Gosha v. The Bank of N.Y. Mellon Corp.

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GARY C. GOSHA, an individual, and KIT M. GOSHA, an individual, and together as husband and wife, Plaintiffs, v. THE BANK OF NEW YORK MELLON CORPORATION FKA THE BANK OF NEW YORK, AS TRUSTEE CWALT 2005-72, a Delaware Corporation; BAYVIEW LOAN SERVICING LLC, a Florida Corporation; CLEAR RECON CORP, a California Corporation, Defendants.

No. 3:19-cv-00470-HZ

United States District Court, D. Oregon

December 28, 2022

Gary M. Gosha Kit M. Gosha Plaintiffs, Pro Se.

Gregor Hensrude Klinedinst PC Attorneys for Defendants Bank of New York Mellon Corporation and Bayview Loan Servicing, LLC.

Shannon K. Calt Aldridge Pite LLP Attorneys for Defendant Clear Recon Corporation.

OPINION & ORDER

MARCO A. HERNANDEZ United States District Judge.

This matter is before the Court on the Motion of Defendants Bank of New York Mellon (“BONY”) and Bayview Loan Servicing for Attorney Fees and Costs [ECF 103]. For the following reasons the Court grants in part Defendants' Motion and awards BONY and Bayview attorney fees in the amount of $29,333.00 and costs in the amount of $1,577.

BACKGROUND

In October 2005 Plaintiffs obtained a cash-out loan in which they took substantial cash out of their home and modified their mortgage terms. As part of the cash-out loan Plaintiffs signed and executed an Adjustable Rate Note (“Note”) on October 24, 2005. On October 31 2005, Plaintiffs signed and executed a Deed of Trust (“Trust Deed”) for the property.

In August 2011 Plaintiffs stopped making payments on their mortgage. Their mortgage servicer subsequently issued several notices detailing the amount outstanding and “threatened foreclosure.” Compl. ¶¶ 29-30.

In 2016 Plaintiffs filed an action to stop the foreclosure proceedings. Gosha v. BONY Mellon, 16-CV-0073-BR (Gosha I). Plaintiffs alleged in that action that the Trust Deed was void and that Defendants committed fraud in attempting to foreclose on the debt. On December 13, 2016, the Court dismissed Gosha I with prejudice. At some point thereafter Defendants voluntarily rescinded their initial non-judicial foreclosure proceedings. Compl. ¶ 18.

On June 14, 2018, the loan servicer, Defendant Bayview invited Plaintiffs to participate in the Oregon Foreclosure Avoidance Program (“OFAP”). Compl. ¶ 25. The OFAP conference ended “with an adverse result for” Plaintiffs, and Bayview was provided with a certificate of compliance that allowed it to pursue nonjudicial foreclosure under Oregon law. Id.

Prior to October 10, 2018, Defendants sent Plaintiffs several notices showing the amounts due and the amounts necessary to reinstate their mortgage. On October 10, 2018, Defendant Clear Recon Corporation (CRC) recorded a second Notice of Default in Washington County, Oregon.

On October 29, 2018, Plaintiffs sent a dispute letter to CRC demanding the foreclosure be rescinded on the basis that the order in which the notices were sent did not comply with Oregon law. Compl. ¶ 47. Shortly thereafter, CRC rescinded the second notice of default and acceleration of the debt. On October 30, 2018, CRC recorded a recission in Washington County.

On December 22, 2018, Plaintiffs were served with a Trustee's Notice of Sale to commence a non-judicial foreclosure. The Notice reflected Plaintiffs' failure to make payments beginning in September of 2011 and a total amount required to reinstate of $247,892.26. Defendants also issued a third Notice of Default, which was recorded in Washington County on December 20, 2018.

On April 1, 2019, Plaintiffs filed a Complaint in this Court in which they sought to enjoin the trustee's sale and asserted several claims for relief. On April 23, 2019 Defendants filed a Motion to Dismiss for failure to state a claim. On October 18, 2019, the Court issued an Opinion and Order in which it granted in part and denied in part Defendants' Motion to Dismiss. Specifically, the Court denied Defendants' Motion as to Plaintiffs' claims for breach of contract against CRC and Bayview, violation of the Oregon Unfair Trade Practices Act against all Defendants, violation of the Real Estate Settlement Procedures Act against Bayview, and violation of the Fair Debt Collection Practices Act against CRC.

On February 28, 2022, Defendants filed Motions for Summary Judgment in which they sought judgment in their favor on all of Plaintiffs' claims.

On August 30, 2022, the Court issued an Opinion and Order in which it granted Defendants' Motions and dismissed Plaintiffs' claims with prejudice. On that same date the Court entered a Judgment in favor of Defendants.

On September 14, 2022, BONY and Bayview filed a Motion for Attorney Fees and Costs pursuant to Federal Rule of Civil Procedure 54(d).

STANDARDS

Federal Rule of Civil Procedure 54(d)(2)(A) provides a “claim for attorney's fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages.” “Rule 54(d)(2) creates a procedure but not a right to recover attorneys' fees . . . there must be another source of authority for” an award of attorney fees. MRO Commc'ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276, 1280-81 (9th Cir. 1999)(quotation omitted).

Oregon Revised Statute § 20.096(1) provides:

In any action or suit in which a claim is made based on a contract that specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the party that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements, without regard to whether the prevailing party is the party specified in the contract and without regard to whether the prevailing party is a party to the contract.

“Under that statute, if a contract entitles one contracting party to recover attorney fees upon prevailing in an action to enforce the provisions of the contract, the prevailing party in the action is entitled to attorney fees whether or not that party is the party specified in the contract.” Menasha Forest Prod. Corp. v. Curry Cnty. Title, Inc., 350 Or. 81, 88 (2011).

DISCUSSION

Defendants assert they are entitled to attorney fees on the grounds that they were the prevailing parties and the Trust Deed and Note contain attorney-fee provisions. Plaintiffs concede Defendants are the prevailing parties in this matter, but assert they are not entitled to attorney fees under the circumstances of this case.

I. Trust Deed and Note

The October 31, 2005 Trust Deed provides if the borrower fails “to perform the covenants and agreements” contained in the Trust Deed, Defendants have the right to “do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property” including “appearing in court” and “paying reasonable attorneys' fees.” Hensrude Decl., Ex. B ¶ 9. The Trust Deed further provides the Lender is entitled to “reasonable . . . attorneys' fees” incurred in “pursuit of acceleration or sale.” Id. ¶ 22.

The October 24, 2005 Note provides in relevant part:

If I do not pay the full amount of each monthly payment on the date it is due, I will be in default.

* * *

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal that has not been paid and all the interest that I owe on that amount.

* * *

If the Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. These expenses include, for example, reasonable attorneys' fees.

Hensrude Decl. [104], Ex. A ¶ 7(B), (C), (E).

II. Plaintiffs' Arguments

Notwithstanding the provisions for attorney fees in the Trust Deed and Note Plaintiffs assert the Court should deny Defendants' request for attorney fees on the grounds that Defendants have not been financially harmed by Plaintiffs, Defendants should be estopped from claiming fees in this matter, and Defendant is not permitted an award of attorney fees under Section 9 of the Trust Deed.

A. No Harm

Plaintiffs assert the Court should deny Defendants' request for fees because Defendants did not suffer any harm in Gosha I or in this case. Specifically, Plaintiffs note CRC rescinded the notice of default on May 26, 2017, and Defendants voluntarily rescinded the December 2018 foreclosure and returned the preliminary injunction bond. Plaintiffs, however, fail to cite any authority to support their assertion that Defendants must establish they suffered harm in order to obtain attorney fees that are provided for under contract. Rather, as noted, Oregon law requires only that a party show there is a contract that entitles it to recover attorney fees and that it is the prevailing in an action to enforce the provisions of the contract. Menasha, 350 Or. at 88. Here both the Trust Deed and Note contain provisions for attorney fees for the prevailing party and Defendants were the prevailing parties. Accordingly, Defendants have satisfied the requirements for an award of reasonable attorney fees.

B. Estoppel

Plaintiffs assert Defendants should be estopped from requesting an award of attorney fees because they previously declined to assert a claim for attorney fees as a prevailing party in Gosha I. Estoppel is an equitable doctrine that “‘precludes a person, based on the person's acts, conduct, or silence where there was a duty to speak, from asserting a right that otherwise would have been available.'” Nelson v. Liberty Ins. Corp., 314 Or.App. 350, 359 (2021)(quoting Deardorff v. Farnsworth, 268 Or.App. 844, 849 (2015)). To succeed on a...