2.


ATTORNEY FEES: Artus v. Gramercy Towers Condominium Association


TAKEAWAY - A successful grant of interim equitable relief in the form of a preliminary injunction under Davis-Stirling does not entitle a party to recover attorney fees and legal expenses as a “prevailing party.”


FACTS - Homeowner/Board Member filed suit to block implementation of an election rule change. Although the Homeowner obtained a preliminary injunction and successfully delayed the election, after a three (3) day trial of the issues on their merits, the trial court rejected the challenges to the proposed election changes, and ruled in favor of the Association. Plaintiff nonetheless sought an award of attorney fees and cost under Davis-Stirling, which was denied by the trial court.


COURT’S RULING - Te Court of Appeal reviewed statutory history of the fee and remedy sections of the Davis-Stirling Act and found that the Legislature did not intend to supplant the general rule that the prevailing party is to be determined, and attorney fees and costs are to be awarded on the basis of the final results, at the conclusion of a case, rather than based upon an interim court order granting temporary relief.


Heron Bay Homeowners Association v. City of San Leandro (19 Cal.App.5th 376)


TAKEAWAY – A Homeowner Association is not disqualified from obtaining a Public Attorney General attorney fees award simply because members have a general financial incentive to initiate the litigation to preserve property values. The mere existence of such a theoretical incentive does not automatically disqualify an Association from receiving an attorney fee award.


FACTS - Te Association, as plaintiff, successfully challenged a proposed zoning variance that would have permitted the construction of a 100 ft. high industrial power generating wind turbine on an adjacent land parcel.


COURT’S RULING - Te Appeals Court rejected the argument that the Association could not receive an attorney fee award merely because the result of the litigation, the denial of a zoning variance, “might someday help the members secure their property interests.”


Marina Pacifica Homeowners Association v. Southern California Financial Corporation


TAKEAWAY – A court can properly determine that neither the plaintiff nor the defendant are the “prevailing party,” and deny any award of attorney fees and legal expenses to either side, even when one party received a significant monetary award.


FACTS - Following litigation of a contract dispute between an Association and the Developer’s Assignees regarding the continued enforceability of a monthly transfer fee, the trial court determined that neither party was the prevailing party, because neither achieved all their litigation goals, and denied both side’s motion for attorney fees and costs. Plaintiff sought to pay nothing, but instead the judgment required it to pay $39 million over time instead of the $97 million defendant sought to charge, while defendant established its right to recover $39 million rather than nothing. Despite the fact that a $39 million judgment was entered in favor of the defendant, the trial court ruled that neither plaintiff nor defendant was the “prevailing party” and refused to make any award of attorney fees and costs.


Rather,


the fee award would only be denied when “the incentive was so large and the benefit so certain” that it precluded any showing of a public benefit.


COURT’S RULING - Te Court of Appeal ruled that trial judges are permitted to compare the relief awarded to the parties with their litigation demands and objectives to determine which one is the prevailing party for purposes of an attorney fee award. Te fact that defendant obtained an actual monetary payment, while plaintiff obtained only a reduction in its monetary obligations as claimed by defendant, does not render that reduction meaningless, or the result lopsided.


In determining which party


has prevailed, trial courts should respect substance over form, and may consider “the unique facts and circumstances of each case.”


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