Opinion
NOT FOR PUBLICATION
Argued and Submitted at Los Angeles, California: November 21, 2008
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. 06-12551-KT, Adv. No. 07-01137-KT. Honorable Kathleen H. Thompson, Bankruptcy Judge, Presiding.
Before: HOLLOWELL, MONTALI and PAPPAS, Bankruptcy Judges.
MEMORANDUM
Creditor All-Tex, Inc. (" All-Tex") appeals an award of attorneys' fees to Branford Partners, LLC (" Debtor") who obtained a dismissal of an adversary proceeding in which All-Tex asserted equitable liens and specific performance rights stemming from a contract between them. We AFFIRM the bankruptcy court's order.
I. FACTS
Debtor filed a chapter 11 bankruptcy petition on December 26, 2006, and continued to operate as the debtor-in-possession.
Unless specified otherwise, all chapter and code references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532. The Federal Rules of Bankruptcy Procedure, 1001-9037, are referred to in this Memorandum as Bankruptcy Rules.
All-Tex asserted a general unsecured claim in the amount of $26,288,126.84 arising out of a contract it entered into with Debtor's predecessor in interest, Sunquest Development, LLC (" Sunquest").
Under the terms of the " Agreement to Sell and Purchase and Escrow Instructions" (the " All-Tex Contract"), Sunquest agreed to build an industrial office building on a parcel of real property (" Property"), transfer title to the finished building to All-Tex upon completion, and provide All-Tex an easement on adjacent property. In return, All-Tex agreed to pay Sunquest $6,800,000 and paid a $500,000 cash deposit.
All-Tex alleges Sunquest and Debtor breached the All-Tex Contract by failing to construct the building and transfer the Property to All-Tex, as well as by encumbering the Property with various liens. All-Tex brought an action against Debtor in state court alleging breach of contract, fraud, negligent misrepresentation, breach of the covenant of good faith and fair dealing, and breach of fiduciary duty. The state court action was stayed as a result of the bankruptcy filing.
The Debtor filed an objection to All-Tex's proof of claim. All-Tex, in turn, filed a complaint and initiated an adversary proceeding against the Debtor to determine its interest in the Property (the " Adversary Proceeding"). It also, after the claims bar date, filed an amended proof of claim changing its unsecured claim to a secured claim based on an assertion of lien rights against the Property. All-Tex then amended its complaint, titling it the " Objection to Claim and Amended Complaint to Determine Extent, Priority and Validity of Lien and Interest of All-Tex, Inc. in Property" (" Amended Complaint").
The Amended Complaint asserted seven claims for relief. The first through fourth claims were for a determination that Debtor's interest in the Property on the petition date was subject to the rights of All-Tex which allegedly held a vendee's lien, equitable liens, and specific performance rights. The fifth through seventh claims were against other entities holding liens against the Property and alleged that those interests were subject to All-Tex's equitable liens. All-Tex based its claims in the Amended Complaint on the All-Tex Contract.
The Debtor filed a Motion for Dismissal of Complaint Pursuant to Bankruptcy Rule 7012(b)(6) (" Motion to Dismiss") in the Adversary Proceeding (which was treated as a motion for summary judgment) and a Motion for Partial Summary Judgment regarding its objection to All-Tex's amended proof of claim (" Claim Objection").
The bankruptcy court heard both motions together. On January 3, 2008, the bankruptcy court ruled that All-Tex presented no evidence to show that a hypothetical bona fide purchaser would have had constructive or inquiry notice of its alleged interests sufficient to survive the avoidance powers of the Debtor, and, that the Debtor could, therefore, defeat or avoid each of the alleged equitable interests, liens, and remedies asserted by All-Tex in connection with the Property. It also denied All-Tex's specific performance rights. The bankruptcy court granted Debtor's partial summary judgment motion in the Claim Objection and disallowed All-Tex's amended secured claim. All-Tex appealed to this Panel. The Panel affirmed the bankruptcy court's orders in an unpublished decision on October 24, 2008 (BAP Nos. 08-1021 & 1044).
On January 23, 2008, Debtor filed a Motion for Order Directing Payment of Attorneys' Fees by All-Tex, Inc. (" Motion for Attorneys' Fees"). All-Tex timely filed an opposition. The bankruptcy court heard the matter, allowed supplemental briefs by both parties, and entered a Memorandum and Order Granting Debtor's Motion for Order Directing Payment of Attorneys' Fees by All-Tex, Inc. (" Memorandum Decision").
The bankruptcy court awarded Debtor attorneys' fees; however, it made deductions for matters not specific to the Adversary Proceeding or related issues in the Claim Objection, excessive conferencing with fellow litigants and reviewing pleadings of other parties. In addition, it reduced the balance by 25% because of the narrowness of its ruling in favor of the Debtor. The total " write down" of Debtor's attorneys' fees was $38,832.50 leaving Debtor with an award in the amount of $69,369.50. All-Tex timely appealed.
II. JURISDICTION
As a threshold matter, we must determine whether the bankruptcy court had jurisdiction to adjudicate the fee issue and whether we, in turn, have jurisdiction to review the order on appeal. See Krasnoff v. Marshack (In re Gen. Carriers Corp.), 258 B.R. 181, 188-89 (9th Cir. BAP 2001). The bankruptcy court had jurisdiction under 28 U.S.C. § § 1334 and 157(b)(2). The bankruptcy court retained jurisdiction to award costs and attorneys' fees even after the underlying matter was appealed. Masalosalo v. Stonewall Ins. Co., 718 F.2d 955, 957 (9th Cir. 1983) (citing White v. N.H. Dept. Of Employment Sec., 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982)); Budinich v. Becton Dickinson & Co., 486 U.S. 196, 199-200, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988).
An order awarding fees is final when the amount of the fee is determined. Intel Corp. v. Terabyte Int'l, Inc., 6 F.3d 614, 617 (9th Cir. 1993). Therefore, we have jurisdiction under 28 U.S.C. § 158.
III. ISSUE
Did the bankruptcy court err in awarding attorneys' fees to the Debtor?
IV. STANDARDS OF REVIEW
A bankruptcy court's determination of attorneys' fees will not be disturbed unless the bankruptcy court abused its discretion or erroneously applied the law. In re Strand, 375 F.3d 854, 857 (9th Cir. 2004). A bankruptcy court abuses its discretion if it bases its decision on an erroneous view of the law or clearly erroneous factual findings. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). We review conclusions of law and issues of statutory interpretation de novo. Vill. Nurseries v. Gould (In re Baldwin Builders), 232 B.R. 406, 410 (9th Cir. BAP 1999) (citations omitted).
Neither party fully complied with Bankruptcy Rules 8009, 8010 and the Rules of the United States Bankruptcy Appellate Panel of the Ninth Circuit (" 9th Cir. BAP Rules") 8006-1, 8009(b)-1, 8010(a)-1. In particular, the transcript of the February 19, 2008 hearing on Debtor's Motion for Attorneys' Fees was not included in the record (or available on the bankruptcy case docket). This limits our review of the bankruptcy court's reasoning to the Memorandum Decision.
V. DISCUSSION
All-Tex's main arguments as to why the award of attorneys' fees was made in error are that: (1) Debtor waived its right to attorneys' fees; (2) attorneys' fees cannot be allowed as recoverable costs; (3) Debtor cannot recover attorneys' fees under the All-Tex Contract; and, (4) the Debtor was not the prevailing party.
Neither party challenges the specific deductions in attorneys' fees made by the bankruptcy court.
A. Debtor Did Not Waive its Right to Recover Attorneys' Fees.
The Debtor's substantive right to attorneys' fees does not come from either the Bankruptcy Rules or the Code; rather, a prevailing party may recover attorneys' fees under state law if state law governs the substantive issues raised in the proceeding. Ford v. Baroff (In re Baroff), 105 F.3d 439, 441 (9th Cir. 1997). Because state law " necessarily controls an action on a contract, " a party in a contract action is entitled to an award of fees if the contract provides for an award and state law authorizes fee shifting agreements. Id .; Johnson v. Righetti (In re Johnson), 756 F.2d 738, 741 (9th Cir. 1997) (a prevailing party to an adversary proceeding in bankruptcy court may be awarded attorneys' fees if attorneys' fees would have been awarded under substantive state law and state law was applied in the court's determination); see also Traveler's Cas. & Sur. Co. Of Am. v. Pac. Gas & Elec., 549 U.S. 443, 127 S.Ct. 1199, 1203-04, 167 L.Ed.2d 178 (2007) (" Travelers").
California law controls the All-Tex Contract and was applied by the bankruptcy court in determining the issues presented in the Adversary Proceeding. Yet, All-Tex asserts Debtor cannot use California attorneys' fee statutes as a basis for recovery, in part because it did not comply with California Rules of Civil Procedure in requesting attorneys' fees.
Even though California law applies to determine if Debtor has a right to attorneys' fees as costs, the Debtor was not obligated to comply with state court rules in its application for fees. Debtor was required to comply with applicable bankruptcy rules in requesting its attorneys' fees because the action on the All-Tex Contract took place in the bankruptcy court. Bankruptcy Rule 1001. The rules applicable to the Debtor's Motion for Attorneys' Fees were, therefore, the Bankruptcy Rules and the Local Bankruptcy Rules for the Central District of California (" Local Rules").
The Bankruptcy Rules apply to bankruptcy cases " except in those limited instances in which the rules specifically incorporate state procedural law" such as Bankruptcy Rule 7069 allowing execution under state law procedures. 9 Alan N. Resnick & Henry J. Sommer, COLLIERS ON BANKRUPTCY § 1001.01 (15th ed. 2008).
1. Local Rule 7054-1
Bankruptcy Rule 7054(b) allows a prevailing party its costs incurred in an adversary proceeding in certain circumstances. Local Rule 7054-1 specifically provides attorneys' fees as part of those costs:
All-Tex makes several statements in its briefs such as: " attorneys' fees are not costs under federal law, " " under Rule 7054 a litigant cannot claim attorneys' fees as costs, " and " under California law, 'costs' are not attorneys' fees." These are misstatements of the law. As explained in this decision, attorneys' fees are allowable costs under the Bankruptcy Rules and Local Rules, and California cost statutes provide that attorneys' fees are recoverable litigation costs under certain circumstances.
Local Rule 7054-1:
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(f) Motion for Attorneys' Fees
If not previously determined at trial or other hearing, any motion for attorneys' fees where such fees may be awarded shall be served and filed within 30 days after the entry of judgment or other final order, unless otherwise ordered by the court. Such motions and their disposition shall be governed by Local Bankruptcy Rule 9013-1.
Debtor filed the Motion for Attorneys' Fees within thirty days of the bankruptcy court's order in the Adversary Proceeding and Claim Objection. However, All-Tex asserts that Debtor failed to comply with Local Rule 7054-1 because it did not file a bill of costs.
The requirement to file a bill of costs is contained in a separate section of Local Rule 7054-1, section (b), and refers to demonstrating that certain specific items (such as filing fees, clerk's fees, transcript fees, deposition costs, etc.) which may be taxed as costs were necessarily incurred. Under the applicable section of Local Rule 7054-1, section (f), a bill of costs is not required as part of an application for attorneys' fees.
2. Bankruptcy Rules 7008 and 7009
All-Tex insists Debtor was required to plead for attorneys' fees under Bankruptcy Rules 7008 and 7009. Under Bankruptcy Rule 7008(b):
A request for an award of attorney's fees shall be pleaded as a claim in a complaint, cross-claim, third-party complaint, answer, or reply as may be appropriate.
All-Tex initiated the Adversary Proceeding against Debtor. Debtor did not file an answer to the Amended Complaint; it filed a Motion to Dismiss. The Motion to Dismiss is allowed under Bankruptcy Rule 7012 (making Federal Rule of Civil Procedure (" Fed. R. Civ. P.") 12 applicable in adversary proceedings). Fed.R.Civ.P. 12(b) allows a defendant to assert the defense of " failure to state a claim upon which relief can be granted" by motion. Bankruptcy Rule 7012 does not require that attorneys' fees be specially pled.
Courts have not barred recovery of attorneys' fees when requested by post trial motion. Merced Prod. Credit Ass'n v. Sparkman (In re Sparkman), 703 F.2d 1097, 1100 (9th Cir. 1983) A post trial motion for costs is the " preferred method" for seeking attorneys' fees and costs. Id . This method is a " common and accepted practice." First Card v. Hunt (In re Hunt), 238 F.3d 1098, 1102 n.4 (9th Cir. 2001); see also Ganey v. Doran, 191 Cal.App.3d 901, 911-12, 236 Cal.Rptr. 787 (1987) (trial court did not err in awarding attorneys' fees that were not pled in complaint); First Chicago FCC Nat'l Bank v. Willett (In re Willett), 125 B.R. 607 (Bankr. S.D. Cal. 1991) (awarding fees that were requested and proved after dismissal of creditor's complaint).
Bankruptcy Rule 7009 requires that items of special damages be " specifically stated." It is inapplicable here because statutory fees are not damages that must be specially pled. In re Sparkman, 703 F.2d at 1100 (citing Beneficial Standard Properties, Inc. v. Scharps, 67 Cal.App.3d 227, 232 n. 3, 136 Cal.Rptr. 549 (1977)).
All-Tex argues that Debtor was required to plead for attorneys' fees under Bankruptcy Rules 7008(b) and 7009 so that All-Tex could have " briefed the fact that Debtor cannot enforce the All-Tex Contract because of its own breaches thereof." However, All-Tex made this argument to the bankruptcy court in its Opposition to Debtor's Motion for Order Directing Payment of Attorneys' Fees and the Supplemental Brief of All-Tex, Inc. With Respect to Debtor's Motion for Attorneys' Fees. Moreover, Debtor included in its Motion for Attorneys' Fees a complete breakdown of fees incurred to which All-Tex made specific objections.
We find no error in the bankruptcy court's ruling that the request for attorneys' fees was governed by Local Rule 7054-1(f) and had not been waived by Debtor's non-compliance with Bankruptcy Rules 7008 and 7009.
B. Under California Law, Costs Can Include Attorneys' Fees.
The Cal. Code Civ. Proc. provides a party the right to recover costs of an action or proceeding if it prevails. CAL. CODE CIV. PROC. § 1032 (" Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding."). Recoverable costs may include attorneys' fees if authorized by contract or law:
(a) The following items are allowable as costs under Section 1032:
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(10) Attorney fees, when authorized by any of the following:
(A) Contract.
(B) Statute.
(C) Law.
CAL. CODE CIV. PROC. § 1033.5.
Additionally, Cal. Civ. Code § 1717 provides a basis for a party to recover attorneys' fees incurred in litigation of a contract claim. Sec. Nat'l Guar., Inc. v. Shores LLC (In re Sec. Nat'l Guar.), 2007 WL 2462124, *5 (Bankr. N.D. Cal. 2007). It provides:
(a) In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs.
CAL. CIV. CODE § 1717. Attorneys' fees awarded under § 1717 are specifically allowed as a recoverable cost under Cal. Code Civ. Proc. § § 1032 and 1033.5. CAL. CODE CIV. PROC. § 1033.5(c)(5).
Debtor sought attorneys' fees under the provisions of the All-Tex Contract. The All-Tex Contract reads:
23. Should either party hereto institute any action or proceeding in court or through arbitration to enforce any provision hereof or for damages by reason of any alleged breach of any provision of this Agreement or for any other remedy, the prevailing party shall be entitled to receive from the losing party all of its costs and expenses, including, without limitation, reasonable attorneys' fees and all court and/or arbitration costs, costs of appeal and disbursements actually and reasonably incurred in connection with said proceeding.
Because the Adversary Proceeding involved the All-Tex Contract and the All-Tex Contract authorizes the recovery of attorneys' fees, the Debtor could seek attorneys' fees as recoverable costs under Cal. Civ. Code § 1717 and Cal. Code Civ. Proc. § § 1032 and 1033.5. Redwood Theaters, Inc. v. Davison (In re Davison), 289 B.R. 716, 724 (9th Cir. 2003); Santisas v. Goodin, 17 Cal.4th 599, 612, 71 Cal.Rptr.2d 830, 951 P.2d 399 (1998) (a defendant in whose favor a dismissal has been entered is entitled to recover costs including attorneys' fees).
At oral argument, counsel for Debtor clarified that it sought attorneys' fees under Cal. Civ. Code § 1717 as recoverable costs under Cal. Code Civ. Proc. § 1033.5.
C. Cal. Civ. Code § 1717 Applies as a Basis for Debtor's Recovery of Attorneys' Fees.
All-Tex's primary argument against the award of attorneys' fees is that Debtor breached the All-Tex Contract and, therefore, may not enforce the attorneys' fees provision of the contract against All-Tex. Because of the alleged breach, All-Tex argues, Cal. Civ. Code § 1717 is " irrelevant." All-Tex asserts: " NOTHING in Section 1717 gives the breaching party a right to legal fees from the non-breaching side without honoring its obligations to the non-breaching party." (Emphasis in original).
All-Tex emphatically states as fact that Debtor breached the All-Tex Contract. However, there has not been a judicial determination about whether the All-Tex Contract was breached, and if so, by which party, or with what damages. It was not the subject of the Adversary Proceeding or the Claims Objection. This, however, does not mean that it must be adjudicated prior to invoking either the attorneys' fee provision of the All-Tex Contract or Cal. Civ. Code § 1717.
Even if the Debtor had breached the All-Tex Contract, we have found no cases that hold attorneys' fees are unrecoverable by a breaching but prevailing party under Cal. Civ. Code § 1717. For example, in In re Sparkman, both parties breached a financial forbearance agreement and attorneys' fees were awarded to the debtor defendant. 703 F.2d 1097. In In re Sec. Nat'l Guar., the debtor defaulted on a loan but was still awarded attorneys' fees as the prevailing party. 2007 WL 2462124; see e.g., In re Johnson, 756 F.2d 738 (breaching party to a contract was awarded attorneys' fees under Cal. Civ. Code § 1717; the district court reversed because the bankruptcy matter was not sufficiently an action " on the contract" - not because the prevailing party was in breach.)
In this case, All-Tex's pre-petition claim was directly dependent on the All-Tex Contract, the interpretation of which was a matter of California and bankruptcy law. The question is not who was in breach of the All-Tex Contract, but whether the claims were sufficiently based upon the All-Tex Contract to support an award of attorneys' feesc under Cal. Civ. Code § 1717. See Next Factors, Inc. v. Aureal, Inc. (In re Aureal), 2006 WL 2130903 (N.D. Cal. 2006). An action " seeking a declaration of rights based on an agreement constitutes an action on the contract" for purposes of Cal. Civ. Code § 1717. In re Sec. Nat'l Guar., 2007 WL 2462124 at *6 (citations omitted).
At oral argument, All-Tex confirmed that its claims were based on the All-Tex Contract. But it argues that only it, as the alleged non-breaching party, has a right to recover attorneys' fees under § 1717. However, § 1717 is intended to provide for a mutual remedy when a contract makes the recovery of attorneys' fees available to one party. PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1090-91, 95 Cal.Rptr.2d 198, 997 P.2d 511 (2000); Santisas v. Goodin, 17 Cal.4th at 610.
The All-Tex Contract provides the parties' remedies in the event either party breaches the All-Tex Contract:
19. Remedies
A. In the event that seller shall fail to consummate the transaction contemplated by this Agreement due to a default by seller (other than the failure of seller to (i) acquire the adjoining city property within a time which will allow seller to perform its obligations under this agreement or (ii) record a parcel map or tract map establishing the land as a legal parcel), purchaser as its sole and exclusive remedy, may either (1) terminate this agreement and receive a refund of the deposit and pursue seller for actual damages; provided, however, in no event shall purchaser be entitled to a recovery or claim against seller for actual damages in excess of an amount equal to the amount of one hundred thousand dollars ($100,000) and seller shall not be liable to purchaser for any punitive, speculative or consequential damages or (2) pursue seller for specific performance. In no event shall this section 19.A. have any application to or limit purchasers rights against seller in connection with Section 23 of this Agreement [the provision for attorneys' fees].
Section 19(B) is similar, offering All-Tex a remedy if Debtor failed to acquire adjoining property or to record the Property. Section 19(C) provides Debtor remedies if All-Tex breaches. These remedy sections specifically allow for the party seeking damages after a breach to invoke the attorneys' fee provision in Section 23.
Under the All-Tex Contract, after any breach by Debtor, All-Tex is entitled to its remedies under Section 19. All-Tex sought damages by filing a proof of claim in the bankruptcy case and by asserting it had equitable liens and specific performance rights that attached to any proceeds of the Property (sold during the bankruptcy case) to allow it to be paid ahead of other creditors. All-Tex could have recovered attorneys' fees under the All-Tex Contract and Cal. Civ. Code § 1717 if it had prevailed.
Because Cal. Civ. Code § 1717 provides mutuality, its effect is to allow recovery of attorneys' fees by whichever contracting party prevails, " whether or not he or she is the party specified in the contract or not." Santisas v. Goodin, 17 Cal.4th at 611.
We find no error in the bankruptcy court's application of Cal. Civ. Code § 1717 and Cal. Code Civ. Proc. § § 1032 and 1033.5 in its determination that Debtor could recover attorneys' fees as costs incurred in the litigation of the Adversary Proceeding.
D. Debtor Is the Prevailing Party.
All-Tex argues " the Debtor has not obtained any victory on any contract claim or under the All-Tex Contract" because the " merits" of the contract were not adjudicated. All-Tex conflates: (1) cases where a court analyzes whether attorneys' fees involved in certain aspects of contract litigation are recoverable under Cal. Civ. Code § 1717, particularly when the action combines tort claims with contract causes of action; and, (2) cases where contract litigation was a bankruptcy matter and, while it involved a contract, was resolved by application of bankruptcy law rather than substantive state law (such as dischargeability actions).
We addressed the former instance in Section C above, finding that Cal. Civ. Code § 1717 provided a basis for the Debtor to recover attorneys' fees. In the latter instance, All-Tex is essentially making a pre-Travelers argument that only fees related to state law contract issues and not bankruptcy issues may be recovered. 549 U.S. 443, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007). Prior to Travelers, the Ninth Circuit held that contract litigation resolved by application of bankruptcy law rather than state law was not sufficiently " on a contract" to allow recovery of attorneys' fees under Cal. Civ. Code § 1717. Fobian v. W. Farm Credit Bank (In re Fobian), 951 F.2d 1149, 1153 (9th Cir. 1991); In re Johnson, 756 F.2d 738, 740-41 (9th Cir. 1985). This dichotomy has been eliminated by Travelers.
Travelers overruled the Fobian rule that prohibited awards of attorneys' fees when only issues of federal bankruptcy law were litigated in a case involving a contract. It makes " clear that contract based fees incurred in the course of litigating issues of federal bankruptcy law may be awarded pursuant to state law." Hoopai v. Countrywide Home Loans, Inc. (In re Hoopai), 369 B.R. 506, 511 (9th Cir. 2007).
Because we have found the bankruptcy court did not err in applying Cal. Civ. Code § 1717, Cal. Code Civ. Proc. § § 1032 and 1033.5, the only remaining determination is whether Debtor was the prevailing party under California law. The " party prevailing on the contract" is defined as the " party who recovered a greater relief in the action on the contract." Cal. Civ. Code § 1717(b); In re Sec. Nat'l Guar., 2007 WL 2462124 at *5. " [W]hen the decision on a litigated contract claim is purely good news for one party and bad news for the other--the Courts of Appeal have recognized that a trial court has no discretion to deny attorney fees to the successful litigant." Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 796, 806, 70 Cal.Rptr.3d 434 (2008) (citations omitted) (emphasis added).
The bankruptcy court dismissed all claims asserted in All-Tex's Amended Complaint and granted partial summary judgment for the Debtor on the Claim Objection. Debtor successfully defended against All-Tex's claims that it held an enforceable equitable lien or specific performance rights that would allow it's damages claim to be paid as a secured claim, superior to certain other creditors. A defendant in whose favor a dismissal is entered is a prevailing party. CAL. CODE CIV. PROC. § 1032(a)(4); Wakefield v. Bohlin, 145 Cal.App.4th 963, 972-73, 52 Cal.Rptr.3d 400 (2007). Therefore, the bankruptcy court correctly decided that Debtor was the prevailing party entitled to attorneys' fees.
VI. CONCLUSION
The bankruptcy court considered all arguments and relevant evidence. The bankruptcy court correctly applied relevant procedural rules and California law in deciding the Debtor was entitled to an award of attorneys' fees as costs because it prevailed in the Adversary Proceeding. It made no error in its application of law. The order granting attorneys' fees is AFFIRMED.