Harris

Plaintiffs Stephen and Ozelia Harris appeal a judgment entered after the trial court sustained without leave to amend a demurrer to their first amended complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair business practices. The trial court held that all three causes of action are preempted by the federal Home Owners’ Loan Act, or HOLA. ( 12 U.S.C. § 1461 et seq.) The court also held that the third cause of action, for unfair business practices, was impermissibly added to the first amended complaint without leave of court.

We conclude that the demurrer was properly sustained as to the claims for breach of the covenant of good faith and fair dealing and unfair business practices. However, plaintiffs’ claim for breach of contract is not preempted by HOLA, and the judgment must be reversed as to that cause of action.

FACTUAL HISTORY

“Because this case comes to us on a demurrer for failure to state a cause of action, we accept as true the well-pleaded [factual] allegations in plaintiffs’ first amended complaint.” (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6 [ 40 Cal.Rptr.3d 205 , 129 P.3d 394 ].)

In their first…