Fee-Shifting Provisions In The Parties’ Loan Documents Entitled Prevailing Lender To Fees For Defending Foreclosure And Enforcing Plaintiff’s Debt Obligation, And Were Worded Broadly Enough To Encompass Both Contract And Tort Causes Of Action.
In Simon v. Wells Fargo Bank, Case No. C086688 (3d Dist. April 12, 2021) (unpublished), plaintiff sued Wells Fargo Bank for breach of contract by overcharging interest, wrongful foreclosure, and concealment after it foreclosed on his shopping center following his default on loans he took out to purchase the shopping center. After defeating plaintiff’s claims through demurrer and summary judgment, Wells Fargo successfully moved for $133,176.15 in attorney fees and costs.
On appeal, plaintiff argued that because he did not bring his action to enforce the deeds of trust or to unwind the foreclosure, and based on the fee-shifting provisions in the parties’ agreements which did not allow recovery of fees incurred after the foreclosure, nor for fees relating to tort claims, Wells Fargo was not entitled to fees.
The Third District disagreed – finding the fee-shifting provisions in the parties’ master agreement and deeds of trust supported the trial court’s post-judgment order on fees. The master agreement provided that a defaulting party would pay to Wells Fargo “all reasonable out-of-pocket expenses, including legal fees . . . , incurred by such other party by reason of the enforcement and protection of its rights under this Agreement . . . .” The deeds of trust provided for fees at the trial and appellate levels for claims “in any way affecting any of the Subject Property or [Wells Fargo’s] ability to exercise any of its rights or remedies with respect thereto.” Wells Fargo had successfully defended plaintiff’s wrongful foreclosure claims and its defense was “founded on the protection of its rights to repayment of interest and principal for the loans it made to [plaintiff] before he defaulted on payment.” Additionally, the panel found the fees provisions in the parties’ loan documents did not restrict fees only to contract causes of action and were broadly worded so as to encompass both contract and tort causes of action.
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