426 P.3d 1228
Ariz. Ct. App.2018Background
- Rodney and Gloria Olson own property governed by Chula Vista HOA CC&Rs; HOA recorded notices of covenant violation and imposed fines, prompting Olsons to sue.
- Olsons sued for declaratory relief (challenging a 2007 CC&R amendment), open meeting law violations, and slander of title under A.R.S. § 33-420(A); they sought statutory damages and attorney fees.
- Trial court ruled for the Olsons on all counts, awarded $5,000 in statutory slander-of-title damages, $318 costs, and $35,000 in attorney fees (total judgment $40,318).
- HOA appealed and moved for a supersedeas bond; trial judge set the bond at the full judgment amount ($40,318), including attorney fees.
- HOA petitioned via special action arguing attorney fees should not be included in the bond amount under A.R.S. § 12-2108 and Ariz. R. Civ. App. P. 7; Olsons argued fees were damages (invoking exceptions like the "tort of another" principle).
- Court accepted jurisdiction and reviewed whether attorney fees awarded are "damages" for setting the supersedeas bond.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether attorney fees awarded to Olsons count as "damages" for calculating a supersedeas bond under § 12-2108 and Rule 7 | Olsons: Fees are part of damages here (legal consequence of HOA's wrongful acts; statute-authorized fees tied to harm) | HOA: Attorney fees are part of the judgment but are not "damages" for bond purposes except in limited exceptions | Held: Fees are not damages for bond calculation; trial court erred including them |
| Whether Desert Mountain (attorney fees as damages when incurred in third-party litigation) controls | Olsons: Desert Mountain supports treating fees as damages when fees arise from protecting interests harmed by defendant's wrongful act | HOA: Desert Mountain is distinguishable because fees there related to third-party litigation | Held: Desert Mountain is distinguishable; fees here were incurred in the underlying suit, not third-party litigation |
| Whether statutory attorney-fee awards (e.g., § 33-420(A), § 12-341.01) convert fees into "damages" for § 12-2108 | Olsons: Statutory fee authorization shows fees are part of the harm remedy and thus damages | HOA: Statutory authorization makes fees a separate component of the judgment, not damages for bond purposes | Held: Statutory fees remain separate from damages; plain statutory language distinguishes them |
| Applicability of other exceptions (wrongful injunction/attachment; sanctions) that treat fees as damages | Olsons: The Notice of Violation functioned like a provisional remedy, so fees should be treated as damages | HOA: No provisional-remedy analogues or other exceptions apply | Held: No applicable exception; general rule that attorney fees are not damages controls |
Key Cases Cited
- City Ctr. Exec. Plaza, LLC v. Jantzen, 237 Ariz. 37 (App. 2015) (general rule: attorneys' fees are not "damages" for supersedeas bond purposes; exceptions are limited)
- Desert Mountain Properties Ltd. P’ship v. Liberty Mut. Fire Ins. Co., 225 Ariz. 194 (App. 2010) (fees incurred in third-party litigation as legal consequence of original wrongful act can be treated as damages)
- United States Fid. & Guar. Co. v. Frohmiller, 71 Ariz. 377 (1951) (attorney fees generally not considered damages absent specific exception)
- Kresock v. Gordon, 239 Ariz. 251 (App. 2016) (reiterating that attorney fees—including sanction-based fees—are not "damages" for bond-setting under § 12-2108)
- AOR Direct L.L.C. v. Bustamante, 240 Ariz. 433 (App. 2016) (followed City Center; attorney fees excluded from damages for supersedeas bond calculation)