Contract – Statute of frauds forecloses breach of contract claim

Where a homeowner alleged that a loan servicer breached an oral agreement modifying the terms of her deed of trust, her breach of contract claim was dismissed as violating Virginia’s statute of frauds as a contract related to the purchase of real estate.

Background

Reba Thompson brought this action against Specialized Loan Servicing LLC, or SLS, Shellpoint Mortgage Servicing, Equity Trustees LLC and the Federal Home Loan Mortgage Corporation, or Freddie Mac. Thompson alleges that defendants unlawfully foreclosed on her family home despite an oral agreement by SLS and Shellpoint not to foreclose in exchange for Thompson making six consecutive monthly payments. SLS/Shellpoint and Freddie Mac have filed motions to dismiss.

Opposition

Freddie Mac argued that it should be dismissed as a party because Thompson did not respond to its motion to dismiss. Freddie Mac is correct that courts within this circuit have acknowledged that a party’s failure to respond to a motion to dismiss amounts to a concession to the moving party’s arguments.

But the Fourth Circuit has cautioned that, even where a party does not challenge a motion to dismiss, “the district court nevertheless has an obligation to review the motion[] to ensure that dismissal is proper.” And Thompson made clear at the hearing that she does not concede that Freddie Mac’s arguments are meritorious, so the court will resolve the motion on the merits.

Breach of contract

Count Two is a breach of contract claim only against SLS and Shellpoint. SLS and Shellpoint they contend that the alleged oral agreement between Thompson and SLS modifying the deed of trust falls under Virginia’s statute of frauds as a contract related to the purchase of real estate. Because any contract (or amendment to a contract) relating to the sale of real estate must be in writing, the alleged oral amendment is unenforceable. Thompson counters that the statute does not apply because the contract was a “separate agreement” rather than a modification of the underlying mortgage. SLS and Shellpoint have the better argument.

The purported agreement changed the terms of the deed of trust. SLS agreed to accept partial payments from Thompson
and not foreclose on the property despite its rights under the deed of trust to do just that—even after receiving partial payments. Thus, the alleged oral agreement modifies the mortgage. Accordingly, the oral contract falls under the statute of frauds and is thus unenforceable unless an exception applies.

Thompson argues that, if the statute of frauds covers the contract, the part-performance exception to the statute of frauds applies SLS and Shellpoint assert that Thompson
is not entitled to the part-performance exception because she “failed to show the definitive nature of the agreement.” The court agrees. Thompson’s breach-of-contract claim is dismissed.

Unjust enrichment

This claim is asserted against SLS, Shellpoint and Freddie Mac. SLS and Shellpoint are correct that the third element of unjust enrichment—inequity—is not adequately pleaded here because, even with the alleged oral modification, they were still entitled to foreclose on the property after accepting partial mortgage payments.

Turning to Freddie Mac, the benefit Thompson alleges that Freddie Mac received—the property—was not conferred by her because Freddie Mac purchased it at the foreclosure auction. Because the benefit Thompson alleges Freddie Mac received was not a benefit she conferred onto it, the court will dismiss Thompson’s unjust-enrichment claims as to all parties.

Fraud

SLS and Shellpoint argue that Thompson’s
fraud claim is barred by the economic loss rule. The court disagrees. Taken together, plaintiff’s allegations allude to intentional, rather than negligent, fraud and therefore sound in tort rather than contract.

In their reply brief, SLS and Shellpoint argue that Thompson failed to plead the intent to mislead and damages elements of actual fraud. They are incorrect. At this stage, Thompson sufficiently alleges these two elements.

Equitable rescission

Thompson has not stated a claim for equitable rescission of foreclosure because rescission “is not a cause of action in itself, but rather a remedy.” Therefore, it would be more appropriate to address equitable rescission as a possible remedy if Thompson prevails at trial.

Conclusion

Because the court has dismissed Freddie Mac as a party, there are no longer any live claims over which this court has original jurisdiction. The court will decline to exercise its supplemental jurisdiction over the remaining claim, and this matter will be remanded to the circuit court.

Thompson v. Specialized Loan Servicing LLC, Case No. 4:25-cv-00032, Feb. 9, 2026. WDVA at Danville (Cullen). VLW 026-3-065. 23 pp.

Full-Text Opinion