Castrol North America v. Sanderson Ray

Filed 11/30/05 Castrol North America v. Sanderson Ray BP CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

CASTROL NORTH AMERICA, INC., Plaintiff and Respondent, v. SANDERSON J. RAY BP, Defendant and Appellant.

G034255 (Super. Ct. No. 02CC15631) O P I N I O N

Appeal from a postjudgment order of the Superior Court of Orange County, Thomas N. Thrasher, Sr., Judge. Affirmed.

Palmieri, Tyler, Wiener Wilhelm & Waldron, Scott R. Carpenter and Heather C. Whitmore, for Defendant and Appellant.

Robert L. Rentto for Plaintiff and Respondent.

Sanderson J. Ray BP (Sanderson) appeals the denial of its motion for attorney fees, made after it prevailed on a motion for summary judgment in this action by Castrol North America, Inc. (Castrol). Sanderson argues it is entitled to fees because Castrol sued on contracts that contain fee clauses. We disagree and affirm.

* * *

In a related appeal, Castrol argues Sanderson was not entitled to summary judgment. Our decision in that matter, affirming judgment for Sanderson, is filed simultaneously with this opinion. (Castrol North America, Inc. v. Sanderson J. Ray BP (Nov. 30, 2005, G033806) [nonpub. opn.].) (Castrol I.) The full facts are set out in Castrol I and will not be repeated here save as necessary to the issue at hand.

I

Sanderson contends Castrol sued to foreclose the leasehold mortgage, and the foreclosure relied on rights against it that Castrol obtained under the lease and mortgage. Both contain fee clauses. So, Sanderson reasons, the foreclosure was an action to enforce a contract with a fee clause. The argument is frivolous.

In denying the motion, the trial judge in effect said Sanderson could not recover under the lease because Castrol was not a party to it, nor under the mortgage, since Sanderson was not a party to that agreement. The judge added that Castrol had not sought to hold Sanderson liable for repayment of Castrol’s loan to RHR Oil Industries, Inc. (RHR). (We understand this to say there could be no recovery on any fee clause in the note).

A nonparty to a contract who unsuccessfully seeks to enforce it against a party may be liable under a fee clause in the contract. (See, e.g., Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 382.) Likewise, a party to a contract with a fee clause who unsuccessfully sues to enforce it against a nonparty may be liable for fees. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124.) Neither rule helps Sanderson.

Castrol did not sue to foreclose the leasehold mortgage, nor did any of its rights depend on the lease, so it cannot be liable for fees under either. Castrol’s sole cause of action against Sanderson was to foreclose two security interests in fixtures and personal property (which it contended included the building erected on the leased premises) – not the leasehold mortgage. The cause of action is entitled “Foreclosure of Security Interest,” and it seeks possession of the collateral described in the “security instruments, along with foreclosure of the “security interests.” So the mortgage is not in issue.

Nor would any foreclosure of the leasehold mortgage depend on the lease. Sanderson’s claim for this relies on a lease provision that a mortgagee who acquires the leasehold by exercising its rights under the mortgage (presumably foreclosure) also agrees to assume the lease obligations and perform its covenants. It then points to a mortgage clause that allows Castrol to assume the lease, or enter into a new lease with Sanderson, in the event a trustee in bankruptcy for RHR disaffirms the lease.^[1] Sanderson suggests the mortgage clause, combined with the lease, is the basis for the right to foreclose.

Neither provision has anything to do with the present case. They deal with what happens after a foreclosure, if Castrol were to be the successful bidder, or if Castrol acquired the lease following rejection/termination in bankruptcy. None of those events occurred here. Moreover, the right to foreclose the mortgage derived solely from the terms of the mortgage, not the lease. Here, the mortgage was in the form of a deed of trust. In it, RHR conveyed the leasehold to a trustee as security for repayment of Castrol’s loan. Upon default, the deed of trust gave Castrol the right to direct the trustee to sell the property and apply the proceeds to repayment of the loan. So even if Castrol had sued to foreclose the mortgage – which it did not – Sanderson would not be entitled to fees under the lease.

II

Sanderson also claims attorney fees under Code of Civil Procedure section 730. It provides: “In all cases of foreclosure of mortgage the attorney’s fee shall be fixed by the court in which the proceedings are had, any stipulation in the mortgage to the contrary notwithstanding.” The argument is meritless, since this was not an action to foreclose a mortgage.

Since Sanderson was not entitled to attorney fees, the order appealed from is affirmed. Castrol is entitled to its costs on appeal.

BEDSWORTH, J.

WE CONCUR:

SILLS, P. J.

ARONSON, J.

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^[1] Sanderson’s brief states this lease clause comes into play upon termination of the lease for default by RHR, but a careful examination of the provision reveals it applies where the lease is terminated or rejected in bankruptcy.