Ruling Affirmed Where Homeowner Spent Fees of At Least $35,088.50 and HOA Spent At Least $92,335.25.
In our category “Cases: Homeowner Associations,” we have examined numerous contests between homeowners and homeowner associations (HOA) in common interest developments where attorney’s fees are often the real battle because most CC&Rs and Civil Code section 1354 allow them to be recovered. Sometimes, one side or the other wins big. (See Ritter & Ritter, Inc. v. The Churchill Condominium Assn., 166 Cal.App.4th 103 (2008), an “honorable mention” in our survey of 2008 Top 10 cases discussed in our December 31, 2008 post.) However, more frequently, we see cases where no side obtained fee recovery—despite spending substantial sums—because the trial court found there was no “prevailing party,” a discretionary call under either Civil Code section 1717 or section 1354. (See, e.g., Pasternak v. Bear Brand Ranch Community Assn. (4th Dist., Div. 3 unpublished), discussed in our May 22, 2008 post.) These cases, as well as any, illustrate the theme of our entire blog (as well summarized by Justice Wallin in Deane Gardenhome Assn. v. Denktas, 13 Cal.App.4th 1394, 1399 (1993)), that attorney’s fees often are the tail that wag the “litigation dog.” The next decision we survey was a “no prevailing party” determination and counsels that homeowners-HOAs should try to work things out, long and hard, before using the courtroom as their field of battle.
Montecito Condominium Homeowner’s Assn. v. Rahmanizad, Case No. B199493 c/w B200982 (2d Dist., Div. 3 Jan. 23, 2009) (unpublished) involved a homeowner-HOA dispute over use of insurance proceeds for remediation of water damage and mold remediation in homeowner’s individual condominium unit, a dispute that was the subject of HOA’s complaint and homeowners’ cross-complaint in a Los Angeles lawsuit. At the end of the day, the trial court ruled that HOA’s complaint for future entry into the unit was moot because no mold remediation was needed, even though HOA eventually gained access into the unit for a mold inspection. However, homeowner did not prevail on his cross-complaint regarding disposition of insurance proceeds relating to the remediation dispute. That led to the all-important cross-motions for attorney’s fees brought by both parties. Care to guess what happened? Although you already know from the prior discussion, the trial judge found there was “no prevailing party,” with both sides appealing this ruling because HOA had sought to recoup $35,088.50 in fees and homeowner had requested recovery of $92,335.25 in fees. (Ultimately, the trial judge awarded homeowner $445 in costs and struck HOA’s cost bill.)
On appeal, the Second District, Division 3 affirmed the “no prevailing party” determinations.
The main problem for both sides is that a finding of “no prevailing party” is reviewed under the deferential abuse of discretion standard. (Deane Gardenhome Assn., supra, 13 Cal.App.4th at 1397; Sears v. Baccaglio, 60 Cal.App.4th 1136, 1158 (1998).) In this context, the analysis is a comparative one: the trial court compares the relief awarded on the claims with the parties’ demands and litigation objectives with respect to the claims in deciding who prevails. (Hsu v. Abbara, 9 Cal.4th 863, 876 (1995) [one of our Leading Cases].) When the results are “mixed,” the trial court has discretion to determine that no party prevailed under the CC&Rs. (Hilltop Investment Associates v. Leon, 28 Cal.App.4th 462, 468-469 (1994) [no abuse of discretion in denying fees where the result was a “draw”].)
The appellate court had no difficulty in upholding the trial court’s “no prevailing party” rulings. HOA failed to obtain declaratory relief, homeowner failed on his insurance proceeds cross-complaint, and homeowner failed to block access to his unit for inspection purposes. Overall, the dispute was a “draw,” with the result being that both sides expended substantial fees and homeowner won a fairly meager $445 in costs.