24 Cal. App. 5th 420
Cal. Ct. App. 5th2018Background
- Stabilis Fund II, LLC holds the deed of trust on a 75‑unit Indio apartment complex; the borrower (Valley & Mountain, controlled by the Kauras) defaulted and Stabilis sued for foreclosure and obtained a court receiver in 2013.
- The City of Indio inspected in March 2014, found extensive substandard/hazardous conditions, issued a repair/abate notice, and intervened in the receivership action in 2015.
- The City moved to modify the receivership to require remediation and later moved to disqualify the then‑receiver; the court granted the modification and replaced the receiver.
- The City sought $98,190.47 in attorney fees, litigation costs, and enforcement costs under (1) Health & Safety Code §17980.7(c)(11), (2) §17980.7(d)(1), and (3) Indio Municipal Code §10.20(C); the trial court awarded the full amount against Stabilis (and the receivership estate if funds available).
- Stabilis appealed, arguing none of the cited statutory provisions authorized fee/expense awards against it (a lender/beneficiary), and the Court of Appeal reversed.
Issues
| Issue | Plaintiff's Argument (City) | Defendant's Argument (Stabilis) | Held |
|---|---|---|---|
| Whether H&S §17980.7(c)(11) authorized fees when a receivership already existed | City: its motion to modify could be treated as an action under §17980.7(c) so prevailing‑party fees apply | Stabilis: §17980.7(c) applies only to appointment of a receiver where an owner failed to comply; it does not apply once a receiver already exists | Court: No — §17980.7(c)(11) does not apply to interventions in an existing receivership; Code Civ. Proc. §568.3 covers modifications and does not authorize fees under (c)(11) |
| Whether H&S §17980.7(d)(1) permits assessing fees/expenses against Stabilis as an “owner” or successor in interest | City: relies on §17980.7(f) definition of owner to include successors in interest with notice | Stabilis: it and the receivership are not owners or successors in interest with the requisite pre‑existing knowledge; a receiver and a lender/beneficiary are not owners | Court: No — Stabilis and the receiver are not "owners" or qualifying successors in interest under §17980.7; statute’s language and purpose preclude treating receiver/lender as owner |
| Whether Indio Muni. Code §10.20(C) authorizes fees against Stabilis as a non‑prevailing party in an action to abate a public nuisance | City: it prevailed by obtaining modification/discharge and new receiver, so is prevailing party entitled to fees against non‑prevailing parties (including Stabilis) | Stabilis: the City did not obtain abatement or final adjudication of nuisance liability; prevailing‑party status in a nuisance abatement action was not established as to Stabilis | Court: No — the City did not prevail in an action to abate the nuisance as to Stabilis; liability for nuisance had not been adjudicated and fees could not be imposed on Stabilis on that basis |
| Whether interim or nonfinal relief suffices to award fees | City: cites cases allowing fee awards without a fully favorable final judgment | Stabilis: prevailing‑party determinations generally require final resolution; interim awards are disfavored absent clear statutory authority | Court: Notes general rule that prevailing‑party status typically requires final judgment; does not definitively resolve for all statutes here but rejects City's reliance on interim relief to impose fees under the cited provisions |
Key Cases Cited
- Tract 19051 Homeowners Assn. v. Kemp, 60 Cal.4th 1135 (discusses American Rule and statutory exceptions for attorneys' fees)
- Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 3 Cal.5th 744 (attorney‑fee legal basis review is de novo)
- City of Los Angeles v. Superior Court, 234 Cal.App.4th 275 (statutory/ordinance interpretation reviewed de novo)
- Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (attorneys' fees ordinarily not recoverable absent statute or agreement)
- Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (discussion of prevailing party where relief rendered moot and limits on interim awards)
- Hsu v. Abbara, 9 Cal.4th 863 (prevailing‑party determination tied to final resolution)
- Bank of Idaho v. Pine Avenue Associates, 137 Cal.App.3d 5 (prevailing party generally determined on final disposition)
- Estate of Baldwin, 21 Cal.2d 586 (discusses scope of "successor in interest" in probate context)
- North v. Cecil B. De Mille Productions, 2 Cal.2d 55 (receiver acquires possession only; title remains with owner)