Roslyn Lane, LLC v. Cave Street Homeowners Assn. CA4/1

Filed 5/10/16 Roslyn Lane, LLC v. Cave Street Homeowners Assn. CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ROSLYN LANE, LLC, D065134
Plaintiff, Cross-defendant and
Appellant,
(Super. Ct. No.
v. 37-2009-00086868-CU-OR-CTL)
CAVE STREET HOMEOWNERS
ASSOCIATION,
Defendant, Cross-complainant and
Appellant.
APPEAL from postjudgment orders of the Superior Court of San Diego County,
Lorna A. Alksne, Judge. Affirmed.
Wilson Elser Moskowitz Edelman & Dicker and Gregory D. Hagen for Plaintiff,
Cross-defendant and Appellant.
Quade & Associates, Michael W. Quade and Amy Elizabeth Allemann for
Defendant, Cross-complainant and Appellant.
Plaintiff and cross-defendant Roslyn Lane, LLC (Roslyn) appeals a postjudgment
order denying its motion for judgment notwithstanding the verdict (JNOV) after the trial
court entered judgment awarding defendant and cross-complainant Cave Street
Homeowners Association (Association) damages in the amount of $161,613.01 on its
claim against Roslyn for breach of Association's declaration of covenants, conditions, and
restrictions (CC&R's). On appeal, Roslyn contends the trial court erred by denying its
JNOV motion because: (1) the evidence is insufficient to support the jury's inclusion of
attorney fees as part of Association's costs of collection of Roslyn's unpaid assessments;
(2) inclusion of those attorney fees in the damages award improperly results in double
recovery by Association and would be inequitable; and (3) Association's special
assessments improperly funded its unmeritorious defense of Roslyn's claims.
Association cross-appeals the trial court's postjudgment order denying its motion
for an award of its attorney fees and costs incurred in defending Roslyn's claims and
prosecuting its cross-claims against Roslyn. Association contends the court abused its
discretion by denying its motion because it was the prevailing party in this action.
FACTUAL AND PROCEDURAL BACKGROUND
In 2009, Roslyn, owner of a unit in the condominium project managed by
Association, filed a complaint against Association alleging causes of action for breach of
contract, breach of declaration, declaratory relief, and an accounting. The complaint
alleged that Association breached the terms of the CC&R's and a 2005 settlement
agreement between them requiring it to make certain repairs and allow certain
improvements.
In 2011, Association filed a cross-complaint against Roslyn alleging causes of
action for breach of contract and declaratory relief. The cross-complaint alleged that
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Roslyn had breached the CC&R's by not paying various assessments, dues, and related
charges since 2009, and Association had incurred attorney fees and costs in attempting to
collect those amounts.
Before trial, Roslyn filed a second amended complaint alleging causes of action
for breach of contract, breach of declaration, breach of fiduciary duty, declaratory relief,
an accounting, and negligence. Following trial, the jury returned verdicts in favor of
Roslyn on its breach of contract and breach of declaration causes of action, awarding it
$117,121.60 in damages, and in favor of Association on its breach of declaration cause of
action, awarding it a total of $161,613.01 in damages. The parties subsequently filed
briefs on their causes of action for declaratory relief.
On August 20, 2013, the trial court entered judgment on the jury verdict and also
matters it determined on declaratory relief. The court denied Association's request for
declaratory relief and granted in part and denied in part Roslyn's requests for declaratory
relief. The court subsequently denied Roslyn's motions for new trial and JNOV.
Association filed a motion for an award of attorney fees pursuant to Civil Code
section 1717 and former Civil Code section 1354, asserting it was the prevailing party in
the action.1 The trial court denied Association's motion, finding there was no prevailing
party in the action.
1 Roslyn also apparently filed a motion for an award of attorney fees, but the parties
have not included its moving papers in the record on appeal. Because Roslyn does not
challenge on appeal the court's denial of its attorney fee motion, we need not, and do not,
address whether the court erred in denying that motion.
3
Roslyn timely filed an amended notice of appeal challenging the order denying its
JNOV motion. Association timely filed a notice of appeal challenging the order denying
its attorney fees motion.
DISCUSSION
ROSLYN'S APPEAL
I
JNOV Standard of Review
"A trial court must render judgment notwithstanding the verdict whenever a
motion for a directed verdict for the aggrieved party should have been granted. (Code
Civ. Proc., § 629.) A motion for judgment notwithstanding the verdict may be granted
only if it appears from the evidence, viewed in the light most favorable to the party
securing the verdict, that there is no substantial evidence in support [of the verdict]."
(Sweatman v. Department of Veteran Affairs (2001) 25 Cal.4th 62, 68 (Sweatman).)
"The trial court's discretion in granting a motion for [JNOV] is severely limited."
(Teitel v. First Los Angeles Bank (1991) 231 Cal.App.3d 1593, 1603.) " 'The trial judge's
power to grant a [JNOV] is identical to his [or her] power to grant a directed verdict
[citations]. The trial judge cannot reweigh the evidence [citation], or judge the credibility
of witnesses. [Citation.] . . . "A motion for [JNOV] may properly be granted only if it
appears from the evidence, viewed in the light most favorable to the party securing the
verdict, that there is no substantial evidence to support the verdict. If there is any
substantial evidence, or reasonable inferences to be drawn therefrom, in support of the
4
verdict, the motion should be denied." [Citation.]' " (Clemmer v. Hartford Insurance Co.
(1978) 22 Cal.3d 865, 877-878.)
In reviewing a trial court's grant of a motion for JNOV, we apply the same
standard as the trial court was charged with applying. (Sweatman, supra, 25 Cal.4th at
p. 68.) "As in the trial court, the [appellate] standard of review is whether any substantial
evidence—contradicted or uncontradicted—supports the jury's conclusion." (Ibid.) "In
other words, we apply the substantial evidence test to the jury verdict, ignoring the
judgment." (Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530, 546.) We resolve all
conflicts in the evidence and draw all reasonable inferences therefrom in favor of the
jury's verdict. (Teitel v. First Los Angeles Bank, supra, 231 Cal.App.3d at p. 1603; In re
Coordinated Latex Glove Litigation (2002) 99 Cal.App.4th 594, 606.) Substantial
evidence is not synonymous with any evidence, but is evidence of ponderable legal
significance that is reasonable, credible, and of solid value. (Roddenberry v.
Roddenberry (1996) 44 Cal.App.4th 634, 651.) The testimony of a single witness may be
sufficient. (Hope v. California Youth Authority (2005) 134 Cal.App.4th 577, 589.)
II
Denial of Roslyn's JNOV Motion
Roslyn contends the trial court erred by denying its JNOV motion. It argues: (1)
the evidence is insufficient to support the jury's inclusion of attorney fees as part of
Association's costs of collection of Roslyn's unpaid assessments; (2) inclusion of those
attorney fees in the damages award improperly results in double recovery by Association
5
and would be inequitable; and (3) Association's special assessments improperly funded
its unmeritorious defense of Roslyn's claims.
A
After entry of the judgment, Roslyn filed a motion for JNOV on the ground
Association did not present substantial evidence to support the elements of its cross-claim
against it. Roslyn argued the evidence was insufficient to support that portion of the
damages award representing unpaid special assessments and attorney fees as costs of
collection of unpaid assessments. It did not dispute that portion of the damages award
representing unpaid regular assessments. Roslyn argued the evidence presented by
Association in support of its claim for attorney fees as costs of collection was
insufficient. Although Stephen Jones, an employee of APS (Association's management
company), testified he received and presented to the Association for its approval bills
from a law firm, Roslyn argued he was not an attorney and could not provide expert
opinion testimony regarding the reasonableness of those fees. Likewise, although
Georgeanne Marston, Association's secretary and treasurer, testified she was responsible
for approving Association's bills, had approved various bills from a law firm, and
believed those attorney fees, in her lay opinion, were reasonable, Roslyn argued she also
was not an attorney and could not provide expert opinion testimony regarding the
reasonableness of those fees. Roslyn cited Association's collections policy, which states
it can collect only reasonable costs of collection, including attorney fees, and argued
those attorney fees must therefore be both related to its collection efforts and reasonable.
Roslyn also argued inclusion of attorney fees as part of the damages award would give
6
Association a double recovery and violate the doctrine of unclean hands because
Association imposed special assessments on its members, including Roslyn, to fund its
defense of Roslyn's action against it. Finally, Roslyn argued it would be improper to
allow Association to impose special assessments to fund its unmeritorious defense of
Roslyn's claims against it because Association had received defense funding from
insurance carriers.
Association opposed Roslyn's JNOV motion, arguing that any unpaid assessments
levied by its board of governors would, under the CC&R's and its collections policy,
become delinquent after 10 days and remain delinquent until all costs, including attorney
fees, are fully paid or otherwise satisfied. Association's collections policy allows the
Association to collect the reasonable costs of collection, including attorney fees, for any
amounts due it. Association further argued that it presented evidence at trial showing the
amount and reasonableness of the attorney fees portion of the collection costs it sought
against Roslyn. Two statements of accounts were admitted showing the amount of
attorney fees incurred by Association. Marston, Association's secretary and treasurer,
testified she received statements for attorney fees incurred in Association's efforts to
collect Roslyn's unpaid assessments. She further testified that, in her lay opinion, she
believed those fees were reasonable. Jones, APS's account representative, testified he
reviewed the attorney fee statements and determined they were reasonable. Association
argued that it presented evidence on the amounts of regular assessments, special
assessments, collection costs, and fees Roslyn had not paid and was obligated to pay
under the CC&R's and the collections policy.
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Association also argued there was substantial evidence to support the special
assessments portion of the jury's damages award. Association presented evidence
showing that under the CC&R's it had the power to impose, and its members approved,
special assessments to pay for its needs and expenses. Association also argued there was
no evidence showing it received any double recovery of its damages. Although one of its
insurers paid it $137,133 for prior legal costs incurred, Association's board of governors
set aside the same amount in a reserve account toward future costs and had since fully
expended that amount. Association also argued Roslyn could not assert any equitable
defense (e.g., unclean hands) because Roslyn had a duty under the CC&R's to pay the
unpaid assessments and collection costs and did not present any evidence that those
assessments were imposed for an improper purpose. It also disputed Roslyn's
characterization of Association's defense of Roslyn's claims against it as unmeritorious.
In its reply, Roslyn argued that Association's evidence was insufficient to prove
the attorney fees portion of the damages award was both reasonable and necessary to
collect its unpaid assessments. Roslyn argued Association should have presented
testimony by the attorney who provided those legal services regarding the necessity and
reasonableness of his or her fees.
The trial court issued a minute order denying Roslyn's JNOV motion, stating
Roslyn did not show there was no substantial evidence to support the jury's verdict. The
court rejected Roslyn's arguments regarding unclean hands and double recovery.
8
B
Substantial evidence. Based on our review of the record, we conclude there is
substantial evidence to support the jury's award of attorney fees as part of Association's
costs of collection of Roslyn's unpaid assessments. The evidence shows that after Roslyn
stopped paying assessments when they were due, Association took action to collect those
unpaid assessments as provided in the CC&R's and its collections policy and, in so doing,
incurred collection costs, including attorney fees. The CC&R's provide that in the event
any assessment levied by Association's board of governors remains unpaid for 10 days
after payment is due, it remains delinquent until that amount, "together with all costs,
including attorney's fees, penalties and interest," is fully paid. Under Association's
collections policy, Association is entitled to recover its reasonable costs of collection,
including attorney fees, if a lawsuit is filed to recover unpaid assessments. That policy
states: "The Association is entitled to collect all of the following as reasonable costs of
collection: interest, late fees, collection expenses, administration fees, attorney's fees,
reimbursement assessments or any other amounts due to the Association." (Italics
added.) As Association asserts, its collections policy requires the overall costs of
collection to be reasonable. The policy further provides that attorney fees are a
reasonable cost of collection. Therefore, on admission of evidence showing Association
incurred attorney fees in collecting Roslyn's unpaid assessments, the actual amount of
those fees are deemed "reasonable costs of collection" to which Association is entitled to
recover along with the unpaid assessments.
9
Assuming arguendo, as Roslyn asserts, that Association's collections policy should
be interpreted as requiring attorney fees incurred in collecting unpaid assessments to be
"reasonable," we nevertheless conclude Association presented substantial evidence to
support a finding the attorney fees it incurred in collecting unpaid assessments from
Roslyn were "reasonable." Association submitted two statements from APS, its
management company, showing Roslyn's account history, including the dates and
amounts of legal fees Association incurred in attempting to collect Roslyn's unpaid
assessments. Marston testified the attorney fees shown on Roslyn's statement of account
history were incurred in representing Association in Roslyn's bankruptcy proceeding and
that she received, reviewed, and approved the attorneys' bills and sent them to APS for
approval and payment. She testified that, in her lay opinion, she believed the attorney
fees shown on those statements were reasonable. She further testified that if she found
any attorney fees were unrelated to Roslyn, she would contact the law firm and discuss
the matter, implying Roslyn would not be charged for those fees. Jones testified that, as
APS's account representative for Association, he also reviewed the charges by attorneys
to determine whether they should, or could, reasonably be added to the amount owed by a
member. There is substantial evidence to support a finding the attorney fees incurred by
Association to collect Roslyn's unpaid assessments were reasonable.
Although Roslyn asserts expert witness testimony was required to show those
attorney fees were reasonable, it does not cite any apposite case holding attorney fees
incurred to collect amounts due under a contract (e.g., CC&R's) cannot be recovered as
contract damages unless there is expert witness testimony regarding the reasonableness of
10
those fees. Hart v. Vidal (1856) 6 Cal. 56 and California Steel Buildings, Inc. v.
Transport Indemnity Co. (1966) 242 Cal.App.2d 749, cited by Roslyn, are factually and
procedurally inapposite to this case. California Steel Buildings held that the trial court
erred by admitting a bill for legal services rendered in defending the plaintiff in a prior
lawsuit, concluding there was a lack of authentication because the witness who proffered
the foundation for admission of that bill was incompetent to testify regarding the actual
work performed. (California Steel Buildings, at pp. 759-760.) In contrast, in this case
the two statements of account history for Roslyn were admitted without any objection
regarding their authentication or otherwise. The evidence showed Association incurred,
and paid, the attorney fees shown on those two statements and that those fees had been
reviewed by both Association and its management company and then properly allocated
to Roslyn. Accordingly, Roslyn has not carried its burden on appeal to show that when
attorney fees are a component of requested contract damages, the claimant must, unlike
for other types of contract damages, present expert witness testimony regarding the
necessity and reasonableness of those fees. Roslyn has not shown the evidence is
insufficient to support the jury's award of attorney fees incurred by Association as costs
in collecting Roslyn's unpaid assessments pursuant to the CC&R's and the collections
policy.2
2 Because we dispose of Roslyn's argument on the above ground, we need not
address its additional argument comparing awards of attorney fees as a component of
contract damages to awards of attorney fees as costs.
11
C
Double recovery and unclean hands. Roslyn asserts that the portion of the jury's
award of unpaid special assessments for the purpose of paying Association's attorney fees
should be reversed on the ground that the award of those fees gave Association an
improper "double recovery" and/or violated the equitable defense of "unclean hands."
We disagree.
Regarding its assertion of double recovery, Roslyn argues that to the extent
Association imposed special assessments to fund its defense of Roslyn's action against it,
those special assessments should not have been imposed because Association received
insurance payments to cover those defense expenses. However, Roslyn did not present
any evidence at trial showing the nature and amount of those insurance payments or that
any of the special assessments were otherwise improper. Furthermore, although Roslyn
submitted some evidence of those insurance payments in support of its JNOV motion,
other evidence it submitted showed that Association set aside the full amount of the
payments in a reserve account for legal costs, which account had already been depleted.3
The record shows the $137,133 amount paid by the insurance company was already spent
3 A note to Association's financial statements for the year ended June 30, 2013,
stated in part: "The Association continues to be involved in protracted litigation with an
owner. . . . [¶] In addition, the Association is involved in litigation against its insurers for
their directors and officers coverage. Two of the general liability carriers for the
Association have agreed to participate in the Association's defense, subject to a
reservation of rights. [¶] During the year ending June 30, 2012[,] one of the insurers paid
to the Association the amount of $137,133 in respect to prior legal costs incurred. The
Association's board of directors set aside the $137,133 in a reserve account to absorb
future legal costs. At June 30, 2013[,] this amount has been fully expended."
12
by Association for additional legal costs and, in so doing, presumably avoided the need to
impose another special assessment in that amount to pay for its legal costs. Roslyn has
not carried its burden on appeal to show Association received an improper double
recovery.
Regarding its assertion of unclean hands, Roslyn argues Association acted
unconscionably when it imposed special assessments on Roslyn (along with all other
Association members) to pay for its unmeritorious defense of Roslyn's action for breach
of the CC&R's and the settlement agreement. However, as Association notes, the
equitable defense of unclean hands is not a ground for a JNOV motion. Rather, the only
ground for a JNOV motion is insufficiency of the evidence to support the verdict. "A
trial court must render judgment notwithstanding the verdict whenever a motion for a
directed verdict for the aggrieved party should have been granted. (Code Civ. Proc.,
§ 629.) A motion for judgment notwithstanding the verdict may be granted only if it
appears from the evidence, viewed in the light most favorable to the party securing the
verdict, that there is no substantial evidence in support [of the verdict]." (Sweatman,
supra, 25 Cal.4th at p. 68.) Roslyn does not cite to the record showing it presented
evidence of Association's alleged unclean hands and does not show the evidence is
insufficient to support the jury's verdict because of that purported evidence. Roslyn has
not carried its burden on appeal to show the trial court erred by denying its JNOV motion
because of Association's purported unclean hands.
13
D
Finally, Roslyn argues the trial court erred by denying its JNOV motion because
the jury's award of attorney fees as a component of contract damages should be reversed
because those fees were incurred to pay for Association's unmeritorious defense of
Roslyn's action against it. We disagree. Under the CC&R's, Association can impose
special assessments on its members to pay for its costs, whether those costs are incurred
for the defense of lawsuits against it or otherwise. Therefore, Roslyn, as a
member/homeowner of a unit, and all other members/homeowners were required to pay
when due all special assessments imposed by Association, including any special
assessments to help pay for its costs in this action. Roslyn is not exempted from payment
of a special assessment imposed by Association simply because its lawsuit caused
Association to incur legal costs in defending that lawsuit, whether such defense is
deemed "meritorious" or "unmeritorious."
Furthermore, as with the equitable defense of unclean hands discussed above,
Roslyn's argument that it should not have to pay a special assessment imposed to help
fund Association's defense of its lawsuit against Association is, in effect, an equitable
argument or defense and, as such, is not a ground on which the trial court could grant
Roslyn's JNOV motion. (Sweatman, supra, 25 Cal.4th at p. 68.) In any event, based on
our review of the record, we disagree with Roslyn's assertion that Association's defense
of its action was "unmeritorious." As discussed in more detail below regarding
Association's cross-appeal, Roslyn recovered only about one-sixth of the damages it
sought and did not obtain all of the declaratory relief it sought. Therefore, there was at
14
least some merit to its defense of Roslyn's action. The court did not err by denying
Roslyn's JNOV motion.
ASSOCIATION'S CROSS-APPEAL
III
Awards of Attorney Fees to Prevailing Parties Generally
" ' " 'An order granting or denying an award of attorney fees is generally reviewed
under an abuse of discretion standard of review; however, the "determination of whether
the criteria for an award of attorney fees and costs have been met is a question of law."
[Citations.]' " ' [Citation.] An issue of law concerning entitlement to attorney fees is
reviewed de novo." (Carpenter & Zuckerman, LLP v. Cohen (2011) 195 Cal.App.4th
373, 378.)
"Code of Civil Procedure section 1021 provides the basic right to an award of
attorney fees." (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1341.)
Code of Civil Procedure section 1021 provides that, in general, "the measure and mode of
compensation of attorneys and counselors at law is left to the agreement, express or
implied, of the parties . . . ." However, "[t]here is nothing in [Code of Civil Procedure
section 1021] that limits its application to contract actions alone. It is quite clear . . . that
parties may validly agree that the prevailing party will be awarded attorney fees incurred
in any litigation between themselves, whether such litigation sounds in tort or in
contract." (Xuereb, at p. 1341.)
Furthermore, Civil Code section 1717 provides for reciprocity of contractual
attorney fee provisions, stating:
15
"(a) In any action on a contract, where the contract specifically
provides that attorney's fees and costs, which are incurred to enforce
that contract, shall be awarded either to one of the parties or to the
prevailing party, then the party who is determined to be the party
prevailing on the contract, whether he or she is the party specified in
the contract or not, shall be entitled to reasonable attorney's fees in
addition to other costs. [¶] Where a contract provides for attorney's
fees, as set forth above, that provision shall be construed as applying
to the entire contract . . . . [¶] . . . [¶]
"(b)(1) The court, upon notice and motion by a party, shall
determine who is the party prevailing on the contract for purposes of
this section . . . . [T]he party prevailing on the contract shall be the
party who recovered a greater relief in the action on the contract.
The court may also determine that there is no party prevailing on the
contract for purposes of this section."
"[Civil Code] section 1717 makes an otherwise unilateral right reciprocal, thereby
ensuring mutuality of remedy . . . ." (Santisas v. Goodin (1998) 17 Cal.4th 599, 611
(Santisas).)
The limited purpose of Civil Code section 1717 is to establish mutuality of remedy
and is triggered when there is a unilateral contractual provision that provides attorney
fees are available to only one of the contracting parties. (Hsu v. Abbara (1995) 9 Cal.4th
863, 870 (Hsu).) Civil Code section 1717 is not an independent statutory basis for
recovering attorney fees (Chelios v. Kaye (1990) 219 Cal.App.3d 75, 79), but instead
"simply transforms a unilateral contractual right into a reciprocal right." (Hambrose
Reserve, Ltd. v. Faitz (1992) 9 Cal.App.4th 129, 132.) "Civil Code section 1717 has a
limited application. It covers only contract actions, where the theory of the case is breach
of contract, and where the contract sued upon itself specifically provides for an award of
16
attorney fees incurred to enforce that contract." (Xuereb v. Marcus & Millichap, Inc.,
supra, 3 Cal.App.4th at p. 1342.)
Civil Code section 5975 (former Civ. Code, § 1354) also provides for awards of
attorney fees and costs to prevailing parties in actions to enforce declarations of
covenants, conditions, and restrictions or other governing documents of homeowners
associations.4 That statute provides:
"(a) The covenants and restrictions in the declaration shall be
enforceable equitable servitudes, unless unreasonable, and shall
inure to the benefit of and bind all owners of separate interests in the
development. Unless the declaration states otherwise, these
servitudes may be enforced by any owner of a separate interest or by
the association, or by both.
"(b) A governing document other than the declaration may be
enforced by the association against an owner of a separate interest or
by an owner of a separate interest against the association.
"(c) In an action to enforce the governing documents, the prevailing
party shall be awarded reasonable attorney's fees and costs." (Civ.
Code, § 5975, italics added.)
In determining which party, if any, was the prevailing party in an action on a
contract or to enforce the governing documents of a homeowners association, a trial court
compares the relief awarded to each party to the relief sought by each party. "If neither
party achieves a complete victory on all the contract claims, it is within the discretion of
the trial court to determine which party prevailed on the contract or whether, on balance,
4 Association erroneously cites former Civil Code section 1354 as a basis for an
award to it of attorney fees as the prevailing party. It should, instead, have cited that
statute's successor, Civil Code section 5975.
17
neither party prevailed sufficiently to justify an award of attorney fees." (Scott Co. v.
Blount, Inc. (1999) 20 Cal.4th 1103, 1109.) "[I]n deciding whether there is a 'party
prevailing on the contract,' the trial court is to compare the relief awarded on the contract
claim or claims with the parties' demands on those same claims and their litigation
objectives as disclosed by the pleadings, trial briefs, opening statements, and similar
sources." (Hsu, supra, 9 Cal.4th at p. 876.)
"If . . . the contract allows the prevailing party to recover attorney fees but does
not define 'prevailing party' or expressly either authorize or bar recovery of attorney fees
in the event an action is dismissed, a court may base its attorney fees decision on a
pragmatic definition of the extent to which each party has realized its litigation
objectives, whether by judgment, settlement, or otherwise." (Santisas, supra, 17 Cal.4th
at p. 622, italics added.) In assessing litigation success, courts should respect substance
rather than form and, to that extent, be guided by equitable considerations. (Salehi v.
Surfside III Condominium Owners Assn. (2011) 200 Cal.App.4th 1146, 1156; Castro v.
Superior Court (2004) 116 Cal.App.4th 1010, 1019.)
The same standards for determining prevailing parties under Civil Code section
1717 and contract actions apply to actions to enforce the governing documents of
homeowners associations under Civil Code section 5975. (Heather Farms Homeowners
Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1572-1574 [regarding former Civ. Code,
§ 1354].) In determining which party, if any, prevailed in an action, a court considers
which party prevailed "as a practical matter." (Id. at p. 1574.) A trial court's
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determination of which party is the prevailing party must be affirmed on appeal absent an
abuse of its discretion. (Ibid.)
IV
Trial Court's Denial of Association's Attorney Fees Motion
Association contends in its cross-appeal that the trial court abused its discretion by
denying its motion for an award of attorney fees and costs because it clearly was the
prevailing party in the action.
A
Following entry of the judgment in the instant action, Association filed a motion
for an award of $1,666,203.80 in attorney fees pursuant to Civil Code section 1717 and
former Civil Code section 1354 (now Civ. Code, § 5975), asserting it was the prevailing
party in the action. Association argued that because it was awarded $161,613.01 in
damages on its cross-complaint and Roslyn was awarded only $117,121.60 in damages,
Association clearly received the net monetary recovery. Association argued it also
received the greater equitable relief. It argued that Roslyn did not receive most of the
declaratory relief it sought in its trial brief on declaratory relief. On the main issue of the
location of air conditioning units, Roslyn sought declaratory relief that it could install two
38 QRC units on the building's roof, but the court denied that request. The court ordered
instead that Roslyn must place units on the driveway side (presumably at ground level),
but if Roslyn could not locate units with a lesser width than the 38 QRC unit, it could
locate the units on the pedestrian walkway side. Association argued Roslyn therefore
received nothing more than it already had pursuant to the 2005 settlement agreement. On
19
Roslyn's request for relief ordering Association to add insulation to the roof and obtain
final approval from the City of San Diego for a re-roofing permit, Association argued the
court denied the request to require it to add insulation and merely ordered it to allow a
final inspection of the roof for issuance of a permit. Also, the court denied Roslyn's
requests for orders directing Association to re-slope the roof (or, at least, install a copper
gutter) and to repair and install flashing. Finally, Association argued the court denied, for
the most part, Roslyn's request for an order directing it to accept and approve Roslyn's
plan per its trial exhibit because Association had not disputed most of the changes set
forth in those plans and the court required Roslyn to redraw and resubmit its plans to the
City of San Diego. Association argued that, on a practical level, Roslyn received very
little of the equitable relief it sought.
In opposition to Association's motion for an award of attorney fees, Roslyn argued
it obtained the greater relief on the contract action. Although Association obtained
$44,491.41 more in monetary relief, Roslyn argued it obtained substantial repairs to its
windows, which repairs involved substantial costs to Association. Roslyn also argued it
obtained the greater equitable relief. Roslyn noted Association was found to have
breached the CC&R's and the 2005 settlement agreement, forced to repair windows,
flashing, and siding, and forced to approve Roslyn's plans. Association was also forced
to approve roof repairs made in 2007 and allow Roslyn to place air conditioning units in a
location other than in front of the building. Roslyn also argued Association achieved
little of its litigation objectives. Association's trial brief asked the trial court to deny all
of Roslyn's requested relief. The court, however, denied Association's request that
20
Roslyn be forced to place air conditioning units in the front of the building or,
alternatively, inside its unit. Roslyn argued that because neither party fully achieved its
litigation objectives, Association had not met its burden to show it was the prevailing
party for purposes of an award of contractual attorney fees.
In reply, Association argued Roslyn obtained only $117,121.60, or about 15
percent, of the total damages of over $750,000 it sought. Association disagreed that
Roslyn obtained window repairs under the CC&R's, because the 2005 settlement
agreement did not contain an attorney fee provision and the CC&R's did not obligate the
Association to replace windows with tempered glass. Association also argued the
window repair issue was only a minor portion of the instant case. Association further
argued it prevailed on the air conditioning unit issue because it prevented Roslyn from
installing air conditioning units on the building's roof. Also, the court awarded Roslyn
only relief to which it was already entitled under the 2005 settlement agreement (i.e.,
location of the air conditioning units on the driveway side). Association also argued it
prevailed on the issues of approval of Roslyn's plans and request for re-roofing and roof
insulation. Comparing the parties' litigation objectives with what they obtained at trial,
Association argued it clearly was the prevailing party and was entitled to an award of its
attorney fees.
The trial court denied Association's motion for an award of attorney fees, finding
there was no prevailing party in the action. The court stated in part:
"Taking into consideration the parties' arguments, pleadings, trial
briefs, and trial arguments and evidence, neither party fully achieved
their litigation objectives. [Roslyn] sought both financial damages
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and equitable relief. In terms of the former, [Roslyn] sought
approximately six times the amount ultimately awarded by the jury.
As for the latter, [Roslyn] obtained several declaratory relief
victories, but not all requested. [Association] sought and obtained
financial damages but was also found to have violated the CC&Rs
and has been ordered to accommodate several of [Roslyn's]
architectural objectives. Considering the entirety of the parties'
litigation objectives, and the circumstances present in this case that
has been litigated for several years, the Court concludes that, on a
practical level, there is no prevailing party for purposes of attorneys'
fees."
Furthermore, because it found there was no prevailing party, the court granted the parties'
competing motions to strike the other party's request for costs.
B
Based on our review of the record, we conclude Association has not carried its
burden on appeal to show the trial court abused its discretion by denying its motion for an
award of attorney fees by finding there was no prevailing party in this action. Both the
CC&R's and Civil Code section 5975 provide for an award of attorney fees to the
prevailing party in litigation to enforce the CC&R's.5 Nevertheless, the court properly
considered the litigation objectives of the parties, both monetary and equitable, and the
relief they obtained at trial, and reasonably concluded neither party prevailed for
purposes of an award of contractual or statutory attorney fees. The court could conclude
Roslyn obtained relief that included a finding Association breached the CC&R's and the
2005 settlement agreement and orders directing Association to repair Roslyn's windows
5 Section 25 of the CC&R's provides that the prevailing party "shall be entitled to
costs of suit and such attorney's fees as the Court may adjudge reasonable and proper."
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(at substantial cost), approve its plans and roof repairs previously made, and allow air
conditioning units at a location other than in front of the building. The court could also
conclude that, in comparison, Association did not obtain most of its litigation objectives.
In particular, although Association sought to force Roslyn to locate air conditioning units
either inside its unit or in front of the building, the court instead granted Roslyn relief
requiring Association to allow it to locate the units on the driveway side (or, if
sufficiently narrow units were unavailable, on the pedestrian walkway side). There is
nothing in the record showing the court acted irrationally, arbitrarily, or otherwise abused
its discretion by finding neither party prevailed, as a practical matter, for purposes of an
award of contractual or statutory attorney fees.
By citing each specific litigation objective of each party and the party's success or
lack of success in achieving that objective, Association, in effect, asks us to conduct a de
novo, or independent, review of its motion for an award of attorney fees and, in
particular, determine which party was the prevailing party. However, that is not our
function on appeal. Rather, in applying the abuse of discretion standard of review, we
must "resolve all evidentiary conflicts in favor of the judgment and determine whether
the court's decision ' "falls within the permissible range of options set by the legal
criteria." ' " (Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 771.) Therefore, even
were we to disagree with the trial court's conclusion on an independent weighing of the
evidence, we cannot substitute our judgment for that of the trial court and must affirm its
ruling absent a showing the court abused its discretion. (Avant! Corp. v. Superior Court
(2000) 79 Cal.App.4th 876, 881-882.) Based on that standard of review, we conclude
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Association has not carried its burden to show the trial court acted outside the bounds of
reason by concluding neither party prevailed in this action for purposes of an award of
contractual or statutory attorney fees. Rather, the record supports our conclusion that the
court properly compared the litigation objectives of each party with what relief each party
obtained and did not abuse its discretion by finding, as a practical or pragmatic matter,
that neither party prevailed. (Scott Co. v. Blount, Inc., supra, 20 Cal.4th at p. 1109; Hsu,
supra, 9 Cal.4th at p. 876; Santisas, supra, 17 Cal.4th at p. 622; Carpenter & Zuckerman,
LLP v. Cohen, supra, 195 Cal.App.4th at p. 378.) None of the cases cited by Association
are factually apposite to this case or otherwise persuade us to reach a contrary conclusion.
(See, e.g., Salehi v. Surfside III Condominium Owners Assn., supra, 200 Cal.App.4th
1146; Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th 1568.)
DISPOSITION
The postjudgment orders denying Roslyn's JNOV motion and denying
Association's motion for an award of attorney fees are affirmed. The parties are to bear
their own costs on appeal.
McDONALD, J.
WE CONCUR:
NARES, Acting P. J.
HALLER, J.
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