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 D972627/D072628 (4^th Dist., Div. 1 May 10, 2018) (unpublished).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.