Most homeowners in a common interest development probably understand that it can be a real hassle to get into a dispute with the Homeowner Association (HOA). Not so many, though, may know that it can become pretty expensive as well. A recent case from California's Fourth Appellate District Court of Appeal makes the latter point abundantly clear. (Rancho Mirage Country Club Homeowners Association v. Thomas B. Hazelbaker et al., August 9, 2016)
Thomas and Lynn Hazelbaker owned a condominium in the Rancho Mirage Country Club development. The development was subject to regulations and CC&Rs which were enforced by the Rancho Mirage Country Club Homeowners Association (Association). According to the Court record, here's what happened:
"In November 2011, defendants [Hazelbakers] applied for and received approval from the Association's architectural committee to make certain improvements to the patio area of their property. Subsequently, however, the Association contended that defendants had made changes that exceeded the scope of the approval, and which would not have been approved had they been included in defendant's November 2011 application.
"On June 19, 2012, the Association sent defendants a request for alternative dispute resolution pursuant to [Civil Code §5930], identifying the disputed improvements and proposing that the parties mediate the issue. Defendants accepted the proposal and a mediation was held on April 8, 2013. A ‘Memorandum of Agreement in Mediation' dated April 9, 2013, was reached … The agreement called for defendants to make certain modifications to the patio, in accordance with a plan newly approved by the Association… The agreement provided for the modifications to be completed within 60 days from the date of the agreement. It also provided for a special assessment on defendants' property to pay a portion of the Association's attorney fees incurred to that point…
"The modifications described in the mediation agreement were not completed within 60 days. The parties each blame the other for that circumstance."
On September 4, 2013, the Association filed a lawsuit seeking specific performance of the mediation agreement. Subsequently, the parties reached an agreement regarding the modifications, slightly different from those agreed to in mediation. Those modifications were completed in September 2014. However, the parties continued to have disagreements about who should bear the costs of litigation to that point.
On October 15, 2014 the Association filed a motion seeking attorney fees. The motion was based on Civil Code §5975(c) which is part of a large body of law, commonly referred to as the Davis -- Stirling Act, concerning common interest developments. §5975(c) says, "In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney's fees and costs."
On December 2, 2014 the trial court issued an order granting the Association $18,991 in attorney fees, plus $572 in costs. The Hazelbakers appealed.
The central question for the Appellate Court was "…is a lawsuit to enforce an agreement that was reached during mediation (or another form of ADR) an action ‘to enforce the governing documents' in the meaning of section 5975, where the mediation was initiated pursuant to the Davis -- Stirling Act? And the Court's answer was "yes", at least in circumstances similar to this case. (The Court acknowledged that the answer might have been ‘no' had the mediation involved other matters.)
The Hazelbakers also questioned the amount the trial court had awarded. They should have been satisfied with what was assessed. The amount initially requested by the Association was $31,970. In any event, the Appellate Court upheld the trial court's figure of $18,991, noting that "It is well settled, however, that the trial court was not required to issue any explanation of its decision with regard to the fee award."
Finally, the Appellate Court noted that, as prevailing party in the appeal, the Association is entitled to recover its appellate attorney fees. That figure will be set by the trial court.
We don't know what the patio improvement itself cost; but we do know that you can add to that figure the Hazelbakers own attorney fees plus those of the Association.
This all started with a decision to depart from or modify the plans as approved by the Association. Typically, it would really be a bother to go back to the architectural committee and seek approval for the change. But it might have been a whole lot cheaper. Maybe there's a lesson there.