Civil Code § 1717 Fees Are Awardable In An Action To Enforce Or, As In This Case, Avoid Enforcement Of A Contract, And Plaintiff Failed To Prove He Met Any Of The Four Exceptions To The Code Civ. Proc. § 2033.420 Mandated Fee Award For His Failures To Make Admissions.
In Yoon v. Cam IX Trust et al., Case No. B301191 (2d Dist., Div. 8 January 29, 2021) (published), plaintiff sued alleging claims for negligence and fraud, statutory claims, and causes of action to set aside the trustee’s sale and quiet title in connection with a trustee’s sale of his home. By the time the case went to a jury, only the negligence and fraud claims remained – which defendants successfully defeated. Afterward, defendants – the assignee of the deed of trust securing repayment of a $640,000 promissory note, and assignee’s loan servicer – moved for Civil Code § 1717 fees pursuant to fee provisions in the promissory note and deed of trust, and under Code Civ. Proc. § 2033.420 for expenses incurred in proving the truth of matters plaintiff denied in responses to requests for admission. The trial court, after making some reductions, found reasonable and awarded $191,619.47 in attorney fees and $29,345.97 in costs. Plaintiff appealed.
The 2/8 DCA affirmed. Contrary to plaintiff’s argument that § 1717 did not apply because his negligence and fraud claims were not based on the contract, the gravamen of plaintiff’s lawsuit sought to avoid his obligations under the note by making claims defendant acted negligently and fraudulently during the foreclosure process – even arguing at trial that defendants’ failed to comply with the terms in the promissory note and deed of trust by improperly sending a foreclosure option notice to the wrong address. “[F]ees should be awarded to the extent that the action in fact is an action to enforce – or avoid enforcement of – the specific contract.” (Shadoan v. World Savings & Loan Assn., 219 Cal.App.3d 97, 108 (1990).)
As to the requests for admission, plaintiff argued that the trial court abused its discretion in making the § 2033.420 award because plaintiff had reasonable ground to believe that he would prevail on the matters – thus entitling him to an exception, under Code Civ. Proc. § 2033.420(b)(3), to the mandated fee award. However, plaintiff failed to support his claim that he had reasonable ground with either evidence or circumstance both at trial and on appeal. Finally, while the panel agreed with plaintiff’s argument that fees can be awarded only for the period after he denied the requests for admission, it found no adjustment in the fee award was necessary as fees were also properly awarded under § 1717.
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