Reynoso v. Patel CA6

Filed 9/22/14 Reynoso v. Patel CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MARGARITA FUNG REYNOSO, H039016 (Santa Clara County Plaintiff and Appellant, Super. Ct. No. 1-11-CV201263)

v.

HIRA PATEL,

Defendant and Respondent.

Plaintiff Margarita Fung Reynoso appeals from an order denying her motion for 1 attorney’s fees under Civil Code section 1717 after she prevailed on her cause of action to cancel a deed of trust. Although Reynoso was not a party to the deed of trust, she contends that she was entitled to recover her attorney’s fees because the beneficiary of the deed of trust, defendant Hira Patel, would have been able to recover his attorney’s fees as a lien on her property had he prevailed. Patel asserts that Reynoso is precluded from recovering her attorney’s fees because she elected a trial de novo after a judicial arbitration award, did not incur any attorney’s fees, was not entitled to recover any attorney’s fees under section 1717, and was estopped from seeking her attorney’s fees. We conclude that Reynoso was entitled to recover her attorney’s fees under section 1717.

1 Subsequent statutory references are to the Civil Code unless otherwise specified.

I. Background In April 2004, a forged grant deed was recorded purporting to transfer Reynoso’s property from her to Moonlien L. Reynoso (Moonlien). At the same time, a deed of trust was recorded on Reynoso’s property purporting to secure a $70,000 promissory note. The deed of trust purported to be an agreement between Patel, as the lender, and Moonlien, as the borrower. One clause in the deed of trust addressed attorney’s fees. This clause appeared under the heading “9. Protection of Lender’s Interest in the Property and Rights Under this Security Instrument.” It stated: “If . . . there is a legal proceeding that might significantly affect Lender’s interest in the Property and/or rights under this Security Instrument . . . , 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 . . . . Lender’s actions can include, but are not limited to . . . paying reasonable attorneys’ fees to protect its interest in the Property and/or rights under this Security Instrument . . . .” “Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument.” In September 2004, a grant deed was recorded purporting to transfer the property from Moonlien back to Reynoso. In May 2006, the forged April 2004 grant deed was declared void by court order. Reynoso’s 2011 first amended complaint sought a declaration cancelling the deed of trust, a judgment quieting title to her property, and damages for slander of title. The parties agreed to submit the case to judicial arbitration, and a judicial arbitration hearing was held in February 2012. The arbitrator’s ruling quieted title to the property in Reynoso, cancelled the deed of trust, and awarded Reynoso $15,000 in attorney’s fees. 2 In April 2012, Reynoso filed a request for a trial de novo. On July 23, 2012, the day of