Barroso v. Ocwen Loan Servicing, LLC
208 Cal. App. 4th 1001
| Cal. Ct. App. | 2012Background
- Barroso challenged a demurrer without leave to amend to claims arising from a failed loan modification and foreclosure.
- Barroso alleges she entered into a Trial Period Plan, a Modification Agreement, and a December 2009 Revised Modification Agreement with Ocwen; payments were made under these plans.
- Foreclosure occurred in April 2010 despite Barroso’s payments and alleged modification, with U.S. Bank as trustee on the loan.
- The trial court sustained the demurrer, citing lack of a fully executed modification and lack of satisfaction of conditions precedent; no leave to amend was granted.
- On appeal, the court held Barroso adequately alleged a valid Modification Agreement (July 2009) but not a valid Revised Modification Agreement (due to notarization and late signature).
- The court reversed to allow amendment for breach of the Modification Agreement and for a claim under the implied covenant of good faith and fair dealing; a wrongful foreclosure claim could be pursued, with leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Barroso pled a valid Modification Agreement | Barroso fully performed under Modification Agreement | Conditions precedent and signatures not satisfied | Yes for Modification Agreement; not for Revised Modification Agreement |
| Whether the breach claim based on the Modification Agreement was properly demurred | Breach due to nonperformance despite full payment | No enforceable modification due to unmet conditions precedent | Reversed; breach claim viable on Modification Agreement |
| Whether Barroso should be allowed to amend to plead breach of the covenant of good faith and fair dealing | Implied covenant exists alongside the Modification Agreement | Covenant cannot contradict express terms | Leave to amend granted for the covenant with respect to the Modification Agreement |
| Whether Barroso may pursue a wrongful foreclosure claim | Equitable wrongful foreclosure applicable given modification and non-default | Tender or other formal requirements may apply; no basis shown | Wrongful foreclosure recognized; claim viable on merits with amendment |
Key Cases Cited
- Committee for Green Foothills v. Santa Clara County Bd. of Supervisors, 48 Cal.4th 32 (2010) (de novo review of pleadings; contract interpretation guidance)
- Davies v. Sallie Mae, Inc., 168 Cal.App.4th 1086 (2008) (contract interpretation; language on face governs construction)
- Avalon Pacific-Santa Ana, L.P. v. HD Supply Repair & Remodel, LLC, 192 Cal.App.4th 1183 (2011) (contract interpretation; mutual intent from writing)
- Bank of America v. La Jolla Group II, 129 Cal.App.4th 706 (2009) (cure of default and improper foreclosure; tender considerations)
- Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal.4th 342 (1992) (implied covenant cannot contradict express terms)
- Stebley v. Litton Loan Servicing, LLP, 202 Cal.App.4th 522 (2011) (wrongful foreclosure; tender requirements in equity)
- Ladd v. Warner Bros. Entertainment, Inc., 184 Cal.App.4th 1298 (2010) (statute of frauds considerations; pleading requirements)
- Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal.4th 882 (1997) (conditions precedent analysis; contract interpretation principles)
- Frankel v. Board of Dental Examiners, 46 Cal.App.4th 534 (1996) (conditions precedent not presumed absent clear language)
- Sprinkles v. Associated Indemnity Corp., 188 Cal.App.4th 69 (2010) (demurrer standard; abuse of discretion if amendable)
- Stebley v. Litton Loan Servicing, LLP, 202 Cal.App.4th 522 (2011) (equitable wrongful foreclosure; tender considerations)