Costs, Deeds Of Trust, Fee Clause Interpretation, Prevailing Party, Section 1717: Deed Of Trust Trustee Did Prevail Under Civil Code Section 1717 Where It Defensed Tort Claims And It Took Neutral Position On Contractual Claim Under Broadly Worded Fees Cla

 

POOF!:  Award of Fees/Costs To Plaintiff Reversed, With Remand To Award Fees/Costs To Prevailing Trustee.

     Torigian v. WT Capital Lender Services, Case No. F068393 (5^th Dist. June 24, 2015) (unpublished) is an interesting unpublished decision, authored by Acting Presiding Justice Cornell, where a neutral trustee under a deed of trust was found to have prevailed under a broadly worded fees clause after having taken neutral actions with regard to a contract claim but defensing plaintiff’s tort claims.

     In this one, plaintiff borrower sued to primarily enjoin a nonjudicial foreclosure initiated by a lender, contending that the loan had been paid off four years earlier. The trustee under the deed of trust smartly, at the outset, filed a declaration of nonmonetary status pursuant to Civil Code section 2924l, which is a “neutrality” position taken with respect to the contractual claims and any injunctive relief requests as far as enjoining the foreclosure. Plaintiff also brought tort claims against trustee, ostensibly seeking money for slander of title and negligence. Trustee successfully obtained summary adjudication of the negligence and slander of title (monetary) causes of action based on the litigation privilege. Both plaintiff and trustee moved for routine costs and attorney’s fees under broadly worded fees clauses in the deed of trust. The lower court awarded plaintiff $120,834.50 in fees/other routine costs and refused to award costs or fees to trustee, prompting an appeal by trustee—which argued the fees/costs awards to plaintiff were erroneous, as was the denial of costs and fees with respect to trustee’s requests before the trial judge.

     Trustee won big on appeal.

     The equitable, nonmonetary claims for quiet title, declaratory relief, and injunction were “on the contract” under Civil Code section 1717, and the DOT fees clause was broad enough to encompass the monetary tort claims. Then, based on the true pragmatics of the parties’ positions and what occurred in lower court proceedings, the appellate court determined that trustee, not plaintiff, had prevailed: it remained neutral on the contract claims by filing the nonmonetary status declaration (in stark contrast to the trustee in Kachlon v. Markowitz, 168 Cal.App.4^th 316, 350 (2008), which did not remain neutral and only filed the nonmonetary status declaration close to trial), and it defensed the tort claims (under which plaintiff sought to recovery money against trustee). This meant that trustee should have been awarded fees, and plaintiff shouldn’t have. Because neither party obtained a monetary recovery, the claims against trustee were not dismissed, and plaintiff obtained an equitable judgment against trustee, the case—with respect to routine costs—fell within the catch-all provision of CCP § 1032(a)(4) which allows the trial court discretion to determine the prevailing party by comparing the relief sought with that obtained, along with the parties’ litigation objectives. Trustee accomplished its objectives of defeating the tort claims and did not oppose nonmonetary relief such that it was the prevailing party for purposes of a routine costs award, not plaintiff.

     Reversed so that trustee could seek recovery of attorney’s fees and costs, with the fee and costs awards to plaintiff going POOF! on appeal.