Tyler v. Wells Fargo Bank CA4/2

California Court of Appeal·Decided July 8, 2016·No. E063985·Unpublished

Opinion

Filed 7/8/16 Tyler v. Wells Fargo Bank CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO

STEVEN GREEN TYLER, Plaintiff and Respondent, E063985 v. (Super.Ct.No. CIVDS1402881) WELLS FARGO BANK, N.A., OPINION Defendant and Appellant.

APPEAL from the Superior Court of San Bernardino County. Bryan Foster, Judge. Affirmed.

Wright, Finlay & Zak, T. Robert Finlay, Nicholas G. Hood and Kathryn A.

Moorer for Defendant and Appellant.

Wesierski & Zurek, David M. Ferrante and Lynne Rasmussen for Plaintiff and Respondent.

I

INTRODUCTION

Defendant Wells Fargo Bank, N.A. (Wells Fargo), as trustee for First Franklin Mortgage Loan Trust Series 2004-FFH2 Asset Backed Certificates 2004-FFH2 (Asset Backed Certificates Trust), appeals an order denying Wells Fargo’s motion for an award of attorney fees. Wells Fargo filed the motion after Wells Fargo was dismissed from a wrongful foreclosure action brought by Steven Green Tyler (Tyler) against Wells Fargo and other defendants.1 Wells Fargo contends that under Civil Code sections 1021 and 1717, Wells Fargo is entitled to recover reasonable attorney fees as the prevailing party under a deed of trust on Tyler’s property (Senior TD). Wells Fargo argues the trial court erred in ruling that the Senior TD did not authorize Wells Fargo to recover attorney fees incurred in protecting Wells Fargo’s interests under the Senior TD. Wells Fargo asserts that, even though the Senior TD was paid off and extinguished prior to the lawsuit, Wells Fargo could nevertheless recover its attorney fees under the Senior TD. Wells Fargo argues it is entitled to recover its attorney fees under Civil Code section 1717, because Tyler’s action involved claims predicated upon a contract, the Senior TD.

1First Entertainment Credit Union; First Franklin Financial Corporation; Ocwen Loan Servicing, LLC; Western Progressive, LLC; and, Asset Backed Certificates Trust.

We conclude the trial court properly denied Wells Fargo’s motion for attorney fees because the attorney fees provision in the Senior TD states that any attorney fees recoverable under the Senior TD “shall become additional debt of Borrower secured by this Security Instrument.” Wells Fargo was therefore limited to recovering its attorney fees against Tyler by adding such fees to the Senior TD as debt, before the Senior TD was extinguished. The judgment is therefore affirmed.

II

FACTS AND PROCEDURAL BACKGROUND In 2004, Tyler borrowed $225,000 to purchase property in Lake Arrowhead (the property). The loan was secured by the property pursuant to the Senior TD, executed by Tyler and recorded on February 27, 2004. First Franklin Financial Corp. was the originating lender. On March 2, 2004, all rights, title and interest in the Senior TD were transferred to Wells Fargo by execution of a recorded Corporate Assignment of Deed of Trust.

Ocwen Loan Servicing, LLC (Ocwen) was the attorney in fact for Wells Fargo and the loan servicer for the loan secured by the Senior TD. Ocwen held a power of attorney for the Senior TD, allowing Ocwen to represent Wells Fargo’s interests in litigation and enforce the Senior TD.

In 2007, Tyler obtained a second loan secured by the property in the amount of $145,000, from First Entertainment Credit Union (FECU). Tyler was the trustor, and FECU was the lender and beneficiary under the deed of trust (Junior TD).

When Tyler began having difficulty making the payments on the property loans, Tyler attempted to modify the loans. He was told the defendants would work with him in structuring an alternative to foreclosure on his property and that he qualified for a mortgage modification. Nevertheless, defendants failed to assist Tyler with modifying the loans and sold the property on November 13, 2013.

In December 2014, Ocwen notified Tyler by email that the senior loan had been paid off. The next day, Tyler received a letter from FECU requesting Tyler to contact FECU. Upon doing so, Tyler learned for the first time that the property had been sold. In January 2014, the locks were changed on the property without Tyler’s consent and he was charged for default-related services. Wrongful Foreclosure Complaint In March 2014, Tyler filed a wrongful foreclosure complaint against the FECU, Ocwen, and the Asset Backed Certificates Trust, alleging breach of contract and seeking to set aside the foreclosure, retain the payoff funds paid to Wells Fargo, and to rescind the note and Senior TD. The breach of contract cause of action in the original complaint alleged that the defendants, including Ocwen, the Asset Backed Certificates Trust, and FECU promised to provide Tyler with a loan modification because he had been approved. Tyler accepted the offer by performing as instructed and making four payments of the modified amount as instructed. Defendants allegedly breached the terms of the contract by returning Tyler’s fourth payment, by not granting the promised permanent loan modification, and by selling Tyler’s home without providing him with notice of the sale.

In April 2014, Ocwen, as servicer of the senior loan, appointed Wells Fargo as successor trustee of the Asset Backed Certificates Trust, in place of First Franklin Financial Corp. Asset Backed Certificates Trust was removed as a defendant and Wells Fargo was added. Tyler filed a first amended complaint (FAC), which eliminated Asset Backed Certificates Trust from the breach of contract cause of action. Ocwen and Wells Fargo demurred to the FAC, which the trial court sustained with leave to amend.

Tyler filed a second amended complaint (SAC). The Asset Backed Certificates Trust was added back as a defendant. The SAC included the following causes of action alleged against the Asset Backed Certificates Trust: (1) quiet title, (2) fraudulent conveyance, (3) negligence, (4) breach of implied covenant of good faith and fair dealing, (5) violation of Business and Professions Code section 17200, (6) wrongful foreclosure/rescission, (7) cancellation of instruments/rescission, and (8) declaratory relief. Wells Fargo was not mentioned in the SAC but was added again as a defendant in place of the defendant Asset Backed Certificates Trust, which was removed as a named defendant. There was no breach of contract claim remaining against Wells Fargo or Asset Backed Certificates Trust.

In October 2014, Wells Fargo, as trustee for the Asset Backed Certificates Trust, and Ocwen demurred to the SAC. Wells Fargo and Ocwen argued foreclosure was on the junior loan, not the senior loan, which was paid off before foreclosure on the Junior TD. Therefore Wells Fargo and Ocwen were not liable in any way because they were not involved in foreclosing on Tyler’s property. In December 2014, Tyler voluntarily

dismissed two of the causes of action, and the trial court sustained Wells Fargo’s demurrer to the remainder of the SAC without leave to amend. The trial court entered an order of dismissal with prejudice as to Wells Fargo, as trustee for the Asset Backed Certificates Trust. Motion for Attorney Fees As a prevailing party, Wells Fargo filed a memorandum of costs and amended memorandum of costs. Wells Fargo also filed a motion for attorney fees under Civil Code section 1717 and the Senior TD attorney fees provision.

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