To the Victor, $233,33.75 in Fees, and Lender’s Appeal Did Not Upset Things.
“To the victor belong the spoils.” Puck. 1914. Library of Congress.
Lane v. U.S. Bank National Assn., Case Nos. A131087/A132432 (1st Dist., Div. 1 Aug. 28, 2012) (unpublished) is a good case for any practitioners needing a discussion of cases that allow recovery to litigants where broadly-worded fees clauses are in play.
What basically happened was that bank’s $1 million loan to the estate of a conservatee was not properly secured by San Francisco property signed by a former conservator, with a probate court authorizing new coconservators to use the proceeds of the sale of the California property to buy Oklahoma property in an Internal Revenue Code section 1031 exchange. Lender tried to prevent the sale in the probate action, but failed. Lender then filed suit against former conservator to recover the proceeds of the sale based on various theories against conservator in both a representative and individual capacity–mainly based on constructive trust tracing theories. Conservator prevailed at trial, sought recovery of $485,728.75 in fees, and was awarded $233,333.75 in attorney’s fees based on fee clauses in the underlying note and deed of trust.
Lender appealed; lender lost–with lender not helping itself by serving over 350 pleadings over a 5 year time frame.
The primary reason for affirmance was the literal breadth of the fees clauses, covering protection of the Lender’s interest in the Property/rights under the Security Instrument and efforts in “enforcing the Note to the extent of applicable law.” The broad contractual language, especially “to the extent of applicable law,” covered all of the equitable theories pled by Bank and, by the reciprocity principles of Civil Code section 1717, also benefited winning conservator. (Kangarlou v. Progressive Title Co., Inc., 128 Cal.App.4th 1174, 1179 (2005); Shadoan v. World Sav. & Loan Assn., 219 Cal.App.3d 97 (1990); Kachlon v. Markowitz, 168 Cal.App.4th 316, 348 (2008) [broadly interpreting section 1717 “on the contract” statutory language to encompass equitable claims arising out of an agreement].) Because winning former conservator was sued both representatively and personally, she was entitled to recoup fees for legal representation that involved issues common to her liability in both capacities–so long as the fees clauses covered losing lender’s equitable claims, which they did. It does not matter that some of the fees were incurred defensively, either. (Shadoan, 219 Cal.App.3d at 107.)
Fee award affirmed.