Virginia Court Articulates Considerations for Determining the Proper Amount of HOA Attorney Fees to Award to the Prevailing Party

This case involved a dispute between a unit owner (“Owner”) and her homeowners association (“Association”) over who was responsible for payment of HOA attorney fees regarding a $500 bill for repairs to the front door of her condominium. Owner contended that the door was common area property that Association was responsible for repairing under Association’s governing documents and the applicable state laws. Following refusals by Association to pay the $500, Owner filed suit in the general district court seeking to recover the $500 as damages plus an award of attorney’s fees that she incurred in the action. The trial court ruled against Owner and entered a judgment in favor of Association.

Unsatisfied with the trial court’s judgment, Owner appealed the decision to the circuit court. In the appellate court proceedings, Owner again sought a recovery of the $500 in damages and an award of attorney’s fees in the amount of $8,232.00. The amount of the attorney fees requested by Owner was subsequently increased to $9,568.50 after additional fees had been incurred by Owner. After hearing the case, the circuit court awarded judgment to Owner for the $500 and then heard argument and allowed briefing on the issue of the attorney fees requested by Owner.

After considering the attorney’s fees issue, the circuit court awarded Owner $375 for attorney fees. Dissatisfied with the attorney fee award, Owner filed a motion for reconsideration of the amount awarded. The court conducted a hearing on the motion for reconsideration and after argument, denied Owner’s motion. At the hearing, the judge stated, “I felt compelled to impose a relationship between the amount in controversy and the level to which I was going to require the defendant to pay your fees.” The judge further stated, “I just didn’t think it was right to impose that kind of attorney fees in a case where the amount in controversy was $500…” The court directed Owner to prepare a final order. Owner submitted a proposed final order in which she included objections relative to the attorney fee award. The court then held another hearing concerning the objections, but did not change the amount of attorney fees awarded to Owner. Still dissatisfied, Owner then appealed the circuit court judgment to the Virginia Supreme Court of Appeals.

In her appeal to the Supreme Court of Appeals, Owner contented that the circuit court erred in awarding her only $375 for her attorney fees and that, the applicable law mandated that she be awarded “reasonable attorney’s fees.” Owner argued that the circuit judge’s ruling was based solely on the fact that there was only $500 in damages, and there is no legal basis for limiting the amount of attorney fees based on the amount of the damages awarded.

The reviewing court articulated seven different factors that court’s generally consider when deciding on the reasonableness of an amount of attorney’s fees, one of which is the “results obtained” factor. The court ruled that, within the scope of considering the results that were obtained, it was permissible for the court to consider the amount of damages the plaintiff recovered or sought to recover but that does not mean the courts could use the amount of the damages sought by a plaintiff as a limit on the amount of attorney fees that could be awarded. The court stated that when “the court weighs the reasonable amount of attorney’s fees to award, it cannot dismiss out of hand the costs of litigation inflicted on the prevailing party by the losing party’s insistence on its losing argument, based solely on the dollar value of the claim.” Thus, the court concluded that the circuit court erred in finding that the fees that Owner had requested were “unreasonable per se” because the case involved a $500 dispute, without regard for consideration of the costs that Owner was required to incur to effectively litigate her claim.

The Supreme Court of Appeals reversed the circuit court’s decision in part, and remanded the case back to the trial court for further proceedings to determine the proper amount of fees that Owner should have been awarded taking all factors into consideration.

Virginia Supreme Court of Appeals decision (April 13, 2017).

See case decision: Lambert_v._Sea_Oats_Condo._Ass’n_Inc._(Va._App._2017)