The Turner Law Firm was awarded 100% of its attorney’s fees and costs in a view rights dispute.   The case is important because it concerns the reciprocal nature of statutory attorney’s fees provisions, including whether they apply if the defendant prevails in the action on the grounds that the statute is not applicable.

The Turner Law Firm represented a property owner that was sued by an alleged homeowner’s association and 48 of the 94 lot owners to stop construction of a two story house that our client was building.  The CC&Rs limited construction to single family houses.  The plaintiffs alleged that the tract was a “common interest development” under the Davis-Stirling Common Interest Development Act (Civil Code §1350, et seq.)  The Davis Striling Act has a prevailing party attorney’s fees provision: “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” Civil Code §1354(c).

The main defense to the lawsuit was that the CC&Rs expired on December 31, 1999.    However, the plaintiffs further alleged that they had extended the CC&Rs on December 30, 1999, until 2010, by “[a]t least 50 %, plus one, of the total voting power of the members” and pursuant to Civil Code §1357, which provided that if the declaration of restrictions for a common interest development “do not provide a means for the property owners to extend the term of the declaration,” it “may be extended by the approval of owners having more than 50 percent of the votes in the association …” Civil Code §1357 specifically refers that it is the procedure to extend the CC&Rs for “common interest developments.”

Because the CC&Rs did not provide a procedure to have amended or extended them by less than 100% of the property owners,  the Turner Law Firm argued that Civil Code §1357 was the only procedure under California law by which plaintiffs could have extended the DORs by less than 100% approval of the lot owners.  Thus, the main issue of the lawsuit was whether plaintiff was “common interest development.”

The Davis-Stirling Act provides that a “planned development” may be a “common interest development,” and the Act defines the term “planned development” as having either or both the following elements:  (1) The tract has a common area, which is owned either by an association or in common by the owners of the separate interests; and/or (2) the association has the power to enforce the obligation of the property owners to maintain the common area “by means of an assessment which may become a lien.”  Civil Code §1351(k).  The issue of whether an older tract was a “planned development” under the Davis-Stirling Act had been addressed in Mount Olympus Property Owners Assn. v. Shpirt (1997) 59 Cal.App.4th 885, 895.  The court in that case held that the tract was not a planned development because there were no common areas and the association was voluntary.

The Court found in favor of the Turner Law Firm’s client on the issue that the tract was not a common interest development because there were no common areas; the association was voluntary; and the association had neither assessment nor lien power.

The Court also granted our motion for attorney’s fees brought under Civil Code §1354(c).  The statutory award of attorney fees under Civil Code section 1354 is expressly awarded to the prevailing party.  We argued that the it is reciprocal, such attorney fees are awarded as a matter of right, and there is no discretion afforded to the trial court in granting or denying such fees.  Even though we defeated the action on the grounds that the Davis-Stirling Act did not apply, we prevailed on the fees’ claim because the plaintiffs had sued and sought their fees under the statute.  A defendant is entitled to its costs if the complaint is unfounded, just as much as a successful plaintiff is entitled to its costs.  In a different but analogous context, courts have sustained a right to recover attorney’s fees under the contractual attorney’s fees statute (Civ. Code §1717), even though the contract which contained the relevant attorney’s fee clause was found to be invalid or unenforceable.  Furthermore, in a case involving a statutory stop notice claim, the defendant was awarded its fees even though it won by providing that stop notice claim was invalid.  The court stated:  “it is only necessary for [the defendant] to have shown that it defeated the claim. Such invalidity will not bar fees to which a prevailing party is otherwise entitled.”

The plaintiffs appealed the trial court’s decision.  The court of appeal in an unpublished decision affirmed the substantive ruling for the defendants, but reversed the attorney’s fees award.   In an extremely rare move, the California Supreme Court granted review of the unpublished Court of Appeal opinion, limiting review to the attorney fees issues.

On March 5, 2015, the California Supreme Court issued its opinion, Tract 19051 v. Kemp (Supreme Court Opin.), reversing the court of appeal’s decision on the attorney fees award.   In other words, the Court held that the prevailing defendant was entitled to his attorney’s fees under the Davis Stirling Act, Civil Code section 5975.   The Court held that the “prevailing party” language of the statute allows reciprocal attorneys fees, even if Plaintiff fails to show that the governing documents are valid.  “because plaintiffs clearly would have been entitled to an award under the statute had they prevailed in the action, denying defendants an award under the statute when they were the prevailing party would unquestionably violate the reciprocal nature of the statute and thus defeat the evident legislative intent underlying the statute.”