in re: elaine l. brosio, 9th cir. bap (2014)
TRANSCRIPT
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
1/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
FILEDMAR 07 2014
SUSAN M. SPRAUL, CLERU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
I n r e: ) BAP No. NC- 13- 1119- Ki DJ u)
ELAI NE L. BROSI O, ) Bk. No. 12- 57468- SLJ)
Debt or . ))
))
ELAI NE L. BROSI O, ))
Appel l ant , ) ) O P I N I O N
v. ))DEUTSCHE BANK NATI ONAL )TRUST COMPANY, )
)Appel l ee. )
______________________________)
Ar gued and Submi t t ed on Febr uar y 20, 2014,at San Franci sco, Cal i f or ni a
Fi l ed - Mar ch 7, 2014
Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Nor t her n Di st r i ct of Cal i f or ni a
Hon. St ephen L. J ohnson, Bankrupt cy J udge, Presi di ng
Appear ances: J i m Er i ckson, Esq. of t he Ml nar i k Law Gr oup, I nc.ar gued f or appel l ant , El ai ne L. Br osi o; St even K.Li nkon, Esq. of RCO Legal , PS ar gued f or appel l ee,Deut sche Bank Nat i onal Trust Company.
Bef ore: KI RSCHER, DUNN and J URY, Bankr upt cy J udges.
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
2/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
KI RSCHER, Bankr upt cy J udge:
Debt or El ai ne L. Br osi o ( "Br osi o" ) appeal s an or der denyi ng
her mot i on f or at t or ney' s f ees on t he basi s t hat she was not t he
pr evai l i ng par t y under CAL. CI V. CODE 1717 and t hat t he f ees
r equest ed were not r easonabl e. We AFFI RM.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Br osi o f i l ed a chapt er 131 bankrupt cy case on Oct ober 16,
2012. Among t he asset s was Br osi o' s r esi dence. I n connect i on
wi t h the resi dence, Br osi o had execut ed a not e ( "Not e") and deed
of t r ust ( "DOT") i n J anuar y 2007 i n f avor of f or mer l ender , PaulFi nanci al , LLC. Appel l ee Deut sche Bank Nat i onal Trust Company
( "Deut sche Bank" ) r ecorded t he assi gnment of t he DOT on November
9, 2012.
Par agr aph 9 of t he DOT, "Pr ot ect i on of Lender ' s I nt er est i n
t he Pr oper t y and Ri ght s Under t hi s Secur i t y I nst r ument , " pr ovi des,
i n r el evant par t :
I f ( a) Bor r ower f ai l s t o per f or m t he covenant s andagr eement s cont ai ned i n t hi s Secur i t y I nst r ument ; ( b)t her e i s a l egal pr oceedi ng t hat mi ght si gni f i cant l yaf f ect Lender ' s i nt er est i n t he Pr oper t y and/ or r i ght sunder t hi s Secur i t y I nst r ument ( such as a pr oceedi ng i nbankrupt cy, pr obat e, f or condemnat i on or f or f ei t ur e, f orenf or cement of a l i en whi ch may at t ai n pr i or i t y over t hi sSecur i t y I nst r ument , or t o enf or ce l aws or r egul at i ons). . . t hen Lender may do and pay f or whatever i sr easonabl e or appr opr i at e t o pr ot ect Lender ' s i nt er est i nt he Pr oper t y and r i ght s under t hi s Secur i t y I nst r ument ,i ncl udi ng pr ot ect i ng and/ or assessi ng t he val ue of t hePr oper t y, and secur i ng and/ or r epai r i ng t he Pr oper t y.
Lender ' s act i ons can i ncl ude, but ar e not l i mi t ed t o:( a) payi ng any sums secur ed by a l i en whi ch has pr i or i t yover t hi s Secur i t y I nst r ument ; ( b) appear i ng i n cour t ;
1 Unl ess speci f i ed ot her wi se, al l chapt er , code and r ul er ef er ences ar e t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532, andt he Federal Rul es of Bankr upt cy Pr ocedur e, Rul es 1001- 9037.
- 2-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
3/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
and ( c) payi ng r easonabl e at t or neys' f ees t o pr ot ect i t si nt er est i n t he Pr oper t y and/ or r i ght s under t hi sSecur i t y I nst r ument , i ncl udi ng i t s secur ed posi t i on i n abankrupt cy pr oceedi ng . . . . Any amount s di sbur sed byLender under t hi s Sect i on 9 shal l become addi t i onal debtof Bor r ower secur ed by t hi s Secur i t y I nst r ument .
Par agr aph 14 of t he DOT, "Loan Char ges, " pr ovi des, i n r el evant
part:
Lender may charge Borr ower f ees f or ser vi ces per f ormed i nconnect i on wi t h Bor r ower ' s def aul t , f or t he pur pose ofpr ot ect i ng Lender ' s i nt er est i n t he Pr oper t y and r i ght sunder t hi s Secur i t y I nst r ument , i ncl udi ng, but notl i mi t ed t o, at t or neys' f ees, pr oper t y i nspect i on andval uat i on f ees . . . .
Par agr aph 22 of t he DOT, "Accel er at i on; Remedi es, " pr ovi des, i nr el evant par t :
Lender shal l be ent i t l ed t o col l ect al l expenses i ncur r edi n pur sui ng t he remedi es provi ded i n t hi s Sect i on 22,i ncl udi ng, but not l i mi t ed t o, r easonabl e at t or neys' f eesand cost s of t i t l e evi dence.
Fi nal l y, Par agr aph 7( E) of t he Not e, "Bor r ower ' s Fai l ur e t o Pay as
Requi r ed, " pr ovi des:
I f t he Note Hol der has r equi r ed me t o pay i mmedi atel y i nf ul l as descr i bed above, t he Not e Hol der wi l l have t her i ght t o be pai d back by me f or al l of i t s cost s andexpenses i n enf or ci ng t hi s Not e t o the extent notpr ohi bi t ed by appl i cabl e l aw. Those expenses i ncl ude,f or exampl e, r easonabl e at t or neys' f ees.
Loan servi cer GMAC Mor t gage, LLC f i l ed a pr oof of cl ai m
( "POC") on behal f of Deut sche Bank, asser t i ng a secur ed cl ai m f or
$587, 050. 61. The amount cl ai med i n t he POC i ncl uded t he pr i nci pal
bal ance of $585, 771. 36, $854. 25 i n i nt er est , and $425. 00 f or
"at t or ney f ees f or f i l i ng pr oof of cl ai m, r evi ewi ng pl an and
f i l i ng r equest f or speci al not i ce[ . ] " Br osi o was cur r ent i n her
mort gage payment s at t he t i me t he POC was f i l ed.
- 3-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
4/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Br osi o f i l ed a one- page f or m obj ect i on t o t he POC, di sput i ng
onl y t he at t or ney f ee of $425. 00 ( "Cl ai m Obj ect i on") . Br osi o
cont ended t he f ees wer e "i nappr opr i at e" and "wer e not j ust i f i ed by
Cr edi t or ' s need t o asser t t hei r [ si c] pr oper t y r i ght s, i n t hat
Debt or i s curr ent i n payment s and has not gi ven any i ndi cat i on
t hat Cr edi t or ' s i nt er est i n t he pr oper t y i s at r i sk or t hat
f or ecl osur e wi l l become an opt i on f or Cr edi t or . " No hear i ng was
r equest ed, set or hel d f or t he Cl ai m Obj ect i on.
Deut sche Bank subsequent l y f i l ed an amended POC r emovi ng t he
$425. 00 at t or ney f ee. Br osi o' s counsel cont act ed counsel f or
Deut sche Bank seeki ng r ei mbur sement f or t he $865. 00 she i ncur r edi n at t or ney' s f ees f i l i ng t he Cl ai m Obj ect i on. Deut sche Bank
decl i ned t o pay t he f ees.
A. Brosio's motion for attorney's fees
On J anuary 24, 2013, Br osi o moved f or an order awardi ng her
at t or ney' s f ees and cost s " f or her successf ul obj ect i on" t o t he
POC ( "Fee Mot i on") . Br osi o ar gued t hat because her obj ect i on t o
t he $425. 00 at t orney f ee pr ompt ed Deut sche Bank t o f i l e an amended
POC r emovi ng t he f ee ( t hus i mpl i ci t l y wi t hdr awi ng t he or i gi nal
POC) , she was " t he pr evai l i ng par t y i n an act i on on a cont r act "
and was t her ef or e ent i t l ed t o f ees and cost s under CAL. CI V. CODE P.
( "CCP") 1032 and 1033. 5( a) ( 10) , and CAL. CI V. CODE ( "CCC")
1717. Br osi o based her cl ai m on t he at t or ney' s f ees pr ovi si ons
f ound i n Paragr aphs 9, 14 and 22 of t he DOT and Paragr aph 7(E) of
t he Not e.
Recogni zi ng t hat no hear i ng or f ur t her l i t i gat i on occur r ed i n
connect i on wi t h her Cl ai m Obj ect i on, Br osi o ar gued t hat Cal i f or ni a
l aw st i l l al l owed f or her f ees as t he "pr evai l i ng par t y, " ci t i ng
- 4-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
5/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Hsu v. Abbar a, 9 Cal . 4t h 863, 877 ( 1995) , whi ch hel d t hat a par t y
may "be f ound t o be a pr evai l i ng par t y i f i t i s cl ear t hat t he
par t y has ot her wi se achi eved i t s mai n l i t i gat i on obj ect i ve, " and
Scot t Co. v. Bl ount , I nc. , 20 Cal . 4t h 1103, 1109 ( 1999) , whi ch,
r el yi ng on Hsu, hel d: "When a par t y obt ai ns a si mpl e, unqual i f i ed
vi ct or y by compl et el y pr evai l i ng on or def eat i ng al l cont r act
cl ai ms i n t he act i on and t he cont r act cont ai ns a pr ovi si on f or
at t or ney f ees, sect i on 1717 ent i t l es t he successf ul par t y to
r ecover r easonabl e at t or ney f ees i ncur r ed i n pr osecut i on or
def ense of t hose cl ai ms. " Br osi o ci t ed t wo addi t i onal unpubl i shed
cases she cont ended suppor t ed her Fee Mot i on: Moran v. Deut scheBank Nat ' l Trust Co. ( I n re Moran) , 2012 WL 6645025 (Bankr . D.
Haw. Dec. 20, 2012) ; and Aur ora Loan Servs. , LLC v. Guzman, 2012
WL 359684 ( N. D. Cal . Feb. 2, 2012) . 2
Br osi o conceded t hat no "pr evai l i ng par t y" exi st s wher e t he
act i on has been vol unt ar i l y di smi ssed or di smi ssed pur suant t o a
set t l ement of t he case. CCC 1717( b) ( 2) . 3 However , Br osi o
2 Br osi o argued t hat i n Moran, t he bankr upt cy cour t awardedat t or ney' s f ees t o a debt or ( under Hawai i ' s ver si on of CCC 1717)f or obj ect i ng t o a pr oof of cl ai m t hat was l at er wi t hdr awn, basedon an at t or ney' s f ee pr ovi si on i n t he not e and deed of t r ust . I nGuzman, t he di st r i ct cour t af f i r med t he bankrupt cy cour t ' s awar dof f ees t o a debt or under CCC 1717 who had l ost a st ay vi ol at i onact i on agai nst t he credi t or , but pr evai l ed i n r educi ng t hecredi t or ' s pr oof of cl ai m by sever al hundr ed dol l ar s f or i mpr operover char ges. The di st r i ct cour t det er mi ned t hat t he st ayvi ol at i on act i on coul d be vi ewed as an act i on "on a cont r act "wi t hi n t he meani ng of CCC 1717, because debt or had al so al l eged
t hat no cont r act ual basi s exi st ed f or t he cr edi t or t o i mpose t hechar ges i n t he f i r st pl ace.
3 CCC 1717( b) ( 2) pr ovi des:
Wher e an act i on has been vol unt ar i l y di smi ssed or di smi ssedpur suant t o a set t l ement of t he case, t her e shal l be no
( cont i nued. . . )
- 5-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
6/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ar gued t hat because she, as t he obj ect or , was i n t he posi t i on of
"pl ai nt i f f , " t he vol unt ar y wi t hdr awal / amendment of t he POC by
"def endant " Deut sche Bank was not a vol unt ary di smi ssal .
I n suppor t of her Fee Mot i on, Br osi o' s counsel submi t t ed a
decl ar at i on set t i ng f or t h t he t i me spent on t he mat t er by var i ous
f i r m member s. I n addi t i on t o t he $865. 00 i n f ees Br osi o i ncur r ed
i n f i l i ng her Cl ai m Obj ect i on, she sought $3, 010. 00 i ncur r ed
pr epar i ng t he Fee Mot i on and r el ated papers and $1, 400. 00 f or her
ant i ci pat ed r epl y t o Deut sche Bank' s r esponse and hear i ng
at t endance, f or a tot al r equest of $5, 265. 00. 4
Deut sche Bank opposed t he Fee Mot i on, cont endi ng t hat Br osi owas not ent i t l ed t o at t orney' s f ees under CCC 1717 because she
had not "pr evai l ed" i n her Cl ai m Obj ect i on, as no or der sust ai ni ng
her obj ect i on was ent er ed, and because her Cl ai m Obj ect i on was not
a "successf ul " cont est ed mat t er . Deut sche Bank ar gued t hat i t s
cl ai med $425. 00 at t orney f ee was suppor t ed by Paragr aph 9 i n t he
DOT, whi ch aut hor i zed such charges due t o Br osi o' s bankr upt cy
f i l i ng, and t hat i t onl y amended t he POC r emovi ng t he f ee as a
cour t esy and i n t he i nt er est of conser vi ng j udi ci al r esour ces; i t
was not an admi ssi on of wr ongdoi ng.
I n her r epl y, Br osi o cont ended t hat no "order " had t o be
ent er ed on t he Cl ai m Obj ect i on f or her t o be ent i t l ed t o f ees
under CCC 1717. Br osi o argued t hat even i f Deut sche Bank' s
$425. 00 at t or ney f ee was j ust i f i ed, t he cl ai m was i mpl i ci t l y
3( . . . cont i nued)pr evai l i ng par t y f or pur poses of t hi s sect i on.
4 The r equest ed amounts add t o $5, 275. 50.
- 6-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
7/18
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
8/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
di st i ngui shed Mor an and Guzman as ei t her f act ual l y di ssi mi l ar or
not pr ecedent i al i n any event . The cour t al so f ound t hat Br osi o' s
r equest ed f ees were not r easonabl e; t he al most $5, 600. 00 she
sought was di spropor t i onat e to the $425. 00 i n f ees t o whi ch she
obj ect ed.
The bankrupt cy cour t ent er ed an or der denyi ng Br osi o' s Fee
Mot i on on Febr uary 27, 2013 ( "Fee Or der" ) . Thi s t i mel y appeal
f ol l owed.
II. JURISDICTION
The bankrupt cy cour t had j ur i sdi ct i on under 28 U. S. C. 1334
and 157( b) ( 2) ( A) . We have j ur i sdi ct i on under 28 U. S. C. 158.III. ISSUES
1. Di d t he bankr upt cy cour t er r i n det er mi ni ng t hat Br osi o was
not t he pr evai l i ng par t y?
2. Di d t he bankr upt cy cour t er r oneousl y det er mi ne t he
r easonabl eness of Br osi o' s r equest ed f ees as an el ement i n t he
anal ysi s of whet her any f ees at al l shoul d be awar ded?
IV. STANDARDS OF REVIEW
We r evi ew a bankrupt cy cour t ' s r ef usal t o awar d at t or ney' s
f ees f or an abuse of di scr et i on. Renf r ow v. Dr aper , 232 F. 3d 688,
693 ( 9t h Ci r . 2000) ; Di nan v. Fry ( I n r e Di nan) , 448 B. R. 775, 783
( 9t h Ci r . BAP 2011) . " [ A] cour t ' s deci si on t hat t her e was no
' pr evai l i ng par t y on t he cont r act ' i s subj ect t o r evi ew under t he
abuse of di scr et i on st andar d of r evi ew. " Ci t y of Emer yvi l l e v.
Robi nson, 621 F. 3d 1251, 1266 ( 9t h Ci r . 2010) ( ci t at i ons omi t t ed) .
A bankrupt cy cour t abuses i t s di scr et i on i f i t appl i ed t he wr ong
l egal st andar d or i t s f actual f i ndi ngs wer e i l l ogi cal , i mpl ausi bl e
or wi t hout suppor t i n t he r ecor d. Tr af f i cSchool . com, I nc. v.
- 8-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
9/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Edr i ver I nc. , 653 F. 3d 820, 832 ( 9t h Ci r . 2011) .
The bankrupt cy cour t ' s appl i cat i on and i nter pret at i on of
Cal i f or ni a l aw wi l l be r evi ewed de novo. Vi cer oy Gol d Cor p. v.
Aubr y, 75 F. 3d 482, 488 ( 9t h Ci r . 1996) .
We may af f i r m on any gr ound suppor t ed by t he r ecor d. Shanks
v. Dr essel , 540 F. 3d 1082, 1086 ( 9t h Ci r . 2008) .
V. DISCUSSION
A. CCC 1717
CCC 1717 pr ovi des a basi s f or a par t y t o r ecover at t or ney' s
f ees i ncur r ed i n l i t i gat i on of a cont r act cl ai m. I t pr ovi des, i n
r el evant par t : ( a) I n any act i on on a cont r act , wher e t he cont r actspeci f i cal l y pr ovi des t hat at t or ney' s f ees and cost s,whi ch ar e i ncur r ed t o enf or ce t hat cont r act , shal l beawar ded ei t her t o one of t he par t i es or t o t he pr evai l i ngpar t y, t hen t he par t y who i s det er mi ned t o be the par t ypr evai l i ng on t he cont r act , whet her he or she i s t hepar t y speci f i ed i n t he cont r act or not , shal l be ent i t l edt o r easonabl e at t or ney' s f ees i n addi t i on t o ot hercost s. . . . Reasonabl e at t or ney' s f ees shal l be f i xed byt he cour t , and shal l be an el ement of t he cost s of sui t .
( b) ( 1) The cour t , upon not i ce and mot i on by a par t y,shal l det er mi ne who i s t he par t y pr evai l i ng on t hecont r act f or pur poses of t hi s sect i on, whet her or not t hesui t pr oceeds t o f i nal j udgment . Except as pr ovi ded i npar agr aph ( 2) , t he par t y pr evai l i ng on t he cont r act shal lbe t he par t y who r ecover ed a gr eat er r el i ef i n t he act i onon t he cont r act . The cour t may al so det er mi ne t hat t her ei s no par t y pr evai l i ng on t he cont r act f or pur poses oft hi s secti on.
CCC 1717( a) , ( b) ( 1) .
At t or ney' s f ees awar ded under CCC 1717 ar e speci f i cal l y
al l owed as a r ecoverabl e cost under CCP 1032 and 1033. 5. CCP
1033. 5( c) ( 5) . 5 CCC 1717 cr eat es a r eci pr ocal r i ght t o r ecover
5 CCP 1033. 5( c) ( 5) provi des, i n r el evant par t :( cont i nued. . . )
- 9-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
10/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
at t or ney' s f ees as cost s i n a di sput e over a cont r act cont ai ni ng
an at t or ney f ee cl ause, r egar dl ess of whet her t he at t or ney f ee
cl ause pr ovi si on i n t he cont r act woul d have al l owed f or r eci pr ocal
r ecover y. Sant i sas v. Goodi n, 17 Cal . 4t h 599, 610- 11 ( 1998) .
B. The bankruptcy court did not err in determining that Brosiowas not the prevailing party.
Br osi o cont ends t he bankrupt cy cour t er r ed i n det ermi ni ng she
was not t he "pr evai l i ng par t y. " Speci f i cal l y, she cont ends t hat
her sol e l i t i gat i on obj ect i ve was t o r emove t he $425. 00 at t or ney
f ee f r om t he amount cl ai med by Deut sche Bank i n i t s POC, and by
Deut sche Bank amendi ng i t s POC t o r emove t he f ee, i t i mpl i ci t l ywi t hdr ew i t s or i gi nal cl ai m. Ther ef or e, Br osi o cont ends t hat she
cl ear l y and unequi vocal l y pr evai l ed on t he sol e i ssue l i t i gat ed i n
t he act i on on t he cont r act .
Br osi o ar gues t hat t he si ze of t he mor t gage i n compar i son t o
t he vi ct or y on t he f ees was of no rel evance because t he "act i on on
t he cont r act " was not an act i on on Deut sche Bank' s ent i r e cl ai m,
i t was on t he sol e i ssue of t he at t or ney' s f ee. She cont ends the
bankrupt cy cour t er r ed by equat i ng "act i on on t he cont r act " wi t h
t he ent i r e cl ai m, r at her t han t he di scr et e l egal pr oceedi ng over
t he di sput ed f ee. Br osi o al so ar gues t hat l ack of an or der on her
Cl ai m Obj ect i on was of no i mpor t ance t o t he i ssue of pr evai l i ng
5( . . . cont i nued)
( c) Any awar d of cost s shal l be subj ect t o t he f ol l owi ng:
. . .
( 5) . . . At t or ney' s f ees awar ded pur suant t o Sect i on 1717 oft he Ci vi l Code ar e al l owabl e cost s under Sect i on 1032 of t hi scode as aut hor i zed by subparagr aph ( A) of paragr aph ( 10) ofsubdi vi si on ( a) .
- 10-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
11/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
par t y.
Deut sche Bank cont ends t hat , i n addi t i on t o Br osi o f ai l i ng t o
submi t any evi dence i n suppor t of her Cl ai m Obj ect i on, she coul d
not be the "prevai l i ng par t y" because t he bankrupt cy cour t never
r ender ed any deci si on on t he Cl ai m Obj ect i on or t he POC; hence, no
par t y obt ai ned a "vi ct or y" or "unqual i f i ed wi n" on t he submi t t ed
cl ai m. We agr ee.
Det er mi nat i on of "pr evai l i ng par t y" f or t he pur pose of
r eci pr ocal at t or ney' s f ees i n Cal i f or ni a i s gui ded by t he
Cal i f or ni a Supr eme Cour t ' s deci si on i n Hsu:
Accor di ngl y, we hol d t hat i n deci di ng whet her t her e i s a"par t y pr evai l i ng on t he cont r act, " t he t r i al cour t i s t ocompar e t he r el i ef awar ded on t he cont r act cl ai m orcl ai ms wi t h t he par t i es' demands on t hose same cl ai ms andt hei r l i t i gat i on obj ecti ves as di scl osed by t hepl eadi ngs, t r i al br i ef s, openi ng st at ement s, and si mi l arsour ces. The pr evai l i ng par t y det er mi nat i on i s t o bemade onl y upon f i nal r esol ut i on of t he cont r act cl ai msand onl y by "a compar i son of t he ext ent t o whi ch eachpar t y has succeeded and f ai l ed t o succeed i n i t scont ent i ons. " [ I nt er nal ci t at i on omi t t ed] .
9 Cal . 4t h at 876. Hsu, wher ei n t he cour t det er mi ned t he mer i t s
of t he cont r act cl ai m at i ssue, al so hel d t hat when t he r esul t s of
t he l i t i gat i on on t he cont r act cl ai ms ar e not mi xed t hat i s,
when t he cour t ' s deci si on i s pur el y good news f or one part y and
bad f or t he ot her t he t r i al cour t has no di scr et i on t o deny
at t or ney' s f ees t o t he successf ul par t y. I d. at 875- 76.
Thus, when a def endant def eat s r ecover y by t he pl ai nt i f fon t he onl y cont r act cl ai m i n t he act i on, t he def endanti s t he par t y pr evai l i ng on t he cont r act under sect i on
1717 as a mat t er of l aw. [ I nt er nal ci t at i ons omi t t ed] .Si mi l ar l y, a pl ai nt i f f who obt ai ns al l r el i ef r equest edon t he onl y cont r act cl ai mi n t he act i on must be r egar dedas t he par t y pr evai l i ng on t he cont r act f or pur poses ofat t or ney f ees under sect i on 1717. [ I nt er nal ci t at i onsomi t t ed] .
I d. at 876. "In determining litigation success, cour t s shoul d
- 11-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
12/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
r espect subst ance r at her t han f or m, and t o t hi s ext ent shoul d be
gui ded by ' equi t abl e consi der at i ons. ' For exampl e, a par t y who i s
deni ed di r ect r el i ef on a cl ai m may nonet hel ess be f ound t o be a
pr evai l i ng par t y i f i t i s cl ear t hat t he par t y has ot her wi se
achi eved i t s mai n l i t i gat i on obj ecti ve. " I d. at 877 ( ci t at i ons
omi t t ed) ( emphasi s i n or i gi nal ) .
Some appel l at e cour t s i n Cal i f or ni a have hel d t hat t he cour t
can det er mi ne a "pr evai l i ng par t y" and awar d at t or ney' s f ees under
CCC 1717, even when t hat part y has pr evai l ed onl y on a di scr ete
l egal pr oceedi ng and t he mer i t s of t he under l yi ng cont r act di sput e
have not yet been deci ded. Thi s i ssue most of t en ar i ses i n t hecont ext of mot i ons t o compel ar bi t r at i on, or when an act i on ( or
def endant ) i s di smi ssed on pr ocedur al gr ounds. See Kandy Ki ss of
Cal . , I nc. v. Tex- El l ent , I nc. , 209 Cal . App. 4t h 604, 613- 14 ( 2012)
( def endant who pr evai l s by obt ai ni ng a di smi ssal f or l ack of
subj ect mat t er j ur i sdi ct i on i s ent i t l ed t o cont r actual at t or ney' s
f ees, even t hough pl ai nt i f f i s abl e t o r ef i l e i n anot her f or um) ;
PNEC Corp. v. Meyer , 190 Cal . App. 4t h 66, 71 ( 2010) ( awardi ng f ees
t o def endant where compl ai nt was di smi ssed on f orum non conveni ens
gr ounds, even t hough no adj udi cat i on on t he act ual cont r act
di sput e had occur r ed and may st i l l occur i n anot her f or um) ; Pr of i t
Concept s Mgmt . , I nc. v. Gr i f f i t h, 162 Cal . App. 4t h 950, 955- 56
( 2008) ( t r i al cour t di smi ssed def endant f or l ack of per sonal
j ur i sdi ct i on and pl ai nt i f f awar ded nothi ng on cl ai m; appel l at e
cour t hel d t hat det er mi nat i on on mer i t s of cont r act cl ai m was not
r equi r ed f or t r i al cour t t o awar d at t or ney' s f ees under
CCC 1717; t he cont r act cl ai m was " f i nal l y r esol ved" wi t hi n t he
meani ng of Hsu) ; Ot ay Ri ver Const r uct ors v. San Di ego Expr essway,
- 12-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
13/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
158 Cal . App. 4t h 796, 806- 08 (2008) ( wher e no cont r act act i on
pendi ng and pet i t i on t o compel ar bi t r at i on i s f i l ed, successf ul
def ense of t he pet i t i on al l ows an awar d of pr evai l i ng par t y
at t or ney' s f ees, even t hough mer i t s of cont r act di sput e may be
deci ded l at er ) .
However , some Cal i f or ni a cour t s have di sagr eed wi t h t hi s
not i on. See HSBC Bank USA v. DJ R Pr ops. , I nc. , 2011 WL 1404899,
at *2 ( E. D. Cal . Apr . 13, 2011) ( di smi ssal f or l ack of subj ect
mat t er j ur i sdi ct i on; r ej ect i ng Pr of i t Concept s as i nconsi st ent
wi t h t he pl ai n l anguage of CCC 1717 and Hsu' s hol di ng t hat
pr evai l i ng par t y can onl y be det er mi ned upon " f i nal r esol ut i on" oft he cont r act cl ai ms) ; I dea Pl ace Cor p. v. Fr i ed, 390 F. Supp. 2d
903, 904- 05 ( N. D. Cal . 2005) ( di st r i ct cour t deni ed f ees under CCC
1717 based on di smi ssal f or l ack of subj ect mat t er j ur i sdi ct i on;
pl ai nt i f f coul d st i l l pur sue cont r act cl ai ms i n st at e cour t , so
"pr evai l i ng par t y" on t he act i on r emai ned t o be seen) ; Fr og Cr eek
Par t ner s, LLC v. Vance Br own, I nc. , 206 Cal . App. 4t h 515, 538- 39
( 2012) ( def eat i ng pet i t i on t o compel ar bi t r at i on f i l ed i n pendi ng
cont r act act i on does not j ust i f y at t or ney' s f ees because mer i t s of
cont r act act i on ar e st i l l t o be det er mi ned and t her e can onl y be
one pr evai l i ng par t y "on t he act i on" ) ; Est at e of Dr ummond, 149
Cal . App. 4t h 46, 51- 52 ( 2007) ( despi t e di smi ssal of pl ai nt i f f ' s
cl ai ms i n pr obat e cour t , t r i al cour t had di scret i on t o deny
def endant s' f ee mot i on because l i t i gat i on was cont i nui ng i n same
cour t wher e separ at e cont r act sui t had al r eady been f i l ed) .
For t unat el y, we do not have t o deci de whi ch cour t s ar e
cor r ect t o r esol ve t hi s appeal . Br osi o f ai l s t o addr ess a maj or
pr ocedur al pr obl em pr esent ed i n t hi s case. I n al l of t he cases
- 13-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
14/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
she ci t es t o suppor t her f ees Hsu, Ot ay Ri ver Const r uct or s,
Scot t Co. , Sant i sas, Mor an, Guzman and i n t he cases we ci t ed
above, t he t r i al cour t r ender ed a "deci si on" on a pendi ng mat t er ,
whet her i t be a mot i on t o compel ar bi t r at i on, a mot i on t o di smi ss,
or a j udgment af t er t r i al , bef or e any par t y moved f or or was
awarded at t orney' s f ees under CCC 1717. She has not ci t ed, and
we coul d not l ocat e, a si ngl e case wi t h a pr ocedur al post ur e such
as t hi s one where nothi ng was adj udi cated by the cour t and yet i t
consi der ed a par t y' s mot i on f or at t orney' s f ees under CCC 1717.
Al t hough t he bankrupt cy cour t ul t i matel y det er mi ned t hat Br osi o
was not t he pr evai l i ng part y because Deut sche Bank was ent i t l ed t ochar ge t he $425. 00 f ee and because i t r ecover ed a gr eat er r el i ef ,
t he cour t al so not ed t hat i t had never made any rul i ng r egar di ng
t he appr opr i at eness or t he l egal suf f i ci ency of ei t her t he POC,
t he amended POC, or t he Cl ai m Obj ect i on. I t i s on t hat basi s we
af f i r m t he bankr upt cy cour t ' s rul i ng.
No " f i nal r esol ut i on" was ever ent er ed by a cour t on Deut sche
Bank' s POC or Br osi o' s Cl ai m Obj ect i on, whet her i t be on t he
ent i r e cl ai m or t he di scret e pr oceedi ng over t he di sput ed f ee.
Hsu, 9 Cal . 4t h at 876. For Br osi o t o be t he pr evai l i ng par t y, we
concl ude that t he bankrupt cy cour t had t o f i r st ent er some sor t of
di sposi t i on on t hese i ssues. Br osi o' s "sel f - pr ocl ai med" vi ctor y
i s i nsuf f i ci ent t o t r i gger an awar d under CCC 1717.
The Cal i f or ni a Rul es of Cour t f ur t her suppor t our deci si on.
Under Cour t Rul e 3. 1702, 6 whi ch gover ns t he t i mi ng of cl ai ms f or
6 Cour t Rul e 3. 1702 pr ovi des, i n r el evant par t :
( a) Appl i cat i on. Except as ot her wi se pr ovi ded by st at ut e,( cont i nued. . . )
- 14-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
15/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
at t or ney' s f ees under CCC 1717, a par t y must f i l e and serve i t s
not i ce and mot i on f or f ees wi t hi n t he t i me f or f i l i ng a "not i ce of
appeal . " Ar guabl y, one cannot f i l e an appeal wi t hout a f i nal
under l yi ng or der or j udgment f r om t he cour t , and cer t ai nl y no
appeal t i me can r un unt i l one i s ent er ed. Thus, "some" or der or
j udgment must exi st bef or e a par t y can move f or , or be ent i t l ed
t o, at t or ney' s f ees under CCC 1717.
Al t er nat i vel y, we concl ude that CCC 1717( b) ( 2) pr ecl uded
Br osi o f r om bei ng t he pr evai l i ng par t y. Under CCC 1717( b) ( 2) ,
no pr evai l i ng par t y wi l l exi st when an act i on has been vol unt ar i l y
di smi ssed. Br osi o i s i ncor r ect when she equat es her sel f t o"pl ai nt i f f " and Deut sche Bank as "def endant . " The f i l i ng of a
pr oof of cl ai m i s anal ogous t o f i l i ng a compl ai nt i n t he
bankrupt cy case. Uni t ed St at es v. Levoy ( I n r e Levoy) , 182 B. R.
827, 833 n. 5 ( 9t h Ci r . BAP 1995) ; Smi t h v. Dowden, 47 F. 3d 940,
943 ( 8t h Ci r . 1995) ; Si mmons v. Savel l ( I n r e Si mmons) , 765 F. 2d
6( . . . cont i nued)t hi s rul e appl i es i n ci vi l cases t o cl ai ms f or st at ut or yat t or ney' s f ees and cl ai ms f or at t or ney' s f ees pr ovi ded f ori n a cont r act . Subdi vi si ons ( b) and ( c) appl y when t he cour tdet er mi nes ent i t l ement t o t he f ees, t he amount of t he f ees,or both, whether t he cour t makes t hat determi nat i on becauset he st at ut e or cont r act r ef er s t o " r easonabl e" f ees, becausei t r equi r es a det er mi nat i on of t he pr evai l i ng par t y, or f orot her r easons.
( b) At t or ney' s f ees bef or e t r i al cour t j udgment
( 1) Ti me f or mot i on
A not i ce of mot i on t o cl ai m at t or ney' s f ees f or ser vi cesup t o and i ncl udi ng t he r endi t i on of j udgment i n t het r i al cour t i ncl udi ng at t or ney' s f ees on an appealbef or e t he r endi t i on of j udgment i n t he t r i al cour t must be ser ved and f i l ed wi t hi n t he t i me f or f i l i ng anot i ce of appeal under r ul es 8. 104 and 8. 108 i n anunl i mi t ed ci vi l case or under r ul es 8. 822 and 8. 823 i n al i mi t ed ci vi l case.
- 15-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
16/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
547, 552 ( 5t h Ci r . 1985) ; Nor t ex Tr adi ng Cor p. v. Newf i el d, 311
F. 2d 163, 164 ( 2d Ci r . 1962) ; I n r e Edwar ds Theat r es Ci r cui t ,
I nc. , 281 B. R. 675, 681 ( Bankr. C. D. Cal . 2002) . And a cl ai m
obj ect i on by t he debt or i s anal ogous t o an answer . O' Nei l l v.
Cont ' l Ai r l i nes ( I n r e Cont ' l Ai r l i nes) , 928 F. 2d 127, 129 ( 5t h
Ci r . 1991) ( "[ T] he f i l i ng of a pr oof of cl ai m i s anal ogous t o t he
f i l i ng of a compl ai nt i n a ci vi l act i on, wi t h t he bankr upt ' s
obj ect i on t he same as t he answer. " ) ( ci t i ng Si mmons and Nort ex
Tr adi ng Cor p. ) ; I n r e Cr ui sephone, I nc. , 278 B. R. 325, 330 ( Bankr .
E. D. N. Y. 2002) ( "I n t he bankr upt cy cont ext , a pr oof of cl ai m f i l ed
by a cr edi t or i s concept ual l y anal ogous t o a ci vi l compl ai nt , anobj ect i on t o t he cl ai m i s aki n t o an answer or def ense and an
adver sar y pr oceedi ng i ni t i at ed agai nst t he credi t or t hat f i l ed t he
pr oof of cl ai m i s l i ke a count er cl ai m. ") .
Accor di ngl y, Deut sche Bank was t he "pl ai nt i f f , " and Br osi o,
as obj ect or t o t he POC, was i n t he r ol e of "def endant . " Deut sche
Bank' s abandonment of i t s cl ai m f or at t or ney' s f ees i n t he amended
POC was aki n t o a vol unt ary di smi ssal , whi ch pr event ed def endant
Br osi o f r om pr evai l i ng on her cl ai m under CCC 1717. See Enni s
v. Mor t gaget r ee Lendi ng, I nc. , 2010 WL 3341544, at *2 ( E. D. Cal .
Aug. 24, 2010) ( pl ai nt i f f ' s abandonment of br each of cont r act cl ai m
bef or e t r i al was aki n t o vol unt ar y di smi ssal and pr ecl uded
def endant s f r om pr evai l i ng on t hei r CCC 1717 cl ai m) ; Bal dai n v.
Am. Home Mort g. Servi ci ng, I nc. , 2010 WL 2606666, at *6 ( E. D. Cal .
J une 28, 2010) ( because pl ai nt i f f vol unt ar i l y di smi ssed i t s TI LA
cl ai m by decl i ni ng t o r e- pl ead i t i n i t s amended compl ai nt ,
def endant was not pr evai l i ng par t y on t hat cl ai m under CCC
1717) ; Dodson v. Pan Pac. Retai l Props. , I nc. , 2003 WL 25656778,
- 16-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
17/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
at *1 ( E. D. Cal . J une 13, 2003) ( hol di ng t hat def endant was not
pr evai l i ng par t y wher e pl ai nt i f f abandoned cl ai m pr i or t o
t r i al ) ( ci t i ng Gal an v. Wol f r i ver Hol di ng Cor p. , 80 Cal . App. 4t h
1124, 1130 ( 2000) ( when pl ai nt i f f has vol unt ar i l y di smi ssed a cause
of act i on no pr evai l i ng par t y exi st s as a pr act i cal mat t er ) ;
Gi l ber t v. Nat ' l Enqui r er , I nc. , 55 Cal . App. 4t h 1273, 1277- 78
( 1997) ( same) .
I n shor t , we vi ew t he pr ocedur al post ur e of t hi s case as
f ol l ows. Deut sche Bank f i l ed i t s POC ( t he compl ai nt ) , and Br osi o
f i l ed her Cl ai m Obj ect i on ( t he answer ) . Deut sche Bank t hen f i l ed
an amended POC ( an amended compl ai nt ) i n whi ch i t abandoned i t scl ai m f or at t or ney' s f ees. Br osi o t hen, t hr ough her Fee Mot i on,
contended t hat because Deut sche Bank amended i t s POC ( compl ai nt )
r emovi ng t he f ee cl ai m, she was t he "wi nner" on t he "act i on on t he
cont r act " and ent i t l ed t o at t or ney' s f ees under CCC 1717. Put
t hi s way, Br osi o' s Fee Mot i on makes l i t t l e sense. 7 Fur t her , t o
award f ees t o Br osi o under t hese ci r cumst ances woul d be puni shi ng
Deut sche Bank f or i t s gest ur e of ci vi l i t y i n r emovi ng i t s cl ai m
f or at t or ney' s f ees f r om t he POC a cl ai m t he bankrupt cy cour t
det er mi ned i t was ent i t l ed t o asser t under Par agr aph 9 of t he DOT.
We agr ee wi t h t hat determi nat i on.
Br osi o has compl ai ned that Deut sche Bank i ncur r ed at t or ney' s
f ees onl y because i t di scret i onar i l y el ected t o f i l e an
unnecessary pr oof of cl ai m. Al t hough secur ed cr edi t or s ar e not
7 Counsel has "an obl i gat i on t o consi der t he pot ent i al f orr ecover y and bal ance t he ef f or t r equi r ed agai nst t he resul t s t hatmi ght be achi eved . . . . [ A] n at t or ney must scal e hi s . . . f eeat l east t o t he r easonabl y expect ed r ecover y. " Unsecur edCr edi t ors Comm. v. Puget Sound Pl ywood, I nc. , 924 F. 2d 955, 961( 9t h Ci r . 1991) . Bi l l i ng j udgment i s mandat or y.
- 17-
-
7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)
18/18
1
2
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
r equi r ed t o f i l e a pr oof of cl ai m i n a chapt er 13 case, pr udent
credi t or s l i ke Deut sche Bank ar e cer t ai nl y ent i t l ed t o f i l e one t o
est abl i sh t he amount t hey are owed accor di ng t o thei r own
cal cul at i ons, r at her t han r el yi ng on t he debt or ' s, and t o r ecei ve
di st r i but i ons on an al l owed cl ai m under t he pr ovi si ons of a
chapt er 13 pl an. See, e. g. , I n r e Dumai n, 492 B. R. 140, 143
( Bankr . S. D. N. Y. 2013) ; 501, 502 and 1326( c) ; Rul es 3002 and
3021. Fur t her , by si gni ng t he DOT, Br osi o agr eed t hat Deut sche
Bank coul d t ake r easonabl e act i ons t o pr ot ect i t s secur i t y
i nt er est , par t i cul ar l y i f she f i l ed bankr upt cy, and t hat she woul d
pay Deut sche Bank' s r easonabl e at t or ney' s f ees i ncur r ed f or t hoseact i ons. Pr epar i ng and f i l i ng t he POC, r evi ewi ng Br osi o' s pl an
and f i l i ng a r equest f or speci al not i ce, and char gi ng a t ot al of
onl y $425. 00 i n at t or ney s f ees, seems mor e than r easonabl e.
Because we concl ude that t he bankrupt cy cour t di d not er r i n
det er mi ni ng Br osi o was not t he pr evai l i ng par t y, we need not r each
Br osi o' s second i ssue about whet her i t er r ed i n deci di ng her f ees
wer e not r easonabl e.
VI. CONCLUSION
Al t hough we have determi ned on a di f f erent l egal basi s why
Br osi o was not t he pr evai l i ng part y under CCC 1717, because t he
bankr upt cy cour t r eached t hi s same concl usi on, we percei ve no
er r or i n t hi s case. Accor di ngl y, we AFFI RM t he Fee Or der . 8
8 Deut sche Bank cont ends t hat Br osi o' s appeal i s f r i vol ous,and i t r equest s at t or ney' s f ees on appeal . We decl i ne t o consi derDeut sche Bank' s r equest because i t di d not f i l e a separ ate mot i onas r equi r ed by Rul e 8020. See Rul e 8020; Gar ner v. Shi er ( I n r eGarner ) , 246 B. R. 617, 626 n. 14 ( 9t h Ci r . BAP 2000) .
- 18-