Property Owners Are Entitled To Fee Award Arising From Invalid Claims Made By Homeowners Association

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In Grossman v. Park Fort Washington Association, 2013 DAR 747 (2013), the California Court of Appeal for the Fifth Appellate District decided an interesting fee case arising out of a dispute between property owners and a homeowners association.

The property owners built improvements on their property without obtaining the approval from their homeowners association (“the Association”). The Association contended that the applicable bylaws prohibited the improvements that were constructed by the property owners without obtaining required permits and paying fees. The Association imposed a daily fine until the improvements were completely removed from the premises.

The trial court reviewed the bylaws and concluded that the rules allowed the constructed improvements. The judge vacated the fine that was imposed by the Association. The property owners then filed a petition for attorney fees. They sought the recovery of the significant time spent by their lawyers on a mediation and related alternative dispute resolution activities. The trial court awarded the property owners more than $100,000 in fees.

The Association appealed the fee award. The Association focused on the portion of the award rendered for the fees incurred for the mediation. The court of appeal reviewed the Association’s arguments but did not find them to be persuasive. The court noted that the applicable statute (the Davis‑Stirling Act) contains a mandatory attorney fees provision. The statute states that in an action to enforce bylaws and related documents, the prevailing party shall be awarded reasonable attorney fees and costs.

The court noted that the Association failed to provide any persuasive legal authority that the Legislature intended to exclude from any applicable fee award for work incurred in ADR‑type of activities. The court of appeal affirmed the award of fees on that basis.