Mobile Homeowners Awarded $350,000 Attorney's Fees Under The San Rafael Mobilehome Rent Stabilization Ordinance

Court of Appeal Also Determines that Settlement Ambiguity Allows Homeowners An Opportunity to Seek More Fees for Sustaining Result on Appeal.

            A mobilehome park owner increased rent to homeowners in the mobilehome park to recoup the costs of capital expenditures.  Following an arbitration, settlement, and lawsuit alleging noncompliance with the arbitration award, an ultimate settlement was reached by which both sides agreed to a $3.72 monthly increase for 20 years (as opposed to a park owner assessment of $18.37 or $7.50 per month, as originally promulgated at different points in time).  As part of the settlement, each side could apply to the trial court for an award of attorney's fees (which applications could be contested), even though homeowners agreed that their counsel "shall not seek to recover more than $375,000 in attorneys' fees and costs, and any such fee application or recovery by Plaintiffs' Counsel shall be limited to those fees that Plaintiffs' Counsel incurred in connection with the Action up through the Court's December 18, 2001 Order, as well as any subsequent appeals from that December 18, 2001 Order."  Park owner was denied a fees award, while the trial court awarded $346,749 to homeowners (pursuant to the settlement cap, even though their counsel expended $1.3 million to gain the lower monthly increase). 

            Park owner appealed, mounting numerous challenges.  Park owner lost.

            In Contempo Marin Homeowners Assn. v. Manufactured Home Communities, Case No. A117394 (1^st Dist., Div. 5 Sept. 19, 2008) (unpublished), the Court of Appeal affirmed the homeowners' fee award on these grounds:

·       There was fee entitlement to homeowners under San Rafael Mobilehome Rent Stabilization Ordinance section 20.16.040, which provides that a court shall award reasonable attorney's fees and costs to the prevailing party in its discretion.  Even though "prevailing party" was not defined, the pragmatic inquiry of who achieved their objectives should be utilized (borrowing from private attorney general statute case law).  See Heather Farms Homeowners Assn. v. Robinson, 21 Cal.App.4^th 1568, 1574 (1994); Winick Corp. v. Safeco Ins. Co., 187 Cal.App.3d 1502, 1507-1508 (1986).  Although the Ordinance was not mentioned as a basis for fee entitlement until later on in the fee proceeding paperwork, it was raised and argued.  Because the enforcement of a prior settlement agreement was akin to enforcing the maximum lawful rent chargeable under the Ordinance, homeowners were successful in their quest to keep the monthly charges low in nature.  Cf.  Berti v. Santa Barbara Beach Properties, 145 Cal.App.4^th 70, 72 (2006); Gilbert v. Monsanto Co., 216 F.3d 695, 698, 702-703 (8^th Cir. 2000) [enforcement of settlements vindicated important statutory directives so as to justify a fee award].

·       Plaintiff's partial success was a factor to be considered in determining the amount of a fee award, not the party's entitlement to the fees.  See Lyons v. Chinese Hospital Assn., 136 Cal.App.4^th 1331, 1345-1346 (2006).

·       Even though a later federal decision had declared the Ordinance invalid, park owner had waived it by not raising the issue until oral argument of the appeal.  Beyond that, homeowners did prevail in the earlier state court action under the Ordinance; that park owner prevailed in the federal action later did not dilute homeowners' entitlement to fees in the state action.  (However, the Court of Appeal did cite a Washington case for the proposition that a defendant who successfully defends an action by demonstrating unconstitutionality may recover fees as the prevailing party under a fee-shifting statute.  See Mt. Hood Beverage Co. v. Constellation Brands, Inc., 149 Wash.2d 98, 120-122 (2003).)

Even better for homeowners, the appellate panel found that homeowners could recover fees for winning on appeal.  Park owner countered in the negative, arguing that the prior settlement agreement capped recovery at $375,000 and was limited fee recovery only to the initial fee application rather than fees on appeal.  Although ambiguities are usually construed against the drafter, this rule did not apply because the parties had a "joint drafting/no ambiguities charged to either side" clause that was honored by the Court.  (Slip Opn., at p. 39.)  Because parol evidence is admissible to resolve contractual ambiguities even with respect to an integrated contract, Casa Herrera, Inc. v. Beydoun, 32 Cal.4^th 336, 343 (2004), the appellate panel found that the "cap" language was susceptible of conflicting interpretations and should be interpreted in favor of the normal rule that a prevailing fee proponent also obtains appellate costs for winning upon review.  That meant the settlement agreement did not bar homeowners from requesting more fees for successfully litigating the appeal of the fee award.