Case Number: KC065878 Hearing Date: June 11, 2014 Dept: J

Re: Bashful Butler, LLC v. First National Bank of Southern California (KC065878)

MOTION FOR AWARD OF ATTORNEYS’ FEES

Moving Party: Defendant First National Bank of Southern California

Respondent: Plaintiff Bashful Butler, LLC

POS: Moving OK; Opposing OK; Reply OK

In this action against a lender Plaintiff alleged that the lender unilaterally lowered its monthly loan payments without any explanation and later foreclosed on the property for accumulated unpaid late fees. Plaintiff commenced the action on 3/20/13. The Second Amended Complaint (“SAC”) was filed on 10/15/13, asserting claims for:

1. Intentional Misrepresentation
2. Negligent Misrepresentation
3. Breach of Good Faith and Fair Dealing
4. Violation of Bus & Prof C § 17200 et seq.
5. Wrongful Foreclosure

A demurrer to the SAC was sustained without leave to amend on 3/13/14, and judgment in favor of Defendant was entered on 4/21/14.

Defendant First National Bank of Southern California (“Bank”) moves for an order awarding it attorneys’ fees of $129,083.75 as its costs to defend this action brought by Plaintiff Bashful Butler, LLC pursuant to CCP §1033.5(a)(10)(A), which authorizes costs of suit to include attorney fees when such fees are provided for by contract.

On 3/13/14, the court sustained the Bank’s demurrer to Plaintiff’s Second Amended Complaint (“SAC”) without leave to amend and dismissed the action with prejudice. The Promissory Note (“Note”) contained an attorney’s fees clause. (Note, Ex. A to SAC, page 2; RJN Ex. “4”). The language of the Note and Deed of Trust (“DOT”) are broadly worded and extend to both contract and tort actions, whether or not an action is filed.

CCP §1032(b) provides in pertinent part that “a prevailing party is entitled as a matter of right to recover costs in the action or proceeding.” CCP §1032(a)(4) defines a prevailing party as “a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief, against that defendant.” Here, although Plaintiff was successful in obtaining obtained a Temporary Restraining Order on 3/21/13, this was subsequently dissolved on 4/13/13 when Plaintiff “failed to carry its burden of establishing likely success…” (Court Findings on OSC re Preliminary Injunction, page 2). A dismissal was entered a year later in favor of the Bank after Plaintiff’s three unsuccessful attempts to plead its case. Thus, there is no support for the conclusion that Plaintiff prevailed in the action. The Bank is the prevailing party.

In this case, the attorney’s fees provision of the DOT states “If Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorney’s fees at trial…” Plaintiff claims that this means the Bank cannot recover attorney’s fees for defending the action. However, “California law is settled that a borrower’s obligation to pay attorney’s fees incurred in the collection of the note includes attorney’s fees incurred in defending against a challenge to the underlying validity of the obligation.” Finalco, Inc. v. Roosevelt (1991) 235 Cal.App.3d 1301, 1308; Siligo v. Castellucci (1994) 21 Cal.App.4th 873, 878. Here, the Bank defended successfully against Plaintiff’s claims on the Note and DOT. Thus, Bank is entitled to its attorney’s fees incurred in defending the action.

Where a suit arises out of or is fundamentally based upon a writing containing an attorney’s fees provision, a prevailing party can recover such fees incurred in defending all tort claims arising out of the writing, pursuant to CCP section 1021. Santisas v. Goodin, 17 Cal.4th 599, 608 (1998). Plaintiff argues that the claims of intentional and negligent misrepresentation, breach of contract, breach of good faith and fair dealing, wrongful foreclosure, and violation of Bus. & Prof. Code §17200, all arise from the Bank’s tortious actions, and not the contract. However, the dispute between the parties would not have arisen but for the subject Note. Plaintiff alleged, in each of its various Complaints, that the Bank was acting in a manner that violated the Loan Documents. Thus, the contract and tort claims are inextricably intertwined, and attorneys’ fees need not be apportioned to each.

Trial courts have discretion to determine the reasonableness of fee requests, and any award of attorneys’ fees by the trial court is governed by equitable principles. Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 881. In this case, the case involved three demurrers to three different factual theories. (Declaration of Christopher R. Nelson, ¶5). Further, the Bank moved successfully to dissolve the TRO, which required the Banks’ counsel to perform its own internal investigation of factual issues in a condensed time-frame (Ibid.). However, the Statement of Account for Services Rendered contains excessive hours spent studying (33.3), reviewing (49.4); emailing (58.5), and preparing the second demurrer (39.9) and third demurrer (47.7). Accordingly, in light of the nature of the case and the type of work involved, these amounts are reduced to more reasonable figures. The Court awards attorney’s fees as costs to Bank in the amount of $80,000.00.