[co-author: Victoria Boyko]

In Monterossa v. Superior Court (PNC Bank), 2015 DJDAR 6488, the California Court of Appeal for the Third District decided a case of first impression under Code of Civil Procedure Section 2924.12(i) enacted in 2012.  The statute allows a borrower to recover attorney fees if they obtain injunctive relief.  The question posed here was whether the borrower was entitled to fees when they only received a preliminary injunction as opposed to permanent injunctive relief.

The borrowers sought and obtained a mortgage from a bank.  Subsequently, the petitioners were unable to pay the loan and they submitted a loan modification agreement to the bank.  The borrowers were told their loan modification was denied due to missing financial documentation.  However, the borrowers had previously received confirmation that the bank had received a “completed application.”  The borrowers were granted a preliminary injunction enjoining the sale of their residence and filed a motion for attorney fees and costs under Civil Code Section 2924.12(i).  The Superior Court denied the fee request, concluding that the statute did not allow for a fee award where the party obtained only a preliminary injunction.

The borrowers attacked the ruling of the Superior Court via writ relief.  The court of appeal reversed, noting that Section 2923.6(c) prohibits the common bank tactic of “dual tracking.”  The court of appeal commented that when a bank pursues foreclosure at the same time a defaulting borrower seeks a loan modification, a borrower may seek injunctive relief.  Section 2924.12(i), meanwhile, allows a “prevailing borrower . . . in an action” who obtained injunctive relief or damages, to recover reasonable attorney fees and costs.  Because the clear language incorporates both preliminary and permanent injunctive relief, the borrowers should have been awarded fees.