As They Were Entitled, Under Code Of Civil Procedure Section 1021, Original Parties To The Contract Entered Into A Fee Arrangement Obligating Payment Of Fees To The Prevailing Party Whether The Underlying Litigation Sounded In Tort Or Contract.
In Cook v. Trebino, Case Nos. H047830/H048498 (6th Dist., May 10, 2022) (unpublished), two sisters each received a 50 percent ownership in a property that had been in their family since the late 1800’s. Over the years, for her alleged share of property expenses, one sister signed various promissory notes and a deed of trust to the other sister and her husband. Eventually, sister signed a grant deed conveying her interest to the other sister’s and her husband’s living trust in exchange for $70,000 plus cancelation of her debt to them. After sister and husband passed, the successors to their interest in the property notified other sister’s children that they now owned the property. Sister’s children sued – alleging numerous causes of action, including quiet title, undue influence, and fraud. Following a bench trial, the trial court found in favor of defendants on their statute of limitations affirmative defense. Following entry of judgment, defendants successfully moved for an award of various costs and attorney fees pursuant to provisions in the promissory notes and deed of trust. The award included $320,100 in attorneys’ fees which plaintiffs appealed.
On appeal, plaintiffs raised numerous challenges to the fees award, but each failed – with the Sixth District determining that the sisters were entitled, under Code of Civ. Proc. section 1021, to enter into a fee arrangement that obligated payment of fees to the prevailing party – whether the underlying litigation sounded in tort or contract. Here, defendants were the prevailing party and had two contractual bases for the fees award. First, defendants’ defense fell within the terms of the promissory notes’ fee provision as plaintiffs sought to rescind the grant deed and unwind the transaction by challenging the validity of the promissory notes. Second, the broad fee provision of the deed of trust was also applicable because the underlying dispute required defendants to appear and enforce their rights under the deed of trust. Contrary to plaintiffs’ argument, defendants’ entitlement to fees under the contractual fees provisions did not depend on whether the notes and deed were litigated on the merits. Rather, entitlement was based on the prevailing party determination. (Mepco Services, Inc. v. Saddleback Valley Unified School Dist., 189 Cal.App.4th 1027, 1047 (2010); and Maynard v. BTI Group, Inc., 216 Cal.App.4th 984, 990 (2013).)
As for plaintiffs’ argument that defendants were excluded from collecting fees under the fees provisions because they were not parties to the notes or deed, the Sixth District found there was no meaningful dispute. The fees provisions did not contain language that indicated an intent to exclude successors in interest from the scope of the fees provisions. Finally, substantial evidence supported the trial court’s finding that sister’s estate and living trust were responsible parties under the fees provisions as sister had transferred her interest in the property into her revocable living trust, had then transferred in her capacity as trustee of her living trust that interest to her sister and sister’s husband , and because two of the plaintiffs had initiated the action as trustees of the sister’s trust and remained parties to the conclusion of the action.
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