Plaintiffs Sought To Create Precedence, Litigated Vigorously, Should Have To Bear The Fee Tab.
This one is truly frightening and shows why fee shifting is a potential game changer in litigation.
Plaintiffs were condo owners who also engaged in short term renting, deciding to challenge enforcement of certain HOA regulations imposing fees for such renting activities, with plaintiffs only owing about $10,264 in assessments for these activities. Rather than paying the assessments, plaintiffs sued for declaratory relief, which also triggered a cross-complaint by HOA to collect the assessments and defend the short-term rental obligations. HOA won across the board, including an award of back assessments. Then, in post-trial fee proceedings, plaintiffs were assessed with over $1.2 million in fees for HOA’s work in successfully defending against the complaint and in prevailing on the cross-complaint.
Plaintiffs were unsuccessful on appeal in Watts v. Oak Shores Community Assn., Case No. B240337 (2d Dist., Div. 6 Mar. 24, 2015) (published). Although not challenging the validity of the short-term rental obligations, plaintiffs did challenge the enforcement of same so as to be entitled to fees under former Civil Code section 1354(c). As far as reasonableness of fees were concerned, the appellate panel basically concluded plaintiffs only had themselves to blame: they could have paid a little over $10,000 in assessments, but chose to vigorously litigate in order to create a precedence. They did that (negatively, we might add), but were also on the hook for the fee tab to HOA as a consequence of attempting to do so.