“Prevailing Party” Definition Under Davis-Stirling Act Different Than Under Civil Code § 1717.
In Matus v. Freedom West Homes Corp., Case No. A165736 (1st Dist., Div. 2 Aug. 21, 2023) (unpublished), a group of homeowner plaintiffs filed a lawsuit against HOA, which was ordered into arbitration. Plaintiffs dismissed their court case without prejudice 15 months later, with the record reflecting they had not initiated arbitration but were thinking about doing so. The lower court awarded HOA $139,977 attorney’s fees as the “prevailing party” under the Davis-Stirling Act fee shifting provision, Civil Code § 5975(c).
The appellate court affirmed the fee award. HOA did achieve its litigation goals by obtaining dismissal of the lawsuit, with nothing in the record showing that plaintiffs had commenced an arbitration. The Court of Appeal acknowledged there is no rigid rule on who is a prevailing party under section 5975(c) when there is a without prejudice dismissal of a lawsuit, with such a determination vested within the discretion of the lower court—no abuse of discretion occurred here given plaintiff’s delay in even attempting to commence arbitration.
Plaintiffs, on appeal, tried to argue that Civil Code section 1717 principles applied because there was no final merits adjudication, but the appellate court made three observations in rejecting this argument: (1) section 1717 principles do not apply to the Davis-Stirling Act statutory fee shifting provision (Parrott v. Mooring Townhomes Assn., Inc., 112 Cal.App.4th 873, 878-880 (2003)); (2) prevailing party fees under section 1717 would not be recoverable under the Santisas case [our Leading Case No. 6], but that is not dispositive of the analysis under statutory fee shifting provisions; and (3) section 1717 case law supported the lower court’s conclusion to award fees (Roberts v. Packard, Packard & Johnson, 217 Cal.App.4th 822, 829-830, 833 (2013)).