Settlement Misconception By The Parties Allowed Dismissed Board Members To Seek Fees.
In Gallian v. Gragnano, Case No. G057198 (4th Dist., Div. 3 Sept. 15, 2020) (unpublished), HOA sued a homeowner for architectural violations under the CC&Rs, which prompted homeowner to crossclaim against the board members for indemnification,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.4th 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.