Brosio v. Deutsche Bank National Trust Co. (In Re Brosio)

505 B.R. 903, 71 Collier Bankr. Cas. 2d 1047, 2014 WL 901093, 2014 Bankr. LEXIS 880
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedMarch 7, 2014
DocketBAP NC-13-1119-KiDJu; Bankruptcy 12-57468-SLJ
StatusPublished
Cited by12 cases

This text of 505 B.R. 903 (Brosio v. Deutsche Bank National Trust Co. (In Re Brosio)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brosio v. Deutsche Bank National Trust Co. (In Re Brosio), 505 B.R. 903, 71 Collier Bankr. Cas. 2d 1047, 2014 WL 901093, 2014 Bankr. LEXIS 880 (bap9 2014).

Opinion

OPINION

KIRSCHER, Bankruptcy Judge.

Debtor Elaine L. Brosio (“Brosio”) appeals an order denying her motion for attorney’s fees on the basis that she was not the prevailing party under Cal. Crv. Code § 1717 and that the fees requested were not reasonable. We AFFIRM.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Brosio filed a chapter 13 1 bankruptcy case on October 16, 2012. Among the assets was Brosio’s residence. In connection with the residence, Brosio had executed a note (“Note”) and deed of trust *906 (“DOT”) in January 2007 in favor of former lender, Paul Financial, LLC. Appellee Deutsche Bank National Trust Company (“Deutsche Bank”) recorded the assignment of the DOT on November 9, 2012.

Paragraph 9 of the DOT, “Protection of Lender’s Interest in the Property and Rights Under this Security Instrument,” provides, in relevant part:

If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument; (b) there is a legal proceeding that might significantly affect Lender’s interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Instrument, or to enforce laws or regulations) ... then Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property. Lender’s actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys’ fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding.... Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument.

Paragraph 14 of the DOT, “Loan Charges,” provides, in relevant part:

Lender may charge Borrower fees for services performed in connection with Borrower’s default, for the purpose of protecting Lender’s interest in the Property and rights under this Security Instrument, including, but not limited to, attorneys’ fees, property inspection and valuation fees....

Paragraph 22 of the DOT, “Acceleration; Remedies,” provides, in relevant part:

Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, reasonable attorneys’ fees and costs of title evidence.

Finally, Paragraph 7(E) of the Note, “Borrower’s Failure to Pay as Required,” provides:

If the Note Holder has required me to pay immediately in full as described above, 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.

Loan servicer GMAC Mortgage, LLC filed a proof of claim (“POC”) on behalf of Deutsche Bank, asserting a secured claim for $587,050.61. The amount claimed in the POC included the principal balance of $585,771.36, $854.25 in interest, and $425.00 for “attorney fees for filing proof of claim, reviewing plan and filing request for special notiee[.]” Brosio was current in her mortgage payments at the time the POC was filed.

Brosio filed a one-page form objection to the POC, disputing only the attorney fee of $425.00 (“Claim Objection”). Brosio contended the fees were “inappropriate” and “were not justified by Creditor’s need to assert their [sic] property rights, in that Debtor is current in payments and has not given any indication that Creditor’s interest in the property is at risk or that foreclosure will become an option for Creditor.” No hearing was requested, set or held for the Claim Objection.

*907 Deutsche Bank subsequently filed an amended POC removing the $425.00 attorney fee. Brosio’s counsel contacted counsel for Deutsche Bank seeking reimbursement for the $865.00 she incurred in attorney’s fees filing the Claim Objection. Deutsche Bank declined to pay the fees.

A. Brosio’s motion for attorney’s fees

On January 24, 2013, Brosio moved for an order awarding her attorney’s fees and costs “for her successful objection” to the POC (“Fee Motion”). Brosio argued that because her objection to the $425.00 attorney fee prompted Deutsche Bank to file an amended POC removing the fee (thus implicitly withdrawing the original POC), she was “the prevailing party in an action on a contract” and was therefore entitled to fees and costs under Cal. Civ. Code P. (“CCP”) §§ 1032 and 1033.5(a)(10), and Cal. Civ. Code (“CCC”) § 1717. Brosio based her claim on the attorney’s fees provisions found in Paragraphs 9, 14 and 22 of the DOT and Paragraph 7(E) of the Note.

Recognizing that no hearing or further litigation occurred in connection with her Claim Objection, Brosio argued that California law still allowed for her fees as the “prevailing party,” citing Hsu v. Abbara, 9 Cal.4th 863, 877, 39 Cal.Rptr.2d 824, 891 P.2d 804 (1995), which held that a party may “be found to be a prevailing party if it is clear that the party has otherwise achieved its main litigation objective,” and Scott Co. v. Blount, Inc., 20 Cal.4th 1103, 1109, 86 Cal.Rptr.2d 614, 979 P.2d 974 (1999), which, relying on Hsu, held: “When a party obtains a simple, unqualified victory by completely prevailing on or defeating all contract claims in the action and the contract contains a provision for attorney fees, section 1717 entitles the successful party to recover reasonable attorney fees incurred in prosecution or defense of those claims.” Brosio cited two additional unpublished cases she contended supported her Fee Motion: Moran v. Deutsche Bank Nat’l Trust Co. (In re Moran), 2012 WL 6645025 (Bankr.D.Haw. Dec. 20, 2012); and Aurora Loan Servs., LLC v. Guzman, 2012 WL 359684 (N.D.Cal. Feb. 2, 2012). 2

Brosio conceded that no “prevailing party” exists where the action has been voluntarily dismissed or dismissed pursuant to a settlement of the case. CCC § 1717(b)(2). 3 However, Brosio argued that because she, as the objector, was in the position of “plaintiff,” the voluntary withdrawal/amendment of the POC by “defendant” Deutsche Bank was not a voluntary dismissal.

In support of her Fee Motion, Brosio’s counsel submitted a declaration setting forth the time spent on the matter by various firm members. In addition to the $865.00 in fees Brosio incurred in filing her *908

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Cite This Page — Counsel Stack

Bluebook (online)
505 B.R. 903, 71 Collier Bankr. Cas. 2d 1047, 2014 WL 901093, 2014 Bankr. LEXIS 880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brosio-v-deutsche-bank-national-trust-co-in-re-brosio-bap9-2014.