CC&R Attorney Fee Clause Did Not Supersede Mandatory Davis-Stirling Fee Shifting Provision, And Apportionment Was Unnecessary Where Each Of Plaintiff’s Causes Of Action Involved Defendants’ Alleged Violations Of The CC&Rs And Plaintiff’s Rights Thereunder.
In Westwood Montserrat v. AGK Sierra de Montserrat, Case Nos. C088859/C090081 (3d Dist., January 31, 2022) (unpublished), plaintiff – owner and developer of a common interest residential development – lost title to much of its property when it was transferred to defendant following foreclosure on a deed of trust and a trustee’s sale. Plaintiff later sued defendant and its general partner seeking a determination of and to enforce its right – as declared in the CC&Rs recorded prior to foreclosure – to repurchase lots that remained vacant three years after transfer of title. However, the trial court concluded that the foreclosure had extinguished plaintiff’s repurchase right. The trial court then found both defendant and its general partner to be prevailing parties – awarding $740,471.75 in attorney fees to defendant and $156,878.10 to its general partner under the Davis-Stirling Act (Civ. Code, § 5975(c)) and a CC&R attorney fee clause.
Plaintiff appealed – arguing that the trial court erred in its application of section 5975 and the CC&R fee clause because the fee clause was discretionary and prevailed over section 5975. Additionally, plaintiff argued that because only one out of eight of its causes of action involved enforcement of the CC&Rs, the trial court should have made a determination of the extent of section 5975’s applicability to each cause of action and apportioned accordingly rather than applying section 5975 to the entire action.
The Third District affirmed on the basis that the fee awards were proper under section 5975, and did not have to reach plaintiff’s argument on the CC&R fee clause. Section 5975 is a mandatory remedy independent of any contractual fee clause, (Hsu v. Abbara, 9 Cal.4th 863, 872 (1995); and Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1152 (2011)) and nothing in the fee clause indicated that the parties intended it to supersede section 5975. Further, the trial court is awarded no discretion in granting or denying fees under section 5975 except as to the reasonableness of the fees. (Chapala Management Corp. v. Stanton, 186 Cal.App.4th 1532, 1546 (2010) [discussed in our August 01, 2010 post].) As to plaintiff’s apportionment argument, the panel concluded the trial court had not abused its discretion as the gist of each of plaintiff’s causes of action was that defendants had violated the CC&Rs as well as plaintiff’s rights thereunder.
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