Appellate Court Offered Guidance, Including That No Section 1717 Adverse Fee Award On Plaintiff’s Complaint Could Be Granted On Grounds Advanced By Lender.
Plaintiff octogenarian sued her lender on various theories stemming from lender’s failure to disburse timely insurance proceeds covering a fire loss. In response to plaintiff’s Complaint, Lender filed an interpleader cross-complaint. The trial judge sustained a demurrer to plaintiff’s complaint and discharged lender through the interpleader, later ordering $68,265 in attorney’s fees (the full request) to lender for prosecuting the interpleader and successfully defending against plaintiff’s complaint and ordered fees payable from the interplead insurance proceeds.
Because the demurrer to plaintiff’s complaint should have been overruled, the fee award also was reversed, with remand guidance, in Rodriguez v. Banco Popular North America, Case No. B280489 (2d Dist., Div. 5 May 4, 2018) (unpublished).
The appellate court acknowledged that Lender, if eventually successful in the interpleader, is entitled to statutory fees (Code Civ. Proc., § 386.6(a)), but that it could locate no authority indicating that the section 1717 fees relating to plaintiff’s complaint could be paid out of interplead funds. Beyond that, however, guidance was offered on remand. In particular, Lender’s reliance on a deed of trust provision only allowed it to add attorney’s fees to the borrower’s loan, not seek an independent award of fees in a court action. With respect to the note provision relied on by Lender, plaintiff did not sue under the note but relied on her contractual rights to disbursement of insurance proceeds, such that this ground could not be advanced as a basis for fee entitlement under section 1717.