Nothing in Davis-Stirling Act or CC&Rs Indicated It Applied To Remote Third Parties.
In Multani v. APB Properties, Case Nos. B260610/B265172 (2d Dist., Div. 7 June 13, 2016) (unpublished), plaintiff HOA were embroiled in a protracted battle against the HOA and successor property owners of the condominiums regarding the propriety of an assessment foreclosure. During the pendency of the litigation against the HOA, the property was transferred to another entity and then eventually APB Properties. In a prior litigation in the case and a prior appeal, APB’s predecessor was absolved from liability, which led to APB being dismissed from the litigation based on a res judicata ruling. APB then moved for and recovered $70,000 in attorney’s fees under the Davis-Stirling Act fee-shifting provision (Civil Code section 5975(c)) and under a fees clause in the CC&Rs.
Although the res judicata merits ruling held up on appeal, the 2/7 DCA reversed the fee award against former homeowners. The reason was that APB was included only as an indispensable party for purposes of a quiet title judgment; APB was not sued under any theory that it violated CC&Rs. The appellate court summarized it this way, both under section 5975(c) and the CC&Rs (finding the CC&R provision to be derivative of the statutory fee claim): “There is no language in the statute suggesting subdivision (c) was intended to extend to homeowner claims against third parties that have some relation to, or otherwise arise from, an association’s violation of the governing documents. Had the Legislature intended section 5975 to apply in such a broad manner, it could have included language stating as much. Instead, the Legislature chose ‘narrow statutory language’ [not encompassing the actual parties enforcing the CC&Rs].”
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