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- CONTINUING LEGAL EDUCATION
- Off Topics
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- Year in Review
- In The News . . . . Recent Surveys Confirm That More Law Firms Today Are Absorbing Online Research Costs As Overhead
- Fee Clause Interpretation: Clause Allowing For Recovery Of Legal Expenses Sensibly Encompassed Recovery Of Attorneys Fees
- Costs/Deadlines/Probate: Because Probate Code Does Not Require A Formal Judgment, 15-Day Costs Memorandum Filing Deadline Ran From Clerk Served Notice Of Ruling Denying Cross-Petition
- Equity/Prevailing Party: Trial Courts Failure To Specify Fee Entitlement Basis Required Remand Of Fee Award
- Costs/Fees As Damages: Costs Of Appraisal Sought To Be Recovered Under Contractual Fees Clause Not Obtainable Based On Failure To Provide Proof At Damages Stage Of Case
- Prevailing Party: Trial Court Did Not Err In Finding Neither Party Prevailed In HOA Driveway Characterization/Slander Of Title Dispute
- Section 1717: Fee Award To Contract Nonsignatory Reversed Because Nonsignatory Cannot Recover Fees On Noncontract Claims
- Substantiation Of Reasonableness Of Fee Requests: N.D.Cal. Magistrate Judge Takes A Sickle To Discovery Sanctions Free Requests by Samsung And Apple
- In The News . . . . Patrick J. Lamb Provides 13 Tips For Preparing Value-Fee Engagement Letter . . . And Nonequity Partner Compensation Is All Over the Board
- Civil Rights/SLAPP: Winning Post-Appeal Defendants Properly Awarded SLAPP Fees Against Plaintiff In Civil Rights Case
- 2008-2009-2010-2011-2012 Marc Alexander & William M. Hensley
Cases: Homeowner Associations
November 15, 2012
Prevailing Party: Trial Court Did Not Err In Finding Neither Party Prevailed In HOA Driveway Characterization/Slander Of Title Dispute
In Mankowski v La Cumbre Owners Assn., Inc., Case No. B236025 (2d Dist., Div. 6 Nov. 13, 2012) (unpublished), plaintiff townhouse owner was apparently really mad that the trial court found no one prevailed in her slander of title/declaratory relief action over the characterization of a driveway after her sister contributed to her incurring attorney’s fees of $17,726.45 after sister lost a prior towing dispute.The procedural history of the case showed that plaintiff was summary adjudicated out of her slander of title claim, and that the lower court really decided the driveway characterization issue under the declaratory relief claim in a manner that neither party really advocated. Under these circumstances, no one was found to prevail.Fee denial affirmed in this one. After all, plaintiff lost the slander of title claim and the remaining declaratory relief claim was decided somewhat in plaintiff’s favor, but not on the theory really advanced by either side. Because the “prevailing party” determination in an unclear winner situation is reviewed for abuse of discretion, plaintiff did not hurdle this formidible review standard based on the facts of this particular cause.
August 28, 2012
SLAPP: Homeowner Not Appealing Merits Determination Had No Basis To Challenge Fee Award To Winning HOA
$8,744.50 Fee Award Affirmed on Appeal.
The underlying dispute was a homeowner-homeowner association (HOA) dispute in which defendants represented HOA but homeowner sued the HOA attorneys for legal malpractice. Defendants won a SLAPP motion and were awarded $8,744.50.Homeowner appealed the adverse result in Kumar v. Robert E. Weiss Inc., Case No. B234663 (2d Dist., Div. 8 Aug. 27, 2012) (unpublished).No change in result on appeal.The main reason was that the merits of the SLAPP grant were not timely appealed, such that the merits challenges could not be entertained with respect to the fee order on appeal either. (Maughan v. Google Technology, Inc., 143 Cal.App.4th 1242, 1246-1247 (2006) [discussion on timely appealing SLAPP merits order].) Because there were no further challenges to the fees in any other respect, the fee order had to be affirmed in entirety.
August 18, 2012
Costs/Homeowner Associations: Some Possible Implications Arising From California Supreme Court’s Pinnacle Decision
May Have Some Repercussions for Construction Defect Litigation Costs and Homeowner/HOA Fee Recovery.
On August 16, 2012, our state supreme court issued its opinion in Pinnacle Museum Tower Assn. v. Pinnacle Market Development, Case No. S186149 (Cal. Sup. Ct. Aug.16, 2012). The high court found that CC&Rs mandating arbitration between developers and homeowner associations (HOAs) were enforceable under the Davis-Stirling Act and were not unconscionable in nature.There are at least two possible implications arising fromPinnacle that have importance in the attorney’s fees area.First, it reaffirmed that expert witness fees in construction defect cases are not recoverable as routine post-trial costs (see Code Civ. Proc., §§ 1033.5(b)(1),1033.5(a)(8) [only expert witness fees of court-ordered expert are recoverable as costs]), but can be recoverable as Civil Code section 3333 damages. (Stearman v. Centex Homes, 78Cal.App.4th 611, 624-625 (2000).) Keep in mind that this means such expenses must be pled and proven during the course of the case, including proof at the time of trial absent a stipulation to the contrary accepted by the court.
Second, reading all of the viewpoints in Pinnacle(majority, concurring, and dissenting) seems to suggest that CC&Rs are not strictly contractual in nature. If so, this may change the result in some opinions where attorney’s fees were awarded under Civil Code section 1717. However, the “end game” result may not matter, given that fee recovery is likely in most situations under Civil Code section 1354 [fees allowable for CC&R enforcement activities].For a more in-depth discussion of Pinnacle, see co-contributor Marc’s August 16, 2012 post on his California Mediation andArbitration website.
Homeowner Associations/POOF!: Strange Procedural Posture Requires Reversal Of $46,300 Fee/Costs Order When Judgment of Dismissal Reversed in Fourth Appeal of Dispute Involving Homeowner and HOA
Bizarre Circumstances Led to Reversal and Denial of Motion to Dismiss Appeal of Fee/Costs Award.
Well, the fourth appeal in a longstanding mold/water intrusion/infestation dispute between a homeowner and HOA involved homeowners’ challenge to a judgment of dismissal in favor of HOA as well as the lower court’s order awarding HOA attorney’s fees of $37,336 and costs of $8,972.The Fourth District, Division 3, in Adams v. Newport Crest Homeowners Assn., Case No. G045590 (4th Dist., Div. 3 Aug. 16, 2012) (unpublished), authored by Justice Moore on behalf of a unanimous panel, reversed the judgment of dismissal based upon a granting of a prior demurrer ruling where no leave was granted to homeowner on her pleadings.Homeowner also challenged the fee/costs award, and HOA argued that the appeal should be dismissed or she waived the ability to challenge by not expressly appealing the subsequent postjudgment order. Good points, the appellate acknowledged, but not good enough under the strange procedural posture of the situation. What happened is this: demurrer ruling was made and notice of entry was served; fee motion was filed by HOA; homeowner filed her notice of appeal from a purported judgment of dismissal, but the appellate court wanted her to cure a deficiency by actually obtaining a judgment of dismissal; fee hearing held and fees awarded; and formal order awarding fees was filed on the same date as judgment of dismissal obtained (and, importantly, the judgment of dismissal included the fee award pronouncement in it).Under these circumstances, the motion to dismiss/waiver argument did not prevail. “It would be a curious thing to hold that Adams was required to file a second notice of appeal from the same judgment in order to challenge the portion thereof containing the attorney fees award. Newport Crest cites no legal authority for the proposition that Adams’s challenge to the attorney fees award must be dismissed under the peculiar procedural posture of this appeal.” (Slip Opn., p. 24.) The waiver argument was rejected because it is axiomatic that a reversal of a dismissal judgment also means the fee award goes POOF!BLOG PRACTICE POINTER--There is also another practice pointer emerging from this opinion. HOA’s motion to dismiss was found defective for failure to comply with California Rules of Court, rule 8.54. This rule requires a separate written motion from the respondent accompanied by a separate memorandum and possibly declarations or other supporting evidence. Simply making a motion to dismiss argument in appellate briefs is not compliant with rule 8.54.
August 03, 2012
Allocation/Homeowner Associations: HOA Members Losing HOA Interest In Foreclosure Action Had To Bear Fee Exposure To HOA
Apportionment Not Required.
Weiss v. Citrus Heights, LLC, Case No. D058614 (4th Dist., Div. 1 Aug. 2, 2012) (unpublished) is yet a stark reminder in these economic times of fee exposure that can be visited upon foreclosed owners of homeowner association interests.The Jumbo Lemon. 1925.In this one, homeowners in an HOA lost a controversy on who was responsible to maintain a sewer system in the common interest development. However, homeowners lost their unit to a nonjudicial foreclosure. Usually (and it was ultimately determined), this meant homeowners also lost any ability to continue the litigation dispute.HOA was awarded $60,610 (out of a requested $66,414) in attorney’s fees based on CCP § 1354(c) and a fee-shifting provision of the CC&Rs. Homeowners argued that the trial court should have allocated fees between HOA work and work incurred in prosecuting a cross-complaint against the developers and City of Escondido.Because entitlement was not at issue, only the appropriateness of apportionment was really at hand for determination. The HOA’s attorney declaration demonstrated why all the work should be included, credible enough to support the determination to not apportion. Fee award to HOA affirmed.
June 29, 2012
Homeowner Associations/POOF!: Reversal Of HOA Award Means Homeowner Survives To See What Happens On Remand
Appellate Court Tells Everyone That Some Claims May Not Be Compensable.
Homeowner Association (HOA)/homeowner disputes seem to be very acrimonious. However, depending on who prevails, there may be fee exposure under Civil Code section 1354 (CC&R enforcement) or Civil Code section 1717 (contractual fee enforcement). But, each side may have to wait until the end of the day--including numerous appeals--to decide who prevails, so that may factor into the decision into how to resolve the dispute (although we leave it to you to decipher, given the specifics of a case).Cathedral Hill Tower Condominium Assn. v. Garbar,Case No. A124711 (1st Dist., Div. 3 June 29, 2012) (unpublished) is a third appeal between HOA and homeowners, apparently revolving about homeowners‘ installation of ceramic tile on balcony and unauthorized renovations to their condominium unit.Even after a 7-day bench trial, one can argue that HOA and homeowners got a mixed result after the appellate court’s scrutiny of events.Well, the appellate court reversed a dismissal of a third amended cross-complaint claims by homeowners, which meant that the lower court’s attorney fee award based on the dismissal went POOF! also. However, the apppellate court did give guidance by suggesting that certain claims may not be subject to fee recovery--so, scrutinze maybe, was the appellate admonition maybe.BLOG UNDERVIEW--Just to show you that us bloggers stay somewhat in tune, see Carly Rae Jepsen’s hit song, “Call Me Maybe,” perhaps an interesting way in which a lot of us interact in the new technology wave and also tells us that fee disputes should be resolved “if only maybe.”
June 15, 2012
Homeowner Associations: HOA Cannot Gain Fee Recovery Even For Frivolous Recall Election Dispute Loss By Plaintiff Homeowner
Statutory Language Did Not Encompass Losing Homeowners, So Concluded in a “Reluctant” Decision By the Appellate Court.
This next case demonstrates judicial restraint based on the appellate court’s construction of the governing statutory language. If they could have done otherwise, they would have -- we surmise -- but the panel left this “loophole” for the Legislature to address in the future.In That v. Alders Maintenance Assn., Case No. G044799 (4th Dist., Div. 3 June 15, 2012) (certified for partial publication; fee discussion published), plaintiff homeowner lost a recall election challenge that the lower court found to be frivolous in nature, a merits determination affirmed on appeal. However, the lower court also awarded defendant HOA approximately $15,000 in attorney’s fees based on the unsuccessful frivolous action under Civil Code section 1363.09(b), which allows a prevailing homeowner member to recover reasonable fees and costs but only allows a prevailing HOA to recover “costs” in the event the action is to be found frivolous, unreasonable, or without foundation.With reluctance, the appellate court reversed in a 3-0 opinion authored by Justice Moore.Even though fees are recoverable as “costs” under CCP § 1033.5(a)(10), that only is dictated if fees are statutorily authorized, which brought the court back to section 1363.09(b). The problem is that if the Legislature had intended fees to be recoverable for frivolous actions, it could have drafted the ending language to say “reasonable fees and costs” rather than just “costs.” Also, other sections of the Davis-Stirling Act had very clear fee entitlement provisions, unlike the language in section 1363.09(b). The appellate court did agree that the Legislature should plug this “loophole.”BLOG UNDERVIEW--There is also another lesson for all practitioners when seeking fees. State all the grounds for fee entitlement, and do it in the trial court or risk forfeiture on appeal. That happened here. HOA claimed on appeal that the CC&Rs (a contract) allowed for recovery of the fees, but the CC&Rs were never provided to the trial court such that the failure to raise/prove it meant this independent basis for fee recovery could not be considered.Dr. Smith from “Lost in Space”: “Oh, the pain”
May 17, 2012
Homeowners Associations: HOA Garners About $140,000 In Fees And Costs Against Homeowner Bringing Frivolous Challenge To Board of Director Election
Civil Code Section 1363.09(b) Was One Basis For Award.
Lingle v. Quail Ridge Residential Assn., Case No. A129505 (1st Dist., Div. 4 May 17, 2012) (unpublished) is a case where an HOA prevailed against a homeowner challenging conduct resulting in the election of HOA’s board of directors. Unfortunately for homeowner, the lower court determined that attorney’s fees of $130,868.90 and costs of $9,052.60 should be awarded to HOA as prevailing party under Civil Code section 1354(c) (relating to CC&R enforcement) and Civil Code setion 1363.09(b) (which allows a prevailing party to obtain fees/costs should the court determine the board election challenge was frivolous in nature).The appellate court affirmed on both grounds. With respect to the section 1363.09(b) rationale, the appellate court found basis for sustaining it based upon borrowing the frivolity standard from the seminal Title VII case ofChristiansburg Garment Co. v. EEOC, 434 U.S. 418, 421 (1978).
April 20, 2012
Homeowner Associations/Prevailing Party: HOA Winning Preliminary Injunction That Produced Repairs To Homeowner’s Deck Was The Prevailing Party Even After HOA Dismissed Complaint Without Prejudice After Repairs Made
Homeowner Had to Pay Fees of About $35,000, But Appellate Court Had To Face An Olio Of Civil Code Section 1354 “Prevailing Party” And Stay/Preliminary Injunction Bond Issues.
Okay, here we go with another homeowners association (HOA)-homeowners fight that, ta! da!, produced an ultimate fight over who was owed attorney’s fees and costs. HOA won this one, both in the trial and appellate courts.HOA had homeowner’s decks replaced after water was leaking into another homeowner’s domain. However, homeowner would not provide access or remove items so that subsequent warranty repairs could be made, prompting HOA to seek and obtain a preliminary injunction to gain access to the deck and have homeowner remove items so repairs could be completed. HOA posted a $30,000 preliminary injunction bond. After the repairs were made, HOA dismissed its complaint without prejudice. HOA sought fees/costs of $24,017, homeowner sought fees/costs of $36,528.50, and homeowner sought to enforce liability against the preliminary injunction bond. The lower court awarded HOA its sought-after fees, awarded HOA additional fees of $10,621 for having to pursue a couple of additional motions, and stayed homeowner’s attempt to enforce liability on the preliminary injunction bond until the appellate court decided who indeed prevailed.HOA got the better of it on appeal in Highlands Owners Assn. v. Cobler, Case No. B216797 (2d Dist., Div. 4 Apr. 17, 2012) (unpublished), in a very analytical 3-0 decision authored by Presiding Justice Epstein.HOA, indeed, was the prevailing party under Civil Code section 1354, the CC&R enforcement fee-shifting provision, with the determination being made on a practical level. The appellate court rebuffed the suggestion that the prevailing party test for general routine costs statute should also apply to fee determinations under section 1354, undertaking an examination of the legislative history on costs statute changes to show that it should not. The practical analysis of who achieved litigation objectives is the governing standard under section 1354. (Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1153 (2011).)Whether or not HOA failed to participate in the ADR process mentioned in Civil Code section 1369.580 was irrelevant to the “prevailing party” determination, although it might impact the amount of any fee award.The appeal of the fee/costs award under section 1354 did not prevent the trial court from awarding additional fees and costs incurred by the HOA on other motions, because they were akin to future damages. (Warsaw v. Chicago Metallic Ceilings, Inc., 35 Cal.3d 564, 574 (1984).)
March 14, 2012
Homeowner Associations/Mediation/Substantiation Of Fees: Homeowner Hit With Fee Recovery For Failing To Satisfy Mediation Condition Precedent In Settlement Agreement With HOA
$58,212 Was the Fee Price Tag for Noncompliance With Mediation Condition Precedent.
Usually, we see what happened in the next case occurring instead under California Association of Realtor (CAR) sale/purchase form contracts, which have attorney’s fees clauses that are conditioned upon one or both parties attempting to mediate a dispute before resorting to arbitration/litigation. In the next case, a settlement agreement between HOA and homeowner stemming from a mold/water intrusion prior dispute dictated that homeowner pursue mediation first before resorting to the courts. She did not, suffering an adverse fee award in favor of HOA.In Adams v. Newport Crest Homeowners Assn., Case No. G044230 (4th Dist., Div. 3 Mar. 13, 2012) (unpublished), homeowner wanted to enforce the settlement agreement but not the part that indicated she should pursue mediation first. That was a big mistake, because the trial court granted the defense motion to enforce the settlement agreement--inclusive of the mediation condition precedent--and awarded it $58,212 (out of a requested $63,380) in attorney’s fees for prevailing on the motion to enforce under the settlement agreement fees clause.Justice Moore, writing for a 3-0 panel of our local Santa Ana appellate court, affirmed. The settlement agreement fees clause was broad, applying to “any dispute” concerning an obligation under the settlement agreement lost by homeowner. Entitlement established. Next, this was no interim resolution, but a final resolution of the proceedings at stake in the same litigation, with HOA meeting its objective to prevent homeowner from suing by leapfrogging the mediation process. (Don’t you just love that word, leapfrogging?) The amount of the fee award was adequately documented using very reasonable rates ($170 per hour), with HOA doing something smart off the bat--it only requested $63,380 in fees although documenting over $81,000. That gave HOA increased credibility when it came to having its fee petition reviewed both before the trial and appellate courts.BLOG UNDERVIEW--Leapfrog derives from a children’s game dating back to the 1590s--and we know that you get a mental picture of how that game was played!
Children playing “leapfrog” in Harlem circa 1930. Wikimedia Commons.
December 12, 2011
Homeowners Association: Surplus Fees Obtained After Nonjudicial Foreclosure Of Delinquences Belonged To Homeowner, Not To Foreclosing Trustee
Second District, Division 7 Has Nice Discussion of Fees/Costs Distribution of Surplus Fees After HOA Delinquency Foreclosure.
For anyone practicing homeowner association law, this next case is a great primer on the expenses and fees that can be obtained by the foreclosing trustee in an HOA delinquency nonjudicial foreclosure lawsuit or its aftermath.What happened in this case is hardly shocking, but was not condoned by either the trial or appellate courts inRegister v. Gabriel, Case No. B226844 (2d Dist., Div. 7 Dec. 12, 2011) (unpublished).In a word, after homeowner lost a HOA delinquency foreclosure suit and set aside follow-up action, surplus funds from the nonjudicial foreclosure were disbursed by the foreclosure trustee’s attorney to trustee in payment of trustee’s set aside lawsuit defense costs.The trial court did not buy it, saying these disbursements were improper by both the trustee and its attorney. The appellate court agreed.Although the HOA may have been entitled to recoup more in fees, the HOA foreclosure trustee was hamstrung by maximum caps set forth in Civil Code section 2924 et seq. “ . . . the amount of any such fees and costs are expressly limited by statute to recovering expenses related to the trustee’s actual ministerial duties in conducting the sale and in subsequently distributing the sale proceeds.” The extraordinary fees claimed by trustee could only exist if there was an independent sources of fees separate from the statutory scheme, something that did not exist in the case before the court. Trustee was not a party to the CC&R’s or any other governing agreements between the homeowner and HOA, so there simply was no basis for entitlement beyond the small statutory amounts already deducted before surplus funds were disbursed.(By the way, trustee’s attorney got hit with an award to disgorge certain amounts which he passed on to the foreclosure trustee.)
December 07, 2011
Homeowners Association: $20,000 Fee Award To Neighbors In Surveillance Camera Dispute Affirmed Based On Breach Of Settlement Agreement Fee Clause
Entitlement and Breach Were Established.
Well, whether the Holidays or not, neighborhood disputes in common area developments always produce interesting results--often times with someone bearing the sting of fees as the losing parties or both parties walking away after incurring lots of fees. The former was the case in Toler v. LeFevre,Case No. A130010 (1st Dist., Div. 4 Dec. 6, 2011) (unpublished).There, neighboring litigants in a common area development located in American Canyon, CA entered into a settlement agreement about the proper positioning of a surveillance camera by plaintiff after defendants alleged in a related action that plaintiff could view directly into private and common areas of the development. The settlement agreement required shielding of the camera, and contained a fees clause indicating that previously-filed fee motions by defendants could be reinstated if plaintiff materially breached the settlement agreement.Not long after the settlement was reached, defendants claimed that there was a material breach in not shielding the camera by plaintiff, which led to protracted proceedings to establish what was what. Eventually, the trial court established that there was a material breach of the settlement by plaintiff, awarding defendants $20,000 in attorney’s fees under Civil Code section 1354(a) [allowing for recovery of fees in CC&Rs enforcement disputes].The Court of Appeal affirmed, after finding that there was substantial evidence supporting plaintiff’s breach. Plaintiff did not dispute entitlement, but only that there was no breach. With the breach being established, the fee award was affirmed on appeal.BLOG UNDERVIEW--Where is American Canyon? Looks like it is south Napa County, and was formerly known as Napa Junction--part of the San Francisco Bay area.
November 14, 2011
HOA/Prevailing Party: Failure To Award HOA Fees When Plaintiff Dismissed 8 Of 10 Claims Based On Faulty Reasoning Was Abuse Of Discretion
HOA, on Remand, Will Get to Renew Request for $252,767 in Defense Fees.
Here is an interesting one where an appellate courtreversed the denial of a fee award as an abuse of discretion. The reason: HOA clearly prevailed when plaintiff dismissed 8 of 10 claims (some of them based on a fee-shifting statute) such that plaintiff cannot have claimed to prevail no matter what the ending on the two remaining claims.You know we were going to love this one when it began this way:“A party contemplating litigation to enforce the covenants, conditions, and restrictions (CC&Rs) of a condominium project should get the ‘ducks in a row.’ That is to say, such party should be ready to go forward procedurally and prove its case substantively. Failure to do subjects the losing party to an award of attorney fees.”In Salehi v. Surfside III Condominium Owners’ Assn.,Case Nos. B224263/B226400 (2d Dist., Div. 6 Nov. 14, 2011) (certified for publication), plaintiff (an attorney herself, in pro per) sued HOA for failure to maintain/repair the condo project and failure to maintain an adequate replacement reserve fund. On the eve of the trial in this one, plaintiff received an adverse decision on behalf of a client in a similar suit against the HOA. Although her expert had a serious heart condition, plaintiff opted to dismiss 8 of 10 claims rather than seek a trial continuance. Only fraud/misrepresentation claims remained, and plaintiff successfully obtained a trial continuance of these claims. HOA moved to recoup $252,767 in fees for the eight counts voluntarily dismissed by plaintiff. The trial court denied the request, reasoning that the eight count dismissals were motivated by plaintiff’s inexperience and poor decisions rather than any implied concession to the merits of HOA’s case.HOA appealed, obtaining a reversal and chance to recoup fees on remand (aside from recouping costs on appeal as the winner).The appellate court, in a 3-0 decision written with panache by Justice Yegan, found the fee denial was an abuse of discretion. Simply put, plaintiff did not prevail--she was not ready to proceed and dismissed out of faulty reasoning that should not impede HOA from obtaining fees under a mandatory CC&R enforcement fee shifting statute (Civil Code section 1354). Plaintiff did not “practically” prevail and certainly did not achieve her litigation objectives.As an underview, Justice Yegan did observe that plaintiff never claimed that the fee award request was premature based on the pendency of the other two claims. However, the appellate court did point out “that prudence may dictate that the trial court postpone ruling on an attorney fees request until all causes of action have been resolved.”
October 20, 2011
Homeowner Associations: Substantial $306,464.63 Fee Award To Some Prevailing Defendants And $236,976 Fee Award To HOA Sustained By Appellate Court
Actions Involved Enforcement of CC&Rs, With Trial Court Reasonably Awarding a Lodestar Amount After Reductions.
Yet again, we have a homeowner-HOA dispute resulting in substantial fee awards against a homeowner and in favor of two set of defendants. Seltzer v. Eugene Burger Management Assn., Case No. A128552 (1st Dist., Div. 3 Oct. 19, 2011) (unpublished) provides a warning to liitgants in homeowner-HOA disputes that clear prevailing parties will obtain fees, and they can be substantial (and crippling) in nature--resulting in financial ruin for homeowners and resulting in increased assessments for losing HOAs.Basically, homeowner sued for CC&R violations, and HOA cross-complained for delinquent assessments and homeowner’s violation of unauthorized building modifications. Homeowner lost against non-HOA/HOA defendants, and HOA won over $50,000 for unpaid homeowner assessments. Subsequently, the lower court awarded $304,464.63 in fees to defendants and HOA $236,976 in attorney’s fees under Civil Code section 1354 (which allows for fee shifting to the prevailing party in a suit to enforce CC&Rs). An appeal followed
Justice Bedsworth, Always Colorful, Pens this Colorful Homeowner-HOA Decision Over No Less Than Tree Trimming to Preserve Ocean Views.
Okay, in Orange County, litigators of homeowner-HOA disputes see a lot of disputes involving homeowners who do not want to trim trees and HOAs which want them trimmed to preserve ocean views for other residents. Well, Monarch Bay Terrace Property Owners Assn. v. Johnson, Case No. G043518 (4th Dist., Div. 3 Oct. 19, 2011) (unpublished) involved such a dispute where HOA obtained a primary $55,034 attorney’s fees award for enforcing a settlement earlier reached between a homeowner in a tree/ocean view dispute. Homeowner appealed, arguing that HOA did not prevail, but Justice Bedsworth--writing colorfully for a 3-0 panel--saw things otherwise. (How about this for a start: “This is a case about a tree--a pretty litigious tree it seems, for this is not its first time in court.” We know that the tree did not sue, although former U.S. Supreme Court Justice William Douglas did indicate in an environmental decision of note that trees should have standing. Justice Bedsworth also went on to talk about Joyce Kilmer’s poem on trees which began with the line “I think that I shall never see a poem lovely as a tree,” but did distinguish it in the pending controversy because “as far as we know, [appellant] offered no poetic comparisons between the aesthetic values of trees and oceans.”)The affirmance of the appeal really revolved around the fact that HOA ultimately prevailed so, as Justice Bedsworth said, “one fight, one victor--and to the victor went the spoils.” The main challenge was that the lower court initially had denied HOA’s request for fees at an earlier juncture “without prejudice.” However, the appellate court found that this did not mean that HOA might not ultimately win later (as it did) in light of subsequent proceedings, given that the settlement did allow for such additional fees. Fee award affirmed.
August 02, 2011
Homeowners Association/Reasonableness Of Fees: $21,588 Fee Award To Plaintiff Homeowners Affirmed On Appeal
Homeowners Failure to Participate in ADR Only Impacted Fee Award Amount, Which Was Not Challenged Properly.
In Chacon v. Brookhurst Village Condominium Assn.,Case No. G043984 (4th Dist., Div. 3 July 29, 2011) (unpublished), plaintiff homeowners were found to be the prevailing parties in an HOA dispute over a board election. A lot of time and energy were spent on who did and who did not agree to participate in ADR, with plaintiffs apparently winning the battle. They then moved for fees as the prevailing parties under the CC&Rs, because fee entitlement extends to an action challenging the propriety of an election under the HOA bylaws. (Kaplan v. Fairway Oaks Homeowners Assn., 98 Cal.App.4th 715, 720-721 (2002).) They were awarded fees of $21,588 and costs of $1,708.HOA appealed, but lost.The fee award to the prevailing parties was mandatory under Civil Code section 1354. Even if they failed to participate in ADR (which was likely not the case), that only impacted the amount of the award. (Civ. Code, § 1369.580.) The amount of fees were not excessive, with HOA not providing any declaration to show otherwise. Also, prelitigation fees were a proper component of the award. (Stokus v. Marsh, 217 Cal.App.3d 647, 655 (1990).)The 3-0 opinion was authored by Acting Presiding Justice Rylaarsdam.
March 26, 2011
Homeowner Associations: Attorney’s Fees Clauses In Unrecorded CC&R Enforcement Committee Manuals Did Not Create Enforceable Fee Clauses In The Absence Of Amending The CC&Rs
Third District Issues Important Decision in the CC&R Enforcement Area.
The Third District in Ferwerda v. Bordon, Case No. C062389 (3d Dist. Mar. 25, 2011) (certified for partial publication on the fee issue) has decided an important case with respect to enforcing attorney’s fees clauses contained in unrecorded CC&R enforcement documents and manuals. In a word, the Court of Appeal held that unless such fees clauses are approved as an amendment to the CC&Rs, such clauses may not be enforceable.
March 24, 2011
Homeowner Associations/Prevailing Party: HOA Was Not Liable For Fees And Costs When It Obtained Injunctive Relief Before Dismissing Its Complaint Voluntarily
Defendant Not Entitled to Fees Where Contractually-Based Complaint Voluntarily Dismissed And Not Entitled to Costs Under Discretionary Prevailing Party Provision.
Homeowner association (HOA)/homeowner disputes have resulted in us doing a fair amount of posts under our category “Homeowner Associations.” Here is one more to add to the list, with a homeowner seeking $64,572.84 in fees and costs although he was both at the trial and appellate court levels.In Leadwell Homeowners Assn. v. Deppen, Case No. B224870 (2d Dist., Div. 1 Mar. 22, 2011) (unpublished), HOA sued defendant homeowner to obtain compliance under the CC&Rs, obtaining a TRO and preliminary injunction. After obtaining this relief, HOA dismissed the case voluntarily. Homeowner then moved to recoup $64,572.84 in fees/costs ($23,900 identifed as attorney’s fees). The lower court decided that the dispute was contract based and that the voluntarily dismissal meant no fee recovery was allowable under the Santisas rule [see our Leading Cases]. Homeowner was also denied recovery of routine costs. Homeowner appealed.
March 18, 2011
Allocation/Appealability/Homeowner Associations/Reasonableness Of Fees: $190,065 Fee Award Affirmed in “Acrid Dispute Between Neighbors” Under CC&Rs
Trial Court’s Significant Reductions in Requested Fees Obviated Need to Apportion With Mathematical Precision.
The next case illustrates a result we see often in appellate decisions when apportionment of fees is necessary as between compensable and noncompensable claims: a lower court’s reduction of fee requests obviates the need to perform a CPA-like audit of billings when undertaking apportionment activities.In our prior post of June 25, 2009, we explored Harm v. Hetman (Harm II), a case where the Fourth District, Division 3 reversed the denial of a $201,150 fee request by plaintiffs in “an acrid dispute between neighbors” in an HOA. The reversal occurred based upon an earlier appeal in which certain ruling reversals meant that plaintiffs were prevailing parties under the CC&Rs, Civil Code section 1717, and Civil Code section 1354. Now, this “acrid dispute” apparently has ended for now with the third appeal affirming the lower court’s award of fees to plaintiffs upon remand.Harm v. Hetman, Case No. G043206 (4th Dist., Div. 3 Mar. 16, 2011) (unpublished) (Harm III) involved an appeal from the lower court’s decision to award plaintiffs the total sum of $190,065 in attorney’s fees, broken down as $75,754 for trial work and $114,311 for appellate work. Defendant Hetman appealed.
March 12, 2011
Homeowners Associations: Civil Code Section 1354 Did Not Allow Third Party To Recoup Fees From Losing Homeowner
Section 1354 Only Applies in Homeowner-Homeowner Association Disputes.
The scope of Civil Code section 1354, which permits homeowner associations and homeowners to recover attorney’s fees in actions to enforce an HOA’s governing documents, was at issue in the next case out of our local Santa Ana appellate court.In Chen v. Association Lien Services, Case No. G042959 (4th Dist., Div. 3 Mar. 11, 2011) (unpublished), homeowner sued his HOA along with several third party entities for wrongful foreclosure, rescission/restitution, breach of fiduciary duty, willful misconduct, accounting, and various unfair business practice claims under both state and federal statutes. Homeowner lost his bid for class certification, but eventually settled with the HOA for $175,000. Chen and one third-party lien service proceeded to trial, which concluded with a hung jury. After the settlement, homeowner dismissed his action without prejudice. Third party lien service moved to recover from homeowner $1,076,227.14 in attorney’s fees under section 1354, a request denied by the trial court.
February 02, 2011
Intervenors: Prevailing Intervenor Neighbor In Homeowner/HOA Lawsuit Over Permit Denial Properly Awarded Attorney’s Fees Of $49,650
Second District, Division 6 Finds Intervenor Was In Same Position As Parties to the Lawsuit for Fee Shifting Purposes.
Here is a case involving an interven0r for our category “Intervenors”--a category that we have not posted on for some time. The case is Larson v. Las Posas Hills Homeowners Assn., Case No. B219066 (2d Dist., Div. 6 Feb. 1, 2011) (unpublished) and comes out of the Second District, Division 6.
February 01, 2011
Homeowners Association/Standard Of Review/Allocation/Substantiation of Fees: Substantial Cross-Fee Awards Affirmed Across The Board In Acrimonious Tree View Dispute
Second District, Division 1 Finds No Abuse of Discretion in Various Fee Awards.
It is amazing how ocean views, privacy, and trees all seem to be in the mix of many neighbor/homeowner association disputes. The next one is no exception, producing substantial cross-fee awards under Civil Code section 1354 that probably only made the lawyers happy participants in the overall controversy.Murrell v. Rollings Hill Community Assn., Case Nos. B202019/204632 (2d Dist., Div. 1 Jan. 31, 2011) (unpublished) opens with this nice summarizing paragraph: “A contentious and costly feud over trees and a neighbor’s view has spawned multiple legal actions, cross-actions, five appeals and two cross-appeals. George and Anne-Merelie Murrell and Leonard and Linda Fuller are neighbors on adjacent residential lots overlooking the Pacific Ocean in the city of Rolling Hills. To obtain an unobstructed ocean view, the Fullers wanted certain trees on ‘the Murrell property’ trimmed or removed. The Murrells, who sought to preserve privacy, resisted. So began the decade-plus dispute now before this court [which also included the Rolling Hills Community Association and a volunteer HOA director].”Boy sitting on pine tree. Maginel Wright Barney. Library of Congress.Except for the director, the Murrells, Fullers, and HOA got mixed results, but results that a referee and trial court could parse out to make the following fee awards: (1) $399,930.88 (out of a requested $647,974.25) in fees to the Murrells and against HOA, but with HOA obtaining $159,148.84 (out of a requested $237,053) in fees against Murrells on a pine tree claim; and (2) $333,525 (out of a requested $488,906.69) in fees to the Fullers and against the Murrells. The Murrells and HOA appealed the various fee awards and various merits rulings.Presiding Justice Mallano, in a 63 page unpublished opinion on behalf of a 2-1 panel, affirmed across the board. (The dissenting justice did not agree with some merits adjudications and one particular fee award.)The $159,148.84 fee award to HOA did not surmount the deferential abuse of discretion review standard. (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) [one of our Leading Cases].) Although a different judge decided a fee request than the judge presiding over germane matters, the Murrells failed to cite authority as to why de novo review was warranted under the circumstances The trial court even apportioned out noncompensable work from compensable work, with the Murrells failing to pinpoint what aspects of the apportionment were wrong. A moving declaration authenticating time records was competent substantiation of the work expended, and a $250 hourly rate for one associate was found to be proper. Other challenges to generalized charges were forfeited by the Murrells’ failure to provide citations to the specifics.The Murrells were not any more successful on their challenges to the $333,525 fee award to the Fullers and to the inadequacy of the $399,930.88 fee award to them. A referee was appointed and made proper calculations of what fees should be recovered by each side. Some hourly rates were pared down correctly by the referee because the moving party failed to present evidence of what attorneys were paid in the downtown L.A. market. The apportionment used by the referee and trial court, which is applicable to section 1354 fee awards, was no abuse of discretion given the overlapping nature of the various claims. Again, the generalized attacks of reasonableness by the Murrells did not meet their burden of challenging the fee award to the Fullers. (Farber v. Bay View Terrace Homeowners Assn., 141 Cal.App.4th 1007, 1015-1016 (2006).)Finally, on a costs issue, the appellate court majority ruled that Civil Code section 1354 does not allow recovery of costs not authorized under Code of Civil Procedure section 1032, such as phone charges, copying charges, and expert witness expenses.Putting into perspective the social utility of $400,000 in attorney’s fees spent on a neighbor tree view dispute, we note in passing that $400,000 will buy 26,667 doses of flu vaccine at $15/dose, 6,667 doses of malaria vaccine, at $60/dose, and 50,000 meals on wheels, at $8/meal; and, that in 2009, median household income in the United States was $49,777, an amount that has since declined.
November 22, 2010
Homeowner’s Associations And SLAPP: Judgment And Fee Awards Correctly Awarded Against Homeowner Trustee As An Individual
Fourth District, Division 1 Sees No Error in Individual Assessment.
In San Diego Country Estates Assn., Inc. v. Ward, Case No. D055182 (4th Dist., Div. 1 Nov. 22, 2010) (unpublished), an HOA and homeowner (a trustee of his revocable inter vivos trust) got embroiled in a retaining wall construction dispute in which trustee was hit with a judgment and attorney’s fees, assessed against the trustee in both his trust capacity and as an individual. He appealed in the individual capacity assessment of the awards against him.The backdrop was that defendant built a retaining wall without getting necessary pre-approvals from the HOA, even though he did so for a prior room addition and a previous pool/patio construction. The retaining wall construction was disapproved because it was found to pose a risk to neighboring properties. Also, defendant lost an unopposed SLAPP motion on his cross-complaint against HOA and individual volunteer members of the Board. The lower court found him individually responsible for the $10,845 in fees and costs incurred by the HOA. HOA then won a summary judgment, with defendant contesting he should be personally responsible for any costs or fees.In rebuffing defendant’s claim, the appellate court found that the record showed defendant personally had controlled all improvements to the property and controlled the litigation, such that he would be personally liable for fees and costs under Probate Code section 18001. (See also Haskett v. Villas at Desert Falls, 90 Cal.App.4th 864, 878 (2001).)
October 02, 2010
Second District, Division 2 Finds Settlement Stipulation Allowed for 1717 Fee Recovery.
In Duenas v. Fraccionamiento Villas Del Mar, S.A.,Case No. B219112 (2d Dist., Div. 2 Sept. 30, 2010) (unpublished), parties to a Baja California condominium dispute settled, reached a stipulation that all issues but a note payment issue in favor of plaintiff—including the recovery of costs and attorney’s fees—were reserved for determination by the court. Plaintiff moved to recover fees, with the trial court awarding her $14,767.50 as the prevailing party. Defendant appealed, arguing that the dismissal pursuant to a settlement meant there was no prevailing party under Civil Code section 1717(b)(2).Wrong, 1717(b)(2) is not applicable said the appellate panel. The parties expressly stipulated that the matter remained pending before the trial court so that the court could make a prevailing party determination. Pragmatically speaking, the bargain between the parties was to be enforced, and plaintiff did prevail in the matter. (Kachlon v. Markowitz, 168 Cal.App.4th 316, 349 (2008).) Fee award affirmed.
August 18, 2010
Block Billing Per Se Will Not Tank a Fee Request.
Under our category "Homeowner Associations," we have reviewed numerous decisions where homeowners or HOAs feel the sting of "victory or defeat," even if ABC's famous "World of Sports" mantra was not directly in play. Well, we have another one to share with you—where the homeowner got stung with bearing hefty fees.Another Mantra: Allen Ginsberg chants Hare KrishnaLakeshore View Homeowners' Assn. v. Tu, Case No. A123298 (1st Dist., Div. 1 Aug. 17, 2010) (unpublished) was a case where defendant homeowner lost a case against a HOA, even though a partial set-off was granted. The net judgment to HOA was $23,584.68, after the set-off of $4,000 in homeowner's favor. Later, HOA filed to recoup attorney's fees of $109,513, but the trial judge awarded fees of $65,707.80. Homeowner appealed, contesting only the amount of the fee award.
August 04, 2010
Homeowners Associations And Section 1717: Homeowner Demonstrating Inapplicability of CC&Rs Entitled To Fee Award Under Civil Code Section 1717
Reciprocity Principle Underlying Section 1717 Required Reversal of Fee Denial.
Here is a decision emphasizing that Civil Code section 1717 reciprocity principles will prevail, even where a successful litigant shows that the contract (in this case, CC&Rs) was inapplicable. The fees clause had to be construed as mutual in nature. The lower court did not do so, but that is why reviewing courts are around—as you readers shall soon see.In Discovery Bay Property Owners Assn., Inc. v. DiFate, Sr., Case No. A127505 (1st Dist., Div. 2 August 4, 2010) (unpublished), homeowner beat a HOA challenge to his installation of multiple curb cuts for additional driveways through the sidewalk area in front of his lot. The CC&Rs had a fees clause pertaining to enforcement of any recorded restrictions. Homeowner then sought to recover $2,057.89 in costs and $46,833.23 in attorney’s fees (under Civil Code section 1717 and Civil Code section 1354). HOA did not oppose the cost request and did not argue that the fee request was unreasonable. However, HOA argued fees were inappropriate because the trial court found the CC&Rs inapplicable in resolving the dispute. The trial court said “no” to the homeowner’s fee request.On appeal, the Court of Appeal said “yes” to the homeowner’s fee request.Boiled down to its essence, the appellate panel found that the fee denial would make a mockery of section 1717’s overarching reciprocity principle. After all, section 1717 allows recovery of fees in a contract fee dispute with a fees clause where the litigant proves the contract is invalid, inapplicable, unenforceable, or nonexistent. (Santisas v. Goodin, 17 Cal.4th 599, 611 (1998) [one of our Leading Cases].) Because CC&Rs are the equivalent of contracts, the reciprocity rule is triggered under section 1717 even though the prevailing party obtains no affirmative relief. (14859 Moorpark Homeowner’s Assn. v. VRT Corp., 63 Cal.App.4th 1396, 1410 (1998); Foothill Properties v. Lyon/Copley Corona Associates, 46 Cal.App.4th 1542, 1555 (1996).) Because HOA would have been entitled to fees under section 1717 had it won, the same goes for winning homeowner.Although a reversal was required to consider fee entitlement on remand, the appellate panel did address the unclean hands argument by HOA—that homeowner’s strident litigation conduct required an outright denial. Not so. Litigation conduct cannot be used to determine who prevailed, but is probative on the issue of the reasonable amount of fees to be awarded. (EnPalm, LLC v. Teitler, 162 Cal.App.4th 770, 775-778 (2008).)End result: remand to determine the reasonable fees to be awarded homeowner.
August 01, 2010
Undertaking: Court Of Appeal Holds That A Judgment Solely for Costs and Attorney’s Fees In HOA Dispute Is Automatically Stayed By Appeal, Without The Need For A Bond
Fourth District, Div. 1 Concludes That Not All Attorney’s Fee Awards Are Equal For Purposes Of Automatic Stay On Appeal.
In the next case, the Court of Appeal has gifted us with a 47 page opinion arising from the fact that homeowners in a condominium association installed two sandstone-colored windows, rather than two dark-brown windows, without receiving architectural approval. Chapala Management Corporation v. Stanton, D055532 (4th Dist., Div. 1 July 29, 2010) (certified for partial publication) (Chapala). The trial judge in San Diego, Steven R. Denton, granted a judgment for injunctive and declaratory relief declaring the homeowners in violation of the CC&Rs, requiring them to modify or replace their windows, and awarding attorney’s fees and costs. The judge ordered the homeowners to post a bond to stay collection of the attorney’s fees. The judge awarded the HOA $59,122.50 in attorney’s fees and $4,298.72 in costs.The homeowners appealed from the judgment, without filing an undertaking, instead seeking a writ of supersedeas to stay the order requiring that they post an undertaking. (Note: “’Supersedeas’ is the appropriate remedy for a refusal to acknowledge the applicability of statutory provisions automatically staying the judgment while an appeal is pursued.” Chapala, n.8.)In Chapala, the Court concluded that the trial judge acted within his discretion by awarding the HOA injunctive relief under the circumstances. The Court noted, however, “that were we to consider the matter de novo, we would question the Board’s business judgment in resorting to expensive and time-consuming litigation generating many thousands of dollars in legal fees, rather than electing to notify the Stantons of their violation and issue a directive that they paint or replace their windows with windows of an approved color . . . . If the Stantons did not comply, Association would have been reasonably within its authority to remedy the Stantons’ noncompliance by painting the two windows, charging the Stantons its expenses incurred in doing so, and recovering the minimal cost in an action at law.” But reasonable minds may differ under an abuse of discretion standard.The Court decided to address on the merits whether attorney’s fees are nonroutine costs requiring an undertaking “for the guidance of trial courts”. The Court decided to address the issue, even though the HOA elected to concede the issue at oral argument (demonstrating that Courts of Appeal have rules that allow them to address issues when they want to, and other rules that allow them to not address issues when they don’t want to).The general rule is that routine costs are stayed by appeal, without the need for an undertaking, whereas attorney’s fees, which are not routine, require an undertaking to stay enforcement. See our July 11, 2008 post, “Are Defense Fee Awards Encompassed Within the Appellate Automatic Stay or Must They Be Bonded?” If litigants had to file an undertaking to stay a routine cost award, then the filing of undertakings would become routine. But are some attorney’s fees awards routine, and some non-routine? Yes, according to the logic of Chapala.Under Code of Civ. Proc. section 1033.5(10)(B), attorney’s fees are authorized as a cost item under section 1032 under any California statute that refers to the award of “costs and attorney’s fees”. Under Civil Code section 1354(c), pertaining to enforcement of CC&Rs, “the prevailing party shall be awarded reasonable attorney’s fee’s and costs.” Section 1354 is interpreted in Chapala to mean that attorney’s fees awarded under it “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.” Put another way, section 1354 fee awards look routine, and thus are encompassed by the stay. So all attorney’s fees awards are not equal when it comes to the undertaking requirement, at least according toChapala.Chapala declines to read Bank of San Pedro v. Superior Court, 3 Cal.4th 797 (1992) and Behniwal v. Mix, 147 Cal.App.4th 621 (2007) as equating all attorney’s fees awards with expert witness fees, which fees are non-routine, not encompassed by the automatic appeal stay, and therefore require an undertaking to stay enforcement. “We do not follow Behniwal to the extent its holding can be read to encompass a judgment solely for costs and attorney fees awarded to the prevailing party under Civil Code section 1354.”The 3-0 opinion is authored by Justice O’Rourke.
July 02, 2010
Third District Reverses Denial of Fee to Prevailing Party.
Ghandour v. Tahoe Sands Time Share Owners Association, Case No. C056395 (3d Dist. July 1, 2010) (unpublished) involved a trial court’s grant of a permanent injunction to plaintiff as against a defendant time share owners association, with the injunction prohibiting association from blocking her vehicular use of two access easements, interfering with her parking on the easement closest to her house, and constructing buildings that would interfere with the easement on which her house stands. However, the lower court refused to grant fees to plaintiff as a prevailing party (despite the existence of a fees clause in operative trust agreement creating the easements), ruling that the operative trust agreement was only used as “defensive” evidence and was not the crux of the dispute. (Plaintiff requested a fee award of $243,872.40.)On appeal, the fee award denial was reversed.
June 12, 2010
Homeowners Associations: Justice Fybel Provides A Great Quote Regarding Fees Often Times Spent By Both Sides In These Disputes
Quote Comes from 2002 Unpublished Opinion.
We would like to thank Justice Richard Fybel of the Fourth District, Division 3 for a great quote from a prior unpublished opinion involving a homeowner association-property owner dispute.In Niguel Shores Community Association v. Buehler,2002 WL 31121089 (4th Dist., Div. 3 Sept. 25, 2002), both sides spent over a combined $220,000 in attorney’s fees after several years of acrimonious litigation over whether property’s home construction deviated from approved plans. Here is how he described this $220,000+ fee expenditure—“enough in many parts of the world to build an entire home or even a small town.” True, true.Above: Valley of Senegal. c1900-1910. Village scene withoxcarts. Library of Congress.Although both sides appealed the fee determination, it was affirmed on appeal. The trial court had actually erred in failing to apply the proper lodestar analysis, but the appellate court applied the doctrine of estoppel in affirming because the homeowner association griping about the lowness of its actual $10,000 fee award failed to cite the lower court to the proper lodestar principles.Association also argued that an award of 20% or less of fees was a per se abuse of discretion, relying on Deane Gardenhome Assn. v. Denktas, 13 Cal.App.4th 1394 (1993) and Hadley v. Krepel, 167 Cal.App.3d 677 (1985). However, the Fourth District, Division 3 found these results were dependent on different circumstances, with neither decision establishing a per se threshold for determination of reasonable fee amounts.Thanks for a great quote, Justice Fybel.BLOG UNDERVIEW—Niguel Shores Community Association is located in South Orange County, which seems to draw a fair amount of the homeowner association-property owner disputes over fees. Deane Gardenhome was authored by (now) Retired Justice Wallin, with the decision containing the famous “fees being the tail that wags the litigation dog” quote that we showcase in our blog’s Mission Statement.
May 29, 2010
Homeowner Associations: Trial Court’s Denial Of Separate Fee Requests For Prevailing In Homeowner Dispute Was Erroneous
Lower Court Erred in Failing to Find Fee Entitlement, to Determine Prevailing Party Status, or to Make Any Apportionments in Summarily Denying Diverse Defense Fee Requests.
Trial courts do have a duty to examine fee entitlement, to determine prevailing party status, and to make any apportionments when examining diverse fee requests by different defendants. Failure to do so may result in a reversal and remand, as it did in the next unpublished decision.Wesbey v. Toll CA IV, L.P., Case No. D054191 (4thDist., Div. 1 May 27, 2010) (unpublished) involved different developer, HOA, and homeowner defendants who prevailed in an access easement dispute with other plaintiff homeowners. Plaintiffs had brought an action alleging numerous theories, but among them were claims based on the CC&Rs—which usually carry fee entitlement under Civil Code section 1717 and/or Civil Code section 1354(c). However, the trial court was unconvinced that the case really involved CC&Rs, even though the defendants did have to defend against some claims that were based on them. It summarily denied the fee requests brought by the different defendants.The Fourth District, Division 1 reversed and remanded with directions to separately address the prevailing party status or need for apportionment as to each defendant. Fee entitlement was evident based on either section 1717 or 1354, with the appellate court providing the lower court some apportionment guidance on remand. (See Bell v. Vista Unified School Dist., 82 Cal.App.4th 672, 686-687 (2000).)
April 05, 2010
Homeowner Associations: $783,944 Awarded to L.A. County As Winner In Public Hiking/Equestrian Trail CC&R Contest With HOA
CC&R Count Justified Fees to County.
We have told you before that HOA contests can be expensive. Yes, they can. Many times, very expensive for the losing HOA, which likely will have to pass losing fees through to homeowners via special assessments or other insolvency options.In County of Los Angeles v. La Vina Homeowners Assn.,Case No. B210444 (2d Dist., Div. 8 Apr. 5, 2010) (unpublished), County brought an action based upon nuisance and CC&R breach theories against HOA for failing to include public hiking and equestrian trails within the residential subdivision. Lots of evidence showed this was the intent, but the trails inadvertently got omitted from final maps. After a 23-day bench trial, County prevailed and was subsequently awarded $783,944 in attorney’s fees as the prevailing party under the CC&Rs.HOA appealed, but the fee award was affirmed. County’s lodestar was $825,395, and it acceded to a 5% reduction to the actual award amount. The appellate court found the hard work of the 3 successful County attorneys, at a “solid but moderate” $ 334 average hourly rate, well justified the fee award. Smart lawyering by the County to agree to a modest discount; it paid off in this one.
March 25, 2010
Homeowners Association Awards: Homeowner’s Success In Obtaining Permanent Injunction And Limited Restitution Entitled Him To Routine Costs Award Against HOA
Trial Court Properly Denied Fee to Either Side, Says Court of Appeal.
Don’t assume that the prevailing party determination for an award of routine costs and attorney’s fees under Civil Code section 1717/fee-shifting statutes is the same. They do differ, as the next case demonstrates.In Duclos v. Marina Pacifica Homeowners Assn., Inc.,Case Nos. B213053/214116 (2d Dist., Div. 7 Mar. 25, 2010) (unpublished), Long Beach HOA and homeowner each won pieces of a special assessments donnybrook contest. HOA won summary adjudication on five claims, but homeowner won a bench trial on two claims by which he was awarded a permanent injunction and limited restitution of $7,500. The trial court denied homeowner his routine litigation costs and also denied HOA its attorney’s fee request. Each side appealed.The appellate panel affirmed everything except reversing the part of the orders by which routine costs were denied to homeowner.Homeowner did recover $7,500 in limited restitution, which was a “net monetary recovery” entitling him to litigation costs as matter of right. (See, e.g., Michell v. Olick, 49 Cal.App.4th 1194, 1198 (1996) [statutory directive of Code of Civil Procedure section 1032 is clear even though plaintiff prevailed on a single, insignificant claim among several unrelated and unmeritorious claims]; Chinn v. KMR Property Mgt., 166 Cal.App.4th 175, 188 (2008).) HOA alternatively argued that no costs should be allowed because homeowner could have obtained this award in a limited civil court case, which allowed the trial court discretion to deny costs. (Code Civ. Proc., § 1033(a).) The problem with that argument is that a permanent injunction cannot be obtained in a limited civil case, such that the provision was inapplicable. (Ytuarte v. Superior Court, 129 Cal.App.4th266, 275 (2005).)That brought the Court of Appeal to HOA’s claim that it should have been awarded attorney’s fees. At the outset, the trial court does have broad discretion to determine there was no prevailing party under Civil Code section 1717 when there was good news and bad news for both parties—as was the case here. (Ajaxo Inc. v. E*Trade Group, Inc., 135 Cal.App.4th 21, 58 (2005).)HOA argued that Civil Code section 1354 entitled it to fees for enforcing governing documents (such as CC&Rs) against homeowners. However, homeowner actually prevailed on the governing document claims, with HOA only prevailing on a Davis-Stirling Common Interest Development Act enforcement claim (not an enforcement claim based on the governing documents). So, no dice to the fee arguments raised by HOA.BLOG FAVORITE QUOTE BY THE TRIAL COURT—“This has become a fool’s errand that, although I’ve thrown some things out hoping that peace would break out, if your client is adamant he wants a merits ruling on this, he’ll get a merits ruling.”
March 05, 2010
Homeowner Associations: Occupants Agreeing To Deal With HOA Directly Stung With Substantial Fee Award For Losing CC&R Violation Dispute
$88,671 Fee Award Entered Against Both Property Owners and Occupants.
Losing HOA disputes can be costly for homeowners, because Civil Code section 1354 has a mandatory fee-shifting directive in favor of a prevailing party successfully enforcing CC&Rs. It can also extend to non-owner occupants, as the litigants in the next case learned.In Bridgeport Community Assn., Inc. v. Martin, Case No. B215166 (2d Dist., Div. 2 Mar. 4, 2010) (unpublished), both property owners and occupants lost a CC&R enforcement dispute to the HOA involving failure to obtain approvals for certain architectural modifications. The lower court awarded HOA mandatory fees of $88,671 under section 1354.Occupants appealed, mainly arguing that fees could not be assessed against them because they were not the property owners entitled to any fees had they prevailed.The appellate court rejected this argument in affirming the fee award against occupants. In a prior opinion, Martin v. Bridgeport Community Assn., Inc., 173 Cal.App.4th1024, 1027-1028 (2009), HOA was found to have properly sued occupants because owners and occupants had entered into an agreement indicating occupants would deal directly with HOA regarding any property issues, with a power of attorney being executed to that effect which was accepted by HOA. That meant one clear thing: occupants were properly assessed with fees as the parties losing under section 1354. Ouch!
February 19, 2010
Homeowners Associations: Substantial Attorney’s Fees Awards In Favor Of Adjoining Neighbors and HOA Sustained On Appeal
Almost $500,000 in Total Fees Assessed Against Losing Homeowners.
For all you Olympic watchers out there, this next case will resonate the famous “agony of defeat” line from ABC’s Wide World of Sports.In Sharp v. Anderson, Case No. B212528 (2d Dist., Div. 1 Feb. 18, 2010) (unpublished), plaintiff neighboring real property owners lost contentious litigation against their neighbors and the HOA/HOA directors. The lower court awarded neighbors $184,510 in attorney’s fees and $14,109 in costs and also awarded HOA $295,547 in fees under Civil Code section 1354(c), a fee-shifting provision under the Davis-Stirling Common Interest Development Act.Losers appealed.
February 10, 2010
Homeowner Associations: Interveners In CC&R Interpretive Dispute Are Entitled To Fee Recovery As Prevailing Parties Under Civil Code Section 1354
Fourth District, Division 3 Finds No Contractual Basis For Award, But Does Find a Statutory Basis.
In an interesting first impression issue, the Fourth District, Division 3—in Renezeder v. Emerald Bay Community Assn., Case Nos. G040657 & G041353 (4thDist., Div. 3 Feb. 8, 2010) (unpublished)—determined that winning interveners in a CC&R dispute are entitled to prevailing party fees under Civil Code section 1354.Plaintiff homeowners lost a CC&R interpretation dispute with both the HOA and interveners (adjacent or nearby homeowners) over a CC&R prohibiting the splitting of lots. Although attorney’s fees were awarded to HOA, the trial court denied fees to interveners. Result: reversal and remand on the interveners’ fee appeal.On appeal, Justice Ikola, on behalf of a 3-0 panel, found that the CC&Rs did not authorize a fee award based on language limiting fee recovery to the Association or prevailing homeowners. (Nothing allowed recovery in a member versus member dispute.) However, that took the appellate panel to Civil Code section 1354(c), a mandatory fee-shifting provision favoring “the prevailing party” in CC&R enforcement actions. This statutory hook was a proper anchor for fee awards to interveners. “Section 1354, subdivision (c), does not explicitly mention interveners as possible beneficiaries of the attorney fees rule. But by virtue of their intervention in the action, interveners became parties.” (Slip Opn., p. 20.) Given that interveners had a real stake (win or lose) in the litigation, they were entitled to fees upon remand—however, only fees for nonduplicative work of a reasonable nature.
January 28, 2010
Arbitration: Homeowner Association’s Failure to Show it Requested Homeowner to Arbitrate Under CC&R Provision and that Homeowner Refused to Arbitrate Results in Denial of Petition to Arbitrate and Overturning of Fees Award.
Code of Civil Procedure Section 1281.2 Is Interpreted to Require a Party Seeking to Compel Arbitration to Plead and Prove a Prior Demand for Arbitration Under the Parties’ Arbitration Agreement and a Refusal to Arbitrate Thereunder.
In the next case, Homeowner Association successfully petitioned to arbitrate a dispute with a homeowner, only to have the order granting the Association’s petition overturned on appeal because it did not carefully follow the provisions of the arbitration provision. As a consequence, the Association’s award of fees ($8,283.50) for its expense in bringing the petition to compel arbitration went . . . . poof. Zari Mansouri v. The Superior Court of Placer County, Case No. C062366 (3d Dist. filed 1/28/10) (certified for partial publication).The Association claimed that Mansouri extended the coverage of her patio beyond what had been approved by the Association, and requested Mansouri to submit the dispute to binding arbitration before a single arbitrator, unilaterally pre-selected by the Association. However, the arbitration provision contained in the CC&Rs provided for three arbitrators – the first chosen by the Association, the second chosen by the homeowner, and the third chosen by the first two arbitrators. Mansouri refused the invitation to arbitrate, but the trial court granted the Association’s petition to compel arbitration. The Association’s petition to compel arbitration also sought attorney fees pursuant to a provision in the CC&Rs, and pursuant to fee-shifting statute Civil Code section 1354, allowing for an award of fees to the prevailing party in Association disputes involving CC&Rs. The trial court awarded fees.Section 1281.2 requires a petition to compel arbitration to allege, “the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy [.]” In a 3-0 decision authored by Justice Cantil-Sakauye, the Court concluded that section 1281.2 required a party seeking to compel arbitration to plead and prove a prior demand for arb itration under the parties’ arbitration agreement and a refusal to arbitrate under the agreement. The problem here was that the offer to arbitrate with a single arbitrator was not under the terms of the arbitration provision, and thus Mansouri’s refusal to arbitrate was not a refusal to arbitrate under the agreement. Once the Court vacated the order granting the petition to compel, the fee award also disappeared.Moral: There are likely to be fee-shifting consequences in homeowner association disputes resulting from a provision in the CC&Rs, or resulting from Civil Code section 1354. If you file a petition to compel arbitration, be prepared to plead and prove a prior demand for arbitration and a refusal to arbitrate under the agreement – or else be prepared to face the consequences, which may include the loss of attorney’s fees.Mike and Marc know attorney Benjamin G. Shatz, an appellate specialist, who represented the Petitioner. We send him our regards, and congratulate him on the outcome.
January 20, 2010
Reasonableness Of Fees: Winning HOA Unit Owners Obtain $238,426 In Attorney’s Fees, But Fail At Obtaining $62,056 More
Court of Appeal Likes Reasoned Deductions Made by Trial Court.
This next case might be put in the category “quit while you are ahead” as far as challenging the reasonableness of an attorney’s fees award, especially when you are asking for an increase to an already substantial award.Defendant unit owners in an owners’ association dispute won $238,426 in attorney’s fees under Civil Code section 1354(c), the Davis-Stirling Act fee-shifting provision allowing fees to be recovered by prevailing parties in an action to enforce governing documents (such as CC&Rs or LLC-analog provisions). However, they sought more, appealing because they were not awarded an additional $62,056. Losing plaintiff owners’ association also appealed, but later dismissed its appeal. That left the unit owners’ appeal.They lost in Showplace Square Loft Owners Assn. v. Mead, Case No. A122575 (1st Dist., Div. 2 Jan. 19, 2010) (unpublished). After all, a party seeking attorney’s fees is not entitled to compensation according to that party’s notion of what should be paid.For anyone new to this area, you must read PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000), which discusses reasonableness of attorney’s fees in a Civil Code section 1717 context, but which has much broader application to many (if not most) fee-shifting statutory situations. [PLCM is one of our Leading Cases.]Defendants complained that they should have been awarded $18,476 in special assessments which were paid to fund the opponent HOA’s lawyers. The problem with this request was that defendants cited no authority demonstrating a basis to obtain this reimbursement under a fee rubric.Defendants then argued that they should have been paid an additional $23,821 for the work of their predecessor counsel. The flaw here was that prior counsel had agreed to a compromise by which the attorneys took only $4,000 for their work, a compromise not revealed to the trial court until the judge raised it at the fee hearing. Because this compromise was not disclosed by claimants in their opening papers, the lower court felt that the defendants were not playing “fair with the court,” a notion endorsed by the appellate court in affirming the failure to award these further fees.The trial court also properly disallowed $10,544 to successor counsel for “coming up to speed.” These duplicative fees can be discounted in the lower court’s discretion.Lastly, defendants challenged the lower court’s reduction of their counsel’s paralegal’s hourly rate from $170/hour to $100/hour. No abuse of discretion occurred, because HOA put in evidence that its paralegal only charged $80/hour and because defendants’ prior counsel’s paralegal only billed out at $100/hour (the latter being the eventual rate awarded by the lower court).
December 09, 2009
Homeowner Associations: Ouch!—Condo Owner Stung With $238,000 Fees/Costs Award After Losing Contentious Battle Over Using Disputed Floor Tile In Unit
Fourth District, Division 1 Finds Award Disproportionate At First Glance, But Affirms Based Upon Total Review of the Litigation Below.
Homeowner-homeowner association battles can be very, very contentious and expensive for the losing side—as the next homeowner learned, in a dispute over the floor covering in his condominium unit.McGuire v. 235 On Market Homeowners Assn., Case Nos. D053218/054131 (4th Dist., Div. 1 Dec. 8, 2009) (unpublished) involved a condominium owner who got into an imbroglio with his homeowners association over whether disputed floor tile was an appropriate floor covering in light of noise and acoustical concerns as expressed in certain CC&Rs. Homeowner lost his action, and HOA won judgment on their cross-complaint.Then, catering to our existence in the blogsphere, the trial court awarded attorney’s fees of $225,200 and costs of $12,803.50 in favor of HOA and against homeowner.Decision on appeal: affirmed, much to the dismay of homeowner.Although observing “at first glance . . . this award seems disproportionate to the result in this case (the HOA is now able to enforce its order that McGuire remove three feet and nine inches of tile from the interior of his unit),” the appellate panel’s visceral reaction vanished upon closer review. The appellate record consisted of 16 volumes of records, with two sets of summary and cross-summary judgment motions by both sides. HOA used two different law firms, at different times, which submitted detailed billing statements to show what was done in the litigation. Both firms, together, requested $335,000 in fees, but the trial court only awarded $225,200—a 33% reduction for duplicative or unnecessary fees. Under the circumstances of this contentious litigation, the reviewing court could find no abuse of discretion in the lower court’s fees/costs award. (Children’s Hospital & Medical Center v. Bonta, 97 Cal.App.4th 740, 782 (2002).)
November 14, 2009
Fourth District, Division 1 Finds Homeowner Did Not Prevail, But HOA Was Entitled to Fee Recovery.
Without meaning to be preachy, we have on numerous occasions—in line with our Mission Statement—reminded readers that litigation happiness or sadness often times boils down to who recovers or who gets socked with fees at the end of an action. That end result is very pronounced in homeowner-HOA disputes, where substantial fees are frequently awarded in favor of the winning side. The next decision is yet another illustration of how fee recovery ends up in these types of disputes.In Woodbury v. Seacrest Villas Homeowners Assn., Case No. D053466 (4th Dist., Div. 1 Nov. 12, 2009) (unpublished), plaintiff sued HOA, its president, and its directors for breach of duty under the CC&Rs to maintain the common areas of the condo project. She lost after the trial court determined some of her claims were minor, some were unfounded, and others concerned methods of repair that were ones within the discretion of the HOA. Later, the trial court granted defendants recovery of $316,106.99 in attorney’s fees as well as $8,802.43 in routine costs.Plaintiff did not overturn these awards on appeal.Suits based on CC&Rs are “on the contract” under Civil Code section 1717 for purposes of determining a prevailing party. (Treo@Kettner Homeowners Assn. v. Superior Court, 166 Cal.App.4th 1055, 1066 (2008).) After carefully reviewing all plaintiff’s claims, the appellate court agreed that defendants prevailed, because plaintiff did not gain her objectives given that the repairs were found to have been made, were too inconsequential in nature, or the HOA’s repair methods (using a handyman) were appropriate even though plaintiff wanted the use of a licensed contractor. Plaintiff also did not obtain her destructive testing relief, with the HOA voluntarily making repairs that were not motivated by plaintiff’s action. Plaintiff did not obtain her litigation objectives; “her action was ‘a vague conglomeration of shifting issues,’ and ‘[i]t can be argued that [she] want[ed] her own private CC&Rs that essentially required[d] the board to never say no to anything she wants.’” (Slip Opn., p. 23.) Under the circumstances, the appellate panel did not believe there was any inequity in requiring her to pay the HOA’s fees and other costs.So, as the prelude to ABC’s “Wide World of Sports” used to say, plaintiff suffered “the agony of defeat.” See video of Vinko Bogataj below.
September 11, 2009
Homeowners Associations: Fourth District, Division 3 Affirms Fee Awards Totaling $188,000 To The Chagrin Of Losing Homeowner
Presiding Justice Sills Sustains Fee Awards on Behalf of 3-0 Panel.
If one is prone to read lots of appellate opinions (as we are), distinctive styles come through by various appellate justices authoring the cases assigned to them. That happens to be the case in the next decision we review—Presiding Justice Sills, the author, has been noted for his distinctive style by Presiding Justice Perluss of the Second District, Division 7 inMarriage of Silverman (an unpublished decision we did a recent post on). This one, however, involves a homeowner association versus homeowner, with the homeowner coming out on the losing end of the fee battle.Nellie Gail Ranch Owners Association v. Colombo, Case No. G040957 (4th Dist., Div. 3 Sept. 9, 2009) (unpublished) involved two attorney's fees awards totaling about $188,000 for trial and previous appellate work in a case where a homeowners association prevailed against a homeowner. HOA obtained an injunction contemplating that it could enter homeowner's property and demolish half-completed structures because they had not been constructed within a specified time period as required under the CC&Rs. (There was a safety valve section of the injunction that allowed homeowner more time, a safety valve period that got extended because of "some confusion" fessed up to by the appellate court in its prior opinion when the dispute was ongoing.) Homeowner was most unhappy, and appealed the two fee orders.