HARRY M FOX VS JP MORGAN CHASE BANK N A ET AL

Tentative Rulings

Case Number: BC602491    Hearing Date: July 29, 2020    Dept: 20

Tentative Ruling

Judge David J. Cowan

Department 20

Hearing Date: Wednesday, July 29, 2020

Case Name: Harry M. Fox v. JP Morgan Chase

Case No.: BC602491

Motion: Award of Attorney’s Fees on Appeal

Moving Party: Defendant JP Morgan Chase

Responding Party: Plaintiff Fox

Notice: OK

Ruling:     The motion for an award of attorneys’ fees is DENIED.

The OSC re: whether the December 14, 2017 order should be modified is set for August 19, 2020 at 10:00 a.m. Responses to the OSC shall be filed no later than one week prior to the OSC.

Chase shall submit a proposed order consistent with the foregoing and give notice of this Ruling.

DISCUSSION

The Court has reviewed the motion for fees, filed March 24, 2020, the opposition of plaintiff Harry M. Fox (“Fox”) to the motion and companying request for judicial notice, served on Chase on July 14, 2020 (which the Court recently obtained and will be filed with the Court), as well as Chase’s Reply and Objection to the request for judicial notice, filed July 22, 2020.

Chase seeks $72,833.59 as reasonable attorney’s fees on appeal. The fees were incurred at a rate of between $300 and $400 per hour, which is reasonable for this type of case for lawyers in Los Angeles with the qualifications and experience of Chase’s counsel. Fees also included a motion to dismiss the appeal and filing an answer to Fox’s petition for review in the California Supreme Court. The total amount of fees is not unreasonable given what was involved (leaving aside the issue of entitlement). The Court sustains the objections to the request for judicial notice. The documents sought to be noticed are not ones that the Court may properly consider.

Reasonable fees are typically appropriate where a party prevailed on appeal and there is a legal basis therefor. On October 22, 2019, the Court of Appeal affirmed the 2017 judgment in favor of Chase and against Fox, as well as the post-judgment order of December 14, 2017 awarding Chase attorney’s fees of $288,435.70 incurred in successfully defending the complaint under the applicable deed of trust and Civil Code sec. 1717. The Court of Appeal discussed the validity of the trial court’s rejection of Fox’s arguments related to standing and their rights under the deed of trust, that he executed, and which included a provision for attorneys’ fees. Fox appears to essentially repeat those arguments in opposition to this motion, regardless of the fact that trial court and the Court of Appeal have already rejected those arguments and held that Chase was entitled to fees even though it was not a signatory to the document. This Court finds no reason why it is not bound to follow the opinion of the Court of Appeal. This Court is also not in a position where it may permissibly correct any perceived errors by the Court of Appeal, a higher court, in this regard. It also does not see any errors.

In footnote 8, on page 22 of the Court of Appeal’s decision herein, the Court of Appeal references the provision in the deed of trust requiring the addition of attorney’s fees to the Loan Amount. The Court of Appeal notes that Fox had not raised this provision in the trial court or on appeal and concluded: “As it has not been raised, it has been abandoned and is waived.” It is unclear from the foregoing whether the Court of Appeal is thereby determining the trial court fees could be awarded separately as an independent obligation, as discussed below, or merely that since the issue (and the Court of Appeal does not state what that issue is exactly) had not been raised it was not a basis to find the trial court was in error. The latter issue is significant: Fox is correct – as Chase acknowledges in its Reply – that attorney’s fees may not be separately awarded based on the applicable deed of trust but may only be added to the loan amount. (Chacker v. JP Morgan Chase (2018) 27 Cal.App.5^th 351) Therefore, at least as far as the fees on appeal now at issue, an award of fees is not permitted.

Chase argues however that the Court still find the requested sum to be “reasonable” given what was involved on the appeal. This the Court cannot do either: Even if the fees were reasonable arguendo for litigation purposes, as indicated above, this is not the purpose of the deed of trust that is the basis for the motion. In Hart v. Clear Recon Corp. (2018) 27 Cal.App.5^th 322, the Court of Appeal held that a comparable provision in the deed of trust in that case “is not a provision that attorney’s fees ‘shall be awarded’; it is, instead, a provision that attorney’s fees, like any other expenses the lender may incur to protect its interest, will be added to the secured debt.” (Id., 27 Cal.App.5^th at 327) In the Court of Appeal’s decision herein, it found the trial court did not err in concluding that defendants were entitled to these fees to protect their interests under the deed of trust or in the Property ; i.e., to allow for recovery of what it was owed by foreclosure in the event of a default. However, it is not clear if that is because Fox had not raised the issue in the trial court and it was waived on appeal. The foregoing concern is a different one than whether a prevailing party reasonably incurred fees in litigation. Moreover, though Hart, supra, involved litigants who were not signatories, as Chase points out, the Court of Appeal’s analysis in Hart at least on this point did not depend on their status but on the lender’s rights based on the applicable language in the deed of trust.

Finally, it is not clear that the Court of Appeal’s decision is “law of the case” on this motion, as Chase argues, as would ordinarily be true, where the Court of Appeal did not address the issues identified herein concerning entitlement to attorney’s fees. Yu v. Signet Bank (2002) 103 Cal.App.4^th 298, 309 (“The doctrine does not apply to points of law that might have been determined, but were not decided in the prior appeal. (Citation omitted) …The doctrine is one of procedure rather than jurisdiction, and can be disregarded in exceptional circumstances. (Citation omitted) “The principal ground for making an exception to the doctrine of law of the case is an intervening or contemporaneous change in the law.” (Citation omitted) The doctrine can also be disregarded to avoid an unjust decision.”)

This leaves the following unanswered question: If attorney’s fees on appeal cannot be awarded, whether this Court’s earlier seemingly inconsistent award of fees in the trial court – on the same basis – should stand or if there is now new law warranting a modification of that order. The Court of Appeal does not expressly address the permissibility of an award of fees under Chacker and Hart, supra. The Court issues an OSC whether the December 14, 2017 order should now be modified consistent with this ruling or whether the order must stand where it has already been affirmed. In this regard, it is worthy of note that the trial court order did not address the rationale behind Chacker or Hart and indeed Chacker and Hart were not published when the trial court made its order. Chacker indicates that it was clarifying law as to which there was no prior California authority. Therefore, since the trial court did not consider Chacker and Hart, it is not clear if Fox is now precluded from raising the issues they present. On the other hand, the Court of Appeal states reference to this provision has been waived. It is not clear if that waiver applies solely to the appeal or for other purposes as well. Finally, the parties should at the same time address what practical significance as far as enforcement results by reason of an order awarding fees as opposed to addition of fees to the Loan.  

CONCLUSION

For these reasons, Chase’s motion for an award of attorneys’ fees is DENIED.

The OSC re: whether the December 14, 2017 order should be modified is set for August 19, 2020 at 10:00 a.m. Responses to the OSC shall be filed no later than one week prior to the OSC.

Chase shall submit a proposed order consistent with the foregoing and give notice of this Ruling.