Judge Kerry Bensinger, Case Number: 22STCV35244, Date: 2025-04-16 Tentative Ruling

Plaintiffs Roman Shkodnik, Lisa Park (collectively, the “Shkodniks”) and Mortgage Electronic Registration Systems (“MERS”) (collectively, “Plaintiffs”) brought this case to clear their title to the property located at 4608 Rosewood Avenue, Los Angeles, CA 90004 (the “Rosewood Property”). In March 2021, Plaintiffs purchased the Rosewood Property from Carmelita Uy (“Uy”). Defendant Marty Fadaei (“Fadaei” or “Defendant”) claimed to have a lien against the Rosewood Property in the form of a Deed of Trust, which was recorded against the Property in July of 2007 (the “July 2007 DOT”). The July 2007 DOT purportedly secured a debt owed by Uy to Fadaei, as evidenced by a promissory note (the “Fadaei Note”). The Fadaei Note, which was executed by Uy alone, provides, in pertinent part, “If action be instituted on this note, I promise to pay such sum as the court may fix as attorney’s fees.”

This case proceeded to a bench trial. After considering the trial testimony, exhibits, and arguments of counsel, the court found in favor of Plaintiffs on the Third Cause of Action for Quiet Title and in favor of Defendant on the Second Cause of Action for Specific Performance and the Thirteenth Cause of Action for Declaratory Relief. Judgment was entered in favor of Plaintiffs on January 9, 2025. The judgment provides, in pertinent part, the “Shkodniks … are determined to be the prevailing parties, and are entitled to recoverable and allowable costs as against Fadaei.” (Judgment, ¶ 20.)

The Shkodniks request judicial notice of the Notice of Default and Election to Sell under Deed of Trust, recorded on August 2, 2022, as Document No. 20220771946 in the Official Records of the Recorder’s Office of Los Angeles County, California. The unopposed request is GRANTED. (Evid. Code, § 452, subd. (h); see also Monterey Peninsula Taxpayers Ass'n v. County of Monterey (1992) 8 Cal.App.4th 1520, 1532, fn.8, [taking judicial notice of a matter of public record not reasonably subject to dispute].)

“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.”¿ (Code Civ. Proc., § 1021.)¿ Attorney’s fees are allowable costs under Code of Civil Procedure section 1032 when authorized by contract, statute, or law.¿ (Code Civ. Proc., § 1033.5, subd. (a)(10).)¿¿¿¿

Civil Code section 1717 provides, in relevant part: “(a) In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs. [¶] ... [¶] Reasonable attorney's fees shall be fixed by the court, and shall be an element of the costs of suit. (b)(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment.”

“When a party seeks to enforce a contractual fees provision and requests fees related to litigation of claims on a contract, Civil Code section 1717 makes the attorney's fees provision reciprocal, in at least two ways. First, section 1717 allows either party to collect fees if the contract allows one party but not the other to do so. Second, section 1717 allows a party who defeats a contract claim by showing the contract did not apply or was unenforceable to nonetheless recover attorney fees under that contract if the opposing party would have been entitled to attorney fees had it prevailed.” (Hom v. Petrou (2021) 67 Cal.App.5th 459, 465 (cleaned up).)

The Shkodniks move the court for an order awarding reasonable attorney’s fees in the amount of $31,687.50 pursuant to the July 2007 DOT and the principle of remedial reciprocity established by Civil Code section 1717, subdivision (a). After reviewing the papers, the court finds the Shkodniks are not entitled to an award of reasonable attorney’s fees.

The court begins by noting that the July 2007 DOT does not contain an attorney’s fee provision. Anticipating this hurdle, Plaintiff advances two arguments: (1) the July 2007 DOT incorporates the terms of the Fadaei Note[1], which contains a fee provision, and (2) because the July 2007 DOT secures the Fadaei Note, the Shkodniks would have been liable for attorney’s fees if Fadaei had prevailed on the Shkodnik’s quiet title claim.

Both arguments are unavailing. First and foremost, the terms of the Fadaei Note are not incorporated into the July 2007 DOT. (See Bartelstone Decl., Ex. D.) The assertion is unsupported by any language in the July 2007 DOT. Thus, without any contractual fee provision, there is no basis to award attorney’s fees.

Second, the case law upon which the Shkodniks rely for their practical liability argument— Saucedo v. Mercury Sav. & Loan Ass’n (1980) 111 Cal.App.3d 309 (Saucedo) and Wilhite v. Callihan (1982) 135 Cal.App.3d 295 (Wilhite)—are inapplicable to this case. Saucedo and Wilhite concerned plaintiffs, both of whom were non-assuming grantees of a note and deed of trust, that brought lawsuits to prevent lenders from foreclosing on their respective residential properties. The plaintiffs in Saucedo and Wilhite prevailed and thereafter sought attorneys’ fees pursuant to a fees provision in the note and deed of trust, respectively. The plaintiffs in Saucedo and Wilhite were ultimately awarded attorneys’ fees despite being non-signatories to the note or deed of trust based on the following reasoning: ““While the nonassuming grantee would not have been personally liable for payment of attorney fees under the note and deed of trust, the trustee and/or beneficiary would have been entitled to attorney fees under the provisions of the deed of trust had they prevailed, and these fees would have become part of the debt secured by the deed of trust. To prevent foreclosure of his interest, the non-assuming grantee would have had to payoff the secured debt, including the attorney fees, by refinancing or otherwise. This practical ‘liability’ of the non-assuming grantee is sufficient to call into play the remedial reciprocity established by Civil Code section 1717.” (Saucedo, at p. 315; see also Wilhite, at p. 302 [setting forth same reasoning].)

However, in contrast to Saucedo and Wilhite, the Shkodniks brought this action to resolve conflicting claims of title. For this reason, this case is more analogous to Clar v. Cacciola (1987) 193 Cal.App.3d 1032 (Clar).[2] Clar concerned competing claims to priority of two deeds of trust affecting a residential property. The parties to the action, the beneficiaries of the competing deeds of trust, were not in contractual privity with each other, but they each claimed priority over the other and the plaintiffs sought to void the others’ deed of trust. The trial court decided the action in favor of the defendants, who sought statutory attorney fees as prevailing parties in the action, which did not include a claim for foreclosure. The trial court denied the fees and the appellate court affirmed, distinguishing Saucedo and concluding that there was no relationship between the parties—signatories of separate deeds of trust—that created a contractual right to fees. Nor was there the same practical liability for them as was found in Saucedo based on an owner's incentive to pay fees to protect his or her equity in the property. The Court of Appeal in Clar concluded:

“The attorney fees provisions here were between the Larscheids and plaintiffs on the one hand and between the Larscheids and defendants on the other. The simple fact is that here, there was no agreement between the parties providing for attorney fees; neither was there any privity of relationship between the parties under which a court could imply a reciprocal right to attorney fees.

“… Both Saucedo and Wilhite involved an award of attorney fees to nonassuming grantees of the subject properties who were successful in enjoining trust deed holders from enforcing due-on-sale clauses in promissory notes secured by deeds of trust. Here, unlike the situation in either Saucedo or Wilhite, plaintiffs and defendants are complete strangers to each other; there are two separate notes and deeds of trust to the same property; the central issue is the priority of the two competing deeds of trust; both parties were creditors of the individual property owners giving competing deeds of trust; neither party was purchasing the property; and neither party took their trust deed “subject to” any other deed of trust… [¶] Moreover, the basic premise of defendants' argument is flawed. The decisions in Saucedo and Wilhite were based on the fact that if the nonassuming grantees were unsuccessful in procuring an injunction, then in order to forestall foreclosure it would be necessary for them as a condition of redemption to pay off the secured debt including attorney fees incurred by the lenders. This ‘practical liability’ of the nonassuming grantees for attorney fees provides justification for the trial court to invoke the remedial reciprocity established by section 1717…

“In conclusion, we decline defendants' invitation to extend the reciprocal attorney fees provisions of section 1717 to situations such as the present case, in which competing lienholders with entirely separate deeds of trust are litigating their respective priorities with respect to a single piece of property, and no relationship of privity or principles of equity would render inapplicable the well-established rule which precludes an award of attorney fees to prevailing parties unless provided for by agreement or statute.”

Like Clar, the Shkodniks were not parties to the July 2007 DOT nor the Fadaei Note containing the attorney’s fee provision. The Shkodinks did not sue as though they were parties to such contracts, and the Shkodniks did not seek the benefits of the July 2007 DOT or the Fadaei Note as a third-party beneficiary or otherwise. This case involved conflicting claims to title. Given this background, the court declines to extend the reciprocal attorney fees provisions of Civil Code section 1717 in this case.

Kerry Bensinger

Judge of the Superior Court

[1] The court notes this argument is improperly raised for the first time in reply. The court nonetheless addresses the argument.

[2] Neither party cited Clar.