Split In Opinion On The Fee Entitlement Conclusion, With Dissenting Justice Concluding The Fee Award Was Not Equitable And Resulted In A Windfall.
McCuien v. Davis, Case No. B276979 (2d Dist., Div. 5 Oct. 5, 2018) (unpublished) dealt with an appeal of a lower court’s award of $105,665 in fees under a good faith improver fee-shifting provision (Code of Civil Procedure section 871.5), which allows the court to adjustment rights, equities, and interests of the good faith improver, the owner of the land, and other interested parties “as is consistent with substantial justice to the parties under the circumstances of the particular case,” with the court allowed to take into consideration the expenses of the land owner such as reasonable attorney’s fees.
What happened factually and procedurally below was that plaintiff filed a quiet title action against defendant Davis who was deeded a fee simple absolute interest by McCuien, who only held a life estate interest. Plaintiff sought to quiet title to the house as a trustee of the trust and cancel the grand deed, while defendant Davis cross-complained against plaintiff and McCuien to quiet title, or alternatively, for fraud and negligent misrepresentation. After a bench trial, the lower court quieted title in the house to plaintiff trustee, with McCuien holding a life estate. The lower court also rejected defendant Davis’ cross-claims, with defendant Davis ordered to pay McCuien $104,000 in restitution for the deprivation of his life interest. Also, defendant Davis was ordered to pay $105,665 in attorney’s fees to plaintiff trustee and McCuien pursuant to CCP § 871.5 as well as a lease agreement between defendant Davis and McCuien. In denying the cross-claims, the trial court did interpret that defendant was claiming to be a good faith improver, but it found that the equities did not favor recovery because defendant failed to provide sufficient evidence to establish the value of the improvements (although defendant did get restitution in the amount of $34,105.30 for property tax payments). Defendant Davis appealed.
Everything was affirmed, but there was a 2-1 appellate split on the fees award.
The majority found that defendant was seeking good faith improver recovery, such that section 871.5 was triggered. Defendant, as good faith improver, was denied compensation, but the majority found that nothing in the section “prohibit[s] a trial court from awarding fees to a landowner when it declines to award relief to an improver,” based upon the general adjustment of equities language in the statute. “Substantial justice to the parties under the circumstances of the particular case” is the primary statutory objective, which allows an award of fees even if the trial court declines to provide relief to a purported good faith improver. The majority also rejected the idea that fees were unavailable even where the principal motive in filing an action was to determine ownership rights.
In dissent to the fee award, Acting Presiding Justice Baker found that the fee award was “unjustified on this record.” He found the fees award was not consistent with “substantial justice” principles because plaintiff trustee and McCuien would have litigated the quiet title regardless of the good faith improver claims such that awarding fees for all of the litigation efforts was unfair. Beyond that, the other parties were given back title and occupancy of the house, in better condition based on the improvements made by Davis (even if the valuation was not adequately shown). Put another way, the dissent found that the fees award was an unjustified windfall to plaintiff trustee and McCuien based on the overall circumstances.