Tract 19051 Homeowners Assn. v. Kemp
60 Cal. 4th 1135
Cal.2015Background
- Tract 19051 homeowners association sued owner Maurice Kemp (and later intervenor Eric Yeldell) alleging Kemp violated recorded declaration of restrictions and that the tract was a common interest development (CID) under the Davis–Stirling Act.
- Plaintiffs claimed the declaration’s original 2000 termination date had been extended by a 1999 majority homeowner vote under the CID Act; defendants maintained the declaration had expired.
- Trial court found plaintiffs failed to prove Tract 19051 was a CID, entered judgment for defendants, and awarded defendants attorneys’ fees under former Civ. Code § 1354(c) (now § 5975(c)).
- Court of Appeal affirmed the merits (no CID) but reversed the fee award, relying on Mount Olympus and concluding § 1354(c) did not apply when the Act itself had no application.
- California Supreme Court granted review limited to whether a prevailing defendant is entitled to fees under former § 1354(c) when the defendant prevails by showing the subdivision is not a CID.
- Supreme Court reversed the Court of Appeal as to fees: § 1354(c) is reciprocal and awards fees to the prevailing party in an action to enforce governing documents even if the defendant prevails by proving no CID exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a prevailing defendant who defeats an action by proving the property is not a CID can recover fees under former Civ. Code § 1354(c) | § 1354(c) applies only if there actually exist governing documents of a CID to be enforced; if no CID exists, the statute never applies and fees are not available | § 1354(c) awards fees to the "prevailing party" in an action to enforce governing documents; if plaintiff sued to enforce alleged CID documents, the action falls within the statute and a prevailing defendant is entitled to reciprocal fees | A prevailing defendant is entitled to fees under former § 1354(c); the statute is reciprocal and applies when the suit was brought to enforce alleged CID governing documents even if a court later finds no CID exists |
Key Cases Cited
- Hsu v. Abbara, 9 Cal.4th 863 (Cal. 1995) (prevailing defendant may recover under a bilateral contractual fee statute when defendant defeats contract claim by showing contract is inapplicable, invalid, unenforceable, or nonexistent)
- Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (reaffirming Hsu rule to ensure mutuality of remedy under prevailing party fee statutes)
- Mechanical Wholesale Corp. v. Fuji Bank, Ltd., 42 Cal.App.4th 1647 (Cal. Ct. App. 1996) (prevailing defendant entitled to fees under a statute that awards fees to the prevailing party in actions to enforce a particular statutory remedy, even when remedy proved inapplicable)
- Mount Olympus Property Owners Assn. v. Shpirt, 59 Cal.App.4th 885 (Cal. Ct. App. 1997) (plaintiff seeking fees under CID Act not entitled to fees when plaintiff failed to prove tract was a CID)
- Blue Lagoon Community Assn. v. Mitchell, 55 Cal.App.4th 472 (Cal. Ct. App. 1997) (petition under CID procedure was not an adversarial "action to enforce" governing documents for purposes of fee recovery)
- Gil v. Mansano, 121 Cal.App.4th 739 (Cal. Ct. App. 2004) (split appellate view on whether an "action to enforce" a release includes using the release defensively; discussed but distinguished)
- Jankey v. Lee, 55 Cal.4th 1038 (Cal. 2012) (legislature uses term "prevailing party" when intending mutual fee entitlement)