The Court of Appeal of the State of California, Third Appellate District, recently held that an order denying interim attorney’s fees under California Civil Code § 2924.12, which is part of the California Homeowner Bill of Rights, is not an appealable order.

A copy of the opinion is available at:  Link to Opinion.

The plaintiff borrower obtained a mortgage loan, which was subsequently modified, but the plaintiff defaulted on the modified loan also. The defendant mortgagee recorded its notice of default. The plaintiff borrower requested another modification but did not submit the required documentation. The property was set for foreclosure sale.

The plaintiff borrower filed a complaint against the defendant mortgagee alleging a violation of the California Homeowner Bill of Rights (CHOBR) as the mortgagee supposedly recorded its notice of notice of sale while a loan modification was pending.  The plaintiff presented evidence that indicated the defendant issued the notice of trustee’s sale before it issued any determination of the plaintiff’s eligibility of a loan modification.

The plaintiff also applied for a temporary restraining order, which the trial court granted.  The plaintiff then applied for a preliminary injunction to enjoin the sale of the property. The trial court granted the injunction as it found the plaintiff borrower met his burden to demonstrate a likelihood of success on the merits and he would suffer great injury if his property was sold at the foreclosure sale. The injunction was to remain in place until the defendant corrected and remedied the allegations.

As the preliminary injunction was in place, the plaintiff moved for attorney’s fees as the prevailing party. The trial court denied the request for interim attorney’s fees and the plaintiff appealed the order.

On appeal, the mortgagee argued the trial court’s order denying the borrower’s motion for interim attorney’s fees under the CHOBR was not an appealable order.

As you may recall, under California’s ‘one final judgment’ rule, a judgment that fails to dispose of all the causes of action pending between the parties is generally not appealable. A final judgment terminates the litigation between the parties on the merits of the case and leaves nothing to be done but to enforce by execution what has been determined. A recognized exception to the ‘one final judgment’ rule is that an interim order is appealable if:  (1) the order is collateral to the subject matter of the litigation,  (2) the order is final as to the collateral matter, and  (3) the order directs the payment of money by the appellant or the performance of an act by or against the appellant.

Here, the Appellate Court noted that the plaintiff’s notice of appeal was filed before a final judgment, and that a trial on the merits might show that the preliminary injunction was improper.

The Appellate Court also found that the trial court’s order denying interim attorney’s fees is also not appealable as a collateral order. The Appellate Court noted that the trial court’s order did not direct the payment of any money, nor did it compel an act by or against the plaintiff. Instead, the Appellate Court noted, the trial court’s order merely represents a denial of attorney’s fees that is not appealable as a collateral order.

The Appellate Court rejected the plaintiff’s reliance on Moore v. Shaw (2004) 116 Cal.App.4th 182.  The Court noted that, in Doe v. Luster (2006) 145 Cal.App.4th 139, the same appellate court that rendered the decision in Moore v. Shaw “considered its earlier decision in Moore and held Moore should not be construed to allow an appeal from an interim attorney fee award.”  The Appellate Court noted that Moore did not address the issue of whether an order denying the request for attorney’s fees was appealable, and thus was not applicable to the case at hand.

The Court also rejected the plaintiff’s reliance on Baharian-Mehr v. Smith (2010) 189 Cal.App.4th 265.  The Appellate Court noted that “Baharian–Mehr did not consider whether an attorney fee order is appealable by itself. (Ibid.) Thus, Baharian–Mehr does not undermine our conclusion that the order denying interim attorney fees in this case does not constitute an appealable order.”

Accordingly, the Court of Appeal dismissed the appeal.