Tucson Estates Property Owners Association, Inc. v. McGovern, Sines
366 P.3d 111
Ariz. Ct. App.2016Background
- In 2012 McGovern and Sines (homeowners) purchased a lot in Tucson Estates that included an older shed; CC&Rs required association approval for replacement or relocation.
- Sines submitted a change request to TEPOA to replace/move the shed; a TEPOA inspector allegedly gave verbal approval, but the written form later bore a handwritten “Plan Denial” the homeowners never received.
- After the homeowners replaced and later relocated the shed, TEPOA sued seeking an injunction, liquidated damages, and attorney fees under the CC&Rs; the case was tried to the court.
- The trial court found the homeowners relied on actual or implicit approval, denied injunctive relief, vacated fines, and concluded each party should bear its own fees and costs.
- Appellants appealed the denial of attorney fees under A.R.S. § 12-341.01 and § 12-349 and sought costs under A.R.S. § 12-341; they also asked this court to take judicial notice of a subsequent TEPOA suit (request denied).
Issues
| Issue | Plaintiff's Argument (TEPOA) | Defendant's Argument (McGovern/Sines) | Held |
|---|---|---|---|
| Whether § 12-341.01(A) required an award of attorney fees to the homeowners where the CC&Rs provided fees to TEPOA only if TEPOA prevailed | Contract’s unilateral fee clause should control; statute does not obligate reciprocal fees | § 12-341.01(A) mandates fees to the prevailing party in contract actions even if contract is silent for that party | Court: § 12-341.01(A) permits but does not require fees; no mandatory reciprocal award |
| Whether trial court abused discretion in denying discretionary fees under § 12-341.01(A) | N/A (TEPOA argued its case had merit) | Factors (merits, avoidability, full relief, hardship) favored homeowners; fees should have been awarded | Court: Denial was within discretion; reasonable basis existed to deny fees |
| Whether sanctions/mandatory fees under § 12-349(A)(1) were required for bringing a claim without substantial justification | TEPOA’s claim was not groundless | TEPOA’s suit lacked substantial justification and merits, so § 12-349 fees are mandatory | Court: No § 12-349 award — factual conflict showed claim was made in good faith or at least not frivolous |
| Whether homeowners were the "successful party" entitled to mandatory costs under § 12-341 | TEPOA contended no prevailing party because injunctive relief is equitable and neither party fully prevailed | Homeowners prevailed on all relief TEPOA sought (injunction, fines, damages), so they are the successful party | Court: Trial court erred — homeowners were the successful party and are entitled to costs; award reversed as to costs |
Key Cases Cited
- Pioneer Roofing Co. v. Mardian Constr. Co., 152 Ariz. 455, 733 P.2d 652 (App. 1986) (holding § 12-341.01 may be applied to award fees to a party even when contract contains a unilateral fee clause favoring another party)
- Barmat v. John & Jane Doe Partners A–D, 155 Ariz. 519, 747 P.2d 1218 (1987) (court should first determine if a contract exists before applying § 12-341.01)
- Associated Indem. Corp. v. Warner, 143 Ariz. 567, 694 P.2d 1181 (1985) (factors to consider in awarding attorney fees under § 12-341.01 and standard of appellate review for discretionary fee rulings)
- Turner, 196 Ariz. 631, 2 P.3d 1276 (App. 2000) (discussing when no prevailing party may be found in CC&R enforcement cases; distinguishable where each party prevailed in part)
- Chaurasia v. Gen. Motors Corp., 212 Ariz. 18, 126 P.3d 165 (App. 2006) (statutory purpose of § 12-341.01 is to mitigate litigation expense for just claims or defenses)
- Michaelson v. Garr, 234 Ariz. 542, 323 P.3d 1193 (App. 2014) (trial court abuses discretion when no competent evidence supports its decision denying costs)