Fees Clause Was Broad Enough To Encompass Conversion Claim And Assignees Were “On The Hook.”
In Sanchez v. El Monte Investments, LLC, Case No. B276423 (2d Dist., Div. 5 Mar. 27, 2018) (unpublished), former property owner sued her lender for conversion of certain insurance proceeds retained by the lender after fire damage to the property following a court order that lender was entitled to the proceeds. Former owner eventually assigned her claim to her attorneys, who lost at trial and were ordered to pay lender’s attorney’s fees of $35,525 (out of a requested $42,350) under a deed of trust fees provision. The fees clause obligated former property owner “to appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of [lender]; and to pay all costs and expenses, including … attorney’s fees in a reasonable sum, in any action or proceeding in which [lender] may appear, and in any suit brought by [lender] to foreclose this deed.”
Appellant law firm appealed, but the fee award stood. The appellate court agreed that the conversion claim fell within the ambit of the broad deed of trust clause, and that the law firm as assignee had to bear the burdens as well as the benefits of the assignment (inclusive of the adverse fee award).