London v. Karatz
1 CA-CV 15-0070
| Ariz. Ct. App. | Oct 4, 2016Background
- Homeowners (London and Whitmer) sued an association they named as the unincorporated "Council of Co-Owners" and the association president, alleging improper elections, failure to enforce a management agreement with the Hilton hotel, and improper use of reserve funds; they sought appointment of a receiver.
- The original unincorporated association had incorporated in 1994 as "Hilton Casitas Council of Homeowners," adopting the 1972 declaration, membership, purpose, and same board; it retained the same EIN and tax filings.
- The Hilton hotel moved to intervene; the incorporated Council of Homeowners joined that motion and moved to dismiss, altering the caption to identify itself as the proper defendant. A prior 2012 trial-court ruling in related litigation had held the incorporated Council of Homeowners was the successor to the unincorporated association.
- Homeowners voluntarily dismissed their suit after the hotel was allowed to intervene. The incorporated Council then sought attorneys’ fees and costs; the trial court awarded fees to defendants (including the Council of Homeowners) and entered joint-and-several judgment including multiple entity names.
- Homeowners challenged the fee award on grounds the incorporated Council was not a party and thus not eligible for fees under A.R.S. § 12–341.01; the trial court and this Court concluded the incorporated Council was the successor entity and therefore a "party" eligible for fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the incorporated "Council of Homeowners" was a party to the suit and thus eligible for attorney fees under A.R.S. § 12–341.01 | The Homeowners argued the complaint named only the unincorporated Council of Co-Owners, not the incorporated Council of Homeowners, so the incorporated entity lacked standing to join and could not collect fees | The Council argued it had succeeded the unincorporated association, had a direct interest and the right to contest the litigation, and had been properly identified as the defendant (supported by prior 2012 ruling) | Court held the incorporated Council was the successor to the unincorporated association, was a "party" with a direct interest, and was eligible for fees under § 12–341.01 |
Key Cases Cited
- Bennet Blum, M.D., Inc. v. Cowan, 235 Ariz. 204 (discussing standard of review for attorney-fee awards)
- John C. Lincoln Hosp. & Health Corp. v. Maricopa Cty., 208 Ariz. 532 (deference to trial-court factual findings sustaining judgment)
- City of Tucson v. Clear Channel Outdoor, Inc., 218 Ariz. 172 (appellate reversal only for clearly erroneous factual findings)
- Chalpin v. Mobile Gardens, Inc., 18 Ariz. App. 231 (definition of a "party" eligible to appeal and litigate issues)
- Switzer v. Superior Court, 176 Ariz. 285 (statutory supersession noted; cited for procedural context)
- Helge v. Druke, 136 Ariz. 434 (party defined as one directly interested who may make defenses and control proceedings)
- Reidy v. O’Malley Lumber Co., 92 Ariz. 130 (court may take judicial notice of records in related cases addressing identical legal questions)