Chacker v. JPMorgan Chase Bank, N.A.
237 Cal. Rptr. 3d 921
| Cal. Ct. App. 5th | 2018Background
- In 2006 Chacker refinanced her home, executing a promissory note (~$1.7M) secured by a deed of trust naming Washington Mutual as Lender and California Reconveyance Company (CRC) as Trustee; the note was placed in a mortgage-backed Trust.
- Washington Mutual's assets were later transferred to JPMorgan Chase, which then assigned the beneficial interest in the deed of trust to Bank of America as trustee for the Trust; Select Portfolio Servicing and U.S. Bank (trustee) were also involved below.
- Chacker defaulted; CRC recorded notices of default and trustee sale and nonjudicial foreclosure proceedings began, though no sale had occurred when litigation was filed.
- Chacker sued (seeking to stop foreclosure) and the trial court sustained demurrers to her third amended complaint; this court affirmed that dismissal on prior appeal (Chacker I).
- The Chase Defendants (Chase and CRC) moved for attorney fees under sections 9 and 14 of the deed of trust and under the Rosenthal Act; the trial court awarded $46,827.40, ordering Chacker to pay that amount.
- On appeal the court considered (1) whether non-signatory Chase/CRC could recover under the deed despite assignment, (2) whether the deed authorized adding fees to the loan balance rather than a separate money judgment, and (3) whether the Rosenthal Act independently supported fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chase/CRC (non-signatories, post-assignment) can recover contractual attorney fees under the deed of trust | Chacker: Chase/CRC are not the "Lender" or signatories, so cannot invoke the deed's fee provisions | Chase/CRC: Civil Code §1717 allows nonsignatories who stand in the lender's shoes to recover fees; they acted as lender/agent | Held: §1717 mutuality principle permits Chase/CRC to recover contractual fees despite not being original signatories because Chacker sued them on the contract rights |
| Whether the deed authorizes a separate court-ordered fee judgment or requires fees to be added to the loan balance | Chacker: Deed requires any fees to be added to the loan balance, not as a standalone judgment | Chase/CRC: Court may order payment; no authority compels adding fees to loan, and they are not current servicers so not "disbursed by Lender" | Held: Deed sections 9 and 14 only permit fees to be charged/added to the outstanding loan as additional debt, not entered as an independent money judgment |
| Whether the trial court properly ordered Chacker to pay fees now rather than adding to debt | Chacker: Fees must be added to note balance and accrue interest per deed terms | Chase/CRC: Practical or equitable grounds support entry of a payment judgment | Held: Trial court erred in ordering immediate payment; fees must be added to the loan balance and treated per the deed's terms |
| Whether the Rosenthal Fair Debt Collections Practices Act provides an independent basis for awarding attorney fees to defendants | Chacker: Her Rosenthal claim was brought in good faith; Chase/CRC are not "creditors" under the Act | Chase/CRC: They qualify as prevailing creditors and Rosenthal authorizes fees because suit lacked good faith | Held: Rosenthal Act does not supply an independent basis for the fee award in this case (trial court did not rely on it and appellate court found no separate Rosenthal basis for compelled payment) |
Key Cases Cited
- Hart v. Clear Recon Corp., 27 Cal.App.5th 322 (Cal. Ct. App. 2018) (construed a deed-of-trust provision similar to §9 as permitting certain fees to be treated as obligations under the deed)
- Bailey v. United States, 568 U.S. 186 (U.S. 2013) (noting parties must "take the bitter with the sweet," cited for the principle that a party cannot accept one contractual benefit while disavowing related obligations)
Disposition: The trial court's money-judgment order compelling Chacker to pay $46,827.40 is reversed. The case is remanded for the court to enter an order authorizing that amount to be added to Chacker's outstanding loan balance under the deed of trust; parties to bear their own appeal costs.