Reasonableness Of Fees: Winning HOA Unit Owners Obtain $238,426 In Attorney’s Fees, But Fail At Obtaining $62,056 More

Court of Appeal Likes Reasoned Deductions Made by Trial Court.

     This next case might be put in the category “quit while you are ahead” as far as challenging the reasonableness of an attorney’s fees award, especially when you are asking for an increase to an already substantial award.

     Defendant unit owners in an owners’ association dispute won $238,426 in attorney’s fees under Civil Code section 1354(c), the Davis-Stirling Act fee-shifting provision allowing fees to be recovered by prevailing parties in an action to enforce governing documents (such as CC&Rs or LLC-analog provisions). However, they sought more, appealing because they were not awarded an additional $62,056. Losing plaintiff owners’ association also appealed, but later dismissed its appeal. That left the unit owners’ appeal.

     They lost in Showplace Square Loft Owners Assn. v. Mead, Case No. A122575 (1^st Dist., Div. 2 Jan. 19, 2010) (unpublished). After all, a party seeking attorney’s fees is not entitled to compensation according to that party’s notion of what should be paid.

     For anyone new to this area, you must read PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084 (2000), which discusses reasonableness of attorney’s fees in a Civil Code section 1717 context, but which has much broader application to many (if not most) fee-shifting statutory situations. [PLCM is one of our Leading Cases.]

     Defendants complained that they should have been awarded $18,476 in special assessments which were paid to fund the opponent HOA’s lawyers. The problem with this request was that defendants cited no authority demonstrating a basis to obtain this reimbursement under a fee rubric.

     Defendants then argued that they should have been paid an additional $23,821 for the work of their predecessor counsel. The flaw here was that prior counsel had agreed to a compromise by which the attorneys took only $4,000 for their work, a compromise not revealed to the trial court until the judge raised it at the fee hearing. Because this compromise was not disclosed by claimants in their opening papers, the lower court felt that the defendants were not playing “fair with the court,” a notion endorsed by the appellate court in affirming the failure to award these further fees.

     The trial court also properly disallowed $10,544 to successor counsel for “coming up to speed.” These duplicative fees can be discounted in the lower court’s discretion.

     Lastly, defendants challenged the lower court’s reduction of their counsel’s paralegal’s hourly rate from $170/hour to $100/hour. No abuse of discretion occurred, because HOA put in evidence that its paralegal only charged $80/hour and because defendants’ prior counsel’s paralegal only billed out at $100/hour (the latter being the eventual rate awarded by the lower court).