Court Awards Homeowners Association $1,881 in Damages and $201,750 for Attorney Fees in Dispute Over Nonpayment of $2,400 Special Assessment

UNPUBLISHED California Appellate Court decision (August 8, 2017).

This case involved a dispute between a homeowner (“Owner”) and his homeowners association (“Association”) over the payment of a $2,400 special assessment made by Association in 2010 for emergency roof repairs. At the time of the assessment, Owner was on the board and served as the president of Association, a position which he continued to hold until early 2011. On multiple occasions from 2010 through 2011 Owner requested permission from Association for payment of the special assessment pursuant to a payment plan, but Association never responded to the requests. Nevertheless, Association continued to bill Owner for the special assessment and imposed late fees and interest on the unpaid $2,400. As a result, Owner’s bill grew to over $7,000. Owner contended that the late fees and interest were improperly applied by Association in violation of Association’s CC&Rs and state laws.

The lawsuit was initiated by Owner’s filing of a complaint against Association and Association’s property manager and others which alleged the following claims that were based on tortious conduct and breach of contract: (i) breach of fiduciary duty (a tort claim); (ii) breach of Association’s governing documents (a breach of contract claim); (iii) intentional infliction of emotional distress (a tort claim); and (iv) negligence (a tort claim). In response, Association filed a cross-complaint against Owner alleging claims for breach of fiduciary duty and interference with prospective business advantage.

When the case went to trial, all of Owner’s claims against the property manager were dismissed by the court granting a nonsuit in favor of the manager and all of Owner’s claims against Association, with the exception of the negligence claim, were dismissed by the court. The jury subsequently ruled in favor of Association on Owner’s negligence claim.  The jury also found in favor of Association on its two causes of action against Owner and awarded Association $1,881 in damages. The court also awarded Association $201,750 in attorney fees. Owner then appealed the trial court’s judgment.

In his appeal, Owner contended that the trial court’s award of $201,750 in attorney fees was improper because Association’ governing documents only provide for the recovery of attorney fees by the prevailing party in an action to enforce Association’s CC&Rs, which is a breach of contract action. Owner contended that, because three out of four of the causes of action that he sued Association for were “tort” claims, and not claims to enforce the CC&Rs. Thus, Owner contended that Association was only entitled to an award of attorney fees that were related to the cause of action for breach of the governing documents and the amount awarded should have been apportioned.

The appellate court affirmed the trial court’s judgment holding that the trial court did not need to apportion the attorney fees awarded to Association between the tort and contract claims because the issues in the different causes of action arose out of the same operative facts. Thus, the court ruled that attorney’s fees that are incurred for representation on an issue that is common to both a cause of action where attorney fees are recoverable, and one where they are not, need not be apportioned between the two causes of action.  Because Owner’s three claims that were based on theories of tortious conduct (and not breach of contract), all alleged the wrongful conduct was performed in violation of Association’s CC&Rs, the claims were found to be interrelated with the breach of contract cause of action and the full amount of the attorney’s fees incurred by Association were properly awarded to Association.

See case decision: Mustafa_v._Mountain_View_Park_Homeowners_Ass’n_Inc._(Cal._App._2017)1