Court may award attorneys’ fees when a borrower obtains a
temporary restraining order to stop a non-judicial foreclosure sale.
The Court of Appeal for the Fifth District of California recently held that a
court may award attorneys’ fees pursuant to Civil Code §
2924.12(h)
when a borrower obtains a temporary restraining order
to stop a non-judicial foreclosure sale.
A copy of the opinion in Hardie v. Nationstar Mortgage LLC is available at: Link
to Opinion.
The borrowers filed an ex parte application
for a temporary restraining order (“TRO”) to
enjoin the trustee’s sale of their home. The application contained a request for
attorneys’ fees and costs.
The trial court granted the TRO and set a hearing to show cause for a
preliminary injunction. The order required the defendants to pay $3,500 in
attorneys’ fees pursuant to Civil Code §
2924.12.
The loan servicer brought this appeal of the attorneys’ fees award.
As you may recall, section 2924.12(h) provides that: “[a] court may award
a prevailing borrower reasonable attorney’s fees and costs in an action brought
pursuant to this section. A borrower shall be deemed to have prevailed for
purposes of this subdivision if the borrower obtained injunctive relief or was
awarded damages pursuant to this section.”
The loan servicer argued that the borrowers did not prevail for purposes of
section 2924.12(h) because they merely obtained a TRO.
The Appellate Court considered Monterossa v. Superior
Court, (2015) 237 Cal. App. 4th 747, where the Third District held that
section 2924.12(h) permitted an award of attorneys’ fees to a borrower
who had obtained preliminary injunction, as opposed to permanent, injunctive
relief.
The Monterossa court concluded that such fees were permitted by the plain
language of the statute because “injunctive relief” incorporates “both
preliminary and permanent injunctive relief.” Monterossa, 237 Cal. App. 4th at
753.
The Monterossa court explained that the purpose of the statutory scheme is to
provide borrowers with a meaningful opportunity to obtain available loss
mitigation options, and a borrower who successfully forces the lender to comply
with the statutory process by obtaining a preliminary injunction has prevailed.
Monterossa, 237 Cal. App. 4th at 755.
The Appellate Court found this reasoning persuasive, holding that “the plain
statutory language is dispositive of this appeal.” The borrowers prevailed in
obtaining a TRO, which was a form of injunctive relief, and therefore the Court
held that attorneys’ fees were authorized under the statute.
The loan servicer also argued that the fee request was procedurally defective.
As you may recall, a party may seek statutory attorneys’ fees as costs through
any of four methods: (1) on noticed motion, (2) at the time a statement of
decision is rendered, (3) on application supported by affidavit made
concurrently with a claim for other costs, or (4) on entry of a default
judgment. Code Civ. Proc. § 1033.5(a)(10)(B), (c)(5).
Rule 3.1702 of the California Rules of Court proscribes a noticed motion
procedure whenever the court is required to determine whether the requested fee
is reasonable or whether the requestor is a prevailing party.
Civil Code § 2924.12(h) requires a determination that the plaintiff is a
prevailing party and that the requested fees are reasonable, but the borrowers
did not file a notice motion for the fee request. Thus, the Appellate Court held
that the grant of fees based on an ex parte application was improper.
Accordingly, the Appellate Court reversed the award of attorneys’ fees and
remanded for further proceeding.
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