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Court of Appeal:
Award Under CC §1717 Proper Though Action Was on Tort
By a MetNews Staff Writer
The Court of Appeal for this district on Friday affirmed an award of $221,000 in attorney fees and costs in favor of the prevailing parties in an action against them for negligence and fraud, holding that Civil Code §1717 applied although the plaintiff did not seek contract damages.
Plaintiff Edward Yoon sued CAM IX Trust which held the deed of trust on his home in Rancho Palos Verdes, securing repayment of a $640,000 promissory note, and BSI Financial Services, Inc., Cam IX’s loan servicer. He claimed they told him the date of a foreclosure sale on his home had been postponed, when it had not been, which resulted in his not making the loan current or finalizing a short sale.
A jury found against him and Los Angeles Superior Court Judge Deirdre Hill awarded the defendants $191,619.47 in attorney fees and $29,345.97 in costs. She based the award on a fee-shifting provision in the promissory note.
But, Yoon argued, he did not sue on that instrument.
Wording of Provision
Sec. 1717(a) provides:
“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”
Yoon pointed to the California Supreme Court’s 1998 decision in Santisas v. Goodin. There, then-Justice Joyce Kennard wrote that “this court has held that section 1717 applies only to actions that contain at least one contract claim,” adding:
“If an action asserts both contract and tort or other noncontract claims, section 1717 applies only to attorney fees incurred to litigate the contract claims.”
Grimes’s Opinion
In Friday’s decision, Justice Elizabeth A. Grimes of Div. Eight pointed out that Santisas also says that “[i]f an action asserts both contract and tort or other noncontract claims, section 1717 applies only to attorney fees incurred to litigate the contract claims,” and goes on to declare:
“If a contractual attorney fee provision is phrased broadly enough, as this one is, it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims.”
Grimes expressed agreement with Hill that Yoon’s tort claims “directly relate to enforcement of the note through foreclosure.”
She wrote:
“Plaintiff insists he did not allege a breach of contract, but only ‘tortious claims, mainly misrepresentation,’ and defendants did not defend based on the note or deed of trust, but only sought to show there was no negligence or misrepresentation in the foreclosure process. All that is so, but misses the point. At its core, plaintiffs suit sought to avoid his obligations under the note by making claims defendant acted negligently and fraudulently during the foreclosure process.”
Grimes noted that Yoon had relied on a provision in the note in asserting that the defendants breached their duty of care by sending a foreclosure option notice to the wrong address.
Alternative Basis
The jurist said the award can also be upheld under Code of Civil Procedure §2033.420 which provides:
“If a party fails to admit...the truth of any matter when requested to do so..., and if the party requesting that admission thereafter proves...the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees.”
In response to requests for admissions, Yoon had denied that BSI had reviewed his “short sale offer in good faith” and denied that BSI “never informed” him “that the foreclosure sale…was continued to November 12, 2015.”
Hill found that the requests related to issues of substantial significance, and Grimes saw no abuse of discretion in making the award, alternatively, under §2033.420.
The case is Yoon v. CAM IX Trust, B301191.
Daniel E. Park and Anna-Sophie Tirre of the West Hollywood firm of Daniel E. Park Law Corporation represented Yoon. Seth P. Cox and Julie A. Choi of the Redondo Beach firm of Wedgewood acted for BSI and Cam IX.
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