Estoppel, Section 1717: After Reversal of Prior Judgment Finding No Easement, Defendant HOA Was Properly Awarded $731,682.08 In Section 1717 Fees And $111,540.01 In Costs

Judicial Estoppel Did Apply Against Plaintiffs Where They Litigated The Position That The Easement Maintenance Agreements Had Fee Clauses, And Were Awarded Fees Before Prior Reversal.

            Ranch at the Falls LLC v. Indian Springs Homeowners Assn., Inc., Case No. B311278 (2d Dist., Div. 8 Feb. 10, 2022) (unpublished) demonstrates how a change of fortune through a reversed judgment and application of judicial estoppel can certainly alter the results in a case.

            In this one, plaintiffs had won a judgment in an easement dispute and were awarded $199,459 in attorney’s fees based on fee clauses in easement maintenance agreements.  Plaintiffs clearly litigated and took the position that fee exposure was present under the fee clauses and Civil Code section 1717.  Then, a huge change in fortune occurred when the appellate court in an earlier opinion reversed the judgment after finding plaintiffs had no enforceable easement over certain private streets in Indian Springs.  That meant plaintiffs’ fee award went POOF!  The lower court then applied judicial estoppel against plaintiffs, awarding defendant $731,682.08 in attorney’s fees and $111,540.01 in costs.  Plaintiffs, clearly dismayed, appealed.

            The 2/8 DCA, in an opinion authored by Acting Presiding Justice Grimes, affirmed.  The judicial estoppel doctrine was properly applied against plaintiffs based on their prior fee position when their fortunes were much different.  Plaintiffs then argued that the fee award would result in their financial ruin, a discretionary factor which may be considered even though there is a split in appellate thinking on the issue.  (Compare Garcia v. Santana, 174 Cal.App.4^th 464, 477 (2009) [may be considered discretionarily] with Walker v. Ticor Title Co. of Cal., 204 Cal.App.4^th 363, 372 (2012) [inappropriate to consider losing party’s financial status as an equitable factor in assessing contractual attorney’s fees].)  However, under Garcia, this is still a discretionary call by the lower court, which found that the financial evidence did not present a clear enough picture that the award would be ruinous.  Finally, plaintiffs complained about excessive hours, but the trial judge had reduced defendant’s fee request by 25% in addressing this concern previously.