Homeowner Associations: Trial Judge Did Not Error In Reducing Homeowner Fees To Prevailing Defendant By Over $100,000

Main Problem Was Failure To Properly Introduce Another Counsel’s Work In Admissible Fashion—Declaration By Later Counsel Did Not Do It.

            In Eith v. Ketelhut, Case No. B272028 (2d Dist., Div. 6 Dec. 17, 2018) (partially published; fees discussion unpublished), many homeowners got involved in a dispute which hinged on whether a HOA Board of Directors properly made a decision on the proper characterization of a defendant homeowners’ operation of a vineyard for purposes of violating CC&Rs and for purposes of an award of attorney’s fees under the Davis-Stirling Act (Civ. Code, § 5975(c)).   The defense won as prevailing parties based on judicial deference to the Board’s decision, which was affirmed on appeal by a majority decision over a dissent by Justice Yegan (with Justice Perren filing a concurring opinion, although joining in the majority decision authored by Presiding Justice Gilbert). The trial judge did award prevailing defendants $250,506.50 in fees, although the fee request of $351,432.55 was cut down over $100,000.

            Both sides appealed, but there was no change in result. Defendants did prevail on the key claims, with plaintiffs forfeiting the argument that payment was stayed based on a bankruptcy automatic stay because the issue was never raised below. With respect to the defense challenge that the $100,000-plus reduction in awards was error, the appellate court found that the biggest item was not properly introduced through declaration testimony, with subsequent counsel not being able to authenticate or get around a hearsay objection as far as the work provided by prior counsel. Although the fact payment was made by the client on the invoice was proper even with hearsay evidence, the nature of the work performed by prior counsel could not be let in without a proper foundation through admissible proof.

            BLOG OBSERVATION—This result, although occurring through fee declaration testimony rather than live trial proof, is consistent with the conclusion of the 4/3 DCA in Copenbarger v. Morris Cerullo World Evangelism, Inc., 29 Cal.App.5^th 1 (2018) [No. 9 of our Top 25 2018 Decisions], where a client was held to have not competently testified as to the work or reasonableness of fees by client’s counsel.