in re: elaine l. brosio, 9th cir. bap (2014)

7/25/2019 In re: Elaine L. Brosio, 9th Cir. BAP (2014)

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FILEDMAR 07 2014

SUSAN M. SPRAUL, CLERU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. NC- 13- 1119- Ki DJ u)

ELAI NE L. BROSI O, ) Bk. No. 12- 57468- SLJ)

Debt or . ))

))

ELAI NE L. BROSI O, ))

Appel l ant , ) ) O P I N I O N

v. ))DEUTSCHE BANK NATI ONAL )TRUST COMPANY, )

)Appel l ee. )

______________________________)

Ar gued and Submi t t ed on Febr uar y 20, 2014,at San Franci sco, Cal i f or ni a

Fi l ed - Mar ch 7, 2014

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Nor t her n Di st r i ct of Cal i f or ni a

Hon. St ephen L. J ohnson, Bankrupt cy J udge, Presi di ng

Appear ances: J i m Er i ckson, Esq. of t he Ml nar i k Law Gr oup, I nc.ar gued f or appel l ant , El ai ne L. Br osi o; St even K.Li nkon, Esq. of RCO Legal , PS ar gued f or appel l ee,Deut sche Bank Nat i onal Trust Company.

Bef ore: KI RSCHER, DUNN and J URY, Bankr upt cy J udges.


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KI RSCHER, Bankr upt cy J udge:

Debt or El ai ne L. Br osi o ( "Br osi o" ) appeal s an or der denyi ng

her mot i on f or at t or ney' s f ees on t he basi s t hat she was not t he

pr evai l i ng par t y under CAL. CI V. CODE 1717 and t hat t he f ees

r equest ed were not r easonabl e. We AFFI RM.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Br osi o f i l ed a chapt er 131 bankrupt cy case on Oct ober 16,

2012. Among t he asset s was Br osi o' s r esi dence. I n connect i on

wi t h the resi dence, Br osi o had execut ed a not e ( "Not e") and deed

of t r ust ( "DOT") i n J anuar y 2007 i n f avor of f or mer l ender , PaulFi nanci al , LLC. Appel l ee Deut sche Bank Nat i onal Trust Company

( "Deut sche Bank" ) r ecorded t he assi gnment of t he DOT on November

9, 2012.

Par agr aph 9 of t he DOT, "Pr ot ect i on of Lender ' s I nt er est i n

t he Pr oper t y and Ri ght s Under t hi s Secur i t y I nst r ument , " pr ovi des,

i n r el evant par t :

I f ( a) Bor r ower f ai l s t o per f or m t he covenant s andagr eement s cont ai ned i n t hi s Secur i t y I nst r ument ; ( b)t her e i s a l egal pr oceedi ng t hat mi ght si gni f i cant l yaf f ect Lender ' s i nt er est i n t he Pr oper t y and/ or r i ght sunder t hi s Secur i t y I nst r ument ( such as a pr oceedi ng i nbankrupt cy, pr obat e, f or condemnat i on or f or f ei t ur e, f orenf or cement of a l i en whi ch may at t ai n pr i or i t y over t hi sSecur i t y I nst r ument , or t o enf or ce l aws or r egul at i ons). . . t hen Lender may do and pay f or whatever i sr easonabl e or appr opr i at e t o pr ot ect Lender ' s i nt er est i nt he Pr oper t y and r i ght s under t hi s Secur i t y I nst r ument ,i ncl udi ng pr ot ect i ng and/ or assessi ng t he val ue of t hePr oper t y, and secur i ng and/ or r epai r i ng t he Pr oper t y.

Lender ' s act i ons can i ncl ude, but ar e not l i mi t ed t o:( a) payi ng any sums secur ed by a l i en whi ch has pr i or i t yover t hi s Secur i t y I nst r ument ; ( b) appear i ng i n cour t ;

1 Unl ess speci f i ed ot her wi se, al l chapt er , code and r ul er ef er ences ar e t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532, andt he Federal Rul es of Bankr upt cy Pr ocedur e, Rul es 1001- 9037.

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and ( c) payi ng r easonabl e at t or neys' f ees t o pr ot ect i t si nt er est i n t he Pr oper t y and/ or r i ght s under t hi sSecur i t y I nst r ument , i ncl udi ng i t s secur ed posi t i on i n abankrupt cy pr oceedi ng . . . . Any amount s di sbur sed byLender under t hi s Sect i on 9 shal l become addi t i onal debtof Bor r ower secur ed by t hi s Secur i t y I nst r ument .

Par agr aph 14 of t he DOT, "Loan Char ges, " pr ovi des, i n r el evant

part:

Lender may charge Borr ower f ees f or ser vi ces per f ormed i nconnect i on wi t h Bor r ower ' s def aul t , f or t he pur pose ofpr ot ect i ng Lender ' s i nt er est i n t he Pr oper t y and r i ght sunder t hi s Secur i t y I nst r ument , i ncl udi ng, but notl i mi t ed t o, at t or neys' f ees, pr oper t y i nspect i on andval uat i on f ees . . . .

Par agr aph 22 of t he DOT, "Accel er at i on; Remedi es, " pr ovi des, i nr el evant par t :

Lender shal l be ent i t l ed t o col l ect al l expenses i ncur r edi n pur sui ng t he remedi es provi ded i n t hi s Sect i on 22,i ncl udi ng, but not l i mi t ed t o, r easonabl e at t or neys' f eesand cost s of t i t l e evi dence.

Fi nal l y, Par agr aph 7( E) of t he Not e, "Bor r ower ' s Fai l ur e t o Pay as

Requi r ed, " pr ovi des:

I f t he Note Hol der has r equi r ed me t o pay i mmedi atel y i nf ul l as descr i bed above, t he Not e Hol der wi l l have t her i ght t o be pai d back by me f or al l of i t s cost s andexpenses i n enf or ci ng t hi s Not e t o the extent notpr ohi bi t ed by appl i cabl e l aw. Those expenses i ncl ude,f or exampl e, r easonabl e at t or neys' f ees.

Loan servi cer GMAC Mor t gage, LLC f i l ed a pr oof of cl ai m

( "POC") on behal f of Deut sche Bank, asser t i ng a secur ed cl ai m f or

$587, 050. 61. The amount cl ai med i n t he POC i ncl uded t he pr i nci pal

bal ance of $585, 771. 36, $854. 25 i n i nt er est , and $425. 00 f or

"at t or ney f ees f or f i l i ng pr oof of cl ai m, r evi ewi ng pl an and

f i l i ng r equest f or speci al not i ce[ . ] " Br osi o was cur r ent i n her

mort gage payment s at t he t i me t he POC was f i l ed.

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Br osi o f i l ed a one- page f or m obj ect i on t o t he POC, di sput i ng

onl y t he at t or ney f ee of $425. 00 ( "Cl ai m Obj ect i on") . Br osi o

cont ended t he f ees wer e "i nappr opr i at e" and "wer e not j ust i f i ed by

Cr edi t or ' s need t o asser t t hei r [ si c] pr oper t y r i ght s, i n t hat

Debt or i s curr ent i n payment s and has not gi ven any i ndi cat i on

t hat Cr edi t or ' s i nt er est i n t he pr oper t y i s at r i sk or t hat

f or ecl osur e wi l l become an opt i on f or Cr edi t or . " No hear i ng was

r equest ed, set or hel d f or t he Cl ai m Obj ect i on.

Deut sche Bank subsequent l y f i l ed an amended POC r emovi ng t he

$425. 00 at t or ney f ee. Br osi o' s counsel cont act ed counsel f or

Deut sche Bank seeki ng r ei mbur sement f or t he $865. 00 she i ncur r edi n at t or ney' s f ees f i l i ng t he Cl ai m Obj ect i on. Deut sche Bank

decl i ned t o pay t he f ees.

A. Brosio's motion for attorney's fees

On J anuary 24, 2013, Br osi o moved f or an order awardi ng her

at t or ney' s f ees and cost s " f or her successf ul obj ect i on" t o t he

POC ( "Fee Mot i on") . Br osi o ar gued t hat because her obj ect i on t o

t he $425. 00 at t orney f ee pr ompt ed Deut sche Bank t o f i l e an amended

POC r emovi ng t he f ee ( t hus i mpl i ci t l y wi t hdr awi ng t he or i gi nal

POC) , she was " t he pr evai l i ng par t y i n an act i on on a cont r act "

and was t her ef or e ent i t l ed t o f ees and cost s under CAL. CI V. CODE P.

( "CCP") 1032 and 1033. 5( a) ( 10) , and CAL. CI V. CODE ( "CCC")

1717. Br osi o based her cl ai m on t he at t or ney' s f ees pr ovi si ons

f ound i n Paragr aphs 9, 14 and 22 of t he DOT and Paragr aph 7(E) of

t he Not e.

Recogni zi ng t hat no hear i ng or f ur t her l i t i gat i on occur r ed i n

connect i on wi t h her Cl ai m Obj ect i on, Br osi o ar gued t hat Cal i f or ni a

l aw st i l l al l owed f or her f ees as t he "pr evai l i ng par t y, " ci t i ng

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Hsu v. Abbar a, 9 Cal . 4t h 863, 877 ( 1995) , whi ch hel d t hat a par t y

may "be f ound t o be a pr evai l i ng par t y i f i t i s cl ear t hat t he

par t y has ot her wi se achi eved i t s mai n l i t i gat i on obj ect i ve, " and

Scot t Co. v. Bl ount , I nc. , 20 Cal . 4t h 1103, 1109 ( 1999) , whi ch,

r el yi ng on Hsu, hel d: "When a par t y obt ai ns a si mpl e, unqual i f i ed

vi ct or y by compl et el y pr evai l i ng on or def eat i ng al l cont r act

cl ai ms i n t he act i on and t he cont r act cont ai ns a pr ovi si on f or

at t or ney f ees, sect i on 1717 ent i t l es t he successf ul par t y to

r ecover r easonabl e at t or ney f ees i ncur r ed i n pr osecut i on or

def ense of t hose cl ai ms. " Br osi o ci t ed t wo addi t i onal unpubl i shed

cases she cont ended suppor t ed her Fee Mot i on: Moran v. Deut scheBank Nat ' l Trust Co. ( I n re Moran) , 2012 WL 6645025 (Bankr . D.

Haw. Dec. 20, 2012) ; and Aur ora Loan Servs. , LLC v. Guzman, 2012

WL 359684 ( N. D. Cal . Feb. 2, 2012) . 2

Br osi o conceded t hat no "pr evai l i ng par t y" exi st s wher e t he

act i on has been vol unt ar i l y di smi ssed or di smi ssed pur suant t o a

set t l ement of t he case. CCC 1717( b) ( 2) . 3 However , Br osi o

2 Br osi o argued t hat i n Moran, t he bankr upt cy cour t awardedat t or ney' s f ees t o a debt or ( under Hawai i ' s ver si on of CCC 1717)f or obj ect i ng t o a pr oof of cl ai m t hat was l at er wi t hdr awn, basedon an at t or ney' s f ee pr ovi si on i n t he not e and deed of t r ust . I nGuzman, t he di st r i ct cour t af f i r med t he bankrupt cy cour t ' s awar dof f ees t o a debt or under CCC 1717 who had l ost a st ay vi ol at i onact i on agai nst t he credi t or , but pr evai l ed i n r educi ng t hecredi t or ' s pr oof of cl ai m by sever al hundr ed dol l ar s f or i mpr operover char ges. The di st r i ct cour t det er mi ned t hat t he st ayvi ol at i on act i on coul d be vi ewed as an act i on "on a cont r act "wi t hi n t he meani ng of CCC 1717, because debt or had al so al l eged

t hat no cont r act ual basi s exi st ed f or t he cr edi t or t o i mpose t hechar ges i n t he f i r st pl ace.

3 CCC 1717( b) ( 2) pr ovi des:

Wher e an act i on has been vol unt ar i l y di smi ssed or di smi ssedpur suant t o a set t l ement of t he case, t her e shal l be no

( cont i nued. . . )

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ar gued t hat because she, as t he obj ect or , was i n t he posi t i on of

"pl ai nt i f f , " t he vol unt ar y wi t hdr awal / amendment of t he POC by

"def endant " Deut sche Bank was not a vol unt ary di smi ssal .

I n suppor t of her Fee Mot i on, Br osi o' s counsel submi t t ed a

decl ar at i on set t i ng f or t h t he t i me spent on t he mat t er by var i ous

f i r m member s. I n addi t i on t o t he $865. 00 i n f ees Br osi o i ncur r ed

i n f i l i ng her Cl ai m Obj ect i on, she sought $3, 010. 00 i ncur r ed

pr epar i ng t he Fee Mot i on and r el ated papers and $1, 400. 00 f or her

ant i ci pat ed r epl y t o Deut sche Bank' s r esponse and hear i ng

at t endance, f or a tot al r equest of $5, 265. 00. 4

Deut sche Bank opposed t he Fee Mot i on, cont endi ng t hat Br osi owas not ent i t l ed t o at t orney' s f ees under CCC 1717 because she

had not "pr evai l ed" i n her Cl ai m Obj ect i on, as no or der sust ai ni ng

her obj ect i on was ent er ed, and because her Cl ai m Obj ect i on was not

a "successf ul " cont est ed mat t er . Deut sche Bank ar gued t hat i t s

cl ai med $425. 00 at t orney f ee was suppor t ed by Paragr aph 9 i n t he

DOT, whi ch aut hor i zed such charges due t o Br osi o' s bankr upt cy

f i l i ng, and t hat i t onl y amended t he POC r emovi ng t he f ee as a

cour t esy and i n t he i nt er est of conser vi ng j udi ci al r esour ces; i t

was not an admi ssi on of wr ongdoi ng.

I n her r epl y, Br osi o cont ended t hat no "order " had t o be

ent er ed on t he Cl ai m Obj ect i on f or her t o be ent i t l ed t o f ees

under CCC 1717. Br osi o argued t hat even i f Deut sche Bank' s

$425. 00 at t or ney f ee was j ust i f i ed, t he cl ai m was i mpl i ci t l y

3( . . . cont i nued)pr evai l i ng par t y f or pur poses of t hi s sect i on.

4 The r equest ed amounts add t o $5, 275. 50.

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di st i ngui shed Mor an and Guzman as ei t her f act ual l y di ssi mi l ar or

not pr ecedent i al i n any event . The cour t al so f ound t hat Br osi o' s

r equest ed f ees were not r easonabl e; t he al most $5, 600. 00 she

sought was di spropor t i onat e to the $425. 00 i n f ees t o whi ch she

obj ect ed.

The bankrupt cy cour t ent er ed an or der denyi ng Br osi o' s Fee

Mot i on on Febr uary 27, 2013 ( "Fee Or der" ) . Thi s t i mel y appeal

f ol l owed.

II. JURISDICTION

The bankrupt cy cour t had j ur i sdi ct i on under 28 U. S. C. 1334

and 157( b) ( 2) ( A) . We have j ur i sdi ct i on under 28 U. S. C. 158.III. ISSUES

1. Di d t he bankr upt cy cour t er r i n det er mi ni ng t hat Br osi o was

not t he pr evai l i ng par t y?

2. Di d t he bankr upt cy cour t er r oneousl y det er mi ne t he

r easonabl eness of Br osi o' s r equest ed f ees as an el ement i n t he

anal ysi s of whet her any f ees at al l shoul d be awar ded?

IV. STANDARDS OF REVIEW

We r evi ew a bankrupt cy cour t ' s r ef usal t o awar d at t or ney' s

f ees f or an abuse of di scr et i on. Renf r ow v. Dr aper , 232 F. 3d 688,

693 ( 9t h Ci r . 2000) ; Di nan v. Fry ( I n r e Di nan) , 448 B. R. 775, 783

( 9t h Ci r . BAP 2011) . " [ A] cour t ' s deci si on t hat t her e was no

' pr evai l i ng par t y on t he cont r act ' i s subj ect t o r evi ew under t he

abuse of di scr et i on st andar d of r evi ew. " Ci t y of Emer yvi l l e v.

Robi nson, 621 F. 3d 1251, 1266 ( 9t h Ci r . 2010) ( ci t at i ons omi t t ed) .

A bankrupt cy cour t abuses i t s di scr et i on i f i t appl i ed t he wr ong

l egal st andar d or i t s f actual f i ndi ngs wer e i l l ogi cal , i mpl ausi bl e

or wi t hout suppor t i n t he r ecor d. Tr af f i cSchool . com, I nc. v.

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Edr i ver I nc. , 653 F. 3d 820, 832 ( 9t h Ci r . 2011) .

The bankrupt cy cour t ' s appl i cat i on and i nter pret at i on of

Cal i f or ni a l aw wi l l be r evi ewed de novo. Vi cer oy Gol d Cor p. v.

Aubr y, 75 F. 3d 482, 488 ( 9t h Ci r . 1996) .

We may af f i r m on any gr ound suppor t ed by t he r ecor d. Shanks

v. Dr essel , 540 F. 3d 1082, 1086 ( 9t h Ci r . 2008) .

V. DISCUSSION

A. CCC 1717

CCC 1717 pr ovi des a basi s f or a par t y t o r ecover at t or ney' s

f ees i ncur r ed i n l i t i gat i on of a cont r act cl ai m. I t pr ovi des, i n

r el evant par t : ( a) I n any act i on on a cont r act , wher e t he cont r actspeci f i cal l y pr ovi des t hat at t or ney' s f ees and cost s,whi ch ar e i ncur r ed t o enf or ce t hat cont r act , shal l beawar ded ei t her t o one of t he par t i es or t o t he pr evai l i ngpar t y, t hen t he par t y who i s det er mi ned t o be the par t ypr evai l i ng on t he cont r act , whet her he or she i s t hepar t y speci f i ed i n t he cont r act or not , shal l be ent i t l edt o r easonabl e at t or ney' s f ees i n addi t i on t o ot hercost s. . . . Reasonabl e at t or ney' s f ees shal l be f i xed byt he cour t , and shal l be an el ement of t he cost s of sui t .

( b) ( 1) The cour t , upon not i ce and mot i on by a par t y,shal l det er mi ne who i s t he par t y pr evai l i ng on t hecont r act f or pur poses of t hi s sect i on, whet her or not t hesui t pr oceeds t o f i nal j udgment . Except as pr ovi ded i npar agr aph ( 2) , t he par t y pr evai l i ng on t he cont r act shal lbe t he par t y who r ecover ed a gr eat er r el i ef i n t he act i onon t he cont r act . The cour t may al so det er mi ne t hat t her ei s no par t y pr evai l i ng on t he cont r act f or pur poses oft hi s secti on.

CCC 1717( a) , ( b) ( 1) .

At t or ney' s f ees awar ded under CCC 1717 ar e speci f i cal l y

al l owed as a r ecoverabl e cost under CCP 1032 and 1033. 5. CCP

1033. 5( c) ( 5) . 5 CCC 1717 cr eat es a r eci pr ocal r i ght t o r ecover

5 CCP 1033. 5( c) ( 5) provi des, i n r el evant par t :( cont i nued. . . )

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at t or ney' s f ees as cost s i n a di sput e over a cont r act cont ai ni ng

an at t or ney f ee cl ause, r egar dl ess of whet her t he at t or ney f ee

cl ause pr ovi si on i n t he cont r act woul d have al l owed f or r eci pr ocal

r ecover y. Sant i sas v. Goodi n, 17 Cal . 4t h 599, 610- 11 ( 1998) .

B. The bankruptcy court did not err in determining that Brosiowas not the prevailing party.

Br osi o cont ends t he bankrupt cy cour t er r ed i n det ermi ni ng she

was not t he "pr evai l i ng par t y. " Speci f i cal l y, she cont ends t hat

her sol e l i t i gat i on obj ect i ve was t o r emove t he $425. 00 at t or ney

f ee f r om t he amount cl ai med by Deut sche Bank i n i t s POC, and by

Deut sche Bank amendi ng i t s POC t o r emove t he f ee, i t i mpl i ci t l ywi t hdr ew i t s or i gi nal cl ai m. Ther ef or e, Br osi o cont ends t hat she

cl ear l y and unequi vocal l y pr evai l ed on t he sol e i ssue l i t i gat ed i n

t he act i on on t he cont r act .

Br osi o ar gues t hat t he si ze of t he mor t gage i n compar i son t o

t he vi ct or y on t he f ees was of no rel evance because t he "act i on on

t he cont r act " was not an act i on on Deut sche Bank' s ent i r e cl ai m,

i t was on t he sol e i ssue of t he at t or ney' s f ee. She cont ends the

bankrupt cy cour t er r ed by equat i ng "act i on on t he cont r act " wi t h

t he ent i r e cl ai m, r at her t han t he di scr et e l egal pr oceedi ng over

t he di sput ed f ee. Br osi o al so ar gues t hat l ack of an or der on her

Cl ai m Obj ect i on was of no i mpor t ance t o t he i ssue of pr evai l i ng

5( . . . cont i nued)

( c) Any awar d of cost s shal l be subj ect t o t he f ol l owi ng:

. . .

( 5) . . . At t or ney' s f ees awar ded pur suant t o Sect i on 1717 oft he Ci vi l Code ar e al l owabl e cost s under Sect i on 1032 of t hi scode as aut hor i zed by subparagr aph ( A) of paragr aph ( 10) ofsubdi vi si on ( a) .

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par t y.

Deut sche Bank cont ends t hat , i n addi t i on t o Br osi o f ai l i ng t o

submi t any evi dence i n suppor t of her Cl ai m Obj ect i on, she coul d

not be the "prevai l i ng par t y" because t he bankrupt cy cour t never

r ender ed any deci si on on t he Cl ai m Obj ect i on or t he POC; hence, no

par t y obt ai ned a "vi ct or y" or "unqual i f i ed wi n" on t he submi t t ed

cl ai m. We agr ee.

Det er mi nat i on of "pr evai l i ng par t y" f or t he pur pose of

r eci pr ocal at t or ney' s f ees i n Cal i f or ni a i s gui ded by t he

Cal i f or ni a Supr eme Cour t ' s deci si on i n Hsu:

Accor di ngl y, we hol d t hat i n deci di ng whet her t her e i s a"par t y pr evai l i ng on t he cont r act, " t he t r i al cour t i s t ocompar e t he r el i ef awar ded on t he cont r act cl ai m orcl ai ms wi t h t he par t i es' demands on t hose same cl ai ms andt hei r l i t i gat i on obj ecti ves as di scl osed by t hepl eadi ngs, t r i al br i ef s, openi ng st at ement s, and si mi l arsour ces. The pr evai l i ng par t y det er mi nat i on i s t o bemade onl y upon f i nal r esol ut i on of t he cont r act cl ai msand onl y by "a compar i son of t he ext ent t o whi ch eachpar t y has succeeded and f ai l ed t o succeed i n i t scont ent i ons. " [ I nt er nal ci t at i on omi t t ed] .

9 Cal . 4t h at 876. Hsu, wher ei n t he cour t det er mi ned t he mer i t s

of t he cont r act cl ai m at i ssue, al so hel d t hat when t he r esul t s of

t he l i t i gat i on on t he cont r act cl ai ms ar e not mi xed t hat i s,

when t he cour t ' s deci si on i s pur el y good news f or one part y and

bad f or t he ot her t he t r i al cour t has no di scr et i on t o deny

at t or ney' s f ees t o t he successf ul par t y. I d. at 875- 76.

Thus, when a def endant def eat s r ecover y by t he pl ai nt i f fon t he onl y cont r act cl ai m i n t he act i on, t he def endanti s t he par t y pr evai l i ng on t he cont r act under sect i on

1717 as a mat t er of l aw. [ I nt er nal ci t at i ons omi t t ed] .Si mi l ar l y, a pl ai nt i f f who obt ai ns al l r el i ef r equest edon t he onl y cont r act cl ai mi n t he act i on must be r egar dedas t he par t y pr evai l i ng on t he cont r act f or pur poses ofat t or ney f ees under sect i on 1717. [ I nt er nal ci t at i onsomi t t ed] .

I d. at 876. "In determining litigation success, cour t s shoul d

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r espect subst ance r at her t han f or m, and t o t hi s ext ent shoul d be

gui ded by ' equi t abl e consi der at i ons. ' For exampl e, a par t y who i s

deni ed di r ect r el i ef on a cl ai m may nonet hel ess be f ound t o be a

pr evai l i ng par t y i f i t i s cl ear t hat t he par t y has ot her wi se

achi eved i t s mai n l i t i gat i on obj ecti ve. " I d. at 877 ( ci t at i ons

omi t t ed) ( emphasi s i n or i gi nal ) .

Some appel l at e cour t s i n Cal i f or ni a have hel d t hat t he cour t

can det er mi ne a "pr evai l i ng par t y" and awar d at t or ney' s f ees under

CCC 1717, even when t hat part y has pr evai l ed onl y on a di scr ete

l egal pr oceedi ng and t he mer i t s of t he under l yi ng cont r act di sput e

have not yet been deci ded. Thi s i ssue most of t en ar i ses i n t hecont ext of mot i ons t o compel ar bi t r at i on, or when an act i on ( or

def endant ) i s di smi ssed on pr ocedur al gr ounds. See Kandy Ki ss of

Cal . , I nc. v. Tex- El l ent , I nc. , 209 Cal . App. 4t h 604, 613- 14 ( 2012)

( def endant who pr evai l s by obt ai ni ng a di smi ssal f or l ack of

subj ect mat t er j ur i sdi ct i on i s ent i t l ed t o cont r actual at t or ney' s

f ees, even t hough pl ai nt i f f i s abl e t o r ef i l e i n anot her f or um) ;

PNEC Corp. v. Meyer , 190 Cal . App. 4t h 66, 71 ( 2010) ( awardi ng f ees

t o def endant where compl ai nt was di smi ssed on f orum non conveni ens

gr ounds, even t hough no adj udi cat i on on t he act ual cont r act

di sput e had occur r ed and may st i l l occur i n anot her f or um) ; Pr of i t

Concept s Mgmt . , I nc. v. Gr i f f i t h, 162 Cal . App. 4t h 950, 955- 56

( 2008) ( t r i al cour t di smi ssed def endant f or l ack of per sonal

j ur i sdi ct i on and pl ai nt i f f awar ded nothi ng on cl ai m; appel l at e

cour t hel d t hat det er mi nat i on on mer i t s of cont r act cl ai m was not

r equi r ed f or t r i al cour t t o awar d at t or ney' s f ees under

CCC 1717; t he cont r act cl ai m was " f i nal l y r esol ved" wi t hi n t he

meani ng of Hsu) ; Ot ay Ri ver Const r uct ors v. San Di ego Expr essway,

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158 Cal . App. 4t h 796, 806- 08 (2008) ( wher e no cont r act act i on

pendi ng and pet i t i on t o compel ar bi t r at i on i s f i l ed, successf ul

def ense of t he pet i t i on al l ows an awar d of pr evai l i ng par t y

at t or ney' s f ees, even t hough mer i t s of cont r act di sput e may be

deci ded l at er ) .

However , some Cal i f or ni a cour t s have di sagr eed wi t h t hi s

not i on. See HSBC Bank USA v. DJ R Pr ops. , I nc. , 2011 WL 1404899,

at *2 ( E. D. Cal . Apr . 13, 2011) ( di smi ssal f or l ack of subj ect

mat t er j ur i sdi ct i on; r ej ect i ng Pr of i t Concept s as i nconsi st ent

wi t h t he pl ai n l anguage of CCC 1717 and Hsu' s hol di ng t hat

pr evai l i ng par t y can onl y be det er mi ned upon " f i nal r esol ut i on" oft he cont r act cl ai ms) ; I dea Pl ace Cor p. v. Fr i ed, 390 F. Supp. 2d

903, 904- 05 ( N. D. Cal . 2005) ( di st r i ct cour t deni ed f ees under CCC

1717 based on di smi ssal f or l ack of subj ect mat t er j ur i sdi ct i on;

pl ai nt i f f coul d st i l l pur sue cont r act cl ai ms i n st at e cour t , so

"pr evai l i ng par t y" on t he act i on r emai ned t o be seen) ; Fr og Cr eek

Par t ner s, LLC v. Vance Br own, I nc. , 206 Cal . App. 4t h 515, 538- 39

( 2012) ( def eat i ng pet i t i on t o compel ar bi t r at i on f i l ed i n pendi ng

cont r act act i on does not j ust i f y at t or ney' s f ees because mer i t s of

cont r act act i on ar e st i l l t o be det er mi ned and t her e can onl y be

one pr evai l i ng par t y "on t he act i on" ) ; Est at e of Dr ummond, 149

Cal . App. 4t h 46, 51- 52 ( 2007) ( despi t e di smi ssal of pl ai nt i f f ' s

cl ai ms i n pr obat e cour t , t r i al cour t had di scret i on t o deny

def endant s' f ee mot i on because l i t i gat i on was cont i nui ng i n same

cour t wher e separ at e cont r act sui t had al r eady been f i l ed) .

For t unat el y, we do not have t o deci de whi ch cour t s ar e

cor r ect t o r esol ve t hi s appeal . Br osi o f ai l s t o addr ess a maj or

pr ocedur al pr obl em pr esent ed i n t hi s case. I n al l of t he cases

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she ci t es t o suppor t her f ees Hsu, Ot ay Ri ver Const r uct or s,

Scot t Co. , Sant i sas, Mor an, Guzman and i n t he cases we ci t ed

above, t he t r i al cour t r ender ed a "deci si on" on a pendi ng mat t er ,

whet her i t be a mot i on t o compel ar bi t r at i on, a mot i on t o di smi ss,

or a j udgment af t er t r i al , bef or e any par t y moved f or or was

awarded at t orney' s f ees under CCC 1717. She has not ci t ed, and

we coul d not l ocat e, a si ngl e case wi t h a pr ocedur al post ur e such

as t hi s one where nothi ng was adj udi cated by the cour t and yet i t

consi der ed a par t y' s mot i on f or at t orney' s f ees under CCC 1717.

Al t hough t he bankrupt cy cour t ul t i matel y det er mi ned t hat Br osi o

was not t he pr evai l i ng part y because Deut sche Bank was ent i t l ed t ochar ge t he $425. 00 f ee and because i t r ecover ed a gr eat er r el i ef ,

t he cour t al so not ed t hat i t had never made any rul i ng r egar di ng

t he appr opr i at eness or t he l egal suf f i ci ency of ei t her t he POC,

t he amended POC, or t he Cl ai m Obj ect i on. I t i s on t hat basi s we

af f i r m t he bankr upt cy cour t ' s rul i ng.

No " f i nal r esol ut i on" was ever ent er ed by a cour t on Deut sche

Bank' s POC or Br osi o' s Cl ai m Obj ect i on, whet her i t be on t he

ent i r e cl ai m or t he di scret e pr oceedi ng over t he di sput ed f ee.

Hsu, 9 Cal . 4t h at 876. For Br osi o t o be t he pr evai l i ng par t y, we

concl ude that t he bankrupt cy cour t had t o f i r st ent er some sor t of

di sposi t i on on t hese i ssues. Br osi o' s "sel f - pr ocl ai med" vi ctor y

i s i nsuf f i ci ent t o t r i gger an awar d under CCC 1717.

The Cal i f or ni a Rul es of Cour t f ur t her suppor t our deci si on.

Under Cour t Rul e 3. 1702, 6 whi ch gover ns t he t i mi ng of cl ai ms f or

6 Cour t Rul e 3. 1702 pr ovi des, i n r el evant par t :

( a) Appl i cat i on. Except as ot her wi se pr ovi ded by st at ut e,( cont i nued. . . )

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at t or ney' s f ees under CCC 1717, a par t y must f i l e and serve i t s

not i ce and mot i on f or f ees wi t hi n t he t i me f or f i l i ng a "not i ce of

appeal . " Ar guabl y, one cannot f i l e an appeal wi t hout a f i nal

under l yi ng or der or j udgment f r om t he cour t , and cer t ai nl y no

appeal t i me can r un unt i l one i s ent er ed. Thus, "some" or der or

j udgment must exi st bef or e a par t y can move f or , or be ent i t l ed

t o, at t or ney' s f ees under CCC 1717.

Al t er nat i vel y, we concl ude that CCC 1717( b) ( 2) pr ecl uded

Br osi o f r om bei ng t he pr evai l i ng par t y. Under CCC 1717( b) ( 2) ,

no pr evai l i ng par t y wi l l exi st when an act i on has been vol unt ar i l y

di smi ssed. Br osi o i s i ncor r ect when she equat es her sel f t o"pl ai nt i f f " and Deut sche Bank as "def endant . " The f i l i ng of a

pr oof of cl ai m i s anal ogous t o f i l i ng a compl ai nt i n t he

bankrupt cy case. Uni t ed St at es v. Levoy ( I n r e Levoy) , 182 B. R.

827, 833 n. 5 ( 9t h Ci r . BAP 1995) ; Smi t h v. Dowden, 47 F. 3d 940,

943 ( 8t h Ci r . 1995) ; Si mmons v. Savel l ( I n r e Si mmons) , 765 F. 2d

6( . . . cont i nued)t hi s rul e appl i es i n ci vi l cases t o cl ai ms f or st at ut or yat t or ney' s f ees and cl ai ms f or at t or ney' s f ees pr ovi ded f ori n a cont r act . Subdi vi si ons ( b) and ( c) appl y when t he cour tdet er mi nes ent i t l ement t o t he f ees, t he amount of t he f ees,or both, whether t he cour t makes t hat determi nat i on becauset he st at ut e or cont r act r ef er s t o " r easonabl e" f ees, becausei t r equi r es a det er mi nat i on of t he pr evai l i ng par t y, or f orot her r easons.

( b) At t or ney' s f ees bef or e t r i al cour t j udgment

( 1) Ti me f or mot i on

A not i ce of mot i on t o cl ai m at t or ney' s f ees f or ser vi cesup t o and i ncl udi ng t he r endi t i on of j udgment i n t het r i al cour t i ncl udi ng at t or ney' s f ees on an appealbef or e t he r endi t i on of j udgment i n t he t r i al cour t must be ser ved and f i l ed wi t hi n t he t i me f or f i l i ng anot i ce of appeal under r ul es 8. 104 and 8. 108 i n anunl i mi t ed ci vi l case or under r ul es 8. 822 and 8. 823 i n al i mi t ed ci vi l case.

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547, 552 ( 5t h Ci r . 1985) ; Nor t ex Tr adi ng Cor p. v. Newf i el d, 311

F. 2d 163, 164 ( 2d Ci r . 1962) ; I n r e Edwar ds Theat r es Ci r cui t ,

I nc. , 281 B. R. 675, 681 ( Bankr. C. D. Cal . 2002) . And a cl ai m

obj ect i on by t he debt or i s anal ogous t o an answer . O' Nei l l v.

Cont ' l Ai r l i nes ( I n r e Cont ' l Ai r l i nes) , 928 F. 2d 127, 129 ( 5t h

Ci r . 1991) ( "[ T] he f i l i ng of a pr oof of cl ai m i s anal ogous t o t he

f i l i ng of a compl ai nt i n a ci vi l act i on, wi t h t he bankr upt ' s

obj ect i on t he same as t he answer. " ) ( ci t i ng Si mmons and Nort ex

Tr adi ng Cor p. ) ; I n r e Cr ui sephone, I nc. , 278 B. R. 325, 330 ( Bankr .

E. D. N. Y. 2002) ( "I n t he bankr upt cy cont ext , a pr oof of cl ai m f i l ed

by a cr edi t or i s concept ual l y anal ogous t o a ci vi l compl ai nt , anobj ect i on t o t he cl ai m i s aki n t o an answer or def ense and an

adver sar y pr oceedi ng i ni t i at ed agai nst t he credi t or t hat f i l ed t he

pr oof of cl ai m i s l i ke a count er cl ai m. ") .

Accor di ngl y, Deut sche Bank was t he "pl ai nt i f f , " and Br osi o,

as obj ect or t o t he POC, was i n t he r ol e of "def endant . " Deut sche

Bank' s abandonment of i t s cl ai m f or at t or ney' s f ees i n t he amended

POC was aki n t o a vol unt ary di smi ssal , whi ch pr event ed def endant

Br osi o f r om pr evai l i ng on her cl ai m under CCC 1717. See Enni s

v. Mor t gaget r ee Lendi ng, I nc. , 2010 WL 3341544, at *2 ( E. D. Cal .

Aug. 24, 2010) ( pl ai nt i f f ' s abandonment of br each of cont r act cl ai m

bef or e t r i al was aki n t o vol unt ar y di smi ssal and pr ecl uded

def endant s f r om pr evai l i ng on t hei r CCC 1717 cl ai m) ; Bal dai n v.

Am. Home Mort g. Servi ci ng, I nc. , 2010 WL 2606666, at *6 ( E. D. Cal .

J une 28, 2010) ( because pl ai nt i f f vol unt ar i l y di smi ssed i t s TI LA

cl ai m by decl i ni ng t o r e- pl ead i t i n i t s amended compl ai nt ,

def endant was not pr evai l i ng par t y on t hat cl ai m under CCC

1717) ; Dodson v. Pan Pac. Retai l Props. , I nc. , 2003 WL 25656778,

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at *1 ( E. D. Cal . J une 13, 2003) ( hol di ng t hat def endant was not

pr evai l i ng par t y wher e pl ai nt i f f abandoned cl ai m pr i or t o

t r i al ) ( ci t i ng Gal an v. Wol f r i ver Hol di ng Cor p. , 80 Cal . App. 4t h

1124, 1130 ( 2000) ( when pl ai nt i f f has vol unt ar i l y di smi ssed a cause

of act i on no pr evai l i ng par t y exi st s as a pr act i cal mat t er ) ;

Gi l ber t v. Nat ' l Enqui r er , I nc. , 55 Cal . App. 4t h 1273, 1277- 78

( 1997) ( same) .

I n shor t , we vi ew t he pr ocedur al post ur e of t hi s case as

f ol l ows. Deut sche Bank f i l ed i t s POC ( t he compl ai nt ) , and Br osi o

f i l ed her Cl ai m Obj ect i on ( t he answer ) . Deut sche Bank t hen f i l ed

an amended POC ( an amended compl ai nt ) i n whi ch i t abandoned i t scl ai m f or at t or ney' s f ees. Br osi o t hen, t hr ough her Fee Mot i on,

contended t hat because Deut sche Bank amended i t s POC ( compl ai nt )

r emovi ng t he f ee cl ai m, she was t he "wi nner" on t he "act i on on t he

cont r act " and ent i t l ed t o at t or ney' s f ees under CCC 1717. Put

t hi s way, Br osi o' s Fee Mot i on makes l i t t l e sense. 7 Fur t her , t o

award f ees t o Br osi o under t hese ci r cumst ances woul d be puni shi ng

Deut sche Bank f or i t s gest ur e of ci vi l i t y i n r emovi ng i t s cl ai m

f or at t or ney' s f ees f r om t he POC a cl ai m t he bankrupt cy cour t

det er mi ned i t was ent i t l ed t o asser t under Par agr aph 9 of t he DOT.

We agr ee wi t h t hat determi nat i on.

Br osi o has compl ai ned that Deut sche Bank i ncur r ed at t or ney' s

f ees onl y because i t di scret i onar i l y el ected t o f i l e an

unnecessary pr oof of cl ai m. Al t hough secur ed cr edi t or s ar e not

7 Counsel has "an obl i gat i on t o consi der t he pot ent i al f orr ecover y and bal ance t he ef f or t r equi r ed agai nst t he resul t s t hatmi ght be achi eved . . . . [ A] n at t or ney must scal e hi s . . . f eeat l east t o t he r easonabl y expect ed r ecover y. " Unsecur edCr edi t ors Comm. v. Puget Sound Pl ywood, I nc. , 924 F. 2d 955, 961( 9t h Ci r . 1991) . Bi l l i ng j udgment i s mandat or y.

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r equi r ed t o f i l e a pr oof of cl ai m i n a chapt er 13 case, pr udent

credi t or s l i ke Deut sche Bank ar e cer t ai nl y ent i t l ed t o f i l e one t o

est abl i sh t he amount t hey are owed accor di ng t o thei r own

cal cul at i ons, r at her t han r el yi ng on t he debt or ' s, and t o r ecei ve

di st r i but i ons on an al l owed cl ai m under t he pr ovi si ons of a

chapt er 13 pl an. See, e. g. , I n r e Dumai n, 492 B. R. 140, 143

( Bankr . S. D. N. Y. 2013) ; 501, 502 and 1326( c) ; Rul es 3002 and

3021. Fur t her , by si gni ng t he DOT, Br osi o agr eed t hat Deut sche

Bank coul d t ake r easonabl e act i ons t o pr ot ect i t s secur i t y

i nt er est , par t i cul ar l y i f she f i l ed bankr upt cy, and t hat she woul d

pay Deut sche Bank' s r easonabl e at t or ney' s f ees i ncur r ed f or t hoseact i ons. Pr epar i ng and f i l i ng t he POC, r evi ewi ng Br osi o' s pl an

and f i l i ng a r equest f or speci al not i ce, and char gi ng a t ot al of

onl y $425. 00 i n at t or ney s f ees, seems mor e than r easonabl e.

Because we concl ude that t he bankrupt cy cour t di d not er r i n

det er mi ni ng Br osi o was not t he pr evai l i ng par t y, we need not r each

Br osi o' s second i ssue about whet her i t er r ed i n deci di ng her f ees

wer e not r easonabl e.

VI. CONCLUSION

Al t hough we have determi ned on a di f f erent l egal basi s why

Br osi o was not t he pr evai l i ng part y under CCC 1717, because t he

bankr upt cy cour t r eached t hi s same concl usi on, we percei ve no

er r or i n t hi s case. Accor di ngl y, we AFFI RM t he Fee Or der . 8

8 Deut sche Bank cont ends t hat Br osi o' s appeal i s f r i vol ous,and i t r equest s at t or ney' s f ees on appeal . We decl i ne t o consi derDeut sche Bank' s r equest because i t di d not f i l e a separ ate mot i onas r equi r ed by Rul e 8020. See Rul e 8020; Gar ner v. Shi er ( I n r eGarner ) , 246 B. R. 617, 626 n. 14 ( 9t h Ci r . BAP 2000) .

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in re: elaine l. brosio, 9th cir. bap (2014)

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