Deeds of Trust, Fee Clause Interpretation: Borrower Prevailing On Quiet Title And Equitable Lien Claims Based On Deeds Of Trust Properly Denied Prevailing Party Fees Based On The Wording Of The So-Called “Fee Clauses”

Look At the Wording, Folks!

            In determining whether there is attorney’s fees entitlement, one must carefully look at the wording of the clauses under which fees are sought as well as the documents which are being sued upon.  Although the borrower technically prevailed on some claims against the lender, the absence of fee entitlement properly led to a conclusion that borrower was not entitled to fees.

            What happened in HSBC Bank USA v. Malekan, Case No. B299157 (2d Dist., Div. 4 Feb. 15, 2022) (unpublished) is that a borrower did prevail, even upon reversal (which might have made a difference, but did not), on some quiet title/equitable lien claims brought by lender under a deed of trust.  After getting some victories, borrower moved for attorney’s fees under clauses in the deed of trust and promissory note.  The lower court denied fees in entirety, so an appeal was brought by borrower.

            The denial of fees was affirmed.  The main problem for borrower was that the deeds of trust clause advocating for fees was not a fees clause, because it only allowed fees to be added to the secured debt, reasoning supporting a rejection of fees under Chacker v. JPMorgan Chase Bank, 27 Cal.App.5^th 351 (2018) [reviewed in our September 20, 2018 post] and Hart v. Clear Recon Corp., 27 Cal.App.5^th 322 (2018) [reviewed in our September 19, 2018 post].  With respect to the argument that fees were required to be awarded under the promissory note, lender did not sue under that instrument, so no go!