Deed Of Trust, Fee Clause Interpretation: Deed Of Trust Fees Clause Did Not Justify Recovery To Successful Litigant Really Suing For Real Estate Option To Purchase Agreement Lacking A Fees Clause

Deed Of Trust Fees Clause Was Not Broad Enough To Encompass Real Estate Option Dispute.

            We have somewhat, on a syllogistic basis, indicated how one can achieve success on a fee petition in past posts—and we may give more clues to follow in future posts.

However, the first element is FEE ENTITLEMENT. You need a statutory or contractual basis for fee recovery. On a contractual basis, this means a laser focus on the terms of the fees clause to determine if it captures the disputes on which a judgment or resolution was reached. The next case shows how a successful result under one agreement, without a fees clause, and under another agreement, with a fees clause, may not entitle one to fees depending on what agreement really governed the dispute. If the dispute was governed under an agreement without a fees clause, you are out of luck!

In New Life Oasis Church v. Central Korean Evangelical Church, Case No. B284456 (2d Dist., Div. 4 Aug. 20, 2018) (unpublished), there was a longstanding dispute between parties as to the ownership of a Koreatown church property in Los Angeles. Plaintiff ultimately won a judgment to enforce a lease option to buy defendants’ church property, although nothing in the lease option document had an attorney’s fees provision. However, plaintiff was given a trust deed to secure an option security deposit on the Koreatown property, which did not contain an attorney’s provision indicating that the trust deed trustor would “ . . . appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary [Plaintiff] or Trustee; and to pay all costs and expenses, including costs of evidence of title and attorney’s fees in a reasonable sum, in any action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.” The trial judge found that this provision allowed the plaintiff to recover attorney’s fees of $285,025 against the defendants as the prevailing party.

The fee award was reversed as a matter of law by the appellate court upon review.

Nothing demonstrated that the two agreements were linked or incorporated by reference so as to justify a fee award based on a deed of trust fees clause which was divorced from plaintiff’s option agreement win. In fact, the reviewing court did place emphasis on punctuation marks in the written clause which influenced its decision.   (Dow v. Lassen Irrigation Co., 216 Cal.App.4^th 766, 783 (2013).) All of the punctuation and context of the trust deed provision showed it applied to narrow trust deed enforcement, not broader lease option concerns. Given the narrower scope of the DOT clause, fee recovery was not proper.