Yoon v. CAM IX Trust

Filed 1/29/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
EDWARD YOON, B301191
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. YC071021)
v.
CAM IX TRUST et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Deirdre Hill, Judge. Affirmed.
Daniel E. Park Law Corporation, Daniel E. Park and Anna-
Sophie Tirre for Plaintiff and Appellant.
Wedgewood, Seth P. Cox and Julie A. Choi for Defendants
and Respondents.
__________________________
SUMMARY
Plaintiff appeals from an award of attorney fees to
defendants. Plaintiff contends it was improper for the trial court
to award fees under clauses in a promissory note and deed of
trust, where plaintiff’s lawsuit did not assert a breach of contract
claim. He further contends a second basis for the fee award,
arising from his denial of defendants’ requests for admission, was
erroneous as well.
We find no merit in plaintiff’s contentions and affirm the
trial court’s order.
FACTS
Plaintiff Edward Yoon sued defendants CAM IX Trust and
BSI Financial Services, Inc. in connection with a trustee’s sale of
plaintiff’s home in Rancho Palos Verdes. CAM IX Trust was the
assignee of a deed of trust on the property that secured
repayment of a $640,000 promissory note, and BSI was Cam IX
Trust’s loan servicer. Plaintiff alleged claims for negligence and
fraud, statutory claims, and causes of action to set aside the
trustee’s sale and quiet title.
By the time the case went to a jury, plaintiff had
abandoned or dismissed all claims except those for negligence
and fraud. Plaintiff asserted defendants failed to properly review
his request for a short sale, and told him the foreclosure sale date
had been postponed for several days (although it had not),
causing him to miss the deadline for making the loan current or
finalizing a short sale. The jury found that neither defendant
was negligent and no false representations were made.
Defendants sought attorney fees on two bases: under Civil
Code section 1717, on the ground the note and deed of trust
provided for the recovery of attorney fees, and under Code of Civil
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Procedure section 2033.420, allowing recovery of expenses
incurred in proving the truth of matters plaintiff failed to admit
in response to defendants’ requests. (We will relate further
relevant facts as necessary in connection with our discussion of
plaintiff’s legal claims.)
The trial court concluded plaintiff’s causes of action
“directly relate to enforcement of the note through foreclosure or
required defendants to defend against a challenge to the
underlying validity of the obligation,” so that defendants were
entitled to fees under Civil Code section 1717. The court also
concluded that “expenses are recoverable for proving that
defendants did not breach their duty of care and did not make a
misrepresentation.” After making certain deductions, the court
awarded attorney fees of $191,619.47 and costs of $29,345.97,
finding those amounts reasonable in light of the duration and
nature of the litigation.
Plaintiff filed a timely appeal from the trial court’s order.
DISCUSSION
A determination of the legal basis for an award of attorney
fees is a question of law we review de novo. (Sessions Payroll
Management, Inc. v. Noble Construction Co. (2000)
84 Cal.App.4th 671, 677.) We review orders granting or denying
cost of proof awards under Code of Civil Procedure
section 2033.420 for abuse of discretion. (Orange County Water
Dist. v. The Arnold Engineering Co. (2018) 31 Cal.App.5th 96,
118.)
1. Fees Under Civil Code Section 1717
In an action on a contract that provides for attorney fees
and costs, the party prevailing on the contract is entitled to
reasonable attorney fees as well as other costs. (Civ. Code,
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§ 1717, subd. (a).) Plaintiff contends section 1717 does not apply
here because his negligence and fraud claims do not refer to or
rely on the existence of a contract. Plaintiff is mistaken. The
gravamen of his lawsuit was an effort to avoid the enforcement of
the note and deed of trust; his suit arose from defendants’ alleged
conduct in the course of enforcing the terms of those documents.
In the note, plaintiff promised to pay $640,000 plus interest
to the lender. In the event of default, “the Note Holder will have
the right to be paid back by me for all of its costs and expenses in
enforcing this Note to the extent not prohibited by Applicable
Law. Those expenses include, for example, reasonable attorneys’
fees.” Similarly, the remedies clause in the deed of trust provided
that the lender “shall be entitled to collect all expenses incurred
in pursuing the remedies provided in this [section], including, but
not limited to, reasonable attorneys’ fees and costs of title
evidence.”
Plaintiff cites Santisas v. Goodin (1998) 17 Cal.4th 599.
Santisas states that “this court has held that [Civil Code]
section 1717 applies only to actions that contain at least one
contract claim,” and “[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.” (Santisas, at
p. 615.) But Santisas also explains that “[i]f 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: ‘[P]arties may
validly agree that the prevailing party will be awarded attorney
fees incurred in any litigation between themselves, whether such
litigation sounds in tort or in contract.’ ” (Id. at p. 608.) “ ‘As to
tort claims, the question of whether to award attorney[] fees
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turns on the language of the contractual attorney[] fee provision,
i.e., whether the party seeking fees has “prevailed” within the
meaning of the provision and whether the type of claim is within
the scope of the provision.’ ” (Brown Bark III, L.P. v.
Haver (2013) 219 Cal.App.4th 809, 827–828 (Brown Bark).)
“To determine whether an action is on the contract, we look
to the complaint and focus on the basis of the cause of action.
[Citations.] Any action that is based on a contract is an action on
that contract regardless of the relief sought.” (Brown Bark,
supra, 219 Cal.App.4th at pp. 821–822 [citing Kachlon v.
Markowitz (2008) 168 Cal.App.4th 316, 347–348, for the
proposition that a “lawsuit to quiet title and for declaratory and
injunctive relief is an action on a contract because the action was
based on a promissory note and deed of trust”].)
Further, California courts liberally construe the term “on a
contract” in Civil Code section 1717. (Blickman Turkus, LP v.
MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.)
“ ‘As long as the action “involve[s]” a contract, it is “ ‘on [the]
contract’ ” within the meaning of section 1717.’ ” (Blickman
Turkus, at p. 894; see also Mitchell Land & Improvement Co. v.
Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 486
[“ ‘[O]n a contract’ does not mean only traditional breach of
contract causes of action. Rather, ‘California courts “liberally
construe ‘on a contract’ to extend to any action ‘[a]s long as an
action “involves” a contract and one of the parties would be
entitled to recover attorney fees under the contract if that party
prevails in its lawsuit . . . .’ ” ’ ”].) Where an attorney fee clause
provides for an award of fees incurred in enforcing a contract,
“[i]t is settled that it is irrelevant if the fees were incurred
offensively or defensively.” (Shadoan v. World Savings & Loan
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Assn. (1990) 219 Cal.App.3d 97, 107; cf. id. at p. 108 [concluding
that “fees should be awarded to the extent that the action in fact
is an action to enforce—or avoid enforcement of—the specific
contract”].)
Applying these rules to this case, we can find no error in
the trial court’s conclusion that plaintiff’s tort claims “directly
relate to enforcement of the note through foreclosure.” 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,
plaintiff’s suit sought to avoid his obligations under the note by
making claims defendant acted negligently and fraudulently
during the foreclosure process. Indeed, at trial plaintiff relied on
the notice provisions of the note and deed of trust when he
contended defendants had improperly sent a foreclosure option
notice to the wrong address; he argued defendants “had a duty to
act with reasonable care under the circumstances as specified, as
a matter of the parties’ agreement, in the Promissory Note and
the Deed of Trust.”
Under the authorities just cited, we are persuaded
defendants are entitled to fees under the note and deed of trust.
2. Fees Under Code of Civil Procedure Section 2033.420
Under Code of Civil Procedure section 2033.420, “[i]f 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
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incurred in making that proof, including reasonable attorney’s
fees.” (Id., subd. (a).) The court “shall make this order” unless it
finds (as plaintiff asserts here) that “[t]he party failing to make
the admission had reasonable ground to believe that that party
would prevail on the matter.” (Id., subd. (b)(3).) (There are
three other exceptions: a sustained objection or waiver of a
response; the admission sought was of no substantial importance;
or there was other good reason for the failure to admit. (Id.,
subd. (b)(1), (2) & (4).) Plaintiff does not contend any of these
apply.)
Defendants asked plaintiff to admit that “BSI properly
reviewed [plaintiff’s] short sale offer in good faith,” that “BSI
properly reviewed [plaintiff’s] short sale offer in a timely
manner,” and that “BSI never informed [plaintiff] that the
foreclosure sale of the [property] was continued to November 12,
2015.” Plaintiff denied these requests. The trial court concluded
the admissions requested were of substantial importance, and
plaintiff did not show any of the exceptions to an award of the
costs of proof applied. Further, plaintiff “fail[ed] to show that he
had a good faith belief he would prevail on the issue at trial other
than stating he had reasonable grounds to deny at the time.”
Plaintiff contends the trial court abused its discretion. He
points out that costs of proof under Code of Civil Procedure
section 2033.420 “are not recoverable simply because the party
promulgating the request prevails at trial.” (Brooks v. American
Broadcasting Co. (1986) 179 Cal.App.3d 500, 513.) Of course that
is so. But the question is whether plaintiff had a reasonable
ground to believe he would prevail at trial. For example, in
Brooks there was anticipated testimony in plaintiff’s favor on the
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point at issue that was “a good reason for denying the request.”
(Ibid.)
In the trial court, plaintiff’s opposition stated, without
elaboration, that he “had reasonable grounds for denying the
requests for admission at the time of responding to the discovery
requests.” But he did not explain how or why that was so.
Plaintiff does the same on appeal: he identifies no evidence or
circumstance justifying a belief he could prevail at trial.
Nonetheless, plaintiff insists he established “triable issues
of material facts” as to his negligence and fraud claims, because
the defendants moved for a nonsuit and the trial court denied the
motion. We cannot see how the trial court’s ruling assists
plaintiff.
Defendants sought a nonsuit on grounds the damages
plaintiff alleged were speculative, defendants owed no duty of
care as a matter of law, and recovery in negligence was barred by
the economic loss rule. The court denied the nonsuit motion
without comment, so far as the record shows.
The bases asserted for the nonsuit—damages and the
existence of a duty of care—are not the issues raised in the
requests for admission. Moreover, on a nonsuit motion the court
cannot weigh the evidence or consider credibility of witnesses,
and must disregard conflicting evidence. (Campbell v. General
Motors Corp. (1982) 32 Cal.3d 112, 118.) Thus, the court’s denial
of the nonsuit motion does not suggest plaintiff produced credible
testimony that defendants acted negligently or fraudulently
during the foreclosure process. (See Grace v. Mansourian (2015)
240 Cal.App.4th 523, 531, 532 [“the mere fact defendants
presented evidence at trial is not an automatic justification for
denial of the requests [for admissions]. Rather, the issue is
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whether, in light of that evidence, defendants could reasonably
believe they would prevail”; the plaintiffs were entitled to costs
associated with proving liability where the defendant driver
believed and testified he did not run a red light but there was
substantial evidence he was at fault].)
Plaintiff points out that even if an award of fees under
Code of Civil Procedure 2033.420 is not an abuse of discretion
(and it is not in this case), fees can be awarded only for the period
after he denied the requests for admissions. (Garcia v. Hyster Co.
(1994) 28 Cal.App.4th 724, 736 [“any expenses incurred prior to
[date of denial] were improperly awarded”].) We agree, but since
fees were also properly awarded under Civil Code section 1717,
no adjustment in the fee award is necessary.
DISPOSITION
The order is affirmed. Defendants shall recover their costs
on appeal.
GRIMES, Acting P. J.
WE CONCUR:
STRATTON, J.
WILEY, J.
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