Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. PC030097 John P. Farrell, Judge.
Everett L. Skillman for Plaintiff and Respondent.
Pite Duncan, Michelle A. Mierzwa and Laurel I. Handley for Defendant and Appellant.
EPSTEIN, P. J.
World Savings Bank, FSB (World) appeals from an order denying its motion for attorney fees against Barry Lenett. We conclude there was no contractual basis for an award of attorney fees and affirm.
FACTUAL AND PROCEDURAL SUMMARY
In September 1991, Lenett financed the purchase of a single-family residence on Mojave Trail in Chatsworth with an adjustable rate loan secured by a deed of trust from World. In July 2001, Lenett’s account was in arrears. World referred the loan to trustee Golden West Savings Association Services, Co. for commencement of nonjudicial foreclosure proceedings. Golden West recorded a notice of default on July 31, 2001.
On November 20, 2001, Golden West recorded a notice of trustee’s sale, scheduling the foreclosure sale for December 11, 2001. Lenett did not reinstate or pay off the loan, and the foreclosure sale was conducted as scheduled. Westhaven, LLC purchased the property for the bid amount of $201,600. Golden West issued a deed upon sale to Westhaven, and it was duly recorded on December 26, 2001.
In April 2002, Lenett brought this action against World, Golden West, and Westhaven. (Neither Golden West nor Westhaven is a party to this appeal.) He sought to quiet title as to Westhaven’s claim to the property, cancel the trustee’s deed upon sale, obtain a judicial declaration as to his right to the property, enjoin Westhaven’s efforts to evict him from the property, and obtain damages from World and Golden West for the foreclosure sale, slander of title, and negligent infliction of emotional distress. The action was premised in part on lack of compliance with the notice requirements for foreclosure.
Lenett filed a first amended complaint after demurrers were sustained, then a second amended complaint. The second amended complaint alleged causes of action for declaratory relief to determine the parties’ rights to the property; negligence against World and Golden West for failure to give proper notice of default and sale and in pursuing foreclosure even though appellant was not in default; negligent infliction of emotional distress; quiet title; and cancellation of the deed. The trial court sustained the demurrer to the second cause of action for negligence “because plaintiff improperly amended the complaint to add this cause of action after the demurrer. In the alternative, the Court sustains the demurrer to the second cause of action for negligence. Without a properly pled negligence cause of action, the third cause of action for negligent infliction of emotional distress must fail as well.”
Lenett was thus left with the first cause of action for declaratory relief against World and Golden West, the fourth cause of action for quiet title, and the fifth cause of action for cancellation of the deed against Golden West and Westhaven. World and Golden West successfully moved for summary judgment.
Lenett filed a timely appeal from the summary judgment and orders relating to World and Golden West (Lenett I, No. B174396). In a nonpublished opinion filed on December 6, 2004, we held that Lenett’s attempt to attack the foreclosure sale and regain title to the property was barred by the conclusive presumption of Civil Code section 2924; World and Golden West were entitled to summary adjudication in their favor on the causes of action for declaratory relief and to cancel the deed. But we also concluded Lenett had raised a triable issue of material fact “as to whether World had notice that his last known address was Devonshire Avenue, and that the trustee should have been instructed to notify him at that address of the default and the foreclosure sale. He alleged this as a basis for what is in substance an action for wrongful foreclosure as against World.” On this basis, we reversed summary judgment in favor of World.
We affirmed the summary judgment in favor of Golden West, based on Civil Code section 2924, which protects the trustee from liability based on good faith reliance on information provided by a beneficiary, and on section 2924b, subdivision (b)(3), which limits the exposure of a trustee arising from notice of foreclosure proceedings. Golden West filed a motion for attorney fees, which was granted. Lenett did not appeal from that order, and has paid the fees.
The case went to trial against World on the theory of negligent foreclosure. The jury found World was not negligent, and judgment was entered in favor of World. Lenett appealed from the judgment, and in case No. B197021, filed this date, we affirm that judgment.
After trial and upon receiving judgment in its favor, World moved for attorney fees based on provisions in the deed of trust. The trial court denied the motion, and World appeals from that order.
DISCUSSION
Code of Civil Procedure section 1021 provides: “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; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” “Under this statute, the allocation of attorney fees is left to the agreement of the parties. There is nothing in the statute that limits its application to contract actions alone. It is quite clear from the case law interpreting Code of Civil Procedure section 1021 that parties 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.” (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1341.)
World based its motion for attorney fees on three provisions in the deed of trust. A determination whether the criteria for an award of attorney fees and costs have been met is a question of law, which we review de novo. (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1169.)
Paragraph 7 of the deed of trust provides: “If: (A) I do not keep my promises and agreements made in this Security Instrument, or (B) someone, including me, begins a legal proceeding that may significantly affect Lender’s rights in the Property (such as a legal proceeding in bankruptcy, in probate, for condemnation or to enforce laws or regulations), then Lender may do and pay for whatever is necessary to protect the Lender’s rights in the Property. Lender’s actions may include appearing in court, paying reasonable attorneys’ fees and entering on the Property to make repairs. . . . [¶] I will pay to Lender any amounts which Lender advances under this Paragraph 7 with interest, at the interest rate in effect under the Secured Notes which have not been paid.”
Under this paragraph, Lenett promised to pay World amounts it expended to protect the Lender’s rights in the Property. Paragraph II explains: “I am giving Lender and Trustee these rights to protect Lender from possible losses that might result if I fail to: [¶] [¶] (ii) pay, with interest, any amounts that Lender spends under Paragraphs 2 and 7 below to protect the value of the Property and Lender’s rights in the Property; . . .”
This portion of the deed of trust obligated Lenett to repay World for property taxes and insurance premiums, which protected World from possible losses in the value of the property. But these costs were not at issue in the litigation. They had been added to the principal balance of the loan, in accordance with the terms of the note and deed of trust, and the loan was paid in full from the proceeds of the foreclosure sale. Once the property was sold and the note paid in full, World had no rights in the property nor any interest in protecting the value of the property. Costs, including attorney fees, incurred after that point do not fall within the meaning of Paragraphs 7 or II.
World argues that it initially was required to defend against Lenett’s attempt to set aside the foreclosure sale. This, it claims, was necessary to protect its interest in the property, and the costs therefore were recoverable under the deed of trust. But World’s interest in the property was not at risk in the action to set aside the foreclosure sale. Had the sale been set aside, World would have been returned to its position as a lender secured by a deed of trust on the property. Instead, the sale was not set aside, World was paid in full, and it had no further interest in the property.
World also relies on Paragraph 28, which provides that the lender may take action to have the property sold if there is a breach of duty. It further provides: “I also agree that Lender may add to the amount that I owe to Lender all legal fees, costs, allowances, and disbursements incurred as a result of the action to sell the Property. [¶] Lender will apply the proceeds from the sale of the Property in the following order: (A) to all fees, expenses and costs incurred in connection with the sale, including trustees’ and attorneys’ fees, if any; (B) to all Sums Secured by this Security Instrument; and (C) any excess to the Person or Persons legally entitled to it.” This provision addresses World’s right to recover costs incurred in the foreclosure process. These costs were paid from the proceeds of the sale, and were no longer at issue at the time Lenett brought his action against World.
Cases relied on by World contain fee provisions which are far broader than those in the deed of trust. For example, in Jones v. Union Bank of California (2005) 127 Cal.App.4th 542, 545, the agreement provided that “‘In any action between the parties . . . in connection with the Peppertree property, . . . the prevailing party in such action shall be awarded . . . its reasonable attorney fees.’” If that were the language in this case, World would be entitled to an award of fees because the action is “in connection with” the Mojave Trail property. But that is not the agreement between World and Lenett.
In Xuereb v. Marcus & Millichap, Inc, supra, 3 Cal.App.4th 1338, 1340, the contract provided: “‘If this Agreement gives rise to a lawsuit or other legal proceeding between any of the parties hereto, including Agent, the prevailing party shall be entitled to recover actual costs and reasonable attorneys’ fees in addition to any other relief to which such party may be entitled.’” The court held: “The language of this provision does not limit an award of attorney fees to actions brought on a breach of contract theory, or to actions brought to interpret or enforce a contract. Neither does it limit attorney fees to the buyer and the seller, the principal parties to the real estate transaction. The language is broad enough to encompass both contract actions and actions in tort; and, by its express terms, it covers disputes involving the ‘Agent,’ that is, appellants.” (Id. at pp. 1342-1343.) Again, if this were the agreement between World and Lenett, World would be entitled to an award of fees because the deed of trust gave “rise to a lawsuit or other legal proceeding . . . .” (Id. at p. 1340.)
The attorney fee provision in Santisas v. Goodin (1998) 17 Cal.4th 599, 603, provided: “‘In the event legal action is instituted by the Broker(s), or any party to this agreement, or arising out of the execution of this agreement or the sale, or to collect commissions, the prevailing party shall be entitled to receive from the other party a reasonable attorney fee to be determined by the court in which such action is brought.’” Under such a provision, Lenett’s lawsuit could give rise to a right to fees, as an action arising out of the agreement. But that is not the language in the deed of trust.
In short, any right of the prevailing party to recover attorney fees as an item of costs must be based on the contract between the parties. (See Code Civ. Proc., § 1033.5, subd. (a)(10(A).) The operative agreement in this case is narrowly drawn, and provides for recovery of the costs incurred by the lender to protect the value of the property and its interest in the property, and the costs incurred in the foreclosure sale. Attorney fees incurred in defending an action for wrongful foreclosure after the sale has been completed do not fall within the parties’ agreement.
DISPOSITION
The order is affirmed. The parties are to bear their own costs on appeal.
We concur: MANELLA J., SUZUKAWA J.