Filed 12/4/13 Residential Credit Solutions v. Adigwe CA2/4 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and pa rties from citing or relying on opinions not certified for pu blication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered publi shed for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

RESIDENTIAL CREDIT SOLUTIONS, INC.,

Plaintiff, Cross-defendant, and Appellant,

v.

PASCAL LORD-MICHAEL ADIGWE,

Defendant, Cross-complainant, and Appellant. B240653

(Los Angeles County Super. Ct. No. BC459810)

APPEALS from a judgment of the Supe rior Court of Los Angeles County, Michael L. Stern, Judge. Affirmed. Marcus, Watanabe & Dave, David M. Marcus and Daniel J. Enowitz for Plaintiff, Cross-defendant, and Appellant. Onwaeze Law Group and Og ochukwu Victor Onwaeze for Defendant, Crosscomplainant, and Appellant.2 In this case, Residential Credit Solutions, Inc. (Residential) presents claims based on an alleged agreement between Pascal Lord -Michael Adigwe (Adigwe) and borrowers

Chris Dike Nwadiwe and his wife Fabre L. Atkins-Nwadiwe (t he Nwadiwes) to the effect

that a secured loan obtain ed by the Nwadiwes from Residential’s predecessor would remain a valid lien on the property even thou gh Adigwe had recorded a notice of lis pendens before the loan was made, and thereaft er obtained a quiet title judgment as to the property that secured the pred ecessor’s loan. Residential c oncedes that due to the lis pendens and the subsequent judg ment in the quiet title action, Residential’s deed of trust would not be a valid lien against the pr operty absent an agreement between the Nwadiwes and Adigwe. These circumstances gave rise to a co mplaint by Residential against Adigwe, and a cross-action by Adigwe agains t Residential for declaratory relief and cancellation of the

deed of trust on which Residential relies. Residential appeals from judgments entered after the trial court sustained Adigwe’s demu rrer to Residential’s co mplaint without leave to amend, and granted judgment on the plea dings to Adigwe on his cross-complaint. Adigwe cross-appeals from denial of his motion for an award of attorney fees.

We conclude that the statute of frauds ba rs Residential from recovery based on the alleged agreement between th e Nwadiwes and Adigwe. We also conclude that Residential is not entitled to recovery on its equitable claims. The trial court did not err in granting judgment on the pleadings on two causes of action of Adigwe’s crosscomplaint. We shall affirm the judgments. We conclude, finally, that the trial court did not err in denying Adigwe his attorney fees under Civil Code section 1717.

FACTUAL AND PROC EDURAL SUMMARY We apply the same standards in review ing the trial court’s orders sustaining a general demurrer and granting a motion for judgment on the pleadings. ( County of Orange v. Association of Or ange County Deputy Sheriffs (2011) 192 Cal.App.4th 21, 32 ( County of Orange ).) “We accept the complaint’s proper ly pleaded factual allegations as true and give them a liberal construction. [Citations.] We do not accept as true ‘any3 contentions, deductions or conclusions of fact or law contained therein.’ [Citation.]” ( Ibid. ) We may consider matters s ubject to judicial notice. ( Southern California Edison Co. v. City of Victorville (2013) 217 Cal.App.4th 218, 227.) The subject real property (the prop erty) was acquired by the Nwadiwes in September 1998. 1 In November 2002, they obtained a $472,500 loan from Finance America Loans, secured by a deed of trust on the property. In Ap ril 2005, Adigwe sued the Nwadiwes in Los Angeles Su perior Court to quiet title to the property (LASC case No. BC332145 (Adigwe action)). On April 27, 2005, Adigwe filed and recorded his first lis pendens pertaining to the property. The withdrawal of this lis pendens was recorded on March 3, 2006. Adigwe recorded a second lis pendens as to the property on March 10, 2006 in the Adigwe action. In April 2006, despite the lis pendens recorded by Adigwe, Winstar Mortgage Partners, Inc., Residential’s predecessor, loan ed the Nwadiwes $630,000, secured by a deed of trust on the property (W instar loan). This deed of tr ust was recorded on April 24,

2006. In August 2006, the court gave judgmen t based on a jury verdict in favor of Adigwe and against the Nwadiwes in the Ad igwe action. The judgment ordered the Nwadiwes to “convey title to th is property to [Adigwe], subject only to that deed of trust the beneficiary of which is Finance America and which recites that the borrower, Chris Dike Nwadiwe, is indebted to his lende r in the principal sum of $472,500.00 .” (Italics added.) The Winstar loan is not mentione d in the quiet title judgment. The judgment was recorded on August 10, 20 06. On August 7, 2006, Chris Nwadiwe quitclaimed his interest in the property to his wife, Fabre Atkins-Nwadiwe, and on August 9, 2008, the

1 The complaint alleges that Chris Nwadi we acquired the property in September 1998, and that Fabre Nwadiwe ex ecuted an interspousal transf er deed at the same time, granting any interest she had in the property to her husband. Th e Nwadiwes executed a series of interspousal transfers between th emselves. There is no dispute that the Nwadiwes owned the property at the releva nt times. Fabre Nwadiwe executed some relevant documents as Fabre Atkins-Nwadiwe.4 property was quitclaimed by Fabre Atkins-Nwadi we to Adigwe pursuant to the terms of the judgment. In April 2011, Winstar’s inte rests in the deed of trust executed by the Nwadiwes in April 2006 were assigned to its successor, Resi dential. The same month, Residential filed the present action against the Nwadiwes and Adigwe in Los Angeles Superior Court (case No. BC459810). It alleged that $468, 204.23 of proceeds from the Winstar loan were used to pay off the Finance Ameri ca loan on the propert y and that the full reconveyance of the deed of trust securing Finance America’s loan to the Nwadiwes was recorded on June 15, 2006. Residential alleged that Ad igwe acquired title to the property pursuant to the quitclaim judgment “subject to the Winstar Deed of Trust, and with the understanding and agreement between him and Defendant Fabre Nwadiwe that the Winstar Deed of Trust, the proceeds of whic h were used to retire the obligation secured by the Finance America Deed of Trust, would remain as a valid lien against the Subject Property. Plaintiff is informed and believes, and based upon said information and belief alleges that, notwithstanding the Judgment en tered in the Adigwe Action[,] the Winstar

Deed of Trust remains as a valid li en against the Subject Property.” Residential alleged causes of action ag ainst Adigwe for declaratory relief (that Adigwe acquired title subj ect to the Winstar Deed of Trus t); for judicial foreclosure on

the Winstar Deed of Trust which was in default; and for declaratory relief (that Residential is entitled to an equitable lien in th e amount of Winstar lo an proceeds used to pay off the Finance America lo an). Residential also allege d causes of action for unjust enrichment and an equitable lien based on the us e of proceeds of the loan it made to the Nwadiwes to pay off the Finance America loan. The Nwadiwes were named as defendants as well, but were dismissed from the action. Adigwe demurred to the complaint and filed a cro ss-complaint to quiet title, cancel the Residential deed of trust, a nd for damages for slander of title against

Residential. The trial court sustained the demurrer without leave to amend. A partial judgment in favor of Adigwe against Residen tial was entered. Residential appealed from that partial judgment.5 Adigwe’s cross-complaint alleged causes of action to quiet title, for cancellation of the Winstar deed of trust, and for slander of title. Adigwe alleged that prior to 1998, he had an agreement with Chris Nwadiwe for Nwadiwe to acquire the property, using money provided by Adigwe, to be held in trust for Adigwe. Nwadiwe was to account for profits and rents and eventually transfer the property to Adigwe. The trial court sustained

Residential’s demurrer to the second cause of action for slander of title without leave to amend and struck Adigwe’s requests for sp ecial and general damages on his cause of action to quiet title. The trial court grante d Adigwe’s subsequent motion for judgment on the pleadings on the remaining causes of action in the cross-co mplaint and entered judgment in his favor against Residential. Residential appealed from the judgment. Adigwe’s motion for atto rney fees was denied and he filed a cross-appeal from that order. We ordered the appeals consolidated.

DISCUSSION

I The legal issues regarding the trial cour t’s rulings on the demurrer to Residential’s complaint and on the motion fo r judgment on the pleadings on Adigwe’s cross-complaint are basically the same. Residential concedes that it does not have a valid lien against the property in light of the lis pendens Adigwe filed and the judgment quieting title in the Adigwe action. “A lis pendens provides cons tructive notice of the litigation, such that any judgment later obtained in the action relate s back to the filing of the lis pendens. [Citation.] A lis pendens clouds title until the litigation is resolved or the lis pendens is expunged, and a ny party acquiring an interest in the property after the action is filed will be bound by the judgment. [Citation.]” ( Slintak v. Buckeye Retir ement Co., L.L.C., Ltd. (2006) 139 Cal.App.4th 575, 586–587; Deutsche Bank National Trust Co. v. McGurk (2012) 206 Cal.App.4th 201, 214 [“[A]ny person who obtains an interest in the property subsequent to the filing of th e lis pendens takes that intere st with constructive knowledge of the quiet title action, and w ill be bound by the judgment in the quiet title action. (Code Civ. Proc., § 765.030, subd. (b).)”].)6 In an effort to avoid the conclusive im pact of the lis pendens and the quiet title judgment in favor of Adigwe here, Residential alleges, and argues on appeal, that there was an agreement between the Nwadiwes and Adigwe that the Winstar deed of trust would remain a valid lien against the proper ty notwithstanding the Adigwe lis pendens and judgment. It does not allege a writte n agreement signed by Adigwe by which he agreed that the Winstar deed of trust would re main a valid lien on the property. Instead, it simply alleges an “understanding and agre ement” between Adigwe and Fabre Nwadiwe that Adigwe took title subject to the Winstar Deed of Trust, the proceeds of which were used to retire the obligation secured by the Fi nance America deed of trust, and that the

Winstar deed of trust would remain as a valid lien against the property. Like the trial court, we look to the doc uments incorporated in to both the complaint and the cross-complaint. Th e Adigwe quiet title judgment e xpressly gave Adigwe title to the property subject to the Finance America de ed of trust. But it does not mention the Winstar deed of trust. The absence of any re ference to the Winstar deed of trust in the quiet title judgment undercuts Residential’s argument that Adigwe agreed that it would remain a valid lien on the property. In his opening brief, Adigwe argues th at Residential cannot base its contract claims on this alleged agreement because it is barred by the statute of frauds, Civil Code section 1624, subdivision (a)(3). 2 That statute requires a written agreement signed by the party to be charged for “[a]n agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein . . . .” We concluded that the case presented a significant issue regarding the statute of frauds, and invited counsel to address the applicability of Civil Code section 1624, subdivision (a)(2), which seemed more applicable to the circumstances presented here. It

2 Residential responds that Adigwe did no t assert the statute of frauds as a basis for his demurrer. “[W]e may affirm an orde r sustaining a demurrer on grounds presented by the record whether or not relied on by th e trial court [citation] , or on grounds first raised on appeal [citation].” ( Ortega v. Topa Ins. Co. (2012) 206 Cal.App.4th 463, 472.)7 provides that a promise to answ er for the debt of another is invalid unless it is in writing and signed by the party to be charged, here Adigwe. In his supplemental brief Adigwe cites a third subdivision of Civil Code section 1624, subdivision (a)(6). He ar gues that this statute of frauds provision bars Residential from arguing the existence of an unwritten, unexecuted agreement between Adigwe and

Fabre Nwadiwe. Civil Code section 1624 , subdivision (a)(6) provides: “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the part y to be charged or by the party’s agent: [¶] . . . [¶] (6) An agreement by a purchaser of real pr operty to pay an indebtedness secured by a mortgage or deed of trust upon the pr operty purchased, unless assumption of the indebtedness by the purchaser is specifically provided for in the conveyance of the property.” The statute of frauds barring oral transf ers of real property interests is also

codified in Code of Civil Procedure section 1971 : “No estate or intere st in real property, . . . nor any power over or concerning it, or in any manner relating ther eto, can be created, granted, assigned, surrendered, or declared, otherwise than by operation of law, or a conveyance or other instrument in writing, subscribed by the party creating, granting, assigning, surrendering, or d eclaring the same . . . .” An oral agreement to grant a lien against re al property as secur ity for a debt falls within the statute of frauds. ( Landes Const. Co., Inc. v. Royal Bank of Canada (9th Cir. 1987) 833 F.2d 1365, 1370, citing Remainders, Inc. v. Bartlett (1963) 215 Cal.App.2d 295, 298-299.) In Remainders, Inc. v. Bartlett

, supra , 215 Cal.App.2d 295, the assignee

of a law firm sued a defendant to recover a ttorney fees and costs for legal matters the firm had handled for the defendant. It sought to foreclose an oral lien on real property allegedly given as security for the payment of fees. The court refused to enforce the alleged oral lien based on Code of Civil Proce dure section 1971. ( Id. at p. 299.)

Miller & Starr cite Civil Code section 1624, subdivision (a)(6 ) for the proposition that: “An assumption agreement must be in writing and must be signed by the grantee.” (Miller & Starr, 4 Cal. Real Estate (3d ed.) § 10.36, p. 119) Th e treatise explains that “[a]8 purchaser ‘assumes’ the obliga tion whenever he or she agrees to pay the obligation secured by an existing trust deed or mo rtgage on the property conveyed.” ( Ibid. ) Residential’s allegation is that Adigwe agreed that the prope rty would be subject to the Winstar lien, even th ough no mention of it was ma de in the Adig we quiet title judgment. This allegation is th e kind of transfer of an oblig ation secured by real property addressed by Civil Code section 1624, subdi vision (a)(6) and Code of Civil Procedure

section 1971. Civil Code section 1624, subdivision (a )(6), and Code of Civ il Procedure section 1971, are specific statutes of frauds applicable to these circumstance s. They are more specific than the general provision of Civil Code section 1624, subdivision (a)(2), which addresses a promise to answer for the debt of another. “It is a fundamental principle that ‘“‘[a] specific provision relating to a particul ar subject will govern a general provision, even though the general provision standing alone would be broad enough to include the subject to which the specific provision rela tes.’” [Citations.]’ [Citation.]” ( Bed, Bath & Beyond of La Jolla, Inc. v. La Jo lla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 877.) This ru le applies to the choice of statute of frauds provisions. ( Id. at pp. 876–877 [ruling subdivision (d) of former Civil Code section 1624 (now subdivision (a)(3)) regarding lease for period lo nger than one year controls over general former subdivision (a) (now subdivision (a)(1 )) governing an agreement that cannot be performed within a year].) We conclude that the specific provisions of Civil Code section 1624, subdivision (a)(6) and Code of Civil Procedure section 1971 govern over Civil Code section 1624, subdivision (a)(2 ) and require a written agreement that the Winstar lien is valid against the property as to Adigwe.

Our conclusion that the statute of frauds bars Residential from relying on an unwritten agreement applies to the first caus e of action for declaratory relief (alleging that Adigwe acquired the property subject to the valid Winstar deed of trust), and the9 second cause of action for judicial for eclosure (alleging the same agreement). 3 We conclude that the trial court properly sust ained demurrers to thes e causes of action on statute of frauds grounds. Residential’s argument that the court e rred in granting judgment on the pleadings on Adigwe’s cause of action to quiet title is based on the claim that there was an agreement between the Nwadiwes and Adigwe that the Winstar deed of trust would remain a valid lien on the property. Since th at claim is barred by the statute of frauds, judgment on the pleadings was properly grante d. Alternatively, Residential cites its claim of entitlement to an equitable lien against the property as a basis for denying Adigwe’s quiet title cause of action. We ad dress that alternativ e ground below.

II Residential argues it is entitled to recove r for unjust enrichment (fourth cause of action) and under an equitable lien (third and fifth causes of action) on the theory that it would be unjust to allow Adigwe to retain the benefit of the $468,204.23 of funds from the Winstar loan used to pay off and satisfy the Finance America lien on the property. The complaint alleges that “p roceeds from the Winstar loan in the amount of $468,204.23 were disbursed to pay off the Finance Am erica Loan, secured by the Finance America Deed of Trust against the Subject Property, and thereafter, the Finance America Deed of Trust was reconveyed, via a Substitution of Trustee and Full Reconveyance (the ‘Reconveyance’) record ed on June 15, 2006 . . .” The re conveyance is e xhibit 11 to the complaint. It identifies the Nwa diwes as the original trustors, states that the debt secured has been fully paid and satisfi ed, and instructs the recorder “to enter the satisfaction of

and cancel of record the deed of trust.” This was nearly two months before the trial court quieted title to the property in Adigwe in his acti on against the Nwadiwes.

3 Residential concedes that our ruling on its first cause of action applies with equal force to its second cause of action.10 For reasons not explained in the record , the judgment entered in Adigwe’s quiet title action states that Adigwe is to take title to the property “subject only to that deed of trust the beneficiary of which is Finance Am erica, and which recites that the borrower, Chris Dike Nwadiwe, is indebted to his le nder in the principal sum of $472,500.00.” (Italics added.) Residential’s theory is that the Finance Am erica lien was paid off with funds loaned by Winstar, and that since the Finance America lien had been satisfied, Adigwe received a benefit of the amount used to pay off Finance America. A. Unjust Enrichment As Adigwe argues, there is no cause of action in California for unjust enrichment. ( Durell v. Sharp Healthcare (2010) 183 Cal.App. 4th 1350, 1370 ( Durrell ).) Rather, it is “synonymous with restitution. [Citation.]” ( Ibid. ) “‘[R]estitution may be awarded

where the defendant obtained a benefit from th e plaintiff by fraud, duress, conversion, or similar conduct.’” ( Ibid. ) “‘Under the law of restitution, “[a]n individual is required to make restitution if he or she is unjustly enrich ed at the expense of another. [Citations.] A person is enriched if the person receives a benefit at another’s expense. [Citation.]” [Citation.] However, “[t]he fact that one person benefits anothe r is not, by itself, sufficient to require restitution. The person receiving the benefit is required to make restitution only if the circumstances are such that, as between the tw o individuals, it is unjust for the person to reta in it. [Citation.]”’ ( McBride v. Boughton [(2004)] 123 Cal.App.4th [379,] 389.)” ( Ibid. ) The unjust enrichment allegation is th at the quiet title judgment in favor of Adigwe awarded him title subject to the Finance America deed of trust. It alleges: “However, proceeds in the amount of $468,204.23 from the Wi nstar Loan, secured by the Winstar Deed of Trust, were used to re tire the Finance America Loan, secured by the Finance America Deed of Trust, and to obtain the reconvey ance of the Finance America Deed of Trust. Accordingly, in the event it is determined th at the Winstar Deed of Trust is not a valid lien against the Subject Prope rty, and that Defendant, Adigwe, did not acquire title to the Subject Property subject to the Winstar Deed of Tr ust, Defendants, and each of them, received direct benefits from the proceeds of the Winstar Loan, secured by11 the Winstar Deed of Trust, which loan and deed of trust, and the rights thereunder, have been assigned to [Residential].” It alleges that each defenda nt has been unjustly enriched by the amount of Winstar proceeds used to re tire the Finance America loan and deed of

trust. The complaint alleges that the Nwadiwes concealed the second lis pendens and the existence of the Adigwe action from Winstar when they applied fo r a loan. But it does not allege that Adigwe engaged in improper conduct in relation to the issuance of the Winstar loan, or the use of Winstar loan procee ds to pay off the Finance America loan. It simply alleges that he received the benefit of those circumstances. Bu t “‘“[t]he fact that one person benefits another is not, by itself, sufficient to re quire restitution. The person receiving the benefit is required to make re stitution only if the ci rcumstances are such that, as between the two individuals, it is unjust for the person to retain it. [Citation.]”’ [Citation.]” ( Durell

, supra , 183 Cal.App.4th at p. 1370.)

Unclean hands is an affirmative defens e in actions seeking equitable relief, including the right of restitution. ( Wilson v. S.L. Rey, Inc. (1993) 17 Cal.App.4th 234, 244.) “The bar applies only if the inequitabl e conduct occurred in a transaction directly

related to the matter before the court and a ffects the equitable relationship between the litigants. [Citation.]” ( Ibid. ) “‘The [unclean hands] doctrine demands that a plaintiff act fairly in the matter fo r which he seeks a remedy. He mu st come into court with clean hands, and keep them clean, or he will be de nied relief, regardless of the merits of his claim.’ [Citation.]” ( Brown v. Grimes (2011) 192 Cal. App.4th 265, 282.) The pleadings and attached exhibits establish that Residential’s predecessor, Winstar, was responsible for the circumstan ces giving rise to the claim for unjust

enrichment. Winstar made the loan notwithstanding the lis pe ndens. The judgment in the quiet title action, which was rendered after the Winstar loan was made, was not made subject to the Winstar loan. There is no allegation that Adigwe was responsible for concealing the pendency of his action from Wins tar. Nor is there an allegation that he

was involved in the Nwadiwes’ decision to use Winstar loan proceeds to pay off the existing Finance America loan on the property. The fact that the judgment in the Adigwe12 quiet title action was expressly made subject to the Finance America loan which already had been satisfied, suggests that Adigwe was unaware that it was no longer a lien on the property. Once Winstar made th e loan to the Nwadiwes they were entitled to use the loan proceeds in any manner they chose. There is no allegation in Reside ntial’s complaint to the contrary. As between Adigwe—who is not alleged to have played a role in the loan from Winstar to the Nwadiwes, or in the use of those loan proceeds to pay off the Finance America loan—and Residential, whose pred ecessor acted withou t due diligence in making the loan, we conclude that Residential is not entitled to restitution under its cause of action for unjust enrichment. ( Durell

, supra , 183 Cal.App.4th at p. 1370.) B. Equitable Lien Residential takes the position that its th ird cause of action for declaratory relief and fifth cause of action for imposition an d foreclosure of an equitable lien are “intertwined and concern its attempt to impos e and foreclose an Equitable Lien against the Subject Property as a result of its pred ecessor’s payoff of the Finance America Deed

of Trust.” Residential characterizes the i ssue as to these theo ries as whether the constructive notice arising from the lis penden s and Adigwe quiet title judgment bars the imposition of an equitable lien in the amount of the Finance America loan payoff. Similarly, Residential argues the trial court erred in granting judgment on the pleadings on Adigwe’s cause of action to quiet title beca use it claims an equitable lien as to the property. A party is not entitled to imposition of an equitable lien where it is chargeable with culpable and inexcusable neglect. ( JP Morgan Chase Bank, N.A. v. Banc of America Practice Solutions, Inc. (2012) 209 Cal.App.4th 855, 861 ( Chase Bank ).) It is true that constructive notice by recording of a claim on property does not preclude a party from invoking equitable subrogation. ( Ibid. ) Nevertheless, we mu st determine whether Adigwe’s equities are equal to or greater than Residential’s. If they are, Residential is not entitled to equitable subrogation. ( Id . at p. 862.)13 Residential cites Chase Bank

, supra , 209 Cal.App.4th 855, to argue that the equities favor its claim for equitable relief. In that case, Chase Bank invoked the doctrine of equitable subrogation where it had paid off existing first a nd second deeds of trust and expected a first deed of trus t in return. There was eviden ce that Chase Bank would not have made its loan otherwise, and that the es crow company was instru cted not to disburse

loan funds if Chase’s deed of trust did not have first priority. But Banc of America Practice Solutions, Inc. (Banc) r ecorded its deed of trust prior to Chase’s filing of its deed of trust. It knew of the two prior deeds of trust, and expected that it would be in third position. The Court of Appeal concluded that in these circumstances, the equities favored Chase. ( Id . at p. 862.) It reasoned that sin ce equitable subrogation looks to the intentions of the parties, allowing Chase to invoke equitable subrogation gave both parties what they intended: priority to Chase and a subor dinate position to Banc. ( Ibid. ) We disagree with Residential’s attempt to analogize Adigwe to the position of a junior encumbrancer, as in JP Morgan , supra , 209 Cal.App.4th 855. It contends that like a junior encumbrancer, Adigwe would be left in the same position (junior to Residential) that he had before this litiga tion began, and would not be prejudiced by a judgment that he pay Residential the $468,204.23 used to pa y off the Finance America loan. We fail to see how Adigwe would not be prejudiced. He is not in the position of a junior encumbrancer. He was awarded title to the prope rty free of any security interest in favor of Winstar. As discussed, there is no allega tion that he was involv ed in the Nwadiwes’ use of Winstar loan proceeds to pay off the Fi nance America loan. Denial of recovery to

Residential under these circumstances does not result in a windfall to Adigwe. The balance of the equities is with Adigwe. The trial court properly sustained the demurrer to

Residential’s third and fifth causes of action. It follows that Residential is unable to plead an equitable lien that would bar the ju dgment on the pleadings on Adigwe’s first cause of action to quiet title in th e property on this basis.14 III The third cause of action in Adigwe’s cr oss-complaint is to cancel the Winstar deed of trust as a valid lien on the property . Adigwe argues that the lis pendens and judgment in the quiet title action render th e Winstar deed of tr ust void because the Winstar deed of trust was subject to the qu iet title judgment. The trial court judgment decreed the Winstar deed of trust null, cance lled, and ineffective to create any interest, legal or equitable, in the property. Residential argues the trial court erred in granting Adigwe judgment on this third

cause of action based on the same claim of an agreement between Adigwe and the

Nwadiwes that the Winstar deed of trust rema in a valid lien on the property. The statute of frauds precludes Residential from relief on that ground. In addition, we have

concluded that Residential cannot plead a right to equitable relief under the circumstances

of this claim. The trial court did not err in granting Adigwe judgment on this cause of

action.

IV Adigwe argues the trial court erred in de nying his motion for a ttorney fees because he prevailed on Residential’s complaint and on his own cro ss-complaint. Residential’s complaint sought to enfo rce the Winstar promissory note and deed of trust. Paragraph 6(E) of the promissory note and paragraph 22 of the deed of trust provide for an award of attorney fees. 4 Residential points out that Adigwe was not a party to either instrument containing a fee clause. Adigwe seeks fees under Civil Co de section 1717. That statute provides: “In any action on a contract, where the contract specifically provides that attorney’s fees

4 The fee clause states that if the not e holder has required the borrower to “pay immediately”, “the Note Holder will have the ri ght to be paid back by [borrower] for all of its costs and expenses in enforcing this No te to the extent not prohibited by applicable law. Those expenses include, for example, re asonable attorneys’ fees.” Similarly, the fee clause in the deed of trust appears in the paragraph on accel eration of the debt upon the borrower’s breach.15 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 dete rmined 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 re asonable attorney’s fees in addition to other costs.” (Italics added.) “Non-signatories to contracts are sometimes entitled to attorn ey fees by virtue of Civil Code section 1717. For example a non-sign atory who prevails in an action on the contract is entitled to attorney fees provided it would have been liable for fees had the other party prevailed. [Citation.]” ( Hyduke’s Valley Motors v. Lobel Financial Corp. (2010) 189 Cal.App.4th 430, 435.) Adigwe argues he is a nons ignatory entitled to fees, citing Saucedo v. Mercury

Sav. & Loan Assn. (1980) 111 Cal.App.3d 309. Th at case is distinguishable. Saucedo was an action to prevent foreclosure for no npayment of a loan. The non-signatory plaintiff found entitled to receive fees was a succ essor in interest to the original signatory of a loan, and had purchased the property expr essly subject to the loan agreement that included the fees clause. ( Id . at p. 311.) As we have seen , since Adigwe obtained title to the property through a quiet title judgment, he did not take title subject to the Winstar loan instruments containing the fe e clauses he now invokes. In Babcock v. Omansky (1973) 31 Cal.App.3d 625, 633, a non-signatory to a contract with an attorney fee clause

was awarded fees under Civil Code section 1717 where it was alleged she engaged in a joint venture with her husband, who was a signato ry. No such allegation is made here. Also distinguishable is Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, an action in which a plaintiff sued shareholders and directors of two bankrupt corporations

in an effort to hold them liable for debts it owed to the corporations based on the claim that the defendants were alter egos of the cor porations. The trial court rejected the alter ego theory and awarded the de fendants attorney fees. ( Id . at p. 127.) Since the

defendants would have been lia ble on the notes if the plainti ff had prevailed on its alter ego theory, the defendants were en titled to recovery of fees. ( Id . at p. 129.) Adigwe fails to demonstrate how he would have been liable for fees to Residential absent express language that he took title subjec t to the instruments w ith the fees clause,16 or allegations of joint venture or alter ego. The trial court did not err in denying the fee

motion.

DISPOSITION The judgments after sustaining the demu rrer to Residential’s complaint without leave to amend and granting judgment on the pl eadings to Adigwe on his cross-complaint are affirmed. The trial court’s order denying a ttorney fees to Adigwe also is affirmed. Adigwe shall have his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

EPSTEIN, P. J.

We concur:

MANELLA, J.

SUZUKAWA, J.