Although Parties Settled, The Settlement Agreement Preserved The Prevailing Party’s Ability To Recoup Fees.
Plaintiff’s successor under certain loan documents brought a judicial foreclosure action against defendant borrower, who brought a declaratory relief cross-complaint claiming repayments all had been timely made. During the course of the litigation, a bank produced information showing that the loan had been repaid, such that the parties reached a settlement where the litigation was dismissed, a reconveyance provided to defendant, and with any party being able to bring a motion that it prevailed in the litigation so as to be entitled to attorney’s fees under Civil Code section 1717 (based on fees clauses in the loan documents). The trial judge agreed defendant prevailed, awarding defendant a little shy of $16,400 in attorney’s fees.
Plaintiff appealed, arguing that the defendant did not prevail and that plaintiff actually prevailed. The appellate court saw things in line with defendant and with the trial court in Cusack v. Togneri, Case No. A152844 (1st Dist., Div. 1 Aug. 30, 2018) (unpublished).
Albeit a successor to a signatory, plaintiff as successor in interest was liable for fees under the loan documents. The settlement reached by the parties was more than just a litigation dismissal, but subject to express settlement agreement reservations such that any party thinking they prevailed could move for fees—so there was no waiver by the litigation dismissal. Finally, defendant did get most of the primary relief, namely, a reconveyance and an acknowledgment that all repayments had been made, such that defendant (not plaintiff) did prevail.