Seller Hit With Fees In a Water Accumulation Concealment Case; Neighbors Obtain Fees Against Neighbors In Tree Obstruction View Case.
In these interesting financial times, we find that real estate disputes still fester and produce interesting posts on attorney’s fees issues. The next two cases do not disappoint, originating from our local Santa Ana appellate court.
Seller Real Estate Concealment Case.
In Johnson v. Dawkins, Case No. G037998 (4th Dist., Div. 3 Nov. 19, 2008) (unpublished), buyers of a Laguna Hills residence successfully sued for undisclosed water accumulation problems, recovering $97,500 compensatory damages against sellers, some minor punitive damages against one of the sellers and their son, and attorney’s fees of $223,157 based upon a fees clause in the real estate purchase contract under Civil Code section 1717. (For a discussion on the legal basis for such an award, see our May 22, 2008 post.) Except for one issue that resulted in a remand, the judgment was affirmed substantially across the board in buyers’ favor.
The lower court awarded $223,157 to buyers–even though their attorneys had billed them only $170,873–based on a lodestar enhancement factor. This reduction must have rankled sellers, because they still got hit with an award that was enhanced beyond the discounted fees paid by buyers to their attorneys. Sellers appealed, but lost when the appellate court affirmed the fee award for buyers.
The record below showed that buyers’ attorneys cut their bill from $242,091.50 to $179,873 before a 1.31 multiplier was applied by the trial court. Lodestar enhancers are indeed permissible under Civil Code section 1717. (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) [one of our Leading Cases].) The appellate panel had no difficulty concluding that this multiplier was modest given the complexity of the case—reinforced by the prolix opening appellate brief which raised “a seemingly endless stream of issues (some borderline, some arguable, one actually meritorious)—thunders a very great ‘volume’ of support of the soundness of the trial court’s exercise of discretion. The reply brief–even larger—speaks literally another volume.” (BLOG OBSERVATION-So who doesn’t think that appellate courts pay attention to the litigiousness of parties when reviewing discretionary issues?)
Homeowner Association Neighbor Feud—Tree Obstruction/View Protection Case.
The second case involves a frequently recurring theme—neighbors battling over their right to protect unobstructed views, balanced against other neighbors who do not want to cut their vegetation (usually, palm trees). Unfortunately, the loser can often times bear the attorney’s fees freight, as Ross v. Emley, Case No. G037688 (4th Dist., Div. 3 Nov. 19, 2008) (unpublished) illustrates.
This neighborhood tree obstruction dispute arose out of the Meredith Canyon development in San Juan Capistrano. Plaintiff neighbors reached a settlement with defendant neighbors by which their trees had to be trimmed, subject to certain conditions, so that unobstructed ocean views were preserved. The issue of attorney’s fees, however, was reserved for determination by the trial court in the settlement agreement. Ultimately, plaintiff neighbors were awarded $52.750.50 in fees, a reduction of over $8,600 in the amount requested. Defendant neighbors were not happy, appealed, and lost.
Even though Civil Code section 1717(b)(2) states there is no prevailing party under a fees clause where an action is dismissed pursuant to a settlement, defendants waived this protection by stipulating that the fee question could be decided by the trial court after settlement of the merits of the claims. (Jackson v. Homeowners Assn. Monte Vista Estates-East, 93 Cal.App.4th 773, 784 (2001).) Beyond that, plaintiffs were entitled to a fee award under Civil Code section 1354—which allows prevailing parties to recoup fees where they enforce CC&Rs. Under section 1354, the trial court has jurisdiction to determine who is the prevailing party even after voluntary dismissal, whether by settlement or otherwise. (E.g., Kim v. Euromotors West/The Auto Gallery, 149 Cal.App.4th 170, 178 (2007); Parrott v. Mooring Townhomes Assn., Inc., 112 Cal.App.4th 873, 877 (2003).)
Because “prevailing party” status depends on a pragmatic determination of the extent to which each party has realized its litigation objectives, the trial court did not err in determining that plaintiff neighbors achieved their main objective by obtaining removal of obstructions to their ocean views.
The amount of fees awarded was not excessive, the appellate panel ruled. The trial court disallowed excessive and unsupported fees, as well as not awarding fees until after the defendant neighbors failed to comply with obstruction removal deadlines set by the homeowners’ association. No abuse of discretion was found in the fee award rendered in the case of the feuding neighbors in ocean view neighborhoods rimmed with palm trees.