FILED
MAR 07 2014
1 SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
2 OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. NC-13-1119-KiDJu
)
6 ELAINE L. BROSIO, ) Bk. No. 12-57468-SLJ
)
7 Debtor. )
)
8 )
)
9 ELAINE L. BROSIO, )
)
10 Appellant, )
) O P I N I O N
11 v. )
)
12 DEUTSCHE BANK NATIONAL )
TRUST COMPANY, )
13 )
Appellee. )
14 ______________________________)
15 Argued and Submitted on February 20, 2014,
at San Francisco, California
16
Filed - March 7, 2014
17
Appeal from the United States Bankruptcy Court
18 for the Northern District of California
19 Hon. Stephen L. Johnson, Bankruptcy Judge, Presiding
20
21
22 Appearances: Jim Erickson, Esq. of the Mlnarik Law Group, Inc.
argued for appellant, Elaine L. Brosio; Steven K.
23 Linkon, Esq. of RCO Legal, PS argued for appellee,
Deutsche Bank National Trust Company.
24
25 Before: KIRSCHER, DUNN and JURY, Bankruptcy Judges.
26
27
28
1 KIRSCHER, Bankruptcy Judge:
2
3 Debtor Elaine L. Brosio ("Brosio") appeals an order denying
4 her motion for attorney's fees on the basis that she was not the
5 prevailing party under CAL. CIV. CODE § 1717 and that the fees
6 requested were not reasonable. We AFFIRM.
7 I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
8 Brosio filed a chapter 131 bankruptcy case on October 16,
9 2012. Among the assets was Brosio's residence. In connection
10 with the residence, Brosio had executed a note ("Note") and deed
11 of trust ("DOT") in January 2007 in favor of former lender, Paul
12 Financial, LLC. Appellee Deutsche Bank National Trust Company
13 ("Deutsche Bank") recorded the assignment of the DOT on November
14 9, 2012.
15 Paragraph 9 of the DOT, "Protection of Lender's Interest in
16 the Property and Rights Under this Security Instrument," provides,
17 in relevant part:
18 If (a) Borrower fails to perform the covenants and
agreements contained in this Security Instrument; (b)
19 there is a legal proceeding that might significantly
affect Lender's interest in the Property and/or rights
20 under this Security Instrument (such as a proceeding in
bankruptcy, probate, for condemnation or forfeiture, for
21 enforcement of a lien which may attain priority over this
Security Instrument, or to enforce laws or regulations)
22 . . . then Lender may do and pay for whatever is
reasonable or appropriate to protect Lender's interest in
23 the Property and rights under this Security Instrument,
including protecting and/or assessing the value of the
24 Property, and securing and/or repairing the Property.
Lender's actions can include, but are not limited to:
25 (a) paying any sums secured by a lien which has priority
over this Security Instrument; (b) appearing in court;
26
27 1
Unless specified otherwise, all chapter, code and rule
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28 the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
-2-
1 and (c) paying reasonable attorneys' fees to protect its
interest in the Property and/or rights under this
2 Security Instrument, including its secured position in a
bankruptcy proceeding . . . . Any amounts disbursed by
3 Lender under this Section 9 shall become additional debt
of Borrower secured by this Security Instrument.
4
5 Paragraph 14 of the DOT, "Loan Charges," provides, in relevant
6 part:
7 Lender may charge Borrower fees for services performed in
connection with Borrower's default, for the purpose of
8 protecting Lender's interest in the Property and rights
under this Security Instrument, including, but not
9 limited to, attorneys' fees, property inspection and
valuation fees . . . .
10
11 Paragraph 22 of the DOT, "Acceleration; Remedies," provides, in
12 relevant part:
13 Lender shall be entitled to collect all expenses incurred
in pursuing the remedies provided in this Section 22,
14 including, but not limited to, reasonable attorneys' fees
and costs of title evidence.
15
16 Finally, Paragraph 7(E) of the Note, "Borrower's Failure to Pay as
17 Required," provides:
18 If the Note Holder has required me to pay immediately in
full as described above, the Note Holder will have the
19 right to be paid back by me for all of its costs and
expenses in enforcing this Note to the extent not
20 prohibited by applicable law. Those expenses include,
for example, reasonable attorneys' fees.
21
22 Loan servicer GMAC Mortgage, LLC filed a proof of claim
23 ("POC") on behalf of Deutsche Bank, asserting a secured claim for
24 $587,050.61. The amount claimed in the POC included the principal
25 balance of $585,771.36, $854.25 in interest, and $425.00 for
26 "attorney fees for filing proof of claim, reviewing plan and
27 filing request for special notice[.]" Brosio was current in her
28 mortgage payments at the time the POC was filed.
-3-
1 Brosio filed a one-page form objection to the POC, disputing
2 only the attorney fee of $425.00 ("Claim Objection"). Brosio
3 contended the fees were "inappropriate" and "were not justified by
4 Creditor's need to assert their [sic] property rights, in that
5 Debtor is current in payments and has not given any indication
6 that Creditor's interest in the property is at risk or that
7 foreclosure will become an option for Creditor." No hearing was
8 requested, set or held for the Claim Objection.
9 Deutsche Bank subsequently filed an amended POC removing the
10 $425.00 attorney fee. Brosio's counsel contacted counsel for
11 Deutsche Bank seeking reimbursement for the $865.00 she incurred
12 in attorney's fees filing the Claim Objection. Deutsche Bank
13 declined to pay the fees.
14 A. Brosio's motion for attorney's fees
15 On January 24, 2013, Brosio moved for an order awarding her
16 attorney's fees and costs "for her successful objection" to the
17 POC ("Fee Motion"). Brosio argued that because her objection to
18 the $425.00 attorney fee prompted Deutsche Bank to file an amended
19 POC removing the fee (thus implicitly withdrawing the original
20 POC), she was "the prevailing party in an action on a contract"
21 and was therefore entitled to fees and costs under CAL. CIV. CODE P.
22 ("CCP") §§ 1032 and 1033.5(a)(10), and CAL. CIV. CODE ("CCC")
23 § 1717. Brosio based her claim on the attorney's fees provisions
24 found in Paragraphs 9, 14 and 22 of the DOT and Paragraph 7(E) of
25 the Note.
26 Recognizing that no hearing or further litigation occurred in
27 connection with her Claim Objection, Brosio argued that California
28 law still allowed for her fees as the "prevailing party," citing
-4-
1 Hsu v. Abbara, 9 Cal. 4th 863, 877 (1995), which held that a party
2 may "be found to be a prevailing party if it is clear that the
3 party has otherwise achieved its main litigation objective," and
4 Scott Co. v. Blount, Inc., 20 Cal. 4th 1103, 1109 (1999), which,
5 relying on Hsu, held: "When a party obtains a simple, unqualified
6 victory by completely prevailing on or defeating all contract
7 claims in the action and the contract contains a provision for
8 attorney fees, section 1717 entitles the successful party to
9 recover reasonable attorney fees incurred in prosecution or
10 defense of those claims." Brosio cited two additional unpublished
11 cases she contended supported her Fee Motion: Moran v. Deutsche
12 Bank Nat'l Trust Co. (In re Moran), 2012 WL 6645025 (Bankr. D.
13 Haw. Dec. 20, 2012); and Aurora Loan Servs., LLC v. Guzman, 2012
14 WL 359684 (N.D. Cal. Feb. 2, 2012).2
15 Brosio conceded that no "prevailing party" exists where the
16 action has been voluntarily dismissed or dismissed pursuant to a
17 settlement of the case. CCC § 1717(b)(2).3 However, Brosio
18
2
19 Brosio argued that in Moran, the bankruptcy court awarded
attorney's fees to a debtor (under Hawaii's version of CCC § 1717)
20 for objecting to a proof of claim that was later withdrawn, based
on an attorney's fee provision in the note and deed of trust. In
21 Guzman, the district court affirmed the bankruptcy court's award
of fees to a debtor under CCC § 1717 who had lost a stay violation
22 action against the creditor, but prevailed in reducing the
creditor's proof of claim by several hundred dollars for improper
23 overcharges. The district court determined that the stay
violation action could be viewed as an action "on a contract"
24 within the meaning of CCC § 1717, because debtor had also alleged
that no contractual basis existed for the creditor to impose the
25 charges in the first place.
3
26 CCC § 1717(b)(2) provides:
27 Where an action has been voluntarily dismissed or dismissed
pursuant to a settlement of the case, there shall be no
28 (continued...)
-5-
1 argued that because she, as the objector, was in the position of
2 "plaintiff," the voluntary withdrawal/amendment of the POC by
3 "defendant" Deutsche Bank was not a voluntary dismissal.
4 In support of her Fee Motion, Brosio's counsel submitted a
5 declaration setting forth the time spent on the matter by various
6 firm members. In addition to the $865.00 in fees Brosio incurred
7 in filing her Claim Objection, she sought $3,010.00 incurred
8 preparing the Fee Motion and related papers and $1,400.00 for her
9 anticipated reply to Deutsche Bank's response and hearing
10 attendance, for a total request of $5,265.00.4
11 Deutsche Bank opposed the Fee Motion, contending that Brosio
12 was not entitled to attorney's fees under CCC § 1717 because she
13 had not "prevailed" in her Claim Objection, as no order sustaining
14 her objection was entered, and because her Claim Objection was not
15 a "successful" contested matter. Deutsche Bank argued that its
16 claimed $425.00 attorney fee was supported by Paragraph 9 in the
17 DOT, which authorized such charges due to Brosio's bankruptcy
18 filing, and that it only amended the POC removing the fee as a
19 courtesy and in the interest of conserving judicial resources; it
20 was not an admission of wrongdoing.
21 In her reply, Brosio contended that no "order" had to be
22 entered on the Claim Objection for her to be entitled to fees
23 under CCC § 1717. Brosio argued that even if Deutsche Bank's
24 $425.00 attorney fee was justified, the claim was implicitly
25
26
3
(...continued)
27 prevailing party for purposes of this section.
28 4
The requested amounts add to $5,275.50.
-6-
1 withdrawn and an amended claim was filed. Therefore, argued
2 Brosio, she "prevailed" because it was clear she had achieved her
3 main litigation objective of removal of the fee. In any event,
4 Brosio argued that Deutsche Bank could not rely on Paragraph 9 of
5 the DOT to justify its fees; she was not in default on the Note
6 nor did she present any risk of default, so Deutsche Bank had no
7 need to protect its interest in the collateral by filing a proof
8 of claim. Lastly, Brosio argued that Deutsche Bank should have
9 accepted her reasonable settlement offer of $865.00. Attached to
10 Brosio's reply was a declaration from counsel asserting that her
11 fees now totaled $6,535.00.
12 B. The bankruptcy court's ruling on the Fee Motion
13 A hearing on the Fee Motion was held on February 21, 2013.
14 After brief argument by the parties, the bankruptcy court read its
15 oral ruling into the record. The court began by noting that it
16 "never considered the [Claim Objection]" and "made no rulings on
17 the appropriateness or the legal sufficiency of either the [POC],
18 the amended [POC], or the [Claim Objection]." Hr'g Tr. (Feb. 21,
19 2013) 5:7-11. After reviewing the language of CCC § 1717(a), the
20 court then stated that two questions were presented by the Fee
21 Motion: Was Brosio the prevailing party? And, were the requested
22 fees reasonable?
23 The bankruptcy court found that Brosio was not the prevailing
24 party for two reasons. First, according to the Note, Deutsche
25 Bank was entitled to charge the $425.00 attorney's fee. Id. at
26 6:23-7:5. Second, the amended POC, which removed the $425.00 fee
27 but still sought over $500,000 from Brosio, was "not an
28 unmitigated win for [Brosio]." Id. at 7:5-16. The court
-7-
1 distinguished Moran and Guzman as either factually dissimilar or
2 not precedential in any event. The court also found that Brosio's
3 requested fees were not reasonable; the almost $5,600.00 she
4 sought was disproportionate to the $425.00 in fees to which she
5 objected.
6 The bankruptcy court entered an order denying Brosio's Fee
7 Motion on February 27, 2013 ("Fee Order"). This timely appeal
8 followed.
9 II. JURISDICTION
10 The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
11 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.
12 III. ISSUES
13 1. Did the bankruptcy court err in determining that Brosio was
14 not the prevailing party?
15 2. Did the bankruptcy court erroneously determine the
16 reasonableness of Brosio's requested fees as an element in the
17 analysis of whether any fees at all should be awarded?
18 IV. STANDARDS OF REVIEW
19 We review a bankruptcy court's refusal to award attorney's
20 fees for an abuse of discretion. Renfrow v. Draper, 232 F.3d 688,
21 693 (9th Cir. 2000); Dinan v. Fry (In re Dinan), 448 B.R. 775, 783
22 (9th Cir. BAP 2011). "[A] court's decision that there was no
23 'prevailing party on the contract' is subject to review under the
24 abuse of discretion standard of review." City of Emeryville v.
25 Robinson, 621 F.3d 1251, 1266 (9th Cir. 2010)(citations omitted).
26 A bankruptcy court abuses its discretion if it applied the wrong
27 legal standard or its factual findings were illogical, implausible
28 or without support in the record. TrafficSchool.com, Inc. v.
-8-
1 Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).
2 The bankruptcy court's application and interpretation of
3 California law will be reviewed de novo. Viceroy Gold Corp. v.
4 Aubry, 75 F.3d 482, 488 (9th Cir. 1996).
5 We may affirm on any ground supported by the record. Shanks
6 v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).
7 V. DISCUSSION
8 A. CCC § 1717
9 CCC § 1717 provides a basis for a party to recover attorney's
10 fees incurred in litigation of a contract claim. It provides, in
11 relevant part:
12 (a) In any action on a contract, where the contract
specifically provides that attorney's fees and costs,
13 which are incurred to enforce that contract, shall be
awarded either to one of the parties or to the prevailing
14 party, then the party who is determined to be the party
prevailing on the contract, whether he or she is the
15 party specified in the contract or not, shall be entitled
to reasonable attorney's fees in addition to other
16 costs. . . . Reasonable attorney's fees shall be fixed by
the court, and shall be an element of the costs of suit.
17
(b)(1) The court, upon notice and motion by a party,
18 shall determine who is the party prevailing on the
contract for purposes of this section, whether or not the
19 suit proceeds to final judgment. Except as provided in
paragraph (2), the party prevailing on the contract shall
20 be the party who recovered a greater relief in the action
on the contract. The court may also determine that there
21 is no party prevailing on the contract for purposes of
this section.
22
23 CCC § 1717(a), (b)(1).
24 Attorney's fees awarded under CCC § 1717 are specifically
25 allowed as a recoverable cost under CCP §§ 1032 and 1033.5. CCP
26 § 1033.5(c)(5).5 CCC § 1717 creates a reciprocal right to recover
27
5
28 CCP § 1033.5(c)(5) provides, in relevant part:
(continued...)
-9-
1 attorney's fees as costs in a dispute over a contract containing
2 an attorney fee clause, regardless of whether the attorney fee
3 clause provision in the contract would have allowed for reciprocal
4 recovery. Santisas v. Goodin, 17 Cal. 4th 599, 610-11 (1998).
5 B. The bankruptcy court did not err in determining that Brosio
was not the prevailing party.
6
7 Brosio contends the bankruptcy court erred in determining she
8 was not the "prevailing party." Specifically, she contends that
9 her sole litigation objective was to remove the $425.00 attorney
10 fee from the amount claimed by Deutsche Bank in its POC, and by
11 Deutsche Bank amending its POC to remove the fee, it implicitly
12 withdrew its original claim. Therefore, Brosio contends that she
13 clearly and unequivocally prevailed on the sole issue litigated in
14 the action on the contract.
15 Brosio argues that the size of the mortgage in comparison to
16 the victory on the fees was of no relevance because the "action on
17 the contract" was not an action on Deutsche Bank's entire claim,
18 it was on the sole issue of the attorney's fee. She contends the
19 bankruptcy court erred by equating "action on the contract" with
20 the entire claim, rather than the discrete legal proceeding over
21 the disputed fee. Brosio also argues that lack of an order on her
22 Claim Objection was of no importance to the issue of prevailing
23
5
24 (...continued)
25 (c) Any award of costs shall be subject to the following:
26 . . .
27 (5) . . . Attorney's fees awarded pursuant to Section 1717 of
the Civil Code are allowable costs under Section 1032 of this
28 code as authorized by subparagraph (A) of paragraph (10) of
subdivision (a).
-10-
1 party.
2 Deutsche Bank contends that, in addition to Brosio failing to
3 submit any evidence in support of her Claim Objection, she could
4 not be the "prevailing party" because the bankruptcy court never
5 rendered any decision on the Claim Objection or the POC; hence, no
6 party obtained a "victory" or "unqualified win" on the submitted
7 claim. We agree.
8 Determination of "prevailing party" for the purpose of
9 reciprocal attorney's fees in California is guided by the
10 California Supreme Court's decision in Hsu:
11 Accordingly, we hold that in deciding whether there is a
"party prevailing on the contract," the trial court is to
12 compare the relief awarded on the contract claim or
claims with the parties' demands on those same claims and
13 their litigation objectives as disclosed by the
pleadings, trial briefs, opening statements, and similar
14 sources. The prevailing party determination is to be
made only upon final resolution of the contract claims
15 and only by "a comparison of the extent to which each
party has succeeded and failed to succeed in its
16 contentions." [Internal citation omitted].
17 9 Cal. 4th at 876. Hsu, wherein the court determined the merits
18 of the contract claim at issue, also held that when the results of
19 the litigation on the contract claims are not mixed — that is,
20 when the court's decision is purely good news for one party and
21 bad for the other — the trial court has no discretion to deny
22 attorney's fees to the successful party. Id. at 875-76.
23 Thus, when a defendant defeats recovery by the plaintiff
on the only contract claim in the action, the defendant
24 is the party prevailing on the contract under section
1717 as a matter of law. [Internal citations omitted].
25 Similarly, a plaintiff who obtains all relief requested
on the only contract claim in the action must be regarded
26 as the party prevailing on the contract for purposes of
attorney fees under section 1717. [Internal citations
27 omitted].
28 Id. at 876. "In determining litigation success, courts should
-11-
1 respect substance rather than form, and to this extent should be
2 guided by 'equitable considerations.' For example, a party who is
3 denied direct relief on a claim may nonetheless be found to be a
4 prevailing party if it is clear that the party has otherwise
5 achieved its main litigation objective." Id. at 877 (citations
6 omitted)(emphasis in original).
7 Some appellate courts in California have held that the court
8 can determine a "prevailing party" and award attorney's fees under
9 CCC § 1717, even when that party has prevailed only on a discrete
10 legal proceeding and the merits of the underlying contract dispute
11 have not yet been decided. This issue most often arises in the
12 context of motions to compel arbitration, or when an action (or
13 defendant) is dismissed on procedural grounds. See Kandy Kiss of
14 Cal., Inc. v. Tex-Ellent, Inc., 209 Cal.App.4th 604, 613-14 (2012)
15 (defendant who prevails by obtaining a dismissal for lack of
16 subject matter jurisdiction is entitled to contractual attorney's
17 fees, even though plaintiff is able to refile in another forum);
18 PNEC Corp. v. Meyer, 190 Cal.App.4th 66, 71 (2010)(awarding fees
19 to defendant where complaint was dismissed on forum non conveniens
20 grounds, even though no adjudication on the actual contract
21 dispute had occurred and may still occur in another forum); Profit
22 Concepts Mgmt., Inc. v. Griffith, 162 Cal.App.4th 950, 955-56
23 (2008)(trial court dismissed defendant for lack of personal
24 jurisdiction and plaintiff awarded nothing on claim; appellate
25 court held that determination on merits of contract claim was not
26 required for trial court to award attorney's fees under
27 CCC § 1717; the contract claim was "finally resolved" within the
28 meaning of Hsu); Otay River Constructors v. San Diego Expressway,
-12-
1 158 Cal.App.4th 796, 806-08 (2008)(where no contract action
2 pending and petition to compel arbitration is filed, successful
3 defense of the petition allows an award of prevailing party
4 attorney's fees, even though merits of contract dispute may be
5 decided later).
6 However, some California courts have disagreed with this
7 notion. See HSBC Bank USA v. DJR Props., Inc., 2011 WL 1404899,
8 at *2 (E.D. Cal. Apr. 13, 2011)(dismissal for lack of subject
9 matter jurisdiction; rejecting Profit Concepts as inconsistent
10 with the plain language of CCC § 1717 and Hsu's holding that
11 prevailing party can only be determined upon "final resolution" of
12 the contract claims); Idea Place Corp. v. Fried, 390 F.Supp.2d
13 903, 904-05 (N.D. Cal. 2005)(district court denied fees under CCC
14 § 1717 based on dismissal for lack of subject matter jurisdiction;
15 plaintiff could still pursue contract claims in state court, so
16 "prevailing party" on the action remained to be seen); Frog Creek
17 Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515, 538-39
18 (2012)(defeating petition to compel arbitration filed in pending
19 contract action does not justify attorney's fees because merits of
20 contract action are still to be determined and there can only be
21 one prevailing party "on the action"); Estate of Drummond, 149
22 Cal.App.4th 46, 51-52 (2007)(despite dismissal of plaintiff's
23 claims in probate court, trial court had discretion to deny
24 defendants' fee motion because litigation was continuing in same
25 court where separate contract suit had already been filed).
26 Fortunately, we do not have to decide which courts are
27 correct to resolve this appeal. Brosio fails to address a major
28 procedural problem presented in this case. In all of the cases
-13-
1 she cites to support her fees — Hsu, Otay River Constructors,
2 Scott Co., Santisas, Moran, Guzman — and in the cases we cited
3 above, the trial court rendered a "decision" on a pending matter,
4 whether it be a motion to compel arbitration, a motion to dismiss,
5 or a judgment after trial, before any party moved for or was
6 awarded attorney's fees under CCC § 1717. She has not cited, and
7 we could not locate, a single case with a procedural posture such
8 as this one where nothing was adjudicated by the court and yet it
9 considered a party's motion for attorney's fees under CCC § 1717.
10 Although the bankruptcy court ultimately determined that Brosio
11 was not the prevailing party because Deutsche Bank was entitled to
12 charge the $425.00 fee and because it recovered a greater relief,
13 the court also noted that it had never made any ruling regarding
14 the appropriateness or the legal sufficiency of either the POC,
15 the amended POC, or the Claim Objection. It is on that basis we
16 affirm the bankruptcy court's ruling.
17 No "final resolution" was ever entered by a court on Deutsche
18 Bank's POC or Brosio's Claim Objection, whether it be on the
19 entire claim or the discrete proceeding over the disputed fee.
20 Hsu, 9 Cal. 4th at 876. For Brosio to be the prevailing party, we
21 conclude that the bankruptcy court had to first enter some sort of
22 disposition on these issues. Brosio's "self-proclaimed" victory
23 is insufficient to trigger an award under CCC § 1717.
24 The California Rules of Court further support our decision.
25 Under Court Rule 3.1702,6 which governs the timing of claims for
26
6
27 Court Rule 3.1702 provides, in relevant part:
28 (a) Application. Except as otherwise provided by statute,
(continued...)
-14-
1 attorney's fees under CCC § 1717, a party must file and serve its
2 notice and motion for fees within the time for filing a "notice of
3 appeal." Arguably, one cannot file an appeal without a final
4 underlying order or judgment from the court, and certainly no
5 appeal time can run until one is entered. Thus, "some" order or
6 judgment must exist before a party can move for, or be entitled
7 to, attorney's fees under CCC § 1717.
8 Alternatively, we conclude that CCC § 1717(b)(2) precluded
9 Brosio from being the prevailing party. Under CCC § 1717(b)(2),
10 no prevailing party will exist when an action has been voluntarily
11 dismissed. Brosio is incorrect when she equates herself to
12 "plaintiff" and Deutsche Bank as "defendant." The filing of a
13 proof of claim is analogous to filing a complaint in the
14 bankruptcy case. United States v. Levoy (In re Levoy), 182 B.R.
15 827, 833 n.5 (9th Cir. BAP 1995); Smith v. Dowden, 47 F.3d 940,
16 943 (8th Cir. 1995); Simmons v. Savell (In re Simmons), 765 F.2d
17
6
18 (...continued)
this rule applies in civil cases to claims for statutory
19 attorney's fees and claims for attorney's fees provided for
in a contract. Subdivisions (b) and (c) apply when the court
20 determines entitlement to the fees, the amount of the fees,
or both, whether the court makes that determination because
21 the statute or contract refers to "reasonable" fees, because
it requires a determination of the prevailing party, or for
22 other reasons.
23 (b) Attorney's fees before trial court judgment
24 (1) Time for motion
25 A notice of motion to claim attorney's fees for services
up to and including the rendition of judgment in the
26 trial court — including attorney's fees on an appeal
before the rendition of judgment in the trial court —
27 must be served and filed within the time for filing a
notice of appeal under rules 8.104 and 8.108 in an
28 unlimited civil case or under rules 8.822 and 8.823 in a
limited civil case.
-15-
1 547, 552 (5th Cir. 1985); Nortex Trading Corp. v. Newfield, 311
2 F.2d 163, 164 (2d Cir. 1962); In re Edwards Theatres Circuit,
3 Inc., 281 B.R. 675, 681 (Bankr. C.D. Cal. 2002). And a claim
4 objection by the debtor is analogous to an answer. O'Neill v.
5 Cont'l Airlines (In re Cont'l Airlines), 928 F.2d 127, 129 (5th
6 Cir. 1991)("[T]he filing of a proof of claim is analogous to the
7 filing of a complaint in a civil action, with the bankrupt's
8 objection the same as the answer.")(citing Simmons and Nortex
9 Trading Corp.); In re Cruisephone, Inc., 278 B.R. 325, 330 (Bankr.
10 E.D.N.Y. 2002)("In the bankruptcy context, a proof of claim filed
11 by a creditor is conceptually analogous to a civil complaint, an
12 objection to the claim is akin to an answer or defense and an
13 adversary proceeding initiated against the creditor that filed the
14 proof of claim is like a counterclaim.").
15 Accordingly, Deutsche Bank was the "plaintiff," and Brosio,
16 as objector to the POC, was in the role of "defendant." Deutsche
17 Bank's abandonment of its claim for attorney's fees in the amended
18 POC was akin to a voluntary dismissal, which prevented defendant
19 Brosio from prevailing on her claim under CCC § 1717. See Ennis
20 v. Mortgagetree Lending, Inc., 2010 WL 3341544, at *2 (E.D. Cal.
21 Aug. 24, 2010)(plaintiff's abandonment of breach of contract claim
22 before trial was akin to voluntary dismissal and precluded
23 defendants from prevailing on their CCC § 1717 claim); Baldain v.
24 Am. Home Mortg. Servicing, Inc., 2010 WL 2606666, at *6 (E.D. Cal.
25 June 28, 2010)(because plaintiff voluntarily dismissed its TILA
26 claim by declining to re-plead it in its amended complaint,
27 defendant was not prevailing party on that claim under CCC
28 § 1717); Dodson v. Pan Pac. Retail Props., Inc., 2003 WL 25656778,
-16-
1 at *1 (E.D. Cal. June 13, 2003)(holding that defendant was not
2 prevailing party where plaintiff abandoned claim prior to
3 trial)(citing Galan v. Wolfriver Holding Corp., 80 Cal.App.4th
4 1124, 1130 (2000)(when plaintiff has voluntarily dismissed a cause
5 of action no prevailing party exists as a practical matter);
6 Gilbert v. Nat'l Enquirer, Inc., 55 Cal.App.4th 1273, 1277-78
7 (1997)(same).
8 In short, we view the procedural posture of this case as
9 follows. Deutsche Bank filed its POC (the complaint), and Brosio
10 filed her Claim Objection (the answer). Deutsche Bank then filed
11 an amended POC (an amended complaint) in which it abandoned its
12 claim for attorney's fees. Brosio then, through her Fee Motion,
13 contended that because Deutsche Bank amended its POC (complaint)
14 removing the fee claim, she was the "winner" on the "action on the
15 contract" and entitled to attorney's fees under CCC § 1717. Put
16 this way, Brosio's Fee Motion makes little sense.7 Further, to
17 award fees to Brosio under these circumstances would be punishing
18 Deutsche Bank for its gesture of civility in removing its claim
19 for attorney's fees from the POC — a claim the bankruptcy court
20 determined it was entitled to assert under Paragraph 9 of the DOT.
21 We agree with that determination.
22 Brosio has complained that Deutsche Bank incurred attorney's
23 fees only because it discretionarily elected to file an
24 unnecessary proof of claim. Although secured creditors are not
25
7
26 Counsel has "an obligation to consider the potential for
recovery and balance the effort required against the results that
27 might be achieved . . . . [A]n attorney must scale his . . . fee
at least to the reasonably expected recovery." Unsecured
28 Creditors’ Comm. v. Puget Sound Plywood, Inc., 924 F.2d 955, 961
(9th Cir. 1991). Billing judgment is mandatory.
-17-
1 required to file a proof of claim in a chapter 13 case, prudent
2 creditors like Deutsche Bank are certainly entitled to file one to
3 establish the amount they are owed according to their own
4 calculations, rather than relying on the debtor's, and to receive
5 distributions on an allowed claim under the provisions of a
6 chapter 13 plan. See, e.g., In re Dumain, 492 B.R. 140, 143
7 (Bankr. S.D.N.Y. 2013); §§ 501, 502 and 1326(c); Rules 3002 and
8 3021. Further, by signing the DOT, Brosio agreed that Deutsche
9 Bank could take reasonable actions to protect its security
10 interest, particularly if she filed bankruptcy, and that she would
11 pay Deutsche Bank's reasonable attorney's fees incurred for those
12 actions. Preparing and filing the POC, reviewing Brosio's plan
13 and filing a request for special notice, and charging a total of
14 only $425.00 in attorney’s fees, seems more than reasonable.
15 Because we conclude that the bankruptcy court did not err in
16 determining Brosio was not the prevailing party, we need not reach
17 Brosio's second issue about whether it erred in deciding her fees
18 were not reasonable.
19 VI. CONCLUSION
20 Although we have determined on a different legal basis why
21 Brosio was not the prevailing party under CCC § 1717, because the
22 bankruptcy court reached this same conclusion, we perceive no
23 error in this case. Accordingly, we AFFIRM the Fee Order.8
24
25
26
8
Deutsche Bank contends that Brosio's appeal is frivolous,
27 and it requests attorney's fees on appeal. We decline to consider
Deutsche Bank's request because it did not file a separate motion
28 as required by Rule 8020. See Rule 8020; Garner v. Shier (In re
Garner), 246 B.R. 617, 626 n.14 (9th Cir. BAP 2000).
-18-