California Appeals Court Decision Allows Prevailing Borrower to Recover Attorneys’ Fees Under HBORIn an issue of first impression, a California appeals court has ruled that a borrower who is successful in obtaining a preliminary injunction against foreclosure can recover attorneys’ fees from the lender or mortgage servicer under the Homeowners Bill of Rights (HBOR).

HBOR, which went into effect on January 1, 2013, allows a court to award attorneys’ fees and costs to a “prevailing borrower,” which is defined under Cal. Civ. Code, § 2924.12 (i) as a borrower who has “obtained injunctive relief or was awarded damages pursuant to this section.”

Prior to the June 12, 2015, ruling in Monterossa v. Superior Court (PNC Bank)by the California Court of Appeals, Third Appellate District, it has been unclear whether “injunctive relief” referred to both a preliminary and a permanent injunction. Many practitioners believed that it referenced a permanent injunction.

However, in the Monterossa decision, the court took a broad view of the statute in ruling that a borrower who obtains a preliminary injunction is entitled to an award of attorneys’ fees and costs, regardless of whether or not the borrower ultimately prevails in his or her HBOR claim.

In its ruling, the court held:

The statute at issue refers to “injunctive relief,” which plainly incorporates both preliminary and permanent injunctive relief. Nevertheless, the respondent superior court concluded that the phrase “prevailing borrower . . . in an action” suggests the Legislature intended for an award of attorney fees and costs solely at the conclusion of the action, i.e., after a judgment issuing a permanent injunction. However, a preliminary injunction is obtained “in an action.” And a borrower who obtains a preliminary injunction has prevailed in obtaining “injunctive relief.” Thus, the plain language of subdivision (i) of section 2924.12 provides for attorney fees and costs to a borrower who obtains a preliminary injunction.

The appeals court ordered the respondent superior court to vacate its September 2014 order denying the petitioner’s motion to recover attorneys’ fees and costs and to reconsider the motion on its merits.

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