Opinion
G052879
09-19-2017
GIGI E. RUEGSEGGER, Plaintiff and Respondent, v. HOMEWARD RESIDENTIAL, INC., et al., Defendants and Appellants.
Wright, Finlay & Zak, Robin P. Wright, Jonathan M. Zak, Bradford E. Klein, and Richard J. Lee, for Defendants and Appellants. David N. Lake and Alan S. Yockelson for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2011-00442197) OPINION Appeal from an order of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed. Wright, Finlay & Zak, Robin P. Wright, Jonathan M. Zak, Bradford E. Klein, and Richard J. Lee, for Defendants and Appellants. David N. Lake and Alan S. Yockelson for Plaintiff and Respondent.
Homeward Residential, Inc., formerly American Home Mortgage Servicing, Inc. (Homeward) and Mortgage Electronic Registration Systems, Inc. (MERS) appeal from an order denying their motion for attorney fees. Homeward and MERS argue the trial court erred by denying their attorney fee motion because the deed of trust (DOT) authorized such an award. We disagree and affirm the order.
FACTS
We need not provide a detailed discussion of the substantive facts as they can be found in Ruegsegger v. CitiMortgage, Inc. (Feb. 16, 2017, G052454) [nonpub. opn.] (Ruegsegger I). In an order dated July 25, 2016, we granted Gigi E. Ruegsegger's request to take judicial notice of the appellate record in that case.
Suffice it to say, in 1988, Gigi and her husband, Robert Ruegsegger purchased property at 22442 Cassia Lane, Lake Forest, California 92630 (Property). Eight years later, Robert refinanced the mortgage on the Property through the original lender. Robert, as the sole borrower, executed a promissory note (Note) in the amount of $630,000; Gigi did not sign the Note. The Note was secured by a DOT, which Gigi signed. The DOT identified MortgageIT as the lender and MERS as beneficiary and nominee for the lender and its successors and assigns. Two years later, Gigi and Robert were in the process of obtaining a divorce. On or around September 14, 2008, Robert conveyed his interest in the Property to Gigi by way of a quitclaim deed. As part of the divorce settlement, Gigi "never agreed to and did not assume any of the obligations under the [Note]." Because of financial difficulties, Gigi contacted the loan servicer CitiMortgage, Inc. (Citi) and made 10 modified payments.
After Homeward began to service the loan and Gigi received a notice of trustee's sale on the family home, she filed an action against Citi, CR Title Services, Inc., MERS, Homeward, and MTGLQ, Investors, L.P. (Ruegsegger I, supra, G052454 at pp. 2-4.) The trial court granted Homeward's and MERS's motion for judgment on the pleadings. (Ruegsegger I, supra, G052454 at p. 4.) That brings us to the current appeal.
Homeward and MERS filed a motion for attorney fees, arguing the DOT authorized such an award. The motion was supported with counsel's declaration and other documentation. Gigi opposed the motion. Homeward and MERS filed a reply. Gigi filed a sur-reply.
After posting its tentative ruling denying the motion, there was a hearing on the attorney fee motion on October 2, 2015. A transcript of that hearing is not part of the record on appeal, and thus we are unable to consider what transpired there. In a minute order issued the same day, the trial court denied the motion, concluding as follows: "The [DOT] does not specifically provide that attorney fees and costs incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, as required by Civil Code section 1717. Therefore, no exception to the general rule that each party is to bear its own fees and costs, has been established." Gigi provided notice of the ruling the same day.
DISCUSSION
Homeward and MERS argue they were entitled to attorney fees pursuant to the DOT's sections 9 and 14 of the DOT. We disagree.
Section 9 of the DOT provided as follows: "Protection of Lender's Interest in the Property and Rights Under this Security Instrument. If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (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), or (c) Borrower has abandoned the Property, then 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 protecting and/or assessing the value of the Property, and securing and/or repairing the Property. Lender's actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9. [¶] 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. [¶] If this Security Instrument is on a leasehold, Borrower shall comply with all the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless Lender agrees to the merger in writing." (Italics added.)
Section 14 of the DOT provides as follows: "Loan Charges. 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, attorneys' fees, property inspection and valuation fees. In regard to any other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on the charging of such fee. Lender may not charge fees that are expressly prohibited by this Security Instrument or by Applicable Law. [¶] If the Loan is subject to a law which sets maximum loan charges, and that law is finally interpreted so that the interest or other loan charges collected or to be collected in connection with the Loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from Borrower which exceed permitted limits will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed under the Note or by making direct payment to Borrower. If a refund reduces principal, the reduction will be treated as a partial prepayment without any prepayment charge (whether or not any prepayment charge is provided for under the Note). Borrower's acceptance of any such refund made by direct payment to Borrower will constitute a waiver of any right of action Borrower might have arising out of such overcharge." --------
"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.] Where a contract specifically provides for an award of attorney fees, Civil Code section 1717 allows recovery of attorney fees by whichever contracting party prevails, regardless of whether the contract specifies that party. [Citation.]" (Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966, italics added.)
Here, Gigi was not personally obligated to pay attorney fees under the Note or the DOT. She was not personally obligated under the Note because she did not sign the Note. Additionally, she was not personally obligated under the DOT based on section 13 of the DOT. Section 13 provided as follows:
"Joint and Several Liability; Co-signers; Successors and Assigns Bound. Borrower covenants and agrees that Borrower's obligations and liability shall be joint and several. However, any Borrower who co-signs this Security Instrument but does not execute the Note (a "co-signer"): (a) is co-signing this Security Instrument only to mortgage, grant and convey the co-signer's Interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower can agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without the co-signer's consent. [¶] Subject to the provisions of [s]ection 18, any Successor in Interest of Borrower who assumes Borrower's obligations under this Security Instrument in writing, and is approved by Lender, shall obtain all of Borrower's rights and benefits under this Security Instrument. Borrower shall not be released from Borrower's obligations and liability under this Security Instrument unless Lender agrees to such release in writing. The covenants and agreements of this Security Instrument shall bind (except as provided in [s]ection 20) and benefit the successors and assigns of Lender." (Italics added.)
Thus, pursuant to the plain language of section 13, Gigi was not personally obligated to pay the sums secured by the DOT because she did not sign the Note. Homeward and MERS sought attorney fees based on the fact they were prevailing parties but sections 9 and 14 do not include prevailing party attorney fee clauses, a point they conceded at oral argument. Thus, Homeward and MERS' reliance on Civil Code section 1717 and cases awarding reciprocal attorney fees is misplaced.
Sections 9 and 14 do not authorize an attorney fees award to Homeward and MERS, but they do provide another remedy. The relevant portion of section 9 provides, "Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument." Thus, section 9 authorizes attorney fees to be added to the amount foreclosed upon, when and if there is a foreclosure. However, nothing in sections 9 and 14 result in Gigi being personally liable for those amounts. And nothing in the DOT's definition of "Loan," which is defined as "debt evidenced by the Note, . . . and all sums due under this Security Instrument[]" alters our conclusion. To repeat, Gigi did not sign the Note, and section 13 of the DOT immunizes from personal obligation anyone who did not sign the Note.
Homeward and MERS's reliance on Valley Bible Center v. Western Title Ins. Co. (1983) 138 Cal.App.3d 931 (Valley Bible Center), is misplaced. In Valley Bible Center, the trustor prevailed in an action to block a trustee's sale of property pursuant to a provision in the deed of trust to defend an action regarding the security. (Id. at p. 932.) The court concluded the trustor was entitled to attorney fees pursuant to the provision. (Id. at pp. 932-933.)
Here, unlike Valley Bible Center, the DOT did not include a provision authorizing an attorney fee award against Gigi. She was not personally liable for attorney fees under either the DOT, because section 13 stated she was not personally obligated for sums secured by the DOT, or the Note, because she did not sign it. Additionally, neither section 9 nor section 14 included language authorizing an attorney fee award to the prevailing party, the theory under which Homeward and MERS proceeded. Therefore, Homeward and MERS were not entitled to recover attorney fees from Gigi pursuant to sections 9 and 14 of the DOT.
DISPOSITION
The order is affirmed. Respondent is awarded her costs on appeal.
O'LEARY, P. J. WE CONCUR: FYBEL, J. IKOLA, J.