Court Opinion

ID: 4580616
Source: CourtListenerOpinion
Date Created: 2020-10-26 19:05:20.082896+00
Date Added: 2024-06-11T13:43:51.189469
License: Public Domain

Filed 10/26/20 Bidasha v. Novastar CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                          SECOND APPELLATE DISTRICT

                                          DIVISION FIVE

JAN BIDASHA,                                                         B290634

          Plaintiff and Appellant,                                   (Los Angeles County
                                                                     Super. Ct. No. BC558394)
          v.

NOVASTAR LLC et al.,

          Defendant and Respondent

     APPEAL from an order of the Superior Court of Los
Angeles County, Stephanie M. Bowick, Judge. Reversed.

          Neil C. Evans for Plaintiff and Appellant.

     Krane & Smith, Marc Smith and Georgia Skoumbis for
Defendant and Respondent.

                                __________________________
       After defaulting on a loan secured on her residence, Jan
Bidasha sued the lender, Novastar LLC, for rescission or
cancellation of the subject deed of trust. Novastar successfully
defended the action, and then moved for attorney fees based on
provision in the deed of trust dealing with attorney’s fees. The
trial court awarded Novastar $60,337.83 in fees. Bidasha
appeals the fee order, and argues the court erred in finding the
deed of trust authorized an award of attorney fees as part of the
judgment. We agree and reverse.
        FACTUAL AND PROCEDURAL BACKGROUND
       In 2014, Bidasha obtained a loan from Novastar secured by
a deed of trust on her residence. After she defaulted on her loan
payments, Bidasha sued Novastar and other defendants alleging
predatory loan practices and related wrongdoing. As against
Novastar, she asserted causes of action for fraud, constructive
fraud, rescission and cancellation of the deed of trust, violation of
Business and Professions Code section 17200, and negligence.
Novastar moved for judgment on the pleadings, which the trial
court granted.
       Novastar then moved for attorney fees under paragraph 7
of the deed of trust. The deed of trust identifies Novastar as the
“Lender” and Bidasha as “Borrower.” Paragraph 7 provides,
       “If Borrower fails to perform the covenants and agreements
       contained in this Deed of Trust, or if any action or
       proceeding is commenced which materially affects Lender’s
       interest in the Property, the Lender, at Lender’s option,
       upon notice to Borrower, may make such appearances,
       disburse such sums, including reasonable attorneys’ fees,
       and take such action as is necessary to protect Lender’s
       interest. . . . Any amounts disbursed by Lender pursuant

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      to this paragraph . . . shall become additional indebtedness
      of Borrower secured by this Deed of trust.”
       Novastar argued that paragraph 7 “specifically authorizes
Novastar to recover its attorney’s fees,” and asked the trial court
to award reasonable fees of $95,337.83. The trial court granted
the motion, concluding that under paragraph 7 Novastar was
entitled to recover its fees defending the cause of action for
rescission or cancellation of the deed of trust which “materially
affected” Novastar’s interest in the property.1 The court reduced
the fees to $60,337.83 “in consideration of [Bidasha’s] argument
as to Novastar’s actual defense of issues materially affecting its
‘interest in the property.’ ” Bidasha timely appealed.
                             DISCUSSION
       “On appeal, a determination of the legal basis for an
attorney fees award is reviewed de novo as a question of law.
[Citation.] [¶] Each party to a lawsuit must pay his or her own
attorney fees except where a statute or contract provides
otherwise. [Citation.]” (Cargill, Inc. v. Souza (2011)
201 Cal. App. 4th 962, 966.)
       Novastar contends that paragraph 7 of the deed of trust
entitled it to recover its fees in a judicial proceeding in which
Novastar defends its interest in the property. Its Respondent’s
Brief, however, selectively quotes the deed of trust when it cites
only this passage: “If any action or proceeding is commenced
which materially affects Lender’s interest in the Property, the
Lender, at Lender’s option, upon notice to Borrower, may make
such appearances, disburse such sums, including reasonable

1     Novastar also moved for attorney’s fees under Civil Code
section 1717 (reciprocal contractual attorney’s fees). The trial
court rejected this argument. We do not address it.

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attorneys’ fees, and take such action as is necessary to protect
Lender’s interest.”2
       Missing completely from Novastar’s recitation of paragraph
7 is the language that follows: “Any amounts disbursed by
Lender pursuant to this paragraph . . . shall become additional
indebtedness of Borrower secured by this Deed of Trust.” (Italics
added.) When read fairly and completely, paragraph 7 of the
deed of trust does not authorize a separate award of attorney fees
as part of a judgment in court proceedings, but instead authorizes
Novastar to add the fees to the borrower’s secured debt. It is
quite silent on an award of fees to a prevailing party in a lawsuit.
       The single appellate case that Novastar cites for the notion
that paragraph 7 authorizes an attorney fees award as part of
judicial proceedings is Santa Clara Sav. & Loan Ass’n v. Pereira
(1985) 164 Cal. App. 3d 1089 (Santa Clara) where the court
concluded a lender was entitled to recover attorney fees in a
dispute concerning a deed of trust. The deed of trust at issue
contained identical language to paragraph 7.3 (Id. at p. 1097.)

2      In point of fact, Novastar repeats its severely truncated
version of paragraph 7 twice, once on page 8 and again on page
12 of its Respondent’s Brief.

3     In Santa Clara, paragraph 7 of the deed of trust provided,
“If Borrower fails to perform the covenants and agreements
contained in this Deed of Trust, or if any action or proceeding is
commenced which materially affects Lender’s interest in the
Property, . . . then Lender . . . may make such appearances,
disburse such sums and take such action as is necessary to
protect Lender’s interest, including, but not limited to,
disbursement of reasonable attorney’s fees. . . . Any amounts
disbursed by Lender pursuant to this paragraph 7, with interest
thereon, shall become additional indebtedness of Borrower

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The Santa Clara court held that the action “certainly affected
lender’s interest in the property, and the disbursement of
attorney’s fees was necessary to protect that interest. Therefore,
lender was entitled to attorney’s fees under this aspect of
paragraph 7 . . . .” (Id. at p. 1098.) What is missing from the
opinion is a consideration of whether the attorney fees were to be
added to the judgment or only the debt. The court, and perhaps
the parties, focused only on whether the proceeding “materially
affects Lender’s interest in the Property,” not the available
remedy. The opinion, thus, does not resolve the issue as we have
framed it. Subsequent case law has.4
       In both Hart v. Clear Recon Corp. (2018) 27 Cal. App. 5th
322 (Hart) and Chacker v. JPMorgan Chase Bank, N.A. (2018)
27 Cal. App. 5th 351 (Chacker), the Court of Appeal addressed
whether the inclusion of an award of fees in a judgment was
authorized by a deed of trust provision stating that attorney fees
become additional debt of the borrower. The Hart and Chacker
courts both answered the question in the negative and reversed
the trial courts’ award of fees.
       In Hart, the deed of trust provided, “Lender may . . . pay[ ]
reasonable attorneys’ fees to protect its interest in the Property
and/or rights under this Security Instrument. . . . Any amounts

secured by this Deed of Trust.” (Santa Clara, supra,
164 Cal.App.3d at p. 1097.)

4      To the extent Santa Clara could be read as resolving the
issue before us, we respectfully choose not to follow that opinion.
(See Gonzalez v. Lew (2018) 20 Cal. App. 5th 155, 166, fn. 7
[“[t]here is no horizontal stare decisis in the California Court of
Appeal”].)

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disbursed by Lender under this Section [ ] shall become
additional debt of Borrower secured by this Security Instrument.”
(Hart, supra, 27 Cal.App.5th at p. 325.) The appellate court read
the provision as providing “that attorney’s fees, like any other
expenses the lender may incur to protect its interest, will be
added to the secured debt.” (Id. at p. 327.)
       In Chacker, the deed of trust provided, “ ‘Lender may do
and pay for whatever is reasonable or appropriate to protect
Lender’s interest in the Property and rights under this Security
Instrument, including . . . paying reasonable attorneys’ fees to
protect its interest in the Property and/or rights under the
Security Instrument . . . .’ Section 9 [of the deed of trust] further
specifies . . . that any amounts disbursed by lender for this
purpose ‘shall become additional debt of Borrower secured by this
Security Instrument’ and that the ‘amounts shall bear interest at
the Note rate from the date of disbursement and shall be payable,
with such interest, upon notice from Lender to Borrower
requesting payment.’ ” (Chacker, supra, 27 Cal.App.5th at
pp. 356–357.) As in Hart, the Chacker court concluded that the
deed of trust did not provide for a separate award of attorney’s
fees as part of a judgment, and that attorney fees could only be
added to the loan amount. (Id. at p. 357.)
       Novastar cited neither Hart or Chacker in its Respondent’s
Brief; nor did Bidasha in her brief.5
       Both Hart and Chacker cited to federal district courts that
had reached the same conclusion and noted there was no
authority to the contrary. (See Hart, supra, 27 Cal.App.5th at
pp. 327–328 citing Valencia v. Carrington Mortg. Services, LLC

5     By letter dated September 25, 2020, we asked the parties to
discuss Hart and Chacker at oral argument.

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(D.Hawaii, June 25, 2013, No. CIVIL-10-00558 LEK-RLP) 2013 L
U.S.Dist. LEXIS 88886, at *2 [“the mortgage does not entitle the
Bank Defendants to recover attorneys’ fees as an award pursuant
to the instant litigation. Rather, as provided in the mortgage, the
Bank Defendants may convert the amounts spent on attorneys’
fees into additional debt secured by the mortgage.”]; see Chacker,
supra, 27 Cal.App.5th at p. 358 citing Eisenberg v. Citibank, N.A.
(C.D.Cal. Oct. 11, 2017, No. 2:13-cv-01814-CAS(JPRx) ) 2017
U.S.Dist. LEXIS 169182, p. *11 [concluding an apparently
identical section 9 in a deed of trust “authorize[d] attorneys’ fees
to be added to the borrower’s outstanding debt”].)
       We reach the same result as in Hart and Chacker. The
deed of trust here does not contain a variation on the theme of
“the prevailing party is entitled to its attorneys’ fees as part of
the judgment.” To the contrary, the deed of trust provides no
more than if the lender has incurred reasonable attorney fees
under paragraph 7, those fees become additional debt secured by
the deed of trust. The trial court erred in granting Novastar’s
motion for fees.
                           DISPOSITION
       The order is reversed. Bidasha shall recover her costs on
appeal.

                                     RUBIN, P. J.
WE CONCUR:

            BAKER, J.                            KIM, J.

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