CALIFORNIA ATTORNEY'S FEES

Fee Clause Interpretation, Homeowner Associations, Reasonableness Of Fees: $132,070.40 Fee Award To Defendant Homeowners Was Affirmed On Appeal As Against Plaintiff Homeowners In Tree Obstruction Dispute

Plaintiffs Pled CC&Rs As A Basis For Nuisance Claim, So There Was Fee Entitlement Under Civil Code Section 1717, CCP Section 1021, And Civil Code Section 5975, With The Fee Award Being Reasonable After A Minor Haircut By The Trial Judge.

            Plaintiff homeowners sued neighboring homeowners in a tree obstruction action based on nuisance and defendants’ alleged violation of certain specified CC&Rs.  After everyone attended an unsuccessful mediation, the matter proceeded to trial and was decided in defendants’ favor.  The trial judge later awarded defendants, as against plaintiffs, attorney’s fees of $132,070.40 (reduced from the $143,381.76 “ask”). 

            Plaintiffs’ appeal in Mascaro v. Brown, Case No. B319419 (2d Dist., Div. 6 Jan. 19, 2023) (unpublished) was unsuccessful.  Although challenging fee entitlement, plaintiffs’ nuisance action was also based on CC&Rs, such that fee entitlement existed under Civil Code section 1717 (based on the CC&Rs fees provision), CCP section 1021 (same; broad CC&Rs fee provision), and Civil Code section 5975 (Davis-Stirling Act fee-shifting provision applicable where governing HOA documents are being enforced).  The fees for mediation work were allowable under section 5975(c) regardless of the CC&Rs’ specific language.  With respect to the amount of the fees awarded, the trial judge did not abuse his discretion given that there was competent fee substantiation in the form of invoices and the lower court did reduce some duplicative, unnecessary work.  Finally, the appellate court agreed that the defendants were also entitled to reasonable appellate fees for their win in the appeal.

Homeowner Associations: $456,330 Fee Award Against Homeowner, Split Between Two HOA Attorneys, Was Affirmed On Appeal

And, At That, It Was 30% Less Than the HOA Request For Award Of Fees!

            If you visit our “Homeowner Associations” category, you can see a vast array of awards both in favor of homeowners and in favor of homeowner associations (HOAs).  We will just say this, the trial court decisions on who gets fees are affirmed on appeal in a majority of situations, whether in favor of homeowners or in favor of HOAs (even if reduced somewhat more).  So, that is a counseling point.  Not to mention that HOAs and HOA directors often bring anti-SLAPP motions, which carry their own fee-shifting allocations, most often in favor of HOAs and HOA Directors.

            An illustration of how a losing homeowner had to bear fees after losing a CC&R violation issue is shown in Loeffler v. Trabuco Highlands Community Association, Case No. G059753 (4^th Dist., Div. 3 June 7, 2022) (unpublished).  What happened here is that homeowner lost a CC&R enforcement action (including an HOA election violation theory not allowing for fees), but the problem was that the gravamen was to avoid property assessments—a classic CC&R enforcement case such that this technical challenge based on an election theory did not work.  Just to put things in context, the basic dispute was over a $17,000 assessment dispute, but homeowner lost—ouch!  Given that fee entitlement was not really at issue, HOA moved for $937,637.50 in fees for the efforts of two sets of attorneys representing the HOA, with one firm requesting an hourly rate of $240 and the other attorney requesting $400 (which was reduced by the trial court to $240 per hour, in line with the other firm).  The lower court could not stomach close to a seven-figure request by the HOA, after observing that the HOA would spare no expense on the case so “there is enough blame to go around.”  So, it reduced the total HOA fee request by 30% to $456,330 (after reducing the $400 hourly rate work larger amount to $240 per hour), to be split between the two sets of attorneys.

            That award was affirmed by a 4/3 panel, in a decision authored by Presiding Justice O’Leary.  Fee entitlement was not really at issue under the Davis-Stirling Act or under the CC&Rs fees provision.  Even after the trial court pared the $937,637.50 request to $651,900 after a reduction in the hourly rate factor, the 30% reduction to $456,330 was no abuse of discretion.  We give the details to show you how trial judges approach HOA fee requests, with the opinion demonstrating how they can be costly against the losing party even after a lower court exercises its discretion to reduce a large HOA requested fee request.   Beware!

Homeowner Associations, Private Attorney General: Lower Court Got It Right In Denying Fees To Homeowner And HOA Which Did Not Meet Their Main Litigation Objectives, And Homeowner Was Not Successful Party Or Provided A Significant Benefit Under CCP § 102

Ending Appellate Court Comment Urges Homeowners and HOAs To Work It Out, Rather Than Run To Court, Saying “Amen” To Trial Judge’s Closing Observation.

            In Artus v. Gramercy Tower Condominium Assn., Case No. A161265 (1^st Dist., Div. 2 Mar. 30, 2022) (published), a homeowner sued an HOA over election voting rules and sale/leasing guidelines.  Homeowner lost one claim on demurrer, a second claim on an anti-SLAPP motion, and dismissed three others as moot based on unilateral changes to rules/guidelines by the HOA.  Then, both sides moved for prevailing party fees under the Davis-Stirling fee shifting provision, with homeowner also claiming fees under the private attorney general statute; both sides asked for over $300,000 in fees.  They submitted 1,867 pages of fee proceeding paperwork, and then charts and 217 more pages when the trial judge asked for more information.  The trial judge denied both fee motions in a detailed ruling, prompting an appeal by both sides (who had been before the appellate court before in the same dispute).

            The 1/2 DCA affirmed.  It initially decided that the abuse of discretion standard applied, even as to entitlement, because there was no clear “winner take all” prevailing party.   With respect to homeowner’s Davis-Stirling fee request, homeowner only obtained one out of four of her litigation objectives, obtaining some changes by the HOA to some rules/guidelines (many of which were technical in nature).  On the HOA side, HOA did not achieve its objective to fight Dr. Artus forever as far telling it how to govern, even though it did unilaterally make changes—to make changes after fighting so hard was a difficult pill to swallow as far as showing it pragmatically prevailed.  Finally, on homeowner’s 1021.5 request, she was not “successful” and the changes made by HOA did not benefit a wide number of other HOA members. 

            However, the appellate court had to quote and endorse the trial judge’s ending observation in this closing part of its opinion:  “‘I’m aware that there has been a long history of disputes between Dr. Artus and this association, I’m trying to send a message here. And that message is, don’t run to court. Run to try to work things out. Both sides.” To that we say ‘Amen.’”

Homeowner Associations, Prevailing Party: Trial Court’s Call That HOA Was Prevailing Party, Although Homeowners Had Partial Success, Was No Abuse Of Discretion

$157,146.44 Was Fee Assessment Against Homeowners Arising Out Of Landscape Dispute.

            In a somewhat complimentary unpublished decision to Harris v. Rojas (a Second District decision we posted on recently), the Third District in Winchester Community Assn. v. Perrotta, Case No. C085295 (3d Dist. July 20, 2021) (unpublished) had to review a discretionary “prevailing party” decision under the Davis-Stirling Act fee shifting statute by which the HOA was awarded $157,146.44 in attorney’s fees against homeowners in a landscaping submission dispute.  (Harris dealt with a denial of fees on a discretionary basis.)  Even the trial and appellate court acknowledged that homeowners gained some partial successes, but they were ultimately unsuccessful in invalidating a prior settlement agreement between the parties or in excusing themselves from a duty of performance as far as resolving the dispute.  The “prevailing party” determination was a discretionary one, and the lower court did not exceed the bounds of reason in coming to that conclusion as supported by some earlier caselaw.  (See, e.g., Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker, 2 Cal.App.5^th 252, 256, 261 (2016) [reviewed in our August 13, 2016 post]; Almanor Lakeside Villas Owners Assn. v. Carson, 246 Cal.App.4^th 761, 775-776 (2016) [reviewed in our April 21, 2016 post].)

Homeowner Associations: Champir Decision, Unpublished Earlier, Now Certified For Publication

Homeowners Did Achieve Their Pragmatic Objective, So Davis-Stirling Fees Were Justified.

         In Champir v. Fairbanks Ranch Assn., Case No. D077384 (4^th Dist., Div. 1 June 22, 2021) (unpublished), which we reviewed when it was unpublished in our June 29, 2021 post, homeowners received a substantial fee award for prevailing against HOA under a Davis-Stirling Act fee shifting provision.  We can now report that this case was certified for publication on July 15, 2021.

Homeowner Associations, Mediation: $318,426 Fee Award To HOA Prevailing On Encroachment Issue Was No Abuse Of Discretion

Parties’ Inability To Mediate Was A Discretionary Factor To Weigh In The Fee Calculus.

            HOA, in Country Glen Oak Park Homeowners Assn. v. Garrett, Case No. B303220 (2d Dist., Div. 6 July 6, 2021) (unpublished), won a case to require removal of a pool equipment encroachment by homeowners as well as $820 in compensatory damages.  The trial court then awarded HOA $318,426 out of a requested $323,579 in attorney’s fees under the Davis-Stirling Act fee shifting provision (Civil Code section 5975(c)).  That award was affirmed on appeal.  HOA’s failure to mediate was only a discretionary factor to weigh in a fee assessment, Civil Code section 5960, with the record showing both sides could not come to terms on how to approach a mediation.  With respect to the award itself, HOA did prevail on the overriding encroachment issue so to enforce CC&Rs, and the record showed the lower court did look closely at the amount being requested as far as fashioning an award.  This case goes to show you how HOA disputes can be costly and earth-shattering with regard to fee award allocations.

BLOG COMMENT—It is with sadness that we announce that Hon. Edward J. Wallin (Ret.) recently passed away in late May of this year.  He was a long-time former sitting justice of the 4/3 DCA and a JAMS neutral, who co-contributor Mike appeared in front of, from time to time, during his tenures as an appellate justice and neutral.  He also is the author of our Mission Statement quote--"All too often attorney fees become the tail that wags the dog in litigation,"  Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993), which has been quoted often by both California and out-of-state decisions. 

Homeowners Association, Prevailing Party: No Abuse Of Discretion In Trial Court’s Determination That Plaintiffs Were Prevailing Party, Resulting In Fees Award Of $112,340, After Plaintiffs Dismissed Action.

Plaintiffs Dismissed Their Action Only After Achieving Their Main Litigation Objective.

            In Champir v. Fairbanks Ranch Assn., Case No. D077384 (4^th Dist., Div. 1 June 22, 2021) (unpublished), plaintiffs sued homeowners’ association for breach of the CCR’s stemming from association’s decision to install traffic lights at a location not approved by a majority of its voting members.  Plaintiffs also asserted causes of action for trespass, nuisance, declaratory relief and injunctive relief.  Following the trial court’s issuance of a preliminary injunction enjoining the association from construction of the traffic signal, association obtained written consent from a majority of its members to proceed, and the trial court granted association’s request to dissolve the preliminary injunction due to a material change in the facts.  Afterward, plaintiffs dismissed their remaining causes of action, and plaintiffs and association filed respective fee motions, each claiming to be the prevailing party under § 5975(c) of the Davis-Stirling Act (Civil Code §§ 4000-6150).  The trial court determined plaintiffs were the prevailing party and awarded them $112,340 in attorney fees. 

            Association appealed – asserting the trial court should have found it to be the prevailing party.  The 4/1 DCA found no abuse of discretion and affirmed – concluding substantial evidence supported the trial court’s determination that plaintiffs prevailed on a practical level.

            The Davis-Stirling Act mandates the award of reasonable attorney fees and costs to the prevailing party in an action to enforce the governing documents of a common interest agreement, but does not define prevailing party.  However, it is well established that “[t]he analysis of who is a prevailing party under the fee-shifting provisions of the Act focuses on who prevailed ‘on a practical level’ by achieving its main litigation objectives.”  (Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker, 2 Cal.App.5th 252, 260 (2016), citing Heather Farms Homeowners Assn. v. Robinson, 21 Cal.App.4th 1568, 1574 (1994); Villa De Las Palmas Homeowners Assn. v. Terifaj, 33 Cal.4th 73, 94 (2004).)  In this case, plaintiff’s main litigation objective was to compel the association to comply with the CC&Rs and obtain majority approval from its members before installing the traffic light – and that is exactly what the association did following issuance of the preliminary injunction.  The fact that plaintiffs ultimately dismissed their action, only after achieving their litigation objective, did not deprive them of prevailing party status.

Homeowner Associations: $492,592 Fee Award To HOA And Neighboring Homeowners, Combined, Affirmed On Appeal After Homeowners Lost View Protection Dispute

HOA View Disputes Can Be Costly.

            Under this category, we have indicated that fee awards can be costly for homeowners and homeowner associations/directors/property managers/neighboring homeowners caught in the middle of “view protection” disputes.  The next case is yet another example of that.

            In Davis v. Irvine Terrace Community Assn., Case Nos. G057682/G058266 (4^th Dist., Div. 3 Jan. 5, 2021) (unpublished), one set of homeowners lost a “view protection” case against the HOA and neighboring homeowners.  The trial judge awarded $159,363 to HOA and $333,229 to the neighboring homeowners as prevailing parties in the dispute.

            The appeal by the plaintiff homeowners did not change things.  There was fee entitlement based on the CC&R nature of the dispute, notwithstanding whether a true common interest subdivision was involved.   (Tract 19051 Homeowner Assn. v. Kemp, 60 Cal.4^th 1135, 1143 (2015).)  With respect to the amount of the fee award, a one paragraph argument with string citations in opposition, with no real contest, did not justify why the result should be disturbed.  Ouch as to losing parties!   Justice Moore penned the 3-0 panel decision.

Homeowner Associations, POOF!: $109,760 Fees Award Went Away Based Upon Merits Reversal

$154,744 In Fees Was Requested.

            One Ford Road Homeowners Assn. v. Johnson, Case No. G058269 (4^th Dist., Div. 3 Dec. 17, 2020) (unpublished), is just a reminder about how expensive HOA/homeowners disputes can be.  Here, HOA won a CC&R dispute which was reversed on appeal as a matter of law.  That resulted in an attorney's fees award to the HOA of $109,760 (out of a requested $154,744) going POOF!  Winning homeowners may get appellate fees later unless a settlement is reached.  But it does show how expensive these cases can be, as Justice Fybel—the author of a 3-0 opinion—so found.

Homeowner Associations, Special Fee Shifting Statutes: Trial Court’s Denial Of Civil Code Section 5975(c) Fees To Prevailing HOA Was Error

The Davis-Stirling Act Fee-Shifting Provision, Section 5975(c), Mandates The Award Of Fees To The Prevailing Party With The Trial Court's Only Discretion Being To Determine The Reasonable Amount Of Fees.

            Hope Ranch Park Homes Assoc. v. Rubin, Case No. B299932 (2d Dist., Div. 6 December 14, 2020) (unpublished) involved a $30,600 penalty assessed against a homeowner for failure to complete a home remodeling project by the deadline extended by the HOA and pursuant to the HOA's CC&Rs.  The trial court determined that the penalties were properly imposed by the HOA and that homeowner owed HOA $26,600 after having paid $4,000 of the penalty by the time of trial.  Additionally, the trial court awarded HOA $1,358.92 in costs, but denied HOA’s motion for attorney fees under Civil Code § 5975(c) – the Davis-Stirling Act fee-shifting provision.

            The 2/6 DCA reversed – finding the trial court erred in denying the HOA’s motion for fees because § 5975(c) mandates the award of attorney fees to the prevailing party.  “Attorney fees under section 5975 ‘are awarded as a matter of right, and there is no discretion afforded to the trial court in granting or denying such fees, other than as to their reasonableness and amount.’” (Chapala Management Corp. v. Stanton, 186 Cal.App.4th 1532, 1546 (2010); see also Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker, 2 Cal.App.5th 252, 260-261 (2016) [trial court has no discretion to deny attorney fees to a prevailing HOA]; Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1152 (2011).)

            On remand, the panel instructed the trial court to exercise its discretion to determine the amount of reasonable attorney’s fees to which the HOA is entitled.

Homeowner Associations: $260,625 Attorney’s Fees Award To HOA and Two Homeowners Prevailing On CC&R Short-Term Vacation Rental Dispute Affirmed

$313,721 Was The Fee Order Request.

            We have many times indicated that HOA-homeowner disputes can be expensive as far as fee-shifting is concerned.

            Lastavich v. Nob Hills Homeowners Assn., Case No. D075466 (4^th Dist., Div. 1 Dec. 2, 2020) (unpublished) is an illustration of how this panned out in a real case.  There, plaintiff homeowner lost a short-term vacation rental dispute as far as how the CC&Rs read and what they prohibited.  The winning HOA and two homeowners moved for attorney’s fees of $313,721.  The trial judge awarded $260,625 against losing plaintiff homeowner, a determination affirmed on appeal once the CC&R merits issue was sustained. 

Appealability, Homeowner Associations: $180,442 Fees Award, $2,195 Expert Fee Award Under Section 998, And Certain Other Costs Awarded To HOA And Against Homeowner Sustained On Appeal

Good Pointer On Appealability—Separately Appeal § 998 Shifting Award As a Postjudgment Award, Or Be Damned!

            Kashani v. Wilshire House Assn., Case No. B296976 (2d Dist., Div. 1 Oct. 28, 2020) (unpublished) involved a HOA-homeowner dispute involving a right of first refusal battle to bid on a particular condo unit, with the HOA winning on summary judgment where the CC&Rs also had a fee-shifting clause.  HOA requested fees of $198,942, certain costs, and $2,195 in expert fees based on an unaccepted CCP § 998 offer.  In the end, the lower court awarded $180,442 in fees, awarded the expert fees, and awarded other costs with some reductions.

            Homeowner’s appeal was unsuccessful.  The lower court showed it did weigh reasonableness of fees issues by reducing the request by over $18,000.  Other routine costs awarded were no abuse of discretion.  As far as the section 998 expert witness fees which were recovered, the problem here was that homeowner failed to separately appeal a post-judgment ruling on these expenses, which left the appellate court without jurisdiction to consider any challenge to the expert fees.  (Pfeifer v. John Crane, Inc., 220 Cal.App.4^th 1270, 1316-1317 (2013).)  So, as we have stated many times before, separately, separately appeal fees and costs orders.

Deadlines, Homeowner Associations: Later Finding That HOA-Homeowner Settlement Agreement Was Invalid Presented Good Cause To File Fee Motion After 60-Day Deadline

Settlement Misconception By The Parties Allowed Dismissed Board Members To Seek Fees.

            In Gallian v. Gragnano, Case No. G057198 (4^th Dist., Div. 3 Sept. 15, 2020) (unpublished), HOA sued a homeowner for architectural violations under the CC&Rs, which prompted homeowner to crossclaim against the board members for indemnification, fault apportionment, and declaratory relief.  The board members were dismissed with prejudice, with HOA and homeowner reaching what they believed to be a binding settlement agreement which also bound board members (although not signed by them)—with the HOA attorney also representing the dismissed board members.  Later, when the HOA sought to enforce the settlement agreement, the trial judge found there was no meeting of the minds.  Well after the 60-day deadline for filing an attorney’s fees motion after the notice of dismissal was served, board members moved for fees as prevailing parties under Civil Code section 5975, the Davis-Stirling Act fee-shifting statute.  The lower court awarded board members $46,138 in fees, finding good cause to allow the fee motion filing based on the mutual misconception that the settlement agreement was binding.

            Homeowner’s appeal of the fee award did not alter the result in a 3-0 panel decision authored by Justice Ikola.

            Homeowner first argued that board members, after dismissal, could not file a fee motion.  This was dispatched easily because former parties after dismissal have collateral rights to seek fees and costs.  (Day v. Collingwood, 144 Cal.App.4^th 1116, 1124 (2006).)  Although the board members were not technical parties to the settlement agreement because they did not sign or expressly assent to its terms before the court, the circumstances at play—everyone’s belief the settlement agreement was valid such that no fees would be sought if it was—presented good cause to file the fee motion later.  “We would not expect a party attempting in good faith to negotiate a settlement to throw a wrench in the works by moving for an award of attorney fees during the negotiation.”  (Slip Op. at 6.)  Homeowner’s argument that the cross-complaint was not one to enforce the CC&Rs did not gain much traction, given that it was derivative of the HOA suit to enforce the governing common interest documents. 

Homeowner Associations, SLAPP: $2,510 SLAPP Fee Award Affirmed Because No Opposition Filed At Trial Level

Fifth District Did Not Have To Decide If Indigency Of Plaintiff, An Argument Not Raised Before The Trial Judge, Could Justify A Fee Reduction Under SLAPP Fee Statute.

            The plaintiff/appellant in Cruz v. Abdelaziz, Case No. F077506 (5^th Dist. May 6, 2020) (unpublished) got SLAPPed and then failed to file an opposition to a defense fee request, resulting in an adverse fee award of $2,510.  Plaintiff appealed, principally arguing that his indigency was a factor which was not considered.  Although the Fifth District acknowledged that this is a factor for a losing homeowner in a Davis-Stirling Act fee-shifting dispute (Garcia v. Santana, 174 Cal.App.4^th 464, 476-477 (2009)), this indigency argument was not raised below and thus was waived, especially given the lack of an opposition by plaintiff.  Fee order affirmed.

            BLOG COMMENT—Although the case did not involve an HOA dispute, we cross-reference to our topical category “Homeowner Associations” for readers who may need to use the reasoning in Garcia.

Homeowner Associations: $390,668 Fee Award To HOA Affirmed When Appellate Court Affirmed HOA Interpretation Of Palm Tree View CC&Rs And Accompanying Policies

HOA Interpretation Of Palm Tree View Policies Was Correct, Such That It Was The Prevailing Party.

            Over the years, because a lot of us live in common interest developments, we are used to seeing homeowner association fights with homeowners, many occurring based on view restriction or tree limitations—generating plenty of disputes by both sides.  In the next case, HOA prevailed and, with it, garnered a substantial attorney’s fees award under the CC&Rs prevailing fees provision and the Davis-Stirling Act fee-shifting section.  We have seen this before in our category “Homeowner Associations,” which can be easily accessed for prior decisions—many large, some for the HOAs and some for the homeowners.  But a lot are not good in the end, resulting in financial issues for the losing homeowners or special assessments for the HOA members bearing the brunt of a lot of HOA fights.

            In Maravich v. Dover Shores Community Association, Case Nos. G056152/G056965 (4^th Dist., Div. 3 Mar. 5, 2020) (unpublished), homeowners sued HOA because palm trees on other properties grew to detract from scenic views of the Eastbluff area of Newport Beach and dramatic night light views of Fashion Island.  The dispute centered on CC&Rs and policies granting the HOA discretion to take appropriate action for trees that “impede and block” views.  HOA sided with the downhill homeowners, finding it had discretion to allow the taller trees to stay. 

            The trial judge rendered a “split” type of decision, although awarding HOA prevailing party fees of $390,668 (yep, no typo here).  On appeal, the appellate court went with the HOA interpretation of the tree ordinances, so the fee award was sustained completely.  Just goes to show you how HOA disputes can be prohibitively expensive for homeowners where fee-shifting provisions are in place.

            Justice Ikola authored the 3-0 opinion. 

Homeowner Associations, Special Fee Shifting Statutes: Error In Lower Court’s Narrow Interpretation Of Civil Code Section 5975(c) Led To Reversal Of Attorney Fees Denial To Prevailing Defendants

Gravamen Of Plaintiff’s Complaint Was On Enforceability Of The Governing Documents.

            In Alexander v. Singletary, Case No. D075943 (4^th Dist., Div. 1 January 21, 2020) (unpublished), one of five homeowners in a common interest development unsuccessfully sought judicial declaration that the governing documents were unenforceable as to him, and for partition from the development.

            As prevailing defendants, the other four homeowners moved for section 5975(c) (Davis-Stirling Act fee-shifting provision) attorneys’ fees.  The lower court denied – concluding Plaintiff’s action did not seek “to enforce” the governing documents.

            Two of the four defendants appealed, and the 4/1 DCA reversed – finding Plaintiff’s entire action revolved around the enforceability of the governing documents within the meaning of section 5975(c), and that Plaintiff could not avoid the fee provision simply because he phrased his complaint to seek a finding that the governing documents are “unenforceable.”

            The 4/1 DCA’s reversal applied only to the two defendants who appealed, with judgment considered final as to the two non-appealing defendants.

Homeowner Associations, Section 1717: $220,000 Fee Award To HOA Under CC&Rs Fees Clause Was Proper

Plaintiff’s Unsuccessful Action Was Founded On CC&Rs Rights, Not Just Solely Sounding In Tort; HOA; Directors Had Sought $322,840 In Fees.

            HOA and HOA directors were awarded $220,000 in attorney’s fees against an unsuccessful plaintiff bringing a suit to challenge HOA’s policies and CC&Rs about parking and the permitting process, as well as enforcement thereof.  In Merritt v. Gandhi, Case No. H043615 (6^th Dist. Dec. 20, 2019) (unpublished), the lower court based the fees award upon Civil Code section 1717 (CC&Rs) and section 5975 (the Davis-Stirling Act fee-shifting provision).  The Sixth District affirmed based on the section 1717 fee entitlement basis.  It found that the gravamen of plaintiff’s action was founded upon rights under the CC&Rs rather than sounding only in tort.  It also found the fee award to be reasonable, given that the lower court did not award the $322,840 in fees requested by HOA and the directors. 

Appealability, Homeowner Associations, Prevailing Party, Special Fee Shifting Statutes: Second District Affirms $67,458.07 Attorneys’ Fees Awarded To Prevailing Defendant On Remand

Gravamen of Plaintiffs’ Action Was Based On Governing CC&Rs Which Made Defendant Prevailing Party For Attorneys’ Fees Purposes When She Defeated The Action Through Demurrers And Plaintiffs’ Voluntary Dismissal.

            We first discussed our next case – Durack v. Wang, Case No. B293597 (2d Dist., Div. 7 November 18, 2019) (unpublished) – in a September 27, 2017 post.  In that appeal, Wang, who prevailed on demurrer against most of plaintiffs’ causes of action – with the remaining causes of action voluntarily dismissed by plaintiffs – challenged the trial court’s denial of her motion for attorneys’ fees. There, the 2/7 DCA found Wang to be the prevailing party under Civ. Code section 5975(c) [the Davis-Stirling Act] as Plaintiffs’ complaint sought to enforce CC&Rs.  With that, the 2/7 DCA reversed and remanded with direction to the lower court to enter a fee award to Wang with proper apportionment.

            On remand, Wang filed a peremptory challenge under Code Civ. Proc. § 170.6 to the trial judge who determined the first attorneys’ fees motion.  After the case was reassigned to a different department, Wang filed her second motion for attorneys’ fees seeking $72,158.57.  Plaintiffs opposed – seeking denial of Wang’s motion in its entirety – with the trial court finding the request to be “patently improper in light of the Court of Appeal’s direction to grant Wang’s motion for attorneys’ fees.”  After some apportionment and reductions, the trial court awarded Wang $67,458.07.

            Plaintiffs were not deterred.  They marched right back to the 2/7 DCA with a slew of failing arguments to support their claim that the trial court erred in awarding the fees as directed on remand.

            First, they argued the peremptory challenge should not have been accepted.  However, the proper procedure for such a review is a petition for writ of mandate.  Next, they argued the trial court failed to properly assess fee and non-fee claims.  This was without merit as the trial court had conducted an evaluation of the legal work Wang’s attorneys performed and appropriately reduced and apportioned for time spent litigating causes of action that did not allow Wang to recover fees. 

            Plaintiffs also focused two of their arguments on Wang’s specific factual defense – claiming she was not entitled to fees because she did not prevail on that specific defense, and because that defense was a lie.  Neither argument gained any traction because Civ. Code section 5975(c) did not require Wang to prevail on every issue or defense, just to achieve her main litigation objective – which she did by defeating all of the causes of action against her.  As to her specific defense being a lie, there was no “lie.”  The parties never resolved/litigated that issue with plaintiffs dismissing their complaint against Wang.

            Finally, plaintiffs attacked the fees charged by Wang’s counsel – claiming her counsel deferred work to a law clerk and submitted improper block billing entries to support the fees request.  To these arguments, the 2/7 DCA found the trial court had correctly ruled that legal assistant and support staff time is routinely included in fee awards – that, if anything, work delegated to the law clerk only served to reduce the amount of an otherwise reasonable fee award.  As to the examples plaintiffs cited as “block billing,” the 2/7 DCA came to no such conclusion.  Rather, they found them to be descriptive entries showing the amount of time spent on each specific task.  One exception to this was the 85.6 appellate work hours Wang’s counsel included in his declaration.  Although the declaration did not include detail, the 2/7 DCA found the significance of detailed time entries reduced for appellate work – with only a few kinds of tasks for which an appellate lawyer bills.  In this case, the amount of time cited was very reasonable given the filing of both an opening and reply brief, appearance for oral argument, and successful reversal of the trial court’s fee denial.

Allocation, Homeowner Associations, Interest, Special Fee Shifting Statutes, Standard of Review: Plaintiff Owner/Developer’s Award Of $1,673,691 In Damages and Entire Fee Request Upheld On Appeal

Defendant HOA’s Breach Of Owner/Developer’s Valid Contractual Access Rights Was The Common Core Involved In The Causes Of Action, So Apportionment Of Fees Not Required.

            In Millennium-Diamond Road Partners v. Diamond Bar etc., Case No. B285539 (2^nd Dist., Div. 3 Sept. 24, 2019) (unpublished), Owner/Developer Millennium sued HOA when it revoked Millennium’s access to undeveloped parcels of land Millennium had purchased for the purpose of developing residential properties. 

            The undeveloped parcels of land were landlocked and adjacent to a guard-gated residential community known as Diamond Bar Country Estates.  From 1997 until October 2013, Millennium had easement access via Country Estates – access that was abruptly revoked when a new group of board members began to oppose Millennium’s development.

            Substantial evidence doomed HOA at trial – with the trial court finding that HOA breached Millennium’s valid contractual access rights pursuant to CC&Rs, a second contractual agreement providing Millennium an option for access rights for which Millennium had tendered the required fee, and a recorded annexation agreement under which the Millennium parcels became a part of the Country Estates development. 

            HOA argued that the CC&Rs were not at play as Millennium had not paid monthly assessments.  HOA also claimed Millennium had failed to pay fees owed under the annexation agreement.  The trial court rejected both claims.  The language of the CC&Rs contradicted HOA’s argument– providing the HOA “no power to cause a forfeiture or abridgement of an Owner’s right to full use and enjoyment of his Lot” absent a judicial/arbitral order or foreclosure.  The annexation agreement did include a schedule of payments to be made to the HOA.  However, the first payment under the schedule was triggered by an event that had not yet occurred, so no annexation fees were yet due.

            At trial, Millennium’s expert testified and explained his computations of Millennium’s damages of $1,673,691 in detail.  HOA did not challenge his methodology or calculation, nor did it call its own expert witness regarding damages, and the trial court awarded the entire amount Millennium claimed as damages.  Additionally, the trial court awarded Millennium prejudgment interest at 10% with a start date of January 2014.

            Millennium’s win triggered an award of attorneys’ fees pursuant to Civil Code section 5975(c) which mandates the award of attorneys’ fees in a successful action to enforce the governing documents of a common interest development.  The trial court awarded the full amount requested with no apportionment.

            HOA appealed, but fared almost no better – achieving only a small victory related to the start date for calculation of the prejudgment interest.  The 2/3 DCA found substantial evidence supported the trial court’s decision, but remanded for prejudgment interest calculations to begin on March 23, 2017 instead of January 2014.  It further determined that the HOA had fashioned its appeal largely “as an attack on the factual findings of the trial court.”  Citing Waller v. Brooks (1968) 267, Cal.App.2d 389, 393, the 2/3 DCA stated that the HOA “misconceiv[ed] the function of an appellate court which is to review errors of law, and not to pass on questions of fact.”

            As to apportionment of the attorney fees, the 2/3 DCA found no abuse of discretion as Millennium’s causes of action were so intertwined, and involved a common core of facts which were directly related to enforcement of the governing documents, such that apportionment was impracticable.

Homeowner Associations: Adams Stirling Law Firm In Los Angeles Has An Excellent Summary Of Fee Shifting Provisions With Respect To HOA And Davis-Stirling Act Issues

Numerous Civil Code and CCP Provisions, As Well Case Law, Summarized By The Firm On Its Website.

            We would like to thank Adams Stirling, a Los Angeles law firm specializing in HOA issues, for its excellent summary of HOA and Davis-Stirling Act fees issues and case law, which we post verbatim below and which can be found on its Website.  We would note that the firm is headed by Adrian Adams and Hon. Larry Stirling (Ret.), who authored the Davis-Stirling Act legislation when he was a member of the California Legislature and before he was appointed as a judge (thereafter retiring and joining forces with Mr. Adams to form Adams Stirling).

            Thanks, Adams Stirling law firm for your synopsis below:

            American Rule. “With regard to an award of attorney fees in litigation, California generally follows what is commonly referred to as the ‘American Rule,’ which provides that each party to a lawsuit must ordinarily pay his or her own attorney fees.  The American Rule is codified in Code of Civil Procedure section 1021, which states in relevant part:  ‘Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties . . . .’”  (Tract 19051 Homeowners Assn. v. Kemp (2015) 60 Cal.4th 1135, 1142.) 

            Pre-Litigation Legal Fees. Neither owners nor associations are entitled to legal fees incurred in a dispute that does not lead to litigation. For example, each side hires a lawyer and exchanges a series of letters with demands and counter-demands. If the matter is resolved or dies away, neither side is entitled to their attorney's fees. Civil Code 5975 only authorizes a prevailing owner to recover their reasonable attorneys’ fees and costs following the conclusion of a successful action (i.e. lawsuit)

            If, however, the dispute turns into litigation, the prevailing party is entitled to reasonable attorney's fees as determined by the court and depending on the nature of the dispute. The starting point for calculating attorney's fees begins with pre-litigation ADR. Because the amount of the award is discretionary with the court, the prevailing party could incur $50,000 in legal fees but be awarded only $20,000 or less by the court. Parties should never enter into litigation believing they will recover their legal fees. Recovery is always uncertain.

STATUTES: The following statutes provide for attorneys' fees and/or costs:

ADR costs		Civil Code §5955
Anti-SLAPP motion		Code of Civil Procedure §425.16
Assessment collection		Civil Code §5650(b), §5740, §5650(a), §5705(a), §5715(a), §5720(a),  §5685, §5658
Governing document enforcement		Civil Code §5975
Contract actions		Civil Code §1717
Escrow Disclosure violations		Civil Code §4540
Discriminatory CC&Rs		Civil Code §4225
Disputed charges		Civil Code §5658
Flags		Civil Code §4705(c)
Foreclosure		Civil Code §5730(a)
Inspection of records		Civil Code §5235
Managing agent		Civil Code §5380
Records inspection		Civil Code §5145
Satellite dishes		Civil Code §4725(d)
Small claims appeal		Code of Civil Procedure §116.780
Solar energy		Civil Code §714

CASE LAW

Marina Pacifica v. S.C. Fin. Corp. (2018). A party's failure to obtain its litigation objective does not automatically make the other party the prevailing party.

Artus v. Gramercy Towers (2018). Neither the language of the Davis-Stirling Act, nor the legislative history of the fee provision Artus invokes, evidences any intent on the part of the Legislature to depart from well-established principles that fees and costs are ordinarily not granted for interim success, and that the prevailing party is determined, and fees and costs awarded, at the conclusion of the litigation.

Retzloff v. Moulton Parkway Assn (2017). Former board members sued their association alleging the board was conducting business outside of meetings and failing to maintain and provide certain corporate records. Plaintiffs failed to attempt ADR as required by Civil Code §5950. The association demurred and the court sustained without leave to amend. As prevailing party, the association moved for attorneys' fees. The Court of Appeal reversed the lower court's award of attorneys' fees concluding that Civil Code §5235 does not authorize a court discretion to award fees to a prevailing association. A plain reading of “any costs” as used in section 5235(c) does not support the inclusion of attorney fees as costs. Section 5235(c) entitles a prevailing association to costs, not attorney fees and costs.

Almanor Lakeside Villas Owners Association v. Carson (2016). Even though the court struck down 90% of the fines levied by the association against and owner for a rental violation, the court decided the key issue was the association's right to enforce rules and impose fines for violations, thereby making it the prevailing party.

            The Davis-Stirling Act does not define “prevailing party” or provide a rubric for that determination. In the absence of statutory guidance, California courts have analyzed analogous fee provisions and concluded that the test for prevailing party is a pragmatic one, namely whether a party prevailed on a practical level by achieving its main litigation objectives. ( Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1574 ( Heather Farms); Salehi, supra, at pp. 1153–1154.) The California Supreme Court implicitly has confirmed this test. In Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 94, the court affirmed the award of attorney’s fees in an action to enforce a restrictive covenant under the Davis-Stirling Act, stating: “We conclude the trial court did not abuse its discretion in determining that the Association was the prevailing party … . On a ‘practical level’ 13 [citation], the Association ‘achieved its main litigation objective.’ ” (Ibid. [quoting Heather Farms, at p. 1574 and Rancho Santa Fe Assn. v. Dolan-King (2004) 115 Cal.App.4th 28, 46].)

Nellie Gail Ranch OA v. McMullin (2016). Failure to appeal a fee ruling deprives an appellate court of jurisdiction to decide the fee challenge.

Rancho Mirage Country Club HOA v. Hazelbaker (2016). An association's lawsuit to enforce a settlement agreement entered into during ADR is deemed an action to enforce the governing documents under the Davis-Stirling Act, which entitles the association to recover reasonable attorneys' fees.

Tract 19051 Homeowners Assn v. Kemp (2015). Prevailing owner can recover attorney fees under Civil Code section 5975(c) in a case brought by association against owner to enforce governing documents even though the court found the association didn’t exist. The Supreme Court held the plain reading of 5975(c) supports that the award of attorney fees is reciprocal in an action where the association brings the claim to enforce the governing documents regardless of whether the association exists. The recovery is based solely on the association’s claim to enforce the governing documents and not based on determining whether the association is a common interest development.

Grossman v. Park Fort Washington Assn. (2013). Normally, any attorneys' fees incurred prior to the filing of the complaint are not awarded. Here, the court concluded that the pre-litigation ADR process mandated by the Davis-Stirling Act is the actual start of litigation. Accordingly, it awarded attorneys' fees expended by the homeowner expended in pre-litigation ADR.

Salehi v Surfside III (2011). Susan Salehi sued her association alleging 10 causes of action. Three days before trial, she dismissed eight of her ten claims against the association. The association spent approximately $250,000 defending against her claims. Three days before trial, Salehi dismissed eight of her ten claims. The association subsequently sought recovery of the legal fees it incurred defending against Salehi's dismissed causes of action. The trial court denied the association’s request but the court of appeal reversed. The appellate court found that the association was entitled to recover attorneys fees from Salehi, reasoning that a party suing to enforce the CC&Rs must get their “ducks in a row” both procedurally and substantively before filing suit. Salehi had done neither.

That v. Alders Maintenance Assn (2012). That brought a frivolous election challenge. As the prevailing party, the association sought attorney's fees under the Davis Stirling Act. The award of attorneys' fees is allowable only when authorized by contract, statute or law. If a statute refers to the award of "costs and attorney's fees," attorney's fees are an item and component of the osts to be awarded and are allowable as costs. The court reviewed the statute (now Civ. Code 5145(b)) and concluded the statute did not authorize associations to recover attorney's fees.

Bear Creek Planning Committee v. Ferwerda (2011). If empowering language is provided for in the CC&Rs, architectural committees may adopt standards beyond those set forth in the CC&Rs, i.e., it can adopt new design standards related to the improvement or development of lots. However, a committee may not unilaterally establish an attorneys’ fees provision for itself. Attorneys’ fees must be reciprocal and contractual--the committee's fee provisions did not seek to clarify existing language in the CC&Rs. Rather, it was an inappropriate attempt by the committee to insert a new provision that bound homeowners without their approval. Nothing in the CC&Rs gave the committee the power to insert into their architectural standards an attorney fee provision that was never in the CC&Rs.

Parrott v. Mooring Townhomes Assn. (2003). Plaintiff sought a preliminary injunction against his association. When he failed to receive one, he dismissed his complaint. The court awarded the association attorneys' fees. A prevailing party is one who prevailed on a practical level.

Mount Olympus POA v. Shpirt (1997). An owner does not have the right to recover attorneys' fees under the Davis-Stirling Act if his HOA is a voluntary association of homeowners having no power to charge or collect assessments. Such associations do not fit the definition of a common interest developments under the Act.

Heather Farms HOA v. Robinson (1994). The court declined to adopt a rigid interpretation of the term "prevailing party" and, instead, analyzed which party had prevailed on a practical level. The court concluded that a a voluntary mutual dismissals as part of a global settlement does not create a prevailing party.

Homeowner Associations: Defendant Condo Owner Voluntarily Dismissed From Suit Against HOA And Condo Owner By Other Condo Owners Before Trial Improperly Denied Fee Recovery Under Both Davis-Stirling Act And Code Of Civil Procedure Section 1032(a)(4)

Suit Did Involve CC&Rs, And Defendant Did Prevail By Being Dismissed, Such That Reversal Means Defendant Condo Owner Will Get Some Fees On Remand.

            Fee entitlement and prevailing party determinations often are matters of law, as they were here where the pleadings and facts made a reversal of a fee denial – something which was directed by our local Santa Ana appellate court in Richardson v. Stevenson, Case No. G056112 (4^th Dist., Div. 3 Aug. 26, 2019) (unpublished).

            Of all things, this was a dispute challenging defendant condo owner’s successful HOA application to convert a window into a door, a decision challenged by another condo owner.  Plaintiff sued HOA and defendant for injunctive relief under the Davis-Stirling Act, not the CC&Rs directly (even though the claim arose from the CC&Rs).  Defendant condo owner was voluntarily dismissed from the action before trial and three years into the litigation for “tactical” reasons, leaving injunctive-based claims against the HOA.  The lower court denied defendant’s request for fees against plaintiff, not believing that plaintiff was suing under CC&Rs and not finding that defendant had prevailed because it was unknown whether the owner could convert window into a door.

            The 4/3 DCA, in an opinion authored by Presiding Justice O’Leary, reversed.    The first ground for denial did not hold up because the pleading showed that the CC&Rs were the basis for the suit (even though not directly sued upon), such that the Davis-Stirling Act was triggered because the case was a suit based on HOA “governing documents.”  Defendant also did prevail on two grounds:  (1) he was now a stranger to the case with the dismissal, which meant he achieved an important litigation objective to get out of the dispute; and (2) he prevailed under CCP § 1032(a)(4) which allows contractual attorney’s fees for non-contractual claims such as this suit under the Davis-Stirling Act.  (See Honey Baked Hams, Inc. v. Dickens, 37 Cal.App.4^th 421, 428 (1995).)

Homeowner Associations: Homeowners Were Not Catalysts For Easement Agreement Assumption, Because They Wanted A More Expansive Amendment

HOA Was Prevailing Party Under Easement Agreement Fees Clause, Awarded Its Fully Requested $51,460 In Fees. 

            In Lemley v. Aliso Homeowners Assn., Inc., Case No. B288789 (2d Dist., Div. 3 July 3, 2019; posted July 5, 2019) (unpublished), HOA and homeowners got entangled in an easement agreement dispute in which homeowners wanted specific performance/declaratory relief to enforce an amendment to the agreement, while HOA defended on the principal grounds of mootness because it recorded an assumption of obligations in the original easement agreement.  HOA won, was declared the prevailing party, and was awarded $51,460 in attorney’s fees under the easement agreement fees clause.  Homeowners appealed, claiming they were actually the prevailing parties as the catalyst for the HOA’s easement agreement assumption.  The appellate court affirmed the result below, determining that homeowners wanted an amendment, not an assumption, and that HOA did prevail by obtaining dismissal of homeowners’ suit.  (In fact, homeowners’ failure to appeal the prior dismissal on the merits cemented that they were not the catalysts for the assumption by the HOA.)

Homeowner Associations: Homeowner Prevailing In Unlawful Foreclosure Of Condo Unit Case Was Entitled To $434,000 In Damages And $720,000 In Attorney’s Fees

Both Civil Code Section 1354 (Now Section 5975) And CC&R Fee Clause Were In Play. 

            Yikes!  Talk about a change in fortune based on a prior appeal.  Homeowner finally won, obtaining damages and substantial attorney’s fees for hanging in there to the end.

            In Multani v. Castle Green Homeowners Assn., Case No. B278397 (2d Dist., Div. 7 May 28, 2019) (unpublished), HOA earlier won a summary judgment and $90,000 in attorney’s fees in connection with foreclosing on a HOA assessment lien.  However, that victory went away in an earlier appeal against the HOA.  Then, after a bench trial on remand, homeowners won—the lower court concluded that the HOA unlawfully foreclosed on an assessment lien by not giving a 90-day notice of the right to redemption in proper matter such that homeowner was entitled to $434,000 in damages for loss of the condo unit.  (The unit was sold at the assessment lien nonjudicial foreclosure for $20,200).  But that was hardly the end of the story.  Homeowner moved for fees under the Davis-Stirling Act fee shifting provision (former Civil Code section 1354, now section 5975) and the CC&Rs’ fees clause.  The lower court awarded them about $720,000 in fees as the prevailing party.

            Both the merits and fee rulings were affirmed on appeal.  What really sealed the deal for the appellate court was that the HOA argued the same bases for fee entitlement when winning them after the summary judgment motion—it could hardly shift course when the tide turned against it. 

Homeowner Associations, Private Attorney General, Section 1717: Defendant Homeowners Winning A Tree Dispute With Another Homeowner Neighbor Rightfully Denied Attorney’s Fees Under CC&Rs, Civil Code Section 1717, And Private Attorney General Statute

However, A Dissenting Justice Would Have Found Fee Entitlement Under CC&Rs And Section 1717.

           The next case, Shah v. Ross, Case No. B286783 (2d Dist., Div. 5 April 25, 2019) (unpublished), involved a situation where defendants/homeowner neighbors won a tree dispute initiated by fellow plaintiff homeowner. Defendants then sought fees under a CC&Rs fees clause, Civil Code section 1717 mutuality principles, and the private attorney general statute (CCP § 1021.5). The trial judge denied fees on all bases.

            A 2-1 majority of the 2/5 DCA affirmed, with a lengthy dissent by Presiding Justice Rubin.

            On a preliminary basis, the appellate court determined that the lack of a reporter’s transcript of the fee motion did not impede review because only legal construction of fee or statutory entitlement provisions was involved.

            The majority found that the CC&Rs fees clause did not apply to disputes between homeowners, but only a where the HOA was involved. They saw no reason to disturb reasoning to the same effect in Mount Olympus Property Owners Assn. v. Shpirt, 59 Cal.App.4^th 885, 893, 896 (1997). Section 1717 did not afford relief because mutuality only applied where there were putative persons who could be impacted by the fees clause, which was not the case. Finally, the private attorney general statute request properly was denied because the winning parties were vindicating their private interests in preventing a blocking of views by trees.

            Justice Rubin, in an 18-page dissent, believed that the CC&Rs were ambiguous such that fees were allowable in inter se homeowner disputes because certain provisions needed to be read together and other provisions where only the HOA was mentioned made no sense such that homeowner disputes had to be included within the ambit of the CC&Rs fees clause. He also did not like the analysis in Shpirt, which he felt was based on incomplete reasoning such that a “clean slate” approach was warranted. Lastly, Justice Rubin engaged in a section 1717 analysis by which he determined that it should be applied in this particular context based on amendments to the “parties” language in the statute some time ago.

Homeowner Associations: $19,233 In Attorney’s Fees And $815 In Litigation Costs To HOA Obtaining Injunction To Require Access To Condo Unit To Make Repairs Affirmed

HOA Satisfied Prelitigation Efforts To Resolve And Prevailed By Meetings Its Objectives.

            In Durant Towers Owners Assn. v. Winchester, Case No. B288966 (2d Dist., Div. 8 March 29, 2019) (unpublished), HOA sued defendant condo owner to obtain access to her unit in order to determine if water leakage from her unit was causing damage to a unit below. After ignoring efforts for voluntarily cooperating, HOA sued under the CC&Rs to obtain access to defendant’s unit. At an injunction hearing, defendant agreed to allow access on certain terms, but later reneged. HOA obtained injunctive relief, the repairs were eventually made, and the case was dismissed without prejudice. HOA moved for recovery of attorney’s fees and costs as the prevailing party against defendant, based on the Davis-Stirling Act’s fee-shifting provision for CC&R enforcement (Civil Code section 5975) as well as the CC&R fee provision itself. The lower court obliged, awarding HOA $19,233 in fees and $815 in costs.

            Defendant’s appeal was unsuccessful. She argued that HOA failed to exhaust administrative remedies, but that was rejected because (1) defendant thwarted voluntary efforts to gain access by the HOA, and (2) HOA’s certification of the need for injunctive relief in the complaint satisfied prelitigation efforts under Civil Code section 5950(a)(3). With respect to the claim that HOA did not prevail, it did obtain its main litigation objective to gain access and make repairs such that its voluntary dismissal did not change the fact it did meet its aims in the lawsuit.

Costs, Fee Clause Interpretation, Homeowner Associations, Section 1717: Trial Court Properly Denied Fee Recovery To Prevailing Defendants Under Davis-Stirling Act Or Civil Code Section 1717 And Properly Struck The Costs Memorandum

Action Was Based On Tort, Not CC&Rs; Fee Clause Did Not Reach Tort Claims Under Section 1717; And Defendants Failed To Apportion Costs As Between Themselves.

            In the fee area, you must have a solid fee entitlement basis and you usually have to apportion costs where there are several prevailing defendants rather than claim total costs without an appropriate allocation. Schuchmacher v. McDermott, Case No. B288130 (2d Dist., Div. 3 March 28, 2019) (unpublished) is a case where prevailing defendants obtained no fees and costs because they could not establish fee entitlement and did not apportion routine costs.

            Plaintiffs suffered an adverse summary judgment against an HOA’s general manager and its current directors (who were not directors when the main plaintiff owned the condo unit) in a tort action involving insurance fire proceeds. Prevailing defendants moved to recover attorney’s fees of $361,586 and filed to recover $ 27,290 in routine costs. The trial judge denied the fee motion and struck the costs memorandum.

            The 2/3 DCA affirmed. The problem for defendants was that the tort claims were not efforts to enforce governing HOA documents, so entitlement under Davis-Stirling Act’s Civil Code section 5975(c) was lacking. Civil Code section 1717 was of no help either, because the CC&R fee clauses were narrow and did not apply to the tort claims against a general manager or the current directors. With respect to striking the costs, that was no abuse of discretion because defendants claimed all litigation costs, without apportioning between plaintiffs as well as defendants.

Homeowner Associations, Prevailing Party, SLAPP, Substantiation Of Reasonableness Of Fees: No Abuse of Discretion In Awarding Prevailing Plaintiff $114,990.75 In Lawsuit Against Homeowners Association

Condominium Owner Plaintiff Wisely Sought Fees Only For The Claims On Which She Prevailed Against Association

            The Broadway Hollywood is a 10-story historical building on the corner of Hollywood and Vine. It was constructed in 1927 and originally used as a store. However, the building was abandoned in 1987 and remained vacant for 18 years – until it was revitalized and converted from an obsolete building to modern use. Today the Broadway Hollywood is a common interest development managed by a homeowners association – with the Davis-Stirling Act (Civ. Code section 4000) governing such developments.

            In Yu v. Broadway Hollywood Homeowners Assn., Case No. B280977 (2d Dist., Div. 1 March 7, 2019) (unpublished) Plaintiff, who owns a condominium in The Broadway Hollywood, sued the homeowners association, alleging it violated its governing documents by failing to offer valet parking (development was deficient in meeting current parking code requirements, and was granted a variance to allow for off-site parking) in her first cause of action; for interfering with homeowners’ 2013 and 2014 board elections, in which she sought election, respectively in her second and third causes of action; and for breach of fiduciary duty in her unsuccessful fourth cause of action.

            Association SLAPPed back against Plaintiff’s claims regarding interference with the election – stating it was simply exercising its protected activity of right of petition. The trial court, while finding the “thrust” of the claim arose from unprotected activities, found that Plaintiff was not likely to prevail on this issue. On appeal, the matter was remanded for further proceedings – with the trial court ultimately denying Association’s anti-SLAPP motion. While the SLAPP appeal was pending, a bench trial was held on the parking violation issue, with the trial court finding in favor of Plaintiff. Post-trial, the trial court also awarded Plaintiff attorney fees, pursuant to Civ. Code section 5975, subd. (c), of $114,990.75 (which included Plaintiff’s requested $112,549.75 after her detailed reduction for time spent on claims in which she did not prevail, plus $2,440 for time and costs incurred by Plaintiff’s attorney in connection with the fee motion). Association appealed the judgment, the order denying its anti-SLAPP motion, and the attorney fees award to Plaintiff – claiming the trial court had abused its discretion in awarding these fees.

            The 2/1 DCA disagreed with Association at every turn, and affirmed on appeal. As to the fees, they found that Plaintiff was the prevailing party as she had achieved her main litigation objectives. To that end, citing PLCM Group, Inc. v. Drexler (2000) 22 Cal.4^th 1084 [our Leading Case No. 1] and Serrano v. Priest (1977) 20 Cal.3d 25 [our Leading Case No. 3], the 2/1 DCA found that the trial court’s order took into consideration the claims on which Plaintiff did not prevail, and that nothing in the record suggested the award was arbitrary or exorbitant.

Homeowner Associations, Section 1717, Special Fee Shifting Statutes: Homeowner Plaintiffs In A Common Interest Development Dispute Over Assessment Liens Must Pay Prevailing Party Defendants $125,796.50 In Attorney Fees

Summary Judgment Hinged On Voting Rights Language In The Covenants Of The Development

            The Davis-Stirling Act (Civ. Code section 4000 et seq.) governs the creation and operation of common interest developments, and requires such developments to be managed by a homeowners association, which homeowners are generally mandated to join.

            In Bertoli v. Dennis, Case No. A150924 (1^st Dist., Div. 5 March 5, 2019) (unpublished), a Board of Governors had been elected for the homeowners association managing a common interest development consisting of improved and unimproved lots in Mendocino County. This Board of Governors had been elected by former owners of the improved lots and their daughter (who collectively owned 10 unimproved lots). Upon election of the Board, certain assessments were levied against 12 homeowners of the 6 improved lots within the development. The assessments went unpaid, and the association employed a debt collection agency that recorded assessment liens against the homeowners.  

            In contesting the validity of the assessment liens, Homeowner Plaintiffs filed an unsuccessful declaratory relief action against the debt collection agency and original owners of the development (who had elected the homeowners association board).  

            The debt collection agency based its successful motion for summary judgment on the fact it had released the liens, no longer worked for the homeowners association (because the association failed to defend or indemnify it), and were no longer parties in interest – therefore, no actual controversy existed as to them.

            Plaintiffs also lost in dueling summary judgment motions with the former owner Defendants. Each sought judicial construction of the key language in the Covenants concerning voting rights – with Plaintiffs believing the language to mean that only owners of improved lots have voting rights. The trial court, however, agreed with the former owner Defendant’s interpretation that the owners of all lots (improved or unimproved) have voting rights, and entered judgment in their favor. Additionally, the trial court granted the former owner Defendants’ opposed request for prevailing party attorney fees – awarding $125,796.50 in fees under Civil Code sections 1717 and 5975.

            Plaintiffs unsuccessfully appealed the summary judgment rulings and attorney fees award – with the 1/5 DCA affirming on appeal, finding no trial court error in granting summary judgment to Former Owner Defendants with regard to voting rights, nor to debt collection agency due to the lack of an actual controversy. The 1/5 DCA further determined that the attorney fees award to former owner Defendants was proper as the Davis-Stirling Act provided the statutory basis for fee shifting in this action.

Homeowner Associations, Section 1717: One Homeowner Prevailing Over Another In Dispute Over Location Of A Fence Was Entitled To Fee Recovery Under Civil Code Section 1717

Dispute Was Covered Under CC&R’s Fee Provision.

            In Hunkel v. Gerhardt, Case No. H044753 (6^th Dist. March 12, 2019) (unpublished), two neighboring homeowners squared off in a dispute over the placement of a fence by one homeowner group. The defendant homeowners claimed that there was no proper board of directors making a decision on the fence dispute, a position ultimately embraced by the trial court. The lower court then awarded prevailing defendants $111,215.50 against losing plaintiffs under both Civil Code section 1717 (the former based on a CC&R fee clause) and Civil Code section 5975 (the latter being a Davis-Stirling Act fee-shifting provision).

            The Sixth District affirmed, based on the Civil Code section 1717 rationale alone.

            Plaintiff neighbors, the losing parties, did sue for declaratory relief, a classic contractual claim covered by a broadly-worded CC&R provision providing for fee entitlement even by individual homeowners.   Defendant neighbors did prevail on a liminal board authority issue, an issue which allowed fee recovery even though they obtained no affirmative relief.

Homeowner Associations, Prevailing Party: HOA Obtaining Preliminary Injunction To Aid Fumigation Of Separate Units Was Prevailing Party Entitled To Fee Recovery

Lower Court Fee Award And Appellate Fees Were Warranted In Favor OF The HOA.

            Although we do not know the amount of fees awarded below, the homeowners in Windham at Carmel Mountain Ranch Assn. v. Lacher, Case No. D071799 (4^th Dist., Div. 1 Jan. 16, 2019) (unpublished) obviously were dismayed when the lower court awarded HOA fees after the trial judge issued a preliminary injunction in favor of the HOA. Under the terms of the preliminary injunction, the homeowners had to vacate their unit and provide a key while separate units were being fumigated. The appellate court affirmed the finding that the HOA was the prevailing party, given that a preliminary injunction assisting the fumigation process so as to demonstrate that the organization obtained its litigation objectives. (Rancho Mirage County Club Homeowners Assn. v. Hazelbacker, 2 Cal.App.5^th 252, 262 (2016); Press v. Lucy Stores, Inc., 34 Cal.3d 311, 316 (1983).) To add more insult, HOA was entitled to fees for prevailing on appeal.

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.

Homeowner Associations, Mediation, Reasonableness Of Fees: $225,000 Fee Recovery In Favor Of HOA And Against Losing Condo Owner Affirmed On Appeal

Mediation Requirement Did Not Apply To HOA-Owner Dispute, Owner Failed To Specifically Identify Objections Fees, And Lower Court Did Award Substantially Reduced Fees From The HOA’s Requests.

            We have done many posts showing how HOAs or owners can be subject to substantial fee exposure for losing HOA-owner disputes. Seahaus La Jolla Owners Assn. v. Witt, Case No. D071229 (4^th Dist., Div. 1 Nov. 27, 2018) (unpublished) illustrates how this can happen, with the non-prevailing condo owner hit with $225,000 in fees in a losing effort.

            HOA sued condo owner to recapture costs incurred in repairing condo owner’s unit after a water leak, with owner cross-complaining against HOA and certain of its directors. The condo owner lost on both the complaint and the cross-complaint after bench proceedings. The trial judge later awarded HOA $ 150,000 in fees (out of a requested $240,000) on its complaint and $75,000 in fees (out of a requested $160,000) for defending against the cross-complaint.

            These determinations were affirmed on appeal. No prelitigation mediation was required because that only applied to developer-condo owner disputes, not HOA-condo owner controversies. Plaintiff failed to identify what portions of the fee requests were duplicative, excessive, or unreasonable, with the trial judge’s reduction showing good discretion was exercised.

Common Fund, Homeowner Associations, Section 1717: Developers Properly Denied $1.950 Million In Attorney’s Fees Against HOA Under Either Civil Code Section 1717 Or The Common Fund/Substantial Benefit Doctrine

HOA Would Not Have Been Entitled To Fees If It Had Won, So Developers Did Not Prevail, With Equitable Doctrines Not Supplying An Anchor For An Award.

            Market Lofts Community Assn. v. 9^th Street Market Lofts, LLC, Case Nos. B280446/B282412 (2d Dist., Div. 2 Nov. 13, 2018) (unpublished) involved a case where an HOA lost a suit against Developers based on a Parking License Agreement (PLA) to which HOA was not a party, with the PLA containing a fees clause. HOA was a party to a sublicense agreement with a fees clause. The lower court denied fees to certain Developers totaling about $1.950 million, as against HOA, finding that it was not a party to the PLA (which prevented Civil Code section 1717) and that the common fund/substantial benefit theory could not provide an anchor for recovery.

            Those determinations were affirmed on appeal.

            Developers were not entitled to fees under the sublicense agreement because the gravamen of the lawsuit was whether the PLA prohibited defendants from charging condo eventual owners for parking—with HOA not a party to the PLA and with the narrow fees clause not extending exposure to HOA, following Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4^th 858, 898-900 (2008) in this regard. With respect to the common fund/substantial benefit theory, this was an equitable theory which could only benefit the HOA in limited circumstances, such that it could form the “reciprocity” basis for recovery; “[a]llowing the Developers to utilize this equitable doctrine to recoup millions of dollars in attorney fees would turn equity on its head.” (Slip Op., at p. 21.)

Allocation, Homeowner Associations: Neighbor Winning $784,208 In Damages Against Another Neighbor Based On CC&R/Nuisance/Prospective Economic Advantage Damages Properly Awarded CC&R Fees Of $363,571.56

Lack Of Fee Hearing Transcript Meant No Adequate Record On Appeal; However, Claims Looked To Be Interrelated Such That No Apportionment Was Required.  

             We have noticed an increasing trend among appellate courts to affirm fee awards or fee denials where the appealing litigant failed to provide a reporter’s transcript, especially where abuse of discretion or non-legal issues are involved. The Second District, Division 5 has been especially vigilant on this issue, and we have seen an uptick in denying fee appeals by our local Santa Ana Court of Appeal based on the lack of an adequate record. Kinsman v. Rodarte, Case No. G048812 (4^th Dist., Div. 3 June 7, 2018) (unpublished) illustrates this well.

            There, a jury found in favor of a plaintiff neighbor governed by CC&Rs as against a nearby defendant neighbor. It awarded $784,208 in damages based on nuisance, prospective economic advantage interference, civil harassment, and CC&R claims, also rejecting defendant’s cross-claims. No one disputed that plaintiff was other than a prevailing party based on a CC&R fees clause which was broadly worded. Plaintiff sought fees of $438,571.56 in contractual fees, with the court awarding $363,571.56.

            Plaintiff’s appeal of the fee award did not result in any change. Plaintiff argued that the fee awarded should have only been awarded for work on the CC&R claims. However, no fee hearing transcript was submitted such that the appellate court did not know the reason(s) why the trial court lowered the requested award, perhaps even restricting the award to work only on the CC&R claim. Beyond that, on the merits, there was no perceived abuse of discretion because the CC&Rs declared that any violation of the Declaration was a nuisance, such that the work on the tort causes of action were inextricably intertwined with the contractual CC&R violations—meaning apportionment would have been unnecessary in any event.

           Acting Presiding Justice Moore authored the 3-0 panel opinion.

Allocation, Homeowner Associations: Judge Presiding Trial Did Not Abuse His Discretion By Failing To Apportion Fee Work Between Contract and Noncontract Claims Where Work On These Claims Was Inextricably Intertwined

Plus . . . Lower Court Did Significantly Reduce Fee Request In Awarding $507,000 In Fees And $33,699 In Costs To HOA.

            We repeatedly have demonstrated in posts how homeowner association disputes can be a pricey proposition, depending on which side prevailed (or, for that matter, where no side has been found to prevail). Over the years in posting in the HOA areas, we see substantial six-figure and even seven-figure awards of fees/costs. That happened in Majestic Asset Mgt., LLC v. The Colony at Calif. Oaks Homeowners Assn., Case Nos. D972627/D072628 (4^th Dist., Div. 1 May 10, 2018) (unpublished).

            There, HOA won a suit by plaintiffs/alter egos who bought a golf course and agreed to certain use and maintenance obligations. They sued under both contractual and many tort theories, with the defendants also filing a cross-complaint. HOA won a $41,024.20 damages judgment and a permanent injunction. Because there were contractual fees clauses in purchase sale agreements and a trust deed, and plaintiffs also sued for breach of CC&Rs (voluntarily dismissed with prejudice), Civil Code section 1717 and 5975(c) did provide fee entitlement to HOA as the prevailing party. HOA requested fees of $1,166,377 and costs of $35,389 (a total of $1,201,766). In opposition, the non-prevailing parties (the defense) claimed that the fee request was unreasonable and should be reduced by 50% to 75%, such that a reasonable range was $439,349.25 - $579,990.75 based on the analysis of a retained fee expert. The trial judge credited the expert analysis and awarded $507,000 in fees and $33,699 in costs over the defense objection that fees further had to be apportioned between contractual (compensable) and tort (non-compensable) work such that $250,000 - $300,000 was more like it. The trial court found the contract and tort work to be melded together and did not do any apportionment beyond his reductions for reasonableness of the request.

            The appellate court affirmed the fees/costs award. The record showed that the lower court, which presided over the trial, did not abuse its discretion in failing to apportion given the overlap between the various issues. The lower court was in a unique position to make this call given its involvement in the case and the eventual trial producing the judgment and fees/costs award.

Homeowner Associations/POOF!: 2/4 DCA Reinstates Homeowner’s Breach Of Fiduciary/Quiet Title Claims And Allows Further Amendment Of Slander Of Title Claim, Which Causes Attorney’s Fees Award To HOA As Prevailing Party To Go POOF!

$249,861.50 Fee Award Goes Away For Now.

            In Colyear v. Rolling Hills Community Assn. of Rancho Palos Verdes, Case Nos. B278198/B279671 (2d Dist., Div. 4 Apr. 23, 2018) (unpublished), homeowner sued HOA for breach of fiduciary duty, slander of title, and quiet title arising from a tree trimming dispute between neighbors.  (Boy, oh boy, tree disputes are very common in HOA cases.)  The lower court eventually sustained demurrers without leave in homeowner’s action and then awarded HOA attorney’s fees to the tune of $249,861.50.  (Yes, that it no typo.)  All of that went POOF! on appeal because the 2/4 DCA reinstated the breach of fiduciary duty and quiet title claims, allowed homeowner a chance to amend the slander of title claim (if he could plead around a privilege), and found that pre-dispute ADR requirement did not apply to this particular case.  Reversal of fortune, yes indeed.

Homeowner Association: Trial Court Correctly Denied Plaintiff’s Negligence-Based Fee Recovery Against HOA Based On Gravamen Of The Claim—Negligence, Not CC&R Enforcement

Plaintiff’s Fee Request Of $145,212.67 Rebuffed By Trial and Appellate Courts.

            This next case should illustrate how both trial and appellate jurists try to get to the nub of a dispute—with the ultimate decision on the nature of the claim being very decisive on whether there is fee entitlement.

            Martini v. Bel Azure Homeowners Assn., Case No. D072288 (4^th Dist., Div. 1 Apr. 12, 2018) (unpublished) was a situation where a plaintiff sued a HOA after suffering a fall on HOA premises.  Plaintiff did win a negligence action for under $11,000 against HOA affiliates.  She then moved for $137,167.50 in attorney’s fees and $8,045.17 in costs against the HOA Defendants.  The trial court denied the fee request, and the appellate court agreed.

            The problem here was that the CC&Rs, although containing a fees clause, had one which was narrow in scope.  Specifically, the fees clause talked about fee entitlement to a prevailing party in “litigation to enforce or interpret” the CC&Rs.  Although some disputes might fall within the ambit of the fees clause, the negligence cause of action did not.  The Legislature, under the Davis-Stirling Act fee authorization, did not allow a prevailing party to recover fees more broadly than an action to actually enforce the CC&Rs.  Since the action was really a negligence/premises liability claim, no fees were recoverable, as the lower court found. 

            No different result occurred under Civil Code section 1717.  This was really a tort claim, with the CC&R fees clause being too narrow to encompass tort claims.  Second ground, also, did not provide relief to appellant on appeal. 

Homeowner Associations: $707,117 Fee Award To HOA Goes Away Upon Reversal Of HOA’s Victory In Judgment Notwithstanding The Verdict Ruling On Plaintiff Homeowners’ Nuisance Claim

Further Fee Proceeding Remand Occurs In Decade-Spanning Litigation.

            Cathedral Hill Tower Condominium Assn. v. Garbar, Case No. A144036 (1^st Dist., Div. 3 Mar. 27, 2018) (unpublished) was the latest appeal by homeowners against HOA in a decade-spanning action involving claims for nuisance, negligence, and breach of contract by HOA.  A jury found in homeowners’ favor and awarded them nuisance personal injury damages of $280,000, although the trial court denied the negligence and breach of contract claims on procedural or substantive grounds.  The trial judge later granted a JNOV motion in HOA’s favor on the nuisance claim, subsequently awarding HOA $707,117 as the prevailing party under Civil Code section 5975.

            The fee award fell upon review because the appellate court determined that the JNOV on the nuisance claim was improper such that the jury verdict was reinstated.  Because this did impact the prevailing party determination, the matter was remanded for a relook on the fees issue.  

Homeowner Associations: HOA Properly Awarded Fees Against Trustee And An Individual Suing As Property’s Successor-In-Interest

Homeowner Was Assessed With About $76,000 In Fees Awardable In HOA’s Favor.

            Plaintiff, who sued as a trustee of her deceased father’s trust and individually as successor-in-interest to a condominium property, lost an exclusive garage use dispute against the HOA through a summary judgment motion, which was affirmed on appeal.  HOA then was awarded about $76,000 in attorney’s fees as the prevailing party under a CC&R fees clause, with the award entered against plaintiff in both capacities. 

            Plaintiff’s appeal of this dual capacity determination was affirmed in Michaelson v. V.P. Condominium Corp., Case No. D071215 (4^th Dist., Div. 1 Feb. 21, 2018) (unpublished).  The reason was that plaintiff did sue in two capacities, such that the fee award was not just limited to trust assets. 

Homeowner Associations/Reasonableness Of Fees: HOA Properly Awarded $31,375 Out Of $91,936 Base Line Lodestar Fee Request

Trial Judge Did Not Err In Assessing Settlement Offers With Respect To Overall Request.

            In Villa Riviera Condominium  Assn. v. Berg, Case No. B269191 (2d Dist., Di. 3 Feb. 8, 2018) (unpublished), HOA did win a CC&R assessment battle against homeowner on a summary judgment motion, then seeking a lodestar amount of $91,936 in attorney’s fees, plus “fees on fees.”  Homeowner argued that more than half the fees were incurred to unsuccessfully pursue claims against homeowner’s former wife.  Also, opposing party indicated that HOA offered to settle the matter for $40,000 earlier in the case in stark contrast to the $91,936 in fees now requested, drawing objections that these settlement communications were privileged information.  The trial judge overruled the objections and entered a fee order of $31,375 in favor of HOA.

            HOA was not happy and appealed, asking for more.  HOA did not get any more.

            The appellate court found that the settlement offer was probative, given it was offered to show that the fees incurred by HOA were disproportionate to the perceived value of HOA’s claim.  Beyond that, the reviewing court relied on Meister v. Regents of University of California, 67 Cal.App.4^th 437, 449-450 (1998) to recognize that a settlement offer may be used to assess the reasonableness of a later fee request.  As far as to the amount of fees awarded, the lower court did not abuse its discretion in reducing fees and did not have to articulate its findings in a detailed ruling.