May Have Some Repercussions for Construction Defect Litigation Costs and Homeowner/HOA Fee Recovery.
On August 16, 2012, our state supreme court issued its opinion in Pinnacle Museum Tower Assn. v. Pinnacle Market Development, Case No. S186149 (Cal. Sup. Ct. Aug.16, 2012). The high court found that CC&Rs mandating arbitration between developers and homeowner associations (HOAs) were enforceable under the Davis-Stirling Act and were not unconscionable in nature.
There are at least two possible implications arising from Pinnacle that have importance in the attorney’s fees area.
First, it reaffirmed that expert witness fees in construction defect cases are not recoverable as routine post-trial costs (see Code Civ. Proc., §§ 1033.5(b)(1),1033.5(a)(8) [only expert witness fees of court-ordered expert are recoverable as costs]), but can be recoverable as Civil Code section 3333 damages. (Stearman v. Centex Homes, 78 Cal.App.4th 611, 624-625 (2000).) Keep in mind that this means such expenses must be pled and proven during the course of the case, including proof at the time of trial absent a stipulation to the contrary accepted by the court.
Second, reading all of the viewpoints in Pinnacle (majority, concurring, and dissenting) seems to suggest that CC&Rs are not strictly contractual in nature. If so, this may change the result in some opinions where attorney’s fees were awarded under Civil Code section 1717. However, the “end game” result may not matter, given that fee recovery is likely in most situations under Civil Code section 1354 [fees allowable for CC&R enforcement activities].
For a more in-depth discussion of Pinnacle, see co-contributor Marc’s August 16, 2012 post on his California Mediation andArbitration website.