borrower." Thus, under the deed of trust, Wells Fargo was not required to reinstate the loan until all sums due under the note and deed of trust were paid, which never occurred.
Section 1 of the deed of trust, entitled "Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges," provides in pertinent part: "Lender may return any payment or partial payment if the payment or partial payments are insufficient to bring the Loan current. Lender may accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its rights to refuse such payment or partial payments in the future, but Lender is not obligated to apply such payments at the time such payments are accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment to bring the Loan current. If Borrower does not do so within a reasonable period of time, Lender shall either apply such funds or return them to Borrower."
Section 19 of the deed of trust, entitled "Borrower's Right to Reinstate After Acceleration," provides in pertinent part: "If Borrower meets certain conditions, Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earlier of: (1) five days before sale of the Property pursuant to any power of sale contained in this Security Instrument; (b) such other period as Applicable Law might specify for the termination of Borrower's right to reinstate; or (c) entry of a judgment enforcing this Security Instrument. Those conditions are that Borrower: (a) pays Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred
It is undisputed that the $10,500 tendered by Hofheinz was insufficient to bring the loan current. Hofheinz tendered the $10,500 payment on August 29, 2009. As of April 6, 2009, the amount of the default was $8,841.04. By August 29, 2009, the loan account would have been past due for at least four additional monthly payments of $900.34 (totaling $3,601.36), plus any additional costs and expenses. Thus, Hofheinz's $10,500 payment was insufficient to cure the default. Hofheinz does not contend otherwise. Rather, he asserts that "[t]he tendered funds should have been deemed sufficient."
In support of his assertion, Hofheinz cites Civil Codesection 1485, which provides that "[a]n obligation is extinguished by an offer of performance, made in conformity to the rules herein prescribed, and with intent to extinguish the obligation." His reliance is misplaced because the $10,500 tender was insufficient to bring the loan current. "An offer of partial performance is of no effect." (Civ. Code, § 1486.) "For that reason, '[nothing] short of the full amount due the creditor is sufficient to constitute a valid tender . . . .' [Citations]." (Gaffney v. Downey Savings & Loan Assn. (1988) 200 Cal.App.3d 1154, 1165 (Gaffney).)
Hofheinz also asserts that Wells Fargo waived any "claim of inadequate payment" by failing to object to the tender in a timely manner. Code of Civil Procedure section 2076, cited by Hofheinz, provides: "The person to whom a tender is made must, at the time, specify any objection he may have to the money, instrument, or property, or he must be deemed to have waived it; and if the objection be to the amount of money, the terms of the instrument, or the amount or kind of property, he must specify the amount, terms, or kind which he requires, or be precluded from objecting afterwards." "The purpose of [Civil Code section 1501 and Code of Civil Procedure section 2076] is to allow a debtor who is willing and able to pay his debt to know what the creditor demands so that the debtor may, if he wishes, make a conforming tender. [Citation.] These statutory provisions do not apply where, as here, the amount of the creditor's demand is known to the debtor and the amount of the tender is wholly insufficient. [Citations.] Moreover, these provisions are intended to enable a debtor to pay his debt without being later confronted with hidden objections which could have been obviated. Accordingly, reasonable compliance is what is required. [Citations.]" (Gaffney, supra, 200 Cal.App.3d at p. 1166.)
Civil Code section 1501 provides: "All objections to the mode of an offer of performance, which the creditor has an opportunity to state at the time to the person making the offer, and which could be then obviated by him, are waived by the creditor, if not then stated."
Here, the NOD, which Hofheinz attached to the complaint, informed Hofheinz that the amount of past due payments on the loan, plus permitted costs and expenses, was $8,841.04 as of April 6, 2009, and would increase until the account became current. Hofheinz was no doubt aware that his monthly loan payment was $900.34. Thus, he had to have known that the $10,500 he tendered over four months later on August 29, 2009, was insufficient to cure the default and bring the loan current. Accordingly, Code of Civil Procedure section 2076 does not apply.
Hofheinz further contends that Wells Fargo's delay in returning the funds, which he asserts was "a calculated effort to hinder [his ability] to cure the default," was a breach of the implied covenant of good faith and fair dealing. Hofheinz fails to explain how such conduct, if true, frustrated his rights under the deed of trust. Significantly, he does not allege that Wells Fargo's failure to return the funds sooner prevented him from curing the default. To the contrary, he alleges that he had access to his girlfriend's brokerage account which contained more than sufficient funds to "pay off the default."
Finally, while not alleged in the complaint or raised in the trial court, Hofheinz contends that "[e]ven if this tender were properly rejected, the failure to timely return the tendered funds is still actionable in the very least for the loss of use of such funds, calculable at the legal rate of interest." Again, Hofheinz fails to explain how the loss of use of such funds frustrated his rights under the deed of trust. More particularly, he does not assert that the loss of use of such funds precluded him from curing the default. To the contrary, he claims that he had access to funds sufficient to pay off the loan in its entirety.
For all the foregoing reasons, Hofheinz's breach of the implied covenant of good faith and fair dealing cause of action fails, and the trial court properly sustained the demurrer to that cause of action.
VII
The Trial Court Acted Within Its Discretion in Sustaining the Demurrer Without Leave to
Amend
The trial court sustained the demurrer without leave to amend because Hofheinz had "three chances to plead a valid cause of action and . . . failed to do so" and because he had not "made any effort to show how an amendment could cure the fatal defects in his [complaint]."
On appeal, Hofheinz has failed to establish that there is a reasonable possibility that any of the defects identified above can be cured by amendment. Accordingly, the trial court acted within its discretion in sustaining the demurrer without leave to amend. (See Zelig v. County of Los Angeles, supra, 27 Cal.4th at p. 1126.)
VIII
The Trial Court Did Not Abuse Its Discretion in Considering Wells Fargo's Untimely
Demurrer
Finally, Hofheinz asserts that the trial court was precluded from considering Wells Fargo's demurrer because it was filed on April 7, 2014, after the trial court's March 17, 2014, deadline and after Hofheinz "attempted to enter Wells Fargo's default" on April 2, 2014.
As Hofheinz acknowledges, a trial court has discretion to consider an untimely demurrer. (Jackson v. Doe (2011) 192 Cal.App.4th 742, 750; McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, 280 (McAllister).) He asserts, however, that "[t]his does not apply and there is no discretion . . . where the plaintiff has taken steps to obtain a default judgment." He is mistaken.
In McAllister, the court held that a trial court may exercise its discretion to consider an untimely demurrer "so long as its action does 'not affect the substantial rights of the parties.' " (McAllister, supra, 147 Cal.App.4th at p. 282, quoting Harlan v. Department of Transportation (2005) 132 Cal.App.4th 868, 873; see also Code of Civ. Proc., § 475.) There, the court concluded that "the trial court's decision to entertain the second demurrer did not affect [the plaintiff's] substantial rights. 'Prior to the filing of respondent's demurrer to the amended complaint, appellant had not taken any steps to have judgment by default entered . . . , nor did he endeavor to show that he was in any way prejudiced by the delay.' " (McAllister, at p. 282, quoting Tuck v. Thuesen (1970) 10 Cal.App.3d 193, 196.)
Here, Hofheinz attempted to file a request for entry of default on April 4, 2014, but the request was rejected by the trial court on the ground that the "[d]ate allowed for [d]efault to be entered is premature." Thus, Wells Fargo's default was never entered. That being the case, Wells Fargo was still permitted to file pleadings and motions with the court. (See Goddard v. Pollock (1974) 37 Cal.App.3d 137, 141; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2018) ¶¶ 5:2 to 5:3, p. 5-1.) Accordingly, the trial court properly considered Wells Fargo's demurrer to the second amended complaint.
DISPOSITION
The judgment is affirmed. Wells Fargo is entitled to recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
/s/_________
Blease, J. We concur: /s/_________
Raye, P. J. /s/_________
Mauro, J.