Borrowers who obtain a preliminary injunction to halt a non-judicial foreclosure are “prevailing borrowers” for purposes of statutory fee award

The issue in Monterossa v. Superior Court of Sacramento County No. C077683 (Cal. Ct. App. June 12, 2015) was whether 2012 legislation entitling a prevailing borrower to attorney’s fees under legislation imposing limitations on nonjudicial foreclosures authorizes fees where the borrower obtained only a preliminary, rather than a permanent, injunction. The facts were that the lender commenced a nonjudicial foreclosure while a complete loan modification application was under review. The borrower’s complained that was dual tracking in violation of California’s Homeowner Bill of Rights (HOBA). They filed an ex parte application for a preliminary injunction, which the trial court granted. The lender offered no evidence to oppose the dual tracking claim, so the trial court granted the injunction. The borrowers then petitioned for attorney fees under Section 2924.12(i) which provides that a court may award attorney fees to a prevailing borrower. This term is defined as a borrower who obtains injunctive relief or damages for HOBR violations, including dual tracking. The trial court denied the motion, reasoning the statute only permitted recovery of attorney fees at the end of the case, i.e. after a judgment issuing a permanent injunction. The appellate court reversed holding that the plain language of the statute incorporates both preliminary and permanent injunctive relief. The language and purpose of the statutory scheme, and its legislative history, demonstrate the Legislature intended to authorize an award of attorney fees and costs when a preliminary injunction issues. For under the nonjudicial foreclosure process, the best a plaintiff can hope to achieve is a preliminary injunction. When a preliminary injunction issues the lender can expeditiously correct and remedy the violation giving rise to the action for injunctive relief and then move to dissolve the preliminary injunction. This would nearly always moot the borrower’s request for a permanent injunction. But given that the borrower has effectively prevailed by obtaining a preliminary injunction forcing compliance with the statute, the Legislature must have intended to authorize an award of attorney fees and costs when a trial court issues a preliminary injunction.

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