Fee Recovery Not Allowed Under Section 5235(c), With DCA Also Providing Guidance On Definition Of “Frivolous” Under Same Provision.
The Fourth District, Division 3 faced a first impression statutory interpretation of Civil Code section 5235(c), which provides that “[a] prevailing association may recover any costs if the court finds the action to be frivolous, unreasonable, or without foundation,” in Retzloff v. Moulton Parkway Residents’ Association, No. One, Case No. G053164 (4th Dist., Div. 3 Aug. 23, 2017) (published).
What happened in this one was that homeowners, former HOA directors, basically lost attempts to force HOA to make available corporate records, because homeowners did not engage in mandatory ADR efforts. Eventually, the trial judge awarded HOA $13,750 in attorney’s fees and $1,688.60 in costs based on the theory the homeowners’ claims were frivolous in nature. The appellate court partially reversed, in a 3-0 opinion authored by Justice Moore. In extensive reasoning, the 4/3 DCA panel concluded that section 5235(c) only allows for routine costs to be awarded, reversing the fee recovery. As far as the challenge by losing plaintiffs that their case was not frivolous, our local appellate court concluded that this should be guided by whether “any reasonable attorney would agree it is completely without merit in the sense that it lacks legal grounds, lacks an evidentiary showing, or involves an unreasonable delay,” a standard not met by homeowners below. Cost award affirmed; fees award reversed.