Filed 8/17/23 Shetty v. Doshi CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

NIKI-ALEXANDER SHETTY,

Plaintiff and Appellant,

v.

TEJAS DOSHI and PARAS DOSHI,

Defendants and Respondents.

 B321391

 (Los Angeles County

 Super. Ct. No. 20STCV25324)

APPEAL from a judgment of the Superior Court of Los Angeles County, 

Teresa A. Beaudet, Judge. Reversed.

Kousha Berokim for Plaintiff and Appellant.

Epps & Coulson, Dawn M. Coulson and Jeffrey A. Cohen for 

Defendants and Respondents.
2

INTRODUCTION

Plaintiff brought an action claiming he had overpaid on a promissory 

note, which included an allegedly usurious interest rate. Following plaintiff’s 

voluntary dismissal of two defendants, the trial court awarded those 

defendants their attorney fees as the prevailing parties pursuant to a feeshifting provision contained in the promissory note. Plaintiff challenges the 

attorney fees award on appeal, contending Civil Code section 17171 precludes 

a finding that defendants were the prevailing parties. We agree and reverse 

the trial court’s order.

FACTUAL AND PROCEDURAL BACKGROUND

The operative first amended complaint alleges the following facts. In 

November 2018, plaintiff Niki-Alexander Shetty (Shetty) borrowed money 

from defendants Tejas and Paras Doshi (the Doshis) pursuant to a 

promissory note secured by a deed of trust on his real property located in 

Redlands, California. The promissory note provided Shetty would receive a 

principal sum of $125,000, on which he would pay interest at 12 percent per 

annum. However, the Doshis only lent him the principal sum of $108,000, 

rather than the $125,000 indicated on the note itself. When a notice of 

default was recorded against the property, Shetty tendered the full and 

correct amount due under the note to avoid default. This offer was rejected 

by the Doshis. 

Based on these allegations, Shetty sued the Doshis and others, 

asserting four causes of action: usury, common counts, violation of Financial

Code section 22750, and unfair competition under Business and Professions 

1 All further statutory references are to the Civil Code unless otherwise 

stated. 
3

Code section 17200. Shetty claimed the interest paid under the note was 

usurious and that he had never received the full balance of the principal as 

provided by the note. In essence, Shetty contended he had been forced to 

overpay on the note to avoid foreclosure. These allegations form the basis of 

each cause of action asserted by Shetty. Shetty’s cause of action for usury is 

based on the 12 percent interest rate set forth in the note, his cause of action 

for common counts is premised on his alleged overpayment under the note, 

the cause of action for violation of Financial Code section 22750 asserts the 

Doshis operated as unlicensed lenders and charged impermissible interest 

and fees in connection with the note, and the cause of action for unfair 

competition is based on the interest rate and purported demand that Shetty 

pay more than was owed to satisfy the note. The complaint seeks, among 

other things, the return of all money paid under the note and a judicial 

determination that the provisions of the note concerning the repayment of 

principal and interest are void.

The Doshis filed a demurrer to the operative complaint. Before the 

demurrer hearing, Shetty filed a request for dismissal without prejudice as to

the Doshis. The trial court then entered that dismissal. 

The Doshis filed a motion to recover their attorney fees pursuant to a 

fee provision in the underlying promissory note. The provision states, “In any 

action to enforce this Note, the prevailing party shall receive attorney fees.” 

The trial court entered an order finding the Doshis were entitled to recover 

their attorney fees as prevailing parties in the action but continued the 

hearing on the motion to allow for supplemental briefing as to the amount of

the fee award. Following supplemental briefing, the court entered an order 
4

granting the motion and awarding the Doshis $20,041.50 in attorney fees. 

Shetty filed a notice of appeal of this order.2 

DISCUSSION

A. Standard of Review

“On appeal this court reviews a determination of the legal basis for an 

award of attorney fees de novo as a question of law.” (G. Voskanian 

Construction, Inc. v. Alhambra Unified School Dist. (2012) 204 Cal.App.4th 

981, 995.) Whether a party is entitled to attorney fees under section 1717 is a 

question of law subject to de novo review. (347 Group, Inc. v. Hawkins (2020) 

58 Cal.App.5th 209, 213.)

B. Civil Code Section 1717

California follows the “American rule,” under which each party to a 

lawsuit must pay its own attorney fees unless a contract, statute, or other 

law authorizes a fee award. (Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10); 

Musaelian v. Adams (2009) 45 Cal.4th 512, 516.)

2 The Doshis note Shetty did not appeal from the order finding the 

Doshis were entitled to an award of attorney fees as prevailing parties on 

Shetty’s claims, and instead only appealed from the subsequent order setting 

the amount of this fee award. This distinction is immaterial. In such 

situations, we will liberally construe the notice of appeal to encompass review 

of both the determination that a party is contractually entitled to attorney 

fees, as well as the amount of fees awarded. (Whiteside v. Tenet Healthcare 

Corp. (2002) 101 Cal.App.4th 693, 706–707; accord, P R Burke Corp. v. Victor 

Valley Wastewater Reclamation Authority (2002) 98 Cal.App.4th 1047, 1053–

1054.) The question of whether the Doshis are contractually entitled to an 

award of attorney fees pursuant to the promissory note is thus properly 

before us.
5

“[A] prevailing party is entitled as a matter of right to recover costs in 

any action or proceeding” except as otherwise expressly provided by statute.

(Code Civ. Proc., § 1032, subd. (b).) The term “prevailing party” is defined as 

“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.” (Id., at subd. (a)(4).) The costs

recoverable include attorney fees when authorized by contract. (Code Civ. 

Proc., § 1033.5, subd. (a)(10).) The attorney fee award here was based on the 

attorney fee provision in the promissory note.

Shetty contends the Doshis’ right to recover attorney fees is limited by 

section 1717 because all of his causes of action are based “on a contract” (i.e., 

the promissory note). Under section 1717, subdivision (a), “In any action on a 

contract, where the contract specifically provides that attorney[] 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[] fees 

in addition to other costs.” However, under section 1717, subdivision (b)(2), 

where an action is “on a contract” pursuant to section 1717 and has been 

voluntarily dismissed, there is no prevailing party. (§ 1717, subd. (b)(2) 

[“Where an action has been voluntarily dismissed or dismissed pursuant to a 

settlement of the case, there shall be no prevailing party for purposes of this 

section”].)

“California courts construe the term ‘on a contract’ liberally.” (Turner 

v. Schultz (2009) 175 Cal.App.4th 974, 979.) “Any action that is based on a 

contract is an action on that contract regardless of the relief sought.” (Brown 
6

Bark III, L.P. v. Haver (2013) 219 Cal.App.4th 809, 821.) “In determining 

whether an action is ‘on the contract’ under section 1717, the proper focus is 

not on the nature of the remedy, but on the basis of the cause of action.”

(Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 347.) 

C. Attorney Fee Award

Courts have recognized “‘“[i]t is difficult to draw definitively from case 

law any general rule regarding what actions and causes of action will be 

deemed to be ‘on a contract’ for purposes of [section] 1717.”’” (Douglas E. 

Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 241.) 

“Nevertheless, we distill . . . the following principle: An action (or cause of 

action) is ‘on a contract’ for purposes of section 1717 if (1) the action (or cause 

of action) ‘involves’ an agreement, in the sense that the action (or cause of 

action) arises out of, is based upon, or relates to an agreement by seeking to 

define or interpret its terms or to determine or enforce a party’s rights or 

duties under the agreement, and (2) the agreement contains an attorney fees 

clause.” (Id. at pp. 241–242.)

The causes of action raised in Shetty’s operative complaint satisfy this

two-part test as actions “on a contract” under section 1717. Each of these 

causes of action are based on the same operative facts concerning the 

promissory note and Shetty’s assertion that he overpaid the principal and 

interest due on the note to avoid foreclosure. Shetty’s cause of action for 

usury is based on the promissory note and alleges the 12 percent interest rate

exceeded the maximum permissible interest rate under article XV of the 

California Constitution. Shetty’s common counts cause of action is based on 

Shetty’s purported overpayment of the amount due on the note to avoid 

foreclosure. Shetty’s third cause of action alleges the Doshis violated 
7

Financial Code section 22750 by operating as unlicensed lenders and in 

charging impermissible interest and fees. Shetty’s cause of action for unfair 

competition is based on the allegation that the Doshis knowingly and 

intentionally charged Shetty for monies they had not actually lent to him, 

and in applying a usurious interest rate on the note. The relief sought by 

Shetty included the return of all principal, interest, and other charges he 

paid, treble damages, attorney fees, and the adjudication that the provisions 

of the note concerning the return of the principal and payment of interest 

“are null and void and have no force or effect.” 

Therefore, Shetty’s operative complaint as a whole—and each cause of 

action asserted therein—arises out of the promissory note and seeks to 

determine the parties’ respective rights or duties under the note, specifically 

the amount owed by Shetty in principal and interest. This satisfies the first 

element as “involving” a contractual agreement.3 “Candidly, it is difficult to 

think of an action that is more likely to be characterized as an ‘action on a 

contract’ than one in which the party bringing the action explicitly seeks to 

have the subject contract declared void and invalid in its entirety.” (Eden 

Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal.App.4th 

418, 427 [holding an action for declaratory and injunctive relief which sought

to invalidate an agreement is an action “on a contract” under section 1717].)

It is uncontested that the second element has been satisfied, as both parties 

acknowledge that the promissory note contains an attorney fee clause. 

3 See Forte v. Nolfi (1972) 25 Cal.App.3d 656, 692 [“usury can only arise 

by reason of an agreement, executed or executory, to receive compensation for 

the loan or forbearance of money in excess of the rate provided by the 

Constitution and the usury law. Therefore, the wrong involved is dependent 

on a contract”].
8

Shadoan v. World Savings & Loan Assn. (1990) 219 Cal.App.3d 97 

(Shadoan) is instructive. In Shadoan, the plaintiffs and defendant had 

entered into a loan agreement which included a prepayment penalty 

provision. The plaintiff borrowers paid the penalty to defendant. 

Subsequently, they brought suit against defendant on behalf of themselves 

and other similarly situated borrowers, alleging in a single cause of action 

that the prepayment penalty was an unfair business practice under Business 

and Professions Code section 17200. In their individual capacities, plaintiffs 

sought to recover the prepayment penalty they had paid to defendant. In 

their representative capacity, they sought to enjoin defendant from collecting 

prepayment penalties from other borrowers. (Id. at pp. 100–101.) The 

plaintiffs’ loan agreement with defendant contained an attorney fee 

provision. The trial court sustained defendant’s demurrer to the complaint 

and dismissed the action. Defendant then moved for an award of attorney 

fees pursuant to the attorney fee clause in the loan agreement. The trial 

court found under section 1717, defendant was only entitled to an award of 

attorney fees incurred in defending plaintiffs’ private action for relief from 

their contract but was not entitled to recover the fees it incurred in defending 

the claim for injunctive relief brought in a representative capacity on behalf 

of similarly situated borrowers. (Id. at p. 107.)

The Court of Appeal affirmed, holding defendant was only “entitled to 

its fees to the extent that they were incurred in an action ‘on the contract’” 

under section 1717. (Shadoan, supra, 219 Cal.App.3d at p. 107.) The court 

reasoned “that fees should be awarded to the extent that the action in fact is 

an action to enforce—or avoid enforcement of—the specific contract.” (Id. at 

p. 108.) Thus, the plaintiffs “in their private capacity, suing on their own 

contract,” were required to pay defendant’s attorney fees in defending that 
9

claim, whereas their claim for injunctive relief brought in a representative 

capacity did not seek to enforce or avoid enforcement of a specific contract 

and thus fell beyond the scope of section 1717. (Id. at p. 109.) 

Here, Shetty’s cause of action for unfair competition seeks to invalidate 

the provisions of the note requiring the repayment of $125,000 in principal 

and the payment of allegedly usurious interest. Under Shadoan, this claim is 

“on a contract” for purposes of applying section 1717.

Respondent’s reliance on Santisas v. Goodin (1998) 17 Cal.4th 599 

(Santisas) and Winnett v. Roberts (1986) 179 Cal.App.3d 909, 923 (Winnett) is 

misplaced. The complaint at issue in Santisas alleged causes of action for 

breach of contract, negligence, deceit, negligent misrepresentation, and 

suppression of fact arising from the sale of a home. (Santisas, supra, 17 

Cal.4th at p. 603.) The court determined the cause of action for breach of 

contract “sounds in contract, not tort, and is therefore an ‘action on a 

contract’ within the meaning of section 1717.” (Id. at p. 615.) As the 

plaintiffs in that action had voluntarily dismissed the action, the court held 

the defendants could not recover attorney fees incurred to defend the breach 

of contract cause of action but were entitled to such an award as to the 

remaining causes of action, which the court characterized as sounding in tort 

without further discussion. (Id. at p. 619.) As such, Santisas offers little 

guidance as to whether Shetty’s claims arise “on a contract” in this action or 

not.

Similarly, Winnett contains no discussion of whether a particular action 

or claim is deemed to be “on a contract” for purposes of section 1717. The 

court in Winnett was faced with a contractual attorney fee provision which 

stated: “‘If action be instituted on this note, I promise to pay such sum as the 

Court may fix as attorneys’ fees.’” (Winnett, supra, 179 Cal.App.3d at p. 922.)
10

The court determined this fee provision was “broad enough to encompass a 

lawsuit attacking the note as usurious.” (Id. at p. 923.) Unlike the instant 

action, there was no voluntary dismissal in Winnett, nor was there any 

question regarding whether the plaintiffs’ claims constituted an action “on a 

contract” under section 1717.

Having found that Shetty’s action is “on a contract” for purposes of 

section 1717, we find the trial court erred in finding the Doshis were entitled 

to an award of attorney fees as the prevailing parties on Shetty’s claims. As 

Shetty’s claims were “on a contract” and Shetty voluntarily dismissed those

claims against respondents, there can be no prevailing parties on those 

claims for purposes of the attorney fee provision in the promissory note. 

(§ 1717, subd. (b)(2).)

D. Scope of the Attorney Fee Provision

The same result would follow even if the Court were to adopt the 

Doshis’ reasoning and hold Shetty’s claims sounded purely in tort and were 

not “on a contract” under section 1717. “Civil Code section 1717 does not 

apply to tort claims; it determines which party, if any, is entitled to attorneys’ 

fees on a contract claim only. [Citations.] As to tort claims, the question of 

whether to award attorneys’ fees turns on the language of the contractual 

attorneys’ fee provision, i.e., whether the party seeking fees has ‘prevailed’ 

within the meaning of the provision and whether the type of claim is within 

the scope of the provision.” (Exxess Electronixx v. Heger Realty Corp. (1998) 

64 Cal.App.4th 698, 708.) “If a contractual attorney fee provision is phrased 

broadly enough, . . . it may support an award of attorney fees to the 

prevailing party in an action alleging both contract and tort claims: ‘[P]arties 

may validly agree that the prevailing party will be awarded attorney fees 
11

incurred in any litigation between themselves, whether such litigation 

sounds in tort or in contract.’” (Santisas, supra, 17 Cal.4th at p. 608.) “The 

court must determine whether the contract provides for attorney fees in a 

tort action under the procedural posture of the particular case.” (Gil v. 

Mansano (2004) 121 Cal.App.4th 739, 743 (Gil).)

The fee provision at issue here provides “In any action to enforce this 

Note, the prevailing party shall receive attorney fees.” We find this language 

does not support an award of attorney fees on non-contractual tort claims.

Gil is squarely on point as it involved an attorney fee clause similar to 

the one found in the promissory note at issue here. The clause in Gil stated 

“‘In the event action is brought to enforce the terms of this [Release], the 

prevailing party shall be paid his reasonable attorney[] fees and costs 

incurred therein.’” (Gil, supra, 121 Cal.App.4th at p. 742.) The court held 

such language could not support an award of attorney fees to a party 

prevailing on tort claims, holding “The language ‘brings an action to enforce 

the contract’ is quite narrow.” (Id. at p. 744.) In finding the clause did not 

authorize an award of attorney’s fees in connection with tort claims, the court 

reasoned “A tort claim does not enforce a contract. [Citation.] Where a 

contract authorizes an award of attorney fees in an action to enforce any 

provision of the contract, tort claims are not covered.” (Id. at p. 743.) The 

court also noted the provision did not authorize an award of attorney fees 

where the contract was raised as a defense to tort claims. (Id. at pp. 743–

744.) Other courts have similarly held that provisions authorizing the 

recovery of attorney fees incurred to “enforce” a contract do not encompass 

tort claims. (See e.g., Exxess Electronixx v. Heger Realty Corp., supra, 64 

Cal.App.4th at p. 709 [holding tort claims for constructive fraud and breach 

of fiduciary duty were not covered by fee provision authorizing a fee award in 
12

an action to “enforce the terms” of a contract and collecting cases analyzing 

similar fee provisions].)

The Doshis rely on Winnett, supra, 179 Cal.App.3d at page 923, which 

held “An attorney fee provision in a promissory note is broad enough to 

encompass a lawsuit attacking the note as usurious,” citing Thunderbird 

Investment Corp. v. Rothschild (1971) 19 Cal.App.3d 820, 830 (Thunderbird) 

and Berge v. International Harvester Co. (1983) 142 Cal.App.3d 152, 164 

(Berge). The Doshis argue that because Shetty asserted a cause of action 

against them for usury, this claim must necessarily fall within the scope of 

the fee provision in the promissory note. However, the fee provision at issue 

in Winnett was much more broadly worded than the clause in Shetty’s 

promissory note here. The clause in Winnett stated “‘If action be instituted 

on this note, I promise to pay such sum as the Court may fix as attorneys’

fees.’” (Winnett, supra, 179 Cal.App.3d at p. 922.) The same is true of the 

clause before the Court in Thunderbird, which stated “‘If action be instituted 

on this note, I promise to pay such sum as the court may fix as attorney’s 

fees.’” (Thunderbird, 19 Cal.App.3d at p. 830.) 

Winnett and Thunderbird do not establish a blanket rule that usury 

claims will always fall within the scope of an attorney fee provision 

regardless of how narrowly that provision is drawn. Rather, they simply 

illustrate the point made in Gil that “Broad language in a contractual 

attorney fee provision may support a broader interpretation” which would 

permit an award of attorney fees incurred on tort claims. (Gil, supra, 121 

Cal.App.4th at p. 744.) 

Berge is similarly inapposite as it did not involve a usury claim at all. 

In Berge the plaintiff brought suit against a vehicle manufacturer for breach 

of express and implied warranties. The manufacturer cross-complained for 
13

damages it incurred in repossessing the subject vehicle after the plaintiff 

defaulted on her payments. The sales contract contained a unilateral 

attorney fee provision, made reciprocal pursuant to section 1717, subdivision 

(a), stating: “‘Purchaser also agrees to pay all expenses, including reasonable 

attorney’s fees to the extent permitted by law, incurred in the collection, by 

suit or otherwise, of any amount payable under this contract.’” (Berge, supra, 

142 Cal.App.3d at p. 163, fn. 8.) The plaintiff successfully defended against 

the cross-complaint and moved for an award of attorney fees. The trial court

denied the motion and the Court of Appeal reversed, finding the cross-claim 

was founded “on a contract” and thus plaintiff was entitled to an award of 

attorney fees as the prevailing party on the cross-complaint pursuant to 

section 1717. (Id. at pp. 163–164.) Berge offers no support for respondents’ 

contention that the fee provision in the promissory note extends to tort 

claims.

As the attorney fee provision in the promissory note is limited to fees 

incurred in an “action to enforce this Note,” it does not authorize an award of 

fees incurred in connection with the defense of non-contractual tort claims. 

To the extent Shetty’s claims sound in tort and are not “on a contract” such as 

to trigger the application of section 1717, subdivision (b)(2), they fall outside 

the scope of the fee provision contained in the promissory note and cannot 

support an award of attorney fees to the Doshis.
14

DISPOSITION

The order granting the motion for attorney fees is reversed. Shetty is 

awarded his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ZUKIN, J.

WE CONCUR:

CURREY, P. J.

MORI, J.