Yreka Western Railroad Co v Tavares

Filing 83

ORDER signed by Senior Judge William B. Shubb on 4/22/2013 ORDERING 77 that plaintiff's motion for the award of attorney's fees be, and the same hereby is DENIED. Plaintiff is awarded $1,204.10 in costs. (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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YREKA WESTERN RAILROAD
COMPANY,

NO. CIV. 2:11-1868 WBS CMK

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Plaintiff,
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ORDER RE: MOTIONS FOR AWARD OF
ATTORNEY’S FEES AND COSTS

v.
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EDWARD A. TAVARES, ROSEMARY T.
TAVARES, PLM LENDER SERVICES,
INC.,

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Defendants.
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/

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Plaintiff Yreka Western Railroad Company filed this

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action against defendants Edward A. Tavares, Rosemary T. Tavares,

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and PLM Lender Services, Inc., seeking to enjoin defendants from

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foreclosing upon plaintiff’s property until defendants apply for

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and obtain approval from the Surface Transportation Board

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(“STB”).

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plaintiff on June 4, 2012, (Docket No. 66), and on March 7, 2013,

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the court granted plaintiff’s unopposed motion for summary

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judgment, (Docket No. 74).

The court granted a preliminary injunction in favor of

Plaintiff now moves for the award of
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attorney’s fees, citing California Civil Code section 1717.

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(Docket No. 77), and for costs, (Docket No. 76).

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“California Civil Code [section] 1717(a) authorizes

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reasonable attorney’s fees ‘[i]n any action on a contract where

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the contract specifically provides that attorney’s fees and

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costs, which are incurred to enforce the contract, shall be

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awarded either to one of the parties or to the prevailing

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party.’”

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(9th Cir. 2009) (second alteration in original).

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Barrientos v. 1801-1825 Morton LLC, 583 F.3d 1197, 1216
A California

appellate court has explained that:
An action (or cause of action) is ‘on a contract’ for
purposes of section 1717 if (1) the action (or cause of
action) ‘involves’ an agreement, in the sense that the
action (or cause of action) arises out of, is based upon,
or relates to an agreement by seeking to define or
interpret its terms or to determine or enforce a party’s
rights or duties under the agreement; and (2) the
agreement contains an attorney fees clause.

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Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc., 211 Cal. App.

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4th 230, 241-42 (4th Dist. 2012).

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action is ‘on a contract’ under section 1717, the proper focus is

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not on the nature of the remedy, but on the basis of the cause of

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action.”

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Dist. 2008).

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Barrientos, 583 F.3d at 1216 (citing Lafarge Conseils Et Etudes,

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S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1340 n.16

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(9th Cir. 1986)).

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“In determining whether an

Kachlon v. Markowitz, 168 Cal. App. 4th 316, 347 (2d
“The provision is interpreted liberally.”

Neither side disputes that the Secured Promissory Note

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provides for attorney’s fees when it states that “Borrower

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promises to pay all costs of collection, including, without

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limitation, attorneys’ fees . . . in connection with the
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protection or realization of any collateral securing this Note or

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the enforcement of any guaranty hereof,” which includes expenses

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incurred in any proceedings “involving Borrower which may affect

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the exercise by Lender of its rights or remedies under this

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Note.”

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dispute whether plaintiff’s suit for declaratory relief was an

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action “on a contract” under California Civil Code section

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1717(a).

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(Compl. Ex. A-1 ¶ 6 (Docket No. 1).)

Rather, the parties

In Barrientos, the Ninth Circuit considered the award

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of attorney’s fees when the district court granted summary

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judgment in favor of tenants who sought a declaratory judgment

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that a landlord’s eviction notices violated federal and local law

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when the lease contained an attorney’s fee provision.

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Barrientos, 583 F.3d at 1206, 1216.

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action was “on a contract” under section 1717(a), the Ninth

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Circuit looked to two prior cases, one of which upheld the award

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of attorney’s fees and one which rejected the award of attorney’s

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fees.

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See

When determining whether the

Barrientos noted that “[i]n Lafarge, [the Ninth

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Circuit] awarded attorney’s fees to the plaintiff for opposing

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the defendant’s motion to vacate an arbitration award, which was

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based on a contract.”

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that ‘the underlying contract between the parties is not

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collateral to the proceedings but plays an integral part in

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defining the rights of the parties.’”

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F.2d at 1340).

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Cir. 1985), . . . [the Ninth Circuit] refused to award debtors

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attorney’s fees for opposing the creditors’ unsuccessful motion

Id. at 1216.

The court in Lafarge “held

Id. (citing Lafarge, 791

“In contrast, in In re Johnson, 756 F.2d 738 (9th

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for relief from an automatic stay.”

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that because the ‘[s]tay litigation is limited to issues of lack

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of adequate protection, the debtor’s equity in the property, and

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the necessity of the property to an effective reorganization,’

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‘[t]he validity of the . . . contract underlying the claim [was]

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not litigated during the hearing.’”

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756 F.2d at 740) (first three alterations in original).

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Id.

In re Johnson “held

Id. (citing In re Johnson,

Ultimately, the court in Barrientos upheld the award of
attorney’s fees, explaining that “Tenants’ lease contracts

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underlying the claim are not collateral to the litigation because

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they incorporate and define the rights and obligations of Tenants

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and [the landlord], the applicability of relevant state and

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federal law, and the role of federal and state actors.”

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“Tenants’ complaint was one to enforce their rights as tenants

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under the lease.”

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“Thus, Tenants’ action for a declaratory judgment regarding their

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right to remain in their apartments is properly considered an

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action ‘on a contract.’”

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Id.

Id. (internal quotation marks omitted).

Id.

Here, the situation is more akin to In re Johnson than

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Barrientos and Lafarge.

Plaintiff brought suit to enjoin the

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foreclosure and sale of its property until defendants sought

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approval from the STB, which has exclusive jurisdiction over

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transportation by rail carriers, including the abandonment of

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rail facilities.

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Plaintiff’s suit was limited to the question of whether

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defendants had to first seek review with that agency before

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foreclosing upon and selling plaintiff’s property.

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4, 2012 Order granting a preliminary injunction, the court

(Compl. ¶ 14; June 4, 2012 Order at 6.)

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In the June

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granted a preliminary injunction on the grounds that, in part,

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the STB “is far better suited than any court to uniformly apply

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national rail policy and determine whether the proposed

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foreclosure will result in interference with, or abandonment of,

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plaintiff’s railroad operations.”

(June 4, 2012 Order at 12.)

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Unlike Barrientos, in which the tenants sought

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declaratory judgment on their right to remain in their apartments

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under their leases, here plaintiff did not seek declaratory

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judgment to determine whether defendants have a right to

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foreclose upon the property under the Secured Promissory Note.

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Instead, plaintiff sought declaratory judgment on which

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governmental body has jurisdiction to first decide that issue.

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As in In re Johnson, “[t]he validity of the . . . contract

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underlying the claim [was] not litigated” in this case.

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Johnson, 756 F.2d at 740.1

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a contract” under California Civil Code section 1717(a), the

In re

Since plaintiff’s action was not “on

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Defendants note that In re Johnson based its holding on
the fact that the plaintiff’s action “was predicated solely upon
a federal statute” and “California state law was not applied to
the substantive issue involved,” therefore “the bankruptcy court
should not have applied the state substantive law awarding
attorney’s fees,” which is also the case here. In re Johnson,
756 F.2d at 740-741. However, subsequent Ninth Circuit cases,
including Lafarge and Barrientos, have not relied upon this
language in In re Johnson and have not based their rulings on the
distinction between federal and state claims. In Lafarge, for
example, the relevant motion was to vacate an arbitration award
that was compelled under the United States Arbitration Act, 9
U.S.C. §§ 1-14 (1982), a federal statute. Lafarge, 791 F.2d at
1337. Barrientos involved preemption of local ordinances by HUD
regulations, also a federal issue. Barrientos, 583 F.3d at 120815.
This court will therefore not base its decision on the
fact that the sole substantive law to be applied was federal law.

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court will decline to award attorney’s fees to plaintiff.2

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In addition to a motion for attorney’s fees, plaintiff

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has submitted a bill of costs in conformance with Local Rule 292.

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(Docket No. 76.)

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1920 and Local Rule 292(f), and defendants do not object to the

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award of those costs.

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$1,204.10 to plaintiff.

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The costs appear appropriate under 28 U.S.C. §

The court will therefore award costs of

IT IS THEREFORE ORDERED that plaintiff’s motion for the
award of attorney’s fees be, and the same hereby is, DENIED.

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Plaintiff is awarded $1,204.10 in costs.

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DATE:

April 22, 2013

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The case at hand is also distinguishable from the other
authority cited by plaintiff, Marsu, B.V. v. Walt Disney, 185
F.3d 932 (9th Cir. 1996), as that case awarded attorney’s fees
for tort claims, such as material concealment, closely tied to a
breach of contract action on a licensing agreement.
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