California’s Davis-Stirling Common Interest Development Act (the “Act”) provides an avenue to recover attorney’s fees when a party prevails in an action to enforce a homeowner’s association’s governing documents. (Cal. Civ. Code § 5975(c)). The fee-shifting provisions of the Act focus on which party prevailed on a practical level, by achieving its main litigation objectives. However, when a party prevails on some but not every claim, a court may reduce the amount of awarded attorney’s fees to reflect the incomplete success of a party’s action. Furthermore, the language of section 5975(c) has been interrupted to include not only the costs of litigation, but the attorney’s fees arising out of pre-litigation alternative dispute resolution, a pre-requisite to an enforcement action in civil court. (Grossman v. Park Fort Washington Assn. (2012) 212 Cal. App. 4th 1128, 1134).
However, what constitutes “an action to enforce the governing documents”, an essential determination for recovering fees? An action to enforce a specific provision of the CC&Rs would certainly fall under the purview of an action to enforce the governing documents. But take for instance, an action to enforce a mediation agreement derived from a CC&R dispute. The court is likely to consider a claim an action to enforce the governing documents where the substance of the claims asserted and relief sought are derived from the enforcement of a governing document. (See Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal. App. 5th 252, 259-60).
The Act’s requirement that an enforcement action in civil court may not be filed until the parties have submitted their claim to the appropriate alternative dispute resolution (“ADR”), has bearing on the court’s discretion to award attorney’s fees. “In an enforcement action in which attorney’s fees and costs may be awarded, the court, in determining the amount of the award, may consider whether a party’s refusal to participate in alternative dispute resolution before commencement of the action was reasonable.” (Cal. Civ. Code § 5960).
The party commencing a civil action, after ADR has concluded or was attempted, must submit a certificate with its initial pleading stating one of the following: (1) Alternative dispute resolution has been completed in compliance with the Act; (2) the other party to the dispute did not accept the terms offered for alternative dispute resolution; or (3) injunctive relief is necessary. (Cal. Civ. Code § 5950).
For more information, contact Stuart Smith at the number below. Bagula, Riviere, Coates and Associates, LLP specializes in business litigation, including HOA matters.
Stuart Smith, Esq.