Prevailing Party, Section 1717: Where Result Was Mixed, Trial Court Did Not Err In Determining That Prevailing Party Borrowers Prevailed More Than Lender

$107,605.20 Fee Award Was The Borrowers’ Gain; Some Tort Claims, If Related To Enforcement Of A Note, Are Recoverable Under Civil Code Section 1717.

            In Bays v. Ashcraft, Case No. D079056 (4^th Dist., Div. 1 Nov. 18, 2021) (unpublished), borrowers and lender got into a tussle, with there being mixed results but with the lower court concluding the loan was “clearly usurious” such that all note interest had to be forfeited.  To put the mixed result in context, lender claimed about $233,000 was owed, and the trial court concluded only $24,868.32 in principal/interest was owed by borrowers—as well as cancelling the NOD and quieting title to the property in borrowers’ favor.  Then, after finding that the litigation results were mixed, the lower court determined borrowers obtained the greater relief and awarded them, as prevailing parties, $107,605.20 in attorney’s fees under Civil Code section 1717 (predicated on promissory note and deed of trust fee clauses). 

            The 4/1 DCA affirmed the fees award.  Based on the ultimate result combined with the voiding of the NOA and quieting of title in borrowers’ favor, the lower court did not err in finding borrowers to be the prevailing parties.  However, lender claimed that there could be no fees awarded on a breach of fiduciary duty and B&P § 17200 claim.  Section 1717’s “on the contract” language is liberally construed, with the pleadings showing that these two claims did relate to the loan such that they were allowable under the statutory provision.  (Cf. Yoon v. Cam IX Trust, 60 Cal.App.5^th 388, 393 (2021), discussed in our Jan. 31, 2021 post [claims against lender for negligence and fraud arose from enforcement of the note, so they were covered under section 1717].)  The fees for the tort/section 17200 claims were correctly awarded.