Court Opinion

ID: 4321767
Source: CourtListenerOpinion
Date Created: 2018-10-17 17:02:16.919444+00
Date Added: 2024-06-11T14:21:29.316176
License: Public Domain

Filed 10/17/18
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION FIVE

MELODY CHACKER,                            B281874

       Plaintiff and Appellant,            (Los Angeles County
                                           Super. Ct. No. BC547853)
       v.
                                           ORDER MODIFYING OPINION
JPMORGAN CHASE BANK, N.A. et               AND DENYING REHEARING
al.,

       Defendants and Respondents.

THE COURT:
     It is ordered that the opinion filed on September 19, 2018,
be modified as follows: On page 15, in the second sentence of the
second full paragraph, the following new footnote number 6 is
added immediately after the comma:
     Hart v. Clear Recon Corp. (2018) 27 Cal.App.5th 322
     (Hart) analyzed a provision identical to section 9 and
     construed it essentially as we have; the Hart case did
     not analyze the import of a provision identical to
     section 14 in the trust deed here because it concluded
     the plaintiffs in that case were not “borrowers” and
      thus the provision could not be invoked by the
      successor to the lender. (Id. at p. 327, fn. 4.)
The addition of new footnote 6 will require renumbering of
all subsequent footnotes.
      Appellant’s petition for rehearing is denied. There is no
change in judgment.

____________________________________________________________
BAKER, Acting P. J.          MOOR, J.                 KIM, J.

                                2
Filed 9/19/18 (unmodified opinion)
             CERTIFIED FOR PARTIAL PUBLICATION ∗

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                    SECOND APPELLATE DISTRICT

                                 DIVISION FIVE

MELODY CHACKER,                                           B281874

        Plaintiff and Appellant,                          (Los Angeles County
                                                          Super. Ct. No. BC547853)
        v.

JPMORGAN CHASE BANK, N.A., et
al.,

        Defendants and Respondents.

      APPEAL from an order of the Superior Court of Los
Angeles County, Stephanie M. Bowick, Judge. Affirmed in part,
reversed in part, and remanded.
      Law Office of Richard L. Antognini and Richard L.
Antognini for Plaintiff and Appellant.
      Parker Ibrahim & Berg, John M. Sorich, Bryant Delgadillo
and Mariel Gerlt-Ferraro, for Defendants and Respondents.

∗
        Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this
opinion is certified for publication with the exception of Parts II.A–II.B and Part II.D.
       Plaintiff and appellant Melody Chacker (plaintiff)
refinanced a loan on her home and then failed to make required
loan payments, which triggered non-judicial foreclosure
proceedings. Plaintiff sued to stop the foreclosure process and
the trial court entered a judgment of dismissal after sustaining
demurrers to plaintiff’s suit—a judgment we affirmed. The trial
court then ordered plaintiff to pay the attorney fees of defendants
and respondents JPMorgan Chase Bank, N.A. (Chase) and
California Reconveyance Company (CRC), finding certain
provisions in the deed of trust she signed authorized a fees
award. We consider whether CRC and Chase (collectively, the
Chase Defendants) can invoke these attorney fees provisions
despite having assigned the trust deed to another financial
institution, whether the trial court properly ordered payment of
fees rather than ordering the fees added to the loan balance due,
and whether the Rosenthal Fair Debt Collections Practices Act
(Rosenthal Act) separately authorizes a fee award.

                        I. BACKGROUND
      A.    Non-Judicial Foreclosure and Plaintiff’s Lawsuit
      Plaintiff refinanced her home in 2006 and executed a
promissory note for approximately $1,700,000. Repayment of the
loan was secured by a deed of trust on plaintiff’s property.
Washington Mutual Bank, FA was the initial lender, and CRC
was the initial trustee. Plaintiff’s promissory note was placed
into a mortgage-backed security trust entitled “WaMu Mortgage
Pass-Through Certificates Series 2006-AR9 Trust” (the Trust).
      In 2008, the Federal Deposit Insurance Corporation seized
the assets of Washington Mutual Bank and transferred them to
Chase. Chase subsequently assigned its beneficial interest in the

                                 2
deed of trust to Bank of America, successor by merger to La Salle
Bank, as trustee for the Trust.
       Plaintiff fell behind on payments due under the promissory
note. In June 2010, as permitted by the trust deed she signed,
CRC recorded a notice of default and election to sell her property.
CRC recorded the first notice of trustee’s sale in September 2010,
and additional notices thereafter. So far as the record reveals,
plaintiff’s property has not yet been sold at a foreclosure auction.
       Plaintiff sued the Chase Defendants (and others) to stop
the foreclosure sale in June 2014. 1 She filed the operative third
amended complaint in September 2015. The operative complaint
asserted four causes of action: (1) a request for stay of non-
judicial foreclosure and injunctive relief predicated on an
asserted violation of Civil Code section 2923.5, (2) quiet title, (3)
unlawful debt collection practices, and (4) declaratory and
injunctive relief.
       The Chase Defendants (and the others) demurred to the
operative complaint. The trial court sustained the demurrers
without leave to amend. Plaintiff appealed, and we affirmed the
trial court’s ruling. (Chacker v. JPMorgan Chase Bank, N.A.
(Dec. 22, 2017, B272380) [nonpub. opn.] (Chacker I).)

       B.    The Pertinent Provisions of the Trust Deed and
             Promissory Note
      Plaintiff’s promissory note identifies Washington Mutual
Bank as the “Lender,” and the note states the lender or anyone
who takes the note by transfer and is entitled to payments under
the note is the “Note Holder.”

1      Select Portfolio Servicing, Inc. and U.S. Bank as Trustee for the Trust were
defendants in the underlying action but are not parties to this appeal.

                                          3
       Plaintiff’s deed of trust similarly identifies Washington
Mutual Bank as the “Lender,” and it identifies CRC as the
“Trustee.” Plaintiff and her former husband are dubbed the
“Borrower.” The deed of trust contains two provisions pertinent
to this appeal—section 9, which addresses “Protection of Lender’s
Interest in the Property and Rights Under this Security
Instrument” and section 14, which addresses “Loan Charges.”
       In relevant part, section 9 provides: “If (a) Borrower fails to
perform the covenants and agreements contained in this Security
Instrument, [or] (b) there is a legal proceeding that might
significantly affect Lender’s interest in the Property and/or rights
under this Security Instrument (such as a proceeding in
bankruptcy, probate, for condemnation or forfeiture, for
enforcement of a lien which may attain priority over this Security
Instrument or to enforce laws or regulations) . . . then Lender
may do and pay for whatever is reasonable and appropriate to
protect Lender’s interest in the Property and rights under this
Security Instrument . . . . Lender’s actions can include, but are
not limited to . . . appearing in court . . . and . . . paying
reasonable attorneys’ fees to protect its interest in the Property
and/or rights in the Security Instrument . . . .” Section 9 of the
trust deed further states: “Any amounts disbursed by Lender
under this Section 9 shall become additional debt of Borrower
secured by this Security Instrument. These 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.”
       The other provision relevant to the question of attorney
fees, section 14, states in pertinent part: “Lender may charge
Borrower fees for services performed in connection with

                                  4
Borrower’s default, for the purpose of protecting Lender’s interest
in the Property and rights under this Security Instrument,
including, but not limited to, attorney fees . . . .”

      C.     The Chase Defendants’ Motion for Attorney Fees
      The Chase Defendants moved for attorney fees pursuant to
sections 9 and 14 of the deed of trust, as well as statutory
provisions enacted as part of the Rosenthal Act. They argued an
award of attorney fees was appropriate under these sections of
the trust deed—even though the trust deed had been assigned to
another financial institution—under Civil Code section 1717. 2
The Chase Defendants separately argued the Rosenthal Act also
provided independent grounds for an attorney fee award because
they qualified as prevailing creditors and plaintiff had not
prosecuted her lawsuit in good faith. The Chase Defendants
asked the trial court to award them $46,827.40, which they
contended was a reasonable amount.
      Plaintiff opposed the attorney fees motion. 3 She argued the
Chase Defendants could not claim fees under either the deed of
trust or the promissory note because the documents gave the
“Lender” the right to attorney fees, neither of the Chase
Defendants then qualified as the lender, and the Chase
Defendants were not otherwise parties to the contracts. Plaintiff
further argued that even if the Chase Defendants could seek

2       The statute provides that “[i]n any action on a contract” containing a
provision authorizing a party to the contract to recover attorney fees incurred to
enforce the contract, the prevailing party shall be entitled to reasonable attorney fees
“whether he or she is the party specified in the contract or not.” (Civ. Code, § 1717,
subd. (a).)
3       Plaintiff did not contest the amount of fees being sought as unreasonable.
Rather, she argued the Chase Defendants were not entitled to an order compelling
her to pay any amount of fees.

                                           5
contractual attorney fees under the trust deed, the relevant deed
provisions required such fees to be added to the balance of their
loan rather than issued as a separate judgment. Plaintiff also
disputed the Rosenthal Act provided a separate basis to seek
attorney fees, reasoning the Chase Defendants did not qualify as
“creditors” under the act and the Rosenthal Act cause of action
she included in the operative complaint was brought in good faith
(because the law on Rosenthal Act liability was unsettled).
      The trial court granted the motion for attorney fees and
ordered plaintiff to pay the Chase Defendants the full amount
sought, $46,827.40. The trial court found Civil Code section 1717
was “broad enough to extend to the attorney fee provisions
contained in those documents [i.e., the deed of trust and
promissory note] to [the Chase] Defendants.” Because plaintiff
sought to preclude all the defendants from enforcing the
promissory note and the deed of trust’s power of sale, the court
reasoned that ordering plaintiff to pay the Chase Defendant’s
attorney fees was “appropriate.”
      The trial court disagreed with plaintiff’s contention that
any award of attorney fees must be added to the balance of her
loan. The court’s ruling on this point was brief, stating only that
“Plaintiff cites to no case authority for that proposition” and “the
Court does not agree that Section 9 of the Deed of Trust applies
in that respect.” The trial court did not discuss the Chase
Defendants’ request for fees pursuant to the Rosenthal Act.

     [Parts II.A through II.B, below, are deleted from
 publication. See post at page 13 for where publication is
                        to resume.]

                                 6
                         II. DISCUSSION
      Plaintiff challenges two aspects of the trial court’s fees
order: (1) the finding that the Chase Defendants are entitled to
contractual attorney fees under sections 9 and 14 of the trust
deed even though they are neither the “lender” nor signatories to
the agreements; and (2) the issuance of an order to pay attorney
fees rather than an order adding any fees awarded to the balance
due on the promissory note. Plaintiff also disputes fees can be
awarded on the Rosenthal Act rationale the trial court did not
reach.
      We disagree with plaintiff’s first contention but agree with
the second. Though the Chase Defendants were not signatories
to the loan documents, they stood in the shoes of a signatory and
plaintiff sued them as though they were parties to the deed of
trust. The mutuality of remedy provided by Civil Code section
1717 thus entitles the Chase Defendants to seek attorney fees
under the trust deed. On the other hand, plaintiff is correct that
the attorney fee provisions do not authorize a separate award of
fees but rather allow the Chase Defendants to add their fees to
the underlying debt. Because we conclude the Rosenthal Act
provides no proper independent basis for awarding attorney fees,
we will reverse the trial court’s order for payment of fees and
remand to permit the court to refashion the order to require the
fee amount sought by the Chase Defendants to be added to the
loan balance.

      A.    Legal Background: Contractual Attorney Fee Awards
      “Under the American rule, each party to a lawsuit
ordinarily pays its own attorney fees. [Citation.] Code of Civil
Procedure section 1021, which codifies this rule, provides:

                                7
‘Except as attorney’s fees are specifically provided for by statute,
the measure and mode of compensation of attorneys and
counselors at law is left to the agreement, express or implied, of
the parties . . . .’ In other words, section 1021 permits parties to
‘“contract out” of the American rule’ by executing an agreement
that allocates attorney fees. [Citations.] Thus, ‘“[p]arties may
validly agree that the prevailing party will be awarded attorney
fees incurred in any litigation between themselves, whether such
litigation sounds in tort or in contract.”’ [Citations.]” (Mountain
Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th
744, 751 (Mountain Air).) Parties may also contractually “limit
the recovery of fees only to claims arising from certain
transactions or events, or award them only on certain types of
claims.” (Brown Bark III, L.P. v. Haver (2013) 219 Cal. App. 4th
809, 818 [“In the absence of a statute authorizing the recovery of
attorney fees, the parties may agree on whether and how to
allocate attorney fees”] (Brown Bark).)
       Civil Code section 1717 authorizes courts to enforce
contractual attorney fee clauses, and to enforce them in a
particular manner. Civil Code section 1717, subdivision (a)
provides in pertinent part: “In any action on a contract, where
the contract specifically provides that attorney’s 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’s fees in addition
to other costs.”
       In other words, when a contract provides for an award of
attorney fees to one party but not the other, Civil Code section

                                 8
1717 makes the right reciprocal. (Santisas v. Goodin (1998) 17
Cal. 4th 599, 610-611 [“[Civil Code s]ection 1717 makes an
otherwise unilateral right reciprocal, thereby ensuring mutuality
of remedy, . . .‘when the contract provides the right to one party
but not to the other’”].) “In this situation, the effect of [Civil
Code] section 1717 is to allow recovery of attorney fees by
whichever contracting party prevails, ‘whether he or she is the
party specified in the contract or not.’” (Id. at p. 611.)
Significantly for our purposes, Civil Code Section 1717 is also
“interpreted to further provide a reciprocal remedy for a
nonsignatory defendant, sued on a contract as if he were a party
to it, when a plaintiff would clearly be entitled to attorney’s fees
should he prevail in enforcing the contractual obligation against
the defendant.” (Reynolds Metals Co. v. Alperson (1979) 25
Cal. 3d 124, 128; see also Cargill, Inc. v. Souza (2011) 201
Cal. App. 4th 962, 966 [nonsignatory may recover attorney fees
under contract where the nonsignatory “‘stands in the shoes of a
party to the contract’”] (Cargill).)
       A trial court’s determination of “‘the propriety or amount of
statutory attorney fees to be awarded’” is reviewed under an
abuse of discretion standard, “‘but a determination of the legal
basis for an attorney fee award is a question of law to be reviewed
de novo.’ [Citations.]” (Mountain Air, supra, 3 Cal.5th at p. 751.)
The de novo standard applies to the legal issues plaintiff raises in
this appeal.

      B.   The Chase Defendants May Invoke the Fee Provisions
           in the Contracts
     Both attorney fees provisions in the trust deed that the
Chase Defendants invoked state the “Lender” is owed attorney

                                 9
fees in certain circumstances. The “Lender” identified in the deed
of trust was Washington Mutual Bank, not Chase or CRC. While
it is therefore true the Chase Defendants were not themselves
signatories to the promissory note or deed of trust, CRC was
named the trustee in the deed of trust and remained the trustee
until 2014. Additionally, the record reflects Washington Mutual
Bank was seized by the Federal Deposit Insurance Corporation
and certain assets and liabilities, including all mortgage
servicing rights and obligations, were sold to Chase in 2008.
Chase remained the servicer of plaintiff’s loan until 2013.
        Under the circumstances, the Chase Defendants were
entitled to fees under Civil Code section 1717 even though
neither was the original lender. The Chase Defendants, as the
loan servicer and trustee of the deed of trust during a portion of
the relevant time period, were agents of the lender who had
authority to enforce the lender’s rights under the deed of trust
and note. Plaintiff sued the Chase Defendants for taking actions
authorized by the deed of trust during their tenure as loan
servicer and trustee, and plaintiff’s suit effectively treated the
Chase Defendants as if they were parties to the loan contracts
and sought to have the loan declared invalid. The Chase
Defendants thus stood in the shoes of a party to the contract and
could recover attorney fees as provided by the contract even
though they were not parties themselves. (See, e.g., Ng v. US
Bank, NA (N.D.Cal. Nov. 30, 2016, No. 15-cv-04998-KAW) 2016
U.S.Dist.LEXIS 166054, at *16-17 [successor in interest to note
holder and loan servicer could recover attorney fees under Civil
Code section 1717 because they were sued as if they were parties
to contract and they stood in shoes of party]; see generally
Cargill, supra, 201 Cal.App.4th at p. 966 [although fees are

                               10
generally awarded only when a suit is between the signatories to
a contract, an exception applies where a non-signatory party
stands in the shoes of a party to the contract].) Although the
attorney fee provisions are unilateral in favor of the lender only,
the “mutuality of remedy” provided by Civil Code section 1717
means the right created by this provision was available to
plaintiff and any non-signatories, like the Chase Defendants, who
ultimately prevailed in an action on the contract. 4 (See Brown
Bark, supra, 219 Cal.App.4th at pp. 818-819.)
       The cases plaintiff cites do not compel a contrary result. It
is true, as a general matter, that the terms of an attorney fee
provision may be so narrow that they only apply to the
signatories of the contract (Blickman Turkus, LP v. MF
Downtown Sunnyvale, LLC (2008) 162 Cal. App. 4th 858, 896 [fee
provision allowing fees in “‘any litigation between the parties
hereto’”]), but the attorney fee clause here is not so narrow.
Similarly, though plaintiff cites cases holding courts must
analyze the attorney fee provisions in a contract before
determining fees may be awarded, these same cases acknowledge
non-signatories can be eligible for fees based on contractual
clauses in certain circumstances. (See, e.g., Brown Bark, supra,
219 Cal.App.4th at p. 819; Super 7 Motel Associates v.
Wang (1993) 16 Cal. App. 4th 541, 544-545.)
       Topanga and Victory Partners v. Toghia (2002) 103
Cal. App. 4th 775 (Topanga), upon which plaintiff chiefly (and

4
           Plaintiff also argues the attorney fee provisions in the deed of trust must be construed
strictly to cover only the specified “lender,” Washington Mutual Bank, because the deed of trust
was a contract of adhesion. The record provides no adequate basis to believe the loan documents
were contracts of adhesion. Even if they were, plaintiff offers no persuasive argument for why
Civil Code section 1717 would apply differently to contracts of adhesion.

                                                11
incorrectly) 5 relies, is also inapposite. The holding of that case,
which has no bearing on the question at hand, is best described
by the Topanga court itself: “The issue presented by this appeal
is whether a defendant who is not a party to a contract but is
sued for breach of that contract and various related tort and
statutory causes of action may recover attorney fees incurred in
defending the noncontract causes of action if the plaintiff files a
voluntary dismissal with prejudice. We hold that he cannot.”
(Id. at p. 778.) Plaintiff does not dispute her lawsuit qualifies as
an “action on a contract” for purposes of Civil Code section 1717
(nor does she contest the trial court’s calculation of reasonable
attorney fees). Topanga’s holding that a non-party may not
recover attorney fees on non-contract causes of action is thus no
help to plaintiff.

                [Part II.C, below, is to be published.]

       C.   The Deed of Trust Authorizes the Addition of Attorney
            Fees to the Loan Amount, Not a Separate Award to
            Pay Fees
      The Chase Defendants sought attorney fees under sections
9 and 14 of the deed of trust. While each section provides the
lender may seek reimbursement for attorney fees paid in certain
circumstances, neither authorizes a court to enter an attorney fee
award order that obligates the borrower to pay fees independent

5       Plaintiff’s reply brief represents the following quote can be found at page 786
of the Topanga opinion: “‘Entities that are not parties to a contract, or who are not
intended third party beneficiaries, have no power to enforce attorney fees clauses in
the contract.’” Plaintiff is mistaken—no such language appears on that page, or any
page, of the Topanga court’s opinion.

                                          12
of the borrower’s repayment obligation under the deed of trust
and associated promissory note.
       Section 9 of the deed of trust provides the “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 further specifies, however,
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.” The plain text of these two clauses
authorizes attorney fees to be added to the loan amount; section 9
does not provide for a separate award of attorney fees.
       In a paragraph headed “Loan Charges,” section 14 of the
deed of trust states “Lender may charge Borrower fees for
services performed in connection with Borrower’s default, for the
purpose of protecting Lender’s interest in the Property and rights
under this Security Instrument, including, but not limited to,
attorney fees . . . .” Here again, the plain language of this
provision does not provide for a separate award of attorney fees.
Rather, it entitles the lender to charge the borrower fees, and the
usage of the word “charge,” particularly in combination with the
“Loan Charges” heading and the other clauses in section 14, is
naturally read to permit the lender to add any attorney fees it
may have incurred to the outstanding amount due under the
promissory note. There is no language in section 14 that

                                13
indicates the trust deed permits a freestanding contractual
attorney fees award.
       Seeking to avoid the conclusion that flows from the text of
these two sections in the deed of trust, the Chase Defendants
argue (1) “no authority” requires adding attorney fees to the
balance of the loan, rather than entering a separate order
directing payment of fees, and (2) because they are no longer the
active servicer or trustee under the trust deed, their attorney fees
were not “amounts disbursed by [the] Lender,” as specified in
section 9. Neither of these arguments is persuasive, and indeed,
the latter is contrary to the Chase Defendants’ litigation position
in seeking fees.
       Where not authorized by statute, entitlement to attorney
fees derives from the contractual terms chosen. Just as parties
may limit or expand the circumstances under which attorney fees
are awardable (Brown Bark, supra, 219 Cal.App.4th at p. 818),
they may also limit or expand how those attorney fees may be
obtained. Here, the parties to the deed of trust agreed attorney
fees incurred as described under section 9 would become
additional debt secured by the deed of trust. They also agreed
the lender could “charge” the borrower fees for services performed
in connection with the borrower’s default, including attorney fees,
under section 14. As we have explained, the trust deed is
properly read (only) to permit attorney fees to be added to the
borrower’s promissory note obligation, and the terms of the trust
deed itself are all the “authority” that is necessary under the
circumstances.
       But there is additional persuasive authority. Although no
published California case has analyzed the import of the trust
deed attorney fee provisions at issue here, multiple federal

                                14
district courts have held trust deed provisions similar or identical
to those here do not authorize a separate fee award and instead
only allow the fees to be added to the outstanding balance due
under the promissory note. (E.g., Eisenberg v. Citibank, N.A.
(C.D.Cal. Oct. 11, 2017, No. 2:13-cv-01814-CAS(JPRx)) 2017
U.S.Dist.LEXIS 169182, at *11 [concluding an apparently
identical section 9 in a trust deed “authorize[d] attorneys’ fees to
be added to the borrower’s outstanding debt” and an identical
section 14 permitted the lender to add attorney fees incurred to
the outstanding amount owed, not to render the borrower
personally liable for the amounts]; Dufour v. Allen (C.D.Cal. Apr.
20, 2017, No. 14-cv-05616-CAS(SSx)) 2017 U.S.Dist.LEXIS
61229, at *15 [plain terms of identical section 9 of trust deed did
not entitle party to obtain attorney fees through a motion for
attorney fees]; Barba v. Flagstar Bank FSB (C.D.Cal. Sept. 19,
2011, No. CV 10-8023-VBF (VBKx)) 2011 U.S.Dist.LEXIS
163110, at *4 [denying motion for attorney fees where the
“language provides for attorney fees, [but] it specifically provides
for them to accrue as part of the debt instrument itself”]; see also
Valencia v. Carrington Mortg. Servs., LLC (D.Hawaii June 25,
2013, No. CIVIL 10-00558 LEK-RLP) 2013 U.S.Dist.LEXIS
88886, at *27 [deed of trust did not provide an independent basis
for an award of attorney fees where it stated amounts disbursed
in protecting rights under the mortgage “‘shall become additional
debt of Borrower secured by this Security Instrument’”].)
       Insofar as the Chase Defendants would contend even these
cases are still insufficient authority, we have one further
rejoinder: every legal proposition has at one time or another been
without authority; novel questions often arise in the law. Going

                                 15
forward, this opinion will serve as the authority the Chase
Defendants believe is lacking.
       As for the Chase Defendants’ argument that adding the
attorney fees amount to the loan balance would be unjustified
because they are no longer the active servicers or trustees of the
deed of trust, Justice Scalia’s observation in another context is
apt: the Chase Defendants “must take the bitter with the sweet.”
(Bailey v. United States (2013) 568 U.S. 186, 206 (conc. opn. of
Scalia, J.).) The Chase Defendants’ argument for why they are
entitled to seek attorney fees in the first place—despite being
non-parties to the contract that serves as the foundation for their
fee request—depends on their assertion that they acted as the
lender’s agents and stood in the lender’s shoes. 6 They cannot
repudiate that position merely because the upshot, required by
the terms of the contract on which they rely, is that the fees they
seek to recoup are added to the balance of a loan agreement that
has since been assigned to another financial institution. 7

    [Part II.D, below, is deleted from publication. See post at
           page 19 for where publication is to resume.]

6       At oral argument, counsel for the Chase Defendants appeared to disavow
seeking fees on the ground that the Chase Defendants stood in the lender’s shoes.
However, that is precisely what the Chase Defendants argued in their motion for
attorney fees filed in the trial court and their respondents’ brief in this court. The
motion for attorney fees, for example, asserted the Chase Defendants qualified for
fees because they were “nonsignator[ies] stand[ing] in the shoes of a party to the
contract” and “third party beneficiaries of the contract.”
7       Although the result we reach is compelled by the terms of the trust deed and
persuasive case law, a party in the Chase Defendants’ position, when negotiating
with a prospective assignee of a trust deed, can adjust the consideration given for the
assignment or other terms of the assignment deal to account for how attorney fees
may be recovered when a borrower defaults.

                                          16
      D.     The Rosenthal Act Provides No Independent Basis for
             Ordering Plaintiff to Pay Attorney Fees
       Plaintiff’s operative complaint alleged, in its third cause of
action, that Chase engaged in unlawful debt collection practices
in violation of the Rosenthal Act and an analogous federal
statute. We affirmed the trial court’s ruling sustaining Chase’s
demurrer to this cause of action, following California authority
and other cases that hold giving notice of a foreclosure sale does
not constitute debt collection activity under the Rosenthal Act.
(Chacker I, supra, B272380.)
       The Rosenthal Act includes a provision authorizing a court
to award reasonable attorney fees to a “prevailing creditor upon a
finding by the court that the debtor’s prosecution or defense of
the action was not in good faith.” (Civ. Code, § 1788.30, subd.
(c).) Chase invokes this provision as an independent ground
justifying an attorney fee award payable by plaintiff, but the
Rosenthal Act’s requirements for an award of attorney fees are
not satisfied here.
       Putting aside the issue of whether Chase is a “creditor”
under the statute, plaintiff’s prosecution of her Rosenthal Act
cause of action was undertaken in good faith. We, of course,
disagreed that liability could be had under the statute, but
plaintiff responsibly advanced a colorable argument to the
contrary. (See, e.g., Dowers v. Nationstar Mortg., LLC (9th Cir.
2017) 852 F.3d 964, 970; but see Pfeifer v. Countrywide Home
Loans, Inc. (2012) 211 Cal. App. 4th 1250, 1264; Sipe v.
Countrywide Bank (E.D.Cal. 2010) 690 F. Supp. 2d 1141, 1151.)
The Rosenthal Act does not authorize an award of attorney fees
to a prevailing defendant under these circumstances.

                                 17
     [The remainder of the opinion is to be published.]

                          DISPOSITION
       The order compelling plaintiff to pay $46,827.40 in attorney
fees to the Chase Defendants is reversed, and the matter is
remanded for the entry of a new order authorizing this amount to
be added to the outstanding balance plaintiff owes as the result of
her default on the promissory note. The parties shall bear their
own costs on appeal.

        CERTIFIED FOR PARTIAL PUBLICATION

                      BAKER, Acting P. J.

We concur:

      MOOR, J.

      KIM, J.

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