POONSOOK BRAINANGKUL VS SELECT PORTFOLIO SERVICING, INC.

TENTATIVE RULING

Calendar: 13

Date: 10/23/2020

Case No: EC 065616 Trial Date: None Set

Case Name: Brainangkul v. Select Portfolio Servicing, Inc., et al.

MOTION FOR ATTORNEY’S FEES

MOTION FOR FURTHER ORDERS ON JUDGMENT

Moving Party: Plaintiff Poonsook Brainangkul (Fees)

Defendant Volantis Global, Inc. (Further Orders)

Responding Party: Defendants Select Portfolio Servicing, Inc. and the Bank of

New York Mellon, as Trustee (Both)

The Wolf Firm (Further Orders)

RELIEF REQUESTED:

Attorney’s Fees

Award of attorneys’ fees in favor of plaintiff and against defendants Select Portfolio Servicing and the Bank of New York Mellon in the sum of $554,485.50.

Further Orders on Judgment

Further orders on the judgment entered 1/17/2019

SUMMARY OF FACTS:

Plaintiff Poonsook Brainangkul alleges that she is the owner of real property in Glendale where she resides as her principal residence. Plaintiff alleges that in July 2015, she submitted a loan modification application to defendant Select Portfolio Servicing, and was approved for a trial period plan, pursuant to which she would make three timely payments and thereafter her loan would be permanently modified. Plaintiff made all three payments, due from October 2015 through December 2015 on time. Plaintiff was provided a permanent modification agreement which she signed and returned to Select Portfolio. Plaintiff made the payments in January and February, which were accepted by Select Portfolio, but the March 2016 payment, received by Select Portfolio was returned, with indication that plaintiff had not returned the permanent loan modification. Plaintiff submitted the tracking number, and assured Select Portfolio she had returned a signed permanent modification agreement, but Select Portfolio refused to permanently modify the loan and initiated foreclosure.

Select Portfolio invited plaintiff to submit another loan modification application, and in an effort to save her home, plaintiff submitted the application. Plaintiff alleges that during the second loan modification process, Select Portfolio constantly mishandled her documents, losing some and requesting resubmission, and making inquiry concerning whether submitted paystubs reflected regular or seasonal income, to which plaintiff responded, and then denying the loan modification because plaintiff had not sent in paystubs.

On September 23, 2016, plaintiff spoke with her relationship manager for Select Portfolio, who recommended she appeal the decision. Plaintiff submitted the documents to appeal the decision that day, and on September 26, 2016 the relationship manager confirmed she had received the appeal and would submit it for review.

Plaintiff alleges that she called Select Portfolio or defendant The Wolf Firm every day to check on the status of the appeal, which they informed her was still pending. On October 4, 2016, the Wolf Firm conducted a trustee’s sale, in which the property was sold to Volantis, an experienced foreclosure sale buyer.

The operative complaint alleges that on October 11, 2016, plaintiff’s counsel provided ex parte notice to Volantis of its intent to seek a temporary restraining order enjoining Volantis from recording a TDUS pursuant to plaintiff’s claims against defendants. On October 12, 2016, at 8:30 a.m., plaintiff sought the TRO, but while plaintiff awaited the court to hear the matter, Volantis recorded the TDUS at 8:52 a.m.

The file shows that on February 9, 2018, the court heard a motion for summary judgment, or in the alternative summary adjudication, brought by defendants Select Portfolio Servicing, Inc. and The Bank of New York Mellon. The motion for summary adjudication was granted as to the third cause of action for breach of implied covenant of good faith and fair dealing. The motion was otherwise denied.

On January 17, 2019, the court entered a Judgment on Stipulation submitted by plaintiff Brainangkul and defendants Select Portfolio Servicing and The Bank of New York Mellon, entering judgment in favor of Plaintiff, declaring that plaintiff is the owner and title holder of the subject property, that BONY holds the loan encumbering the property, and that SPS is the servicer of the loan. The judgment provides that once plaintiff’s loan was modified, and the default cured, defendants lacked the power to sell the property under the power of sale in the DOT because there was no default to enforce, and set aside the trustee’s sale of October 4, 2016 as void. The judgment states:

“7. The foreclosure sale shall be set aside and Volantis Global shall be entitled to a return of the sale proceeds of $502,000.00, and such other relief as is proper under the Civil Code when a foreclosure sale is set aside.”

This motion for attorney’s fees was originally scheduled to be heard on April 26, 2019. On that date, the court also heard a motion brought by Volantis Global to vacate the Judgment on Stipulation, arguing the court was not authorized to quiet title as to Volantis and the party to which the property has since been transferred, Half Life, based on the stipulation of plaintiff and the bank defendants, without including Volantis or conducting a properly noticed evidentiary hearing in open court.

The court heard the motion to set aside the judgment and set a non-jury trial on the issue of title, and ruled that this attorney fee motion was to be set and heard after the trial was conducted.

The trial was conducted on June 19, 2019, and continued to July 24, 2019, and again to July 26, 2019. The court announced its oral statement of decision, finding that plaintiff prevails on the quiet title action as to causes of action Nos. 5, 6 and 7 of the Verified Second Amended Complaint, and cross-defendant prevails as to Volantis’ Second Amended Cross-Complaint for Declaratory Relief and to Quiet Title

On October 23, 2019, the court signed and filed its Judgment on Stipulation, finding that plaintiff owns the property subject to a loan held by BONY and serviced by SPS, the foreclosure sale of October 4, 2016 was void because defendants lacked the power of sale as there was no default on which the sale could be based, so the foreclosure sale was set aside as void. Judgment was entered in favor of plaintiff, with plaintiff and defendants to bear their own costs. The judgment states, “Plaintiff may bring a motion for attorneys’ fees, and Defendants may oppose the motion for attorneys’ fees on any grounds available to them.” [Judgment on Stipulation, p. 5:8-9]. A Notice of Entry of Judgment was filed and served the same date.

On October 28, 2019, plaintiff filed a Notice of Lodging and Reinstating Plaintiff’s Attorney Fee Motion, with a hearing date of December 13, 2019.

On December 4, 2019, the court heard an ex parte application filed on behalf of defendant SPS and the Bank of New York Mellon, at Trustee, to continue the hearing on the motion for attorney fees, which was granted. The motion has been continued several times while the Volantis appeal has been pending.

On March 16, 2020, Volantis filed an Abandonment of Appeal, indicating that the undersigned appellant herby abandons the appeal filed on 12/09/2019 in this action. This document was evidently never served on the parties.

On May 6, 2020, Volantis filed a Motion for Further Orders on Judgment, which is set for hearing this date.

On May 20, 2020, Volantis filed another Abandonment of Appeal stating that the undersigned appellant herby abandons the appeal filed on 12/09/2019 in this action. This document was served on the parties.

On July 24, 2020, the court signed and filed a Stipulation Re: Disbursement of Purchase Funds Following Abandonment of Appeal, which was stipulated by all parties, including Volantis, and states, in pertinent part:

“12. On May 6, 2020, Volantis filed a Motion for Further Orders on Judgmetn (the “Motion for Further Orders”) seeking an Order compelling the Wolf Firm to remit the Purchase Amount to Volantis.

13. Subsequent to the filing of the Motion for Further Orders on May 6, 2020, Half Life contacted the Wolf Firm and counsel for Defendants and made a demand for payment of the Purchase Amount directly to Half Life.

14. On June 16, 2020, Volantis instructed, in writing, the remittance of the entire Purchase Amount directly to Half Life.

BASED ON THE ABOVE-STATED FACTS, IT IS HEREBY STIPULATED AND AGREED between the Parties that The Wolf Firm shall remit and return all of the sales proceeds (i.e. the Purchase Amount) from the void Trustee’s Sale in the amount of $502,000 directly to Half Life, and that, by doing so, any obligation of any type to return the Purchase Amount to Volantis shall be deemed to have been fully satisfied.”

ANALYSIS:

Motion for Further Orders

Volantis has filed a motion for further orders in connection with the judgment.

As an initial matter, the opposition filed by Select Portfolio and The Bank of New York argues that the court lacks jurisdiction to hear this motion, as Volantis’ appeal is still pending, and has not been properly abandoned, and no remittitur has issued from the court of appeal.

The docket for the appeal does not show any disposition of this matter, or that any abandonment has been filed in the appeal. It also does not show that the record on appeal has been received, only that it was due on April 7, 2020. The file in this matter shows that the transcripts were received by the Civil Appeals unit of the LASC on April 2, 2020, but not that the record was filed with the Court of Appeal

CRC Rule 8.244 (b) (1) provides: “Before the record is filed in the Court of Appeal, the appellant may serve and file in superior court an abandonment of the appeal…. The filing effects a dismissal of the appeal and restores the superior court’s jurisdiction.”

It is not established here that the record had been filed in the Court of Appeal, so it appears that jurisdiction has been restored to this court.

Both oppositions also argue that the motion itself does not sufficiently notice what relief is being sought. Under CCP section 1010, “the notice of a motion… must state when, and the grounds upon which it will be made….”

Under CRC Rule 3.1110(a):

“A notice of motion must state in the opening paragraph the nature of the order being sought and the grounds for issuance of the order.”

Under CRC Rule 3.1112(d), the required elements of a motion are set forth, including that the motion “name the parties to whom it is addressed,” and that it “[b]riefly state the basis for the motion and the relief sought.” (Emphasis added).

The motion here indicates that Volantis will seek “further orders on the judgment entered 1/17/2019…” without specifying what orders are sought, or, significantly, against whom they are sought. To the extent relief is sought against the Wolf firm, it argues that has filed Declarations of Nonmonetary Status, so no monetary relief can be awarded against it without a proper motion pursuant to CCP section 473. Under Civil Code section 2924l (d) and (e) with respect to such Declarations:

“(d) In the event that no objection is served within the 15–day objection period, the trustee shall not be required to participate any further in the action or proceeding, shall not be subject to any monetary awards as and for damages, attorneys' fees or costs, shall be required to respond to any discovery requests as a nonparty, and shall be bound by any court order relating to the subject deed of trust that is the subject of the action or proceeding.

(e) In the event of a timely objection to the declaration of nonmonetary status, the trustee shall thereafter be required to participate in the action or proceeding.

Additionally, in the event that the parties elect not to, or fail to, timely object to the declaration of nonmonetary status, but later through discovery, or otherwise, determine that the trustee should participate in the action because of the performance of its duties as a trustee, the parties may file and serve on all parties and the trustee a motion pursuant to Section 473 of the Code of Civil Procedure that specifies the factual basis for the demand. Upon the court's granting of the motion, the trustee shall thereafter be required to participate in the action or proceeding, and the court shall provide sufficient time prior to trial for the trustee to be able to respond to the complaint, to conduct discovery, and to bring other pretrial motions in accordance with the Code of Civil Procedure.”

(Emphasis added).

No timely objection was made, or motion filed here.

In any case, the motion appears to seek to rescind an agreement leading to the Trustee’s Deed Upon Sale, but it is not clear what agreement is referenced, and no evidence of this is submitted. There is also a brief argument that in rescinding a contract to purchase realty, parties are entitled to interest on money they paid. The motion also states that Volantis is concurrently applying to the court for a right to attach order with respect to funds held by Wolf in the amount of $502,000.00. There is no application for a writ of attachment filed concurrently.

To the extent the motion seeks funds held by Wolf in the amount of $502,000, the motion appears to be mooted by the voluntary entry of this party into a stipulation after the motion was filed for the release of the funds to Half Life. The opposition by Wolf submits evidence that these funds have in fact been forwarded to and received by Half Life.

To the extent the conclusion appears to seek the return of the funds, “plus costs and interest on the funds,” there is no clear legal argument supporting entitlement to costs and interest, and no evidence submitted showing what interest would be due, or what figure is sought, or how that figure would be calculated.

In fact, it is not made clear until the reply that what the motion seeks is interest on the funds, and, again, it is not clear from whom. The reply seeks prejudgment interest at the rate of 7% per annum, and post judgment interest at the rate of 10% per annum, with figures specified, but again without evidence or evidentiary calculations supporting those figures.

This request and legal argument supporting it is improperly first made in the reply papers. “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.”

Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d. 1002, 1010.

Moreover, the request appears to have been disposed of by the Stipulation of July 24, 2020, made after this motion was filed and while Volantis was evidently aware of the interest issue, in which Volantis voluntarily agreed that once payment of the $502,000 was made to Half Life, “any obligation of any type to return the Purchase Amount to Volantis shall be deemed to have been fully satisfied.”

The reply also indicates for the first time that relief is sought pursuant to the Court’s Judgment on Stipulation filed January 17, 2019, and the Judgment on Stipulation filed on October 23, 2019, specifically language stating, “Volantis Global shall be entitled to return of the sale proceeds and such other relief as is proper under the Civil Code when a foreclosure sale is set aside.”

This again is mentioned for the first time in the reply, so that the opposing parties have not had the opportunity to address the argument. In addition, the oppositions, in response to the notice of motion which expressly sought relief only pursuant to the January 17, 2019 Judgment on Stipulation, pointed out that the judgment under which relief was sought was set aside, on motion of Volantis, so could not form the basis for any relief here.

The oppositions also point out that Volantis does not in the single cause of action remaining in its operative cross-complaint, for declaratory relief, seek interest or monetary relief, and has not otherwise sought to adjudicate such an issue. Volantis does not argue otherwise.

Overall, the moving papers are so devoid of notice, evidence or appropriate legal argument upon which appropriate relief can be granted, the motion is denied.

Motion for Attorney’s Fees

Plaintiff Brainangkul argues that she is entitled to attorney’s fees in this action, because the Note and Deed of Trust upon which this action was based each provide for the payment of expenses and reasonable attorney’s fees.

In general, under CCP § 1021:

“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties...”

Where there is an agreement for attorney’s fees, Civil Code 1717 provides:

“(a) In an action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs. ...Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the costs of suit.”

CCP § 1032 defines “prevailing party”:

“(4) “Prevailing party” includes the party with a net monetary recovery, 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. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides...”

Here, since plaintiff prevailed on her claims for breach of contract, negligence, violation of Business Code § 17200, and declaratory relief, as well as obtaining title to the subject property in the quiet title judgment, plaintiff is the prevailing party in the action.

The Note pursuant to which the mortgage loan at issue was secured provides in connection with the borrower’s failure to pay as required:

“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 attorney’s fees.”

[Gurevitch Decl., Ex. 1 ¶ 6]

The Deed of Trust between plaintiff Brainangkul and the original “Lender” provides at paragraph 22 for acceleration and remedies of the lender in the event of default and the procedures for invoking the power of sale, and provides, “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.” [Gurevitch Decl., Ex. 2 ¶22].

While these provisions entitle the Note Holder and Lender to recover expenses incurred, including attorney’s fees, and not the borrower, under CCP § 1717, “the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

It is held, “Section 1717 was enacted to establish mutuality of remedy where a contractual provision makes recovery of attorney's fees available for only one party, and to prevent oppressive use of one-sided attorney's fees provisions.” Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128, citations omitted.

The opposition argues that the provisions at issue do not specifically provide for an “award” of attorney’s fees and costs, or make any reference to a prevailing party. The argument is that the Note merely allows the lender to be “paid back” for attorney’s fees it incurs once it calls the note due, and the Deed of Trust allows the lender to “collect” attorney’s fees, but then describes that they are to be collected by the foreclosure trustee applying the proceeds of sale in a particular order, not via an award of attorney’s fees.

Defendants rely on Hart v. Clear Recon Corporation (2018) 27 Cal.App.5^th 322, in which the Second District reversed an attorney fees award in favor of the successor to a lender under a deed of trust, specifically paragraph 9, which permits the lender to engage in certain acts to protect its interest in the property, and provides for expenses, including attorneys’ fees to become additional debt of the borrower. The Second District found that paragraph 9 is not an attorney’s fees provision subject to Civil Code § 1717:

“Pursuant to the language quoted above, section 1717 applies only where a “contract specifically provides that attorney’s fees ... shall be awarded” to one party or the prevailing party. We must consider whether paragraph 9 of the deed of trust specifically so provides. By its plain language, it does not. The paragraph allows the lender to take numerous actions, including incurring attorney’s fees, to protect its interest. It then provides, in the language we emphasized above, that “any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument.” This 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.”

Hart, at 327.

However, as argued in the opposition, the Second District in Hart did not address whether fees were recoverable under paragraph 22, as is claimed here, as the issue was only raised by the lender for the first time on appeal:

“Because this paragraph was only raised on appeal, Nationstar failed to provide evidence in the trial court that this paragraph applies. That is, there is no evidence that Nationstar gave proper notice of default, and that the borrower failed to cure the default, allowing acceleration. As such, Nationstar cannot rely on this paragraph as an after-the-fact justification for the fees awarded by the trial court on a different basis.”

Hart, at 330.

This paragraph is followed by a footnote, in which the Second District also notes that the lender sought to justify the fee award under an attorney’s fees clause in the Note, but the Note had not been before the trial court, and plaintiffs had not signed or sued on the Note. Here, the Note has an attorney’s fees provision and is properly before the court, and forms the basis for the foreclosure acts at issue here.

Defendants also rely on Chacker v. JP Morgan Chase Bank, N.A. (2018) 27 Cal.App.5^th 351, which again addresses paragraphs 9 and 14 of the deed of trust, not paragraph 22.

These cases, directed to entirely different provisions of the standard Deed of Trust, do not dictate that fees may not be awarded under paragraph 22, which permit attorney’s fees to be collected for the expenses of enforcement by a foreclosure, and would by the reciprocity recognized entitle a borrower to collect such fees for the expense of resisting enforcement by the foreclosure process. This appears to be a classic case where reciprocity would avoid the oppressive use by the party drafting the agreement of one-sided attorney’s fees provisions. The contractual language is sufficient to entitle plaintiff to a reciprocal fee award here.

Defendants then argue that plaintiff is not entitled to recover fees, because under the terms of the judgment, “Plaintiff and Defendants shall each bear their own costs.” [Ex. C, p. 5 ¶ 7]. Defendants argue that this constitutes a waiver of fees, as fees recoverable under Section 1717 are “costs.” Defendant relies on Civil Code § 1033.5 (c)(5)(B), which provides:

“(B) Attorney's fees awarded pursuant to Section 1717 of the Civil Code are allowable costs under Section 1032 as authorized by subparagraph (A) of paragraph (10) of subdivision (a).”

The argument is that the fees here are designated “allowable costs” which have been waived.

Plaintiff argues in reply that the parties here expressly agreed in the Judgment on Stipulation that “Plaintiff may bring a motion for attorneys’ fees, and Defendants may oppose the motion for attorneys’ fees on any grounds available to them.” [Ex. C, p. 4 ¶ 23]. The argument is that this represents an understanding and intent that the parties were specifically carving out attorney’s fees from the other costs to be borne by the parties who bore them. [See Reply Gurvevich Decl. ¶ 7]. Plaintiff argues that ordinarily the costs of a civil action consist of the expenses of litigation, usually excluding attorney fees, and that the cost provisions summarized in Civil Code §§ 1033.5 were intended to restate existing law, and provide a comprehensive lists of allowable and not allowable costs in one easily accessible place, and not to affect the nature of those expenses.

Plaintiff relies on Davis v. KGO-T.V., Inc. (1998) 17 Cal.4^th 436, in which the California Supreme Court observed, “The ‘costs’ of a civil action consist of the expenses of litigation, usually excusing attorney fees.” Davis, at 439. In analyzing whether under FEHA the fees of experts not ordered by the court were properly awarded, the Court reviewed the legislative history of CCP § 1033.5:

“Subsequent to the enactment of Government Code section 12965, the Legislature enacted Code of Civil Procedure section 1033.5, to expressly define the term “costs” as used in Code of Civil Procedure section 1032, the principal statute governing the right of a prevailing party to recover costs. Code of Civil Procedure section 1033.5 specifies which costs are “allowable” (id., subd. (a)), which are “not allowable ..., except when expressly authorized by law” (id., subd. (b)), and which may be allowed or denied in the court's discretion (id., subd. (c)). Allowable costs include ordinary witness fees and the fees of experts ordered by the court, so long as they are “reasonably necessary” to the conduct of the litigation and “reasonable” in amount. (Code Civ. Proc. 1033.5, subds. (a)(7) & (8), (c)(1), (2), & (3).) Nonallowable costs include fees of experts not ordered by the court, “except when expressly authorized by law.” (Id., 1033.5, subd. (b)(1).)

As explained in an analysis prepared by the Assembly Judiciary Committee, Code of Civil Procedure section 1033.5 was intended not to alter existing law but, instead, to eliminate confusion by specifying for general purposes “which costs are and which costs are not allowable.” (Assem. Jud. Com., 3d reading analysis of Sen. Bill No. 654 (1985-1986 Reg. Sess.) Apr. 17, 1986, p. 1.) The lists of allowable and nonallowable costs included in the statute, it explains, “are essentially restatements of existing law, and to a large extent are codifications of case law.” (Ibid.) “The California Judges Association (CJA), which is the source of this bill, states that the existing law, rules and procedures relating to the awarding of litigation costs are hard to find and hard to follow. This bill is intended to rectify that situation by enacting comprehensive statutory lists of which costs are and are not allowable so that litigants and judges will no longer have to search through myriad statutes, cases and treatises in order to determine whether a particular cost item is allowable. CJA states that the list is not intended to substantively change existing law but rather to, as nearly as possible, merely restate it in a central statutory location.” (Id. at p. 2.)

Davis, at 441.

Plaintiff argues that the previously existing Civil Code 1717 provides a distinction between fees and costs, which should continue to be honored:

“(a) In an action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

(Emphasis added).

The fees here are not denied on the basis of a waiver of costs.

Instead, the court finds that it is sufficiently established that plaintiff is entitled, pursuant to the Note and Deed of Trust, to reasonable attorney’s fees incurred in defeating defendants’ claims that they were entitled to foreclose on the subject property.

Court’s Determination of Reasonableness of Fees

The California Supreme Court in PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084 established the standard for evaluating the appropriate amount of attorney’s fees to be awarded: