Georgia Ct. Says Homeowners “Prevailed” in Action Brought by HOA and Were Entitled to Attorney Fees

Georgia Appellate Court decision (March 16, 2015).

A homeowners association (“Association”) sued homeowners for damages and to enforce a restrictive covenant contained in the Association’s governing documents that required garages to be used for parking vehicles and not for storage. The homeowners defended the Association’s case by contending that the restrictive covenant in question was invalid. The homeowners had owned their home in the community for approximately ten years prior to the Association adopting an Amended Declaration that contained the “Garage Use Covenant” which prohibited use of a garage for storage. Because the homeowners did not have a basement in the home, the used their garage for storage and parked their cars in the driveway. They did not vote for or give written consent to the amendment containing the “Garage Use Covenant.” The Association refused to grant the homeowners a permanent variance and when the homeowners refused to comply with the restriction, the Association began to levy daily fines, which the homeowners refused to pay. The Association then filed the subject lawsuit seeking damages, injunctive relief, and attorney fees. The trial court granted summary judgment to the Association on its claims for damages for nonpayment of fines, injunctive relief, and attorney fees.

The homeowners appealed contending that the Garage Use Covenant was unenforceable against them because they had not consented to it in writing, and because it had not been approved by two-thirds of the Association members as required by Georgia law. The appellate agreed with the homeowners and reversed the trial court’s judgment and the award of attorney fees to the Association as the prevailing party. The case was remanded back to the trial court for further proceedings which resulted in additional rulings in the trial court, but no award of attorney fees to either party. The homeowners then appealed the trial court’s ruling that there was no “prevailing party” that should have been awarded attorney fees, contending that they did in fact prevail, and should have been awarded their attorney fees in accordance with provisions contained in the Amended Declaration.

In considering the issue of whether the homeowners were the “prevailing party,” the court ruled that, “unlike plaintiffs who typically must obtain some affirmative relief on their claim to be deemed the ‘prevailing party’……… defendants prevail by not having any relief imposed against them.” Thus, considering the facts of the case, the homeowners having prevailed on the only claims that were ultimately adjudicated on the merits, they were the “prevailing party” and were entitled to an award of attorney fees. The case was then again remanded back to the trial court for a determination of the exact amount of attorney fees to be awarded to the homeowners.

See case decision: Marino_v._Clary_Lakes_Homeow