“Security First”/Antideficiency Arguments Did Not Prevail Because Contractual Fee Exposure For Wrongful Foreclosure Claims Were Independent Contractual Obligations.
This next appeal is a somewhat related appeal to our independent July 26, 2022 post regarding sanctions awarded against plaintiff borrower’s attorney for violation of trial preparation rules. In Shiheiber v. JPMorgan Chase Bank, N.A., Case No. A160189 (1st Dist., Div. 2 July 28, 2022) (unpublished), plaintiff lost wrongful foreclosure claims against lender (the merits ruling affirmed in an earlier appeal), with the trial judge assessing $878,067.11 in contractual fees against borrower and in favor of lender based on a promissory note fee clause.
That fee award was affirmed on appeal, with borrower not challenging the amount of the award, but only challenging fee entitlement. Because the wrongful foreclosure loss triggered contractual fee exposure under separate loan documents, the fee award was legally warranted. (See Passanisi v. Merit-McBride Realtors, Inc., 190 Cal.App.3d 1496, 1507-1509 (1987); Flynn v. Page, 218 Cal.App.3d 342, 349 (1990); Jones v. Union Bank of California, 127 Cal.App.4th 542, 551 (2005).) These cases establish “that a foreclosure sale does not extinguish or preclude enforcement of a prevailing party attorney fee clause in the loan instruments. Such a provision represents a separate contractual covenant, distinct from the covenant to repay the loan on specified terms, that is simply intended to alter the traditional American rule that each side bear their own attorney fees in the event of litigation between them.” (Slip Opn., p. 9.) The promissory note clause was broad enough to encompass tort wrongful foreclosure claims. (Yoon v. Cam IX Trust, 60 Cal.App.5th 388, 391, 393 (2021).) So, the fee award was upheld.
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